UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 2827, ~~2024~~2025 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the transition period from to

Commission file number: 0-16088

CPS TECHNOLOGIES CORP.
(Exact Name of Registrant as Specified in its Charter)

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

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

508-222-0614

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CPSH	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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 every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions 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 (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Yes ☒ No

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): ~~☐ Yes ☒ No~~

~~The~~☐ ~~aggregate~~Yes ~~market~~☒ value of the voting Common Stock held by non-affiliates of the Registrant was $21 million based on the average of the reported closing bid and asked prices for the Common Stock as of the last business day of the registrant’s most recently completed fourth fiscal quarter as reported on the NASDAQ Capital Market.No

~~Number~~The ofaggregate ~~shares~~market value of the voting Common Stock ~~outstanding~~held by non-affiliates of the Registrant was $52 million based on the average of the reported closing bid and asked prices for the Common Stock as of ~~March~~the ~~10,~~last ~~2025:~~business ~~14,525,960~~day ~~shares~~of the registrant’s most recently completed fourth fiscal quarter as reported on the NASDAQ Capital Market.

~~Portions~~Number of ~~the~~shares ~~Proxy~~of ~~Statement~~Common toStock beoutstanding ~~filed~~as ~~for the Company’s 2025 meeting~~ of ~~stockholders~~February ~~are~~18, ~~incorporated~~2026: by17,991,780 ~~reference into Part III of this form 10-K~~shares.

Portions of the Proxy Statement to be filed for the Company’s 2026 meeting of stockholders are incorporated by reference into Part III of this form 10-K.

Part I

Item 1. Business.

CPS Technologies Corp. (the ‘“Company’” or ‘“CPS’”) ~~provides~~is a Massachusetts-based advanced ~~material~~materials ~~solutions~~company ~~for~~founded ~~the~~in ~~transportation,~~1984 ~~automotive,~~(originally ~~energy,~~as ~~computing/internet,~~Ceramics ~~telecommunications,~~Process ~~aerospace~~Systems Corporation) and ~~defense~~publicly ~~markets~~listed on Nasdaq since 1987. ~~CPS~~ ~~products~~Renamed ~~are~~CPS ~~important~~Technologies ~~elements~~Corp. in ~~electrifying~~2007, the ~~green~~Company ~~economy~~designs, manufactures, and insells ~~the~~high-performance ~~protection~~material ofsolutions ~~military~~for ~~personnel~~global ~~around~~customers ~~the~~across ~~world~~diverse markets, including transportation, energy, automotive, electronics, telecommunications, aerospace, and defense.

~~Our~~CPS ~~primary~~possesses ~~material~~significant ~~solution~~proprietary isexpertise in metal matrix composites (MMCs)~~. We design~~, ~~manufacture~~which ~~and~~are ~~sell~~ custom-engineered ~~MMC~~materials ~~components~~ that ~~improve~~combine ~~the~~metals and ceramics to deliver superior performance ~~and~~properties. ~~reliability~~Due ofto ~~systems~~these inproperties, ~~the~~which ~~end~~include ~~markets~~improved ~~described~~thermal ~~above. The~~conductivity, ~~Company~~stiffness, isdurability, anlighter ~~important~~weight, ~~participant~~and inthermal expansion matching compared to conventional materials, the ~~growing~~Company's ~~movement~~products ~~towards~~are ~~alternative~~well ~~energy~~suited for applications with high performance demands. ~~The~~ ~~Company~~CPS’s ~~products~~components are used in high-speed trains, mass transit, ~~hybrid~~HVDC ~~and~~power ~~electric~~systems, ~~cars~~electrical infrastructure, ~~wind-turbines~~internet ~~for~~equipment, ~~electricity~~electric ~~generation~~and hybrid vehicles, ~~routers~~wind turbines, ~~switches~~satellites, and ~~fiber~~even ~~optic~~NASA ~~components~~Mars ~~for internet infrastructure~~rovers.

~~The~~Hermetic Packaging products, the Company’s ~~Hermetic~~second ~~Packaging~~product ~~products~~category, are used in high reliability communications and power modules for avionics and satellite applications, ~~such~~including ~~as the current generation of~~ GPS ~~satellites~~systems. The Company’s ~~also~~products ~~produces~~include 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~~The ~~its proprietary MMC technology, the~~ Company ~~also~~is ~~produces~~a ~~light-weight~~fully ~~armor.~~qualified ~~Due~~supplier to ~~its~~many ~~ability~~major toglobal ~~withstand~~electronics ~~extreme environments and high threat levels, CPS armor has been selected as the solution for crew served weapons stations on the U~~OEMs.~~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~~Using ~~are~~its aproprietary ~~class~~MMC oftechnology, ~~materials~~the ~~consisting~~Company ofalso aproduces ~~combination~~lightweight, ofhigh ~~metals~~performance ~~and ceramics~~armor. ~~Compared~~ Due to ~~conventional~~its ~~materials,~~ability ~~MMCs~~to ~~provide~~withstand ~~superior~~extreme ~~thermal~~environments ~~conductivity,~~and ~~improved~~high ~~thermal~~threat ~~expansion matching~~levels, ~~greater~~the ~~stiffness~~Company's ~~and~~HybridTech ~~lighter~~Armor® ~~weight. This~~has ~~makes~~been ~~CPS~~selected ~~products~~as ~~very~~the ~~useful~~solution for ~~applications~~crew inserved ~~which~~weapons ~~there~~stations ison athe ~~high~~U.S. ~~cost~~Navy’s ofaircraft ~~failure~~carriers. ~~These~~Its ~~factors,~~light ~~in particular the lighter~~ weight ~~and~~also ~~durability,~~makes ~~are~~it ~~among~~an ~~the~~ideal ~~reasons~~solution ~~CPS~~for ~~parts~~aircraft ~~are~~and onother ~~the~~vehicles ~~last~~requiring ~~two~~a ~~Mars~~high ~~Rovers~~strength asto ~~well~~weight ~~as many satellites~~ratio.

CPS maintains a strong focus on research and development and is actively expanding its product portfolio. The Company's strategy is to drive sustained, profitable growth by developing and delivering advanced, high-performance material solutions to a ~~fully~~diversified ~~qualified~~set ~~manufacturer~~of ~~for~~global, high-growth end markets. The Company focuses on applications where performance and reliability are critical, and where the cost of failure is often high. While many of these new product initiatives involve the ~~world’s~~utilization ~~largest~~of ~~electronics~~our ~~OEMs~~current materials science and manufacturing expertise, many of them address large markets which we have not historically served.

InThe ~~2022~~Company ~~CPS~~believes ~~resumed~~ its ~~participation~~diversified inend-market ~~the~~strategy, ~~Small~~emphasis ~~Business~~on ~~Innovation~~innovation, ~~Research~~growing ~~(SBIR)~~portfolio ~~and~~of ~~Small~~market-driven ~~Business~~intellectual ~~Technology~~property ~~Transfer~~ (~~STTR~~IP) ~~programs~~, ~~sponsored~~and byreputation ~~the~~for USquality ~~Small~~and ~~Business~~reliability ~~Administration.~~position ~~These~~the ~~programs~~Company ~~provide funding~~ for ~~innovative~~sustained ~~research~~growth ~~and~~in ~~development~~high-value, totechnology-driven ~~domestic~~markets. ~~small~~Central ~~businesses,~~to ~~who~~this ~~maintain~~strategy ~~certain~~is ~~intellectual~~leveraging ~~property~~CPS’s ~~rights.~~proprietary ~~The~~MMC technologies ~~developed~~and byspecialized ~~the~~manufacturing ~~Company~~processes ~~during~~(Quickset ~~these~~and ~~programs~~QuickCast) ~~will~~to ~~further~~create ~~enhance~~customized ~~CPS’~~products ~~intellectual~~that ~~property~~are ~~portfolio.~~difficult Infor ~~2024~~competitors to replicate. CPS ~~received~~emphasizes ~~funding~~technical ~~for~~differentiation, ~~its~~quality, ~~first~~and ~~two~~reliability ~~Phase~~to IImaintain ~~SBIRs~~strong ~~confirming~~customer ~~its~~relationships ~~decision~~with toleading ~~participate~~OEMs in ~~these~~electronics, ~~programs~~transportation, ~~and~~energy, ~~further~~aerospace, ~~advancing~~and ~~this portfolio~~defense.

~~CPS~~In ~~management~~2022 ~~believes~~the ~~our~~Company ~~business~~resumed ~~model~~participation ofin ~~providing~~U.S. ~~advanced~~government ~~material~~Small ~~solutions~~Business toInnovation aResearch ~~portfolio~~(SBIR) ofand ~~high~~Small ~~growth~~Business ~~end~~Technology ~~markets~~Transfer in(STTR) ~~various~~programs, ~~stages~~through ofwhich ~~the~~it ~~technology~~has ~~adoption~~now ~~lifecycle~~secured ~~provides~~multiple ~~CPS~~Phase ~~with~~I ~~the~~and ~~opportunity~~Phase ~~for~~II ~~sustained~~awards, ~~growth~~strengthening ~~and~~its aintellectual ~~diversified~~property ~~customer base~~portfolio. WeThese ~~have~~programs aprovide ~~number~~funding ~~of significant production orders generating revenue, but also have many significant opportunities~~ for ~~new~~innovative ~~products~~research ~~which~~and ~~could~~development ~~lead~~ to ~~significant~~domestic ~~production~~small ~~orders~~businesses, inwho ~~new~~maintain ~~product~~certain ~~lines~~intellectual inproperty ~~the future~~rights. ~~Some~~In of2024 ~~these~~CPS ~~opportunities~~received ~~may~~funding ~~come~~for toits ~~fruition~~first astwo ~~early~~Phase asII ~~the~~SBIRs. ~~next~~In ~~year or two~~2025, ~~while~~CPS ~~others~~received ~~will~~funding ~~take~~for ~~longer~~its tothird ~~develop.~~Phase WeII ~~believe~~program weas ~~have~~well ~~validated this model~~ as wefive ~~are~~new ~~now~~phase ~~supplying~~I ~~customers at all stages of the technology adoption lifecycle~~SBIRs.

~~Our~~CPS ~~products~~management ~~are~~believes ~~manufactured~~our bybusiness ~~proprietary~~model ~~processes~~of providing advanced material solutions to a portfolio of high growth markets provides CPS with the opportunity for sustained growth and a diversified customer base. While we have ~~developed~~a ~~including~~number of ongoing production orders generating significant revenue, we also have many new product opportunities which could lead to significant production orders in new product lines in the ~~QuicksetTM~~future. ~~Injection~~Some ~~Molding~~of ~~Process~~these ~~(“Quickset~~opportunities ~~Process”)~~may ~~and~~come to fruition as early as the ~~QuickCastTM~~next ~~Pressure~~year ~~Infiltration~~or ~~Process~~two, ~~(“QuickCast~~while ~~Process”)~~others will take longer to develop.

~~CPS~~Operationally, ~~was~~the ~~incorporated~~Company intypically ~~Massachusetts~~follows ~~in 1984 as Ceramics Process Systems Corporation and reincorporated in Delaware in April 1987 through~~ a ~~merger into a wholly~~build-~~owned~~to-order, ~~Delaware~~highly ~~subsidiary~~customized ~~organized~~manufacturing ~~for~~model, ~~purposes~~supported ofby ~~the~~ongoing ~~reincorporation.~~investments Inin ~~July~~employee ~~1987~~training, ~~CPS~~automation, ~~completed~~and ~~our~~process ~~initial public offering of 1~~efficiency.5 ~~million~~CPS ~~shares~~also ofemphasizes ~~our~~regulatory ~~Common~~compliance, ~~Stock.~~cybersecurity, Inand ~~March~~export ~~2007,~~controls ~~the~~to ~~Company~~support ~~changed~~ its ~~name~~growing ~~from~~presence ~~Ceramics~~in ~~Process~~defense- ~~Systems~~and ~~Corporation~~aerospace-related ~~to CPS Technologies Corp~~markets.

Overall, CPS’s ~~website~~strategy is ~~http://www~~to combine advanced materials science, proprietary processes, disciplined operations, and targeted investment in product development to build a diversified, defensible business positioned for long-term growth in demanding, technology-driven markets.~~cpstechnologysolutions.com.~~

~~Overview~~In 2025, our three largest customers accounted for 39%, 13%, and 12% of ~~Markets~~revenues, respectively. In 2025, approximately 81% of our revenues were derived from commercial applications and ~~Products~~19% from defense-related applications.

~~Electronics~~CPS’s ~~Markets~~website ~~Overview~~is http://www.cpstechnologysolutions.com.

~~The~~Products 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.

InMetal ~~both~~Matrix ~~power processing and signal processing, end-user demand continues to motivate the electronics industry to produce products which:~~Composites

-We ~~operate~~design, ~~with~~manufacture ~~lower~~and ~~losses~~sell custom MMC components that improve the performance and~~/or~~ atreliability ~~higher~~of ~~speeds;~~ systems in applications that include high-speed ~~are~~trains, ~~smaller~~mass intransit, ~~size;~~hybrid and electric cars, energy infrastructure, High-Voltage ~~operate~~Direct ~~with~~Current ~~higher~~(HVDC) ~~reliability~~converter stations, wind-turbines, routers, switches and fiber optic components for internet infrastructure.

~~While~~MMCs ~~these~~are ~~three~~advanced ~~requirements~~materials ~~result~~formed inby ~~products~~combining ofmetals ~~ever-increasing~~with ~~performance~~ceramics. Compared to conventional materials, ~~they~~MMCs ~~also~~offer ~~create~~higher athermal ~~fundamental~~conductivity, ~~challenge~~better ~~for~~thermal ~~the~~expansion ~~designer~~matching, toincreased ~~manage~~stiffness, ~~the~~and ~~heat~~significantly ~~generated~~lower byweight. ~~the~~These ~~system~~advantages, ~~operating~~in atparticular ~~higher~~the ~~speeds~~lighter weight and~~/or~~ ~~higher~~durability, ~~power.~~are ~~Smaller~~why ~~assemblies~~CPS ~~further~~components ~~concentrate~~have been used on the ~~heat~~last ~~and~~two ~~increase~~Mars ~~the~~Rovers, ~~difficulty~~as ofwell ~~removing~~as iton numerous satellites.

~~This~~CPS ~~challenge~~produces isMMCs ~~found~~by atcombining ~~each~~a ~~level~~ceramic inand ana ~~electronic~~metal ~~assembly:~~ at the ~~integrated~~microstructural ~~circuit~~ level, ~~speeds~~creating ~~are~~materials ~~increasing~~that ~~and~~efficiently ~~line~~dissipate ~~widths~~heat ~~are~~while ~~decreasing;~~maintaining ata ~~the~~coefficient ~~circuit~~of ~~board~~thermal ~~level,~~expansion ~~higher~~closely ~~density~~matched ~~devices~~to ~~are~~surrounding ~~placed~~components. ~~closer~~This ~~together;~~compatibility ~~and~~is atcritical to the ~~system~~long-term ~~level~~reliability of the assembly. Typically, ~~higher~~the ~~density~~ceramic ~~circuit~~is ~~boards~~silicon ~~are~~carbide ~~being~~(SiC) ~~assembled~~and ~~closer~~the ~~together.~~metal ~~Silicon~~is ~~carbide~~aluminum ~~chips~~(Al), ~~are~~resulting ~~slowly~~in ~~replacing~~an aluminum silicon ~~chips~~carbide ~~due~~(AlSiC) tocomposite. ~~their~~By ~~higher~~adjusting ~~efficiency.~~the ~~Silicon~~SiC-to-aluminum ~~carbide~~ratio, ~~chips~~CPS ~~run~~can attailor ~~higher~~the ~~temperatures~~thermal ~~than~~expansion ~~silicon~~of ~~chips,~~AlSiC ~~furthering~~components to meet the ~~need~~requirements ~~for~~of ~~proper~~each ~~thermal~~customer’s ~~management~~application.

We provide baseplates and heat spreaders on which power semiconductors are mounted to produce modules for motor control. The ~~designer~~power ~~must~~semiconductors ~~resolve~~are ~~the~~typically ~~thermal~~Insulated ~~management~~Gate ~~issues~~Bipolar Transistor, or ~~the~~IGBTs. ~~system~~Our ~~will~~MMC ~~fail.~~baseplates ~~For~~have ~~every~~sufficient 10thermal ~~degree~~conductivity ~~Celsius~~to ~~rise~~enable inremoval ~~temperature~~of ~~above~~heat through the baseplate and have a ~~threshold~~thermal ~~level,~~expansion rate sufficiently similar to the ~~reliability~~other ofcomponents anin ~~integrated~~the ~~circuit~~assembly isto ~~decreased~~ensure byreliability ~~approximately~~over ~~half.~~time Inas ~~addition,~~the ~~heat~~assembly ~~usually~~thermally ~~causes~~cycles. ~~changes~~We inbelieve ~~parameters~~this ~~which~~market ~~degrade~~will continue to grow as the ~~performance~~use of ~~both~~power ~~active~~modules penetrates additional motor applications, and ~~passive~~as ~~electronic~~electric ~~components~~motors themselves penetrate new applications such as hybrid and electric vehicles and HVDC converter stations.

ToCPS ~~resolve~~produces ~~thermal~~products ~~management~~made ~~issues,~~of ~~the~~AlSiC ~~designer~~in ~~is primarily concerned with two properties of~~ the ~~materials~~shapes ~~which~~and ~~comprise~~configurations ~~the~~required ~~system:~~for 1)each ~~thermal conductivity~~application, ~~which~~for ~~is the rate at which heat moves through materials~~example, ~~and~~in 2)the ~~thermal~~form ~~expansion rate (Coefficient~~ of ~~Thermal~~baseplates, ~~Expansion~~lids, orsubstrates, ~~CTE)~~housings, ~~which~~etc. isEvery ~~the~~product ~~rate~~is atmade ~~which~~to ~~materials~~a ~~expand~~customer’s ~~or contract as temperature changes~~specifications. The ~~designer~~CPS ~~must~~process ~~ensure~~technology ~~that~~allows ~~the~~most ~~temperature~~products ofto anbe ~~electronic~~made ~~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,~~net ~~delaminating~~shape, requiring little or ~~related~~no ~~causes~~final machining.

