UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the period ended
or
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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
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
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Registrant’s Telephone Number, including Area Code:
CPS TECHNOLOGIES CORP.
111 South Worcester Street
Norton, MA 02766-2102
Former Name, Former Address and Former Fiscal Year if Changed since Last Report
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
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 ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of April 28, 2026:
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (Unaudited)
CPS TECHNOLOGIES CORP.
Condensed Balance Sheets (Unaudited)
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March 28, 2026 |
December 27, 2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Marketable securities, at fair value |
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Accounts receivable-trade |
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Accounts receivable-other |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment: |
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Production equipment |
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Furniture and office equipment |
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Leasehold improvements |
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Total cost |
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Accumulated depreciation and amortization |
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Construction in progress |
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Net property and equipment |
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Net intangible assets |
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Right-of-use lease asset |
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Deferred taxes, net |
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Total Assets |
$ | |||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued expenses |
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Deferred revenue |
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Lease liability, current portion |
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Total current liabilities |
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Deferred revenue – long term |
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Long term lease liability |
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Total liabilities |
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Commitments & Contingencies |
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Stockholders’ equity: |
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Common stock, $ |
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Preferred stock, shares issued or outstanding |
– | – | ||||||
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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Accumulated deficit |
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Less cost of |
( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
See accompanying notes to condensed financial statements.
CPS TECHNOLOGIES CORP.
Condensed Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
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Fiscal Quarters Ended |
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March 28, 2026 |
March 29, 2025 |
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Product sales |
$ | $ | ||||||
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Cost of product sales |
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Gross profit |
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Selling, general, and administrative expenses |
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Operating income (loss) |
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Other income, net |
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Income (loss) before income taxes |
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Income tax provision (benefit) |
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Net income (loss) |
$ | ( |
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Other comprehensive income |
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Net unrealized gains (losses) on available for sale securities |
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Reclassification adjustment for gains included in net income |
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Total other comprehensive income |
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Comprehensive income (loss) |
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Net income (loss) per basic common share |
$ | ( |
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Weighted average number of basic common shares outstanding |
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Net income (loss) per diluted common share |
$ | ( |
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Weighted average number of diluted common shares outstanding |
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See accompanying notes to condensed financial statements.
CPS TECHNOLOGIES CORP.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 28, 2026 AND MARCH 29, 2025
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Common Stock |
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Number of shares issued |
Par Value |
Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive income (loss) |
Stock repurchased |
Total stockholders’ equity |
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Balance at December 27, 2025 |
$ | $ | $ | ( |
) | $ | $ | ( |
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Share-based compensation expense |
— | |||||||||||||||||||||||||||
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Net unrealized gains on available for sale securities |
— | ( |
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Employee option exercises |
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Net loss |
— | ( |
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Balance at March 28, 2026 |
$ | $ | $ | ( |
) | $ | ( |
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Balance at December 28, 2024 |
$ | $ | $ | ( |
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Share-based compensation expense |
— | |||||||||||||||||||||||||||
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Net unrealized gains on available for sale securities |
— | |||||||||||||||||||||||||||
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Reclassification adjustment for gains included in net income |
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Net income |
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Balance at March 29,2025 |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||
See accompanying notes to condensed financial statements.
CPS TECHNOLOGIES CORP.
Condensed Statements of Cash Flows (Unaudited)
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Fiscal Quarters Ended |
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March 28, 2026 |
March 29, 2025 |
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Cash flows from operating activities: |
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Net income (loss) |
$ | ( |
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Adjustments to reconcile net income (loss) to cash (used in) operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Deferred taxes |
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Realized gain on sale of marketable securities |
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Changes in: |
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Accounts receivable - trade |
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Accounts receivable - other |
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Inventories |
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Prepaid expenses and other current assets |
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Accounts payable |
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Accrued expenses |
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Deferred revenue |
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Net cash (used in) operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Acquisition cost of patents and trademarks |
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Proceeds from sale of marketable securities |
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Purchases of marketable securities |
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Net cash provided by (used in) investing activities |
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Cash flows from financing activities: |
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Proceeds from employee stock options |
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Payments on note payable |
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Net cash provided by (used in) financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ | $ | ||||||
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Supplemental disclosures of cash flows information: |
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Cash paid for interest |
$ | $ | ||||||
| Net exercise of stock options | $ | $ | ||||||
See accompanying notes to condensed financial statements.
CPS TECHNOLOGIES CORP.
Notes to Condensed Financial Statements
(Unaudited)
(1) Nature of Business
CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive and other industries. The Company’s primary advanced material solution is metal-matrix composites ("MMC") which are a combination of metal and ceramic.
CPS also assembles housings and packages for hybrid circuits. These housings and packages may include components made of metal-matrix composites or they may include components made of more traditional materials such as aluminum, copper-tungsten, etc.
