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Item 1. Business

2026-03-03 compared with 2025-03-17 · 199 added, 153 removed, 25 unchanged (93% of the section changed)

CPS Technologies Corp.

(the ‘Company’ or ‘CPS’) provides advanced material solutions for the transportation, automotive, energy, computing/internet, telecommunications, aerospace and defense markets.

CPS products are important elements in electrifying the green economy and in the protection of military personnel around the world.

Our primary material solution is metal matrix composites (MMCs).

We design, manufacture and sell custom MMC components that improve the performance and reliability of systems in the end markets described above.

The Company is an important participant in the growing movement towards alternative energy.

The Company’s products are used in high-speed trains, mass transit, hybrid and electric cars, wind-turbines for electricity generation, routers, switches and fiber optic components for internet infrastructure.

The Company’s Hermetic Packaging products are used in high reliability communications and power modules for avionics and satellite applications such as the current generation of GPS satellites.

The Company also produces housings and heat spreaders for high-performance microprocessors, graphics processing chips, and application-specific integrated circuits.

All of these applications involve electrical energy use or energy generation.

(the “Company” or “CPS”) is a Massachusetts-based advanced materials company founded in 1984 (originally as Ceramics Process Systems Corporation) and publicly listed on Nasdaq since 1987.

Renamed CPS Technologies Corp.

in 2007, the Company designs, manufactures, and sells high-performance material solutions for global customers across diverse markets, including transportation, energy, automotive, electronics, telecommunications, aerospace, and defense.

CPS possesses significant proprietary expertise in metal matrix composites (MMCs), which are custom-engineered materials that combine metals and ceramics to deliver superior performance properties.

Due to these properties, which include improved thermal conductivity, stiffness, durability, lighter weight, and thermal expansion matching compared to conventional materials, the Company's products are well suited for applications with high performance demands.

CPS’s components are used in high-speed trains, mass transit, HVDC power systems, electrical infrastructure, internet equipment, electric and hybrid vehicles, wind turbines, satellites, and even NASA Mars rovers.

Hermetic Packaging products, the Company’s second product category, are used in high reliability communications and power modules for avionics and satellite applications, including GPS systems.

The Company’s products include housings and heat spreaders for high-performance microprocessors, graphics processing chips, and application-specific integrated circuits.

The Company’s products allow higher performance and improved energy efficiency, particularly in applications in which there is a high cost of failure.

Using its proprietary MMC technology, the Company also produces light-weight armor.

Due to its ability to withstand extreme environments and high threat levels, CPS armor has been selected as the solution for crew served weapons stations on the U.S.

The Company is a fully qualified supplier to many major global electronics OEMs.

Using its proprietary MMC technology, the Company also produces lightweight, high performance armor.

Due to its ability to withstand extreme environments and high threat levels, the Company's HybridTech Armor® has been selected as the solution for crew served weapons stations on the U.S.

Navy’s aircraft carriers.

Its light weight also makes it an ideal solution for aircraft and other vehicles requiring a high strength to weight ratio.

MMCs are a class of materials consisting of a combination of metals and ceramics.

Compared to conventional materials, MMCs provide superior thermal conductivity, improved thermal expansion matching, greater stiffness and lighter weight.

This makes CPS products very useful for applications in which there is a high cost of failure.

These factors, in particular the lighter weight and durability, are among the reasons CPS parts are on the last two Mars Rovers as well as many satellites.

CPS is a fully qualified manufacturer for many of the world’s largest electronics OEMs.

In 2022 CPS resumed its participation in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, sponsored by the US Small Business Administration.

CPS maintains a strong focus on research and development and is actively expanding its product portfolio.

The Company's strategy is to drive sustained, profitable growth by developing and delivering advanced, high-performance material solutions to a diversified set of global, high-growth end markets.

The Company focuses on applications where performance and reliability are critical, and where the cost of failure is often high.

While many of these new product initiatives involve the utilization of our current materials science and manufacturing expertise, many of them address large markets which we have not historically served.

