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~~June 2928, 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:

~~Registrant’s~~CPS ~~Telephone~~Technologies ~~Number, including Area Code:~~Corp.

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~~15U.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

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~~NASDAQ Capital ~~Market~~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 ~~April~~July 2123, 2025: 14,525,960.

PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS (Unaudited)

PSCPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	March 29, 2025			December 28, 2024
	June 28, 2025			December 28, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	12,~~929~~374,~~919~~037		$	3,280,687
Marketable securities, at fair value		1,~~039~~044,~~714~~925			1,031,001
Accounts receivable-trade		65,~~302~~602,~~650~~703			4,858,208
Accounts receivable-other		~~210~~416,~~475~~029			177,068
Inventories, net		45,~~812~~198,~~833~~246			4,331,066
Prepaid expenses and other current assets		~~389~~263,~~764~~636			480,986
Total current assets		14,~~685~~899,~~355~~576			14,159,016
Property and equipment:
Production equipment		10,~~439~~659,~~670~~948			10,382,379
Furniture and office equipment		~~891~~910,~~921~~310			891,921
Leasehold improvements		997,830			997,830
Total cost		12,~~329~~568,~~421~~088			12,272,130
Accumulated depreciation and amortization		(10,~~542~~698,~~494~~945	)		(10,377,756	)
Construction in progress		~~144~~78,~~653~~834			108,874
Net property and equipment		1,~~931~~947,~~580~~977			2,003,248
Right-of-use lease asset		147,000			186,000
Intangible assets		21,363			-
Deferred taxes, net		2,444,973			2,528,682
Right-of-use lease asset		108,000			186,000
Total Assets	$	19,208,908			18,876,946
Deferred taxes, net		2,392,854			2,528,682
Total Assets	$	19,369,770			18,876,946
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Note payable, current portion		-			8,130
Accounts payable		3,~~135~~286,~~552~~223			3,053,712
Accrued expenses		1,~~070~~036,~~932~~463			913,279
Deferred revenue		~~108~~30,~~080~~384			172,429
Lease liability, current portion		~~147~~108,000			160,000
Total current liabilities		4,461,~~564~~070			4,307,550
Deferred revenue – long term		31,277			31,277
Long term lease liability		-			26,000
Total liabilities		4,492,~~841~~347			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
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,661,487 shares; outstanding 14,525,960 shares at each June 28, 2025 and December 28, 2024		146,615			146,615
Additional paid-in capital		40,~~702~~751,~~573~~927			40,580,387
Accumulated other comprehensive income		19,~~300~~469			15,500
Accumulated deficit		(25,~~794~~690,~~283~~450	)		(25,890,245	)
Less cost of 135,527 common shares repurchased at each March 29, 2025 and December 28, 2024		(340,138	)		(340,138	)
Less cost of 135,527 common shares repurchased at each June 28, 2025 and December 28, 2024		(340,138	)		(340,138	)
Total stockholders’ equity		14,~~716~~877,~~067~~423			14,512,119
Total liabilities and stockholders’ equity	$	19,~~208~~369,~~908~~770		$	18,876,946

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Operations and Other Comprehensive Income (Loss) (Unaudited)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 28,		June 29,			June 28,			June 29,
	2025		2024			2025			2024
Product sales	$	8,078,657	$	5,030,313		$	15,584,578		$	10,942,947

Cost of product sales		6,742,341		5,260,305			13,017,261			10,266,629

Gross profit		1,336,316		(229,992	)		2,567,317			676,318

Selling, general, and administrative expenses		1,199,389		1,084,995			2,300,739			2,250,917

Income (loss) from operations		136,927		(1,314,987	)		266,578			(1,574,599	)

Other income, net		19,025		90,851			69,501			170,021

Net income (loss) before income taxes		155,952		(1,224,136	)		336,079			(1,404,578	)
Income tax provision (benefit)		52,119		(269,832	)		136,284			(307,120	)

Net income (loss)	$	103,833	$	(954,304	)	$	199,795		$	(1,097,458	)
Other comprehensive income
Net unrealized gains on available for sale securities		8,169		8,701			10,206			8,701
Reclassification adjustment for gains included in net income		-		-			(16,237	)		-
Total other comprehensive income		8,169		8,701			(6,031	)		8,701
Comprehensive income (loss)		112,002		(945,603	)		193,764			(1,088,757	)