~~CPS~~Although ~~combines at~~ the ~~microstructural~~Company ~~level~~primarily amanufactures ~~ceramic~~MMC ~~with~~components acomprised ~~metal~~of toAlSiC, ~~produce~~its aproprietary ~~metal~~Quickset ~~matrix composite which has the thermal conductivity needed to remove heat,~~ and aQuickcast ~~thermal~~process ~~expansion~~technologies ~~rate~~can ~~which~~be isused ~~sufficiently close~~ to produce other ~~components~~MMCs ~~in the assembly~~ to ~~ensure~~meet ~~the~~market ~~assembly is reliable~~requirements. ~~Typically~~For ~~the ceramic is silicon carbide (SiC)~~example, ~~the~~CPS ~~metal~~combines is aluminum ~~(Al),~~with ~~and~~other ~~the~~ceramic ~~composite~~or ~~is aluminum silicon carbide (AlSiC), a~~ metal~~-matrix~~ ~~composite. CPS can adjust the thermal expansion rate of AlSiC~~ components tosuch ~~match~~as ~~the~~ceramic ~~specific~~fibers, ~~application~~tungsten byand ~~modifying~~boron ~~the amount of SiC compared to the amount of Al in the component~~carbide.

~~CPS~~An ~~produces~~important ~~products~~development ~~made~~in ofpower ~~AlSiC~~processing inis the ~~shapes~~emergence ~~and~~of ~~configurations~~wide-band ~~required~~gap ~~for each application~~semiconductors, ~~for~~particularly ~~example,~~SiC insemiconductors. SiC ~~the~~chips ~~form~~are ofmore ~~lids,~~efficient ~~substrates,~~than ~~housings,~~Si ~~etc.~~chips ~~Every~~and ~~product~~are isbeing ~~made~~used tomore afrequently ~~customer’s~~in ~~specifications~~power applications. ~~The~~Modules ~~CPS~~using ~~process~~SiC ~~technology~~chips ~~allows~~run ~~most~~at ~~products~~higher totemperatures, beincreasing ~~made~~the toneed ~~net~~for ~~shape~~improved thermal management, ~~requiring~~a ~~little~~need orwhich nothe ~~final~~Company's ~~machining~~products address.

~~The~~CPS’s ~~Company~~MMC ~~primarily~~products ~~manufactures~~enable ~~MMC~~higher ~~components~~system ~~comprised~~performance, ofimproved ~~AlSiC.~~energy ~~Nevertheless~~efficiency, ~~its~~and ~~proprietary~~enhanced ~~Quickset-~~reliability ~~Quickcast~~across ~~process~~a ~~technology~~broad ~~can~~range beof ~~used~~advanced toindustrial, ~~produce~~electronics, ~~other~~energy, ~~MMCs~~aerospace, toand ~~meet~~defense ~~market requirements~~applications. ~~For~~CPS’s ~~example,~~MMC ~~CPS~~products ~~combines~~are ~~aluminum~~targeted ~~with~~at ~~other~~customers ~~ceramic~~operating orin ~~metal~~high-performance, ~~components~~high-reliability industries where material properties such as ~~ceramic~~thermal ~~fibers,~~management ~~tungsten~~ and ~~boron~~durability ~~carbide~~are critical.

AnHermetic ~~important~~Packaging ~~development~~Products 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~~CPS’s ~~Market~~hermetic ~~Overview~~packaging products are designed for high-reliability electronic and power applications in aerospace, defense, space, telecommunications, and advanced electronics. These products leverage CPS’s materials science expertise and precision manufacturing capabilities to protect microelectronics from moisture, contaminants, and harsh operating environments.

~~Armor~~CPS’s ~~has~~products ~~traditionally~~support ~~been~~mission-critical ~~comprised~~systems ofwith ~~steel~~a ~~panels. As~~high ~~threat~~cost ~~levels have increased, the amount~~ of ~~steel~~failure. ~~required~~Extended toreliability, ~~provide~~effective ~~sufficient~~environmental ~~ballistic~~sealing, ~~protection has become unacceptably heavy~~ and ~~therefore~~superior ~~detrimental~~thermal toperformance aare ~~vehicle’s~~critical ~~performance. The~~product Uattributes.S. ~~military~~These ~~has~~products ~~increasingly~~are frequently used ~~ceramic~~for ~~armor~~space inapplications ~~weight~~such ~~sensitive~~as ~~applications. However~~satellites, ~~ceramic~~flight ~~armor~~applications ~~has~~such ~~several~~as ~~limitations,~~avionics ~~including~~and ~~limited~~undersea ~~multi-hit~~applications ~~capability. By~~such ~~embedding~~as ~~ceramic~~torpedoes, ~~armor~~submarines ~~tiles~~and incommunications abuoys. ~~metal~~The ~~matrix,~~Company ~~these~~also ~~problems~~produces ~~are~~housings ~~overcome;~~and ~~the~~heat ~~result~~spreaders isfor ~~armor that is light~~high-~~weight~~performance microprocessors, ~~has~~graphics ~~excellent~~processing ~~ballistic protection~~chips, and ~~environmental~~application-specific ~~durability~~integrated circuits.

~~The~~To ~~Company’s~~our ~~HybridTech~~knowledge, ~~Armor®~~CPS ~~panels~~is ~~are~~the ~~particularly~~only ~~well~~producer ~~suited~~of ~~for~~hermetic ~~extreme~~packages ~~environments~~with –AlSiC ~~the~~bases, ~~panels~~combining doour ~~not~~expertise ~~degrade~~ in ~~salt~~hermetic ~~spray~~package orproduction ~~extreme~~with ~~heat~~our expertise in MMC production. The ~~Company~~CPS ~~has~~AlSiC ~~produced~~hermetic ~~armor~~package ~~panel~~provides ~~strikefaces~~tremendous ~~for~~benefits ~~the~~in ~~U.S.~~terms ~~Navy~~of ~~aircraft~~reduced ~~carrier~~weight ~~fleet~~ and ~~expects~~CTE itmatching ~~will~~which beare extremely important for space-based programs. CPS hermetic packages are used in ~~other~~every ~~surface~~current ~~vessel~~generation GPS satellite, the Mars Perseverance rover as well as many other aerospace applications. There are even CPS parts on NASA’s New Horizons mission, currently well beyond Pluto and in the ~~future.~~Kuiper Belt!

~~Product~~We ~~Development~~sell ~~Overview~~primarily to major microelectronics systems houses in the U.S., 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.

~~Since~~HybridTech 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. Armor®

~~Our~~CPS’s ~~Phase~~armor IIproducts, ~~SBIR~~marketed ~~for~~under the USHybridTech ~~Navy~~Armor® ~~involves~~brand, ~~using~~utilize ~~our aluminum infiltration process with nitinol for use in thermal energy storage. Nitinol allows for significantly better storage than~~ the ~~Navy~~Company’s ~~current~~proprietary ~~solution.~~MMC ~~Similarly,~~technology ~~our~~to ~~Phase~~deliver IIlightweight, ~~SBIR~~high-strength ~~for~~protection ~~the~~capable ~~Department~~ of ~~Energy~~withstanding toextreme ~~create~~environments ~~radiation~~and ~~shielding~~advanced ~~for~~ballistic ~~the~~threats. ~~transportation~~Designed offor ~~nuclear~~defense ~~micro-reactors~~customers ~~involves~~operating ~~the~~across ~~infiltration~~diverse ~~of boron carbide~~ and ~~tungsten~~demanding ~~with~~conditions, ~~aluminum~~the toMMC-based ~~create~~armor aline ~~lightweight~~addresses ~~solution~~mission torequirements ~~this~~where ~~problem,~~reducing ~~allowing~~weight ~~for~~without ~~their~~compromising ~~safe~~protection ~~transportation~~is critical.

~~CPS~~Historically, ~~also~~armor ~~self-funds~~systems ahave ~~number~~relied ofon ~~product~~steel ~~development efforts~~panels. InAs ~~March~~ballistic ~~2024~~threat welevels ~~announced~~have ~~our worldwide~~increased, ~~exclusive~~the ~~licensing~~amount ~~agreement~~of ~~with~~steel ~~Triton~~required ~~Systems~~to ~~for~~achieve ~~their~~adequate ~~Fiber~~protection ~~Reinforced~~has ~~Aluminum~~become ~~(FRA).~~prohibitively ~~FRA~~heavy, isnegatively ~~stronger~~impacting ~~and~~platform ~~more~~performance. ~~durable~~While ~~than~~ceramic ~~neat~~armor ~~aluminum,~~has ~~especially~~been atadopted ~~high~~by ~~temperatures,~~the ~~at only a marginally higher weight~~U.S. ~~Target~~military ~~applications~~ for ~~FRA~~weight-sensitive ~~include helicopter bearing liners~~applications, ~~with~~it ~~FRA~~has ~~serving~~notable ~~as a replacement for much heavier steel~~limitations, ~~providing~~including areduced ~~lighter~~multi-hit ~~weight~~capability. ~~solution~~CPS’s ~~that~~MMC ~~allows~~technology ~~for~~overcomes ~~more~~these ~~cargo~~challenges ~~weight.~~by ~~While~~embedding ~~this~~ceramic ~~could~~armor ~~lead~~elements towithin ~~large~~a ~~production~~metal ~~orders to CPS~~matrix, itresulting ~~will~~in ~~likely~~a ~~take~~lightweight, ~~several~~durable ~~years~~armor ofsystem ~~testing~~with ~~before~~excellent ~~this~~ballistic ~~comes~~performance to(including ~~fruition.~~robust ~~Based~~multi-hit oncapability) ~~customer~~that ~~interest,~~is wewell ~~anticipate~~suited ~~other potential applications~~ for ~~this~~demanding ~~material,~~operational ~~which could result in a faster move into regular production~~environments.

WeHybridTech ~~continue~~Armor® tois ~~work~~suitable onfor ~~broadening~~a ~~our~~wide ~~armor~~range ~~offerings. The development~~ of ~~STANAG 6~~ ~~ballistic~~applications, ~~protection~~including ~~remains~~ground avehicles, ~~priority.~~naval Ifand ~~successful~~amphibious ~~this~~vessels, ~~could~~aircraft, ~~lead~~and tofixed ~~the~~installations. ~~incorporation~~Compared ofwith ~~CPS~~traditional armor ~~into ground vehicles. Similarly~~materials, weCPS’s ~~continue~~solutions toprovide ~~work~~superior onballistic ~~lightweight~~protection ~~armor~~at ~~for~~significantly ~~helicopter~~reduced ~~flooring~~weight, ~~which~~along ~~came~~with ~~out~~enhanced ofdurability ain ~~Phase~~harsh Ienvironments ~~SBIR~~such ~~funded~~as bysalt ~~the~~spray USand ~~Army~~extreme heat. ~~Although~~Armor ~~the~~panels USare ~~Army~~custom ~~did~~engineered ~~not~~to ~~allocate~~meet ~~any~~specific ~~Phase~~ballistic IIthreat ~~for~~levels ~~this~~and ~~program, due~~ to ~~interest~~integrate ~~from~~seamlessly ~~certain~~with ~~helicopter OEMs~~vehicle, ~~CPS has successfully performed ballistic testing on the flooring~~aircraft, ~~which~~or ~~was~~platform ~~not~~design ~~part of the funded Phase I effort~~requirements.

From 2021 through 2024, CPS ~~also~~manufactured ~~has~~armor apanel ~~number~~strikefaces offor ~~other~~the ~~product~~U.S. ~~development~~Navy’s ~~initiatives~~aircraft ~~which~~carrier ~~may~~fleet. orThese ~~may~~panels ~~not~~are ~~lead~~currently being installed on these ships, beginning with the USS Abraham Lincoln. The Company expects this technology to be adopted for additional ~~business~~surface vessel applications in the future.

~~Specific~~A ~~Markets~~new ~~and~~Phase ~~Products~~I program funded by the U.S. Navy in 2025 provides for the lightweighting of the U.S. Marine Corps Amphibious Combat Vehicle (ACV). CPS’s HybridTech armor solution offers a potential replacement for the steel panels currently used for ballistic protection on the ACV, which would provide significant weight reduction.

~~Motor~~Product ~~Controller~~Development ~~Applications (Insulated Gate Bipolar Transistor ("IGBT") Applications)~~

~~The~~CPS’s ~~electrification~~product ofdevelopment ~~the~~efforts ~~economy~~are –focused ~~particularly~~on ~~the~~leveraging ~~use~~its ofcore ~~electric~~materials ~~motors~~science expertise and ~~power~~proprietary ~~modules~~manufacturing technologies to ~~control~~address ~~electric~~clearly ~~motors~~defined ofcustomer ~~all~~requirements ~~sizes~~in ~~– is growing. This growth is the result of several factors including emerging~~ high-~~power~~growth ~~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~~markets. ~~Power~~Using ~~semiconductors~~this ~~are a significant portion of the cost of variable speed drives~~methodology, ~~and~~ the ~~cost~~Company ofis ~~the~~developing ~~module~~products ~~housing~~for ~~and~~new ~~thermal~~applications ~~management~~while ~~system~~strengthening ~~are~~its ~~also~~intellectual ~~significant;~~property ~~cost reductions of all these components are driving increased use of variable speed drives~~portfolio.

WeNew ~~provide~~initiatives ~~baseplates~~are ~~and~~typically ~~heat~~built ~~spreaders~~ on ~~which~~CPS’s ~~power~~established ~~semiconductors~~strengths, ~~are~~such ~~mounted~~as tothe ~~produce~~design ~~modules~~and ~~for~~manufacture ~~motor~~of ~~control.~~MMCs, ~~The~~enabling ~~power~~the ~~semiconductors~~Company ~~are~~to ~~typically~~reuse ~~IGBTs~~established ~~and~~processes ~~these~~while ~~applications~~expanding ~~are~~into ~~often~~new ~~referred~~markets. toThese asmaterials ~~IGBT~~can ~~applications.~~provide ~~Our~~desirable ~~MMC~~properties, ~~(AlSiC)~~including ~~baseplates~~low ~~have~~density, ~~sufficient~~high ~~thermal~~strength ~~conductivity~~and tostiffness, ~~enable~~low ~~removal~~coefficient of ~~heat through the baseplate and have a~~ thermal expansion, ~~rate~~and ~~sufficiently~~be ~~similar~~either tohighly ~~the~~conductive ~~other~~or ~~components in the assembly to ensure reliability over time as the assembly thermally cycles~~insulating. WeThese ~~believe~~properties ~~this~~allow ~~market~~MMCs ~~will continue~~ to ~~grow~~function asin ~~the~~thermal ~~use~~management ofapplications, ~~power~~as ~~modules~~lightweight ~~penetrates additional motor applications~~structures, and as ~~electric~~supports ~~motors~~that ~~themselves~~provide ~~penetrate~~high ~~new~~levels ~~applications~~of ~~such~~dimensional ~~as hybrid and electric vehicles~~stability.

~~Today~~CPS ~~our~~follows ~~primary~~a ~~products~~solution-driven process for ~~IGBT~~developing ~~applications~~new products, often involving close collaboration with the customer. New product ideas are ~~used~~typically based on well-defined customer requirements, often in ~~electric~~high-reliability, ~~trains~~mission-critical applications. Components often undergo rigorous testing to meet customer specifications. For example, ~~subway~~hermetic ~~cars~~packaging products receive specialized testing for challenging environments (e.g., ~~wind~~salt ~~turbines~~fog) ~~and~~while ~~hybrid~~armor ~~and~~products ~~electric~~are ~~vehicles~~tested for ballistic performance at specialized laboratories.

~~Major~~The ~~automobile~~vast ~~companies~~majority ~~around~~of ~~the~~CPS’s ~~world~~solutions are ~~introducing~~internally ~~hybrid~~developed, ~~electric~~However, ~~vehicles~~in ~~(HEVs)~~March ~~and~~2024 ~~electric~~the ~~vehicles~~Company ~~(EVs)~~announced atit anhad ~~increasing~~entered ~~rate.~~into ~~There~~a ~~are~~worldwide, ~~many~~exclusive ~~varieties~~licensing ofagreement ~~HEVs~~with ~~and~~Triton ~~EVs~~Systems for their Fiber Reinforced Aluminum (FRA) solution. FRA, ~~but~~which ~~all~~CPS ~~HEVs~~is marketing as AlMax, is stronger and ~~EVs~~more ~~contain~~durable anthan ~~electric~~neat ~~motor~~aluminum, ~~and~~especially ~~one~~at orhigh ~~more~~temperatures, ~~motor~~at ~~controller~~only ~~modules~~a marginally higher weight. ~~The~~Target ~~Company~~applications ~~provides~~include ~~baseplates~~helicopter onbearing ~~which~~liners, ~~motor~~with ~~controller~~FRA ~~modules~~serving ~~are~~as ~~assembled;~~a ~~these~~replacement ~~baseplates~~for ~~are~~much heavier steel, providing a lighter weight ~~and~~solution. ~~provide~~While ~~greater~~this ~~reliability~~could ~~than~~lead ~~baseplates~~to ~~made~~large ~~from~~production ~~more~~orders ~~conventional~~for ~~materials~~CPS, ~~typically~~it ~~copper~~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.

