EDGAR 10-K Filing

Company CIK: 814676
Filing Year: 2025
Filename: 814676_10-K_2025_0001437749-25-008029.json

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ITEM 1. BUSINESS
Item 1. Business.
CPS Technologies Corp. (the ‘Company’ or ‘CPS’) provides advanced material solutions for the transportation, automotive, energy, computing/internet, telecommunications, aerospace and defense markets. CPS products are important elements in electrifying the green economy and in the protection of military personnel around the world.
Our primary material solution is metal matrix composites (MMCs). We design, manufacture and sell custom MMC components that improve the performance and reliability of systems in the end markets described above. The Company is an important participant in the growing movement towards alternative energy. The Company’s products are used in high-speed trains, mass transit, hybrid and electric cars, wind-turbines for electricity generation, routers, switches and fiber optic components for internet infrastructure.
The Company’s Hermetic Packaging products are used in high reliability communications and power modules for avionics and satellite applications such as the current generation of GPS satellites. The Company also produces housings and heat spreaders for high-performance microprocessors, graphics processing chips, and application-specific integrated circuits. All of these applications involve electrical energy use or energy generation. The Company’s products allow higher performance and improved energy efficiency, particularly in applications in which there is a high cost of failure.
Using its proprietary MMC technology, the Company also produces light-weight armor. Due to its ability to withstand extreme environments and high threat levels, CPS armor has been selected as the solution for crew served weapons stations on the U.S. Navy’s aircraft carriers. Its light weight also makes it an ideal solution for aircraft and other vehicles requiring a high strength to weight ratio.
MMCs are a class of materials consisting of a combination of metals and ceramics. Compared to conventional materials, MMCs provide superior thermal conductivity, improved thermal expansion matching, greater stiffness and lighter weight. This makes CPS products very useful for applications in which there is a high cost of failure. These factors, in particular the lighter weight and durability, are among the reasons CPS parts are on the last two Mars Rovers as well as many satellites.
CPS is a fully qualified manufacturer for many of the world’s largest electronics OEMs.
In 2022 CPS resumed its participation in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, sponsored by the US Small Business Administration. These programs provide funding for innovative research and development to domestic small businesses, who maintain certain intellectual property rights. The technologies developed by the Company during these programs will further enhance CPS’ intellectual property portfolio. In 2024 CPS received funding for its first two Phase II SBIRs confirming its decision to participate in these programs and further advancing this portfolio.
CPS management believes our business model of providing advanced material solutions to a portfolio of high growth end markets in various stages of the technology adoption lifecycle provides CPS with the opportunity for sustained growth and a diversified customer base. We have a number of significant production orders generating revenue, but also have many significant opportunities for new products which could lead to significant production orders in new product lines in the future. Some of these opportunities may come to fruition as early as the next year or two, while others will take longer to develop. We believe we have validated this model as we are now supplying customers at all stages of the technology adoption lifecycle.
Our products are manufactured by proprietary processes we have developed including the QuicksetTM Injection Molding Process (“Quickset Process”) and the QuickCastTM Pressure Infiltration Process (“QuickCast Process”).
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, the Company changed its name from Ceramics Process Systems Corporation to CPS Technologies Corp.
CPS’ website is http://www.cpstechnologysolutions.com.
Overview of Markets and Products
Electronics Markets Overview
The applications for electronics can typically be characterized as either power processing or signal processing. Power processing consists of converting the electrical power provided by the power source into the appropriate voltage and amperage needed by the device using the power. Signal processing consists of the myriad ways digital and analog signals are used in computing, communications, and related applications.
In both power processing and signal processing, end-user demand continues to motivate the electronics industry to produce products which:
- operate with lower losses and/or at higher speeds;
- are smaller in size; and
- operate with higher reliability.
While these three requirements result in products of ever-increasing performance, they also create a fundamental challenge for the designer to manage the heat generated by the system operating at higher speeds and/or higher power. Smaller assemblies further concentrate the heat and increase the difficulty of removing it.
This challenge is found at each level in an electronic assembly: at the integrated circuit level, speeds are increasing and line widths are decreasing; at the circuit board level, higher density devices are placed closer together; and at the system level, higher density circuit boards are being assembled closer together. Silicon carbide chips are slowly replacing silicon chips due to their higher efficiency. Silicon carbide chips run at higher temperatures than silicon chips, furthering the need for proper thermal management.
The designer must resolve the thermal management issues or the system will fail. For every 10 degree Celsius rise in temperature above a threshold level, the reliability of an integrated circuit is decreased by approximately half. In addition, heat usually causes changes in parameters which degrade the performance of both active and passive electronic components.
To resolve thermal management issues, the designer is primarily concerned with two properties of the materials which comprise the system: 1) thermal conductivity, which is the rate at which heat moves through materials, and 2) thermal expansion rate (Coefficient of Thermal Expansion or CTE), which is the rate at which materials expand or contract as temperature changes. The designer must ensure that the temperature of an electronic assembly stays within a range that ensures that the expansion rates of the materials in the assembly do not result in a failure due to breaking, delaminating, or related causes.
CPS combines at the microstructural level a ceramic with a metal to produce a metal matrix composite which has the thermal conductivity needed to remove heat, and a thermal expansion rate which is sufficiently close to other components in the assembly to ensure the assembly is reliable. Typically the ceramic is silicon carbide (SiC), the metal is aluminum (Al), and the composite is aluminum silicon carbide (AlSiC), a metal-matrix composite. CPS can adjust the thermal expansion rate of AlSiC components to match the specific application by modifying the amount of SiC compared to the amount of Al in the component.
CPS produces products made of AlSiC in the shapes and configurations required for each application, for example, in the form of lids, substrates, housings, etc. Every product is made to a customer’s specifications. The CPS process technology allows most products to be made to net shape, requiring little or no final machining.
The Company primarily manufactures MMC components comprised of AlSiC. Nevertheless, its proprietary Quickset- Quickcast process technology can be used to produce other MMCs to meet market requirements. For example, CPS combines aluminum with other ceramic or metal components such as ceramic fibers, tungsten and boron carbide.
An important development in power processing is the emergence of wide-band gap semiconductors, particularly SiC semiconductors. SiC chips are more efficient than Si chips and are being used more frequently in power applications. Modules using SiC chips run at higher temperatures, increasing the need for improved thermal management, a need which the Company’s products meet.