Using its proprietary MMC technology, the Company also produces light-weight armor, particularly for extreme environments and heavy threat levels.
The Company also engages in research and development, in some cases government funded and in others internally funded, focused on developing new products in response to customer requirements. These products expand our offerings in existing markets and enable penetration into new markets.
The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and defense markets.
(2) Summary of Significant Accounting Policies
As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles and should be read in conjunction with the audited financial statements and related notes included in the 2025 Annual Report.
The accompanying financial statements are unaudited. In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods.
The Company’s balance sheet at December 27, 2025 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
For further information, refer to the financial statements and footnotes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended December 27, 2025 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.cpstechnologysolutions.com.
The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
(3) Future Application of Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). The standard requires certain details for expenses presented on the face of the Statements of Operations and Comprehensive Income (Loss) as well as selling expenses to be presented in the notes to the financial statements on an interim and annual basis. The provisions of the standard are effective for public companies for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 31, 2027. The amendment can be applied either prospectively or retrospectively, with early adoption permitted. The Company is currently assessing the impact of this standard.
(4) Use of Estimates
The preparation of the Condensed Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
(5) Marketable Securities
Investments consist of U.S. Treasury Bills 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 other comprehensive income.
(6) 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 US Government bonds and treasury bills with a maturity of 12 months or less and which fall under Level II of the fair value hierarchy. The value of these securities as of March 28, 2026 was $
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March 28, 2026 |
December 27, 2025 |
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Cost basis |
$ | |||||||
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Unrealized gain (loss) |
$ | ( |
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Total fair value |
$ | |||||||
(7) Net Income (Loss) Per Common and Common Equivalent Share
Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing net income (loss) by the sum of the weighted average number of common shares plus additional common shares that would have been outstanding if potential dilutive common shares had been issued for granted stock options and stock purchase rights. Had there been a profit in Q1 2026, the dilutive effect would have been
The following table presents the calculation of both basic and diluted EPS:
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Three Months Ended |
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March 28, 2026 |
March 29, 2025 |
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Basic EPS Computation: |
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Numerator: |
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Net income (loss) |
$ | ( |
) | $ | ||||
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Denominator: |
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Weighted average common shares outstanding |
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Basic EPS |
$ | ( |
) | $ | ||||
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Diluted EPS Computation: |
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Numerator: |
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Net income (loss) |
$ | ( |
) | $ | ||||
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Denominator: |
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Weighted average common shares outstanding |
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Dilutive effect of stock options |
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Total Shares |
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Diluted EPS |
$ | ( |
) | $ | ||||
(8) Commitments & Contingencies
Commitments
Operating Leases
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 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 2028 (the “Norton facility lease”) is included as a right-of-use lease asset and corresponding lease liability (current and noncurrent portions) on the balance sheet. This asset and liability was recognized based on the present value of lease payments over the lease term using the Company’s incremental borrowing rate at commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Norton facility lease comprises approximately
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of March 28, 2026
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(Dollars in Thousands) |
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Maturity of capitalized lease liabilities |
Lease payments |
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Remaining 2026 |
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2027 |
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2028 |
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Total undiscounted operating lease payments |
$ | |||
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Less: Imputed interest |
( |
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Present value of operating lease liability |
$ | |||
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Balance Sheet Classification |
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Current lease liability |
$ | |||
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Long-term lease liability |
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Total operating lease liability |
$ | |||
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Other Information |
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Weighted-average remaining lease term for capitalized operating leases (in months) |
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Weighted-average discount rate for capitalized operating leases |
% | |||
Operating Lease Costs and Cash Flows
Operating lease cost and cash paid was $
Finance Leases
The Company does not have any finance leases.
(9) Share-Based Payments
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted.
During the quarters ended March 28, 2026 and March 29, 2025, a total of
During the quarters ended March 28, 2026 and March 29, 2025, there were
During the quarters ended March 28, 2026 and March 29, 2025, there were
During the quarters ended March 28, 2026 and March 29, 2025, the Company repurchased
There were also
As of March 28, 2026, there was $
During the quarters ended March 28, 2026 and March 29, 2025, the Company recognized approximately $
(10) Inventories
Inventories consist of the following:
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March 28, 2026 |
December 27, 2025 |
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Raw materials |
$ | $ | ||||||
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Work in process |
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Finished goods |
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Gross inventory |
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Reserve for obsolescence |
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Inventories, net |
$ | $ | ||||||
(11) Accrued Expenses
Accrued expenses consist of the following:
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March 28, 2026 |
December 27, 2025 |
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Accrued legal and accounting |
$ | $ | ||||||
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Accrued payroll and related expenses |
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Accrued other |
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Total Accrued Expenses |
$ | $ | ||||||
(12) Revolving Line of Credit
In May 2023, the Company entered into a line of credit (LOC) in the amount of $
(13) Income Taxes
A valuation allowance 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 believes that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset. For the first quarter of 2026 the deferred tax asset was increased $
(14) Enactment of the One Big Beautiful Bill 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.
