CPS TECHNOLOGIES CORP/DE/

Previous wording

The Company’s products contribute to the electrification of the green economy. The products we provide include baseplates for motor controllers used in high-speed electric trains, subway cars, wind turbines, and hybrid and electric vehicles. We provide hermetic packages used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits in internet switches and routers. We provide armor for naval and other military applications.

Current wording

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, 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.

Previous wording

The Company believes the underlying demand for metal matrix composites is growing as the electronics and other industries seek higher performance, higher reliability, and reduced costs. CPS believes that the Company is well positioned to offer our solutions to current and new customers as these demands grow. In 2024 the Company’s top three customers accounted for 57% of revenue and the remaining 43% of revenue was derived from 45 other customers. In 2023 the top three customers accounted for 60% of revenue and the remaining 40% of revenue was derived from approximately 57 customers.

Current wording

The Company believes the underlying demand for MMCs 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 2025 the Company’s top three customers accounted for 64% of revenue and the remaining 36% of revenue was derived from approximately 43 other customers. In 2024 the top three customers accounted for 58% of revenue and the remaining 42% of revenue was derived from approximately 45 customers.

Previous wording

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:

Current wording

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’ 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:

Previous wording

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.

Current wording

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’ 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.

Previous wording

The Company typically buys ‘lots’ of components for its hermetic packaging products. Often all the components in a lot are not necessary to complete the order. Annually the company reviews this unused material and establishes an obsolescence reserve for the amount it does not expect to use over the next three years.

Current wording

The Company typically buys ‘lots’ of components for its hermetic packaging products. Often all the components in a lot are not necessary to complete the order. Annually the Company reviews this unused material and establishes a reserve for the amount it has not used in the prior 12 months and does not have an expectation of future activity.

Previous wording

At December 28, 2024, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $12 million and reversals of existing temporary differences to fully utilize the deferred tax asset, assuming a statutory corporate tax rate of 21%.

Current wording

At December 27, 2025, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $8.3 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.

Previous wording

Selling, general and administrative (SG&A) expenses were $4.3 million during 2024, down from SG&A expenses of $5.1 million incurred during 2023. This decrease was primarily due to a reduction in variable compensation expense, due to the reduction in revenue and profit year over year, as well as a reduction in salaries paid for selling and administrative personnel.

Current wording

Selling, general and administrative (SG&A) expenses were $4.8 million during 2025, up from SG&A expenses of $4.3 million incurred during 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.

Previous wording

The Company generated an operating loss of $4.4 million in 2024, compared with operating income of $1.7 in 2023. This decrease was due almost entirely to the reduction in revenue and additional expenses due to end of year sales growth, discussed above. The Company recorded a net loss of $3.1M in 2024 compared to net income of $1.4M in 2023. In 2024 the Company recorded an income tax benefit of $1.0 million compared to a provision for income taxes $0.6 million in 2023.

Current wording

The Company generated operating income of $0.4 million in 2025, compared with an operating loss of $4.4 in 2024. This increase was due almost entirely to the increase in revenue, discussed above. The Company recorded net income of $0.4M in 2025 compared to a net loss of $3.1 million in 2024. In 2025 the Company recorded a provision for income taxes of $0.3 million compared to a tax benefit of $1.0 million in 2024.

Previous wording

SG&A expenses totaled $1.0 million during the quarter, compared to $1.0 million in the same quarter of 2023.

Current wording

SG&A expenses totaled $1.3 million during the quarter, compared to $1.0 million in the same quarter of 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.

Previous wording

The Company recorded an operating loss of $1.3 million in the fourth quarter of 2024 compared to operating income of $0.1 million in the fourth quarter of 2023.

Current wording

The Company recorded an operating loss of $0.1 million in the fourth quarter of 2025 compared to an operating loss of $1.3 million in the fourth quarter of 2024.

Previous wording

The Company recorded a net loss of $1.0 million in the fourth quarter of 2024 compared to net income of $0.1 million in the fourth quarter of 2023.

Current wording

The Company recorded net income of $0.0 million in the fourth quarter of 2025 compared to a net loss of $1.0 million in the fourth quarter of 2024.

Previous wording

The Company’s cash and cash equivalents at December 28, 2024 totaled $3.3, restricted cash of $85 thousand and marketable debt securities with a fair value of $1.0. compared with cash and cash equivalents at December 30, 2023 of $8.8 and no restricted cash or marketable debt securities. This decrease was primarily due to the Company’s losses for the year as well as the increase in receivables of $0.6.

Current wording

The Company’s cash and cash equivalents at December 27, 2025 totaled $4.5, no restricted cash and marketable debt securities with a fair value of $8.8 compared with cash and cash equivalents at December 28, 2024 of $3.3, restricted cash of $85 thousand and marketable debt securities with a fair value of $1.0. This increase was primarily due to the Company’s equity raise partially offset by increases in accounts receivable and inventory needed to support increased revenue. 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.

Previous wording

Accounts receivable at December 28, 2024 totaled $4.9 compared to $4.4 at December 30, 2023. Days Sales Outstanding (DSO) increased to 75 days at the end of 2024 compared to 60 days at the end of 2023. This change was due to continued growth of sales throughout the 4 th quarter. This resulted in collections on the earlier lower sales, while the higher later sales remained in receivables. The accounts receivable balances at December 28, 2024, and December 30, 2023 were both net of an allowance for credit losses of $10 thousand.

Current wording

Trade accounts receivable at December 27, 2025 totaled $5.2 compared to $4.9 at December 28, 2024. Days Sales Outstanding (DSO) decreased to 61 days at the end of 2025 compared to 75 days at the end of 2024. This change was due to higher sales growth throughout the 4 th quarter of 2024 as compared to Q3 2024 versus a decline in sales from Q3 2025 to Q4 2025. The accounts receivable balances at December 27, 2025, and December 28, 2024 were both net of an allowance for credit losses of $10 thousand.

Previous wording

Inventories decreased to $4.3 at December 28, 2024 from $4.6 at December 30, 2023. The inventory turnover in the four quarters ending 2024 was 4.8 times, up from 4.3 times averaged during the four quarters of 2023 (each based on a 5 point average).

Current wording

Inventories increased to $5.6 at December 27, 2025 from $4.3 at December 28, 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 2025 was 5.4 times, up from 4.8 times averaged during the four quarters of 2024 (each based on a 5 point average).

Previous wording

The Company had no inventory on consignment at any customers at the end of 2024 or 2023. At December 28, 2024 and December 30, 2023 inventory of, $0.8 and $0.5, respectively, was located at vendor locations pursuant to inventory agreements.

Current wording

The Company had no inventory on consignment at any customers at the end of 2025 or 2024. At December 27, 2025 and December 28, 2024 inventory of, $2.3 and $0.8, respectively, was located at vendor locations pursuant to inventory agreements.

Previous wording

In May 2023 a line of credit (LOC) in the amount of $3.0 million was entered into with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal. On December 28, 2024, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated which can be done by either party.

Current wording

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 27, 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.

Previous wording

As of December 28, 2024, the Company had $109 thousand of construction in progress and no outstanding commitments to purchase production equipment.

Current wording

As of December 27, 2025, the Company had $460 thousand of construction in progress and no material outstanding commitments to purchase production equipment.

Previous wording

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.

Current wording

Recent inflationary trends have had an impact on our profitability. We have had 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.