UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q~~

~~(Mark~~SECURITIES ~~One)~~AND ☒EXCHANGE ~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 2023 or~~COMMISSION

☐Washington, ~~Transition~~D.C. ~~Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to~~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 30, 2024

☐	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.)
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 ~~Registrants Telephone Number, including Area Code:~~

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

CPS TECHNOLOGIES CORP.

111 South Worcester Street

Norton, MA 02766-2102

Former Name, Former Address and Former Fiscal Year if Changed since Last Report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ ~~Emerging growth company☐~~

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (~~15U~~15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

☐ 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 ~~Markets~~Market

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of ~~October~~April 2030, ~~2023~~2024: 14,519,215.

PART I FINANCIAL INFORMATION ~~ITEM 1 FINANCIAL STATEMENTS (Unaudited) CPS TECHNOLOGIES CORP. Balance Sheets (Unaudited) (continued on next page)~~

	September 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	8,778,856		$	8,266,753
Accounts receivable-trade, net		5,006,451			3,777,975
Accounts receivable-other		17,043			685,668
Inventories, net		4,827,957			4,875,901
Prepaid expenses and other current assets		337,476			211,242
Total current assets		18,967,783			17,817,539
Property and equipment:
Production equipment		11,195,993			10,770,427
Furniture and office equipment		952,883			952,883
Leasehold improvements		985,649			985,649
Total cost		13,134,525			12,708,959
Accumulated depreciation and amortization		(11,810,209	)		(11,446,901	)
Construction in progress		206,693			64,910
Net property and equipment		1,531,009			1,326,968
Right-of-use lease asset		367,000			466,000
Deferred taxes, net		1,645,467			2,069,436
Total assets	$	22,511,259		$	21,679,943

ITEM 1 FINANCIAL STATEMENTS (Unaudited)

CPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	March 30, 2024			December 30, 2023
ASSETS

Current assets:
Cash and cash equivalents	$	8,667,728		$	8,813,626
Accounts receivable-trade, net		3,848,635			4,389,155
Accounts receivable-other		27,490			83,191
Inventories, net		4,611,460			4,581,930
Prepaid expenses and other current assets		391,953			276,349
Total current assets		17,547,266			18,144,251
Property and equipment:
Production equipment		11,155,183			11,271,982
Furniture and office equipment		952,883			952,883
Leasehold improvements		985,649			985,649
Total cost		13,093,715			13,210,514
Accumulated depreciation and amortization		(11,581,885	)		(11,936,004	)
Construction in progress		206,250			281,629
Net property and equipment		1,718,080			1,556,139
Right-of-use lease asset (note 4, leases)		297,000			332,000
Deferred taxes		1,609,982			1,569,726
Total Assets	$	21,172,328			21,602,116

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Note payable, current portion		43,478			46,797
Accounts payable		2,409,773			2,535,086
Accrued expenses		843,770			1,075,137
Deferred revenue		207,247			251,755
Lease liability, current portion		160,000			160,000

Total current liabilities		3,664,268			4,068,775

Note payable less current portion		-			8,090
Deferred revenue – long term		31,277			31,277
Long term lease liability		137,000			172,000

Total liabilities		3,832,545			4,280,142
Commitments & Contingencies
Stockholders’ equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,601,487 shares; outstanding 14,519,215 shares at each March 30, 2024 and December 30, 2023		146,015			146,015
Additional paid-in capital		40,341,855			40,180,893
Accumulated deficit		(22,897,949	)		(22,754,796	)
Less cost of 82,272 common shares repurchased at each March 30, 2024 and December 30, 2023		(250,138	)		(250,138	)

Total stockholders’ equity		17,339,783			17,321,974

Total liabilities and stockholders’ equity	$	21,172,328		$	21,602,116

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. ~~Balance Sheets (Unaudited) (concluded)~~

	September 30,			December 31,
	2023			2022
LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities:
Note payable, current portion		57,457			43,711
Accounts payable		2,151,127			1,836,865
Accrued expenses		1,067,293			820,856
Deferred revenue		1,675,086			2,521,128
Lease liability, current portion		159,000			157,000
Total current liabilities		5,109,963			5,379,560
Note payable less current portion		8,655			54,847
Deferred revenue-long term		31,277			231,020
Lease liability less current portion		208,000			309,000
Total liabilities		5,357,895			5,974,427
Commitments (note 4)
Stockholders` equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,601,487 and 14,460,486, respectively; outstanding 14,519,215 and 14,450,470, respectively; at September 30, 2023 and December 31, 2022		146,015			144,605
Additional paid-in capital		40,151,794			39,726,851
Accumulated deficit		(22,894,307	)		(24,125,092	)
Less cost of 82,272 and 10,016 common shares repurchased, respectively; at September 30, 2023 and December 31, 2022		(250,138	)		(40,848	)
Total stockholders` equity		17,153,364			15,705,516
Total liabilities and stockholders` equity	$	22,511,259		$	21,679,943

Statements of Operations (Unaudited)

	Fiscal Quarters Ended
	March 30, 2024			April 1, 2023

Revenues:
Product sales	$	5,912,634		$	7,100,267

Total revenues		5,912,634			7,100,267
Cost of product sales		5,006,324			4,855,564

Gross Margin		906,310			2,244,703
Selling, general, and administrative expense		1,165,922			1,550,522

Operating income (loss)		(259,612	)		694,181
Other income, net		79,171			15,590

Income (loss) before taxes		(180,441	)		709,771
Income tax provision (benefit)		(37,288	)		250,570

Net income (loss)	$	(143,153	)	$	459,201

Net income (loss) per basic common share	$	(0.01	)	$	0.03

Weighted average number of basic common shares outstanding		14,519,215			14,452,284

Net income (loss) per diluted common share	$	(0.01	)	$	0.03

Weighted average number of diluted common shares outstanding		14,519,215			14,639,600

See accompanying notes to financial statements.

