cpsh20250329

cpsh20250329_10q.htm

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 March 29, 2025

☐	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 (State or Other Jurisdiction of Incorporation or Organization)	04-2832509 (I.R.S. Employer Identification No.)

111 South Worcester Street Norton MA (Address of principal executive offices)	02766-2102 (Zip Code)

(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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 (15 U.S.C. 7262(b)) by the registered public accounting 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 Market

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 April 21, 2025: 14,525,960.

PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS (Unaudited)

PS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	March 29, 2025			December 28, 2024
ASSETS

Current assets:
Cash and cash equivalents	$	1,929,919		$	3,280,687
Marketable securities, at fair value		1,039,714			1,031,001
Accounts receivable-trade		6,302,650			4,858,208
Accounts receivable-other		210,475			177,068
Inventories, net		4,812,833			4,331,066
Prepaid expenses and other current assets		389,764			480,986
Total current assets		14,685,355			14,159,016
Property and equipment:
Production equipment		10,439,670			10,382,379
Furniture and office equipment		891,921			891,921
Leasehold improvements		997,830			997,830
Total cost		12,329,421			12,272,130
Accumulated depreciation and amortization		(10,542,494	)		(10,377,756	)
Construction in progress		144,653			108,874
Net property and equipment		1,931,580			2,003,248
Right-of-use lease asset		147,000			186,000
Deferred taxes, net		2,444,973			2,528,682
Total Assets	$	19,208,908			18,876,946

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Note payable, current portion		-			8,130
Accounts payable		3,135,552			3,053,712
Accrued expenses		1,070,932			913,279
Deferred revenue		108,080			172,429
Lease liability, current portion		147,000			160,000

Total current liabilities		4,461,564			4,307,550

Deferred revenue – long term		31,277			31,277
Long term lease liability		-			26,000

Total liabilities		4,492,841			4,364,827
Commitments & Contingencies
Stockholders’ equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,661,487 shares; outstanding 14,525,960 shares at each March 29, 2025 and December 28, 2024		146,615			146,615
Additional paid-in capital		40,702,573			40,580,387
Accumulated other comprehensive income		1,300			15,500
Accumulated deficit		(25,794,283	)		(25,890,245	)
Less cost of 135,527 common shares repurchased at each March 29, 2025 and December 28, 2024		(340,138	)		(340,138	)

Total stockholders’ equity		14,716,067			14,512,119

Total liabilities and stockholders’ equity	$	19,208,908		$	18,876,946

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

	Fiscal Quarters Ended
	March 29, 2025			March 30, 2024

Product sales	$	7,505,921		$	5,912,634

Cost of product sales		6,274,920			5,006,324

Gross profit		1,231,001			906,310
Selling, general, and administrative expenses		1,101,350			1,165,922

Operating income (loss)		129,651			(259,612	)
Other income, net		50,476			79,171

Income (loss) before income taxes		180,127			(180,441	)
Income tax provision (benefit)		84,165			(37,288	)

Net income (loss)	$	95,962		$	(143,153	)
Other comprehensive income
Net unrealized gains on available for sale securities		2,037			-
Reclassification adjustment for gains included in net income		(16,237	)
Total other comprehensive income		(14,200	)		-
Comprehensive income (loss)		81,762			(143,153	)

Net income (loss) per basic common share	$	0.01		$	(0.01	)

Weighted average number of basic common shares outstanding		14,525,960			14,519,215

Net income (loss) per diluted common share	$	0.01		$	(0.01	)

Weighted average number of diluted common shares outstanding		14,543,911			14,519,215

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 29, 2025 AND MARCH 30, 2024

	Common Stock
	Number of shares issued		Par Value		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive income			Stock repurchased			Total stockholders’ equity
Balance at December 28, 2024		14,661,487	$	146,615	$	40,580,387	$	(25,890,245	)	$	15,500		$	(340,138	)	$	14,512,119
Share-based compensation expense		—		—		122,186		—			—			—			122,186
Net unrealized gains on available for sale securities		—		—		—		—			2,037			—			2,037
Reclassification adjustment for gains included in net income		—		—		—		—			(16,237	)		—			(16,237	)
Net income		—		—		—		95,962			—			—			95,962
Balance at March 29, 2025		14,661,487		146,615	$	40,702,573	$	(25,794,283	)	$	1,300		$	(340,138	)	$	14,716,067