~~Copper~~The ~~is less expensive than the~~ Company’s ~~MMC~~pipeline ~~solution,~~management ~~but~~approach ~~its~~allocates ~~rate~~resources ofto ~~thermal~~projects ~~expansion is significantly different than~~ that ofhave ~~the~~strong ~~silicon~~technical ~~semiconductors~~differentiation ~~mounted~~and ~~to the baseplates. In low voltage applications, this is not~~ a ~~problem~~high aspotential ~~the~~for ~~heat being generated is not enough to degrade the reliability of the power module~~commercialization. AsThe ~~voltage~~Company ~~levels~~seeks ~~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~~Broaden ~~interest~~its isproduct 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.portfolio

~~Hermetic~~● ~~Packages~~Strengthen its competitive advantage through technical differentiation

~~Hermetic~~● ~~packaging~~Develop ~~products~~unique ~~are primarily used for space applications such as satellites~~materials, ~~flight applications such as avionics and undersea applications such as torpedoes~~designs, ~~submarines~~ and ~~communications~~manufacturing ~~buoys.~~processes ~~Hermetic~~that ~~packages~~create ~~allow~~defensible ~~the~~barriers ~~assembly~~to 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.entry

~~CPS~~● isExpand ~~the~~its ~~only~~engineering, ~~producer~~design, ofsimulation, ~~hermetic packages with AlSiC bases~~prototyping, ~~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~~testing 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.capabilities

~~Customers~~● Shorten internal development cycles

We● ~~sell~~Validate ~~primarily~~product toperformance ~~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~~meet ~~year~~established ~~period before purchasing production volumes.~~standards

InCurrent ~~2024,~~areas ~~our three largest customers accounted for 32%, 15%, and 11%~~ of ~~revenues,~~active ~~respectively.~~development ~~In 2024, approximately 70% of our revenues were derived from commercial applications and 30% from defense-related applications.~~include:

~~Availability~~● Injection molded alloys and ceramics: CPS has utilized Quickset Injection Molding as part of ~~Raw~~the ~~Materials~~fabrication process for AlSiC composites for decades. The process offers broad compatibility with most alloys (stainless steels, tungsten, nickel alloys, and others) and ceramics (silicon carbide, boron carbide, alumina, silicon nitride, and others). CPS is actively pursuing opportunities for fabricating these materials, offering an alternative to traditional injection molding. The CPS process results in larger, more complex, easier to sinter alloys and ceramics with demonstrated high volume capacity.

We● ~~use~~Infiltration aof ~~variety~~composites: ofCPS ~~raw~~utilizes ~~materials~~QuickCast ~~from~~Pressure ~~numerous~~Infiltration ~~domestic~~to ~~and~~convert ~~foreign~~porous ~~suppliers.~~silicon ~~These~~carbide ~~materials~~preforms ~~are~~to ~~primarily~~AlSiC composites. The same molten aluminum ~~ingots,~~infiltration ~~ceramic~~process ~~powders,~~can ~~chemicals~~be ~~and~~used ~~hermetic~~to ~~assembly~~fabricate ~~components~~other types of MMCs. ~~The~~CPS ~~raw~~is ~~materials~~actively wematuring ~~use~~and ~~are~~commercializing ~~available~~AlMax, ~~from~~a ~~domestic~~high ~~and~~strength ~~foreign~~aluminum ~~sources~~composite ~~and~~reinforced ~~none~~with isdiscontinuous ~~believed~~ceramic tofibers. beAdditional ~~scarce~~opportunities orinclude ~~restricted~~utilizing ~~for~~the ~~national~~process ~~security~~with ~~reasons. We~~reinforcements ~~use~~that noyield ~~conflict~~unique ~~metals~~properties such as radiation shielding (boron carbide and/or tungsten) and ultra-high strength (continuous ceramic fibers).

~~Patents~~● HybridTech Armor: These products have been successfully installed on U.S. Navy aircraft carriers. HybridTech is easily modified by altering ceramic fiber reinforcements, ceramic tile composition, and ~~Trade~~overall ~~Secrets~~panel thickness. CPS is actively engaged in developing alternate HybridTech designs to meet demand across platforms that demand both extremely low density armor solutions (aircraft) and heavy, high-threat situations (land vehicles).

AsSBIR ofand ~~December~~STTR 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.Programs

WeCPS ~~intend~~actively toparticipates ~~continue~~in tothe ~~apply~~SBIR ~~for~~(Small ~~domestic~~Business Innovation Research) and ~~foreign~~STTR ~~patent~~(Small ~~protection~~Business inTechnology ~~appropriate~~Transfer) ~~cases~~programs of the U.S. Ingovernment. ~~other~~Since ~~cases~~reengaging in these programs in 2022, wethe ~~believe~~Company wehas ~~are~~secured ~~better~~13 ~~served~~Phase byI ~~reliance~~or onPhase ~~trade~~II ~~secret~~awards, ~~protection.~~as Inof ~~all~~December ~~cases~~27, we2025, ~~seek~~funded ~~protection~~by ~~for~~either ~~our~~the ~~technological~~Department ~~developments~~of toDefense ~~preserve~~or ~~our~~the ~~competitive~~Department ~~position~~of Energy. These programs now support a significant portion of the Company’s new product development efforts.

~~Backlog~~The Company’s three active Phase II programs, as of December 27, 2025, are as follows: modular radiation shielding for nuclear applications (funded by the Department of Energy); the application of MMCs to thermal management for long range missiles (funded by the U.S. Navy); and ~~Contracts~~development of a controlled fragmentation tungsten warhead (funded by the U.S. Army).

~~Virtually~~SBIR ~~100%~~and ofSTTR ~~the~~contracts ~~Company's product sales~~ are ~~custom~~administered inby ~~that they are based on customers’ drawings and~~ the ~~large~~Small ~~majority~~Business ofAdministration ~~these~~to ~~sales~~promote ~~are~~domestic ~~"designed~~research ~~in"~~ and ~~sold~~development ~~over~~of ~~multiple~~innovative ~~years~~technologies. ~~Some~~The ~~large~~awards ~~customers~~fund ~~typically~~advanced ~~give~~research ~~the Company a non-binding forecast of demand for a one-year period~~ and ~~then~~development ~~negotiate~~(R&D) ainitiatives, ~~pricing~~reduce ~~agreement~~financial ~~with~~risk, ~~the Company valid for that one-year period. These~~ and ~~other~~contribute ~~customers typically issue purchase orders~~ to bethe ~~shipped~~expansion onof aCPS’s ~~particular~~intellectual ~~date,~~property ~~or to be drawn against and shipped under releases~~portfolio. ~~The~~CPS ~~Company~~is ~~has~~among a ~~backlog~~relatively ofsmall ~~$26~~number ~~million as~~ of ~~December~~publicly ~~28,~~traded ~~2024.~~companies ~~This~~that ~~backlog~~meet ~~consists~~the ofprogram’s ~~orders~~eligibility ~~received from customers which are~~requirements, ~~for~~including ~~the most part~~size, ~~scheduled~~ownership ~~to ship in 2025. Under certain circumstances~~structure, ~~customers~~and ~~may be able to cancel existing orders or extend the period over which orders may be shipped~~U.S. ~~Some~~operational ~~of these changes may be significant, which would reduce this backlog or extend the timing of these shipments~~presence.

Through SBIR and STTR funding, CPS is able to pursue research avenues that might not otherwise be possible, while retaining certain intellectual property rights. Technologies developed under these federal programs often transition into commercial product pipelines, strengthening the Company’s long term innovation and IP strategy.

The typical SBIR/STTR funding structure is as follows:

●

Phase I: Feasibility Study. Initial government funding to evaluate the technical merit, feasibility, and commercial potential of the solution proposed in response to a published need.

●

Phase II: Prototype Development. Funding for the development of prototypes, engineering models, and testing based to expand upon Phase I results. Enables the small business to refine products and prepare them for commercialization.

●

Phase III: Commercialization. No direct SBIR/STTR funding. The small business uses commercial or non-SBIR government funding to bring products to market. Successful Phase I/II projects often attract commercial interest or government contracts.

An important element of the SBIR/STTR program is the “Phase III mandate.” Federal agencies are required to grant non-competitive, follow-on contracts to small businesses for technology developed under Phase I and Phase II contracts, provided the work derives from or extends that earlier work. This provides a mechanism to commercialize technology without additional competition, enabling rapid procurement to satisfy government needs. To satisfy this mandate, federal agencies should, "to the greatest extent practicable," award Phase III contracts to the original Phase I/II awardee, bypassing the need for a separate, formal competition. There is no limit on the number, duration, or dollar value of Phase III awards. Additionally, although the Company must be a small business to receive Phase I or Phase II funding, they may have outgrown small business status by the time of the Phase III award. This directive ensures that the government can continue to access the promising technology which was developed with government funding.

Competition

WeCPS’s ~~have~~primary ~~developed~~competitor ~~and expect to continue to develop products~~ for aMMC ~~number~~baseplates ofis ~~different end markets~~Denka, ~~and~~a welarge ~~will~~Japanese ~~encounter~~chemical ~~competition~~company. ~~from~~Other ~~different~~potential ~~producers~~competitors ofinclude ~~MMCs,~~emerging ~~hermetic~~Chinese ~~packages,~~manufacturers ~~armor,~~offering ~~and~~lower-priced ~~other competing materials~~products.

WeFor ~~believe~~customers ~~that~~whose ~~the~~applications ~~principal~~are ~~competitive~~less ~~factors~~demanding, ina ~~our~~copper ~~end~~baseplate ~~markets~~is ~~today~~an ~~include~~attractive ~~technical~~alternative. ~~competence,~~Copper ~~product~~is ~~performance,~~less ~~quality,~~expensive ~~reliability,~~than ~~price,~~an ~~delivery~~AlSiC ~~performance~~solution, ~~corporate~~but ~~reputation,~~its ~~and~~rate ~~strength~~ of ~~sales~~thermal ~~and~~expansion ~~marketing~~is ~~resources.~~significantly Wedifferent ~~believe~~than ~~our~~that ~~proprietary~~of ~~processes, reputation, and~~ the ~~price~~silicon atsemiconductors ~~which~~mounted ~~we can offer products for sale will enable us~~ to ~~compete successfully in~~ the ~~many electronics, aerospace and defense end markets~~baseplates. ~~Our~~ ~~primary~~In ~~direct~~low ~~competitor~~voltage ~~in MMCs is Denka~~applications, a ~~large~~copper ~~chemical~~solution ~~company~~is ~~based~~sufficient inas ~~Japan. We~~the ~~also~~heat ~~see~~being ~~manufacturers~~generated inis ~~China~~not ~~seeking~~enough to ~~penetrate~~degrade ~~our~~the ~~markets.~~reliability Weof ~~believe~~the ~~they~~power ~~offer~~module. ~~their~~As ~~products~~voltage atlevels ~~lower~~and ~~prices,~~the ~~but~~heat ~~they~~related ~~have generally not yet been~~ to bethem ~~able~~go ~~to provide the delivery~~up, ~~performance,~~MMC ~~quality~~baseplates ~~and~~become ~~reliability required by~~ the ~~market~~preferred solution.

The market for ~~hermetic~~HPB ~~packages~~products is ~~much~~highly ~~more~~ fragmented. ~~There~~with ~~are~~multiple aspecialized ~~number of different hermetic package types, allowing different~~ manufacturers ~~to specialize in a particular area of the hermetic package market~~. ~~Some~~Key ~~of these companies are~~ competitors of CPS, ~~while~~include ~~others~~Egide, ~~focus~~Ametek, onand ~~product types not sold by CPS~~Qnnect. ~~CPS~~Due ~~continues~~ to ~~expand~~the ~~our~~nature ~~technical~~of ~~competence~~the ~~to increase our offerings in areas in which we previously did not participate. Based on these increased offerings~~business, ~~combined~~most ~~with~~of ~~our~~CPS’s ~~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~~market ~~include~~are ~~Egide, Ametek, and Qnnect (formerly Hermetic Solutions Group)~~domestic.

~~The~~CPS ~~company~~has ~~does~~no ~~not~~direct ~~currently~~competitors ~~have~~for ~~orders to produce~~ its ~~HybridTech~~armor ~~Armor® panels as the aircraft carrier order has been completed~~solution. WeRather ~~continue~~competition tois ~~work~~based ~~with~~on ~~Kinetic~~three ~~Protection~~factors, ~~the~~effectiveness, ~~Navy’s~~weight ~~prime~~and ~~contractor,~~price. toBy ~~get~~effectiveness ~~new~~we ~~orders~~mean ~~for~~not ~~other~~only ~~classes~~its ofability ~~Navy~~to ~~ships.~~stop Toballistic ~~our knowledge~~threats, webut doalso ~~not~~its ~~have~~durability ~~any~~in ~~direct~~the ~~competitors~~environment ~~who produce encapsulated armor. Our competition~~ in ~~this~~which ~~area~~it ~~consists~~will ofbe ~~alternatives~~deployed. toWe believe our ~~HybridTech~~armor ~~Armor®~~solution ~~which~~provides ~~involve~~significant ~~tradeoffs~~advantages regarding ~~cost,~~its ~~weight,~~effectiveness ~~anti-ballistic~~per ~~properties~~pound, ~~etc.~~hence Asthe ~~CPS~~reason ~~expands~~it ~~its~~was ~~armor~~selected ~~capabilities,~~by wethe ~~could~~US ~~begin~~Navy tofor ~~see~~the ~~more~~crew ~~direct~~served ~~competition~~weapons ~~from~~stations ~~more~~on ~~established~~its ~~armor~~air ~~producers~~craft carrier fleet.

~~Government~~Raw ~~Regulation~~Materials

We ~~produce~~use ~~non-nuclear,~~a ~~non-medical~~variety ~~hazardous waste in our development and manufacturing operations. The disposal~~ of ~~such~~raw ~~waste~~materials isfrom ~~governed~~numerous bydomestic ~~state~~ and ~~federal~~foreign ~~regulations~~suppliers. ~~Various~~These ~~customers,~~materials ~~vendors,~~are ~~and~~primarily ~~collaborative~~aluminum ~~development~~ingots, ~~agreement~~ceramic ~~partners of CPS may reside abroad~~powders, ~~thereby~~chemicals ~~possibly requiring export~~ and ~~import~~hermetic byassembly ~~CPS~~components. None of the raw materials, ~~intermediate~~we ~~products,~~use ~~and~~is ~~finished~~believed ~~products,~~to asbe ~~well~~scarce asor ~~potential~~restricted ~~technology~~for ~~transfer~~national ~~abroad~~security ~~under collaborative development agreements~~reasons. ~~These~~We ~~types~~use ofno ~~activities~~conflict ~~are regulated by bureaus within the Departments of Commerce, State and Treasury~~metals.

Sales, Marketing and Order Backlog

CPS’s go-to-market strategy leverages its proprietary solutions to address well-defined customer requirements. CPS primarily sells custom, high-reliability products to OEMs in various markets. The sales effort emphasizes key attributes for a given market, such as technical performance, reliability, and energy efficiency. The Company targets customers at all stages of the technology adoption lifecycle, from early-stage innovators to large, established OEMs. Sales efforts include direct engagement with engineers, procurement teams, and program managers to establish clearly defined requirements.

In its marketing efforts, the Company leverages industry reputation, technical competence, and successful past projects to demonstrate credibility. Long-standing relationships with major OEMS and federally funded research programs serve as valuable indicators of technical capability. Marketing emphasizes performance, quality, and reliability as critical product differentiators.

The majority 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 for that 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 27, 2025. This backlog consists of orders received from customers which are, for the most part, scheduled to ship in 2026. Under certain circumstances, customers may be able to cancel existing orders or extend the period over which orders are shipped. Some of these changes may be significant, which would reduce this backlog or extend the timing of these shipments.

Intellectual Property

CPS’s intellectual property consists primarily of proprietary processes and technical know-how. Some of this intellectual property is protected by the filing and maintenance of patents, both domestically and internationally. 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.

As of December 27, 2025, the Company had 8 United States patents. In addition, the Company had several international patents covering the same subject matter as the U.S. patents. CPS has also applied for patent protection for its nuclear shielding solution. We intend to continue to apply for domestic and foreign patent protection in appropriate cases.

The Company’s intellectual property portfolio provides competitive differentiation, protects innovation, and supports commercialization. Key proprietary manufacturing processes include the Company's Quickset™ Injection Molding Process (for precision MMC components with superior thermal and structural performance) and QuickCast™ Pressure Infiltration Process (for complex MMC parts with uniform properties and high strength-to-weight ratios). Proprietary processes such as these allow CPS to offer unique solutions that are difficult for competitors to replicate. Ongoing R&D, including funded SBIR/STTR contracts, helps enhance the Company's IP portfolio, supporting new product development and potential expansion into new markets.

Regulatory and Environmental Matters

Regulatory Compliance

CPS operates in industries subject to aerospace, defense, electronics, and international trade regulations. Certain activities, such as the import/export of raw materials, intermediate products, and finished goods, may require compliance with U.S. Departments of Commerce, State, and Treasury regulations. Work in the aerospace and defense sector also subjects CPS to government requirements for handling controlled unclassified information (CUI); more information about this is provided in the cybersecurity section of this document.

Environmental Compliance

The Company produces non-nuclear, non-medical hazardous waste in its R&D and manufacturing operations. Disposal of this waste is governed by federal and state environmental regulations. CPS actively manages hazardous materials and byproducts to ensure compliance with all applicable laws and minimize environmental impact.

Employees

As of December 2827, ~~2024~~2025, we had 92117 permanent full-time employees. 82107 were engaged in manufacturing and engineering and 10 in sales and administration, including finance, human resources and general management. We also have approximately 4833 manufacturing ~~people~~personnel ~~working~~who ~~with~~are usemployed through temporary employment agencies. During ~~2024~~2025, the Company continued its efforts to increase factory efficiency both in terms of employee training as well as increased automation.

None of our employees isare covered by a collective bargaining agreement. We consider our relations with our employees to be excellent.

Item 1A. Risk Factors.

~~The~~An investment in our common stock involves significant risks. ~~set~~The ~~forth~~following risk factors should be read together with the other information included in this report, including our financial statements and related notes. The risks described below may not be the only ~~risk~~risks ~~factors~~that ~~relating~~we toface. ~~the~~Additional ~~Company.~~risks ~~Any~~and uncertainties that we are unaware of, ~~these~~or that we currently consider immaterial, may also become important factors that could adversely affect our business, ~~many~~financial condition, results of ~~which~~operations, liquidity, or future prospects. Many of these risks are beyond our control, and could materially and adversely ~~affect~~impact our business, financial condition, operating results, cash flow, and stock price.