CPS TECHNOLOGIES ~~CORP.~~CORPORATION ~~Statements~~STATEMENTS ofOF ~~Operations~~STOCKHOLDERS’ EQUITY (~~Unaudited~~UNAUDITED) FOR THE THREE MONTHS ENDED March 30, 2024 AND April 1, 2023

	Fiscal Quarters Ended						Nine Months Ended
	Common Stock
	September 30,			October 1,			September 30,			October 1,
	Number of shares issued			Par Value			Additional paid-in capital			Accumulated deficit			Stock repurchased			Total stockholders’ equity
	2023			2022			2023			2022
Balance at December 30, 2023		14,601,487		$	146,015		$	40,180,893		$	(22,754,796	)	$	(250,138	)	$	17,321,974
Revenues:
Share-based compensation expense		—			—			160,962			—			—			160,962
Product sales	$	6,285,041		$	6,748,117		$	20,803,447		$	20,471,574
Net loss		—			—			—			(143,153	)		—			(143,153	)
Total Revenues		6,285,041			6,748,117			20,803,447			20,471,574
Balance at March 30, 2024		14,601,487			146,015		$	40,341,855		$	(22,897,949	)	$	(250,138	)	$	17,339,783
Cost of product sales		5,049,177			4,864,876			15,126,621			14,796,206
Balance at December 31, 2022		14,460,486		$	144,605		$	39,726,851		$	(24,125,092	)	$	(40,848	)	$	15,705,516
Gross Profit		1,235,864			1,883,241			5,676,826			5,675,368
Share-based compensation expense		—			—			130,441			—			—			130,441
Selling, general and administrative expense		1,105,227			1,174,581			4,121,099			3,750,131
Employee options exercises		7,001			70			10,215			—			(790	)		9,495
Operating income		130,637			708,660			1,555,727			1,925,237
Net income		—			—			—			459,201			—			459,201
Interest income (expense), net		78,181			(1,892	)		176,325			(6,245	)
Balance at April 1, 2023		14,467,487			144,675		$	39,867,507		$	(23,665,891	)	$	(41,638	)	$	16,304,653
Other income (expense), net		(1,228	)		645,594			(4,130	)		649,628
Net income before income tax expense		207,590			1,352,362			1,727,922			2,568,620
Income tax provision		36,509			364,497			497,137			706,211
Net income	$	171,081		$	987,865		$	1,230,785		$	1,862,409
Net income per basic common share	$	0.01		$	0.07		$	0.08		$	0.13
Weighted average number of basic common shares outstanding		14,517,364			14,434,468			14,487,873			14,417,995
Net income per diluted common share	$	0.01		$	0.07		$	0.08		$	0.13
Weighted average number of diluted common shares outstanding		14,636,241			14,686,476			14,632,591			14,683,632

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. ~~STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022~~

	Common Stock
	Number of				Additional								Total
	shares				paid-in		Accumulated			Stock			stockholders'
	issued		Par Value		capital		deficit			repurchased			equity
Balance at July 1, 2023		14,546,487		145,465		39,978,453		(23,065,388	)		(111,938	)		16,946,592
Share-based compensation expense		-		-		27,941		-			-			27,941
Employee option exercises		55,000		550		145,400		-			(138,200	)		7,750
Net income		-		-		-		171,081			-			171,081
Balance at September 30, 2023		14,601,487		146,015		40,151,794		(22,894,307	)		(250,138	)		17,153,364

Statements of Cash Flows (Unaudited)

	Common Stock
	Fiscal Quarters Ended
	Number of						Additional								Total
	March 30, 2024			April 1, 2023
	shares						paid-in		Accumulated			Stock			stockholders'
Cash flows from operating activities:
	issued			Par Value			capital		deficit			repurchased			equity
Net income (loss)	$	(143,153	)	$	459,201
Balance at December 31, 2022		14,460,486		$	144,605		$	39,726,851		(24,125,092	)		(40,848	)		15,705,516
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Share-based compensation expense		-			-			175,698		-			-			175,698
Depreciation and amortization		101,405			124,608
Employee options exercised		141,001			1,410			249,245		-			(209,290	)		41,365
Share-based compensation		160,962			130,441
Net income		-			-			-		1,230,785			-			1,230,785
Changes in:
Balance at September 30, 2023		14,601,487			146,015			40,151,794		(22,894,307	)		(250,138	)		17,153,364
Accounts receivable - trade		540,520			(936,163	)
Accounts receivable - other		55,701			(15,035	)
Inventories		(29,530	)		183,246
Prepaid expenses and other current assets		(115,604	)		(88,359	)
Accounts payable		(125,313	)		210,028
Accrued expenses		(231,367	)		(89,402	)
Deferred taxes		(40,256	)		226,444
Deferred revenue		(44,508	)		(924,080	)
Net cash provided by (used in) operating activities		128,857			(719,071	)
Cash flows from investing activities:
Purchases of property and equipment		(263,346	)		(176,618	)
Net cash used in investing activities		(263,346	)		(176,618	)
Cash flows from financing activities:
Proceeds from exercise of employee stock options		-			9,495
Payments on note payable		(11,409	)		(10,696	)
Net cash used in financing activities		(11,409	)		(1,201	)
Net decrease in cash and cash equivalents		(145,898	)		(896,890	)
Cash and cash equivalents at beginning of period		8,813,626			8,266,753
Cash and cash equivalents at end of period	$	8,667,728		$	7,369,863
Supplemental disclosures of cash flows information:
Cash paid for interest	$	825		$	1,538
Supplemental disclosures of non-cash activity:
Net exercise of stock options	$	-		$	790