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		—		—		160,962		—			—			—			160,962
Net loss		—		—		—		(143,153	)		—			—			(143,153	)
Balance at March 30, 2024		14,601,487		146,015	$	40,341,855	$	(22,897,949	)		—		$	(250,138	)	$	17,339,783

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Cash Flows (Unaudited)

	Fiscal Quarters Ended
	March 29, 2025			March 30, 2024

Cash flows from operating activities:
Net income (loss)	$	95,962		$	(143,153	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		164,738			101,405
Share-based compensation		122,186			160,962
Deferred taxes		83,709			(40,256	)
Realized gain on sale of marketable securities		(26,068	)		-
Changes in:
Accounts receivable - trade		(1,444,442	)		540,520
Accounts receivable - other		(33,407	)		55,701
Inventories		(481,767	)		(29,530	)
Prepaid expenses and other current assets		91,222			(115,604	)
Accounts payable		81,840			(125,313	)
Accrued expenses		157,653			(231,367	)
Deferred revenue		(64,349	)		(44,508	)

Net cash provided by (used in) operating activities		(1,252,723	)		128,857

Cash flows from investing activities:
Purchases of property and equipment		(93,070	)		(263,346	)
Proceeds from sale of marketable securities		518,000			-
Purchases of marketable securities		(514,845	)		-

Net cash used in investing activities		(89,915	)		(263,346	)

Cash flows from financing activities:
Payments on note payable		(8,130	)		(11,409	)

Net cash used in financing activities		(8,130	)		(11,409	)

Net decrease in cash and cash equivalents		(1,350,768	)		(145,898	)
Cash and cash equivalents at beginning of period		3,280,687			8,813,626

Cash and cash equivalents at end of period	$	1,929,919		$	8,667,728

Supplemental disclosures of cash flows information:
Cash paid for interest	$	26		$	825

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 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, copper-tungsten, etc.

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.

The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and defense 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 March 29, 2025 was $1,039,714 and, as of December 28, 2024, was $1,031,001.

	March 29, 2025		December 28, 2024
Cost basis	$	1,036,409		1,015,501
Unrealized gain	$	3,305		15,500
Total fair value	$	1,039,714		1,031,001

(5) Net Income (Loss) Per Common and Common Equivalent Share

Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing net income (loss) 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. Had there been a profit in Q1 2024, the dilutive effect would have been 74,285 shares. Common stock equivalents are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive.

The following table presents the calculation of both basic and diluted EPS:

	Three Months Ended
	March 29, 2025		March 30, 2024

Basic EPS Computation:
Numerator:
Net income (loss)	$	95,962	$	(143,153	)
Denominator:
Weighted average common shares outstanding		14,525,960		14,519,215
Basic EPS	$	0.01	$	(0.01	)
Diluted EPS Computation:
Numerator:
Net income (loss)	$	95,962	$	(143,153	)
Denominator:
Weighted average common shares outstanding		14,525,960		14,519,215
Dilutive effect of stock options		17,951		-
Total Shares		14,543,911		14,519,215
Diluted EPS	$	0.01	$	(0.01	)

(6) Commitments & Contingencies

Commitments

Operating Leases

The Company has one real estate lease expiring in February 2026. 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 2026 (the “Norton facility lease”) is included as a right-of-use lease asset and corresponding lease liability (current and noncurrent portions) 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. 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 an option to renew the lease starting in March 2026 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 $152 thousand to $165 thousand through maturity.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of March 29, 2025

(Dollars in Thousands)
Maturity of capitalized lease liabilities	Lease payments
Remaining 2025		124
2026		28
Total undiscounted operating lease payments	$	152
Less: Imputed interest		(5	)
Present value of operating lease liability	$	147
Balance Sheet Classification
Current lease liability	$	147
Long-term lease liability		-
Total operating lease liability	$	147
Other Information
Weighted-average remaining lease term for capitalized operating leases (in months)		11
Weighted-average discount rate for capitalized operating leases		6.6	%