The Company believes its diversified end-market strategy, emphasis on innovation, growing portfolio of market-driven intellectual property (IP), and reputation for quality and reliability position the Company for sustained growth in high-value, technology-driven markets.

Central to this strategy is leveraging CPS’s proprietary MMC technologies and specialized manufacturing processes (Quickset and QuickCast) to create customized products that are difficult for competitors to replicate.

CPS emphasizes technical differentiation, quality, and reliability to maintain strong customer relationships with leading OEMs in electronics, transportation, energy, aerospace, and defense.

In 2022 the Company resumed participation in U.S.

government Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, through which it has now secured multiple Phase I and Phase II awards, strengthening its intellectual property portfolio.

These programs provide funding for innovative research and development to domestic small businesses, who maintain certain intellectual property rights.

The technologies developed by the Company during these programs will further enhance CPS’ intellectual property portfolio.

In 2024 CPS received funding for its first two Phase II SBIRs confirming its decision to participate in these programs and further advancing this portfolio.

CPS management believes our business model of providing advanced material solutions to a portfolio of high growth end markets in various stages of the technology adoption lifecycle provides CPS with the opportunity for sustained growth and a diversified customer base.

We have a number of significant production orders generating revenue, but also have many significant opportunities for new products which could lead to significant production orders in new product lines in the future.

In 2024 CPS received funding for its first two Phase II SBIRs.

In 2025, CPS received funding for its third Phase II program as well as five new phase I SBIRs.

CPS management believes our business model of providing advanced material solutions to a portfolio of high growth markets provides CPS with the opportunity for sustained growth and a diversified customer base.

While we have a number of ongoing production orders generating significant revenue, we also have many new product opportunities which could lead to significant production orders in new product lines in the future.

Some of these opportunities may come to fruition as early as the next year or two, while others will take longer to develop.

We believe we have validated this model as we are now supplying customers at all stages of the technology adoption lifecycle.

Our products are manufactured by proprietary processes we have developed including the QuicksetTM Injection Molding Process (“Quickset Process”) and the QuickCastTM Pressure Infiltration Process (“QuickCast Process”).

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, the Company changed its name from Ceramics Process Systems Corporation to CPS Technologies Corp.

CPS’ website is http://www.cpstechnologysolutions.com.

Overview of Markets and Products

Electronics Markets Overview

The applications for electronics can typically be characterized as either power processing or signal processing.

Power processing consists of converting the electrical power provided by the power source into the appropriate voltage and amperage needed by the device using the power.

Signal processing consists of the myriad ways digital and analog signals are used in computing, communications, and related applications.

In both power processing and signal processing, end-user demand continues to motivate the electronics industry to produce products which:

- operate with lower losses and/or at higher speeds;

- are smaller in size;

- operate with higher reliability.

While these three requirements result in products of ever-increasing performance, they also create a fundamental challenge for the designer to manage the heat generated by the system operating at higher speeds and/or higher power.

Smaller assemblies further concentrate the heat and increase the difficulty of removing it.

This challenge is found at each level in an electronic assembly:

at the integrated circuit level, speeds are increasing and line widths are decreasing;

at the circuit board level, higher density devices are placed closer together;

and at the system level, higher density circuit boards are being assembled closer together.

Silicon carbide chips are slowly replacing silicon chips due to their higher efficiency.

Silicon carbide chips run at higher temperatures than silicon chips, furthering the need for proper thermal management.

The designer must resolve the thermal management issues or the system will fail.

For every 10 degree Celsius rise in temperature above a threshold level, the reliability of an integrated circuit is decreased by approximately half.

In addition, heat usually causes changes in parameters which degrade the performance of both active and passive electronic components.

To resolve thermal management issues, the designer is primarily concerned with two properties of the materials which comprise the system:

1) thermal conductivity, which is the rate at which heat moves through materials, and 2) thermal expansion rate (Coefficient of Thermal Expansion or CTE), which is the rate at which materials expand or contract as temperature changes.