Net income (loss) per basic common share	$	0.01	$	(0.07	)	$	0.01		$	(0.08	)

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

Net income (loss) per diluted common share	$	0.01	$	(0.07	)	$	0.01		$	(0.08	)

Weighted average number of diluted common shares outstanding		14,577,433		14,519,215			14,560,672			14,519,215

	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 AND SIX MONTHS ENDED ~~MARCH~~JUNE 2928, 2025 AND ~~MARCH~~JUNE 3029, 2024

	Common Stock
	Number of shares issued		Par Value		Additional paid-in capital		Accumulated ~~deficit~~other comprehensive income			Accumulated ~~other comprehensive income~~deficit			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
Balance at March 29, 2025		14,661,487	$	146,615	$	40,702,574	$	1,300		$	(25,794,283	)	$	(340,138	)	$	14,716,068
Share-based compensation expense		—-		—-		~~122~~49,~~186~~353		—-			—-			—-			~~122~~49,~~186~~353
Net unrealized gains on available for sale securities		—		—		—		—			2,037			—			2,037
Other comprehensive income		-		-		-		8,169			-			-			8,169
Reclassification adjustment for gains included in net income		—		—		—		—			(16,237	)		—			(16,237	)
Net loss		-		-		-		-			103,833			-			103,833
Net income		—		—		—		95,962			—			—			95,962
Balance at June 28, 2025		14,661,487	$	146,615	$	40,751,927	$	9,469		$	(25,690,450	)	$	(340,138	)	$	14,877,423
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

	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		-		-		171,540		-			-			-			171,540
Net unrealized gains on available for sale securities		-		-		-		10,206			-			-			10,206
Reclassification adjustment for gains included in net income		-		-		-		(16,237	)		-			-			(16,237	)
Net income		-		-		-		-			199,795			-			199,795
Balance at June 28, 2025		14,661,487	$	146,615	$	40,751,927	$	9,469		$	(25,690,450	)	$	(340,138	)	$	14,877,423

	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 March 30, 2024		14,601,487	$	146,015	$	40,341,855	$	-	$	(22,897,950	)	$	(250,138	)	$	17,339,782
Share-based compensation expense		-		-		44,480		-		-			-			44,480
Other comprehensive income		-		-		-		8,701		-			-			8,701
Net loss		-		-		-		-		(954,304	)		-			(954,304	)
Balance at June 29, 2024		14,601,487	$	146,015	$	40,386,335	$	8,701	$	(23,852,254	)	$	(250,138	)	$	16,438,659

	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		-		-		205,442		-		-			-			205,442
Other comprehensive income		-		-		-		8,701		-			-			8,701
Net loss		-		-		-		-		(1,097,458	)		-			(1,097,458	)
Balance at June 29, 2024		14,601,487	$	146,015	$	40,386,335	$	8,701	$	(23,852,254	)	$	(250,138	)	$	16,438,659

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Cash Flows (Unaudited)

	Fiscal Quarters Ended
	Six Months Ended
	March 29, 2025			March 30, 2024
	June 28,			June 29,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	95199,~~962~~795		$	(~~143~~1,~~153~~097,458	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization		~~164~~321,~~738~~189			~~101~~237,~~405~~954
Share-based compensation		~~122~~171,~~186~~540			~~160~~205,~~962~~442
Deferred taxes		83,709			(40,256	)
Realized gain on sale of marketable securities		(12,183	)		-
Realized gain on sale of marketable securities		(26,068	)		-
Deferred taxes		135,828			(307,576	)
Changes in:
Accounts receivable - trade		(1,444,442	)		540,520
Accounts receivable-trade		(744,495	)		324,862
Accounts receivable - other		(33,407	)		55,701
Accounts receivable-other		(238,961	)		(115,157	)
Inventories		(~~481~~867,~~767~~180	)		~~(29~~460,~~530~~252	)
Prepaid expenses and other current assets		91217,~~222~~350			(~~115~~90,~~604~~306	)
Accounts payable		81232,~~840~~511			~~(125~~52,~~313~~788	)
Accrued expenses		~~157~~123,~~653~~184			(~~231~~403,~~367~~284	)
Deferred revenue		(64142,~~349~~045	)		(44186,~~508~~177	)
Net cash provided by (used in) operating activities		(1,252,723	)		128,857
Net cash used in operating activities		(603,467	)		(918,660	)
Cash flows from investing activities:
Purchases of property and equipment		(93265,~~070~~918	)		(~~263~~815,~~346~~720	)
Acquisition cost of patents and trademarks		(21,363	)		-
Proceeds from sale of marketable securities		518,000			-
Purchases of marketable securities		(514,845	)		-
Purchase of marketable securities		(525,772	)		(750,000	)
Net cash used in investing activities		(89295,~~915~~053	)		(~~263~~1,~~346~~565,720	)
Cash flows from financing activities:
Payments on note payable		(8,130	)		(1123,~~409~~002	)
Net cash used in financing activities		(8,130	)		(1123,~~409~~002	)
Net decrease in cash and cash equivalents		(1906,~~350,768~~650	)		(~~145~~2,~~898~~507,382	)
Cash and cash equivalents at beginning of period		3,280,687			8,813,626
Cash and cash equivalents at end of period	$	12,~~929~~374,~~919~~037		$	86,~~667~~306,~~728~~244
Supplemental disclosures of cash flows information:
Cash paid for interest	$	26		$	~~825~~1,465

