cpsh20250927

cpsh20250927_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended September 27, 2025

☐ 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:

CPS Technologies Corp.

111 South Worcester Street

Norton, MA 02766-2102

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

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15U.S.C. 7262(b)) by the registered public 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):

☐Yes ☒ No

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of October 20, 2025: 17,979,277.

PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS (Unaudited)

CPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	September 27, 2025			December 28, 2024
ASSETS

Current assets:
Cash and cash equivalents	$	3,234,142		$	3,280,687
Marketable securities, at fair value		1,054,079			1,031,001
Accounts receivable-trade		5,400,080			4,858,208
Accounts receivable-other		376,652			177,068
Inventories, net		5,383,680			4,331,066
Prepaid expenses and other current assets		328,249			480,986
Total current assets		15,776,882			14,159,016
Property and equipment:
Production equipment		10,599,479			10,382,379
Furniture and office equipment		910,310			891,921
Leasehold improvements		997,830			997,830
Total cost		12,507,619			12,272,130
Accumulated depreciation and amortization		(10,737,391	)		(10,377,756	)
Construction in progress		216,193			108,874
Net property and equipment		1,986,421			2,003,248
Net intangible assets		23,746			-
Right-of-use lease asset		370,000			186,000
Deferred taxes, net		2,279,253			2,528,682
Total Assets	$	20,436,302			18,876,946

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Note payable, current portion		-			8,130
Accounts payable		3,530,052			3,053,712
Accrued expenses		1,298,268			913,279
Deferred revenue		74,257			172,429
Lease liability, current portion		161,000			160,000

Total current liabilities		5,063,577			4,307,550

Deferred revenue – long term		31,277			31,277
Long term lease liability		209,000			26,000

Total liabilities		5,303,854			4,364,827
Commitments & Contingencies
Stockholders’ equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,666,987 and 14,661,487 shares; outstanding 14,529,277 and 14,525,960 shares at September 27, 2025 and December 28, 2024, respectively		146,670			146,615
Additional paid-in capital		40,809,151			40,580,387
Accumulated other comprehensive income		7,176			15,500
Accumulated deficit		(25,482,486	)		(25,890,245	)
Less cost of 137,710 and 135,527 common shares repurchased at each September 27, 2025 and December 28, 2024, respectively		(348,063	)		(340,138	)

Total stockholders’ equity		15,132,448			14,512,119

Total liabilities and stockholders’ equity	$	20,436,302		$	18,876,946

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Operations and Other Comprehensive Income (Loss) (Unaudited)

	Three Months Ended						Nine Months Ended
	September 27, 2025			September 28, 2024			September 27, 2025			September 28, 2024

Product sales	$	8,803,695		$	4,247,116		$	24,388,272		$	15,190,063

Cost of product sales		7,301,129			4,770,548			20,318,390			15,037,177

Gross profit		1,502,566			(523,432	)		4,069,882			152,886

Selling, general, and administrative expenses		1,226,484			963,064			3,527,223			3,214,831

Income (loss) from operations		276,082			(1,486,496	)		542,659			(3,061,945	)

Other income, net		45,483			70,974			114,985			241,845

Net income (loss) before income taxes		321,565			(1,415,522	)		657,644			(2,820,100	)
Income tax provision (benefit)		113,601			(372,683	)		249,885			(679,803	)

Net income (loss)	$	207,964		$	(1,042,839	)	$	407,759		$	(2,140,297	)
Other comprehensive income
Net unrealized gains (losses) on available for sale securities		(2,293	)		8,745			7,913			17,446
Reclassification adjustment for gains included in net income		-			-			(16,237	)		-
Total other comprehensive income (loss)		(2,293	)		8,745			(8,324	)		17,446
Comprehensive income (loss)		205,671			(1,034,094	)		399,435			(2,122,851	)

Net income (loss) per basic common share	$	0.01		$	(0.07	)	$	0.03		$	(0.15	)

Weighted average number of basic common shares outstanding		14,527,126			14,525,664			14,526,349			14,521,365

Net income (loss) per diluted common share	$	0.01		$	(0.07	)	$	0.03		$	(0.15	)

Weighted average number of diluted common shares outstanding		14,674,384			14,525,664			14,598,576			14,521,365

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 27, 2025 AND SEPTEMBER 28, 2024