WeOur ~~have~~customer abase is highly concentrated, ~~customer~~and ~~base~~any sosignificant ~~that~~ changes in ordering patterns, delays, or order cancellations could ~~have~~materially aand ~~material~~adversely ~~adverse~~affect ~~effect on~~ our business and results of operations.

~~Three~~In 2025, three customers accounted for 58approximately 64% of our revenue, incompared ~~2024~~to ~~and 60~~58% ~~of revenue~~ in ~~2023~~2024. WeWhile ~~believe~~we ~~that~~maintain ~~our~~positive relationships with these customers, ~~are~~which ~~positive~~we ~~and~~believe may ~~provide~~support ~~us with~~ ongoing ~~continuous~~business sustainability, ~~for~~the ~~years~~loss toof ~~come.~~any ~~However, a~~ large customer, ifcould ~~lost, would~~ be difficult to replace,. ~~and~~Our ~~our~~ inability to doreplace sosignificant customer business 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~~We ~~lengthy~~expect that a relatively small number of customers will continue to account for a substantial portion of our business. The composition of our customer base and ~~variable~~the volume of sales ~~cycle makes it~~to ~~difficult~~any single customer may vary significantly from quarter to ~~predict~~quarter and year to year. If any of our significant customers reduce, delay, or cancel orders, we may not be able to replace the lost business in a timely manner or at all, potentially materially affecting our financial results. Additionally, major customers may seek, and occasionally receive, pricing, payment, or other commercial terms that are less favorable to us, which could negatively impact our competitive position and profitability.

~~The~~Our ~~sales cycle for our products is often~~ lengthy, ~~ranging~~and ~~from~~variable 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~~it ~~the volume and timing of sales~~ difficult ~~and~~to ~~raises~~accurately ~~additional~~forecast ~~risks~~financial ~~that customers may cancel or delay introduction of their end-products into the marketplace, thus affecting our demand~~results. ~~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~~The asales ~~significant~~cycle ~~portion~~for our products is often prolonged, ranging from several months to several years. Prospective customers typically conduct extensive evaluations of our ~~operating~~products ~~expenses~~relative isto ~~fixed~~their existing solutions. In many cases, wecustomers ~~may~~must ~~incur~~also ~~substantial~~redesign ~~expense~~other ~~before~~components weof ~~earn~~their ~~associated~~end ~~revenue~~products to fully realize the benefits of our offerings. IfAs ~~customer~~a ~~cancellations~~result, ~~occur~~the extended sales cycle makes it difficult to predict the timing and volume of sales and increases the risk that customers may delay or cancel the launch of their end products, ~~they~~which could ~~result~~adversely inaffect ~~the~~demand ~~loss~~for our products. The duration of ~~anticipated~~the sales ~~without~~cycle ~~allowing~~varies usbased ~~sufficient~~on ~~time~~the tosize ~~reduce~~and ~~our~~complexity ~~operating~~of ~~expenses~~the project and the level of evaluation required by the customer.

Fluctuations in foreign exchange rates ~~can~~could negatively ~~impact~~affect our ~~ability~~competitiveness ~~to compete~~ against foreign -based competitors.

Several of our major competitors are located outside of the United States. ~~The~~ ~~relative~~Changes ~~strength~~in the value of the U.S. dollar ~~compared~~relative to ~~such~~these competitors’ ~~respective~~ local currencies ~~makes~~can make our products more expensive tofor ~~our~~ customers ~~relative~~compared to ~~our~~competing ~~competitors’ prices~~products. ~~Such~~ ~~circumstances~~To ~~could~~maintain ~~result~~or ingrow aour ~~reduction~~business, inwe ~~product~~may ~~pricing~~need ~~(and profitability) in order~~ to ~~maintain~~reduce orproduct ~~grow~~pricing, ~~our~~which ~~current~~could ~~levels~~negatively ofimpact ~~business~~profitability. If we are unable or unwilling to ~~reduce~~adjust ~~pricing~~prices ~~of our products to the level necessary to maintain current business levels~~sufficiently, we could ~~see~~experience ana ~~overall~~ reduction in overall revenue.

~~Our~~We ~~dependence~~rely on outside vendors tofor ~~perform~~certain ~~particular~~ steps in our manufacturing process, ~~could~~and ~~negatively~~any ~~impact~~inability usor ~~should~~unwillingness ~~those~~of these vendors ~~be unable or unwilling~~ to provide ~~such~~services ~~service~~ at a reasonable cost could negatively affect our business.

~~Several~~Some of our major customers require that we use only ~~vendors~~ customer-approved byvendors ~~them~~ for ~~certain~~specific manufacturing steps, typically plating, ~~of our manufacturing process~~ before the finished product can be shipped ~~to the customer~~ and ~~recognized as~~ revenue recognized. In ~~some~~certain cases, these vendors are sole -sourced, ~~i.e.,~~meaning only one vendor is ~~the only vendor~~ approved for that process. If ~~that~~a sole-sourced vendor raises their ~~price to us~~prices, we may ~~not~~ be ~~able~~unable to pass ~~that~~the increase on to our customer, ~~eroding~~which would erode our margins. IfEven if we ~~are~~can ~~able to~~ pass along ~~these~~the ~~increases~~increase, ~~that~~higher costs could ~~negatively~~reduce ~~impact our~~ sales volumes if ~~our~~the customer shifts some ~~of their~~ purchases to a lower -priced ~~competitor~~competitors. IfAdditionally, if a sole -sourced vendor iscannot ~~unable to~~ process our ~~product~~products ~~fast~~quickly enough to meet ~~our~~ customer’s demand, or ifis ~~they~~unable doto ~~not~~ process ~~our~~them ~~product~~ at all, our expected revenue could be ~~negatively~~adversely ~~affected~~impacted, ~~despite~~even ~~our~~if ~~ability~~we tohave ~~produce~~sufficient ~~enough~~internal toproduction ~~meet that demand~~capacity.

Our success isdepends ~~highly~~heavily ~~dependent~~ on ~~managerial~~the contributions of key ~~individuals~~executives and employees, and we may be unable to retain ~~these~~them ~~individuals~~ or recruit ~~others~~suitable replacements.

We ~~depend~~rely on ~~our~~ senior executives, ~~and certain~~ key managers, asand ~~well~~specialized aspersonnel in engineering, research and development, sales, marketing, and manufacturing ~~personnel,~~ who are critical to our business. ~~While~~Although wesome executives have employment agreements ~~with certain executives~~, none ~~of these agreements would~~ prevent ~~any~~them ~~such person~~ from leaving the Company. ~~Furthermore,~~Larger ~~larger~~ competitors may ~~be able to~~ offer more ~~generous~~attractive compensation ~~packages to our executives and key employees~~, ~~and~~creating ~~therefore~~a we risk of losing key personnel ~~to those competitors~~. IfLosing wesuch ~~were to lose the services of any of our key personnel~~individuals, or iffailing ~~we fail~~ to attract and train qualified ~~personnel~~employees, ~~our engineering, product development, manufacturing and sales efforts~~ could benegatively ~~slowed.~~impact ~~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~~efforts.

WeOur ~~may~~MMC ~~also~~business ~~incur~~is ~~increased~~niche, ~~operating~~with ~~expenses~~few competitors located within the U.S., making it essential to develop key engineering and production talent internally. Experienced employees can be ~~required~~difficult to ~~divert~~replace, ~~the~~particularly ~~attention~~skilled ofengineers ~~our~~with ~~senior~~the ~~executives~~qualifications necessary to ~~search~~support ~~for~~our ~~replacements~~growth strategy. ~~The~~Our ~~integration~~success ofdepends ~~any~~on ~~new~~our ability to identify, hire, train, and retain qualified engineering personnel, ~~could~~including ~~disrupt~~product development, materials, and manufacturing engineers who work with our ~~ongoing~~sales ~~operations~~force to qualify new opportunities, execute orders, and demonstrate our products.

~~Business~~Additionally, orlosing ~~economic~~key ~~disruptions~~personnel ormay ~~global~~increase ~~health~~operating ~~concerns~~expenses and require senior executives to focus on recruiting, while the integration of new personnel could ~~seriously~~temporarily ~~harm~~disrupt ~~our~~ongoing ~~business~~operations.

~~Broad-based~~The ~~business,~~Company’s ~~economic~~reliance ~~disruptions~~on oraging ~~global~~equipment ~~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~~capital-~~19)~~intensive ~~originated~~processes inmay ~~Wuhan,~~require ~~China,~~significant ~~and~~ongoing ~~spread~~investment ~~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~~expose ~~ripple~~it ~~effects~~ to ~~businesses~~operational 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~~risks.

~~Changes~~The inCompany’s ~~trade~~operations ~~policy~~depend on specialized equipment and facilities, some of which may be aging or nearing the end of their useful lives. As equipment ages, the risk of breakdowns, unplanned downtime, safety incidents, and reduced efficiency increases, which could ~~seriously~~disrupt ~~impact~~operations ~~our~~and ~~business~~result in higher maintenance and repair costs.

~~Most~~Maintaining ofand ~~our~~upgrading ~~raw~~equipment ~~materials~~and ~~are~~facilities ~~domestically~~can ~~sourced~~require bysubstantial ~~CPS.~~capital ~~However, some of those raw materials may originate in countries other than the United States~~expenditures. ~~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~~need ~~be able~~ to ~~pass~~make ~~these~~significant ~~cost~~investments ~~increases~~to onmodernize tooperations, ~~our~~comply ~~customers~~with inregulatory aor ~~timely~~environmental ~~manner~~requirements, ~~therefore~~or ~~eroding~~remain ~~our margins~~competitive. AIf ~~significant~~we ~~portion~~are ofunable ~~our business is exported~~ to ~~customers~~fund ~~outside~~these ~~the~~investments ~~United~~through ~~States.~~cash ~~Should~~flows, ~~their~~financing, ~~countries~~or ~~impose~~other ~~tariffs~~sources on USacceptable ~~goods~~terms, ~~including ours, we could find ourselves at a competitive disadvantage in relation to~~ our ~~competitors,~~operational ~~some~~performance ofand ~~whom~~long-term ~~are~~growth ~~located~~prospects ~~outside~~could ~~the~~be ~~United~~adversely ~~States~~affected.

~~Acquisitions~~We ~~can~~are ~~result~~considering inmoving anto ~~increase~~a inlarger ~~our~~facility, ~~operating~~and ~~costs,~~the ~~divert~~relocation ~~management’s~~and ~~attention~~transition ~~away~~process ~~from~~could ~~other~~be ~~operational~~costly, ~~matters~~disruptive to our operations, and ~~expose~~may usadversely affect our ability to ~~other~~manufacture ~~associated~~products ~~risks~~and achieve expected financial and operational benefits, which could hurt our short-term and long-term results.

~~From~~We ~~time~~are considering a move to ~~time,~~a welarger ~~evaluate~~facility ~~potential~~near ~~acquisitions~~our ofcurrent ~~businesses~~location ~~and~~in ~~technologies,~~order to support anticipated growth and weimprove ~~consider~~our ~~targeted~~operational ~~acquisitions~~capabilities. ~~that~~The ~~expand~~actual costs associated with the relocation may exceed our ~~core~~estimates. ~~competencies~~These tocosts bemay aninclude ~~important~~build-out ~~part~~expenses, ofequipment ~~our~~relocation, ~~future~~infrastructure ~~growth~~upgrades, ~~strategy. We~~and ~~expect~~other ~~that~~unanticipated expenditures, any ~~acquisitions~~ of ~~other~~which ~~businesses~~could ~~will~~place ~~have~~additional ~~synergistic~~strain ~~products,~~on ~~services~~our financial resources and ~~technologies~~adversely affect our results of operations.

~~Acquisitions~~The ~~involve~~relocation ~~numerous~~process ~~risks~~could disrupt our manufacturing operations and business activities. During the transition period, ~~which~~we ~~include~~may ~~but~~experience ~~are~~temporary ~~not~~reductions ~~limited~~in production capacity, inefficiencies, delays in order fulfillment, quality issues, or increased scrap and rework as equipment is moved, installed, calibrated, and validated. We may also be required to: demonstrate to customers that we can successfully manufacture products at the new facility. Any delays or difficulties in qualifying the new facility or manufacturing processes could negatively impact customer confidence or result in lost or delayed orders.

●In ~~difficulties~~addition, ~~and increased costs in connection with~~ the ~~integration~~anticipated ofbenefits ~~the personnel, operations, technologies, services and products~~ of the ~~acquired~~larger ~~companies~~facility ~~into~~may ~~our~~not ~~existing~~be ~~facilities~~realized ~~and~~on ~~operations; ● diversion of management’s attention from other operational matters; ● failure to commercialize~~ the ~~acquired~~timeline ~~technology;~~we ●expect, ~~the~~or ~~potential~~at ~~loss~~all. ofIf ~~key employees of~~ the ~~acquired~~revenue ~~companies;~~growth ~~● lack of synergy,~~ or ~~inability~~demand tolevels ~~realize~~that ~~expected~~underlie ~~synergies, resulting from~~ the ~~acquisitions;~~need ●for ~~the~~a ~~risk~~larger ~~that~~facility ~~the~~do ~~issuance~~not ~~of our common stock~~materialize, ifwe ~~any, in an acquisition or merger~~ could be ~~dilutive~~left towith ~~our~~higher ~~shareholders;~~fixed ●operating ~~the~~costs ~~inability~~and toreduced ~~obtain~~operating ~~and~~margins ~~protect~~without ~~intellectual~~a ~~property~~corresponding ~~rights~~increase in ~~key~~revenue. ~~technologies;~~The ~~and~~move ●could ~~the~~also ~~acquired~~divert ~~assets~~management’s ~~becoming~~attention ~~impaired~~and asresources afrom ~~result~~other ofstrategic ~~technological advancements~~ or ~~worse-than-expected~~operational ~~performance of the acquired assets~~priorities.

~~The~~Any ~~conditions~~ of ~~the~~these ~~markets~~factors, inindividually ~~which~~or wein ~~operate~~combination, ~~are~~could ~~volatile.~~materially ~~The~~and ~~demand~~adversely ~~for~~affect our ~~products~~business, ~~and~~financial ~~the~~condition, ~~profitability~~results of ~~our~~operations, ~~products~~and ~~can~~cash ~~change~~flows, ~~significantly~~particularly ~~from~~in ~~period~~the toperiods ~~period as~~immediately afollowing ~~result~~the ~~of numerous factors~~relocation.

~~The~~Fluctuations ~~industries~~ in ~~which~~the weprices ~~operate~~and ~~are~~availability ~~characterized~~of byraw ~~ongoing~~materials ~~changes~~may adversely affect margins, ~~including:~~operating results, and cash flows.

●We ~~the~~rely ~~availability~~on ofvarious ~~funds~~raw ~~for~~materials ~~research~~ and ~~development;~~components ●whose ~~global~~prices ~~and~~may ~~regional~~be ~~economic~~subject to volatility due to market conditions;, ●geopolitical ~~governmental~~events, ~~budgetary~~supply disruptions, and ~~political~~broader ~~constraints;~~macroeconomic ~~and~~factors. ●Significant ~~changes~~or sustained increases in ~~technology~~raw material costs could increase production expenses and negatively impact profitability, particularly if we are unable to pass these increased costs on to customers through pricing adjustments.

~~For~~Additionally, ~~these~~shortages or delays in the supply of critical raw materials could disrupt production schedules and ~~other~~increase ~~reasons~~lead times. Efforts to mitigate these risks, ~~our~~such ~~results~~as oflong-term ~~operations~~supply ~~for~~agreements ~~past~~or ~~periods~~the sourcing of alternative materials, may not ~~necessarily~~ be ~~indicative~~fully ofeffective ~~future~~or ~~operating~~may ~~results~~introduce additional costs and complexities.

~~Volatile~~Broad ~~and~~economic ~~cyclical~~disruptions ~~demand~~or ~~for~~global ~~our~~health ~~products~~concerns ~~may~~could ~~make~~materially itharm ~~difficult for us to accurately budget~~ our ~~expense levels, which are based in part on our projections of future revenues~~business.

~~When~~Widespread ~~cyclical~~economic ~~fluctuations~~instability ~~result~~and inglobal ~~lower-than-expected~~health ~~revenue~~events ~~levels,~~can ~~operating results may be materially~~ adversely ~~affected,~~affect ~~and~~demand ~~cost reduction measures may be necessary~~ for usour toproducts ~~remain competitive~~ and ~~financially~~our ~~sound~~overall operations. ~~During~~For ~~a down cycle~~example, ~~we must be able to make timely adjustments to our cost and expense structure to correspond to~~ the ~~prevailing~~COVID‑19 ~~market~~pandemic ~~conditions.~~significantly Indisrupted ~~addition,~~businesses ~~during periods of rapid growth~~worldwide, ~~we must be able to increase manufacturing capacity~~ and the ~~number~~possibility of ~~our~~future ~~personnel~~resurgences toof ~~meet~~COVID‑19 ~~customer~~or ~~demand,~~similar ~~which~~health ~~may~~crises ~~require~~remains ~~additional~~a ~~liquidity.~~risk ~~We can provide no assurance~~ that ~~these~~could ~~objectives~~slow ~~can~~economic beactivity ~~met~~and indisrupt asupply ~~timely manner in response to changes within the industry cycles in which we operate~~chains. ~~If we fail to respond to these cyclical changes, our business could be seriously harmed.~~

WeIn doaddition, ~~not~~ongoing ~~typically~~geopolitical ~~have~~conflicts, ~~long-term~~such ~~volume~~as ~~production~~the ~~contracts~~Russia‑Ukraine ~~with~~war ~~our customers,~~ and wetensions doin ~~not control~~ the ~~timing~~Middle orEast, ~~volume~~continue ofto ~~orders~~contribute ~~placed by our customers. Whether and~~ to ~~what~~uncertainty ~~extent~~in ~~our~~global ~~customers~~markets, ~~place~~supply ~~orders for any specific products~~chains, and ~~the~~trade ~~mix~~flows, ~~and~~even ~~quantities~~for ofcompanies ~~products~~without ~~included~~substantial indirect ~~those~~exposure ~~orders~~to ~~are~~the ~~factors~~affected ~~beyond our control~~regions. ~~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~~cannot ~~significant~~predict ~~competition~~the duration, ~~are~~severity, ~~relatively~~or ~~small~~full ineffects ~~size~~of ~~and~~future ~~have~~economic, ~~fewer~~health, ~~resources~~or ingeopolitical ~~comparison~~events. ~~with~~Extended ~~some~~shutdowns or disruptions affecting our operations, or those of our ~~competitors~~customers, suppliers, or other third parties on whom we rely, could materially and adversely affect our business, financial condition, and operating results.