The designer must ensure that the temperature of an electronic assembly stays within a range that ensures that the expansion rates of the materials in the assembly do not result in a failure due to breaking, delaminating, or related causes.

CPS combines at the microstructural level a ceramic with a metal to produce a metal matrix composite which has the thermal conductivity needed to remove heat, and a thermal expansion rate which is sufficiently close to other components in the assembly to ensure the assembly is reliable.

Typically the ceramic is silicon carbide (SiC), the metal is aluminum (Al), and the composite is aluminum silicon carbide (AlSiC), a metal-matrix composite.

CPS can adjust the thermal expansion rate of AlSiC components to match the specific application by modifying the amount of SiC compared to the amount of Al in the component.

CPS produces products made of AlSiC in the shapes and configurations required for each application, for example, in the form of lids, substrates, housings, etc.

Operationally, the Company typically follows a build-to-order, highly customized manufacturing model, supported by ongoing investments in employee training, automation, and process efficiency.

CPS also emphasizes regulatory compliance, cybersecurity, and export controls to support its growing presence in defense- and aerospace-related markets.

Overall, CPS’s strategy is to combine advanced materials science, proprietary processes, disciplined operations, and targeted investment in product development to build a diversified, defensible business positioned for long-term growth in demanding, technology-driven markets.

In 2025, our three largest customers accounted for 39%, 13%, and 12% of revenues, respectively.

In 2025, approximately 81% of our revenues were derived from commercial applications and 19% from defense-related applications.

CPS’s website is http://www.cpstechnologysolutions.com.

Metal Matrix Composites

We design, manufacture and sell custom MMC components that improve the performance and reliability of systems in applications that include high-speed trains, mass transit, hybrid and electric cars, energy infrastructure, High-Voltage Direct Current (HVDC) converter stations, wind-turbines, routers, switches and fiber optic components for internet infrastructure.

MMCs are advanced materials formed by combining metals with ceramics.

Compared to conventional materials, MMCs offer higher thermal conductivity, better thermal expansion matching, increased stiffness, and significantly lower weight.

These advantages, in particular the lighter weight and durability, are why CPS components have been used on the last two Mars Rovers, as well as on numerous satellites.

CPS produces MMCs by combining a ceramic and a metal at the microstructural level, creating materials that efficiently dissipate heat while maintaining a coefficient of thermal expansion closely matched to surrounding components.

This compatibility is critical to the long-term reliability of the assembly.

Typically, the ceramic is silicon carbide (SiC) and the metal is aluminum (Al), resulting in an aluminum silicon carbide (AlSiC) composite.

By adjusting the SiC-to-aluminum ratio, CPS can tailor the thermal expansion of AlSiC components to meet the requirements of each customer’s application.

We provide baseplates and heat spreaders on which power semiconductors are mounted to produce modules for motor control.

The power semiconductors are typically Insulated Gate Bipolar Transistor, or IGBTs.

Our MMC baseplates have sufficient thermal conductivity to enable removal of heat through the baseplate and have a thermal expansion rate sufficiently similar to the other components in the assembly to ensure reliability over time as the assembly thermally cycles.

We believe this market will continue to grow as the use of power modules penetrates additional motor applications, and as electric motors themselves penetrate new applications such as hybrid and electric vehicles and HVDC converter stations.

CPS produces products made of AlSiC in the shapes and configurations required for each application, for example, in the form of baseplates, lids, substrates, housings, etc.

Every product is made to a customer’s specifications.

The CPS process technology allows most products to be made to net shape, requiring little or no final machining.

The Company primarily manufactures MMC components comprised of AlSiC.

Nevertheless, its proprietary Quickset- Quickcast process technology can be used to produce other MMCs to meet market requirements.

Although the Company primarily manufactures MMC components comprised of AlSiC, its proprietary Quickset and Quickcast process technologies can be used to produce other MMCs to meet market requirements.

For example, CPS combines aluminum with other ceramic or metal components such as ceramic fibers, tungsten and boron carbide.

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SiC chips are more efficient than Si chips and are being used more frequently in power applications.