In Q1 2026 the Company expensed $
It is anticipated that the unamortized Section 174 R&E expenditures at Q1 2026 will be expensed as follows (subject to further analyses and discussions):
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Q2 2026 |
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Q3 2026 |
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Q4 2026 |
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Totals |
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.
(15) Segment Reporting
The Company views its operations and manages its business as 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) is Brian Mackey, our President and CEO. The Company's CODM regularly reviews financial information presented and does not evaluate the Company's operating segment using asset or liability information. Instead, the CODM uses revenue, gross margin, 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:
| March 28,
2026 |
March 29,
2025 |
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Product sales |
$ | $ | ||||||
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Cost of product sales |
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Gross profit |
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Selling, general, and administrative expenses |
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Income (loss) from operations |
( |
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Other income, net |
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Income (loss) before income tax |
( |
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Income tax provision (benefit) |
( |
) | ||||||
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Net income (loss) |
$ | ( |
) | $ | ||||
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ITEM 2 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with the financial statements of the Company and notes thereto included in this report and the Company’s Annual Report on Form 10-K for the year ended December 27, 2025 and in CPS’s other SEC reports, which are accessible on the SEC’s website at www.sec.gov and the Company’s website at www.cpstechnologysolutions.com.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company’s actual results to differ materially from those forecasted or projected in such forward-looking statements. This includes the impact of the Russian invasion of Ukraine, the war in Iran and other conflicts and potential conflicts, including economic conflicts, throughout the world, which are discussed in Item 3 of this report. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or changed circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Critical Accounting Policies
The critical accounting policies utilized by the Company in preparation of the accompanying financial statements are set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 27, 2025, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There have been no material changes to these policies since December 27, 2025.
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, 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’s products are custom rather than catalog items. They are made to customers’ designs and are used as components in systems built and sold by our customers. At any point in time our product mix will consist of some products with on-going production demand, and some products which are in the prototyping or evaluation stages at our customers. The Company seeks to have a portfolio of products which include products in every stage of the technology adoption lifecycle at our customers. CPS’ growth is dependent upon the level of demand for those products already in production, as well as its success in achieving new "design wins" for future products.
As a manufacturer of highly technical and custom products, the Company incurs fixed costs needed to support the business, but which do not vary significantly with changes in sales volume. These costs include the fixed costs of applications such as engineering, tooling design and fabrication, process engineering, and others. Accordingly, particularly given our 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 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.
CPS was incorporated in Massachusetts in 1984 as Ceramics Process Systems Corporation and reincorporated in Delaware in April 1987 through a merger into a wholly-owned Delaware subsidiary organized for purposes of the reincorporation. In July 1987, CPS completed our initial public offering of 1.5 million shares of our Common Stock. In March 2007, we changed our name from Ceramics Process Systems Corporation to CPS Technologies Corporation.
Results of Operations for the First Fiscal Quarter of 2026 (Q1 2026) Compared to the First Fiscal Quarter of 2025 (Q1 2025); (all $ in 000’s)
Revenues totaled $7,029 in Q1 2026 compared with $7,506 in Q1 2025, a decrease of 6%. The major factor contributing to this decrease is the reduction in demand from one of our major customers. As announced in Q4 2025, CPS received a large order from this customer covering the twelve month period beginning October 2025. Through Q1 the customer has taken well less than half of the quantities ordered. CPS has continued to produce their products at the higher rate, both so we can meet there needs if their demand increases without putting undue stress on our production line, and in anticipation of our potential move to a larger facility, allowing us to continue to meet their needs during the move.
Gross margin in Q1 2026 totaled $607 or 9% of sales. This compares with gross margin in Q1 2025 totaled $1,231 or 16% of sales. This decrease was primarily due to the impact of lower sales volumes on fixed costs, the impact of the price of gold, billed at $1,019 at approximately a 0% margin, and increased R&D spending on our margins.
Selling, general and administrative (SG&A) expenses totaled $1,130 in Q1 2026 compared with SG&A expenses of $1,101 in Q1 2025, a 3% increase year over year. This increase was primarily due to fees associated with the Company’s CFO search, in anticipation of the future retirement of the current CFO, and higher foreign exchange costs this year as compared to last year.
The Company had an operating loss of $523 in Q1 2026 compared with operating income of $130 in Q1 2025. This decrease was a result of the decreased gross margin discussed above. The net after tax loss was $294 in Q1 2026 compared to after tax income of $96 in Q1 2025.