	Common Stock
	Number of				Additional									Total
	shares				paid-in			Accumulated			Stock			stockholders'
	issued		Par Value		capital			deficit			repurchased			equity
Balance at July 2, 2022		14,438,786	$	144,388	$	39,600,085			(25,381,948	)		(20,849	)		14,341,676
Share-based compensation expense		-		-		43,422			-			-			43,422
Issuance of common stock (net of costs)		-		-		(23,135	)		-			-			(23,135
Employee option exercises		-		-		-						-			-
Net income									987,865			-			987,865
Balance at October 1, 2022		14,438,786		144,388		39,620,372			(24,394,083	)		(20,849	)		15,349,828

	Common Stock
	Number of				Additional									Total
	shares				paid-in			Accumulated			Stock			stockholders'
	issued		Par Value		capital			deficit			repurchased			equity
Balance at December 25, 2021		14,350,786	$	143,508	$	39,281,810			(26,256,492	)		(2,515	)		13,166,311
Share-based compensation expense		-		-		207,277			-			-			207,277
Issuance of common stock (net of costs)		-		-		(40,893	)		-			-			(40,893	)
Employee options exercised		88,000		880		172,178						(18,334	)		154,724
Treasury shares retired		-		-		-			-			-			-
Net income									1,862,409			-			1,862,409
Balance at October 1, 2022		14,438,786		144,388		39,620,372			(24,394,083	)		(20,849	)		15,349,828

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. ~~Statements of Cash Flows (Unaudited)~~

	Nine Month Periods Ended
	September 30,			October 1,
	2023			2022
Cash flows from operating activities:
Net income	$	1,230,785		$	1,862,409
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		363,308			316,469
Share-based compensation		175,698			207,277
Deferred taxes		423,969			705,755
Changes in:
Accounts receivable-trade		(1,228,476	)		(965,717	)
Accounts receivable-other		668,625			-
Inventories		47,944			(956,948	)
Prepaid expenses		(126,234	)		(20,807	)
Accounts payable		314,262			(55,394
Deferred revenue		(1,045,785	)		-
Accrued expenses		246,437			(220,891	)
Net cash provided by operating activities		1,070,533			872,153
Cash flows from investing activities:
Purchases of property and equipment		(567,349	)		(392,286	)
Net cash provided by (used in) investing activities		(567,349	)		(392,286	)
Cash flows from financing activities:
Proceeds from employee stock options		41,365			154,724
Stock issuance costs in excess of proceeds		-			(40,893	)
Payments on note payable		(32,446	)		(45,507	)
Net cash provided by financing activities		8,918			68,324
Net increase in cash and cash equivalents		512,103			548,191
Cash and cash equivalents at beginning of period		8,266,753			5,050,312
Cash and cash equivalents at end of period	$	8,778,856		$	5,598,503
Supplemental disclosures of cash flows information:
Cash paid for income taxes	$	109,456		$	456
Cash paid for interest		4,130			6,243
Supplemental disclosures of non-cash activity:
Share repurchases as a reduction of stock option exercise proceeds		209,290			18,334

Notes to Financial Statements

~~See accompanying notes to financial statements.~~(Unaudited)

CPS TECHNOLOGIES CORP. Notes to Financial Statements (Unaudited)

(1) Nature of Business

CPS Technologies ~~Corp.~~Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive and other industries. The Company’s primary advanced material solution is metal-matrix composites ~~(MMC’s)~~ 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 ~~ballistic~~ threat levels.

The Company sells into several end markets including the ~~aerospace & defense markets,~~ 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 3130, ~~2022~~2023 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 3130, ~~2022~~2023 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) Net Income (Loss) Per Common and Common Equivalent Share

Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing net income (loss) by the sum of the weighted average number of common shares plus additional common shares that would have been outstanding if potential dilutive common shares had been issued for granted stock options and stock purchase rights. Had there been a profit in Q1 2024, the dilutive effect would have been 74,285 shares. Common stock equivalents are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive.

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

	Three Months Ended					~~Nine Months Ended~~
	September 30,			October 1,		September 30,		October 1,
	March 30, 2024			April 1, 2023
	2023			2022		2023		2022
Basic EPS Computation:
Basic EPS Computation:
Numerator:
Numerator:
Net income (loss)	$	(143,153	)	$	459,201
Net income	$	171,081		$	987,865	$	1,230,785	$	1,862,409
Denominator:
Denominator:
Weighted average common shares outstanding		14,519,215			14,452,284
Weighted average Common shares Outstanding		14,517,364			14,434,468		14,487,873		14,417,995
Basic EPS	$	(0.01	)	$	0.03
Basic EPS	$	0.01		$	0.07	$	0.08	$	0.13
Diluted EPS Computation:
Diluted EPS Computation:
Numerator:
Numerator:
Net income (loss)	$	(143,153	)	$	459,201
Net income	$	171,081		$	987,865	$	1,230,785	$	1,862,409
Denominator:
Denominator:
Weighted average common shares outstanding		14,519,215			14,452,284
Weighted average Common shares Outstanding		14,517,364			14,434,468		14,487,873		14,417,995
Dilutive effect of stock options		-			187,316
Dilutive effect of stock options		118,877			252,008		144,718		265,637
Total Shares		14,519,215			14,639,600
Total Shares		14,636,241			14,686,476		14,632,591		14,683,632
Diluted EPS	$	(0.01	)	$	0.03
Diluted EPS	$	0.01		$	0.07	$	0.08	$	0.13