Armor Market Overview
Armor has traditionally been comprised of steel panels. As threat levels have increased, the amount of steel required to provide sufficient ballistic protection has become unacceptably heavy and therefore detrimental to a vehicle’s performance. The U.S. military has increasingly used ceramic armor in weight sensitive applications. However, ceramic armor has several limitations, including limited multi-hit capability. By embedding ceramic armor tiles in a metal matrix, these problems are overcome; the result is armor that is light-weight, has excellent ballistic protection, and environmental durability.
The Company’s HybridTech Armor® panels are particularly well suited for extreme environments - the panels do not degrade in salt spray or extreme heat. The Company has produced armor panel strikefaces for the U.S. Navy aircraft carrier fleet and expects it will be used in other surface vessel applications in the future.
Product Development Overview
Since our reengagement in the SBIR/STTR programs, CPS has added significant resources for developing new products. Many of these new product initiatives are for markets not currently served by CPS, and they involve the utilization of our current materials science and manufacturing expertise to address well-defined customer requirements.
Our Phase II SBIR for the US Navy involves using our aluminum infiltration process with nitinol for use in thermal energy storage. Nitinol allows for significantly better storage than the Navy’s current solution. Similarly, our Phase II SBIR for the Department of Energy to create radiation shielding for the transportation of nuclear micro-reactors involves the infiltration of boron carbide and tungsten with aluminum to create a lightweight solution to this problem, allowing for their safe transportation.
CPS also self-funds a number of product development efforts. In March 2024 we announced our worldwide, exclusive licensing agreement with Triton Systems for their Fiber Reinforced Aluminum (FRA). FRA is stronger and more durable than neat aluminum, especially at high temperatures, at only a marginally higher weight. Target applications for FRA include helicopter bearing liners, with FRA serving as a replacement for much heavier steel, providing a lighter weight solution that allows for more cargo weight. While this could lead to large production orders to CPS, it will likely take several years of testing before this comes to fruition. Based on customer interest, we anticipate other potential applications for this material, which could result in a faster move into regular production.
We continue to work on broadening our armor offerings. The development of STANAG 6 ballistic protection remains a priority. If successful this could lead to the incorporation of CPS armor into ground vehicles. Similarly, we continue to work on lightweight armor for helicopter flooring which came out of a Phase I SBIR funded by the US Army. Although the US Army did not allocate any Phase II for this program, due to interest from certain helicopter OEMs, CPS has successfully performed ballistic testing on the flooring, which was not part of the funded Phase I effort.
CPS also has a number of other product development initiatives which may or may not lead to additional business in the future.
Specific Markets and Products
Motor Controller Applications (Insulated Gate Bipolar Transistor ("IGBT") Applications)
The electrification of the economy - particularly the use of electric motors and power modules to control electric motors of all sizes - is growing. This growth is the result of several factors including emerging high-power applications which demand power modules such as trains, subways and certain industrial equipment, and cost reductions in power modules which increasingly make variable speed drives cost effective. Power semiconductors are a significant portion of the cost of variable speed drives, and the cost of the module housing and thermal management system are also significant; cost reductions of all these components are driving increased use of variable speed drives.
We provide baseplates and heat spreaders on which power semiconductors are mounted to produce modules for motor control. The power semiconductors are typically IGBTs and these applications are often referred to as IGBT applications. Our MMC (AlSiC) baseplates have sufficient thermal conductivity to enable removal of heat through the baseplate and have a thermal expansion rate sufficiently similar to the other components in the assembly to ensure reliability over time as the assembly thermally cycles. We believe this market will continue to grow as the use of power modules penetrates additional motor applications, and as electric motors themselves penetrate new applications such as hybrid and electric vehicles.
Today our primary products for IGBT applications are used in electric trains, subway cars, wind turbines and hybrid and electric vehicles.
Major automobile companies around the world are introducing hybrid electric vehicles (HEVs) and electric vehicles (EVs) at an increasing rate. There are many varieties of HEVs and EVs, but all HEVs and EVs contain an electric motor and one or more motor controller modules. The Company provides baseplates on which motor controller modules are assembled; these baseplates are lighter weight and provide greater reliability than baseplates made from more conventional materials, typically copper.
Copper is less expensive than the Company’s MMC solution, but its rate of thermal expansion is significantly different than that of the silicon semiconductors mounted to the baseplates. In low voltage applications, this is not a problem as the heat being generated is not enough to degrade the reliability of the power module. As voltage levels and the heat related to them go up, MMC baseplates become the preferred solution. Currently, HEV/EV manufacturers who want to save on short term costs are using power modules with copper baseplates, while those who want longer term reliability, such as those in the luxury vehicle market, may use power modules with an MMC (AlSiC) baseplate.
Of particular interest is the move to using Silicon Carbide (SiC) semiconductors instead of silicon semiconductors. SiC is more efficient than silicon allowing, among other things, for EVs and HEVs to run for longer distances on a single battery charge. This is important to CPS, as SiC semiconductors run hotter than silicon semiconductors. As such, the voltage level at which AlSiC becomes preferred over copper would be lower, creating expanded opportunities for AlSiC baseplates.
Hermetic Packages
Hermetic packaging products are primarily used for space applications such as satellites, flight applications such as avionics and undersea applications such as torpedoes, submarines and communications buoys. Hermetic packages allow the assembly of multiple semiconductor devices known as Hybrid Microelectronic Assemblies (HMA). Today’s HMA technology can, in a CPS 2”x2” package, provide the computing technology of today's typical server or yesterday's small mainframe.
CPS is the only producer of hermetic packages with AlSiC bases, combining our expertise in hermetic package production with our expertise in MMC production. The CPS AlSiC hermetic package provides tremendous benefits in terms of reduced weight and CTE matching which are extremely important for space-based programs. CPS hermetic packages are used in every current generation GPS satellite, the Mars Perseverance rover as well as many other aerospace applications.
Customers
We sell primarily to major microelectronics systems houses in the United States, Europe and Asia. Our customers typically purchase prototype and evaluation quantities of our products over a one to three year period before purchasing production volumes.