Modules using SiC chips run at higher temperatures, increasing the need for improved thermal management, a need which the Company’s products meet.

Armor Market Overview

Armor has traditionally been comprised of steel panels.

As threat levels have increased, the amount of steel required to provide sufficient ballistic protection has become unacceptably heavy and therefore detrimental to a vehicle’s performance.

military has increasingly used ceramic armor in weight sensitive applications.

However, ceramic armor has several limitations, including limited multi-hit capability.

By embedding ceramic armor tiles in a metal matrix, these problems are overcome;

the result is armor that is light-weight, has excellent ballistic protection, and environmental durability.

The Company’s HybridTech Armor® panels are particularly well suited for extreme environments – the panels do not degrade in salt spray or extreme heat.

The Company has produced armor panel strikefaces for the U.S.

Navy aircraft carrier fleet and expects it will be used in other surface vessel applications in the future.

Product Development Overview

Since our reengagement in the SBIR/STTR programs, CPS has added significant resources for developing new products.

Many of these new product initiatives are for markets not currently served by CPS, and they involve the utilization of our current materials science and manufacturing expertise to address well-defined customer requirements.

Our Phase II SBIR for the US Navy involves using our aluminum infiltration process with nitinol for use in thermal energy storage.

Nitinol allows for significantly better storage than the Navy’s current solution.

Similarly, our Phase II SBIR for the Department of Energy to create radiation shielding for the transportation of nuclear micro-reactors involves the infiltration of boron carbide and tungsten with aluminum to create a lightweight solution to this problem, allowing for their safe transportation.

CPS also self-funds a number of product development efforts.

In March 2024 we announced our worldwide, exclusive licensing agreement with Triton Systems for their Fiber Reinforced Aluminum (FRA).

FRA is stronger and more durable than neat aluminum, especially at high temperatures, at only a marginally higher weight.

Target applications for FRA include helicopter bearing liners, with FRA serving as a replacement for much heavier steel, providing a lighter weight solution that allows for more cargo weight.

While this could lead to large production orders to CPS, it will likely take several years of testing before this comes to fruition.

Based on customer interest, we anticipate other potential applications for this material, which could result in a faster move into regular production.

We continue to work on broadening our armor offerings.

The development of STANAG 6 ballistic protection remains a priority.

If successful this could lead to the incorporation of CPS armor into ground vehicles.

Similarly, we continue to work on lightweight armor for helicopter flooring which came out of a Phase I SBIR funded by the US Army.

Although the US Army did not allocate any Phase II for this program, due to interest from certain helicopter OEMs, CPS has successfully performed ballistic testing on the flooring, which was not part of the funded Phase I effort.

CPS also has a number of other product development initiatives which may or may not lead to additional business in the future.

Specific Markets and Products

Motor Controller Applications (Insulated Gate Bipolar Transistor ("IGBT") Applications)

The electrification of the economy – particularly the use of electric motors and power modules to control electric motors of all sizes – is growing.

This growth is the result of several factors including emerging high-power applications which demand power modules such as trains, subways and certain industrial equipment, and cost reductions in power modules which increasingly make variable speed drives cost effective.

Power semiconductors are a significant portion of the cost of variable speed drives, and the cost of the module housing and thermal management system are also significant;

cost reductions of all these components are driving increased use of variable speed drives.

We provide baseplates and heat spreaders on which power semiconductors are mounted to produce modules for motor control.

The power semiconductors are typically IGBTs and these applications are often referred to as IGBT applications.

Our MMC (AlSiC) baseplates have sufficient thermal conductivity to enable removal of heat through the baseplate and have a thermal expansion rate sufficiently similar to the other components in the assembly to ensure reliability over time as the assembly thermally cycles.

Today our primary products for IGBT applications are used in electric trains, subway cars, wind turbines and hybrid and electric vehicles.

Major automobile companies around the world are introducing hybrid electric vehicles (HEVs) and electric vehicles (EVs) at an increasing rate.

There are many varieties of HEVs and EVs, but all HEVs and EVs contain an electric motor and one or more motor controller modules.