(4) Commitments & Contingencies

Commitments

Operating Leases

The Company has one real estate lease expiring in February 2026. CPS also has a few ~~operating~~other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases ~~has~~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 on March 30, 2024 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 $~~160~~152 thousand to $165 thousand through maturity.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s ~~facility~~capitalized ~~lease~~operating leases as of ~~September~~March 30, ~~2023.~~2024

(Dollars in Thousands)
Maturity of capitalized lease liabilities	Lease payments
2023		41
Remaining 2024	$	124
2024		165
2025		165
2026		2728
Total undiscounted operating lease payments	$	~~398~~317
Less: Imputed interest		(3120	)
Present value of operating lease liability	$	~~367~~297
Balance Sheet Classification
Current lease liability	$	~~159~~160
Long-term lease liability		~~208~~137
Total operating lease liability	$	~~367~~297
Other Information
Remaining lease term for capitalized operating leases (in months)		29
Weighted-average remaining lease term for capitalized operating leases (in months)		23
Discount rate		6.6	%
Weighted-average discount rate for capitalized operating leases		6.6	%

Operating Lease Costs and Cash Flows

Operating lease cost and cash paid was $41 thousand during the ~~third~~first quarter of ~~2023 and $122 thousand for the nine months ended September 30, 2023~~2024. ~~These~~This ~~costs~~cost ~~are~~is 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.

(5) Share-Based Payments

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted.

During the ~~quarter~~quarters ended ~~September~~March 30, 2024 and April 1, 2023, ~~there~~a ~~were~~total ~~229~~of 135,500 and 0 stock options, respectively, were granted to employees under the Company’s 2020 Equity Incentive Plan. ~~There~~(the ~~were~~“Plan”) 25and a total of 75,000 and 50,000 stock options, respectively, were granted ~~under~~to ~~the~~outside ~~Plan~~directors during the ~~quarter~~quarters ended ~~October~~March 30, 2024 and April 1, ~~2022~~2023.

During the quarter ended ~~September~~March 30, ~~2023~~2024, ~~55,000~~there ~~options~~ were ~~exercised~~0 atoptions ~~a weighted average cost of $2~~exercised.~~65 per share.~~ During the quarter ended ~~September~~April 301, 2023, ~~27,400~~there ~~options~~ were ~~forfeited and none expired. During the quarter ended October 1~~7,001 ~~2022,~~options noexercised ~~options~~and ~~were~~corresponding ~~exercised,~~shares ~~10,000~~issued ~~options~~at ~~were~~a ~~forfeited~~weighted ~~and~~average ~~none~~price ~~expired~~of $1.47.

During the quarter ended ~~September~~March 30, ~~2023~~2024, the Company repurchased ~~138,200~~0 shares for employees to facilitate their exercise of stock options. During the quarter ended ~~October~~April 1, ~~2022~~2023, the Company ~~did~~repurchased ~~not~~285 ~~repurchase any~~ shares for employees to facilitate their exercise of stock options.

There were also ~~901~~1,097,900 ~~shares~~options outstanding at a weighted average price of $2.6761 with a weighted average remaining contractual term of 6.7.06 years as of ~~September~~March 30, ~~2023,~~2024 and there were ~~497~~582,~~000~~800 shares exercisable at a weighted average price of $2.4344 with a weighted average remaining term of 45.83 years. There were 1,004,400 options outstanding at a weighted average price of $2.51 with a weighted average remaining contractual term of 6.10 years as of ~~September~~April 301, 2023. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of ~~September~~March 30, ~~2023~~2024, there were ~~834~~638,300 shares available for future grants.

~~During~~As ~~the three and nine months ended~~of ~~September~~March 30, ~~2023~~2024, ~~the~~there ~~Company~~was ~~recognized approximately~~ $28693 thousand ~~and~~of ~~$176~~total ~~thousand,~~unrecognized ~~respectively, as share-based~~ compensation ~~expense~~cost related to nonvested share-based ~~and~~compensation ~~option~~arrangements ~~grants.~~granted ~~These~~under ~~amounts~~the ~~are~~Plan; ~~included~~that ascost ais ~~component~~expected ofto ~~selling,~~be ~~general~~recognized ~~and~~over ~~administrative~~a ~~expenses~~weighted inaverage ~~the~~period ~~statement~~ of ~~operations~~2.44 years.

During the ~~three~~quarters ~~and~~ended March ~~nine~~30, ~~months~~2024 ~~ended~~and ~~October~~April 1, ~~2022~~2023, the Company recognized approximately $43161 thousand and $~~207~~130 thousand, respectively, as ~~share~~shared-based compensation expense related to ~~share~~previously ~~and~~granted ~~option~~shares ~~grants.~~under ~~These amounts are included as a component of selling, general and administrative expenses in~~ the ~~statement of operations~~Plan.

