CPS TECHNOLOGIES CORP/DE/

Previous wording

Results of Operations for the Second Fiscal Quarter of 2026 (Q2 2026) Compared to the Second Fiscal Quarter of 2025 (Q2 2025); (all $ in 000’s)

Current wording

Results of Operations for the Third Fiscal Quarter of 2026 (Q3 2026) Compared to the Third Fiscal Quarter of 2025 (Q3 2025); (all $ in 000’s)

Previous wording

Revenues totaled $8,309 in Q2 2026 compared with $8,078 generated in Q2 2025, an increase of 3%. The increase was primarily driven by higher demand for components used in the semiconductor capital equipment and defense supply chains. This growth was partially offset by lower order volumes from certain customers that use baseplates in power electronics, following significant growth in demand from those customers in 2025.

Current wording

Revenues totaled $8,900 in Q3 2026 compared with $8,804 generated in Q3 2025, an increase of 1%. The increase was primarily driven by higher demand for components used in the semiconductor capital equipment and defense supply chains. This growth was partially offset by lower order volumes from certain customers that use baseplates in power electronics, following significant growth in demand from those customers in 2025.

Previous wording

Gross profit in Q2 2026 totaled $1,229 or 15% of sales. This compares with a gross profit in Q2 2025 of $1,336 or 17% of sales. Excluding the impact of higher gold plating costs, underlying gross margin performance remained consistent with the prior year. Increases in gold costs are passed through to customers without a corresponding markup, resulting in approximately equal increases in both sales and cost of sales. As a result, while gross profit dollars are largely unaffected, the gross profit percentage declines.

Current wording

Gross profit in Q3 2026 totaled $1,856 or 21% of sales. This compares with a gross profit in Q3 2025 of $1,503 or 17% of sales. The gross profit percentage improvement came from a combination of sales mix and price improvements.

Previous wording

Selling, general and administrative (SG&A) expenses totaled $1,487 in Q2 2026 compared with SG&A expenses of $1,199 in Q2 2025. The increase was primarily attributable to higher stock-based compensation expense resulting from grants to directors that vested immediately during the second quarter of 2026. In 2025 these options were granted during the first quarter. The remaining increase was primarily due to higher marketing expenses and one-time legal costs.

Current wording

Selling, general and administrative (SG&A) expenses totaled $1,499 in Q3 2026 compared with SG&A expenses of $1,226 in Q3 2025. The increase was primarily due to the operating lease expense associated with the new Attleboro facility, marketing expenses and one-time legal costs.

Previous wording

The Company reported an operating loss of ($259) in Q2 2026, compared with operating income of $137 in Q2 2025. The change was primarily attributable to the increase in SG&A expenses discussed above. Other income, consisting primarily of interest income, increased to $146 during Q2 2026 from $19 during Q2 2025, reflecting higher interest earned on the proceeds from two recent capital issues. Together with the income tax benefit recognized on the operating loss, this resulted in net income of $38 for Q2 2026, compared with $104 in Q2 2025.

Current wording

The Company reported operating income of $358 in Q3 2026, compared to $276 in Q3 2025, primarily reflecting improved gross margins discussed above. Other income, consisting primarily of interest income, increased to $163 during Q3 2026 from $45 during Q3 2025, reflecting higher interest earned on the proceeds from two recent capital issues. After an income tax charge of $174, net income was $347 for Q3 2026, compared with $208 in Q3 2025.

Previous wording

Results of Operations for the First Six Months of 2026 Compared to the First Six Months of 2025 (all $ in 000s)

Current wording

Results of Operations for the First Nine Months of 2026 Compared to the First Nine Months of 2025 (all $ in 000s)

Previous wording

Total revenue was $15,338 in the first half of 2026, a $247 decline compared with total revenue of $15,585 in the first half of 2025. This decline happened in Q1 2026 which saw a reduction in demand from one major customer which has started to be recovered in Q2 2026.

Current wording

Total revenue was $24,239 in the first nine months of 2026, a $149 decline compared with total revenue of $24,388 in the same period for 2025. This decline happened in Q1 2026 which saw a reduction in demand from one major customer which is recovering as the year progresses.