	Common Stock

	Number of shares issued		Par Value		Additional paid-in capital		Accumulated other comprehensive income			Accumulated deficit			Stock repurchased			Total stockholders’ equity
Balance at June 28, 2025		14,661,487	$	146,615	$	40,751,927	$	9,469		$	(25,690,450	)	$	(340,138	)	$	14,877,423
Share-based compensation expense		--		--		49,354		--			--			--			49,354
Employee option exercises		5,500		55		7,870		--			--			(7,925	)		--
Other comprehensive loss		--		--		--		(2,293	)		--			--			(2,293	)
Net income		--		--		--		--			207,964			--			207,964
Balance at September 27, 2025		14,666,987	$	146,670	$	40,809,151	$	7,176		$	(25,482,486	)	$	(348,063	)	$	15,132,448

	Common Stock
	Number of shares issued		Par Value		Additional paid-in capital		Accumulated other comprehensive income			Accumulated deficit			Stock repurchased			Total stockholders’ equity
Balance at December 28, 2024		14,661,487	$	146,615	$	40,580,387	$	15,500		$	(25,890,245	)	$	(340,138	)	$	14,512,119
Share-based compensation expense		--		--		220,894		--			--			--			220,894
Employee option exercises		5,500		55		7,870		--			--			(7,925	)		--
Net unrealized gains on available for sale securities		--		--		--		7,913			--			--			7,913
Reclassification adjustment for gains included in net income		--		--		--		(16,237	)		--			--			(16,237	)
Net income		--		--		--		--			407,759			--			407,759
Balance at September 27, 2025		14,666,987	$	146,670	$	40,809,151	$	7,176		$	(25,482,486	)	$	(348,063	)	$	15,132,448

	Common Stock

	Number of shares issued		Par Value		Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit			Stock repurchased			Total stockholders’ equity
Balance at June 29, 2024		14,601,487	$	146,015	$	40,386,335	$	8,701	$	(23,852,254	)	$	(250,138	)	$	16,438,659
Share-based compensation expense		--		--		44,480		--		--			--			44,480
Employee option exercises		60,000		600		89,400		--		--			(90,000	)		--
Other comprehensive income		--		--		--		8,745		--			--			8,745
Net loss		--		--		--		--		(1,042,839	)		--			(1,042,839	)
Balance at September 28, 2024		14,661,487	$	146,615	$	40,520,215	$	17,446	$	(24,895,093	)	$	(340,138	)	$	15,449,045

	Common Stock
	Number of shares issued		Par Value		Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit			Stock repurchased			Total stockholders’ equity
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		--		--		249,922		--		--			--			249,922
Employee option exercises		60,000		600		89,400		--		--			(90,000	)		--
Other comprehensive income		--		--		--		17,446		--			--			17,446
Net loss		--		--		--		--		(2,140,297	)		--			(2,140,297	)
Balance at September 28, 2024		14,661,487	$	146,615	$	40,520,215	$	17,446	$	(24,895,093	)	$	(340,138	)	$	15,449,045

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Cash Flows (Unaudited)

	Nine Months Ended
	September 27,			September 28,
	2025			2024

Cash flows from operating activities:
Net income (loss)	$	407,759		$	(2,140,297	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		458,478			369,698
Share-based compensation		220,894			249,922
Realized gain on sale of marketable securities		(11,470	)		--
Deferred taxes		249,429			(680,259	)

Changes in:
Accounts receivable-trade		(541,872	)		734,606
Accounts receivable-other		(199,584	)		(279,122	)
Inventories		(1,052,615	)		148,518
Prepaid expenses and other current assets		152,736			(145,063	)
Accounts payable		476,340			(38,030	)
Accrued expenses		384,991			(234,379	)
Deferred revenue		(98,171	)		(91,343	)

Net cash provided by (used in) operating activities		446,915			(2,105,749	)

Cash flows from investing activities-
Purchases of property and equipment		(439,492	)		(895,868	)
Acquisition cost of patents and trademarks		(25,905	)		--
Proceeds from sale of marketable securities		1,027,000			--
Purchase of marketable securities		(1,046,933	)		(1,003,506	)

Net cash used in investing activities		(485,330	)		(1,899,374	)

Cash flows from financing activities:
Payments on note payable		(8,130	)		(34,784	)

Net cash used in financing activities		(8,130	)		(34,784	)

Net decrease in cash and cash equivalents		(46,545	)		(4,039,907	)

Cash and cash equivalents at beginning of period		3,280,687			8,813,626

Cash and cash equivalents and restricted cash at end of period	$	3,234,142		$	4,773,719
Less: Restricted cash at end of period		--			84,715
Cash and cash equivalents at end of period		3,234,142		$	4,689,004
Supplemental disclosures of cash flows information:
Cash paid for income taxes		--			432
Cash paid for interest		26			1,917

Supplemental disclosures of non-cash activity
Disposal of fully depreciated production equipment		96,684			1,896,631
Share repurchases as a reduction of stock option exercise proceeds		7,925			90,000

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.
Notes to Financial Statements
(Unaudited)

(1) Nature of Business

CPS Technologies Corporation (the “Company” or “CPS”) provides advanced material solutions to the electronics, power generation, automotive, defense 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.