CPS does not rely on raw materials from Ukraine, Russia, Iran, Israel or Gaza. As a result, we do not believe that the Russian invasion of Ukraine or the conflicts in Middle East will have a direct impact on our results. Most of our raw materials are sourced domestically. In some cases, our suppliers may be sourcing these materials from a foreign source. To date, we have not seen any significant cost increases that we believe are attributable to tariffs, however this could change in the future.
Inflation has had an impact on our costs. Thus far, we have largely 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. Wages have also been impacted by inflation. We have instituted a combination of wage increases as well as more competitive benefits in order to retain the personnel making up our workforce.
The factors mentioned above, including inflation and tariffs, create elevated uncertainty regarding future financial performance.
Liquidity and Capital Resources (all $ in 000’s unless noted)
The Company’s cash and cash equivalents at March 28, 2026 totaled $5,724, with marketable securities of $6,798. This compares to cash and cash equivalents at December 27, 2025 of $4,466 and marketable securities of $8,769. The change in cash and securities is predominantly due to our increased inventory, purchases of fixed assets and reduction of accrued expenses, offset by a reduction in accounts receivable.
Trade accounts receivable at March 28, 2026 totaled $3,789 compared with $5,245 at December 27, 2025. Days Sales Outstanding (DSO) decreased from 61 days at the end of 2025 to 51 days at the end of Q1 2026. The reason for this decrease is that one of our major customers who historically pays monthly the first week of each month made their April payment early, at the end of March. The accounts receivable balances at December 27, 2025, and March 28, 2026 were both net of an allowance for credit losses of $10.
Inventories totaled $7,144 at March 28, 2026 compared with inventory totaling $5,598 at December 27, 2025. The inventory turnover in the most recent four quarters ending Q1 2026 was 4.9 times (based on a 5 quarter end average) compared with 5.4 times averaged during the four quarters of 2025. Due to reduced demand from a major customer and the pending move, the Company has been increasing its inventory levels.
The Company expects it will continue to be able to fund its operations for the remainder of 2026 from operations and existing cash balances.
The Company continues to sell to a limited number of customers and the loss of any one of these customers 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.
Management believes that existing cash balances will be sufficient to fund our cash requirements for the foreseeable future. However, there is no assurance that we will be able to generate sufficient revenues or reduce certain discretionary spending in the event that planned operational goals are not met such that we will be able to meet our obligations as they become due.
Contractual Obligations (all $ in 000’s unless otherwise noted)
The Company maintains a $3.0 million revolving line of credit (LOC) 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 March 28, 2026, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted the full $2.7 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties.
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 6, Commitments and Contingencies)
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ITEM 3 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is not significantly exposed to the impact of interest rate changes. The Company has not used derivative financial instruments. As one of our major competitors is located in Japan, currency fluctuations can have an impact on how we price our product in order to remain competitive.
Although CPS has not been directly impacted by the war in Ukraine or by the conflict in the Middle East, potential supply chain disruptions and its impact on energy costs are areas where we could be impacted in the future.
Inflation is an area where we have seen some impact on our business. We have seen price increases in commodity raw materials, as well as increases in other costs of doing business. As we receive new orders we have been able to pass on most of these costs to our customers. In the case of longer term pricing agreements, we have been able to pass on some of these costs through surcharges and in other ways to mitigate the impact on our profit. As inflation continues, our ability to continue to absorb higher costs by raising customer prices cannot be guaranteed.
As of the date of this document, we are not aware of any material negative impacts that tariffs have on our business. Nevertheless, this issue is currently in flux. We could be negatively impacted in the sourcing of raw materials, or, reciprocal tariffs on CPS product could make it more difficult for us to sell profitably to foreign customers.
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ITEM 4 |
CONTROLS AND PROCEDURES |
(a) The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d - 14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, 1) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports the Company files under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and 2) the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II OTHER INFORMATION
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ITEM 1 |
LEGAL PROCEEDINGS |
We are not a party to any litigation which could have a material adverse effect on us or on our business.
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ITEM 1A |
RISK FACTORS |
There have been no material changes to the risk factors as discussed in our 2025 Form 10-K.
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ITEM 2 |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
None.
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ITEM 3 |
DEFAULTS UPON SENIOR SECURITIES |
None.
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ITEM 4 |
MINE SAFETY DISCLOSURES |
Not applicable.
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ITEM 5 |
OTHER INFORMATION |
applicable.
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ITEM 6 |
EXHIBITS AND REPORTS ON FORM 8-K: |
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(a) |
Exhibits: |
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)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CPS TECHNOLOGIES CORPORATION
(Registrant)
Date: May 5, 2026
/s/Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer
Date: May 5, 2026
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer