Company: CPSH
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001437749-25-024312
Chunk: 9

Company: CPS TECHNOLOGIES CORP/DE/
Filing Date: 2025-08-01
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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ing the realizability of deferred tax assets tied to prior capitalization regimes and evaluating the sensitivity of future reversals.

International Tax Provisions (NeCTIe and FDDEI): The restructuring of GILTI and FDII regimes introduces new deduction rates, foreign tax credit limitations, and eligibility criteria. These changes affect the Company’s assumptions regarding foreign income inclusions, expense allocations, and valuation allowances. Estimation uncertainty arises from forecasting foreign earnings, tax credit utilization, and jurisdictional tax rates.

Bonus Depreciation and Enhancement of Section 179 Expensing: The reinstatement of 100% bonus depreciation and enhancement of section 179 requires updated modeling of book-tax differences and deferred balances. The Company is evaluating the impact on capital expenditure forecasts and financing strategies, which may materially affect deferred tax liabilities and effective tax rate projections.

The Company’s critical accounting estimates related to income taxes are subject to change as further guidance is issued and as the Company refines its tax planning strategies. Management continues to monitor developments and will update assumptions and disclosures as necessary.

Overview

Products we provide include baseplates for power electronics used in high-speed electric trains, subway cars, wind turbines, and hybrid and electric vehicles. We provide baseplates and housings used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits for use in internet switches and routers. We provide baseplates and housings used in modules built with Wide Band Gap Semiconductors like Silicon Carbide (“ SiC”) and Gallium Nitride (“ GaN”), collectively Metal Matrix Composites (“ MMC”). CPS also assembles housings and packages for hybrid circuits. These housings and packages may include MMC components; they may include components made of more traditional materials such as aluminum, cold rolled steel and Kovar. Using its proprietary MMC technology, the Company also produces lightweight armor, particularly for extreme environments and heavy threat levels.

CPS’s products are custom rather than catalog items. They are made to customers’ designs and are used as components in systems built and sold by our customers. At any point in time our product mix will consist of some products with on-going production demand, and some products which are in the prototyping or evaluation stages at our customers. The Company seeks to have a portfolio of products which include products in every stage of the technology adoption lifecycle at our customers. CPS’ growth is dependent upon the level of demand for those products already in production, as well as its success in achieving new "design wins" for future products.

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