The Company provides baseplates on which motor controller modules are assembled;

these baseplates are lighter weight and provide greater reliability than baseplates made from more conventional materials, typically copper.

Copper is less expensive than the Company’s MMC solution, but its rate of thermal expansion is significantly different than that of the silicon semiconductors mounted to the baseplates.

In low voltage applications, this is not a problem as the heat being generated is not enough to degrade the reliability of the power module.

As voltage levels and the heat related to them go up, MMC baseplates become the preferred solution.

Currently, HEV/EV manufacturers who want to save on short term costs are using power modules with copper baseplates, while those who want longer term reliability, such as those in the luxury vehicle market, may use power modules with an MMC (AlSiC) baseplate.

Of particular interest is the move to using Silicon Carbide (SiC) semiconductors instead of silicon semiconductors.

SiC is more efficient than silicon allowing, among other things, for EVs and HEVs to run for longer distances on a single battery charge.

This is important to CPS, as SiC semiconductors run hotter than silicon semiconductors.

As such, the voltage level at which AlSiC becomes preferred over copper would be lower, creating expanded opportunities for AlSiC baseplates.

Hermetic Packages

Hermetic packaging products are primarily used for space applications such as satellites, flight applications such as avionics and undersea applications such as torpedoes, submarines and communications buoys.

Hermetic packages allow the assembly of multiple semiconductor devices known as Hybrid Microelectronic Assemblies (HMA).

Today’s HMA technology can, in a CPS 2”x2” package, provide the computing technology of today's typical server or yesterday's small mainframe.

CPS is the only producer of hermetic packages with AlSiC bases, combining our expertise in hermetic package production with our expertise in MMC production.

Modules using SiC chips run at higher temperatures, increasing the need for improved thermal management, a need which the Company's products address.

CPS’s MMC products enable higher system performance, improved energy efficiency, and enhanced reliability across a broad range of advanced industrial, electronics, energy, aerospace, and defense applications.

CPS’s MMC products are targeted at customers operating in high-performance, high-reliability industries where material properties such as thermal management and durability are critical.

Hermetic Packaging Products

CPS’s hermetic packaging products are designed for high-reliability electronic and power applications in aerospace, defense, space, telecommunications, and advanced electronics.

These products leverage CPS’s materials science expertise and precision manufacturing capabilities to protect microelectronics from moisture, contaminants, and harsh operating environments.

CPS’s products support mission-critical systems with a high cost of failure.

Extended reliability, effective environmental sealing, and superior thermal performance are critical product attributes.

These products are frequently used for space applications such as satellites, flight applications such as avionics and undersea applications such as torpedoes, submarines and communications buoys.

The Company also produces housings and heat spreaders for high-performance microprocessors, graphics processing chips, and application-specific integrated circuits.

To our knowledge, CPS is the only producer of hermetic packages with AlSiC bases, combining our expertise in hermetic package production with our expertise in MMC production.

The CPS AlSiC hermetic package provides tremendous benefits in terms of reduced weight and CTE matching which are extremely important for space-based programs.

CPS hermetic packages are used in every current generation GPS satellite, the Mars Perseverance rover as well as many other aerospace applications.

We sell primarily to major microelectronics systems houses in the United States, Europe and Asia.

There are even CPS parts on NASA’s New Horizons mission, currently well beyond Pluto and in the Kuiper Belt!

We sell primarily to major microelectronics systems houses in the U.S., Europe and Asia.

Our customers typically purchase prototype and evaluation quantities of our products over a one to three year period before purchasing production volumes.

In 2024, our three largest customers accounted for 32%, 15%, and 11% of revenues, respectively.

In 2024, approximately 70% of our revenues were derived from commercial applications and 30% from defense-related applications.

Availability of Raw Materials

HybridTech Armor ®

CPS’s armor products, marketed under the HybridTech Armor® brand, utilize the Company’s proprietary MMC technology to deliver lightweight, high-strength protection capable of withstanding extreme environments and advanced ballistic threats.

Designed for defense customers operating across diverse and demanding conditions, the MMC-based armor line addresses mission requirements where reducing weight without compromising protection is critical.

Historically, armor systems have relied on steel panels.

As ballistic threat levels have increased, the amount of steel required to achieve adequate protection has become prohibitively heavy, negatively impacting platform performance.

While ceramic armor has been adopted by the U.S.

military for weight-sensitive applications, it has notable limitations, including reduced multi-hit capability.

CPS’s MMC technology overcomes these challenges by embedding ceramic armor elements within a metal matrix, resulting in a lightweight, durable armor system with excellent ballistic performance (including robust multi-hit capability) that is well suited for demanding operational environments.

HybridTech Armor® is suitable for a wide range of applications, including ground vehicles, naval and amphibious vessels, aircraft, and fixed installations.

Compared with traditional armor materials, CPS’s solutions provide superior ballistic protection at significantly reduced weight, along with enhanced durability in harsh environments such as salt spray and extreme heat.

Armor panels are custom engineered to meet specific ballistic threat levels and to integrate seamlessly with vehicle, aircraft, or platform design requirements.

From 2021 through 2024, CPS manufactured armor panel strikefaces for the U.S.

Navy’s aircraft carrier fleet.

These panels are currently being installed on these ships, beginning with the USS Abraham Lincoln.

The Company expects this technology to be adopted for additional surface vessel applications in the future.

A new Phase I program funded by the U.S.

Navy in 2025 provides for the lightweighting of the U.S.

Marine Corps Amphibious Combat Vehicle (ACV).

CPS’s HybridTech armor solution offers a potential replacement for the steel panels currently used for ballistic protection on the ACV, which would provide significant weight reduction.

Product Development

CPS’s product development efforts are focused on leveraging its core materials science expertise and proprietary manufacturing technologies to address clearly defined customer requirements in high-growth markets.

Using this methodology, the Company is developing products for new applications while strengthening its intellectual property portfolio.

New initiatives are typically built on CPS’s established strengths, such as the design and manufacture of MMCs, enabling the Company to reuse established processes while expanding into new markets.

These materials can provide desirable properties, including low density, high strength and stiffness, low coefficient of thermal expansion, and be either highly conductive or insulating.

These properties allow MMCs to function in thermal management applications, as lightweight structures, and as supports that provide high levels of dimensional stability.

CPS follows a solution-driven process for developing new products, often involving close collaboration with the customer.

New product ideas are typically based on well-defined customer requirements, often in high-reliability, mission-critical applications.

Components often undergo rigorous testing to meet customer specifications.

For example, hermetic packaging products receive specialized testing for challenging environments (e.g., salt fog) while armor products are tested for ballistic performance at specialized laboratories.

The vast majority of CPS’s solutions are internally developed, However, in March 2024 the Company announced it had entered into a worldwide, exclusive licensing agreement with Triton Systems for their Fiber Reinforced Aluminum (FRA) solution.

FRA, which CPS is marketing as AlMax, is stronger and more durable than neat aluminum, especially at high temperatures, at only a marginally higher weight.

Target applications include helicopter bearing liners, with FRA serving as a replacement for much heavier steel, providing a lighter weight solution.

While this could lead to large production orders for CPS, it will likely take several years of testing before this comes to fruition.

Based on customer interest, we anticipate other potential applications for this material, which could result in a faster move into regular production.

The Company’s pipeline management approach allocates resources to projects that have strong technical differentiation and a high potential for commercialization.

The Company seeks to:

Broaden its product portfolio

Strengthen its competitive advantage through technical differentiation

Develop unique materials, designs, and manufacturing processes that create defensible barriers to entry

Expand its engineering, design, simulation, prototyping, and testing capabilities

Shorten internal development cycles

Validate product performance to meet established standards

Current areas of active development include:

Injection molded alloys and ceramics:

CPS has utilized Quickset Injection Molding as part of the fabrication process for AlSiC composites for decades.

The process offers broad compatibility with most alloys (stainless steels, tungsten, nickel alloys, and others) and ceramics (silicon carbide, boron carbide, alumina, silicon nitride, and others).

CPS is actively pursuing opportunities for fabricating these materials, offering an alternative to traditional injection molding.

The CPS process results in larger, more complex, easier to sinter alloys and ceramics with demonstrated high volume capacity.

Infiltration of composites:

CPS utilizes QuickCast Pressure Infiltration to convert porous silicon carbide preforms to AlSiC composites.

The same molten aluminum infiltration process can be used to fabricate other types of MMCs.

CPS is actively maturing and commercializing AlMax, a high strength aluminum composite reinforced with discontinuous ceramic fibers.

Additional opportunities include utilizing the process with reinforcements that yield unique properties such as radiation shielding (boron carbide and/or tungsten) and ultra-high strength (continuous ceramic fibers).

HybridTech Armor:

These products have been successfully installed on U.S.

Navy aircraft carriers.

HybridTech is easily modified by altering ceramic fiber reinforcements, ceramic tile composition, and overall panel thickness.

CPS is actively engaged in developing alternate HybridTech designs to meet demand across platforms that demand both extremely low density armor solutions (aircraft) and heavy, high-threat situations (land vehicles).

SBIR and STTR Programs

CPS actively participates in the SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programs of the U.S.

Since reengaging in these programs in 2022, the Company has secured 13 Phase I or Phase II awards, as of December 27, 2025, funded by either the Department of Defense or the Department of Energy.

These programs now support a significant portion of the Company’s new product development efforts.

The Company’s three active Phase II programs, as of December 27, 2025, are as follows:

modular radiation shielding for nuclear applications (funded by the Department of Energy);

the application of MMCs to thermal management for long range missiles (funded by the U.S.

and development of a controlled fragmentation tungsten warhead (funded by the U.S.

SBIR and STTR contracts are administered by the Small Business Administration to promote domestic research and development of innovative technologies.

The awards fund advanced research and development (R&D) initiatives, reduce financial risk, and contribute to the expansion of CPS’s intellectual property portfolio.

CPS is among a relatively small number of publicly traded companies that meet the program’s eligibility requirements, including size, ownership structure, and U.S.

operational presence.

Through SBIR and STTR funding, CPS is able to pursue research avenues that might not otherwise be possible, while retaining certain intellectual property rights.

Technologies developed under these federal programs often transition into commercial product pipelines, strengthening the Company’s long term innovation and IP strategy.

The typical SBIR/STTR funding structure is as follows:

Feasibility Study.

Initial government funding to evaluate the technical merit, feasibility, and commercial potential of the solution proposed in response to a published need.

Prototype Development.

Funding for the development of prototypes, engineering models, and testing based to expand upon Phase I results.

Enables the small business to refine products and prepare them for commercialization.

Commercialization.

No direct SBIR/STTR funding.

The small business uses commercial or non-SBIR government funding to bring products to market.

Successful Phase I/II projects often attract commercial interest or government contracts.

An important element of the SBIR/STTR program is the “Phase III mandate.” Federal agencies are required to grant non-competitive, follow-on contracts to small businesses for technology developed under Phase I and Phase II contracts, provided the work derives from or extends that earlier work.

This provides a mechanism to commercialize technology without additional competition, enabling rapid procurement to satisfy government needs.

To satisfy this mandate, federal agencies should, "to the greatest extent practicable," award Phase III contracts to the original Phase I/II awardee, bypassing the need for a separate, formal competition.

There is no limit on the number, duration, or dollar value of Phase III awards.

Additionally, although the Company must be a small business to receive Phase I or Phase II funding, they may have outgrown small business status by the time of the Phase III award.

This directive ensures that the government can continue to access the promising technology which was developed with government funding.

CPS’s primary competitor for MMC baseplates is Denka, a large Japanese chemical company.

Other potential competitors include emerging Chinese manufacturers offering lower-priced products.

For customers whose applications are less demanding, a copper baseplate is an attractive alternative.