(6) Inventories

Inventories consist of the following:

	September 30,			December 31,
	March 30, 2024			December 30, 2023
	2023			2022
Raw materials	$	2,745,792		$	2,861,333
Raw materials	$	2,781,188		$	2,645,442
Work in process		1,577,574			1,493,582
Work in process		1,512,835			1,863,512
Finished goods		616,054			537,975
Finished goods		729,359			525,872
Gross inventory		4,939,420			4,892,890
Total inventory		5,023,382			5,034,826
Reserve for obsolescence		(327,960	)		(310,960	)
Reserve for obsolescence		(195,425	)		(158,925	)
Inventories, net	$	4,611,460		$	4,581,930
Inventories, net	$	4,827,957		$	4,875,901

(7) Accrued Expenses

Accrued expenses consist of the following:

	September 30,		December 31,
	March 30, 2024		December 30, 2023
	2023		2022
Accrued legal and accounting	$	57,460	$	86,000
Accrued legal and accounting	$	69,189	$	35,398
Accrued payroll and related expenses		387,271		649,201
Accrued payroll		795,952		760,305
Accrued other		399,039		339,936
Accrued other		202,152		25,153
Total Accrued Expenses	$	843,770	$	1,075,137
	$	1,067,293	$	820,856

(8) Revolving Line of Credit

In May 2023, the Company terminated its $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC). A new 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 (8.5% at March 30, 2024). On ~~September~~March 30, ~~2023~~2024, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties. Total interest expense for Q1 2024 was $0 and was $0 thousand for Q1 2023.

(9) Note Payable

In March 2020, the Company acquired inspection equipment for a price of $208 thousand. The full amount was financed through a 5 year note payable with a third party equipment finance company. The note is collateralized by the equipment and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a fixed rate of 6.47%.

The aggregate maturities of the notes payable based on the payment terms of the agreement are as follows:

Year	Payments due by period
Remaining in:
2023 (remaining)	$	11,265
FY 2024	$	35,388
2024	$	46,757
FY 2025	$	8,090
2025	$	8,090
Total	$	43,478
Total		66,112

Total interest expense on notes payable during ~~2023~~Q1 2024 was $4825 compared to $1,~~130~~538 in Q1 2023.

(10) Income Taxes

~~The~~A ~~Company’s~~valuation ~~current~~allowance ~~income~~against ~~tax expense and~~ deferred ~~income~~ tax ~~expense~~assets ~~are~~is ~~$73~~required ~~and~~to ~~$424,~~be ~~respectively,~~established ~~for~~or ~~the~~maintained ~~nine~~when ~~months~~it ~~ended September~~is ~~30,~~"more ~~2023.~~likely ~~The~~than ~~Company’s~~not" ~~current~~that ~~income~~all ~~tax~~or ~~expense~~a ~~and~~portion of deferred ~~income~~ tax ~~expense~~assets ~~are~~will ~~$18~~not ~~and~~be ~~$19, respectively, for the three months ended September 30, 2023~~realized.

~~ITEM~~The ~~2 MANAGEMENTS~~Company ~~DISCUSSION~~believes ~~AND~~that ~~ANALYSIS~~it OFis ~~FINANCIAL~~“more ~~CONDITION~~likely ~~AND~~than ~~RESULTS~~not” OFthat ~~OPERATIONS~~the Company will be able to fully utilize the deferred tax asset. For the first quarter of 2024 the deferred tax asset was increased $40 for the estimated tax benefit on Q1 net loss.

~~The~~ITEM ~~following~~2 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 CompanyMANAGEMENT’sS ~~Annual~~DISCUSSION ~~Report~~AND onANALYSIS ~~Form~~OF ~~10-K~~FINANCIAL ~~for~~CONDITION ~~the~~AND ~~year~~RESULTS ~~ended~~OF ~~December 31, 2022 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.~~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 30, 2023 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.cpstechnologysolutions.com.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company’s actual results to differ materially from those forecasted or projected in such forward-looking statements. This includes the impact of the Russian invasion of Ukraine, and other conflicts and potential conflicts throughout the ~~war~~world, which are discussed in ~~Israel/Gaza~~Item ~~and~~3 ~~other~~of ~~geopolitical~~this ~~events~~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 ~~estimates~~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 3130, ~~2022~~2023, 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 3130, ~~2022~~2023.

Overview

Products we provide include baseplates for motor controllers used in high-speed electric trains, subway cars, wind turbines, and hybrid and electric vehicles. We provide baseplates and housings used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits for use in internet switches and routers. We provide baseplates and housings used in modules built with Wide Band Gap Semiconductors like Silicon Carbide (“SiC”) and Gallium Nitride (“GaN”), collectively Metal Matrix Composites (“MMC”). CPS also assembles housings and packages for hybrid circuits. These housings and packages may include MMC components; they may include components made of more traditional materials such as aluminum, cold rolled steel and Kovar. Using its proprietary MMC technology, the Company also produces light-weight vehicle 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 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 MMC, housings for hybrid circuits and our proprietary armor solution is growing as the electronics and other industries seek higher performance, higher reliability, and reduced costs. CPS believes that the Company is well positioned to offer our solutions to current and new customers as these demands grow.

CPS was incorporated in Massachusetts in 1984 as Ceramics Process Systems Corporation and reincorporated in Delaware in April 1987 through a merger into a wholly-owned Delaware subsidiary organized for purposes of the reincorporation. In July 1987, CPS completed our initial public offering of 1.5 million shares of our Common Stock. In March 2007, we changed our name from Ceramics Process Systems Corporation to CPS Technologies Corporation.