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.

(2) Summary of Significant Accounting Policies

As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles.

The accompanying financial statements are unaudited. In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods.

The Company’s balance sheet at December 28, 2024 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 28, 2024 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) 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.

(4) 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 with a maturity of 12 months or less and which fall under Level II of the fair value hierarchy. The value of these bonds as of September 27, 2025 was $1,054,079 and was $1,031,001 as of December 28, 2024.

	September 27, 2025		December 28, 2024
Cost basis	$	1,046,903	$	1,015,501
Unrealized gain		7,176		15,500
Total fair value	$	1,054,079	$	1,031,001

(5) Net Income Per Common and Common Equivalent 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 Q3 and year to date in 2024, the dilutive effect would have been 41,471 shares and 25,905 shares, respectively.

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

	Three Months Ended					Nine Months Ended
	September 27, 2025		September 28, 2024			September 27, 2025		September 28, 2024
Basic EPS Computation:
Numerator:
Net income (loss)	$	207,964	$	(1,042,839	)	$	407,759	$	(2,140,297	)

Denominator:
Weighted average
Common shares
Outstanding		14,527,126		14,525,664			14,526,349		14,521,365

Basic EPS	$	0.01	$	(0.07	)	$	0.03	$	(0.15	)

Diluted EPS Computation:
Numerator:
Net income (loss)	$	207,964	$	(1,042,839	)	$	407,759	$	(2,140,297	)

Denominator:
Weighted average
Common shares
Outstanding		14,527,126		14,525,664			14,526,349		14,521,365
Dilutive effect of stock options		147,257		--			72,227		--

Total Shares		14,674,384		14,525,664			14,598,576		14,521,365

Diluted EPS	$	0.01	$	(0.07	)	$	0.03	$	(0.15	)

(6) Commitments & Contingencies

Commitments

Operating Leases

The Company has one real estate lease now expiring in February 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 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 was recognized based on the present value of lease payments over the lease term using the Company’s incremental borrowing rate at commencement date, for the portion expiring in February 2026, and the option exercise date, for the final two years of the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Norton facility lease comprises approximately 38 thousand square feet. The lease is triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities. The Company also has two, two year options to renew the lease in March 2028 and again in March 2030 through February 2032. The Company is not reasonably certain these extensions will be exercised at this time, and therefore are not included in the lease asset or liability. Annual rental payments range from $165 thousand to $169 thousand through maturity.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating lease as of September 27, 2025:

(Dollars in Thousands)	September 27, 2025
Maturity of capitalized lease liabilities	Lease payments

2025		41
2026		168
2027		169
2028		28
Total undiscounted operating lease payments	$	406
Less: Imputed interest		(36	)
Present value of operating lease liability	$	370

Balance Sheet Classification
Current lease liability	$	161
Long-term lease liability		209
Total operating lease liability	$	370

Other Information
Remaining lease term for capitalized operating lease (months)		29
Discount rate for capitalized operating leases		7.3	%

Operating Lease Costs and Cash Flows

Operating lease cost and cash paid was $41 thousand during the third quarter of 2025 and $124 thousand for the nine months ended September 27, 2025. These costs are related to its long-term operating lease. All other short-term leases were immaterial.

Finance Leases

The company does not have any finance leases.

(7) Share-Based Payments

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

During the quarter ended September 27, 2025, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and no stock options were granted to outside directors during the quarter ended September 27, 2025. For the nine months ended September 27, 2025 a total of 115,000 stock options and 75,000 stock options were granted to employees and directors, respectively. During the quarter ended September 28, 2024, no stock options were granted to employees under the Company’s 2020 Equity Incentive Plan Stock Incentive Plan (the “Plan”) and no stock options were granted to outside directors during the quarter ended September 28, 2024. For the nine months ended September 28, 2024 a total of 135,500 stock options and 75,000 stock options were granted to employees and directors, respectively.

During the three and nine months ended September 27, 2025, there were 5,500 options exercised and corresponding shares issued at a weighted average price of $1.44. During the three and nine months ended September 28, 2024, there were 60,000 options exercised and corresponding shares issued at a weighted average price of $1.50.