In 2024, our three largest customers accounted for 32%, 15%, and 11% of revenues, respectively. In 2024, approximately 70% of our revenues were derived from commercial applications and 30% from defense-related applications.
Availability of Raw Materials
We use a variety of raw materials from numerous domestic and foreign suppliers. These materials are primarily aluminum ingots, ceramic powders, chemicals and hermetic assembly components. The raw materials we use are available from domestic and foreign sources and none is believed to be scarce or restricted for national security reasons. We use no conflict metals.
Patents and Trade Secrets
As of December 28, 2024, the Company had 9 United States patents. In addition, the Company had several international patents covering the same subject matter as the U.S. patents. In addition, CPS has applied for patent protection for its nuclear shielding solution.
We intend to continue to apply for domestic and foreign patent protection in appropriate cases. In other cases, we believe we are better served by reliance on trade secret protection. In all cases, we seek protection for our technological developments to preserve our competitive position.
Backlog and Contracts
Virtually 100% of the Company's product sales are custom in that they are based on customers’ drawings and the large majority of these sales are "designed in" and sold over multiple years. Some large customers typically give the Company a non-binding forecast of demand for a one-year period and then negotiate a pricing agreement with the Company valid for that one-year period. These and other customers typically issue purchase orders to be shipped on a particular date, or to be drawn against and shipped under releases. The Company has a backlog of $26 million as of December 28, 2024. This backlog consists of orders received from customers which are, for the most part, scheduled to ship in 2025. Under certain circumstances, customers may be able to cancel existing orders or extend the period over which orders may be shipped. Some of these changes may be significant, which would reduce this backlog or extend the timing of these shipments.
Competition
We have developed and expect to continue to develop products for a number of different end markets, and we will encounter competition from different producers of MMCs, hermetic packages, armor, and other competing materials.
We believe that the principal competitive factors in our end markets today include technical competence, product performance, quality, reliability, price, delivery performance, corporate reputation, and strength of sales and marketing resources. We believe our proprietary processes, reputation, and the price at which we can offer products for sale will enable us to compete successfully in the many electronics, aerospace and defense end markets.
Our primary direct competitor in MMCs is Denka, a large chemical company based in Japan. We also see manufacturers in China seeking to penetrate our markets. We believe they offer their products at lower prices, but they have generally not yet been to be able to provide the delivery, performance, quality and reliability required by the market.
The market for hermetic packages is much more fragmented. There are a number of different hermetic package types, allowing different manufacturers to specialize in a particular area of the hermetic package market. Some of these companies are competitors of CPS, while others focus on product types not sold by CPS. CPS continues to expand our technical competence to increase our offerings in areas in which we previously did not participate. Based on these increased offerings, combined with our emphasis on quality and customer service, we expect to see continued growth in our hermetic package product line. Our main domestic competitors in this arena include Egide, Ametek, and Qnnect (formerly Hermetic Solutions Group).
The company does not currently have orders to produce its HybridTech Armor® panels as the aircraft carrier order has been completed. We continue to work with Kinetic Protection, the Navy’s prime contractor, to get new orders for other classes of Navy ships. To our knowledge, we do not have any direct competitors who produce encapsulated armor. Our competition in this area consists of alternatives to our HybridTech Armor® which involve tradeoffs regarding cost, weight, anti-ballistic properties, etc. As CPS expands its armor capabilities, we could begin to see more direct competition from more established armor producers.
Government Regulation
We produce non-nuclear, non-medical hazardous waste in our development and manufacturing operations. The disposal of such waste is governed by state and federal regulations. Various customers, vendors, and collaborative development agreement partners of CPS may reside abroad, thereby possibly requiring export and import by CPS of raw materials, intermediate products, and finished products, as well as potential technology transfer abroad under collaborative development agreements. These types of activities are regulated by bureaus within the Departments of Commerce, State and Treasury.
Employees
As of December 28, 2024, we had 92 permanent full-time employees. 82 were engaged in manufacturing and engineering and 10 in sales and administration, including finance, human resources and general management. We also have approximately 48 manufacturing people working with us through temporary employment agencies. During 2024, the Company continued its efforts to increase factory efficiency both in terms of employee training as well as increased automation.
None of our employees is covered by a collective bargaining agreement. We consider our relations with our employees to be excellent.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
The risks set forth below may not be the only risk factors relating to the Company. Any of these factors, many of which are beyond our control, could materially adversely affect our business, financial condition, operating results, cash flow and stock price.
We have a highly concentrated customer base so that changes in ordering patterns, delays or order cancellations could have a material adverse effect on our business and results of operations.
Three customers accounted for 58% of revenue in 2024 and 60% of revenue in 2023. We believe that our relationships with these customers are positive and may provide us with ongoing continuous sustainability for years to come. However, a large customer, if lost, would be difficult to replace, and our inability to do so may have a material adverse effect on our business and financial condition. We expect that orders from a relatively limited number of customers will continue to account for a substantial portion of our business. The mix and type of customers, and sales to any single customer, may vary significantly from quarter to quarter and from year to year. If any of our significant customers do not place orders, or they substantially reduce, delay or cancel orders, we may not be able to replace the business in a timely manner or at all, which can have a material adverse effect on our results of operations and financial condition. Major customers may also seek, and on occasion receive, pricing, payment or other commercial terms that are less favorable to us and can hurt our competitive position.
Our lengthy and variable sales cycle makes it difficult to predict our financial results.
The sales cycle for our products is often lengthy, ranging from several months to several years. In many cases potential customers must evaluate the properties of our product against their current solution. In many cases potential customers must redesign other components of the end product they are making to realize the full benefits of using our products. The lengthy sales cycle makes forecasting the volume and timing of sales difficult and raises additional risks that customers may cancel or delay introduction of their end-products into the marketplace, thus affecting our demand. The length of the sales cycle depends on the size and complexity of the project, and the depth of the evaluation of our products conducted by the customers.
Because a significant portion of our operating expenses is fixed, we may incur substantial expense before we earn associated revenue. If customer cancellations occur, they could result in the loss of anticipated sales without allowing us sufficient time to reduce our operating expenses.
Fluctuations in foreign exchange rates can negatively impact our ability to compete against foreign based competitors.
