Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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 June 29, 2024

☐ 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 July 24,2024: 14,525,960.

PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS (Unaudited)

CPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

	June 29,			December 30,
	2024			2023
ASSETS

Current assets:
Cash and cash equivalents	$	6,306,244		$	8,813,626
Marketable securities, at fair value		758,701			-
Accounts receivable-trade, net		4,064,293			4,389,155
Accounts receivable-other		198,348			83,191
Inventories, net		4,121,678			4,581,930
Prepaid expenses and other current assets		366,655			276,349

Total current assets		15,815,919			18,144,251

Property and equipment:
Production equipment		9,940,480			11,271,982
Furniture and office equipment		891,921			952,883
Leasehold improvements		873,730			985,649

Total cost		11,706,131			13,210,514

Accumulated depreciation and amortization		(10,068,557	)		(11,936,004	)
Construction in progress		496,331			281,629

Net property and equipment		2,133,905			1,556,139

Right-of-use lease asset		261,000			332,000
Deferred taxes, net		1,877,302			1,569,726

Total assets	$	20,088,126		$	21,602,116

See accompanying notes to financial statements.

(continued)

CPS TECHNOLOGIES CORP.

Balance Sheets (Unaudited)

(concluded)

	June 29,			December 30,
	2024			2023
LIABILITIES AND STOCKHOLDERS` EQUITY

Current liabilities:
Note payable, current portion	$	31,885		$	46,797
Accounts payable		2,587,874			2,535,086
Accrued expenses		671,853			1,075,137
Deferred revenue		65,578			251,755
Lease liability, current portion		160,000			160,000

Total current liabilities		3,517,190			4,068,775

Note payable less current portion		-			8,090
Deferred revenue – long term		31,277			31,277
Long term lease liability		101,000			172,000

Total liabilities		3,649,467			4,280,142

Commitments and contingencies (note 6)

Stockholders` equity:
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,601,487 shares; outstanding 14,519,215 shares at each June 29, 2024 and December 30, 2023		146,015			146,015
Additional paid-in capital		40,386,335			40,180,893
Accumulated other comprehensive income		8,701			-
Accumulated deficit		(23,852,254	)		(22,754,796	)
Less cost of 82,272 common shares repurchased at each June 29, 2024 and December 30, 2023		(250,138	)		(250,138	)

Total stockholders` equity		16,438,659			17,321,974

Total liabilities and stockholders` equity	$	20,088,126		$	21,602,116

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Operations and Other Comprehensive Income (Unaudited)

	Three Months Ended					Six Months Ended
	June 29,			July 1,		June 29,			July 1,
	2024			2023		2024			2023
Revenues:
Product sales	$	5,030,313		$	7,418,138	$	10,942,947		$	14,518,405

Total revenues		5,030,313			7,418,138		10,942,947			14,518,405

Cost of product sales		5,260,305			5,221,879		10,266,629			10,077,444

Gross margin		(229,992	)		2,196,259		676,318			4,440,961

Selling, general, and administrative expense		1,084,995			1,465,349		2,250,917			3,015,871

Income (loss) from operations		(1,314,987	)		730,910		(1,574,599	)		1,425,090

Interest income (expense), net		90,851			79,652		170,021			95,242

Net income (loss) before income tax		(1,224,136	)		810,562		(1,404,578	)		1,520,332
Income tax provision (benefit)		(269,832	)		210,058		(307,120	)		460,628

Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704
Other comprehensive income
Net unrealized gains on available for sale securities		8,701			--		8,701			--
Total other comprehensive income		8,701			--		8,701			--

Total comprehensive income (loss)		(945,603	)		600,503		(1,088,757	)		1,059,704	)

Net income (loss) per basic common share	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Weighted average number of basic common shares outstanding		14,519,215			14,493,970		14,519,215			14,473,128

Net income (loss) per diluted common share	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Weighted average number of diluted common shares outstanding		14, 519,215			14,621,929		14,519,215			14,630,765

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 2024 AND JULY 1, 2023

	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 March 30, 2024		14,601,487	$	146,015	$	40,341,855	$	-	$	(22,897,950	)	$	(250,138	)	$	17,339,782
Share-based compensation expense		-		-		44,480		-		-			-			44,480
Other comprehensive income		-		-		-		8,701		-			-			8,701
Net loss		-		-		-		-		(954,304	)		-			(954,304	)
Balance at June 29, 2024		14,601,487	$	146,015	$	40,386,335	$	8,701	$	(23,852,254	)	$	(250,138	)	$	16,438,659

	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		-		-		205,442		-		-			-			205,442
Other comprehensive income		-		-		-		8,701		-			-			8,701
Net loss		-		-		-		-		(1,097,458	)		-			(1,097,458	)
Balance at June 29, 2024		14,601,487	$	146,015	$	40,386,335	$	8,701	$	(23,852,254	)	$	(250,138	)	$	16,438,659

	Common Stock				Additional								Total
	Number of				paid-in		Accumulated			Stock			stockholders'
	shares issued		Par Value		capital		deficit			repurchased			equity
Balance at April 1, 2023		14,467,487	$	144,675	$	39,867,507	$	(23,665,891	)	$	(41,638	)	$	16,304,653
Share-based compensation expense		-		-		17,316		-			-			17,316
Employee option exercises		79,000		790		93,630		-			(70,300	)		24,120
Net income		-		-		-		600,503			-			600,503
Balance at July 1, 2023		14,546,487	$	145,465	$	39,978,453	$	(23,065,388	)	$	(111,938	)	$	16,946,592