Results of Operations for the ~~Third~~First Fiscal Quarter of ~~2023~~2024 (Q3Q1 ~~2023~~2024) Compared to the ~~Third~~First Fiscal Quarter of ~~2022~~2023 (Q3Q1 ~~2022~~2023); (all $ in ~~000s~~000’s)

~~Total~~Revenues ~~revenue~~totaled ~~was~~$5,913 in Q1 2024 compared with $67,~~285~~100 generated in Q3Q1 2023, a 7decrease of 17%. ~~decrease~~Two ~~compared~~factors ~~with~~in ~~total~~particular ~~revenue~~contributed to this decrease. One of ~~$6,748~~our largest customers in Q32023 ~~2022.~~significantly ~~This~~reduced ~~decrease~~their ~~was~~purchases due ~~primarily~~ to ~~customers~~their ~~moving~~having ~~expected~~excess Q3inventory ~~shipments~~that ~~into~~they ~~Q4.~~are ~~The~~in ~~bulk~~the process of ~~the~~working ~~deferrals~~down. ofAdditionally, ~~these~~while ~~shipments~~we ~~was~~are incautiously ~~armor~~optimistic ~~which~~that ~~did~~identified ~~not~~quality ~~affect~~issues ~~production~~have asbeen resolved, we ~~built~~continue upto ~~our~~run ~~finished~~tests ~~goods~~which ~~armor~~occupy ~~inventory~~machine ~~for~~time ~~the~~that Q4would ~~shipments~~otherwise have been spent on production for customers.

Gross ~~profit~~margin in Q3Q1 ~~2023~~2024 totaled $~~1,236~~906 or 2015% of sales. InThis Q3compares ~~2022,~~with gross ~~profit~~margin ~~was~~in Q1 2023 of $12,~~883~~245 or 2832% of sales. This decrease inwas ~~profit~~due ~~directly correlates~~ to the ~~decreased~~lower ~~revenue~~sales ~~and~~volumes ~~the impact increased revenue has~~ on fixed ~~manufacturing~~ costs. Inas ~~addition,~~well weas ~~are~~the ~~replacing~~aforementioned ~~a piece of~~ testing ~~equipment~~being ~~and~~done inon the ~~interim~~quality ~~are outsourcing the testing, resulting in higher costs~~issues.

Selling, general and administrative ~~expenses~~ (SG&A) ~~were~~expenses totaled $1,~~105~~166 in Q3Q1 ~~2023, down~~2024 ~~6% when~~ compared with SG&A expenses of $1,~~175~~551 in Q3Q1 ~~2022~~2023. This decrease was ~~primarily~~ due in part to ~~decreased~~a reduction in variable compensation inas Q3well as lower commission expense due to lower revenue numbers and their impact on profitability. In addition, there are a ~~result~~number of ~~the~~areas ~~Company’s~~in ~~decreased~~which ~~revenue~~management has been able to reduce SG&A expenses compared to last year.

InThe Q3Company ~~2023,~~experienced ~~the~~an ~~Company~~operating ~~incurred~~loss ~~interest~~of ~~expense~~$260 in Q1 2024 compared with an operating profit of $1694 ~~due~~in toQ1 ~~equipment~~2023, ~~financing~~a decrease of 137%. This ~~compares~~decrease ~~with~~was ~~interest~~a ~~expense~~result of $2the indecreased Q3gross ofmargin, ~~2022~~partially offset by the decrease in SG&A expenses.

~~The~~CPS ~~Company~~does ~~generated~~not ~~operating~~rely ~~income~~on ofraw ~~$131~~materials ~~compared~~from ~~with~~Ukraine, ~~operating~~Russia, ~~income~~Israel ofor ~~$709 in the same quarter last year~~Gaza. ~~This~~As ~~decrease~~a inresult, ~~operating~~we ~~income~~do isnot ~~due~~believe tothat the ~~reduction~~Russian ininvasion ~~gross profit, discussed above. The net income for Q3 2023 totaled $171 versus net income~~ of ~~$988~~Ukraine inor Q3the ~~2022. This~~conflict ~~differential~~ in ~~net~~Israel ~~income~~and isGaza ~~due~~will tohave ~~the~~a ~~decrease~~direct inimpact ~~operating~~on ~~income,~~our ~~discussed~~results. ~~above~~Nevertheless, asthere ~~well~~could asbe ~~the~~an ~~Employee~~indirect ~~Retention~~impact ~~Tax~~regarding ~~Credit~~supply ~~("ERTC")~~chain inand ~~2022~~inflationary ~~which~~issues ~~was~~as ~~claimed~~a ~~and~~result ~~recognized~~of inthese ~~2022~~conflicts.

~~Results~~Inflation ofhas ~~Operations~~had ~~for~~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 ~~First~~future. ~~Nine~~In ~~Months~~addition, there is often a lag between when the costs increase and when we can adjust customer prices. Some of ~~2023~~our ~~Compared~~larger customers will have pricing agreements, typically for one year, and we must wait for those agreements to end before making any pricing adjustments. Wage increases are also part of the ~~First~~inflation ~~Nine~~impact. ~~Months~~We have instituted a combination of ~~2022~~wage ~~(all~~increases $as well as richer benefits, such as the increased 401k match mentioned above, in ~~000s)~~order to retain the folks making up our workforce.

~~Total~~These ~~revenue~~factors ~~was~~combine ~~$20,803~~to increate ~~the first nine months of 2023,~~ a 2%higher ~~increase~~degree ~~compared with total revenue~~ of ~~$20,472~~uncertainty inregarding ~~the~~future ~~first~~financial ~~nine months of 2022~~performance. ~~A reduction in shipments of hermetic packages was more than offset by an increase in MMC shipments.~~

~~Gross~~Liquidity ~~margin~~and inCapital ~~the~~Resources ~~first~~(all ~~nine months of 2023 totaled~~ $~~5,677~~ orin ~~27%~~000’s ofunless ~~sales. In the first nine months of 2022 gross margin totaled $5,675 or 28% of sales.~~noted)