Previous wording

Gross profit in the first six months of 2026 totaled $1,836 or 12% of sales, compared with $2,567, or 16% of sales, for the first six months of 2025. The decrease in gross margin percentage was partly attributable to higher gold prices, which increased 40% compared with the first half of 2025. As previously mentioned, these higher gold costs without a corresponding markup caused the gross profit percentage to decline without a material impact on gross profit dollars. We also saw increases in other material costs that were partially offset by improved labor and overhead costs compared with the prior year.

Current wording

Gross profit in the first nine months of 2026 totaled $3,692 or 15% of sales, compared with $4,070, or 17% of sales, for the first nine months of 2025. The decrease in gross margin percentage was partly attributable to higher gold prices, which increased 40% compared with 2025. Higher gold costs without a corresponding markup caused the gross profit percentage to decline. We also saw increases in other material costs that were partially offset by improved labor and overhead costs compared with the prior year.

Previous wording

Selling, general and administrative (SG&A) expenses were $2,617 during the first six months of 2026, up $316 compared with SG&A expenses of $2,301 in the first six months of 2025. These increases relate to the previously mentioned business development and legal costs during Q2 as well as the new CFO search and higher foreign exchange costs in Q1.

Current wording

Selling, general and administrative (SG&A) expenses were $4,116 during the first nine months of 2026, up $589 compared with SG&A expenses of $3,527 in the first nine months of 2025. These increases were primarily attributable to operating lease expense associated with the new lease in Attleboro in Q3, the business development and legal costs during Q2 and Q3, as well as the new CFO search and higher foreign exchange costs in Q1.

Previous wording

The higher material and SG&A costs resulted in an operating loss of ($781) in 2026 compared with an operating profit of $267 in 2025.

Current wording

The higher material and SG&A costs resulted in an operating loss of ($423) in 2026 compared with an operating profit of $543 in 2025.

Previous wording

During the first half of 2026, the Company had net other income of $292 This consists primarily of interest income and compares with net other income of $70 realized during the first half of 2025. The increase in net other income is due to funds placed on investment from the capital raise in the last quarter of 2025 and the end of May 2026.

Current wording

During the first nine months of 2026, the Company had net other income of $456 from interest income compared with net other income of $115 during the same period in 2025. The increase in net other income was primarily attributable to higher interest income earned on the investment proceeds from the capital raises completed in the fourth quarter of 2025 and May 2026.

Previous wording

In the first six months of 2026 the Company had a net loss of ($256) compared with net income of $200 in the same period last year.

Current wording

In the first nine months of 2026 the Company had net income of $90 compared with net income of $408 in the same period last year.

Previous wording

Inflation has had an impact on our costs. Thus far, we have been able to pass along these increases to our customers, but there is no guarantee that we will be able to continue this in the future. In addition, there is often a lag between when the costs increase and when we can adjust customer prices. Some of our larger customers will have pricing agreements, typically for one year, and we must wait for those agreements to end before making any pricing adjustments. Further, several of our larger customers buy from our major competitor in Japan. The impact of the fluctuation of foreign exchange rates can create situations where our pricing to foreign customers can be more or less competitive as compared to our Japanese competitor.

Current wording

Inflation has impacted our costs. Thus far, we have been able to pass along these increases to our customers, but there is no guarantee that we will be able to continue this in the future. In addition, there is often a lag between when the costs increase and when we can adjust customer prices. Some of our larger customers will have pricing agreements, typically for one year, and we must wait for those agreements to end before making any pricing adjustments. Further, several of our larger customers buy from our major competitor in Japan. The impact of the fluctuation of foreign exchange rates can create situations where our pricing to foreign customers can be more or less competitive as compared to our Japanese competitor.

Previous wording

We are beginning to see an impact of tariffs on our cost structure. While many of our raw materials are sourced domestically, we are seeing instances where the domestic supplier is able to raise prices due to the impact of tariffs on prices charged by their foreign competitors. While the overall impact of these costs increases is relatively small, they are still enough to impact our margins. Given that our major competitor is from outside the U.S., our ability to pass on these cost increases to our foreign customers is somewhat limited.