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. Notes to Financial Statements (Unaudited)

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~~, 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~~June 2928, 2025 was $1,~~039~~044,~~714~~925 and was $1,031,001 as of December 28, 2024~~, was $1,031,001~~.

	March 29, 2025		December 28, 2024
	June 28, 2025		December 28, 2024
Cost basis	$	1,~~036~~033,~~409~~947	$	1,015,501
Unrealized gain	$	310,~~305~~978		15,500
Total fair value	$	1,~~039~~044,~~714~~925	$	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. Had there been a profit in Q2 and year to date in 2024, the dilutive effect would have been 29,254 shares and 50,607 shares, respectively.

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

	Three Months Ended					Six Months Ended
	March 29, 2025		March 30, 2024
	June 28,		June 29,			June 28,		June 29,
Basic EPS Computation:
	2025		2024			2025		2024
Numerator:
Basic EPS Computation:
Net income (loss)	$	95,962	$	(143,153	)
Numerator:
Denominator:
Net income (loss)	$	103,833	$	(954,304	)	$	199,795	$	(1,097,458	)
Weighted average common shares outstanding		14,525,960		14,519,215
Denominator:
Basic EPS	$	0.01	$	(0.01	)
Weighted average
Diluted EPS Computation:
Common shares
Numerator:
Outstanding		14,525,960		14,519,215			14,525,960		14,519,215
Net income (loss)	$	95,962	$	(143,153	)
Basic EPS	$	0.01	$	(0.07	)	$	0.01	$	(0.08	)
Denominator:
Diluted EPS Computation:
Weighted average common shares outstanding		14,525,960		14,519,215
Numerator:
Dilutive effect of stock options		17,951		-
Net income (loss)	$	103,833	$	(954,304	)	$	199,795	$	(1,097,458	)
Total Shares		14,543,911		14,519,215
Denominator:
Diluted EPS	$	0.01	$	(0.01	)
Weighted average
Common shares
Outstanding		14,525,960		14,519,215			14,525,960		14,519,215
Dilutive effect of stock options		51,473		-			34,712		-
Total Shares		14,577,433		14,519,215			14,560,672		14,519,215
Diluted EPS	$	0.01	$	(0.07	)	$	0.01	$	(0.08	)

(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~~160 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~~lease as of ~~March~~June 2928, 2025:

(Dollars in Thousands)	June 28, 2025
Maturity of capitalized lease liabilities	Lease payments
Remaining 2025		124
2025		83
2026		28
Total undiscounted operating lease payments	$	~~152~~111
Less: Imputed interest		(53	)
Present value of operating lease liability	$	~~147~~108
Balance Sheet Classification
Current lease liability	$	~~147~~108
Long-term lease liability		-
Total operating lease liability	$	~~147~~108
Other Information
Weighted-average remaining lease term for capitalized operating leases (in months)		11
Remaining lease term for capitalized operating lease (months)		8
Weighted-average discount rate for capitalized operating leases		6.6	%
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~~second quarter of 2025 and $83 thousand for the six months ended June 28, 2025. ~~This~~These ~~cost~~costs isare related to its long-term operating lease. All other short-term leases were immaterial.

Finance Leases

The ~~Company~~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~~company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted.