~~Selling,~~The ~~general~~Company’s cash and ~~administrative~~cash ~~(SG&A)~~equivalents ~~expenses~~at ~~were~~March $430,~~121~~ ~~during~~2024 ~~the~~totaled ~~first~~$8,668. ~~nine~~This ~~months~~compares ofto ~~2023,~~cash upand ~~10%~~cash ~~compared~~equivalents ~~with~~at ~~SG&A~~December ~~expenses of $3~~30,~~750~~ in2023 ~~the first nine months~~ of ~~2022~~$8,814. ~~There~~The ~~were~~Company ~~three~~has ~~major~~invested ~~reasons for this increase. First there was a significant increase~~ in ~~travel~~new ~~expenses.~~equipment ~~In 2022 we were just beginning~~ to ~~come~~enable ~~out~~us ~~of the Covid-19 pandemic. Many conferences continued~~ to be ~~virtual~~more ~~and~~cost ~~many~~effective ~~customers~~as ~~continued~~well toas ~~prohibit~~improving ~~outside visitors. In 2023 this has changed, thus~~ our ~~business~~quality ~~development~~department’s ~~team,~~ability into ~~particular,~~ensure ~~have~~we ~~been~~are ~~doing~~shipping ~~significantly~~better ~~more travel than a year ago. Secondly~~product, ~~the~~going ~~Company increased its 401k matching formula in 2023 resulting in increased payroll costs~~forward. ~~Lastly, the Company accrued severance to a long-time employee whose service with the Company was terminated.~~

~~During~~Accounts ~~the~~receivable ~~first~~at ~~nine~~March ~~months of 2023~~30, ~~the~~2024 ~~Company~~totaled ~~incurred~~$3,876 ~~interest~~compared ~~expense~~with of $4,472 onat ~~its~~December ~~notes~~30, ~~payable~~2023. ~~This~~Days ~~compares~~Sales ~~with~~Outstanding ~~interest~~(DSO) ~~expense~~decreased from 60 days at the end of $62023 ~~incurred~~to ~~during~~59 days at the ~~first~~end ~~nine~~of ~~months~~Q1 2024. The accounts receivable balances at December 30, 2023, and March 30, 2024 were both net of ~~2022~~an allowance for doubtful accounts of $10.

InInventories ~~the~~totaled ~~first nine months of 2023~~$4,611 ~~the~~at ~~Company~~March ~~generated operating income of $1~~30,~~556~~ 2024 compared with ~~operating~~inventory ~~income~~totaling of $14,~~925~~582 inat ~~the~~December ~~same~~30, ~~period last year~~2023. ~~This difference is primarily due to the increased SG&A discussed above.~~ The ~~net~~inventory ~~income~~turnover ~~for~~in the ~~first~~most ~~nine~~recent ~~months~~four ofquarters ~~2023~~ending ~~totaled~~Q1 ~~$1,231~~2024 ~~versus~~was ~~net~~4.4 ~~income~~times of(based ~~$1,862~~on ina ~~the~~5 ~~first~~quarter ~~nine~~end ~~months~~average) ofcompared ~~2022~~with 4.3 Astimes ~~mentioned~~averaged ~~above,~~during the ~~ERTC~~four ~~which~~quarters ~~was~~of ~~recognized in 2022, accounted for this difference~~2023.

~~Liquidity~~The ~~and~~Company ~~Capital~~expects ~~Resources~~it ~~(all~~will $continue into ~~000s~~be ~~unless~~able ~~noted)~~to fund its operations for the remainder of 2024 from operations and existing cash balances.

The Company’s ~~cash~~continues to sell to a limited number of customers and ~~cash~~the ~~equivalents~~loss atof ~~September~~any ~~30,~~one ~~2023~~of ~~totaled~~these ~~$8,779.~~customers ~~This~~could ~~compares~~cause tothe ~~cash~~Company ~~and~~to ~~cash~~require ~~equivalents~~additional atexternal ~~December~~financing. ~~31,~~Failure ~~2022~~to ofgenerate $8sufficient revenues,~~267.~~ ~~The~~raise ~~increase~~additional incapital ~~cash~~or ~~was~~reduce ~~primarily~~certain ~~due~~discretionary tospending ~~our~~could ~~net~~have ~~profit,~~a ~~offset~~material byadverse ~~increased~~effect ~~accounts~~on ~~receivable~~the Company’s ability to ~~support~~achieve ~~higher~~its ~~sales~~business objectives.

~~Accounts~~Management ~~receivable~~believes atthat ~~September~~existing ~~30,~~cash ~~2023~~balances ~~totaled~~will ~~$5,023~~be ~~compared~~sufficient ~~with~~to ~~$4,464~~fund atour ~~December~~cash ~~31,~~requirements ~~2022~~for the foreseeable future. ~~The~~However, ~~2022~~there ~~total~~is ~~includes~~no ~~$641~~assurance ~~receivable~~that ~~for~~we will be able to generate sufficient revenues or reduce certain discretionary spending in the ~~ERTC~~event that planned operational goals are not met such that we will be able to meet our obligations as they become due.