Several of our major competitors are located outside of the United States. The relative strength of the U.S. dollar compared to such competitors’ respective local currencies makes our products more expensive to our customers relative to our competitors’ prices. Such circumstances could result in a reduction in product pricing (and profitability) in order to maintain or grow our current levels of business. If we are unable or unwilling to reduce pricing of our products to the level necessary to maintain current business levels, we could see an overall reduction in revenue.
Our dependence on outside vendors to perform particular steps in our manufacturing process could negatively impact us should those vendors be unable or unwilling to provide such service at a reasonable cost.
Several of our major customers require that we use only vendors approved by them for certain steps, typically plating, of our manufacturing process before the finished product can be shipped to the customer and recognized as revenue. In some cases these vendors are sole sourced, i.e., one vendor is the only vendor approved for that process. If that vendor raises their price to us, we may not be able to pass that increase on to our customer, eroding our margins. If we are able to pass along these increases, that could negatively impact our sales volumes if our customer shifts some of their purchases to a lower priced competitor. If a sole sourced vendor is unable to process our product fast enough to meet our customer’s demand, or if they do not process our product at all, our expected revenue could be negatively affected despite our ability to produce enough to meet that demand.
Our success is highly dependent on managerial contributions of key individuals and we may be unable to retain these individuals or recruit others.
We depend on our senior executives and certain key managers as well as engineering, research and development, sales, marketing and manufacturing personnel, who are critical to our business. While we have employment agreements with certain executives, none of these agreements would prevent any such person from leaving the Company. Furthermore, larger competitors may be able to offer more generous compensation packages to our executives and key employees, and therefore we risk losing key personnel to those competitors. If we were to lose the services of any of our key personnel, or if we fail to attract and train qualified personnel, our engineering, product development, manufacturing and sales efforts could be slowed. In particular, we have, from time to time, experienced difficulty in hiring and retaining skilled engineers with appropriate qualifications to support our growth strategy. Our success depends on our ability to identify, hire, train and retain qualified engineering personnel. Specifically, we need to continue to attract and retain product development, materials and manufacturing engineers to work with our direct sales force to technically qualify and perform on new sales opportunities and orders, and to demonstrate our products.
We may also incur increased operating expenses and be required to divert the attention of our senior executives to search for replacements. The integration of any new personnel could disrupt our ongoing operations.
Business or economic disruptions or global health concerns could seriously harm our business.
Broad-based business, economic disruptions or global health concerns could adversely affect our business and the sale of our products. For example, in December 2019 an outbreak of a novel strain of the coronavirus disease (COVID-19) originated in Wuhan, China, and spread to a number of other countries, including the United States. Initially, this outbreak resulted in extended shutdowns of certain businesses in the Wuhan region and had ripple effects to businesses around the world. While the impact of this pandemic has largely subsided, a resurgence of this virus or another could have an impact on our business. Although the Company remained open throughout the COVID-19 pandemic, complete or partial government shutdowns of many businesses, schools, bars and restaurants did occur. The Russian invasion of Ukraine and the conflict in Israel and Gaza could also adversely affect our business in spite of the immaterial amount of direct business we have done in these regions in the past. We cannot presently predict the scope and severity of any future business shutdowns or disruptions to us, but if we or any of the third parties with whom we engage, including our customers, suppliers and other third parties, were to experience extended shutdowns or other business disruptions, our ability to conduct our business could be materially and negatively impacted, and could have a material adverse effect on our business and our results of operation and financial condition.
Changes in trade policy could seriously impact our business.
Most of our raw materials are domestically sourced by CPS. However, some of those raw materials may originate in countries other than the United States. Should tariffs be imposed on any of these countries of origin, our vendors would likely increase their price to us to cover the cost of these tariffs. We may not be able to pass these cost increases on to our customers in a timely manner, therefore eroding our margins. A significant portion of our business is exported to customers outside the United States. Should their countries impose tariffs on US goods, including ours, we could find ourselves at a competitive disadvantage in relation to our competitors, some of whom are located outside the United States.
Acquisitions can result in an increase in our operating costs, divert management’s attention away from other operational matters and expose us to other associated risks.
From time to time, we evaluate potential acquisitions of businesses and technologies, and we consider targeted acquisitions that expand our core competencies to be an important part of our future growth strategy. We expect that any acquisitions of other businesses will have synergistic products, services and technologies.
Acquisitions involve numerous risks, which include but are not limited to:
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difficulties and increased costs in connection with the integration of the personnel, operations, technologies, services and products of the acquired companies into our existing facilities and operations;
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diversion of management’s attention from other operational matters;
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failure to commercialize the acquired technology;
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the potential loss of key employees of the acquired companies;
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lack of synergy, or inability to realize expected synergies, resulting from the acquisitions;
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the risk that the issuance of our common stock, if any, in an acquisition or merger could be dilutive to our shareholders;
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the inability to obtain and protect intellectual property rights in key technologies; and
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the acquired assets becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired assets.
The conditions of the markets in which we operate are volatile. The demand for our products and the profitability of our products can change significantly from period to period as a result of numerous factors.
The industries in which we operate are characterized by ongoing changes, including:
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the availability of funds for research and development;
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global and regional economic conditions;
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governmental budgetary and political constraints; and
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changes in technology.
For these and other reasons, our results of operations for past periods may not necessarily be indicative of future operating results.
Volatile and cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues.
When cyclical fluctuations result in lower-than-expected revenue levels, operating results may be materially adversely affected, and cost reduction measures may be necessary for us to remain competitive and financially sound. During a down cycle, we must be able to make timely adjustments to our cost and expense structure to correspond to the prevailing market conditions. In addition, during periods of rapid growth, we must be able to increase manufacturing capacity and the number of our personnel to meet customer demand, which may require additional liquidity. We can provide no assurance that these objectives can be met in a timely manner in response to changes within the industry cycles in which we operate. If we fail to respond to these cyclical changes, our business could be seriously harmed.
We do not typically have long-term volume production contracts with our customers, and we do not control the timing or volume of orders placed by our customers. Whether and to what extent our customers place orders for any specific products, and the mix and quantities of products included in those orders are factors beyond our control. Insufficient orders would result in under-utilization of our manufacturing facilities and infrastructure and will negatively affect our financial position and results of operations.
We face significant competition, are relatively small in size and have fewer resources in comparison with some of our competitors.