WeChanges ~~face significant competition throughout the world, which may increase as certain markets~~ in ~~which~~trade wepolicy ~~operate~~could ~~continue~~materially toaffect ~~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.

WeSome of our raw materials originate from other countries. If tariffs are imposed on these materials, our suppliers may ~~experience~~increase ~~increasing~~prices, ~~price~~which ~~pressure~~we may not be able to pass on to customers quickly, potentially reducing our profit margins. Additionally, a significant portion of our products are exported. If foreign countries impose tariffs on U.S. goods, including ours, we could face a competitive disadvantage compared with companies located outside the United States, which could adversely impact our business and financial results.

~~Our~~Acquisitions ~~historical~~may ~~business~~increase ~~strategy for many of~~ our ~~products~~operating ~~has~~costs, ~~focused~~divert onmanagement’s ~~product~~attention ~~performance~~from ~~and~~other ~~customer service rather than on offering the lowest price. As a result of budgetary constraints~~priorities, ~~many~~and ofexpose ~~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~~additional ~~to compete on the basis of product performance and customer service, our profit margins will be reduced~~risks.

~~Manufacturing~~We ~~interruptions~~periodically evaluate potential acquisitions of businesses or ~~delays~~technologies ~~could~~and ~~affect~~view targeted acquisitions that expand our ~~ability~~core tocompetencies ~~meet~~as ~~customer~~an ~~demand~~important ~~and~~part ~~lead~~of toour ~~higher~~growth ~~costs~~strategy. While acquisitions may offer synergies in products, services, and technologies, they involve risks, including:

We● ~~may~~challenges ~~experience~~and ~~significant~~higher ~~interruptions~~costs ofin ~~our~~integrating ~~manufacturing~~personnel, operations, ~~delays~~technologies, ~~in our ability to deliver~~ products ~~or services~~, ~~increased~~and ~~costs or customer order cancellations as a result of:~~services

● ~~the~~diversion ~~failure or inability~~ of ~~suppliers~~management’s tofocus ~~timely~~from deliver sufficient quantities of materials and components on a cost-effective basis; ● volatility in the availability and cost of materials; ● unforeseen equipment failures resulting in the need to delay or outsource certain production processes; ● difficulties or delays in obtaining required import or export approvals; ● information technology or infrastructure failures; ● natural disasters or other ~~events~~operational beyond our control (such as earthquakes, floods or storms, regional economic downturns, pandemics, social unrest, political instability, terrorism, or acts of war); and ● the effects of a global pandemic on our employees, suppliers and other third-parties upon which we rely.matters

~~Continued~~● ~~growth~~failure ~~could result in the need~~ to ~~move~~successfully orcommercialize ~~expand~~acquired ~~our facilities. The costs of such a move or expansion could be significant to our profitability.~~technology

~~Our~~● ~~ability~~loss ~~to meet our customers’ needs including the on-time shipment~~ of ~~products,~~key isemployees ~~paramount~~from toacquired 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. companies

We● ~~have~~inability ~~made~~to ~~investments~~achieve inexpected 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.synergies

~~Our~~● ~~success~~potential isdilution ~~dependent~~of inexisting ~~part~~shareholders onif our ~~technologies~~common ~~and~~stock 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~~part ~~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~~a 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.transaction

We● ~~attempt~~difficulties 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~~obtaining weor ~~sell~~protecting ~~our products may not protect our~~ intellectual property rights, ~~to the same extent as do the laws of the United States.~~and

We● ~~may~~impairment ~~receive communications from other parties asserting the existence~~ of ~~patent~~acquired ~~rights~~assets ordue 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~~technological ~~the~~advances ~~technology in question on commercially reasonable terms,~~ or ~~defending our position~~underperformance. 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.

These risks could materially and adversely affect our business, financial condition, and results of operations.

Market conditions in the industries in which we operate are volatile, and the demand for our products and their profitability can fluctuate significantly.

The industries we serve are subject to constant change, driven by factors such as:

●

the availability of funding for research and development

●

global and regional economic conditions

●

government budgetary and political constraints, and

●

technological advancements

As a result, our historical operating results may not be indicative of future performance, and periods of lower demand or profitability could materially affect our business.

Volatile and cyclical demand for our products may make it difficult to accurately budget expenses, which are partially based on projected revenues.

Demand for our products can fluctuate significantly due to cyclical industry trends. When revenue falls below expectations, our operating results may be materially affected, and cost reduction measures may be required to maintain competitiveness and financial stability. Conversely, periods of rapid growth may require us to expand manufacturing capacity and hire additional personnel, which could strain liquidity. There is no assurance that we can adjust our cost structure or scale operations quickly enough to respond effectively to these market cycles.

We generally do not have long-term production contracts with our customers and cannot control the timing, volume, or mix of their orders. Lower-than-expected orders can lead to underutilized facilities and infrastructure, which would negatively affect our financial position and results of operations.

We operate in highly competitive markets, have fewer resources than some competitors, and may be subject to future import duties that could adversely affect our business.

We operate in highly competitive global markets, and some competitors have significantly greater financial and operational resources. These competitors may be able to develop more advanced products or reduce prices, which could place us at a competitive disadvantage. If we are unable to compete effectively, our business and results of operations could be adversely affected.

In addition, our MMC products are currently exported into the European Union (EU) on a duty-free basis. If a European manufacturer begins producing similar products, import duties could be imposed, increasing costs for our EU customers and potentially reducing demand for our products.

We may face increasing price pressure, which could adversely affect our margins.

Historically, our strategy has emphasized product performance and customer service rather than competing primarily on price. However, many of our customers are highly price sensitive, and inflationary pressures may further intensify pricing competition. If we are unable to continue differentiating our products based on performance and service, we may be required to reduce prices to remain competitive, which could result in lower profit margins and adversely affect our financial results.

Manufacturing interruptions or delays could impair our ability to meet customer demand and increase operating costs.

Our manufacturing operations may be subject to interruptions, delays, increased costs, or customer order cancellations due to a variety of factors, including:

●

the failure or inability of suppliers to deliver materials and components in sufficient quantities or on a timely and cost-effective basis,

●

volatility in the availability or cost of raw materials and components,

●

unexpected equipment failures requiring production delays or the outsourcing of certain manufacturing processes,

●

difficulties or delays in obtaining required import or export licenses, permits, or approvals,

●

information technology, systems, or infrastructure failures,

●

natural disasters or other events beyond our control, such as earthquakes, floods, severe weather, regional economic downturns, pandemics, social unrest, political instability, terrorism, or acts of war, and

●

the effects of pandemics or public health emergencies on our employees, suppliers, logistics providers, and other third parties on whom we rely.

Any of these events could disrupt our operations, delay product deliveries, increase costs, or harm customer relationships, which could materially and adversely affect our business, financial condition, and results of operations.

Our investments in proprietary technologies may lose value if we are unable to adequately protect our intellectual property or if we are accused of infringing the intellectual property rights of third parties, which could result in costly litigation.

Our success depends in part on our proprietary technologies and related intellectual property rights. We use a combination of patents, trademarks, confidentiality agreements, and internal controls to protect our intellectual property; however, these measures may be inadequate or unenforceable. Patent protection is costly and time-consuming, and there is no assurance that our patent applications will result in issued patents or provide meaningful protection. In addition, competitors or other third parties may develop similar or superior technologies or design around our intellectual property.

We may also face claims that our products or technologies infringe the intellectual property rights of others. Resolving such claims may require us to obtain licenses, modify our products, or defend ourselves through litigation, any of which could be expensive, disruptive, and unsuccessful. The laws of certain jurisdictions may offer less protection than those in the United States. Any failure to protect our intellectual property or adverse outcome of an infringement claim could materially and adversely affect our business, financial condition, and results of operations.

The price of our common shares is volatile and could decline significantly.

The stock market has atexperienced, ~~times~~and ~~over~~may ~~the~~continue ~~last~~to 15experience, ~~years experienced~~ periods of ~~high~~significant ~~and extreme~~ volatility. IfThese ~~these~~ market fluctuations ~~continue~~can ordirectly ~~for~~affect ~~other factors, including those listed below,~~ the trading price of our common shares, ~~could~~regardless ~~decline~~of ~~significantly~~our ~~independent~~actual ofoperating ~~the~~performance. ~~overall~~In ~~market~~addition, ~~and~~factors ~~stockholders~~specific ~~could~~to ~~lose~~our ~~all~~Company ormay acause ~~substantial~~the ~~part of their investment. The~~ market price of our common shares ~~could~~to fluctuate ~~significantly~~independently inof ~~response~~overall tomarket ~~several factors~~conditions, ~~including,~~and ~~among~~stockholders ~~others:~~could lose all or a substantial portion of their investment.

●The ~~difficult~~trading ~~macroeconomic~~price ~~conditions,~~of ~~including~~our ~~inflation,~~common ~~unfavorable~~shares ~~geopolitical~~may ~~events,~~fluctuate ~~and~~significantly ~~general~~in ~~stock~~response ~~market~~to ~~uncertainties~~various factors, ~~such~~including, asamong ~~those occasioned by a global liquidity crisis and a failure of large financial institutions;~~others:

● ~~receipt~~adverse ofmacroeconomic large orders or cancellations of orders for our products; ● issues associated with the performance and reliability of our products; ● actual or anticipated variations in our results of operations; ● announcements of financial developments or technological innovations; ● changes in recommendations and/or financial estimates by investment research analysis; ● strategic transactionsconditions, such as ~~acquisitions~~inflation, ~~divestitures,~~unfavorable orgeopolitical ~~spin-offs;~~events, and ●general ~~the~~stock ~~occurrence~~market ~~of major catastrophic events~~uncertainty, including ~~the~~those ~~effects~~associated ofwith aglobal ~~possible~~liquidity ~~resurgence~~crises ofor the ~~novel~~failure ~~coronavirus~~of ~~(COVID-19).~~large financial institutions,

~~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~~receipt, ~~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~~delay, itor ~~could~~cancellation ~~result in substantial costs and a diversion~~ of ~~management’s~~significant ~~attention~~customer ~~and resources~~orders, ~~which could materially and adversely affect our financial condition, results of operations, and liquidity.~~

If● weissues ~~are~~related ~~subject~~ to ~~cyber-attacks,~~the ~~we could incur substantial costs and~~performance, ~~if such attacks are successful~~quality, weor ~~could~~reliability ~~incur~~of ~~significant liabilities, reputational harm, and disruption to~~ our ~~operations.~~products,

We● ~~manage,~~actual 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~~anticipated ~~our~~variations ~~confidential~~in 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~~operating ~~or our products~~results, ~~or that otherwise exploit any security vulnerabilities.~~

~~The~~● ~~costs~~announcements ofregarding ~~addressing~~financial ~~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~~performance, ~~delays,~~business ~~or cessation of service~~developments, ~~and loss of existing~~ or ~~potential~~technological ~~customers~~innovations, 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.

●

changes in investment analyst recommendations or financial estimates,

●

strategic transactions, including acquisitions, divestitures, or spin-offs, and

●

the occurrence of major catastrophic events, such as the COVID-19 pandemic.

We have experienced significant volatility in the market price of our publicly traded securities in the past, and we expect that the price of our common shares may continue to be volatile in the future. Periods of stock price volatility have historically led to securities class action litigation against public companies. If such litigation were initiated against us, it could result in substantial costs and a diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations, and liquidity.

Claims related to product defects, safety, or performance could result in significant costs, reputational harm, and operational disruption.

We may be subject to product liability, warranty, or recall claims arising from alleged defects, failures to meet specifications, or misuse of its products. Even if products are designed and manufactured in compliance with applicable standards, defects may occur due to design flaws, manufacturing errors, supplier issues, or unforeseen usage conditions. Such claims could lead to litigation, settlements, fines, penalties, or the costs of product recalls and corrective actions.

In addition to direct financial impacts, adverse product liability or warranty claims could damage the Company’s reputation, reduce customer confidence, and negatively affect demand for its products. The Company maintains insurance coverage for certain liabilities, but such coverage may be insufficient to cover all losses or may not be available on commercially reasonable terms in the future.

Cyber-attacks or security breaches could result in substantial costs, significant liabilities, reputational harm, and disruption to our operations.

We manage, store, and transmit proprietary information and sensitive data related to our operations, making us a potential target for cyber-attacks and security breaches. Unauthorized parties may attempt to gain access to our information technology systems to misappropriate or compromise our confidential information or that of third parties, disrupt system functionality, or cause system shutdowns. Such attacks may include the introduction of viruses, worms, ransomware, or other malicious software designed to exploit vulnerabilities in our systems or products.

Addressing cybersecurity incidents and vulnerabilities, whether before or after an attack, may require significant financial and operational resources. Our remediation efforts may be unsuccessful or only partially effective and could result in service interruptions, delays, or temporary cessation of operations, as well as the loss of existing or prospective customers. In addition, any breach of our security measures or unauthorized disclosure of proprietary or sensitive information could expose us or our customers to loss or misuse of data, lead to litigation or regulatory actions, damage our reputation, and adversely affect our business, financial condition, and results of operations.

Compliance with U.S. government requirements for handling controlled unclassified information (CUI) could increase CPS’s operating costs.

The U.S. Department of Defense requires government contractors and subcontractors to comply with the Cybersecurity Maturity Model Certification (CMMC). CMMC mandates the implementation and ongoing maintenance of extensive cybersecurity policies, procedures, and controls for the protection of CUI, which can be costly and resource intensive. Some of CPS’s customers are government contractors with whom CPS exchanges CUI. As a result, CPS may be required to achieve and maintain CMMC compliance to continue doing business with these customers. Failure to do so could result in the loss of revenue associated with these relationships, while compliance may increase operating expenses.

Item 1B. Unresolved Staff Comments.

Smaller reporting companies are not required to provide the information required by this item.

Item 1C. Cybersecurity

Cybersecurity is an area of increasing concern to the management of, and investors in CPS. While CPS has been International Traffic in Arms Regulations (ITAR) compliant for many years, that in itself does not mitigate the risks of a cybersecurity incident. The Company is currently also working towards full compliance with NIST 800-171 as well as CMMC compliance. In working towards this goal, CPS has retained an outside consulting firm to help us implement the policies, processes and procedures to further mitigate cybersecurity risks.

CPS generally keeps all employee personally identifiable information with its payroll service provider. Each year the provider furnishes us with their Service Organization Controls ("“SOC"”) report which includes their cybersecurity policies and procedures.

Management is not aware of any previous cybersecurity incidents of any significance. Nevertheless, there is always a risk that a phishing attempt, ransomware or other attack by a bad actor could be successful. Although CPS is generally down the supply chain from prime contractors, the fact that we do work in the aerospace and defense industries does make us a potential target. Please refer to the risk factors titled “Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs”, ~~and~~ “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” and “U.S. government requirements for the handling of controlled unclassified information (CUI) could increase CPS’ operating costs” in “Risk Factors” in Part I, Item 1A of this Form 10-K for more information on the risks posed to us by cybersecurity threats. Based on information currently available, management does not believe that there is a reasonably likely risk of these issues, nevertheless the possibility of one occurring cannot be completely ruled out.

Item 2. Properties

As of December 2827, ~~2024~~2025, all of our manufacturing, engineering, sales and administrative operations were located in leased facilities in Norton, Massachusetts.

In ~~February~~August ~~2021~~2025, the Company extended the lease for the Norton facility through February ~~2026~~2028. 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~~2025 were $165 thousand.

~~While~~Continued ~~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. The Company is actively pursuing the first option, moving to a larger location.

On December 2, 2025 Gifford Investments, the lessor of the Norton facility was placed in receivership under Massachusetts state law. We do not anticipate this will have a negative impact on CPS of any significance.

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.

Item 4. Mine Safety Disclosures

Not applicable

Part II

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 2827, ~~2024~~2025, we had approximately 7063 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.

Item 6. Selected Financial Data

Smaller reporting companies are not required to provide the information required by this item.

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 and the transmission of High Voltage Direct Current (HVDC). 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~~MMCs ~~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~~2025 the Company’s top three customers accounted for 5764% of revenue and the remaining 4336% of revenue was derived from 45approximately 43 other customers. In ~~2023~~2024 the top three customers accounted for 6058% of revenue and the remaining 4042% of revenue was derived from approximately 5745 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~~Company reviews this unused material and establishes ana ~~obsolescence~~ reserve for the amount it ~~does~~has not ~~expect~~used toin ~~use~~the ~~over~~prior ~~the~~12 ~~next~~months ~~three~~and ~~years~~does not have an expectation of future activity.

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., Itit 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 2827, ~~2024~~2025, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $128.3 million and reversals of existing temporary differences to fully utilize the deferred tax asset, assuming a statutory corporate tax rate of 21% and 6.32% for federal and state taxes respectively.

Results of Operations (all $ in millions unless noted)

Results of Operations for the year ~~2024~~2025 (“~~2024~~2025”) compared with the year ~~2023~~2024 (“~~2023~~2024”):

Total revenue was $2132.16 million in ~~2024~~2025, a 2454% ~~decrease~~increase compared with total revenue of $2721.61 million in ~~2023~~2024. This ~~decrease~~increase was ~~due~~ primarily due to significant growth in our core business. At the ~~successful~~end ~~completion~~of August 2024 the Company added a third production shift enabling it to meet this growth. Additionally, a significant portion of our 2024 production efforts went towards the ~~armor~~manufacture ~~contract~~and testing of parts needed to solve a quality issue with a major customer. Upon resolution in ~~April~~later 2024, ~~compared~~this production capacity was again available to make products for sale to customers. Lastly, gold represents a ~~full~~significant ~~year~~cost in our hermetic package products. The price of ~~revenue~~gold ~~from~~increased ~~armor~~significantly ~~production~~especially during the second half of 2025 over it’s price in ~~2023,~~2024. ~~partially~~The ~~offset~~price byof ~~increased~~gold accounted for $1.9 million of total revenue ~~from~~in ~~AlSiC~~2025 ~~baseplates~~as compared to $0. 5 million in 2024.

Gross profit in ~~2024~~2025 totaled $(05.1)3 million or ~~(1)~~16% of sales. This compares with $6(0.81) million, or 25(1)% of sales, ~~generated~~in ~~during 2023~~2024. The ~~decrease~~increase in margin was primarily due to the impact of the ~~completion~~increased ofrevenue ~~the~~as ~~armor contract~~ described above. As CPS incurs significant fixed costs in its operations, aan ~~reduction~~increase in revenue has a significant impact on margin. InA ~~addition,~~mitigating ~~then~~factor ~~growth of AlSiC baseplate sales~~ in Q4this ofincreased ~~2024~~margin ~~required~~was the ~~hiring~~impact ~~and training~~ of ~~new~~rising ~~employees~~gold asprices. ~~well~~The asmethodologies ~~the~~in ~~incurring~~recovering ~~of additional expenses for~~ the ~~ramp~~increased upgold ofcosts ~~production. A~~can ~~new~~vary ~~employee~~by iscustomer, ~~trained~~but ~~for~~generally ~~2-3~~speaking ~~weeks~~we ~~before~~do ~~even~~not ~~beginning~~generate ~~their~~a ~~actual~~profit ~~work~~ on ~~the~~these ~~shop~~gold ~~floor. It~~cost ~~can~~recovery ~~then~~charges ~~take~~which areduced ~~few~~profit ~~months~~margin ~~before~~by ~~they~~about ~~are fully up to speed~~1%.

Selling, general and administrative (SG&A) expenses were $4.38 million during ~~2024~~2025, ~~down~~up from SG&A expenses of $54.13 million incurred during ~~2023~~2024. This ~~decrease~~increase was primarily due to athe ~~reduction~~increase in variable compensation expense, due to the ~~reduction~~increase in revenue and profit year over year,. asIn ~~well~~addition, asthe aincreased ~~reduction~~revenue ingenerated ~~salaries~~a ~~paid~~significant ~~for~~increase ~~selling~~in ~~and~~our ~~administrative~~sales ~~personnel~~commission expense.

The Company generated an operating ~~loss~~income of $40.4 million in ~~2024~~2025, compared with an operating ~~income~~loss of $14.74 in ~~2023~~2024. This ~~decrease~~increase was due almost entirely to the ~~reduction~~increase in revenue ~~and additional expenses due to end of year sales growth~~, discussed above. The Company recorded a net ~~loss~~income of $30.1M4M in ~~2024~~2025 compared to a net ~~income~~loss of $13.4M1 million in ~~2023~~2024. In ~~2024~~2025 the Company recorded ana ~~income~~provision ~~tax~~for ~~benefit~~income taxes of $1.0.3 million compared to a ~~provision~~tax ~~for~~benefit ~~income~~of ~~taxes~~ $01.60 million in ~~2023~~2024.

Significant Fourth Quarter Activity in ~~2024~~2025:

Revenues totaled $58.92 million in the fourth quarter of ~~2024~~2025 versus $65.79 million in the fourth quarter of ~~2023~~2024, aan ~~decrease~~increase of 1238%. This ~~decrease~~increase was ~~the~~primarily ~~result~~due to significant growth in our core business. In Q4 of ~~the~~2024, ~~completion~~our third shift was just getting started. Our third shift folks had not yet reached their full level of proficiency resulting in lower production as compared to a fully experienced group. Secondarily, gold represents a significant cost in our ~~armor~~hermetic ~~contract~~package ~~earlier~~products. The price of gold increased significantly during the fourth quarter of 2025 over it’s price in 2024,. ~~partially~~The ~~offset~~price of gold increased our total revenue by an$1.0 ~~increase~~million in ~~AlSiC~~Q4 ~~baseplate~~2025 ~~sales~~as compared to $0.2 million in Q4 2024.

Gross ~~margin~~profit ~~decreased~~increased in the fourth quarter of ~~2024~~2025 compared with the fourth quarter of ~~2023~~2024 to $(01.3)2 million from $1(0.13) million. This ~~decrease~~increase was due to ~~lower~~higher revenue asand ~~well~~its asfavorable ~~the~~impact on fixed costs. ~~associated~~In ~~with~~addition, ~~the~~our ~~production~~third ~~ramp~~shift upwas ~~described~~added ~~above~~in late Q3 2024. Its expected operational efficiencies had not yet been achieved in Q4 of 2024.

SG&A expenses totaled $1.03 million during the quarter, compared to $1.0 million in the same quarter of ~~2023~~2024. This increase was primarily due to the increase in variable compensation expense, due to the increase in revenue and profit year over year. In addition, the increased revenue generated a significant increase in our sales commission expense.

The Company recorded an operating loss of $10.31 million in the fourth quarter of ~~2024~~2025 compared to an operating ~~income~~loss of $0.1.3 million in the fourth quarter of ~~2023~~2024.

The Company recorded a net ~~loss~~income of $10.0 million in the fourth quarter of ~~2024~~2025 compared to a net ~~income~~loss of $0.1.0 million in the fourth quarter of ~~2023~~2024.

Liquidity and Capital Resources (all $ in millions unless noted)

The Company’s cash and cash equivalents at December 2827, ~~2024~~2025 totaled $34.35, no restricted cash ~~of $85 thousand~~ and marketable debt securities with a fair value of $18.0.8 compared with cash and cash equivalents at December 3028, ~~2023~~2024 of $83.83, ~~and no~~ restricted cash orof $85 thousand and marketable debt securities with a fair value of $1.0. This ~~decrease~~increase was primarily due to the Company’s ~~losses~~equity ~~for~~raise partially offset by increases in accounts receivable and inventory needed to support increased revenue. On October 8, 2025 the ~~year~~Company asclosed ~~well~~an asequity raise underwritten by Roth Capital Partners (“Roth”). Roth acquired 3,450,000 shares of the ~~increase~~Company’s incommon ~~receivables~~stock at a price of $03.600 per share. The net proceeds to the Company were $9,540,025.

~~Accounts~~Trade accounts receivable at December 2827, ~~2024~~2025 totaled $45.92 compared to $4.49 at December 3028, ~~2023~~2024. Days Sales Outstanding (DSO) ~~increased~~decreased to 7561 days at the end of ~~2024~~2025 compared to 6075 days at the end of ~~2023~~2024. This change was due to ~~continued~~higher ~~growth of~~ sales growth throughout the 4th quarter~~. This~~ ~~resulted~~of in2024 ~~collections~~as oncompared ~~the~~to ~~earlier~~Q3 ~~lower~~2024 ~~sales,~~versus ~~while~~a ~~the~~decline ~~higher~~in ~~later~~ sales ~~remained~~from inQ3 ~~receivables~~2025 to Q4 2025. The accounts receivable balances at December 2827, ~~2024~~2025, and December 3028, ~~2023~~2024 were both net of an allowance for credit losses of $10 thousand.

Inventories ~~decreased~~increased to $45.36 at December 2827, ~~2024~~2025 from $4.63 at December 3028, ~~2023~~2024. This increase was almost entirely the result of an increase in work in process (WIP). CPS ships parts to platers in Europe where the parts are plated prior to shipment to the customer. In order to meet the significantly increased demand from these customers, parts at the platers, which are part of WIP, have increased significantly from 2024 to 2025. The inventory turnover in the four quarters ending ~~2024~~2025 was 45.84 times, up from 4.38 times averaged during the four quarters of ~~2023~~2024 (each based on a 5 point average).

The Company had no inventory on consignment at any customers at the end of ~~2024~~2025 or ~~2023~~2024. At December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 inventory of, $02.83 and $0.58, respectively, was located at vendor locations pursuant to inventory agreements.

The Company funded its operations from its cash balances in ~~2024~~2025. The Company expects it will continue to be able to fund its operations during ~~2025~~2026 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 2827, ~~2024~~2025, 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 was renewed in August 2025 and remains in effect until terminated which can be done by either party.

InAs ~~March~~of ~~2020~~December 27, 2025, the Company ~~acquired~~had ~~a scanning acoustic microscope for a price of~~ $~~208~~460 thousand~~. The~~ ~~full~~of ~~amount~~construction ~~was~~in ~~financed~~progress ~~through a 5 year note payable with a financing company. The note is collateralized by the microscope~~ and isno ~~being~~material ~~paid~~outstanding incommitments ~~monthly~~to ~~installments~~purchase ofproduction ~~$4 thousand, consisting of principal plus interest at a rate of 6~~equipment.~~47%.~~

AsDuring 2025, our leasing arrangements consisted of ~~December~~the 28Norton, ~~2024~~MA facility lease. The Norton facility lease was renewed in August 2025, expires in February 2028 and is a triple net lease wherein the Company ~~had~~is ~~$109~~responsible ~~thousand~~for payment of ~~construction~~all inreal ~~progress~~estate taxes, operating costs and noutilities. The ~~outstanding~~Company ~~commitments~~also has an option to ~~purchase~~buy ~~production~~the ~~equipment~~property and a first right of refusal during the term of the lease. Annual rental payments were $165 thousand in 2025.

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.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

Smaller reporting companies are not required to provide the information required by this item.

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.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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 2827, ~~2024~~2025.

Changes in Internal Control over Financial Reporting

There were no material changes in the Company’s internal control over financial reporting during fiscal ~~2024~~2025.

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 2827, ~~2024~~2025. 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 2827, ~~2024~~2025.

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.

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

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~~2026 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~~2025 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/.

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~~2026 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~~2025 fiscal year.

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~~2026 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~~2025 fiscal year.

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~~2026 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~~2025 fiscal year.

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~~2026 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~~2025 fiscal year.

Part IV

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
4.3*	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
4.4*	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.
4.5*	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
4.6*	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
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.
97	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
104	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.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

By: /s/ Brian Mackey President and Chief Executive Officer March 173, ~~2025~~2026

Pursuant to the Requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Brian Mackey	President and Chief Executive Officer	March 173, ~~2025~~2026
Brian Mackey
/s/ Charles K. Griffith Jr.	Chief Financial Officer	March 173, ~~2025~~2026
Charles K. Griffith Jr.
/s/ Francis J. Hughes, Jr.	Director	March 173, ~~2025~~2026
Francis J. Hughes
/s/ Daniel C. Snow	Director	March 173, ~~2025~~2026
Daniel C. Snow
/s/ I. James Cavoli	Director	March 173, ~~2025~~2026
I. James Cavoli
/s/ Ralph M. Norwood	Director	March 173, ~~2025~~2026
Ralph M. Norwood
/s/ Grant C. Bennett	Director	March 173, ~~2025~~2026
Grant C. Bennett

INDEX TO FINANCIAL STATEMENTS
OF
CPS TECHNOLOGIES CORP.

Report of Independent Registered Public Accounting Firm Balance Sheets as of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 Statements of Operations and Comprehensive Income (Loss) for the years ended December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 Statements of Stockholders’ Equity for the years ended December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 Statements of Cash Flows for the years ended December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of ~~CPS Technologies Corp.~~

CPS Technologies Corp.

Opinion on the Financial Statements

We have audited the accompanying balance ~~sheet~~sheets of CPS Technologies Corp. (the “Company”) as of December 27, 2025 and December 28, 2024, and the related statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the ~~year~~years then ended, and the related notes to the financial statements (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 27, 2025 and December 28, 2024, and the results of its operations and its cash flows for the ~~year~~years then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2023 information in Note (2)(m) to retrospectively apply the change in accounting (resulting from the adoption of Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures), as described in Note (2)(i). In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2023 financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements taken as a whole.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audit~~audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

We have served as the Company’s auditor since October 11, 2024.

/s/ PKF O’Connor Davies, LLP

Boston, Massachusetts

March 173, ~~2025~~2026

PCAOB ID No. 127

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of CPS Technologies Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheet of CPS Technologies Corporation (the Company) as of December 30, 2023, the related statements of operations, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to the changes in segment reporting disclosure described in Note (2)(m), and accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Wolf & Company, P.C.

We served as the Company’s auditor from 2005 to October 11, 2024.

Boston, Massachusetts

March 13, 2024

PCAOB ID #392

CPS TECHNOLOGIES CORP.
BALANCE SHEETS

	December 28,			December 30,
	December 27,			December 28,
	2024			2023
	2025			2024
ASSETS
Current assets:
Cash and cash equivalents	$	34,~~280~~466,~~687~~198		$	83,~~813~~280,~~626~~687
Marketable securities, at fair value		18,~~031~~769,~~001~~363			–1,031,001
Accounts receivable-trade, net		45,~~858~~235,~~208~~307			4,~~389~~858,~~155~~208
Accounts receivable-other		~~177~~380,~~068~~948			83177,~~191~~068
Inventories, net		45,~~331~~598,~~066~~407			4,~~581~~331,~~930~~066
Prepaid expenses and other current assets		~~480~~299,~~986~~829			~~276~~480,~~349~~986
Total current assets		1424,~~159~~750,~~016~~052			1814,~~144~~159,~~251~~016
Property and equipment:
Production equipment		10,~~382~~647,~~379~~170			1110,~~271~~382,~~982~~379
Furniture and office equipment		~~891~~910,~~921~~310			~~952~~891,~~883~~921
Leasehold improvements		997,830			~~985~~997,~~649~~830
Total cost		12,~~272~~555,~~130~~310			1312,~~210~~272,~~514~~130
Accumulated depreciation and amortization		(10,~~377~~877,~~756~~927	)		(1110,~~936~~377,~~004~~756	)
Construction in progress		~~108~~459,~~874~~671			~~281~~108,~~629~~874
Net property and equipment		2,~~003~~137,~~248~~054			12,~~556~~003,~~139~~248
Right-of-use lease asset		186,000			332,000
Net intangible assets		21,778			-
Deferred taxes, net		2,528,682			1,569,726
Right-of-use lease asset		336,000			186,000
Total assets	$	18,876,946		$	21,602,116
Deferred taxes, net		2,266,854			2,528,682
Total assets	$	29,511,738		$	18,876,946

(continued)

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.
BALANCE SHEETS

	December 28,			December 30,
	December 27,			December 28,
	2024			2023
	2025			2024
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable, current portion	$	~~8,130~~-		$	468,~~797~~130
Accounts payable		3,~~053~~363,~~712~~233			23,~~535~~053,~~086~~712
Accrued expenses		~~913~~907,~~279~~910			1913,~~075,137~~279
Deferred revenue		~~172~~238,~~429~~044			~~251~~172,~~755~~429
Lease liability, current portion		~~160~~162,000			160,000
Total current liabilities		4,~~307~~671,~~550~~187			4,~~068~~307,~~775~~550
Notes payable less current portion		-			8,090
Deferred revenue – long term		31,277			31,277
Long term lease liability		26174,000			~~172~~26,000
Total liabilities		4,~~364~~876,~~827~~464			4,~~280~~364,~~142~~827
Commitments & Contingencies
Stockholders’ Equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,661,487 and 14,601,487 shares; outstanding 14,525,960 and 14,519,215; at December 28, 2024 and December 30, 2023, respectively		146,615			146,015
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 18,132,767 and 14,661,487 shares; outstanding 17,988,634 and 14,525,960; at December 27, 2025 and December 28, 2024, respectively		181,320			146,615
Preferred stock, no shares issued or outstanding		–			–
Additional paid-in capital		4050,~~580~~295,~~387~~019			40,~~180~~580,~~893~~387
Accumulated other comprehensive income		~~15,500~~139			–15,500
Accumulated deficit		(25,~~890~~469,~~245~~891	)		(2225,~~754~~890,~~796~~245	)
Less cost of 135,527 and 82,272 common shares repurchased at December 28, 2024 and December 30, 2023, respectively		(340,138	)		(250,138	)
Less cost of 144,133 and 135,527 common shares repurchased at December 27, 2025 and December 28, 2024, respectively		(371,313	)		(340,138	)
Total stockholders’ equity		1424,~~512~~635,~~119~~274			1714,~~321~~512,~~974~~119
Total liabilities and stockholders’ equity	$	1829,~~876~~511,~~946~~738		$	2118,~~602~~876,~~116~~946

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 2827, ~~2024~~2025 AND DECEMBER 3028, ~~2023~~2024