~~Days~~Contractual ~~Sales~~Obligations ~~Outstanding~~ (~~DSO)~~all ~~increased~~$ ~~from 52 days at the end of 2022 to 72 days at the end of Q3 2023, based on trade receivables. This change was due to the reduction of deferred revenue occurring~~ in ~~the~~000’s ~~4th~~unless ~~quarter~~otherwise of 2022. Prepayments received in 2021 were used to pay for shipments shipped in the 4th quarter thus immediately reducing accounts receivable, rather than the customer paying 30-45 days later. The accounts receivable balances at September 30, 2023, and December 31, 2022 were both net of an allowance for doubtful accounts of $10.noted)

~~Inventories~~In ~~totaled~~May $42023,~~828~~ atthe ~~September~~Company ~~30,~~terminated ~~2023~~its ~~compared~~$3.0 million revolving line of credit (LOC) with ~~inventory~~Massachusetts ~~totaling~~Business Development Corporation (BDC). A new LOC in the amount of $~~4,876~~3.0 atmillion ~~December~~was ~~31,~~entered ~~2022~~into with Rockland Trust Company. The ~~inventory~~LOC ~~turnover~~is insecured by the ~~most~~accounts ~~recent~~receivable ~~four~~and ~~quarters~~other ~~ending~~assets Q3of ~~2023~~the ~~was~~Company ~~4.1~~and ~~times,~~has ~~slightly~~an ~~down~~interest ~~from~~rate 4of the National Prime Rate as published by the Wall Street Journal.2 ~~times~~On ~~averaged~~March ~~during~~30, 2024, the ~~four~~Company ~~quarters~~had $0 of ~~2022~~borrowings ~~(based~~under onthis aLOC 5and ~~point~~its ~~average)~~borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties.

~~The~~In ~~Company~~March ~~financed~~2020, ~~its~~the ~~working~~Company ~~capital~~acquired ~~during~~a ~~the~~scanning ~~first~~acoustic ~~nine~~microscope ~~months~~for a price of ~~2023~~$208 ~~from~~thousand. ~~its~~The ~~net~~full ~~profit~~amount ~~during~~was ~~the~~financed ~~period~~through a 5 year note payable with a financing company. The ~~Company~~note ~~expects~~is itcollateralized ~~will~~by ~~continue~~the tomicroscope beand ~~able~~is tobeing ~~fund~~paid ~~its~~in ~~working~~monthly ~~capital~~installments ~~requirements~~of ~~for~~$4 ~~the~~thousand, ~~remainder~~consisting of ~~2023~~principal ~~from~~plus ~~existing~~interest ~~cash~~at ~~balances~~a fixed rate of 6.47%

~~Although~~The ~~the~~ Company’s ~~customer~~has ~~base is expanding, the Company continues to sell to a limited number of customers and the loss of any~~ one ofreal ~~these~~estate ~~customers~~lease ~~could~~expiring ~~have~~in ~~significant~~February ~~negative consequences on future results~~2026. ~~Although~~CPS ~~the~~also ~~Company~~has ~~is in~~ a ~~good~~few ~~cash~~other ~~position~~leases ~~today,~~for ~~failure~~equipment towhich ~~generate~~are ~~sufficient~~minor ~~revenues,~~in ~~raise~~nature ~~additional~~and ~~capital~~are orgenerally ~~reduce~~short-term ~~certain~~in ~~discretionary~~duration. ~~spending~~None ~~could~~of these have abeen ~~material~~capitalized. ~~adverse~~(Note ~~effect~~4, ~~on the Company’s ability to achieve its business objectives.~~Leases)

Contractual Obligations

In May 2023, the Company terminated its $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC). A new 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 September 30, 2023, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties.

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%

The Company has one real estate lease expiring in February 2026. CPS also has a few leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized. (Note 4, Leases)

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not significantly exposed to the impact of interest rate changes or foreign currency fluctuations. The Company has not used derivative financial instruments.

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

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

ITEM 4

CONTROLS AND PROCEDURES

(a) The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d - 14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, 1) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports the Company files under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and 2) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS ~~None.~~

~~ITEM~~We ~~1A RISK~~are ~~FACTORS There~~not ~~have~~a ~~been~~party noto any litigation which could have a material ~~changes~~adverse toeffect on us or on our business. The Company has received a letter from the ~~risk~~attorney ~~factors~~of a former European outside sales representative stating that under European law the representative is entitled to compensation as ~~discussed~~a result of his termination. The Company completely disagrees with the claims. Should this result in ~~our~~litigation ~~2020~~the ~~Form~~Company ~~10-K~~will defend itself to the fullest extent of the law and estimates any losses incurred to be immaterial.

ITEM ~~2 UNREGISTERED~~1A ~~SALES~~RISK ~~OF EQUITY SECURITIES AND USE OF PROCEEDS. None.~~FACTORS

~~ITEM~~There ~~3 DEFAULTS~~have ~~UPON~~been ~~SENIOR~~no ~~SECURITIES None~~material changes to the risk factors as discussed in our 2023 Form 10-K.

ITEM ~~4 MINE~~2 ~~SAFETY~~UNREGISTERED ~~DISCLOSURES Not~~SALES ~~applicable~~OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~ITEM 5 OTHER INFORMATION Not applicable~~None.

ITEM ~~6 EXHIBITS (a) Exhibits:~~3 DEFAULTS UPON SENIOR SECURITIES

~~Exhibit 31~~None.~~1 Certification of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 of The Sarbanes-Oxley Act Of 2002~~

~~Exhibit~~ITEM ~~31.2~~4 ~~Certification~~MINE ofSAFETY ~~Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 of The Sarbanes-Oxley Act Of 2002~~DISCLOSURES

~~Exhibit~~Not 32applicable.~~1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002~~

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)

(b) Reports on Form 8-K

None

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 ~~CORP. (Registrant)~~CORPORATION

~~Date: November 3, 2023~~(Registrant)

~~/s/~~Date: ~~Brian~~May T.7, ~~Mackey~~2024

/s/Brian T. Mackey ~~Chief Executive Officer~~

~~Date:~~Brian ~~November~~T. ~~3, 2023~~Mackey

President and Chief Executive Officer

Date: May 7, 2024

/s/ Charles K. Griffith Jr.

Charles K. Griffith Jr.

Chief Financial Officer

Filing Compare · CPS TECHNOLOGIES CORP/DE/