Current wording

We are beginning to see an impact of tariffs on our cost structure. While many of our raw materials are sourced domestically, we are seeing instances where the domestic supplier is able to raise prices due to the impact of tariffs on prices charged by their foreign competitors. While the overall impact of these cost increases is relatively small, they are still enough to impact our margins. Given that our major competitor is from outside the U.S., our ability to pass on these cost increases to our foreign customers is somewhat limited.

Previous wording

The Company’s liquid assets at June 27, 2026 consist of cash and cash equivalents of $15,355 and marketable debt securities with a fair value of $3,801. This compares to cash and cash equivalents at December 27, 2025 of $4,466 and $8,769 marketable debt securities. The increase in liquidity came from a capital raise on May 29, 2026 involving the issuance of 1,200,000 shares of common stock for net proceeds of $8,997.

Current wording

The Company’s liquid assets at September 26, 2026 consist of cash and cash equivalents of $3,301 and marketable debt securities with a fair value of $15,613. This compares to cash and cash equivalents at December 27, 2025 of $4,466 and $8,769 marketable debt securities. The increase in liquidity came from a capital raise on May 29, 2026 involving the issuance of 1,200,000 shares of common stock for net proceeds of $8,958.

Previous wording

Accounts receivable at June 27, 2026 totaled $4,942 compared with $5,245 at December 27, 2025. Days sales outstanding (DSO) decreased from 61 days at the end of 2025 to 42 days at the end of Q2 2026. The decrease in DSO was primarily due to the timing and mix of sales and related customer collections during the period. The accounts receivable balances at June 27, 2026 and December 27, 2025 are both net of an allowance for credit losses of $10.

Current wording

Accounts receivable at September 26, 2026 totaled $4,703 compared with $5,235 at December 27, 2025. Days sales outstanding (DSO) decreased from 61 days at the end of 2025 to 48 days at the end of Q3 2026. The decrease in DSO was primarily due to the timing and mix of sales and related customer collections during the period. The accounts receivable balances at September 26, 2026 and December 27, 2025 are both net of an allowance for credit losses of $10.

Previous wording

Inventories totaled $8,649 at June 27, 2026 compared with inventory totaling $5,598 at December 27, 2025. The inventory turnover in the most recent four quarters ending Q2 2026 was 6.6 times (based on a 5 quarter end average) compared with 5.4 times averaged during the four quarters of 2025. Finished goods inventory increased primarily due to the planned build of inventory for products supported by long-term customer orders. The additional inventory is intended to maintain continuity of customer supply during the Company’s planned facility relocation and associated production transition.

Current wording

Inventories totaled $10,320 at September 26, 2026 compared with inventory totaling $5,598 at December 27, 2025. The inventory turnover in the most recent four quarters ending Q3 2026 was 3.7 times (based on a 5 quarter end average) compared with 5.4 times averaged during the four quarters of 2025. Finished goods inventory increased primarily due to the planned build of inventory for products supported by long-term customer orders. The additional inventory is intended to maintain continuity of customer supply during the Company’s planned facility relocation and associated production transition.

Previous wording

The Company expects it will continue to be able to fund its operations for the remainder of 2026 from operations and existing cash balances.

Current wording

The Company expects it will continue to be able to fund its operations for the remainder of 2026 from operations and existing cash balances. In addition, the Company anticipates approximately $10 million in capital expenditures during 2027 related to the build-out of its Attleboro facility, a portion of which is expected to be reimbursable through the $3.2 million tenant improvement allowance provided under the lease. The Company expects to fund these expenditures through existing cash balances, proceeds from the liquidation or maturity of marketable securities, and cash generated from operations.

Previous wording

The Company has a line of credit (LOC) 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 (7.5% on 6/27/2026). On*June 27, 2026,*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.

Current wording

The Company has a line of credit (LOC) 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 (6.75% on 9/26/2026). On*September 26, 2026,*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.

Previous wording

The Company has one real estate lease expiring in February 2028. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized. (Note 8, Leases)

Current wording

CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized. (Note 9, Leases)