	Common Stock				Additional								Total
	Number of				paid-in		Accumulated			Stock			stockholders'
	shares issued		Par Value		capital		deficit			repurchased			equity
Balance at December 31, 2022		14,460,486	$	144,605	$	39,726,851	$	(24,125,092	)	$	(40,848	)	$	15,705,516
Share-based compensation expense		-		-		147,757		-			-			147,757
Employee options Exercised		86,001		860		103,845		-			(71,090	)		33,615
Net income		-		-		-		1,059,704			-			1,059,704
Balance at July 1, 2023		14,546,487	$	145,465	$	39,978,453	$	(23,065,388	)	$	(111,938	)	$	16,946,592

See accompanying notes to financial statements.

CPS TECHNOLOGIES CORP.

Statements of Cash Flows (Unaudited)

	Six Months Ended
	June 29,			July 1,
	2024			2023

Cash flows from operating activities:
Net income (loss)	$	(1,097,458	)	$	1,059,704
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		237,954			252,969
Share-based compensation		205,442			147,757

Changes in:
Accounts receivable-trade		324,862			(1,296,584	)
Accounts receivable-other		(115,157	)		611,028
Inventories		460,252			62,148
Prepaid expenses and other current assets		(90,306	)		(77,073	)
Accounts payable		52,788			522,667
Accrued expenses		(403,284	)		40,658
Deferred taxes		(307,576	)		405,404
Deferred revenue		(186,177	)		(892,803	)

Net cash provided by (used in) operating activities		(918,660	)		835,875

Cash flows from investing activities:
Purchases of property and equipment		(815,720	)		(433,579	)
Purchase of marketable securities		(750,000	)		-

Net cash used in investing activities		(1,565,720	)		(433,579	)

Cash flows from financing activities:
Proceeds from exercise of employee stock options, net of repurchases		-			33,615
Payments on note payable		(23,002	)		(21,439	)

Net cash provided by (used in) financing activities		(23,002	)		12,176

Net increase (decrease) in cash and cash equivalents		(2,507,382	)		414,472

Cash and cash equivalents at beginning of period		8,813,626			8,266,753

Cash and cash equivalents at end of period	$	6,306,244		$	8,681,225

Supplemental disclosures of cash flows information:
Cash paid for interest		1,465			2,902

Supplemental disclosures of non-cash activity:
Net exercise of stock options		-			71,090

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 and other industries. The Company’s primary advanced material solution is metal-matrix composites 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.

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 30, 2023 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 30, 2023 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 management’s 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 June 29, 2024 was $758,701. CPS held no investments in marketable securities as of December 30, 2023.

	June 29, 2024	December 30, 2023
Cost basis	$ 750,000	--
Unrealized gain	$ 8,701	--
Total fair value	$ 758,701	--

(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 Q2 2024, the dilutive effect would have been 29,254 shares.

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

	Three Months Ended					Six Months Ended
	June 29,			July 1,		June 29,			July 1,
	2024			2023		2024			2023
Basic EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128

Basic EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Diluted EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128
Dilutive effect of stock options		-			127,959		-			157,637

Total Shares		14,519,215			14,621,929		14,519,215			14,630,765

Diluted EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

(6) Commitments & Contingencies

Commitments

Operating Leases

The Company has one real estate lease expiring in February 2026. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases have been capitalized as the Company elected an accounting policy for short-term leases, which allows lessees to avoid recognizing right-of-use assets and liabilities for leases with terms of 12 months or fewer.

The real estate lease expiring in 2026 (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. 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 an option to renew the lease starting in March 2026 through February 2032. Annual rental payments range from $160 thousand to $165 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 June 29, 2024:

(Dollars in Thousands)	June 29, 2024
Maturity of capitalized lease liabilities	Lease payments

2024	$	83
2025		165
2026		28
Total undiscounted operating lease payments	$	276
Less: Imputed interest		(15	)
Present value of operating lease liability	$	261

Balance Sheet Classification
Current lease liability	$	160
Long-term lease liability		101
Total operating lease liability	$	261

Other Information
Remaining lease term for capitalized operating lease (months)		20
Discount rate for capitalized operating leases		6.6	%

Operating Lease Costs and Cash Flows

Operating lease cost and cash paid was $41 thousand during the second quarter of 2024 and $82 thousand for the six months ended June 29, 2024. 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 June 29, 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 June 29, 2024. During the quarter ended July 1, 2023, a total of 60,000 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 July 1, 2023, issued at a weighted average price of $2.66 per share.

During the three and six months ended June 29, 2024, there were no options exercised and corresponding shares issued. During the three and six months ended July 1, 2023, there were 79,000 and 86,001 options exercised and corresponding shares issued at a weighted average price of $1.20 and $1.22, respectively.

During the three and six months ended June 29, 2024, the Company did not repurchase any shares for employees to facilitate their exercise of stock options. During the three and six months ended July 1, 2023, the Company repurchased 24,642 and 24,927 shares, respectively, for employees to facilitate their exercise of stock options.