During the three and nine months ended September 27, 2025, the Company repurchased 2,183 shares for employees to facilitate their exercise of stock options. During the three and nine months ended September 28, 2024, the Company repurchased 53,255 shares for employees to facilitate their exercise of stock options.

There were also 1,077,800 options outstanding at a weighted average price of $2.45 with a weighted average remaining term of 7.13 years as of September 27, 2025, and there were 635,500 options exercisable at a weighted average price of $2.45 with a weighted average remaining term of 6.37 years as of September 27, 2025. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of September 27, 2025, there were 421,400 shares available for future grants under the 2020 Plan and 138,900 shares outstanding under the 2009 Plan. As of September 28, 2024, there were 626,400 shares available for future grants under the 2020 Plan and 248,400 shares outstanding under the 2009 Plan.

As of September 27, 2025, there was $509 thousand of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan; that cost is expected to be recognized over a weighted average period of 2.68 years.

During the three and nine months ended September 27, 2025, the Company recognized $49,354 and $220,894, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

During the three and nine months ended September 28, 2024, the Company recognized $44,480 and $249,922, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

(8) Inventories

Inventories consist of the following:

	September 27,			December 28,
	2025			2024

Raw materials	$	2,422,339		$	2,625,305
Work in process		3,175,806			1,880,396
Finished goods		328,395			343,722

Total inventory		5,926,541			4,849,423

Reserve for obsolescence		(542,860	)		(518,357	)

Inventories, net	$	5,383,680		$	4,331,066

(9) Accrued Expenses

Accrued expenses consist of the following:

	September 27,		December 28,
	2025		2024

Accrued legal and accounting	$	96,450	$	138,600
Accrued payroll and related expenses		635,051		254,737
Accrued product returns		465,696		429,617
Accrued other		101,071		90,325

	$	1,298,268	$	913,279

(10) Line of Credit

The Company has 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 (7.25% at September 27, 2025). On September 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 line of credit remains in effect and has been extended to August 5, 2026.

(11) 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) 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:

	Three Months Ended					Nine Months Ended
	September 27, 2025		September 28, 2024			September 27, 2025		September 28, 2024
Product Sales	$	8,803,695	$	4,247,116		$	24,388,272	$	15,190,063

Cost of product sales		7,301,129		4,770,548			20,318,390		15,037,177
Gross profit (loss)		1,502,566		(523,432	)		4,069,882		152,886

Selling, general, and administrative expenses		1,226,484		963,064			3,527,223		3,214,831
Income (loss) from operations		276,082		(1,486,496	)		542,659		(3,061,945	)

Other income, net		45,483		70,974			114,985		241,845
Income (loss) before income taxes		321,565		(1,415,522	)		657,644		(2,820,100	)
Income tax provision (benefit)		113,601		(372,683	)		249,885		(679,803	)
Net income (loss)	$	207,964	$	(1,042,839	)	$	407,759	$	(2,140,297	)

(12) 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. Management has determined that a valuation allowance is not needed as it expects that the deferred tax asset will be fully utilized.

For the three and nine months ended September 27, 2025 the deferred tax asset was decreased $113,601 and $249,429 for the estimated tax provision for Q3 and year to date net income, respectively.

(13) 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.

During Q3 2025, the Company expensed $899,728 of unamortized Section 174 R&E expenditures.

It is anticipated that the unamortized Section 174 R&E expenditures at Q2 2025 will be expensed as follows (subject to further analyses and discussions):

	2025		2026		Total		Rationale
Q4 2025		187,193		-		187,193	Expense 12.5% of 2022-2024
Q1 2026		-		187,193		187,193	Expense 12.5% of 2022-2024
Q2 2026		-		187,193		187,193	Expense 12.5% of 2022-2024
Q3 2026		-		187,193		187,193	Expense 12.5% of 2022-2024
Q4 2026		-		187,193		187,193	Expense 12.5% of 2022-2024
Totals		187,193		748,772		935,965

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 will incorporate 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. The Company will incorporate these changes into its tax provision and planning beginning in fiscal year 2025.

(14) Subsequent Events: Equity capital 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. Had the transaction occurred on the final day of the fiscal quarter, September 27, 2025, the balance sheet would have appeared as follows (changes are italicized):

CPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	September 27, 2025		December 28, 2024
ASSETS

Current assets:
Cash and cash equivalents	$	12,774,167	$	3,280,687
Marketable securities, at fair value		1,054,079		1,031,001
Accounts receivable-trade		5,400,080		4,858,208
Accounts receivable-other		376,652		177,068
Inventories, net		5,383,680		4,331,066
Prepaid expenses and other current assets		328,249

SEC Form 10-Q filed by CPS Technologies Corp.