We face significant competition throughout the world, which may increase as certain markets in which we operate continue to evolve. Our future performance depends, in part, upon our ability to continue to compete successfully worldwide. Some of our competitors are diversified companies that have substantially greater financial resources and more extensive research, engineering, manufacturing, marketing and customer service and support capabilities than we can provide. Our failure to compete successfully with these other companies would seriously harm our business. There is a risk that larger, better financed competitors will develop and market more advanced products than those we currently offer, or that competitors with greater financial resources may decrease prices, thereby putting us under financial pressure.
We may experience increasing price pressure.
Our historical business strategy for many of our products has focused on product performance and customer service rather than on offering the lowest price. As a result of budgetary constraints, many of our customers are extremely price sensitive when purchasing our products. Recent inflationary trends could further exacerbate this issue. If we are unable to obtain prices that allow us to continue to compete on the basis of product performance and customer service, our profit margins will be reduced.
Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs.
We may experience significant interruptions of our manufacturing operations, delays in our ability to deliver products or services, increased costs or customer order cancellations as a result of:
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the failure or inability of suppliers to timely deliver sufficient quantities of materials and components on a cost-effective basis;
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volatility in the availability and cost of materials;
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unforeseen equipment failures resulting in the need to delay or outsource certain production processes;
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difficulties or delays in obtaining required import or export approvals;
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information technology or infrastructure failures;
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natural disasters or other events beyond our control (such as earthquakes, floods or storms, regional economic downturns, pandemics, social unrest, political instability, terrorism, or acts of war); and
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the effects of a global pandemic on our employees, suppliers and other third-parties upon which we rely.
Continued growth could result in the need to move or expand our facilities. The costs of such a move or expansion could be significant to our profitability.
Our ability to meet our customers’ needs including the on-time shipment of products, is paramount to our success. Our current facility may not be able to adequately handle future growth and our ability to meet the needs of our customers. This could result in our having to relocate to a new facility which could have a material impact on our profitability.
We have made investments in our proprietary technologies. If third parties violate our proprietary rights, or accuse us of infringing upon their proprietary rights, such events could result in a loss of value of some of our intellectual property or costly litigation.
Our success is dependent in part on our technologies and our other proprietary rights. We believe that while patents can be useful and may be utilized by us in the future, they are not always necessary or feasible to protect our intellectual property. The process of seeking patent protection is lengthy and expensive, and we cannot be certain that applications will result in issued patents or that issued patents will be of sufficient scope or strength to provide meaningful protection or commercial advantage to us. In addition to patent protection, we have also historically protected our proprietary information and intellectual property such as design specifications, blueprints, technical processes and employee know-how, by limiting access to this confidential information and trade secrets and through the use of non-disclosure agreements. Other companies and individuals, including our competitors, may develop technologies that are similar or superior to our technology, or design around the intellectual property that we own or license. Our failure to adequately protect our intellectual property could result in the reduction or elimination of our rights to such intellectual property. We also assert rights to certain trademarks relating to certain of our products and product lines.
We attempt to protect our trade secrets and other proprietary information through confidentiality agreements with our customers, suppliers, employees and consultants, and through other internal security measures. However, these employees, consultants and third parties may breach these agreements, and we may not have adequate remedies for wrongdoing. In addition, the laws of certain territories in which we sell our products may not protect our intellectual property rights to the same extent as do the laws of the United States.
We may receive communications from other parties asserting the existence of patent rights or other intellectual property rights that they believe cover certain of our products, processes, technologies or information. If such cases arise, we will evaluate our position and consider the available alternatives, which may include seeking licenses to use the technology in question on commercially reasonable terms, or defending our position. Nevertheless, we cannot ensure that we will be able to obtain licenses, or, if we are able to obtain licenses, that related terms will be acceptable, or that litigation or other administrative proceedings will not occur. Defending our intellectual property rights through litigation could be very costly. If we are not able to negotiate the necessary licenses on commercially reasonable terms or successfully defend our position, our financial position and results of operations could be materially and adversely affected.
The price of our common shares is volatile and could decline significantly.
The stock market has at times over the last 15 years experienced periods of high and extreme volatility. If these market fluctuations continue or for other factors, including those listed below, the trading price of our common shares could decline significantly independent of the overall market, and stockholders could lose all or a substantial part of their investment. The market price of our common shares could fluctuate significantly in response to several factors, including, among others:
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difficult macroeconomic conditions, including inflation, unfavorable geopolitical events, and general stock market uncertainties, such as those occasioned by a global liquidity crisis and a failure of large financial institutions;
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receipt of large orders or cancellations of orders for our products;
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issues associated with the performance and reliability of our products;
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actual or anticipated variations in our results of operations;
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announcements of financial developments or technological innovations;
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changes in recommendations and/or financial estimates by investment research analysis;
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strategic transactions, such as acquisitions, divestitures, or spin-offs; and
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the occurrence of major catastrophic events, including the effects of a possible resurgence of the novel coronavirus (COVID-19).
Significant price fluctuations have occurred with respect to our publicly traded securities. The price of our common shares is likely to be volatile in the future. In the past, securities class action litigation often has been brought against a company following periods of volatility in the market price of its securities. If similar litigation were pursued against us, it could result in substantial costs and a diversion of management’s attention and resources, which could materially and adversely affect our financial condition, results of operations, and liquidity.
If we are subject to cyber-attacks, we could incur substantial costs and, if such attacks are successful, we could incur significant liabilities, reputational harm, and disruption to our operations.
We manage, store and transmit proprietary information and sensitive data relating to our operations. We may be subject to breaches of the information technology systems we use for these purposes. Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate and/or compromise our confidential information (and or third-party confidential information), create system disruptions, or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our systems or our products, or that otherwise exploit any security vulnerabilities.
The costs of addressing the foregoing security problems and security vulnerabilities before or after a cyber-incident could be significant. Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service, and loss of existing or potential customers, impeding our sales, manufacturing, distribution, or other critical functions. In addition, breaches of our security measures and the unapproved dissemination of proprietary information or sensitive data about us, our customer, or other third parties, could expose us, our customers, or other third parties to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation, or otherwise harm our business.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
Smaller reporting companies are not required to provide the information required by this item.

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ITEM 2. PROPERTIES
Item 2. Properties
As of December 28, 2024, all of our manufacturing, engineering, sales and administrative operations were located in leased facilities in Norton, Massachusetts.
In February 2021, the Company extended the lease for the Norton facility through February 2026. The leased facilities comprise approximately 38 thousand square feet. The lease is a 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 buy the property and a first right of refusal during the term of the lease. Annual rental payments for 2024 were $165 thousand.
While adequate for current business volumes, continued expected growth of our business may result in the need to move to a larger location, open a second location or expand our footprint at our current location.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
We are not a party to any litigation which could have a material adverse effect on us or on our business.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities.
CPS Technologies Corp. shares trade on The Nasdaq Capital Market under the symbol “CPSH”. On December 28, 2024, we had approximately 70 shareholders of record. A substantially greater number of holders of CPS common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions. We have never paid cash dividends on our Common Stock. We currently plan to reinvest our earnings, if any, for use in the business and do not intend to pay cash dividends in the foreseeable future. Future dividend policy will depend, among other factors, upon our earnings and financial condition.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
Smaller reporting companies are not required to provide the information required by this item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This document contains forward-looking statements, based on numerous assumptions, subject to risks and uncertainties. Although we believe that the forward-looking statements are reasonable, we do not and cannot give any assurance that our beliefs and expectations will prove to be correct. Many factors could significantly affect our operations and cause our actual results to be substantially different from our expectations. Those factors include, but are not limited to: (i) general economic and business conditions; (ii) customer acceptance of our products; (iii) materials and manufacturing costs; (iv) the financial condition of customers, competitors and suppliers; (v) technological developments; (vi) increased competition; (vii) changes in capital market conditions; (viii) governmental and business conditions in countries where our products are manufactured and sold; (ix) changes in trade regulations; (x) the effect of acquisition activity; (xi) changes in our plans, strategies, objectives, expectations or intentions; and (xii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. Actual results might differ materially from results suggested by any forward-looking statements in this report. We do not have an obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
Overview
The Company’s products contribute to the electrification of the green economy. The 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 hermetic packages used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits in internet switches and routers. We provide armor for naval and other military applications.
We provide baseplates and housings used in modules built with Wide Band Gap Semiconductors like SiC and GaN. 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, copper-tungsten, and others.
CPS’ 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 engineering, tooling design and fabrication, process engineering, etc. Accordingly, particularly given our current 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 metal matrix composites 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. In 2024 the Company’s top three customers accounted for 57% of revenue and the remaining 43% of revenue was derived from 45 other customers. In 2023 the top three customers accounted for 60% of revenue and the remaining 40% of revenue was derived from approximately 57 customers.
Critical Accounting Estimates
Financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. As such, the Company is required to make certain estimates, judgments and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. CPS’s significant accounting policies are presented within Note 2 to the financial statements; the significant accounting policies which management believes are most critical to aid in fully understanding and evaluating its reported financial results include the following:
a)
Allowance for credit losses
The Company performs ongoing monitoring of the status of its receivables based on the payment history and the creditworthiness of our customers, as determined by a review of their current credit information. Management continually monitors collections and payments from customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been low and within expectations, there is no guarantee that we will continue to experience the same credit loss rates as in the past. Although the Company’s major customers are large and have a favorable payment history, a significant change in the liquidity or financial position of one of them could have a material adverse impact on the collectability of accounts receivable and future operating results. To further mitigate the potential for credit losses the Company has acquired a credit insurance policy covering most of our sales to non-US accounts.
b)
Inventory valuation
The Company has a build-to-order business model and manufactures product to ship against specific purchase orders; occasionally CPS manufactures product in advance of anticipated purchase orders to level load production or prepare for a ramp-up in demand. In addition, virtually 100% of the Company’s products are custom, meaning they are produced to a customer’s design and generally cannot be used for any other purpose. Purchase orders generally have cancellation provisions which vary from customer to customer, but which can result occasionally in CPS producing product which the customer is not obligated to purchase. However, once a product has gone into production, most customer orders are recurring and order cancellations are rare. The Company’s general obsolescence policy is to reserve against inventory when there has been no activity on a particular part for a twelve month period and there are no pending or expected customer orders.
In some cases, customers place blanket purchase orders and request the Company to maintain inventory sufficient to respond quickly upon receiving a shipment request. The Company manufactures to specifications and the products typically have a life which extends over several years and does not deteriorate over time. Therefore, the risk of obsolescence due to the passage of time, per se, is minimal. However, to more efficiently schedule production or to meet agreements with customers to have inventory in the pipeline, the Company occasionally manufactures products in advance of purchase orders. In these instances, the Company bears the risk that it will be left with product manufactured to specification for which there are no customer purchase orders. The Company scrutinizes its inventory and, in the absence of pending orders or strong evidence of future sales, establishes an obsolescence reserve when there has been no activity or pending or expected customer orders on a particular part for a twelve month period.
In determining inventory cost, the Company uses the first-in, first-out method and states inventory at the lower of cost or net realizable value. Virtually, all of the Company’s inventory is customer specific; as a result, if a customer’s order is cancelled, it is unlikely that CPS would be able to sell that inventory to another customer. Likewise, if the Company chooses to manufacture product in advance of anticipated purchase orders and those orders do not materialize, it is unlikely that it would be able to sell that inventory to another customer. The value of CPS’s work in process and finished goods is based on the assumption that specific customers will take delivery of specific items of inventory. Raw materials are less unique to specific products. AlSiC raw materials are used for all AlSiC parts and therefore they are continuously in production. Hermetic package and armor raw materials present a mix of raw material items, some of which are used in multiple parts and others in only specific parts. These raw material items are evaluated using the same criteria as the finished goods into which they go and are reserved against when there has been no activity for that finished good in the prior 12 months or expectation of future activity. The Company has not experienced significant losses to date as a result of customer cancellations and has not established a reserve for such cancellations.
The Company typically buys ‘lots’ of components for its hermetic packaging products. Often all the components in a lot are not necessary to complete the order. Annually the company reviews this unused material and establishes an obsolescence reserve for the amount it does not expect to use over the next three years.
c)
Valuation of deferred tax assets
Deferred tax assets and liabilities are based on the net tax effects of tax credits, operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company considers many factors in assessing whether or not a valuation allowance for its deferred tax asset is warranted. In light of recent profitability and expected future profitability. It was determined that a reserve is not needed, as it is more likely than not that the Company would be able to fully utilize its deferred tax asset.
At December 28, 2024, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $12 million and reversals of existing temporary differences to fully utilize the deferred tax asset, assuming a statutory corporate tax rate of 21%.
Results of Operations (all $ in millions unless noted)
Results of Operations for the year 2024 (“2024”) compared with the year 2023 (“2023”):
Total revenue was $21.1 million in 2024, a 24% decrease compared with total revenue of $27.6 million in 2023. This decrease was due primarily to the successful completion of the armor contract in April 2024 compared to a full year of revenue from armor production in 2023, partially offset by increased revenue from AlSiC baseplates.
Gross profit in 2024 totaled $(0.1) million or (1)% of sales. This compares with $6.8 million, or 25% of sales, generated during 2023. The decrease in margin was primarily due to the impact of the completion of the armor contract described above. As CPS incurs significant fixed costs in its operations, a reduction in revenue has a significant impact on margin. In addition, then growth of AlSiC baseplate sales in Q4 of 2024 required the hiring and training of new employees as well as the incurring of additional expenses for the ramp up of production. A new employee is trained for 2-3 weeks before even beginning their actual work on the shop floor. It can then take a few months before they are fully up to speed.
Selling, general and administrative (SG&A) expenses were $4.3 million during 2024, down from SG&A expenses of $5.1 million incurred during 2023. This decrease was primarily due to a reduction in variable compensation expense, due to the reduction in revenue and profit year over year, as well as a reduction in salaries paid for selling and administrative personnel.
The Company generated an operating loss of $4.4 million in 2024, compared with operating income of $1.7 in 2023. This decrease was due almost entirely to the reduction in revenue and additional expenses due to end of year sales growth, discussed above. The Company recorded a net loss of $3.1M in 2024 compared to net income of $1.4M in 2023. In 2024 the Company recorded an income tax benefit of $1.0 million compared to a provision for income taxes $0.6 million in 2023.
Significant Fourth Quarter Activity in 2024:
Revenues totaled $5.9 million in the fourth quarter of 2024 versus $6.7 million in the fourth quarter of 2023, a decrease of 12%. This decrease was the result of the completion of our armor contract earlier in 2024, partially offset by an increase in AlSiC baseplate sales.
Gross margin decreased in the fourth quarter of 2024 compared with the fourth quarter of 2023 to $(0.3) million from $1.1 million. This decrease was due to lower revenue as well as the costs associated with the production ramp up described above.
SG&A expenses totaled $1.0 million during the quarter, compared to $1.0 million in the same quarter of 2023.
The Company recorded an operating loss of $1.3 million in the fourth quarter of 2024 compared to operating income of $0.1 million in the fourth quarter of 2023.
The Company recorded a net loss of $1.0 million in the fourth quarter of 2024 compared to net income of $0.1 million in the fourth quarter of 2023.
Liquidity and Capital Resources (all $ in millions unless noted)
The Company’s cash and cash equivalents at December 28, 2024 totaled $3.3, restricted cash of $85 thousand and marketable debt securities with a fair value of $1.0. compared with cash and cash equivalents at December 30, 2023 of $8.8 and no restricted cash or marketable debt securities. This decrease was primarily due to the Company’s losses for the year as well as the increase in receivables of $0.6.
Accounts receivable at December 28, 2024 totaled $4.9 compared to $4.4 at December 30, 2023. Days Sales Outstanding (DSO) increased to 75 days at the end of 2024 compared to 60 days at the end of 2023. This change was due to continued growth of sales throughout the 4th quarter. This resulted in collections on the earlier lower sales, while the higher later sales remained in receivables. The accounts receivable balances at December 28, 2024, and December 30, 2023 were both net of an allowance for credit losses of $10 thousand.
Inventories decreased to $4.3 at December 28, 2024 from $4.6 at December 30, 2023. The inventory turnover in the four quarters ending 2024 was 4.8 times, up from 4.3 times averaged during the four quarters of 2023 (each based on a 5 point average).
The Company had no inventory on consignment at any customers at the end of 2024 or 2023. At December 28, 2024 and December 30, 2023 inventory of, $0.8 and $0.5, respectively, was located at vendor locations pursuant to inventory agreements.
The Company funded its operations from its cash balances in 2024. The Company expects it will continue to be able to fund its operations during 2025 from existing cash balances and profits.
The Company continues to sell to a limited number of customers and the loss of any one of these customers or vendors 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.
Contractual Obligations
In May 2023 a line of credit (LOC) in the amount of $3.0 million was entered into 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 December 28, 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 which can be done by either party.
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 is collateralized by the microscope and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a rate of 6.47%.
As of December 28, 2024, the Company had $109 thousand of construction in progress and no outstanding commitments to purchase production equipment.
During 2024, our leasing arrangements consisted of the Norton, MA facility lease. The Norton facility lease was renewed in February 2021, expires in February 2026 and is a 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 buy the property and a first right of refusal during the term of the lease. Annual rental payments were $165 thousand in 2024.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Inflation
Recent inflationary trends have had an impact on our profitability. We have had higher than normal wage increases, have implemented other programs to ameliorate the effects of inflation on our employees, such as improvements to our benefit package, and seen price increases from some of our suppliers. We have been able to pass along many of these price increases to our customers, however in some cases we have had to absorb these price increases for a period of time, before being able to pass them along. There can be no assurance that our customers will continue to accept further price increases, that our employees will continue to be satisfied with their wage and benefit increases and that inflation will not further affect our operations or business in the future.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
Smaller reporting companies are not required to provide the information required by this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
See Index to the Company’s Financial Statements and the accompanying notes which are filed as part of this Annual Report on Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the direction of our Chief Executive Officer and Chief Financial Officer, management has carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures as such item is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of December 28, 2024.
Changes in Internal Control over Financial Reporting
There were no material changes in the Company’s internal control over financial reporting during fiscal 2024.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the direction of our Chief Executive Officer and Chief Financial Officer, management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 28, 2024. In making this assessment, management used the criteria set forth in the "Internal Control Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013). Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 28, 2024.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
The Company had no information required to be disclosed in a report on Form 8-K during the fourth quarter of the year covered by this Form 10-K that has not been so reported.
Part III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officer and Corporate Governance
The information required by this Item 10 is incorporated herein by reference to our Definitive Proxy Statement, under the captions “Members of the Board of Directors, Nominees and Executive Officers,” “Certain Relationships and Related Person Transactions; Legal Proceedings,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Conduct” and “Corporate Governance” and with respect to our 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company’s 2024 fiscal year.
The Company has adopted the CPS Code of Conduct, which applies to all directors, officers (including the principal executive officer, principal financial officer and treasurer) and employees. A copy of this code can be found on the Company’s website at https://cpstechnologysolutions.com/investor-overview/.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required by this Item 11 is incorporated herein by reference to our Definitive Proxy Statement, under the captions “Compensation” and “Compensation Discussion and Analysis” with respect to our 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company’s 2024 fiscal year.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 is incorporated herein by reference to our Definitive Proxy Statement, under the caption “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” with respect to our 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company’s 2024 fiscal year.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated herein by reference to our Definitive Proxy Statement, under the captions “Certain Relationships and Related Person Transactions; Legal Proceedings” and “Corporate Governance” with respect to our 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company’s 2024 fiscal year.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
The information required by this Item 14 is incorporated herein by reference to our Definitive Proxy Statement, under the caption “Accounting Matters” with respect to our 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company’s 2024 fiscal year.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
(a) Documents filed as part of this Form 10-K.
1. Financial Statements
The financial statements filed as part of this Form 10-K are listed on the Index to Financial Statements of this Form 10-K.
2. Exhibits
The exhibits to this Form 10-K are listed on the Exhibit Index of this Form 10-K.
CPS TECHNOLOGIES CORP.
EXHIBIT INDEX
Exhibit No.
Description
3.1*
Restated Certificate of Incorporation of the Company, as amended, is incorporated herein by reference to Exhibit 3.1 to the Company’s annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021
3.2*
By-laws of the Company, as amended, are incorporated herein by reference to Exhibit 3.2 to the Company’s annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021
3.3*
Certificate of Amendment of Restated Certificate of Incorporation of the Company dated May 14, 2014 is incorporated herein by reference to Exhibit 3.4 to the Company’s annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021
3.4*
Certificate of Ownership and Merger Merging CPS Superconductor Corporation into Ceramics Process Systems Corporation dated March 15, 2007 is incorporated herein by reference to Exhibit 3.2 to the Company’s annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021
4.1*
Specimen certificate for shares of Common Stock of the Company is incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-3 (Registration Statement No. 333-255373) filed with the Securities and Exchange Commission on April 20, 2021
4.2*
Description of the Company’s securities is incorporated by reference to Exhibit 4.2 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
4.3
Amendment dated May 12, 2020 to Credit and Security Agreement by and between CPS Technologies Corp. and The Massachusetts Business Development Corporation dated September 25, 2019
4.4
Amendment dated May 17, 2021 to Credit and Security Agreement by and between CPS Technologies Corp. and The Massachusetts Business Development Corporation dated September 25, 2019
4.5
CNC Associates, Inc. Notification of Approval of Financing dated May 26, 2020.
4.6
Credit and Security Agreement by and between CPS Technologies Corp. and The Massachusetts Business Development September 25, 2019
4.7
Amendment dated September 8, 2021 to Credit and Security Agreement by and between CPS Technologies Corp. and The Massachusetts Business Development Corporation dated September 25, 2019
10.2*
Amendment No. 1 dated November 7, 2008 to Standard Form Commercial Lease by and between Gifford Investments, Inc.(lessor) and Ceramics Process Systems Corporation dated July 19, 2006 is incorporated by reference to Exhibit 10.2 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.5*(1)
Retirement Savings Plan, effective September 1, 1987 is incorporated by reference to Exhibit 10.35 to the Company’s 1989 S-1 Registration Statement
10.6*
Amendment No. 2 dated May 7, 2009 to Standard Form Commercial Lease by and between Gifford Investments, Inc.(lessor) and Ceramics Process Systems dated July 19, 2006 is incorporated by reference to Exhibit 10.6 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021).
Exhibit No.
Description
10.7*
Third Amendment dated January 6, 2015 to Standard Form Commercial Lease by and between Gifford Investments, Inc.(lessor) and CPS Technologies Corp. dated July 19, 2006 is incorporated by reference to Exhibit 10.7 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.8*
Fourth Amendment dated February 28, 2018 to Standard Form Commercial Lease by and between Gifford Investments, Inc. and CPS Technologies Corp. dated July 19, 2006 is incorporated by reference to Exhibit 10.8 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.9*
Fifth Amendment dated January 25, 2021 to Standard Form Commercial Lease by and between Gifford Investments, Inc. and CPS Technologies Corp. dated July 19, 2006 is incorporated by reference to Exhibit 10.9 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.21*
1999 Stock Incentive Plan adopted by the Company’s Board of Directors on January 22, 1999
10.22*
2009 Stock Incentive Plan ("2009 Plan") on December 10, 2009 is incorporated by reference to Exhibit 99.1 of the Company's Form S-8 (File No. 333-163553) filed with the Securities and Exchange Commission on December 8, 2009)
10.23*(1)
2020 Stock Incentive Plan (“2020 Plan”) on March 3, 2020 is incorporated by reference to Exhibit 10.23 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.24*(1)
Amended and Restated 2009 Stock Incentive Plan is incorporated by reference to Exhibit 10.24 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
10.26*(1)
Form of Stock Option Agreement for 2020 Equity Incentive Plan and Amended and Restated 2009 Stock Option Plan is incorporated by reference to Exhibit 10.26 of the Company's annual report on Form 10-K (File No. 001-36807) filed with the Securities and Exchange Commission on March 17, 2021)
23.1
Consent of PKF O’Connor Davies LLP
23.2
Consent of Wolf & Company, P.C.
31.1
Certification Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Policy for the Recovery of Erroneously Awarded Compensation adopted by the Board of Directors July 12, 2023.
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
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
* Incorporated herein by reference.
(1) Management Contract or compensatory plan or arrangement filed as an exhibit to this Form pursuant to Items 14(a) and 14(c) of Form 10-K.