Operating Lease Costs and Cash Flows

Operating lease cost and cash paid was $41 thousand during the first quarter of 2025. This cost is 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 quarters ended March 29, 2025 and March 30, 2024, a total of 115,000 and 135,500 stock options, respectively, were granted to employees under the Company’s 2020 Equity Incentive Plan (the “Plan”) and a total of 75,000 and 75,000 stock options, respectively, were granted to outside directors during the quarters ended March 29, 2025 and March 30, 2024.

During the quarters ended March 29, 2025 and March 30, 2024, there were 0 options exercised.

During the quarters ended March 29, 2025 and March 30, 2024, the Company repurchased 0 shares for employees to facilitate their exercise of stock options.

There were also 1,083,300 options outstanding at a weighted average price of $2.45 with a weighted average remaining contractual term of 7.6 years as of March 29, 2025 and there were 581,900 shares exercisable at a weighted average price of $2.37 with a weighted average remaining term of 6.7 years. There were 1,097,900 options outstanding at a weighted average price of $2.61 with a weighted average remaining contractual term of 7.1 years as of March 30, 2024 and there were 582,800 shares exercisable at a weighted average price of $2.44 with a weighted average remaining term of 5.3 years. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of March 29, 2025, there were 466,400 shares available for future grants.

As of March 29, 2025, there was $608 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 2.41 years.

During the quarters ended March 29, 2025 and March 30, 2024, the Company recognized approximately $122 thousand and $161 thousand, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

(8) Inventories

Inventories consist of the following:

	March 29, 2025			December 28, 2024

Raw materials	$	2,561,513		$	2,625,305
Work in process		2,537,536			1,880,396
Finished goods		272,212			343,722

Gross inventory		5,371,221			4,849,423
Reserve for obsolescence		(558,428	)		(518,357	)

Inventories, net	$	4,812,833		$	4,331,066

(9) Accrued Expenses

Accrued expenses consist of the following:

	March 29, 2025		December 28, 2024

Accrued legal and accounting	$	79,702	$	138,600
Accrued payroll and related expenses		456,019		254,737
Accrued other		535,211		519,942

Total Accrued Expenses	$	1,070,932	$	913,279

(10) Revolving Line of Credit

In May 2023, the Company entered into 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 (7.5% at March 29, 2025). On March 29, 2025 and March 30, 2024, 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 LOC remains in effect until terminated per mutual agreement by both parties. Total interest expense for Q1 2025 was $0 and was $0 for Q1 2024.

(11) 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.

The Company believes that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset. For the first quarter of 2025 the deferred tax asset was decreased $84 for the estimated tax on Q1 net income.

(12) 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:

		March 29, 2025		March 30, 2024
Product sales	$	7,505,921	$	5,912,634

Cost of product sales		6,274,920		5,006,324
Gross profit		1,231,001		906,310

Selling, general, and administrative expenses		1,101,350		1,165,922
Income (loss) from operations		129,651		(259,612	)

Other income		50,476		79,171
Income (loss) before income tax		180,127		(180,441	)
Income tax provision (benefit)		84,165		(37,288	)
Net income (loss)	$	95,962	$	(143,153	)

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, including economic conflicts, throughout the world, 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.

Overview

Products we provide include baseplates for motor controllers 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 First Fiscal Quarter of 2025 (Q1 2025) Compared to the First Fiscal Quarter of 2024 (Q1 2024); (all $ in 000’s)

Revenues totaled $7,506 in Q1 2025 compared with $5,913 generated in Q1 2024, an increase of 27%. The major factor contributing to this increase is the continued expansion of production capacity to meet growing demand, including the addition of our third shift and the continued improvement of our production associates as they gain more experience. As announced in Q4 2024, CPS received an order from an existing customer approximately $5 million greater than the same order received in Q4 2023.