There were also 1,097,900 options outstanding at a weighted average price of $2.61 with a weighted average remaining term of 6.81 years as of June 29, 2024, and there were 610,000 options exercisable at a weighted average price of $2.45 with a weighted average remaining term of 5.09 years as of June 29, 2024. The Plan, as amended, is authorized to issue 1,500,000 shares of common stock. As of June 29, 2024, there were 638,300 shares available for future grants under the 2020 Plan and 236,200 shares outstanding under the 2009 Plan.

As of June 29, 2024, there was $648 thousand of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan; that cost is expected to be recognized over a weighted average period of 2.93 years.

During the three and six months ended June 29, 2024, the Company recognized $44,480 and $205,442, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

During the three and six months ended July 1, 2023, the Company recognized $17,316 and $147,757, respectively, as shared-based compensation expense related to previously granted shares under the Plan.

(8) Inventories

Inventories consist of the following:

	June 29,			December 30,
	2024			2023

Raw materials	$	2,567,758		$	2,861,333
Work in process		1,579,991			1,493,582
Finished goods		393,889			537,975

Total inventory		4,541,638			4,892,890

Reserve for obsolescence		(419,960	)		(310,960	)

Inventories, net	$	4,121,678		$	4,581,930

(9) Accrued Expenses

Accrued expenses consist of the following:

	June 29,		December 30,
	2024		2023

Accrued legal and accounting	$	67,846	$	86,000
Accrued payroll and related expenses		246,953		649,201
Accrued product returns		288,000		288,000
Accrued other		69,054		51,936

	$	671,853	$	1,075,137

(10) Line of Credit

In May 2023, the Company terminated its $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC). A new LOC in the amount of $3.0 million was entered into with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal (8.5% at June 29, 2024). On June 29, 2024, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The line of credit remains in effect until terminated by mutual agreement of both parties.

(11) Note Payable

In March 2020, the Company acquired inspection equipment for a price of $208 thousand. The full amount was financed through a 5 year note payable with a third-party equipment finance company. The note is collateralized by the equipment and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a rate of 6.47%.

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

Remaining in:	Payments due by period
FY 2024	$	23,795
FY 2025	$	8,090
Total		31,885

Total interest expense on notes payable during 2024 was $1,465.

(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 six months ended June 29, 2024 the deferred tax asset was increased $40,256 and $307,576 for the estimated tax benefit on Q2 and year to date net losses, respectively

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 30, 2023 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 and other conflicts and potential conflicts throughout the world and the impact of a strong dollar on the prices the Company charges to foreign customers, 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 Estimates

The critical accounting estimates 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 30, 2023, 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 30, 2023.

Overview

Products we provide include baseplates for motor controllers used in high-speed electric trains, subway cars, wind turbines, and hybrid and electric vehicles. We provide baseplates and housings used in radar, satellite and avionics applications. We provide lids and heat spreaders used with high performance integrated circuits for use in internet switches and routers. We provide baseplates and housings used in modules built with Wide Band Gap Semiconductors like Silicon Carbide (“SiC”) and Gallium Nitride (“GaN”), collectively Metal Matrix Composites (“MMC”). 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, cold rolled steel and Kovar. Using its proprietary MMC technology, the Company also produces light-weight vehicle armor, particularly for extreme environments and heavy threat levels. In addition the Company engages in research and development activities with the goal of developing new products that address challenging customer requirements. These activities typically leverage the company’s extensive knowledge base in the development and volume manufacturing of advanced materials.

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 current size, changes in sales volume generally result in even greater changes in financial performance on a percentage basis as fixed costs are spread over a larger or smaller base. Sales volume is therefore a key financial metric used by management.

The Company believes the underlying demand for MMC, housings for hybrid circuits and our proprietary armor solution 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 Second Fiscal Quarter of 2024 (Q2 2024) Compared to the Second Fiscal Quarter of 2023 (Q2 2023); (all $ in 000’s)

Revenues totaled $5,030 in Q2 2024 compared with $7,418 generated in Q2 2023, a decrease of 32%. This decrease was mainly due to the completion of the armor contract for the US Navy in Q2 2024 as compared to 2023. In addition, one of the Company’s major customers in 2023 significantly reduced their purchases in Q2 due to their having excess inventory that they are in the process of working down.

Gross loss in Q2 2024 totaled $230 or -5% of sales. This compares with gross profit in Q2 2023 of $2,196 or 30% of sales. This percentage decrease was due to several factors including the impact of fixed costs on significantly lower revenues, as well as abnormally low production yield levels in some of our hermetic package products.

Selling, general and administrative (SG&A) expenses totaled $1,085 in Q2 2024 compared with SG&A expenses of $1,465 in Q2 2023. This decrease was primarily due to the reduction in variable compensation as a result of weaker results from operations in Q2 2024 as compared to Q2 2023. In addition, the Company was able to reduce its outside consulting costs.

The Company experienced an operating loss of $1,315 in Q2 2024 compared with an operating profit of $731 in Q2 2023, a decrease of 280%. This decrease was a result of the decreased gross margin, partially offset by the decrease in SG&A expenses.

Results of Operations for the First Six Months of 2024 Compared to the First Six Months of 2023 (all $ in 000s)

Total revenue was $10,943 in the first half of 2024, a 25% decrease compared with total revenue of $14,518 in the first half of 2023. This decrease was mainly due to the completion of our armor order for the US Navy in 2024 as compared to 2023. In addition, one of the Company’s major customers in 2023 significantly reduced their purchases in both Q1 and Q2 due to their having excess inventory that they are in the process of working down.

Gross margin in the first six months of 2024 totaled $676 or 6% of sales. In the first six months of 2023 gross margin totaled $4,441 or 31% of sales. This decrease was due to the decrease in revenue and the decreased coverage of our fixed costs, as well as the increased costs incurred by the Company in non-revenue producing activities, designed to increase revenue in the future, including fiber reinforced aluminum and new armor configurations. .

Selling, general and administrative (SG&A) expenses were $2,251 during the first six months of 2024, down 25% compared with SG&A expenses of $3,016 in the first six months of 2023. Decreased variable compensation accruals due to lower 2024 profitability as well as reduced commission and consulting expenses were the primary reasons for this decrease.

During the first half of 2024, the Company had net interest income of $170. This compares with interest income of $95 realized during the first half of 2023. The increase in interest income is primarily due to higher interest rates.

In the first six months of 2024 the Company had an operating loss of $1,575 compared with operating income $1,425 in the same period last year. The net loss for the first six months of 2024 totaled $1,097 versus operating income of $1,060 in the first six months of 2023.

CPS does not rely on raw materials from Ukraine, Russia, Israel or Gaza. As a result, we do not believe that the Russian invasion of Ukraine or the conflict in Israel and Gaza will have a direct impact on our results. Nevertheless, there could be an indirect impact regarding supply chain and inflationary issues as a result of these conflicts.

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 devaluation of the Japanese yen related to the US dollar has made it more difficult for us to increase our prices in an amount necessary to fully make up for higher costs.

These factors combine to create a higher degree of uncertainty regarding future financial performance.

Liquidity and Capital Resources (all $ in 000’s unless noted)

The Company’s liquid assets at June 29, 2024 consist of cash and cash equivalents of $6,306 and marketable debt securities with a fair value of $759. This compares to cash and cash equivalents at December 30, 2023 of $8,814 and no marketable debt securities held at December 30, 2023. The decrease in cash was due primarily to a decrease in working capital, higher expenditures for capital equipment acquired to improve future performance as well as the operating losses incurred in 2024.

Accounts receivable at June 29, 2024 totaled $4,263 compared with $4,472 at December 30, 2023. Days Sales Outstanding (DSO) increased from 60 days at the end of 2023 to 77 days at the end of Q2 2024. The increase in DSO was due to several large payments due at the end of Q2 2024 being delayed to the beginning of Q3 2024, as well as significantly higher sales volumes at the end of Q2 2024 as compared to the beginning of Q2 2024. The accounts receivable balances at December 30, 2023, and June 29, 2024 were both net of an allowance for doubtful accounts of $10.

Inventories totaled $4,122 at June 29, 2024 compared with inventory totaling $4,582 at December 30, 2023. The inventory turnover in the most recent four quarters ending Q2 2024 was 4.6 times (based on a 5 quarter end average) compared with 4.3 times averaged during the four quarters of 2023.

The Company expects it will continue to be able to fund its operations for the remainder of 2024 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)

In May 2023, the Company terminated its $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC). A new LOC in the amount of $3.0 million was entered into with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal. On June 29, 2024, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed.

In March 2020, the company acquired a scanning acoustic microscope for a price of $208 thousand. The full amount was financed through a 5 year note payable with a financing company. The note is collateralized by the microscope and is being paid in monthly installments of $4 thousand, consisting of principal plus interest at a rate of 6.47%

The Company has one real estate lease expiring in February 2026. 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 4, Leases)

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not significantly exposed to the direct impact of interest rate changes or foreign currency fluctuations. Nevertheless, one of the Company’s major competitors is located in Japan. The relative strength of the US dollar versus the Japanese yen can have a negative impact on the Company’s ability to raise prices when necessary to offset increasing costs. The Company has not used derivative financial instruments.

Although CPS has not been directly impacted by the war in Ukraine, 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 significant price increases in commodity raw materials, such as aluminum, 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.

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

ITEM 1

LEGAL PROCEEDINGS

None. The potential claim mentioned in form 10-Q dated March 30, 2024 has been fully resolved.

ITEM 1A

RISK FACTORS

There have been no material changes to the risk factors as discussed in our 2023 Form 10-K.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5

OTHER INFORMATION

Not applicable.

ITEM 6

EXHIBITS:

(a)

Exhibits:

Exhibit 31.1 Certification Of President and Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002

Exhibit 31.2 Certification Of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002

Exhibit 32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002

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: August 2, 2024

/s/Brian T. Mackey

Brian T. Mackey

President and Chief Executive Officer

Date: August 2, 2024

/s/ Charles K. Griffith Jr.

Charles K. Griffith Jr.

Chief Financial Officer

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian T. Mackey, certify that:

I have reviewed this quarterly report on Form 10-Q;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant`s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant`s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation (the "Evaluation Date"); and

d) Disclosed in this quarterly report any change in the registrant`s internal control over financial reporting that occurred during the registrant`s most recent fiscal quarter that has materially affected or is reasonably like to materially affect, the registrant`s internal control over financial reporting.

The registrant`s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant`s auditors and the audit committee of the registrant`s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant`s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant`s internal control over financial reporting.