	2024			2023
	2025			2024
Product sales	$	2132,~~123~~596,~~346~~314		$	2721,~~550~~123,~~646~~346
Cost of product sales		2127,~~241~~306,~~984~~955			2021,~~725~~241,~~237~~984
Gross margin		~~(118~~5,~~638~~289,359	)		6(118,~~825,409~~638	)
Selling, general, and administrative expenses		4,~~262~~845,~~290~~385			54,~~126~~262,~~046~~290
Income (loss) from operations		(4443,~~380,928~~974	)		1(4,~~699~~380,~~363~~928	)
Interest income		~~285~~237,~~322~~881			~~225~~285,~~757~~322
Other income		~~1,657~~783			271,~~261~~657
Income (loss) before income tax		(4,093,949	)		1,952,381
Income before income tax		682,638			(4,093,949	)
Income tax provision (benefit)		~~(958~~262,~~500~~284	)		~~582~~(958,~~085~~500	)
Net income (loss)	$	(3420,~~135,449~~354	)	$	1(3,~~370~~135,~~296~~449	)
Other comprehensive income
Other comprehensive income (loss)
Net unrealized gains on available for sale securities		15,500			-
Net unrealized gains (losses) on available for sale securities		(15,361	)		15,500
Total other comprehensive income		(15,~~500~~361	)		-15,500
Comprehensive income (loss)	$	(3,119,949	)	$	1,370,296
Total comprehensive income (loss)	$	404,993		$	(3,119,949	)
Net income (loss) per basic common share	$	(0.2203	)	$	(0.0922	)
Weighted average number of basic common shares outstanding		1415,~~522~~286,~~513~~097			14,~~495~~522,~~709~~513
Net income (loss) per diluted common share	$	(0.2203	)	$	(0.0922	)
Weighted average number of diluted common shares outstanding		1415,~~522~~388,~~513~~726			14,~~628~~522,~~811~~513

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 2827, ~~2024~~2025 AND DECEMBER 3028, ~~2023~~2024

	Common stock
	Number of shares issued		Par Value		Additional Paid-in		Accumulated deficit			Accumulated other comprehensive income			Stock repurchased			Stockholders equity
Balance at December 31, 2022		14,460,486	$	144,605	$	39,726,851	$	(24,125,092	)	$	—			(40,848	)	$	15,705,516
Share-based compensation expense		—		—		204,797		—			—			—			204,797
Employee option exercises		141,001		1,410		249,245		—			—			(209,290	)		41,365
Net income		—		—		—		1,370,296						—			1,370,296
Balance at December 30, 2023		14,601,487	$	146,015	$	40,180,893	$	(22,754,796	)	$	—			(250,138	)	$	17,321,974
Share-based compensation expense		—		—		310,094		—			—			—			310,094
Employee option exercises		60,000		600		89,400		—			—			(90,000	)		—
Other comprehensive income											15,500
Net loss		—		—		—		(3,135,449	)		--			—			(3,135,449	)
Balance at December 28, 2024		14,661,487	$	146,615	$	40,580,387	$	(25,890,245	)	$	15,500			(340,138	)	$	14,512,119
Share-based compensation expense		—		—		273,028		—			—			—			273,028
Issuance of common stock		3,450,780		34,500		9,410,634					—						9,445,134
Employee option exercises		20,500		205		30,970		—			—			(31,175	)		—
Other comprehensive loss											(15,361	)					(15,361	)
Net income		—		—		—		420,354						—			420,354
Balance at December 27, 2025		18,132,767	$	181,320	$	50,295,019	$	(25,469,891	)	$	139			(371,313	)	$	24,635,274

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 2827, ~~2024~~2025 AND DECEMBER 3028, ~~2023~~2024

	2024			2023
	2025			2024
Cash flows from operating activities:
Net income	$	(3,135,449	)	$	1,370,296
Net income (loss)	$	420,354		$	(3,135,449	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Share-based compensation		~~310~~273,~~094~~028			~~204~~310,~~797~~094
Depreciation and amortization		~~547~~601,~~152~~191			~~489~~547,~~103~~152
Deferred taxes		(958,956	)		499,710
Realized gain on sale of marketable securities		(15,361	)		-
Deferred taxes		261,828			(958,956	)
Changes in operating assets and liabilities:
Accounts receivable – trade		(~~469~~377,~~053~~099	)		(~~611~~469,~~180~~053	)
Accounts receivable – other		(93203,~~877~~880	)		~~602~~(93,~~477~~877	)
Inventories, net		~~250~~(1,~~864~~267,341	)		~~293~~250,~~971~~864
Prepaid expenses and other current assets		~~(204~~181,~~637~~157	)		(65204,~~107~~637	)
Accounts payable		~~518~~309,~~626~~521			~~698~~518,~~221~~626
Accrued expenses		(~~161~~5,~~858~~369	)		~~254~~(161,~~281~~858	)
Deferred revenue		~~(79~~65,~~327~~615	)		(279,~~469,116~~327	)
Net cash provided (used) by operating activities		(3243,~~476,421~~644	)		1(3,~~267~~476,~~453~~421	)
Cash flows from investing activities:
Purchases of property and equipment		(~~994~~730,~~261~~662	)		(~~718~~994,~~274~~261	)
Purchase of marketable securities		(1,015,501	)		-
Acquisition cost of patents and trademarks		(26,113	)		-
Net cash used by investing activities		(2,009,761	)		(718,274	)
Sale of marketable securities		1,300,000			-
Purchase of marketable securities		(9,038,362	)		(1,015,501	)
Net cash used by investing activities		(8,495,137	)		(2,009,761	)
Cash flows from financing activities:
Proceeds from employee stock options		-			41,365
Proceeds from issuance of common stock		9,445,134			-
Payment on notes payable		(468,~~757~~130	)		(4346,~~671~~757	)
Net cash used by financing activities		~~(46~~9,~~757~~437,004	)		(246,~~306~~757	)
Net increase (decrease) in cash and cash equivalents		(51,~~532~~185,~~939~~511	)		~~546~~(5,~~873~~532,939	)
Cash and cash equivalents at beginning of year		83,~~813~~280,~~626~~687			8,~~266~~813,~~753~~626
Cash and cash equivalents at end of year	$	34,~~280~~466,~~687~~198		$	83,~~813~~280,~~626~~687
Supplemental cash flow information:
Cash paid for income taxes	$	~~432~~-		$	~~111,456~~432
Cash paid for interest	$	~~2,177~~26		$	52,~~096~~177
Supplemental disclosures of non-cash activity:
Net exercise of stock options	$	9031,~~000~~175			~~209~~90,~~290~~000

See accompanying notes to financial statements.

CPS Technologies Corp. Years Ended December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 Notes to Financial Statements

(1) Nature of Business

CPS Technologies Corp. (the ‘Company’ or ‘CPS’) provides advanced material solutions to the transportation, automotive, energy, computing/internet, telecommunications, aerospace, defense and oil and gas end markets.

Our primary material solution is metal matrix composites. We design, manufacture and sell custom metal matrix composite components which improve the performance and reliability of systems in these end markets.

(2) Summary of Significant Accounting Policies

(2)(a) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

(2)(b) Accounts Receivable

The Company reports its accounts receivable at the invoiced amount less an allowance for credit losses. The Company’s management provides appropriate provisions for uncollectible accounts based upon factors surrounding the credit risk and activity of specific customers, historical trends, economic conditions and other information to estimate future expected losses. Adjustments to the allowance are charged to operations in the period in which information becomes available that may affect the allowance. The Company maintains an allowance for credit losses of $10,000 as of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024.

(2)(b)(1) Accounts Receivable-Other

As of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 this amount was primarily VAT paid by CPS, but due to be either repaid by its European customers with future shipments or refunded by the European tax authorities.

(2)(c) Inventories

Inventories are stated at the lower of cost (cost is based on standard costs which approximate actual costs), as determined under the first-in, first-out method (FIFO), or net realizable value. A reserve for obsolete inventories is based on factors regarding the sales and usage of such inventories, including inventories manufactured for specific customers. The Company’s general obsolescence policy is to reserve against obsolete inventory when there has been no activity for a particular part for a twelve month period and there are no expected customer orders.

(2)(d) Property and Equipment

Property and equipment are stated at cost. Depreciation of equipment is calculated on a straight-line basis over the estimated useful life, generally five to seven years for production equipment and three to five years for furniture and office equipment. Leasehold improvements are depreciated over the shorter of the lease term or their useful life. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation or amortization are removed from their respective accounts. Any gains or losses on the disposition of property and equipment are included in the results of operations in the period in which they occur.

(2)(e) Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. Recoverability is assessed based on estimated undiscounted future cash flows. As of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024, the Company believes that there has been no impairment of its long-lived assets.

(2)(f) ~~Revenue~~Intangible ~~Recognition~~ Assets

The Company’s intangible assets are made up of legal and filing fees incurred for new patents and trademark protection. It is the Company’s policy to write these costs off using straight line amortization over a three year period. As of 12/27/2025 total intangible costs were $26,113 and $4,335 was amortized during 2025. There were no costs or amortization during 2024.

(2)(g) Revenue Recognition

Revenue is recognized in accordance with the five-step method under Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.”

Identifying the Contract with the Customer

The Company identifies contracts with customers as agreements that create enforceable rights and obligations. In the case of a few large customers the Company has executed long-term Master Sales Agreements (“MSA”). These are umbrella agreements which typically define the terms and conditions under which a customer can order goods from CPS. These in themselves do not constitute a contract as no products are committed to be transferred and the customer has no obligation to make payments. In the case of SBIRs an enforceable contract is signed by both the customer and CPS.

The Company contract is only enforceable once both parties have approved it and is usually in the form of a written purchase order from a customer combined with acknowledgement from the Company, subject to the terms and conditions of such order or underlying MSA.

In cases without an MSA, the customer submits a print for a product, the Company provides a quote, and the customer responds with a purchase order. In these cases, the Company’s acceptance of the purchase order constitutes an enforceable contract.

Identifying the Performance Obligations in the Contract

For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. For SBIRs the Company is obligated to provide certain services over the life of the agreement and the customer is obligated to pay for those services, generally monthly, as they are performed. In some cases, SBIR payments are made equally over time, regardless of the services actually performed. In these instances, revenue is recognized based on services actually performed in accordance with the contracted budget. Excess payments are included in deferred revenue and revenue from services performed in excess of payments are included on other receivables.

Shipping and handling activities for which the Company is responsible are not a separate promised service but instead are activities to fulfill the entity’s promise to transfer goods. Shipping and handling fees will be recognized at the same time as the related performance obligations are satisfied.

The Company provides an assurance-type warranty. This guarantees that the product functions as promised and meets specifications. Under its terms and conditions, the Company offers a 30 day warranty and replaces defective or non-conforming products. The expense of replacement is recorded at the time the Company agrees to replace a defective or non-conforming product. This assurance type warranty is not considered to be a distinct performance obligation.

Determining the Transaction Price

The Company determines the transaction price as the amount of consideration specified in the contract that it expects to receive in exchange for transferring promised goods or services to the customer. Amounts collected from customers for sales value added and other taxes are excluded from the transaction prices. Product sales are recorded net of trade discounts and sales returns. The Company will establish a reserve for product returns when necessary based on returns history and specific circumstances in which the Company anticipates returns to occur. Such product return reserves are recorded as a reduction to revenue.

If a contract includes a variable amount, such as a rebate, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending upon the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances. As of December 2827, ~~2024~~2025 there are no contracts with variable consideration.

When credit is granted to customers, payment is typically due 30 to 90 days from billing and accordingly our contracts with customers do not include a significant financing component.

Allocating the Transaction Price to the Performance Obligations

In virtually all cases the transaction price is tied to a specific product or service in the contract obviating the need for any allocation.

Recognizing Revenue When (or as) the Performance Obligations are Satisfied

The Company recognizes revenue at the point in time when it transfers control of the promised goods or services to the customer, which typically occurs once the product has shipped or has been delivered to the customer or the service has been performed. Occasionally, for the purpose of ensuring a steady flow of products, the Company ships products on consignment. In these instances, delivery is deemed to have occurred when the customer pulls inventory out of the warehouse for use in their production, or upon a specified period as agreed upon by both parties. As of December 2827, ~~2024~~2025 there are no products on consignment.

The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. The costs are recorded within, selling, general and administrative expenses.

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

(2)(gh) Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for the expected future tax consequences of temporary differences between the financial reporting and income tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in affect when the differences reverse. A valuation allowance is established to reduce net deferred tax assets to the amount expected to be realized.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024, the Company has no accruals for interest or penalties related to income tax matters. The Company does not have any uncertain tax positions at December 2827, ~~2024~~2025 or December 3028, ~~2023~~2024 which required accrual or disclosure.

(2)(hi) Net Income Per Common Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income 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 option and stock purchase rights. Common stock equivalents are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive.

(2)(ij) Recent Accounting Pronouncements

In the normal course of business, management evaluates all the new accounting pronouncements issued by the Financial Accounting Standard Board (“FASB”). In ~~November~~December 2023, FASB issued Accounting Standard Update ("“ASU"”) 2023-0709, ~~Segment~~the ~~Reporting~~ASU is effective for annual periods beginning after December 15, 2024 which requires a reconciliation of the amount of reported income tax expense (~~Topic~~or ~~280~~benefit); ~~Improvements~~from tocontinuing ~~Reportable~~operations ~~Segment~~and ~~Disclosures~~the ~~requiring~~amount ~~public~~computed ~~entities~~by tomultiplying ~~disclose~~the ~~information~~income ~~about~~(or ~~their~~loss) ~~reportable~~from ~~segments'~~continuing ~~significant~~operations ~~expenses~~before ~~and~~income ~~other~~taxes ~~segment~~by ~~items~~the onapplicable anstatutory ~~interim~~federal ~~and~~(national) ~~annual~~income ~~basis~~tax rate of the jurisdiction (country) of domicile. See note (212)~~(m)~~ for more information.

(2)(jk) Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recorded during the reporting period. Such estimates are adjusted by management periodically as a result of existing or anticipated economic changes which effect, or may effect, the Company’s financial statements. Actual results could differ from these estimates.

(2)(kl) Fiscal Year-End

The Company’s fiscal year end is the last Saturday in December which could result in a 52 or 53 week year. Fiscal years ~~2024~~2025 and ~~2023~~2024 each consisted of 52 weeks.

(2)(lm) 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, 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 stock options granted.

(2)(mn) Segment Reporting

The Company views its operations and manages its business as one segment. The Company produces and sells advanced material solutions, primarily metal matrix composites, to assemblers of high density electronics and other specialty components and subassemblies. The Company also assembles housings and packages for hybrid circuits, selling to the same customers mentioned above. These customers represent a single market or segment with similar stringent and well-defined requirements. The Company’s customers, in turn, sell the components and subassemblies which incorporate the products into many different end markets, however, these end markets are two to three levels removed from the Company. The Company also sells armor strike faces to armor manufacturers, using the same manufacturing process used in its other product solutions. The Company makes operating decisions and assesses financial performance only for the Company as a whole and does not make operating decisions or assess financial performance by the end markets which ultimately use the products. Our chief operating decision maker (~~CODM~~CDOM) is Brian Mackey, our President and CEO. The Company's CODM regularly reviews financial information presented on a consolidated basis and does not evaluate the Company's operating segment using asset or liability information. Instead, the CODM uses consolidated revenue, gross margin, demand creation costs, and net income or loss to allocate operating and capital resources and assess performance by comparing actual results to historical results and previously forecasted financial information.

The following table presents segment information for the Company's single reporting segment:

2024 2023

	2025		2024
Product sales	$	32,596,314	$	21,123,346

Cost of product sales		27,306,955		21,241,984
Gross margin		5,289,359		(118,638	)

Selling, general, and administrative expenses		4,845,385		4,262,290
Income (loss) from operations		443,974		(4,380,928	)

Interest income		237,881		285,322
Other income		783		1,657
Income (loss) before income tax		682,638		(4,093,949	)
Income tax provision (benefit)		262,284		(958,500	)
Net income (loss)	$	420,354	$	(3,135,449	)

Product sales	$	21,123,346		$	27,550,646
Cost of product sales		21,241,984			20,725,237
Gross margin		(118,638	)		6,825,409
Selling, general, and administrative expenses		4,262,290			5,126,046
Income (loss) from operations		(4,380,928	)		1,699,363
Interest income		285,322			225,757
Other income		1,657			27,261
Income (loss) before income tax		(4,093,949	)		1,952,381
Income tax provision (benefit)		(958,500	)		582,085
Net income (loss)	$	(3,135,449	)	$	1,370,296

(3) Cash, Cash Equivalents and Restricted Cash

Our cash and cash equivalents are carried at fair value and consist primarily of cash, money market funds, cash deposits with commercial banks, U.S. government bonds and notes, and highly rated direct short-term instruments with an original maturity of 90 days or less. There was no restricted cash as of December 27, 2025. The Company ~~has~~had a restricted cash account in the amount of $84,715, as of December 28, 2024 to cover an open letter of credit for overseas purchases. Upon presentation of documents evidencing shipment of these goods, the issuing bank will draw on this account and make payment to the vendor. ~~There was no restricted cash as of December 30, 2023.~~

	December 28, 2024		December 30, 2023
	December 27, 2025		December 28, 2024
Cash and cash equivalents	$	34,~~280~~466,~~687~~198	$	83,~~813~~280,~~626~~687
Restricted cash1	$	~~84,715~~-		–84,715
Total cash, cash equivalents and restricted cash	$	34,~~365~~466,~~402~~198	$	83,~~813~~365,~~626~~402

(1)

Recognized in prepaid expenses and other current assets on our Balance Sheet.

(4) Marketable Securities

Investments consist of U.S. Treasury ~~Bills~~bills and U.S. Government bonds with maturities up to one year. Since it is not currently managements intention to hold these debt securities until the maturity dates, these have been classified as available-for-sale (“AFS”) and are recorded on the balance sheet at fair value, with changes in fair value recorded as a component of accumulated other comprehensive income.

(5) Fair value of Marketable Securities

ASC 820, Fair Value Measurements (“ASC 820”) states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. CPS’ marketable securities consist solely of USU.S. Treasury bills and U.S. Government bonds with a maturity of 12 months or less and which fall under Level II of the fair value hierarchy. The fair value of these ~~bonds~~securities as of December 27, 2025 and December 28, 2024 was $8,769,363 and $1,031,001~~. CPS held no investments in marketable securities as of December 30~~, ~~2023~~respectively.

	December 28, 2024		December 30, 2023
	December 27, 2025		December 28, 2024
Cost basis	$	18,~~015~~769,~~501~~502		–1,015,501
Unrealized gain	$	~~15,500~~139		–15,500
Total fair value	$	18,~~031~~769,~~001~~363		–1,031,001

(6) Inventories

As of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 inventories consisted of the following:

	2024			2023
	2025			2024
Raw materials	$	2,~~625~~559,~~305~~787		$	2,~~861~~625,~~333~~305
Work in process		13,~~880~~449,~~396~~211			1,~~493~~880,~~582~~396
Finished goods		~~343~~278,~~722~~770			~~537~~343,~~975~~722
Gross Inventory		46,~~849~~287,~~423~~768			4,~~892~~849,~~890~~423
Reserve for obsolescence		(~~518~~689,~~357~~361	)		(~~310~~518,~~960~~357	)
Total	$	45,~~331~~598,~~066~~407		$	4,~~581~~331,~~930~~066

(7) Leases

The Company ~~had~~has one real estate lease innow ~~2024~~ expiring in February ~~2026~~2028. In August 2025 the Company exercised its option to extend the lease term for two additional years. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases have been capitalized as the Company elected an accounting policy for short-term leases, which allows lessees to avoid recognizing right-of-use assets and liabilities for leases with terms of 12 months or fewer.

The real estate lease expiring in ~~2026~~2028 (the “Norton facility lease’) is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability are based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at the commencement date of the lease. The Company does not separate lease components from non-lease components. 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 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. In December 2025, the owner of the property filed for a receivership under Massachusetts state law. The Company does not expect this filing to have an impact on its operations or on the lease. Annual rental payments are through maturity are reflected in the table below.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating lease as of December 2827, ~~2024~~2025:

	December 28, 2024
	December 27, 2025
	Lease payments
Maturity of capitalized lease liability	Lease payments
Maturity of capitalized lease liability
2026		168,000
2025		165,240
2027		169,000
2026		27,540
2028		28,000
Total undiscounted operating lease payments	$	~~192~~365,~~780~~000
Less: Imputed interest		(629,~~780~~000	)
Present value of operating lease liability	$	~~186~~336,000
Balance Sheet Classification
Current lease liability	$	~~160~~162,000
Long-term lease liability		26174,000
Total operating lease liability	$	~~186~~336,000
Other Information
Weighted-average remaining lease term for capitalized operating leases (in months)		1426
Weighted-average discount rate for capitalized operating leases		67.63	%

Operating Lease Costs and Cash Flows

Operating lease cost and cash paid was $165 thousand for both the twelve months ended December 2827, ~~2024~~2025 and ~~$162 thousand during the year ended~~ December 3028, ~~2023~~2024. These costs are related to its long-term operating lease. All other short-term leases were immaterial.

Estimated monthly payments under the terms of the Norton facility lease, escalate from $13 thousand to $14 thousand over the lease term.

(8) Share-Based Compensation Plans

The Company adopted the 2020 Equity Incentive Plan ("2020 Plan") on March 3, 2020. Under the terms of the 2020 Plan all of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock awards, or other stock-based awards. Some outstanding options are non-statutory stock options; some are incentive stock options. All options granted are exercisable at the fair market value of the stock on the date of grant and expire ten years from the date of grant. The options granted to employees generally vest in equal annual installments over a four or five-year period. The options granted to directors generally vest immediately on date of grant. Certain options also remain issued and outstanding under the 2009 Stock Incentive Plan.

Under the 2020 Plan a total of 1,500,000 shares of common stock are available for issuance, of which ~~611~~415,~~400~~620 shares remain available for grant as of December 2827, ~~2024~~2025.

A summary of stock option activity as of December 2827, ~~2024~~2025 and changes during the year then ended is presented below:

				Weighted		Weighted
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Life (years)		Value
Outstanding at beginning of year		~~903~~938,~~500~~300		$	2.6664
Granted		~~225~~195,~~500~~780		$	21.2963
Exercised		(6021,~~000~~280	)	$	1.5047
Forfeited		(69,200	)	$	2.47
Expired		(45,000	)	$	2.85
Expired		(61,500	)	$	2.90
Outstanding at end of year		1,067,800		$	2.47		6.94	$	907,909
Outstanding at end of year		938,300		$	2.64		7.02	$	17,197
Options exercisable at year-end		622,500		$	2.47		6.20	$	558,295
Options exercisable at year-end		499,300		$	2.51		5.76	$	16,742

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following table presents the annualized weighted average values of the significant assumptions used to estimate the fair values of the options granted during ~~2024~~2025 and ~~2023~~2024:

	2024			2023
	2025			2024
Risk-free interest rate	4.16%	-	4.33%	34.4316%	-	4.2433%
Expected life in years	5.2	-	7.60	5	-	57.56
Expected volatility		6156.27%			5961.72%
Expected dividend yield		0			0
Weighted average fair value of grants		$20.2992			$2.9129

All options are granted with an exercise price equal to the fair market value of the underlying common stock on the date of grant.

The Company recognized $~~310~~273,~~094~~028 and $~~204~~310,~~797~~094 as stock based compensation expense in ~~2024~~2025 and ~~2023~~2024, respectively. As of December 2827, ~~2024~~2025, there was $~~559~~468,~~242~~773 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan; that cost is expected to be recognized over a weighted average period of 21.6487 years.

(9) Accrued Expenses

Accrued expenses at December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 consist of the following:

	2024		2023
	2025		2024
Accrued legal and accounting	$	~~138~~101,~~600~~605	$	86138,~~000~~600
Accrued payroll and related costs		~~254~~683,~~737~~631		~~649~~254,~~201~~737
Accrued other		~~519~~122,~~942~~674		~~339~~519,~~936~~942
	$	~~913~~907,~~279~~910	$	1913,~~075,137~~279

Included in 2024 Accrued other is $288,000 as a reserve for potential credits to be issued as part of a quality issue with a major customer which was set up at the end of 2023. These credits were issued in 2025.

(10) Revolving Line of Credit

In May 2023, the Company entered into a line of credit (LOC) agreement in the amount of $3.0 million with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal (76.575% at December 2827, ~~2024~~2025). On December 27, 2025 and 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 per mutual agreement by both parties. Total Interest Expense ~~for 2024~~ was $0 ~~and~~for ~~was~~2025 $0and ~~for 2023~~2024.

(11) Notes Payable

In March 2020, the Company acquired a Sonoscan ultrasound microscope 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 iswas collateralized by the microscope and iswas ~~being~~ paid in ~~monthly~~full ~~installments~~in ~~of $4 thousand, consisting of principal plus interest at a rate of 6~~2025.~~47%.~~

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

Remaining in:	Payments due by period
FY 2025	$	8,155
Less Interest	$	(25	)
Total Principal Payments	$	8,130

Total interest expense on notes payable during 2024 was $2,177 and during 2023 was $5,096.

(12) Income Taxes

Components of income tax expense (benefit) for each year are as follows:

	2024			2023
	2025			2024
Current:
Federal	$	-		$	~~81,919~~-
State		456			456
Current income tax provision (benefit):		456			~~82,375~~456
Deferred:
Federal		~~(727~~205,~~390~~439	)		~~357~~(727,~~507~~390	)
State		~~(231~~56,~~566~~389	)		~~142~~(231,~~203~~566	)
Deferred income tax provision (benefit), net		~~(958~~261,~~956~~828	)		~~499~~(958,~~710~~956	)
Total	$	~~(958~~262,~~500~~284	)	$	~~582~~(958,~~085~~500	)

Deferred tax assets as of December 2827, ~~2024~~2025 and December 3028, ~~2023~~2024 are as follows:

	December 28, 2024		December 30, 2023
	December 27, 2025		December 28, 2024
Deferred Tax Assets:
Net operating loss carryforwards	$	~~766~~719,~~023~~586	$	-766,023
Stock compensation		~~117~~119,~~453~~130		~~209~~117,~~609~~453
Credit carryforwards		~~899~~887,~~441~~910		~~865~~899,~~928~~441
Inventory		~~141~~188,~~615~~334		84141,~~955~~615
Accrued liabilities		6,~~468~~359		-6,468
Depreciation		~~120~~104,~~452~~575		~~143~~120,~~081~~452
Capitalized R&D, net		~~474~~237,~~088~~044		~~263~~474,~~421~~088
Other		3,~~142~~916		23,~~732~~142
Net deferred tax assets	$	2,~~528~~266,~~682~~854	$	12,~~569~~528,~~726~~682

Net operating loss carryforwards are the result of federal net operating losses as of 12/272025 and 12/28/2024 are $2,624,214 and 2,805,819, respectively. Under current tax law, these federal losses were incurred subsequent to 2018 and can be carried forward indefinitely. State net operating loss carryforwards expire in 2044.

A summary of the change in the deferred tax asset is as follows:

	2024			2023
	2025			2024
Gross deferred tax balance at beginning of year	$	12,~~569~~528,~~726~~682		$	21,~~069~~569,~~436~~726
Deferred tax benefit (provision)		958,956			(499,710	)
Deferred tax (provision) benefit		(261,828	)		958,956
Balance at end of year, net	$	2,~~528~~266,~~682~~854		$	12,~~569~~528,~~726~~682

Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 21 percent toand ~~pretax~~the Massachusetts statutory income astax arate ~~result~~(net of ~~the~~federal ~~following:~~benefit) of 6.32 percent

	2024			2023
Tax at statutory rate	$	(857,216	)	$	416,663
State tax, net of federal benefit		(231,204	)		142,562
Other		129,920			22,860
Total	$	958,500		$	582,085

to pretax income as a result of the following:

The Company’s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2020 through 2023.

	2025			2024
		Amount	Rate		Amount		Rate
Tax at statutory rate	$	143,354	21.00%	$	(857,216	)	21.00%
State tax, net of federal benefit		56,749	8.31%		(231,204	)	5.66%
Other		62,181	21.00%		129,920		19.14%

Total	$	262,284	34.82%	$	(958,500	)	23.48%

~~(13)~~A ~~Retirement~~valuation ~~Savings~~allowance ~~Plan~~against deferred tax assets is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. The Company concluded that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset.

The Company ~~sponsors a Retirement Savings Plan (the ‘Plan~~’)s ~~under~~income ~~the~~tax ~~provisions~~filings ~~of Section 401 of the Internal Revenue Code. Employees, as defined in the Plan,~~ are ~~eligible~~subject to ~~participate~~review inand ~~the~~examination ~~Plan~~by ~~after~~federal 30and ~~days~~state oftaxing ~~employment~~authorities. ~~Under~~The ~~the terms of the Plan, the~~ Company ~~may~~is ~~match~~currently ~~employee~~open ~~contributions under such method as described in the Plan. During 2024 the Company elected~~ to ~~match~~audit 1%under ~~of each of~~ the ~~first~~applicable 4%statutes of ~~employee~~limitations ~~contributions~~for ~~paid proportionally each pay period amounting to $239 thousand. In 2023~~ the ~~Company~~years ~~elected~~2021 tothrough ~~match 1% of each of the first 4% of employee contributions paid proportionally each pay period amounting to $232 thousand~~2024.

(1413) Enactment ~~Concentrations~~ of ~~Credit~~the ~~Risk,~~One ~~Significant~~Big ~~Customers~~Beautiful ~~and~~Bill ~~Geographic Information~~Act

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (Public Law 119-21), which includes significant modifications to the Internal Revenue Code. The legislation permanently extends and modifies key provisions of the Tax Cuts and Jobs Act of 2017 and introduces new deductions and credits applicable to both individuals and businesses.

Key provisions relevant to the Company include:

Restoration of Immediate Expensing for Domestic Research and Experimental (“R&E”) Expenditures: Effective for tax years beginning after December 31, 2024, domestic R&E expenditures may be immediately expensed under new Section 174A, reversing the prior capitalization and amortization requirement. This change may materially impact the Company’s deferred tax assets and current tax expense depending on the volume of qualifying expenditures.

During 2025, the Company expensed $867,657 of unamortized Section 174 R&E expenditures

It is anticipated that the unamortized Section 174 R&E expenditures at Q4 2025 will be expensed as follows (subject to further analyses and discussions):

	2026		Rationale
Q1 2026		216,914	Expense 12.5% of 2022-2024
Q2 2026		216,914	Expense 12.5% of 2022-2024
Q3 2026		216,914	Expense 12.5% of 2022-2024
Q4 2026		216,914	Expense 12.5% of 2022-2024
Totals		867,656

Enhancement of Section 179 Expensing: The maximum Section 179 deduction is increased to $2.5 million, with a phase-out threshold beginning at $4 million. This expansion is expected to accelerate tax deductions for qualifying property and benefit capital investment strategies.

Permanent Reinstatement of 100% Bonus Depreciation: For qualified property acquired and placed in service after January 19, 2025, the Company may elect full expensing under Section 168(k), which is expected to accelerate tax deductions and reduce taxable income in applicable periods.

Modifications to FDII (now FDDEI): The deduction under Section 250 for foreign-derived intangible income is reduced to 33.34%, and eligibility criteria are narrowed. These changes may impact export-related tax incentives and deferred tax projections tied to U.S.-held IP.

The Company is currently evaluating the impact of these provisions on its financial statements and tax positions. While the changes are not expected to materially affect prior period results, they may influence future effective tax rates, deferred tax balances, and cash tax obligations. The Company incorporated these changes into its tax planning and provision calculations for fiscal year 2025 and beyond. However, the full effect of these provisions will depend on the Company's future capital expenditures, R&E activities, financing arrangements, and international operations.

(14) Retirement Savings Plan

The Company sponsors a Retirement Savings Plan (the ‘Plan’) under the provisions of Section 401 of the Internal Revenue Code. Employees, as defined in the Plan, are eligible to participate in the Plan after 30 days of employment. Under the terms of the Plan, the Company may match employee contributions under such method as described in the Plan. During 2025 the Company elected to match 1% of each of the first 4% of employee contributions paid proportionally each pay period amounting to $249 thousand. In 2024 the Company elected to match 1% of each of the first 4% of employee contributions paid proportionally each pay period amounting to $239 thousand.

(15) Concentrations of Credit Risk, Significant Customers and Geographic Information

Financial instruments which subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company maintains cash deposits in a sweep account, whereby funds are automatically moved in increments of $250,000 to various FDIC insured financial institutions on a nightly basis.

The Company extends credit to customers who consist principally of microelectronics systems companies in the United States, Europe and Asia. The Company generally does not require collateral or other security as a condition of sale rather relying on credit approval, balance limitation and monitoring procedures to control credit risk of trade accounts receivable. The Company also maintains a credit insurance policy covering most of its non-US customers to further mitigate credit risk. Management conducts on-going credit evaluations of its customers, and historically the Company has not experienced any significant credit-related losses with respect to its trade accounts receivable.

Revenues from significant customers as a percentage of total revenues in ~~2024~~2025 and ~~2023~~2024 were as follows:

	Percent of Total Revenues
Significant Customer	~~2024~~2025			~~2023~~2024
A		3239	%		3332	%
B		1513	%		1815	%
C		1112	%		911	%

As of December 2827, ~~2024~~2025, the Company had trade accounts receivable due from these three customers that accounted for 7469% of total trade accounts receivable as of that date. 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. Management believes that any credit risks have been properly provided for in the accompanying financial statements.

The Company’s revenue was derived from the following countries in ~~2024~~2025 and ~~2023~~2024:

	Percent of Total Revenues
Country	~~2024~~2025			~~2023~~2024
United States of America		4641	%		5646	%
Germany		3239	%		1832	%
Other		2220	%		2622	%

Many of the Company’s customers based in the United States conduct design, purchasing and payable functions in the United States, but manufacture overseas.

All of the Company’s long-lived assets and operations are located in the United States.

(1516) Net Income Per Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income 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. Common stock equivalents are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive. Had there been a profit in 2024, the dilutive effect would have been 25,905 shares.

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

	Dec. 28,			Dec. 30,
	Dec. 27,			Dec. 28,
	2024			2023
	2025			2024
Basic EPS Computation:
Numerator:
Net income (loss)	$	(3420,~~135,449~~354	)	$	1(3,~~370~~135,~~296~~449	)
Denominator:
Weighted average
Common shares
Outstanding		1415,~~522~~286,~~513~~097			14,~~495~~522,~~709~~513
Basic EPS	$	(0.2203	)	$	(0.0922	)
Diluted EPS Computation:
Numerator:
Net income (loss)	$	(3420,~~135,449~~354	)	$	1(3,~~370~~135,~~296~~449	)
Denominator:
Weighted average
Common shares
Outstanding		1415,~~522~~286,~~513~~097			14,~~495~~522,~~709~~513
Dilutive effect of stock options		-102,629			~~133,102~~-
Total shares		1415,~~522~~388,~~513~~726			14,~~628~~522,~~811~~513
Diluted net income per share	$	(0.2203	)	$	(0.0922	)

(1617) ~~Commitments~~Equity ~~and~~Capital ~~Contingencies~~Raise

On October 8, 2025 the Company closed an equity raise underwritten by Roth Capital Partners (“Roth”). Roth acquired 3,450,000 shares of the Company’s common stock at a price of $3.00 per share. The net proceeds to the Company were $9,540,025.

(18) Commitments and Contingencies

We are subject to contingencies, including legal proceedings and claims arising in the normal course of business that cover a wide range of matters including, among others, contract and employment claims; workers compensation claims; product liability; warranty and modification; and adjustment or replacement of units sold.

Direct costs associated with the estimated resolution of contingencies are accrued at the earliest date at which it is deemed probable that a liability has been incurred, and the amount of such liability can be reasonably estimated. While it is impossible to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits, we believe that the aggregate amount of such liabilities, if any, inmore ~~excess~~than of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated financial position or results of operations. It is possible, however, that future results of operations for any ~~particular~~ future period could be materially affected by changes in our assumptions or strategies related to these contingencies or changes out of our control.

(19) Subsequent Events

The Company has evaluated subsequent events through March 3, 2026 the date the financial statements were approved and authorized for issuance by management and determined that there have been no subsequent events that would require recognition in the financial statements or disclosure in the notes to the financial statements.

Filing Compare · CPS TECHNOLOGIES CORP/DE/