Gross margin in Q1 2025 totaled $1,231 or 16% of sales. This compares with gross margin in Q1 2024 of $906 or 15% of sales. This increase was primarily due to the impact of higher sales volumes on fixed costs.

Selling, general and administrative (SG&A) expenses totaled $1,101 in Q1 2025 compared with SG&A expenses of $1,166 in Q1 2024, a 6% decrease year over year. There are a number of areas in which management has been able to reduce SG&A expenses compared to last year.

The Company experienced operating income of $130 in Q1 2025 compared with an operating loss of $260 in Q1 2024. This increase was a result of the increased gross margin and by the decrease in SG&A expenses. Net after tax income was $96 in Q1 2025 compared to an after tax loss of $143 in Q1 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 or the conflict in Israel and Gaza will have a direct impact on our results. Most of our raw materials are sourced domestically. In some cases, our suppliers may be sourcing these materials from a foreign source. To date, we have not seen any cost increases that we believe are attributable to tariffs, however this could change in the future.

Inflation has had an impact on our costs. Thus far, we have largely 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. Wages have also been impacted by inflation. We have instituted a combination of wage increases as well as more competitive benefits in order to retain the personnel making up our workforce.

The factors mentioned above, including inflation and tariffs, create elevated uncertainty regarding future financial performance.

Liquidity and Capital Resources (all $ in 000’s unless noted)

The Company’s cash and cash equivalents at March 29, 2025 totaled $1,930, with marketable securities of $1,040. This compares to cash and cash equivalents at December 28, 2024 of $3,281 and marketable securities of $1,031. The change in cash is predominantly due to our increased accounts receivable which are discussed in more detail below.

Trade accounts receivable at March 29, 2025 totaled $6,303 compared with $4,858 at December 28, 2024. Days Sales Outstanding (DSO) increased from 76 days at the end of 2024 to 78 days at the end of Q1 2025. The reason for this increase is that sales dollars per week grew throughout the quarter, resulting in a higher percentage of Q1 sales remaining in accounts receivable than would be expected, had weekly sales been relatively uniform during the quarter. The accounts receivable balances at December 28, 2024, and March 29, 2025 were both net of an allowance for credit losses of $10.

Inventories totaled $4,813 at March 29, 2025 compared with inventory totaling $4,331 at December 28, 2024. The inventory turnover in the most recent four quarters ending Q1 2025 was 5.5 times (based on a 5 quarter end average) compared with 5.9 times averaged during the four quarters of 2024.

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 maintains 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. On March 29, 2025, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted the full $3.0 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties.

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. The note was paid in full during the quarter ended March 29, 2025.

The Company has one real estate lease expiring in February 2026. 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 4, Leases)

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not significantly exposed to the impact of interest rate changes. The Company has not used derivative financial instruments. As one of our major competitors is located in Japan, currency fluctuations can have an impact on how we price our product in order to remain competitive.

Although CPS has not been directly impacted by the war in Ukraine or by the conflict in Israel and Gaza, potential supply chain disruptions and its impact on energy costs are areas where we could be impacted in the future.

Inflation is an area where we have seen some impact on our business. We have seen price increases in commodity raw materials, 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. In the case of longer term pricing agreements, we have been able to pass on some of these costs through surcharges and in other ways to mitigate the impact on our profit. As inflation continues, our ability to continue to absorb higher costs by raising customer prices cannot be guaranteed.

As of the date of this document, we are not aware of any material negative impacts that tariffs have on our business. Nevertheless, this issue is currently in flux. We could be negatively impacted in the sourcing of raw materials, or, reciprocal tariffs on CPS product could make it more difficult for us to sell profitably to foreign customers.

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

We are not a party to any litigation which could have a material adverse effect on us or on our business.

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:

Exhibit 31.1 Certification Of President and Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002

Exhibit 31.2 Certification Of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002

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

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: May 2, 2025

/s/Brian T. Mackey

Brian T. Mackey

President and Chief Executive Officer

Date: May 2, 2025

/s/ Charles K. Griffith Jr.

Charles K. Griffith Jr.

Chief Financial Officer

SEC Form 10-Q filed by CPS Technologies Corp.