Date: August 2, 2024
/s/ Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles K. Griffith Jr., certify that:

I have reviewed this quarterly report on Form 10-Q;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant`s internal control over financial reporting.

Date: August 2, 2024
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CPS Technologies Corporation (the "Company") on Form 10-Q for the three month period ended June 29, 2024 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian T. Mackey, President and Chief Executive Officer of the Company, and I, Charles K. Griffith Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 2, 2024
/s/ Brian T. Mackey
Brian T. Mackey
President and Chief Executive Officer

Date: August 2, 2024
/s/ Charles K. Griffith Jr.
Charles K. Griffith Jr.
Chief Financial Officer

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 29, 2024	Jul. 24, 2024
Document Information [Line Items]
Entity Central Index Key	0000814676
Entity Registrant Name	CPS TECHNOLOGIES CORP/DE/
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 29, 2024
Document Transition Report	false
Entity File Number	0-16088
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-2832509
Entity Address, Address Line One	111 South Worcester Street
Entity Address, City or Town	Norton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02766-2102
City Area Code	508
Local Phone Number	222-0614
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	CPSH
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		14,525,960

Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 29, 2024	Dec. 30, 2023
Current assets:
Cash and cash equivalents	$ 6,306,244	$ 8,813,626
Marketable securities, at fair value	758,701	0
Accounts receivable-trade, net	4,064,293	4,389,155
Accounts receivable-other	198,348	83,191
Inventories, net	4,121,678	4,581,930
Prepaid expenses and other current assets	366,655	276,349
Total current assets	15,815,919	18,144,251
Property and equipment:
Production equipment	9,940,480	11,271,982
Furniture and office equipment	891,921	952,883
Leasehold improvements	873,730	985,649
Total cost	11,706,131	13,210,514
Accumulated depreciation and amortization	(10,068,557)	(11,936,004)
Construction in progress	496,331	281,629
Net property and equipment	2,133,905	1,556,139
Right-of-use lease asset	261,000	332,000
Deferred taxes, net	1,877,302	1,569,726
Total assets	20,088,126	21,602,116
LIABILITIES AND STOCKHOLDERS` EQUITY
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,601,487 shares; outstanding 14,519,215 shares at each June 29, 2024 and December 30, 2023	146,015	146,015
Additional paid-in capital	40,386,335	40,180,893
Accumulated other comprehensive income	8,701	0
Accumulated deficit	(23,852,254)	(22,754,796)
Less cost of 82,272 common shares repurchased at each June 29, 2024 and December 30, 2023	(250,138)	(250,138)
Total stockholders` equity	16,438,659	17,321,974
Total liabilities and stockholders` equity	20,088,126	21,602,116
Current liabilities:
Note payable, current portion	31,885	46,797
Accounts payable	2,587,874	2,535,086
Accrued expenses	671,853	1,075,137
Deferred revenue	65,578	251,755
Current lease liability	160,000	160,000
Total current liabilities	3,517,190	4,068,775
Note payable less current portion	0	8,090
Deferred revenue – long term	31,277	31,277
Long-term lease liability	101,000	172,000
Total liabilities	3,649,467	4,280,142
Commitments and contingencies (note 6)

Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 29, 2024	Dec. 30, 2023
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	14,601,487	14,601,487
Common stock, outstanding (in shares)	14,519,215	14,519,215
Treasury stock, shares (in shares)	82,272	82,272

Statements of Operations and Other Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Product sales	$ 5,030,313	$ 7,418,138	$ 10,942,947	$ 14,518,405
Total revenues	5,030,313	7,418,138	10,942,947	14,518,405
Cost of product sales	5,260,305	5,221,879	10,266,629	10,077,444
Gross margin	(229,992)	2,196,259	676,318	4,440,961
Selling, general, and administrative expense	1,084,995	1,465,349	2,250,917	3,015,871
Income (loss) from operations	(1,314,987)	730,910	(1,574,599)	1,425,090
Interest income (expense), net	90,851	79,652	170,021	95,242
Net income (loss) before income tax	(1,224,136)	810,562	(1,404,578)	1,520,332
Income tax provision (benefit)	(269,832)	210,058	(307,120)	460,628
Net income (loss)	(954,304)	600,503	(1,097,458)	1,059,704
Net unrealized gains on available for sale securities	8,701		8,701
Total other comprehensive income	8,701		8,701
Total comprehensive income (loss)	$ (945,603)	$ 600,503	$ (1,088,757)	$ 1,059,704
Net income (loss) per basic common share (in dollars per share)	$ (0.07)	$ 0.04	$ (0.08)	$ 0.07
Weighted average number of basic common shares outstanding (in shares)	14,519,215	14,493,970	14,519,215	14,473,128
Net income (loss) per diluted common share (in dollars per share)	$ (0.07)	$ 0.04	$ (0.08)	$ 0.07
Weighted average number of diluted common shares outstanding (in shares)	14,519,215	14,621,929	14,519,215	14,630,765

Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Total
Balance (in shares) at Dec. 31, 2022	14,460,486
Balance at Dec. 31, 2022	$ 144,605	$ 39,726,851		$ (24,125,092)	$ (40,848)	$ 15,705,516
Share-based compensation expense	0	147,757		0	0	147,757
Net income (loss)	$ 0	0		1,059,704	0	$ 1,059,704
Employee option exercises (in shares)	86,001					86,001
Employee option exercises	$ 860	103,845		0	(71,090)	$ 33,615
Balance (in shares) at Jul. 01, 2023	14,546,487
Balance at Jul. 01, 2023	$ 145,465	39,978,453		(23,065,388)	(111,938)	16,946,592
Balance (in shares) at Apr. 01, 2023	14,467,487
Balance at Apr. 01, 2023	$ 144,675	39,867,507		(23,665,891)	(41,638)	16,304,653
Share-based compensation expense	0	17,316		0	0	17,316
Net income (loss)	$ 0	0		600,503	0	$ 600,503
Employee option exercises (in shares)	79,000					79,000
Employee option exercises	$ 790	93,630		0	(70,300)	$ 24,120
Balance (in shares) at Jul. 01, 2023	14,546,487
Balance at Jul. 01, 2023	$ 145,465	39,978,453		(23,065,388)	(111,938)	16,946,592
Balance (in shares) at Dec. 30, 2023	14,601,487
Balance at Dec. 30, 2023	$ 146,015	40,180,893	$ 0	(22,754,796)	(250,138)	17,321,974
Share-based compensation expense	0	205,442	0	0	0	205,442
Other comprehensive income	0	0	8,701	0	0	8,701
Net income (loss)	$ 0	0	0	(1,097,458)	0	$ (1,097,458)
Employee option exercises (in shares)						0
Balance (in shares) at Jun. 29, 2024	14,601,487
Balance at Jun. 29, 2024	$ 146,015	40,386,335	8,701	(23,852,254)	(250,138)	$ 16,438,659
Balance (in shares) at Mar. 29, 2024	14,601,487
Balance at Mar. 29, 2024	$ 146,015	40,341,855	0	(22,897,950)	(250,138)	17,339,782
Share-based compensation expense	0	44,480	0	0	0	44,480
Other comprehensive income	0	0	8,701	0	0	8,701
Net income (loss)	$ 0	0	0	(954,304)	0	(954,304)
Balance (in shares) at Jun. 29, 2024	14,601,487
Balance at Jun. 29, 2024	$ 146,015	$ 40,386,335	$ 8,701	$ (23,852,254)	$ (250,138)	$ 16,438,659

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
Statements of Cash Flows (Unaudited) - USD ($)	Jun. 29, 2024	Jul. 01, 2023
Cash flows from operating activities:
Net income (loss)	$ (1,097,458)	$ 1,059,704
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization	237,954	252,969
Share-based compensation	205,442	147,757
Changes in:
Accounts receivable-trade	324,862	(1,296,584)
Accounts receivable-other	(115,157)	611,028
Inventories	460,252	62,148
Prepaid expenses and other current assets	(90,306)	(77,073)
Accounts payable	52,788	522,667
Accrued expenses	(403,284)	40,658
Deferred taxes	(307,576)	405,404
Deferred revenue	(186,177)	(892,803)
Net cash provided by (used in) operating activities	(918,660)	835,875
Cash flows from investing activities:
Purchases of property and equipment	(815,720)	(433,579)
Purchase of marketable securities	(750,000)	0
Net cash used in investing activities	(1,565,720)	(433,579)
Cash flows from financing activities:
Proceeds from exercise of employee stock options, net of repurchases	0	33,615
Payments on note payable	(23,002)	(21,439)
Net cash provided by (used in) financing activities	(23,002)	12,176
Net increase (decrease) in cash and cash equivalents	(2,507,382)	414,472
Cash and cash equivalents at beginning of period	8,813,626	8,266,753
Cash and cash equivalents at end of period	6,306,244	8,681,225
Supplemental disclosures of cash flows information:
Cash paid for interest	1,465	2,902
Supplemental disclosures of non-cash activity:
Net exercise of stock options	$ 0	$ 71,090

Note 1 - Nature of Business

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

(1) Nature of Business

Using its proprietary MMC technology, the Company also produces light-weight armor, particularly for extreme environments and heavy threat levels.

Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(2) Summary of Significant Accounting Policies

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Note 3 - Marketable Securities

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

(3) Marketable Securities

Note 4 - Fair Value of Marketable Securities

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Fair Value Disclosures [Text Block]

(4) Fair value of Marketable Securities

	June 29, 2024	December 30, 2023
Cost basis	$ 750,000	--
Unrealized gain	$ 8,701	--
Total fair value	$ 758,701	--

Note 5 - Net Income Per Common and Common Equivalent Share

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Earnings Per Share [Text Block]

(5) Net Income Per Common and Common Equivalent Share

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

	Three Months Ended					Six Months Ended
	June 29,			July 1,		June 29,			July 1,
	2024			2023		2024			2023
Basic EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128

Basic EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Diluted EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128
Dilutive effect of stock options		-			127,959		-			157,637

Total Shares		14,519,215			14,621,929		14,519,215			14,630,765

Diluted EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Note 6 - Commitments and Contingencies

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

(6) Commitments & Contingencies

Commitments

Operating Leases

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating lease as of June 29, 2024:

(Dollars in Thousands)	June 29, 2024
Maturity of capitalized lease liabilities	Lease payments

2024	$	83
2025		165
2026		28
Total undiscounted operating lease payments	$	276
Less: Imputed interest		(15	)
Present value of operating lease liability	$	261

Balance Sheet Classification
Current lease liability	$	160
Long-term lease liability		101
Total operating lease liability	$	261

Other Information
Remaining lease term for capitalized operating lease (months)		20
Discount rate for capitalized operating leases		6.6	%

Operating Lease Costs and Cash Flows

Finance Leases

The company does not have any finance leases.