During the ~~quarters~~quarter ended ~~March~~June 2928, 2025, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and ~~March~~no 30stock options were granted to outside directors during the quarter ended June 28, ~~2024~~2025. For the six months ended June 28, 2025 a total of 115,000 stock options and ~~135~~75,~~500~~000 stock options were granted to employees and directors, respectively. During the quarter ended June 29, 2024, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and ano ~~total of 75,000 and 75,000~~ stock options, ~~respectively,~~ were granted to outside directors during the ~~quarters~~quarter ended ~~March~~June 29, ~~2025~~2024. For ~~and~~the ~~March~~six 30months ended June 29, 2024. a total of 135,500 stock options and 75,000 stock options were granted to employees and directors, respectively

During the ~~quarters~~three and six months ended ~~March~~June 2928, 2025, there were no options exercised and ~~March~~corresponding 30shares issued. During the three and six months ended June 29, 2024, there were 0no options exercised and corresponding shares issued.

During the ~~quarters~~three and six months ended ~~March~~June 2928, 2025, the Company did not repurchase any shares for employees to facilitate their exercise of stock options. During the three and ~~March~~six 30months ended June 29, 2024, the Company ~~repurchased~~did 0not repurchase any 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 7.636 years as of ~~March~~June 2928, 2025, and there were ~~581~~594,~~900~~100 ~~shares~~options exercisable at a weighted average price of $2.3740 with a weighted average remaining term of 6.749 years~~. There~~ ~~were~~as ~~1,097,900~~of ~~options~~June ~~outstanding~~28, at2025. aThe ~~weighted~~Plan, ~~average~~as ~~price~~amended, ofis ~~$2.61~~authorized ~~with~~to aissue ~~weighted~~1,500,000 ~~average~~shares ~~remaining contractual term~~ of 7common stock.1 ~~years~~As as of ~~March~~June 3028, ~~2024~~2025, ~~and~~ there were ~~582~~421,~~800~~400 shares ~~exercisable~~available atfor afuture ~~weighted~~grants ~~average~~under ~~price~~the of2020 ~~$2.44~~Plan ~~with~~and a141,900 ~~weighted~~shares ~~average~~outstanding ~~remaining~~under ~~term~~the of2009 5Plan.3 As ~~years.~~of ~~The~~June ~~Plan~~29, ~~as amended~~2024, isthere ~~authorized~~were ~~to issue 1~~638,~~500,000~~300 shares ofavailable ~~common~~for ~~stock.~~future Asgrants ofunder ~~March~~the ~~29,~~2020 ~~2025,~~Plan ~~there~~and ~~were 466~~236,~~400~~200 shares ~~available~~outstanding ~~for~~under ~~future~~the ~~grants~~2009 Plan.

As of ~~March~~June 2928, 2025, there was $~~608~~559 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~~three ~~ended~~and ~~March~~six ~~29,~~months ~~2025~~ended ~~and~~June ~~March 30~~28, ~~2024~~2025, the Company recognized ~~approximately~~ $~~122~~49,354 ~~thousand~~ and $~~161 thousand~~171,540, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

During the three and six months ended June 29, 2024, the Company recognized $44,480 and $205,442, 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
	June 28,			December 28,
Raw materials	$	2,561,513		$	2,625,305
	2025			2024
Work in process		2,537,536			1,880,396
Raw materials	$	2,719,237		$	2,625,305
Finished goods		272,212			343,722
Work in process		2,678,705			1,880,396
Gross inventory		5,371,221			4,849,423
Finished goods		351,716			343,722
Reserve for obsolescence		(558,428	)		(518,357	)
Total inventory		5,749,658			4,849,423
Inventories, net	$	4,812,833		$	4,331,066
Reserve for obsolescence		(551,412	)		(518,357	)
Inventories, net	$	5,198,246		$	4,331,066

(9) Accrued Expenses

Accrued expenses consist of the following:

	March 29, 2025		December 28, 2024
	June 28,		December 28,
Accrued legal and accounting	$	79,702	$	138,600
	2025		2024
Accrued payroll and related expenses		456,019		254,737
Accrued legal and accounting	$	77,177	$	138,600
Accrued other		535,211		519,942
Accrued payroll and related expenses		354,631		254,737
Total Accrued Expenses	$	1,070,932	$	913,279
Accrued product returns		500,283		429,617
Accrued other		104,372		90,325
	$	1,036,463	$	913,279

(10) ~~Revolving~~ Line of Credit

InThe ~~May~~Company ~~2023,~~has ~~the~~a ~~Company~~$3.0 ~~entered~~million ~~into~~revolving 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~~June 2928, 2025). On ~~March~~June 2928, 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~~line of credit remains in effect ~~until~~and ~~terminated~~has ~~per~~been ~~mutual~~extended ~~agreement~~to byAugust ~~both~~5, ~~parties. Total interest expense for Q1~~ 2025 ~~was $0 and was $0 for Q1 2024~~.

(11) ~~Income~~ Segment ~~Taxes~~Reporting

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
	Three Months Ended					Six Months Ended
Product sales	$	7,505,921	$	5,912,634
	June 28, 2025		June 29, 2024			June 28, 2025		June 29, 2024
Cost of product sales		6,274,920		5,006,324
Product sales	$	8,078,657	$	5,030,313		$	15,584,578	$	10,942,947
Gross profit		1,231,001		906,310
Cost of product sales		6,742,341		5,260,305			13,017,261		10,266,629
Selling, general, and administrative expenses		1,101,350		1,165,922
Gross profit (loss)		1,336,316		(229,992	)		2,567,317		676,318
Income (loss) from operations		129,651		(259,612	)
Selling, general, and administrative expenses		1,199,389		1,084,995			2,300,739		2,250,917
Other income		50,476		79,171
Income (loss) from operations		136,927		(1,314,987	)		266,578		(1,574,599	)
Income (loss) before income tax		180,127		(180,441	)
Other income, net		19,025		90,851			69,501		170,021
Income tax provision (benefit)		84,165		(37,288	)
Income (loss) before income taxes		155,952		(1,224,136	)		336,079		(1,404,578	)
Net income (loss)	$	95,962	$	(143,153	)
Income tax provision (benefit)		52,119		(269,832			136,284		(307,120	)
Net income (loss)	$	103,833	$	(954,304	)	$	199,795	$	(1,097,458	)

(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 six months ended June 28, 2025 the deferred tax asset was decreased $52,119 and $135,828 for the estimated tax provision for Q2 and year to date net income, respectively.

(13) Subsequent Events: 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.

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
Q3 2025		899,728		-		899,728	Expense remaining unamortized for 2025 and 37.5% of 2022-2024
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		1,086,921		748,772		1,835,693

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.

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~~throughout ~~economic~~the ~~conflicts,~~world ~~throughout~~and the ~~world~~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 ~~motor~~power ~~controllers~~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 ~~First~~Second Fiscal Quarter of 2025 (Q1Q2 2025) Compared to the ~~First~~Second Fiscal Quarter of 2024 (Q1Q2 2024); (all $ in 000’s)

Revenues totaled $78,~~506~~079 in Q1Q2 2025 compared with $5,~~913~~030 generated in Q1Q2 2024, an increase of 2761%. ~~The~~In ~~major~~spite ~~factor~~of ~~contributing~~the tocompletion ~~this~~of ~~increase~~our isarmor ~~the~~order ~~continued~~for ~~expansion~~the ofU.S. ~~production~~Navy ~~capacity~~during toQ2 ~~meet~~2024, growing demand, ~~including~~in ~~the~~our ~~addition~~other ofproduct ~~our~~lines ~~third~~has ~~shift~~significantly ~~and~~increased ~~the~~compared ~~continued~~to ~~improvement~~last ofyear. ~~our~~In ~~production~~September ~~associates~~2024 asthe ~~they~~Company ~~gain~~added ~~more~~a ~~experience.~~third Asshift ~~announced~~ in Q4order ~~2024,~~to ~~CPS~~meet ~~received~~this angrowing ~~order~~demand. ~~from~~In anaddition, ~~existing~~the ~~customer~~company ~~approximately~~received $5significantly ~~million~~more ~~greater~~funding ~~than~~under the ~~same~~federal ~~order~~government’s ~~received~~Small Business Innovative Research ("SBIR") program in Q4Q2 ~~2023~~of 2025 as compared to Q2 2024.

Gross ~~margin~~profit in Q1Q2 2025 totaled $1,~~231~~336 or 1617% of sales. This compares with a gross ~~margin~~loss in Q1Q2 2024 of $~~906~~230 or 15-5% of sales. This percentage increase was ~~primarily~~ due to several factors including the impact of fixed costs on significantly higher ~~sales~~revenues, ~~volumes~~as onwell ~~fixed~~as ~~costs~~abnormally low production yield levels in some of our hermetic package products during Q2 of 2024.

Selling, general and administrative ("SG&A") expenses totaled $1,~~101~~199 in Q1Q2 2025 compared with SG&A expenses of $1,~~166~~085 in Q1Q2 2024,. aThis 6%increase ~~decrease~~was ~~year~~due ~~over~~to ~~year.~~several ~~There~~factors ~~are~~including, the increase in variable compensation as a ~~number~~result of ~~areas~~stronger results from operations in ~~which~~Q2 ~~management~~2025 ~~has~~as ~~been~~compared ~~able~~to Q2 2024, the weakening of the U.S. dollar relative to ~~reduce~~the ~~SG&A~~Euro ~~expenses~~and ~~compared~~its impact on our costs with European vendors, and increased commission costs due to ~~last~~higher ~~year~~revenue.

The Company experienced an operating ~~income~~profit of $~~130~~137 in Q1Q2 2025 compared with an operating loss of $~~260~~1,315 in Q1Q2 2024. This increase was a result of the increased gross margin, ~~and~~partially offset by the ~~decrease~~increase in SG&A expenses. Net after tax income was $96104 in Q1Q2 2025 compared to an after tax loss of $~~143~~954 in Q1Q2 2024.

~~CPS~~Results ~~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~~Operations orfor the ~~conflict~~First inSix ~~Israel~~Months ~~and~~of ~~Gaza~~2025 ~~will~~Compared ~~have~~to athe ~~direct~~First ~~impact~~Six onMonths ~~our results. Most~~ of ~~our~~2024 ~~raw~~(all ~~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.~~000s)

~~Inflation~~Total ~~has~~revenue ~~had~~was an$15,585 ~~impact~~in onthe ~~our~~first ~~costs.~~half ~~Thus~~of ~~far~~2025, wea ~~have~~42% ~~largely~~increase ~~been~~compared ~~able~~with tototal ~~pass~~revenue ~~along~~of ~~these increases to our customers~~$10,943 ~~but~~in ~~there~~the isfirst nohalf ~~guarantee~~of ~~that we will be able to continue this in the future~~2024. In ~~addition,~~spite ~~there~~of isthe ~~often~~completion aof ~~lag~~our ~~between~~armor ~~when~~order for the ~~costs~~U.S. ~~increase~~Navy ~~and~~during ~~when~~Q2 we2024, ~~can~~growing ~~adjust~~demand ~~customer~~in ~~prices.~~our ~~Some~~other ofproduct ~~our~~lines ~~larger~~has ~~customers~~significantly ~~will~~increased ~~have~~in ~~pricing~~2025 ~~agreements,~~compared ~~typically~~to ~~for~~last ~~one~~ year,. ~~and~~In weSeptember ~~must~~2024 ~~wait~~the ~~for~~Company ~~those~~added ~~agreements~~a tothird ~~end~~shift ~~before~~in ~~making~~order ~~any~~to ~~pricing~~meet ~~adjustments.~~this ~~Wages~~growing ~~have also been impacted by inflation~~demand. WeIn ~~have~~addition, ~~instituted~~the acompany ~~combination~~received ofsignificantly ~~wage~~more ~~increases~~funding asunder ~~well~~the asfederal ~~more~~government’s ~~competitive~~SBIR ~~benefits~~program in ~~order~~Q2 toof ~~retain~~2025 ~~the~~as ~~personnel~~compared ~~making~~to upQ2 ~~our workforce~~2024.

~~The~~Gross ~~factors~~profit ~~mentioned~~in ~~above~~the first six months of 2025 totaled $2,567 or 16% of sales. In the first six months of 2024 gross margin totaled $676 or 6% of sales. This percentage increase was due to several factors including ~~inflation~~the ~~and~~impact ~~tariffs~~of fixed costs on significantly higher revenues, ~~create~~as ~~elevated~~well ~~uncertainty~~as ~~regarding~~abnormally ~~future~~low ~~financial~~production ~~performance~~yield levels in some of our hermetic package products during Q2 of 2024.

Selling, general and administrative (SG&A) expenses were $2,300 during the first six months of 2025, up 2% compared with SG&A expenses of $2,251 in the first six 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 half of 2025, the Company had net other income of $70. This compares with net other income of $170 realized during the first half of 2024. The decrease in net other income is primarily due to reduced cash balances in the first half of 2025 as compared to 2024.

In the first six months of 2025 the Company had operating income of $267 compared with an operating loss $1,575 in the same period last year. The net income for the first six months of 2025 totaled $200 versus a net loss of $1,097 in the first six 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 or the conflict in Israel and Gaza 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 cost 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 ~~cash~~liquid ~~and~~assets ~~cash equivalents~~ at ~~March~~June 29, 2025 ~~totaled~~consist of cash and cash equivalents of $12,~~930,~~374 ~~with~~and marketable debt securities with a fair value of $1,~~040~~045. 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. While cash is down from the end of 2024, it has moved in a “U” shaped pattern with a reduction to $1~~,031~~.9 ~~The~~million ~~change~~at inthe ~~cash~~end isof ~~predominantly~~Q1 ~~due~~2025 now recovering to ~~our~~about ~~increased~~$2.4 ~~accounts~~million ~~receivable~~at ~~which~~the ~~are~~end ~~discussed~~of inQ2 ~~more~~2025. ~~detail~~We ~~below~~expect this recovery to continue.

~~Trade~~Accounts ~~accounts~~ receivable at ~~March~~June 2928, 2025 totaled $65,~~303~~603 compared with $4,858 at December 28, 2024. Days Sales Outstanding (DSO) ~~increased~~decreased from 76 days at the end of 2024 to 7867 days at the end of Q1Q2 2025. The ~~reason~~decrease ~~for~~in ~~this~~DSO ~~increase~~was isdue ~~that~~to increasing sales ~~dollars~~volumes ~~per~~as ~~week~~we ~~grew~~neared ~~throughout~~ the ~~quarter,~~end ~~resulting~~of in2024. As a ~~higher~~result ~~percentage~~our ofreceivables Q1at ~~sales~~the ~~remaining~~end inof ~~accounts~~2024 ~~receivable~~were ~~than~~a ~~would~~higher bepercentage ~~expected,~~of ~~had~~than ~~weekly~~if ~~sales~~revenue ~~been~~was ~~relatively~~spread ~~uniform~~out evenly during the ~~quarter~~period. The accounts receivable balances at December 28, 2024, and ~~March~~June 2928, 2025, ~~were~~are both net of an allowance for ~~credit~~doubtful ~~losses~~accounts of $10.

Inventories totaled $45,~~813~~198 at ~~March~~June 2928, 2025 compared with inventory totaling $4,331 at December 28, 2024. The inventory turnover in the most recent four quarters ending Q1Q2 2025 was 5.52 times (based on a 5 quarter end average) compared with 54.98 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~~has a ~~$3.0 million revolving~~ 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% on 6/28/2025). On ~~March~~June 2928, 2025, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted ~~the~~an ~~full~~additional $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~~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~~This note was paid in full ~~during~~in the first quarter ~~ended~~of ~~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 46, Leases)

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not significantly exposed to the direct impact of interest rate changes. ~~The~~or ~~Company~~foreign ~~has~~currency ~~not used derivative financial instruments~~fluctuations. AsNevertheless, one of ~~our~~the Company’s major competitors is located in Japan,. ~~currency~~The ~~fluctuations~~relative strength of the US dollar versus the Japanese yen can have ana negative impact on ~~how~~the weCompany’s ~~price~~ability ~~our~~to ~~product~~raise inprices ~~order~~when necessary to ~~remain~~offset ~~competitive~~increasing costs. The Company has not used derivative financial instruments.

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 and the impact of tariffs on our costs is an area where we have seen some ~~impact~~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. InFortunately, ~~the~~raw ~~case~~materials ofmake ~~longer~~up ~~term~~a ~~pricing~~smaller ~~agreements,~~portion weof ~~have~~our ~~been~~overall ~~able~~costs. toWhile ~~pass~~they onprovide ~~some~~a ofheadwind ~~these~~to ~~costs~~our ~~through~~profitability, ~~surcharges~~they ~~and~~are ina ~~other~~relatively ~~ways~~small tofactor ~~mitigate~~in ~~the~~that ~~impact~~total ~~on our profit~~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.

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~~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:

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~~August 21, 2025

/s/Brian T. Mackey

Brian T. Mackey

President and Chief Executive Officer

Date: ~~May~~August 21, 2025

/s/ Charles K. Griffith Jr.

Charles K. Griffith Jr.

Chief Financial Officer

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