Note 7 - Share-based Payments

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(7) Share-Based Payments

Note 8 - Inventories

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Inventory Disclosure [Text Block]

(8) Inventories

Inventories consist of the following:

	June 29,			December 30,
	2024			2023

Raw materials	$	2,567,758		$	2,861,333
Work in process		1,579,991			1,493,582
Finished goods		393,889			537,975

Total inventory		4,541,638			4,892,890

Reserve for obsolescence		(419,960	)		(310,960	)

Inventories, net	$	4,121,678		$	4,581,930

Note 9 - Accrued Expenses

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

(9) Accrued Expenses

Accrued expenses consist of the following:

	June 29,		December 30,
	2024		2023

Accrued legal and accounting	$	67,846	$	86,000
Accrued payroll and related expenses		246,953		649,201
Accrued product returns		288,000		288,000
Accrued other		69,054		51,936

	$	671,853	$	1,075,137

Note 10 - Line of Credit

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

(10) Line of Credit

Note 11 - Note Payable

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Long-Term Debt [Text Block]

(11) Note Payable

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

Remaining in:	Payments due by period
FY 2024	$	23,795
FY 2025	$	8,090
Total		31,885

Total interest expense on notes payable during 2024 was $1,465.

Note 12 - Income Taxes

6 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(12) Income Taxes

For the three and six months ended June 29, 2024 the deferred tax asset was increased $40,256 and $307,576 for the estimated tax benefit on Q2 and year to date net losses, respectively

Insider Trading Arrangements

6 Months Ended

Jun. 29, 2024

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

ITEM 5

OTHER INFORMATION

Not applicable.

Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

Note 4 - Fair Value of Marketable Securities (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	June 29, 2024	December 30, 2023
Cost basis	$ 750,000	--
Unrealized gain	$ 8,701	--
Total fair value	$ 758,701	--

Note 5 - Net Income Per Common and Common Equivalent Share (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended					Six Months Ended
	June 29,			July 1,		June 29,			July 1,
	2024			2023		2024			2023
Basic EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128

Basic EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Diluted EPS Computation:
Numerator:
Net income (loss)	$	(954,304	)	$	600,503	$	(1,097,458	)	$	1,059,704

Denominator:
Weighted average
Common shares
Outstanding		14,519,215			14,493,970		14,519,215			14,473,128
Dilutive effect of stock options		-			127,959		-			157,637

Total Shares		14,519,215			14,621,929		14,519,215			14,630,765

Diluted EPS	$	(0.07	)	$	0.04	$	(0.08	)	$	0.07

Note 6 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

(Dollars in Thousands)	June 29, 2024
Maturity of capitalized lease liabilities	Lease payments

2024	$	83
2025		165
2026		28
Total undiscounted operating lease payments	$	276
Less: Imputed interest		(15	)
Present value of operating lease liability	$	261

Balance Sheet Classification
Current lease liability	$	160
Long-term lease liability		101
Total operating lease liability	$	261

Other Information
Remaining lease term for capitalized operating lease (months)		20
Discount rate for capitalized operating leases		6.6	%

Note 8 - Inventories (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 29,			December 30,
	2024			2023

Raw materials	$	2,567,758		$	2,861,333
Work in process		1,579,991			1,493,582
Finished goods		393,889			537,975

Total inventory		4,541,638			4,892,890

Reserve for obsolescence		(419,960	)		(310,960	)

Inventories, net	$	4,121,678		$	4,581,930

Note 9 - Accrued Expenses (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	June 29,		December 30,
	2024		2023

Accrued legal and accounting	$	67,846	$	86,000
Accrued payroll and related expenses		246,953		649,201
Accrued product returns		288,000		288,000
Accrued other		69,054		51,936

	$	671,853	$	1,075,137

Note 11 - Note Payable (Tables)

6 Months Ended

Jun. 29, 2024

Notes Tables

Schedule of Maturities of Long-Term Debt [Table Text Block]

Remaining in:	Payments due by period
FY 2024	$	23,795
FY 2025	$	8,090
Total		31,885

Note 4 - Fair Value of Marketable Securities (Details Textual)	Jun. 29, 2024 USD ($)
Investments, Fair Value Disclosure	$ 758,701

Note 4 - Fair Value of Marketable Securities - Marketable Securities Purchased (Details)	6 Months Ended
	Jun. 29, 2024 USD ($)
Cost basis	$ 750,000
Unrealized gain	8,701
Total fair value	$ 758,701

Note 5 - Net Income Per Common and Common Equivalent Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Weighted Average Number of Shares Outstanding, Diluted, Adjustment (in shares)	0	127,959	0	157,637
Scenario, Plan [Member]
Weighted Average Number of Shares Outstanding, Diluted, Adjustment (in shares)	29,254

Note 5 - Net Income Per Common and Common Equivalent Share - Table of Both Basic and Diluted EPS (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 29, 2024	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Basic EPS Computation:
Net income (loss)	$ (954,304)	$ (954,304)	$ 600,503	$ (1,097,458)	$ 1,059,704
Outstanding (in shares)		14,519,215	14,493,970	14,519,215	14,473,128
Basic EPS (in dollars per share)		$ (0.07)	$ 0.04	$ (0.08)	$ 0.07
Diluted EPS Computation:
Net income (loss)	$ (954,304)	$ (954,304)	$ 600,503	$ (1,097,458)	$ 1,059,704
Outstanding (in shares)		14,519,215	14,493,970	14,519,215	14,473,128
Dilutive effect of stock options (in shares)		0	127,959	0	157,637
Total Shares (in shares)		14,519,215	14,621,929	14,519,215	14,630,765
Diluted EPS (in dollars per share)		$ (0.07)	$ 0.04	$ (0.08)	$ 0.07

Note 6 - Commitments and Contingencies (Details Textual) ft² in Thousands, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 29, 2024 USD ($) ft²	Jun. 29, 2024 USD ($) ft²
Area of Real Estate Property (Square Foot) \| ft²	38	38
Norton Facility [Member]
Operating Lease, Expense	$ 41	$ 82
Minimum [Member]
Lessee, Operating Lease, Annual Rent Payments		160
Maximum [Member]
Lessee, Operating Lease, Annual Rent Payments		$ 165

Note 6 - Commitments & Contingencies - Maturity of Capitalized Lease Liabilities (Details) - USD ($)	Jun. 29, 2024	Dec. 30, 2023
2024	$ 83,000
2025	165,000
2026	28,000
Total undiscounted operating lease payments	276,000
Less: Imputed interest	(15,000)
Present value of operating lease liability	261,000
Current lease liability	160,000	$ 160,000
Long-term lease liability	101,000	$ 172,000
Total operating lease liability	$ 261,000
Remaining lease term for capitalized operating lease (months) (Month)	20 months
Discount rate for capitalized operating leases	6.60%

Note 7 - Share-based Payments (Details Textual) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares)	0		79,000	0	86,001
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in dollars per share)			$ 1.2		$ 1.22
Stock Repurchased During Period, Shares (in shares)	0		24,642	0	24,927
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number (in shares)	1,097,900			1,097,900
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 2.61			$ 2.61
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term (Year)	6 years 9 months 21 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number (in shares)	610,000			610,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 2.45			$ 2.45
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term (Year)	5 years 1 month 2 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)	1,500,000			1,500,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 648			$ 648
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				2 years 11 months 4 days
Share-Based Payment Arrangement, Expensed and Capitalized, Amount	$ 44,480	$ 17,316		$ 205,442	$ 147,757
The 2020 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)	638,300			638,300
The 2009 Stock Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number (in shares)	236,200			236,200
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares)	0	60,000
Outside Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares)	0	0
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in dollars per share)		$ 2.66

Note 8 - Inventories - Inventories (Details) - USD ($)	Jun. 29, 2024	Dec. 30, 2023
Raw materials	$ 2,567,758	$ 2,861,333
Work in process	1,579,991	1,493,582
Finished goods	393,889	537,975
Total inventory	4,541,638	4,892,890
Reserve for obsolescence	(419,960)	(310,960)
Inventories, net	$ 4,121,678	$ 4,581,930

Note 9 - Accrued Expenses - Accrued Expenses (Details) - USD ($)	Jun. 29, 2024	Dec. 30, 2023
Accrued legal and accounting	$ 67,846	$ 86,000
Accrued payroll and related expenses	246,953	649,201
Accrued product returns	288,000	288,000
Accrued other	69,054	51,936
Accounts Payable and Accrued Liabilities, Current	$ 671,853	$ 1,075,137

Note 10 - Line of Credit (Details Textual) - Revolving Credit Facility [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 29, 2024	May 01, 2023	May 31, 2020
Massachusetts Business Development Corporation [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 3,000
Long-term Line of Credit, Total	$ 0
Line of Credit Facility, Remaining Borrowing Capacity	$ 3,000
Rockland Trust Company [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000
Line of Credit Facility, Interest Rate During Period	8.50%

Note 11 - Note Payable (Details Textual) - USD ($)		1 Months Ended	6 Months Ended
Note 11 - Note Payable (Details Textual) - USD ($)	Sep. 30, 2019	Mar. 31, 2020	Jun. 29, 2024
Interest Expense, Debt			$ 1,465
Massachusetts Business Development Corporation [Member] \| Revolving Credit Facility [Member]
Debt Instrument, Termination Period (Year)	3 years
Microscope Note Payable [Member]
Debt Instrument, Term (Year)		5 years
Debt Instrument, Periodic Payment, Total		$ 4,000
Debt Instrument, Interest Rate, Stated Percentage		6.47%
Sonoscan Ultrasound Microscope [Member]
Property, Plant and Equipment, Gross, Ending Balance		$ 208,000

Note 11 - Note Payable - Note Payable Maturities (Details)	Jun. 29, 2024 USD ($)
FY 2024	$ 23,795
FY 2025	8,090
Total	$ 31,885

Note 12 - Income Taxes (Details Textual) - USD ($)	3 Months Ended	6 Months Ended
Note 12 - Income Taxes (Details Textual) - USD ($)	Jun. 29, 2024	Jun. 29, 2024
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ 40,256	$ 307,576