Copper is less expensive than an AlSiC solution, but its rate of thermal expansion is significantly different than that of the silicon semiconductors mounted to the baseplates.

In low voltage applications, a copper solution is sufficient as the heat being generated is not enough to degrade the reliability of the power module.

As voltage levels and the heat related to them go up, MMC baseplates become the preferred solution.

The market for HPB products is highly fragmented with multiple specialized manufacturers.

Key competitors of CPS include Egide, Ametek, and Qnnect.

Due to the nature of the business, most of CPS’s competitors in this market are domestic.

CPS has no direct competitors for its armor solution.

Rather competition is based on three factors, effectiveness, weight and price.

By effectiveness we mean not only its ability to stop ballistic threats, but also its durability in the environment in which it will be deployed.

We believe our armor solution provides significant advantages regarding its effectiveness per pound, hence the reason it was selected by the US Navy for the crew served weapons stations on its air craft carrier fleet.

Raw Materials

We use a variety of raw materials from numerous domestic and foreign suppliers.

These materials are primarily aluminum ingots, ceramic powders, chemicals and hermetic assembly components.

The raw materials we use are available from domestic and foreign sources and none is believed to be scarce or restricted for national security reasons.

None of the raw materials we use is believed to be scarce or restricted for national security reasons.

We use no conflict metals.

Patents and Trade Secrets

As of December 28, 2024, the Company had 9 United States patents.

In addition, the Company had several international patents covering the same subject matter as the U.S.

In addition, CPS has applied for patent protection for its nuclear shielding solution.

We intend to continue to apply for domestic and foreign patent protection in appropriate cases.

In other cases, we believe we are better served by reliance on trade secret protection.

In all cases, we seek protection for our technological developments to preserve our competitive position.

Backlog and Contracts

Virtually 100% of the Company's product sales are custom in that they are based on customers’ drawings and the large majority of these sales are "designed in" and sold over multiple years.

Some large customers typically give the Company a non-binding forecast of demand for a one-year period and then negotiate a pricing agreement with the Company valid for that one-year period.

Sales, Marketing and Order Backlog

CPS’s go-to-market strategy leverages its proprietary solutions to address well-defined customer requirements.

CPS primarily sells custom, high-reliability products to OEMs in various markets.

The sales effort emphasizes key attributes for a given market, such as technical performance, reliability, and energy efficiency.

The Company targets customers at all stages of the technology adoption lifecycle, from early-stage innovators to large, established OEMs.

Sales efforts include direct engagement with engineers, procurement teams, and program managers to establish clearly defined requirements.

In its marketing efforts, the Company leverages industry reputation, technical competence, and successful past projects to demonstrate credibility.

Long-standing relationships with major OEMS and federally funded research programs serve as valuable indicators of technical capability.

Marketing emphasizes performance, quality, and reliability as critical product differentiators.

The majority of the Company's product sales are custom in that they are based on customers’ drawings and the large majority of these sales are "designed in" and sold over multiple years.

Some large customers typically give the Company a non-binding forecast of demand for a one-year period and then negotiate a pricing agreement for that period.

These and other customers typically issue purchase orders to be shipped on a particular date, or to be drawn against and shipped under releases.

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This backlog consists of orders received from customers which are, for the most part, scheduled to ship in 2026.

Under certain circumstances, customers may be able to cancel existing orders or extend the period over which orders may be shipped.

Under certain circumstances, customers may be able to cancel existing orders or extend the period over which orders are shipped.

Some of these changes may be significant, which would reduce this backlog or extend the timing of these shipments.

We have developed and expect to continue to develop products for a number of different end markets, and we will encounter competition from different producers of MMCs, hermetic packages, armor, and other competing materials.

We believe that the principal competitive factors in our end markets today include technical competence, product performance, quality, reliability, price, delivery performance, corporate reputation, and strength of sales and marketing resources.

We believe our proprietary processes, reputation, and the price at which we can offer products for sale will enable us to compete successfully in the many electronics, aerospace and defense end markets.

Our primary direct competitor in MMCs is Denka, a large chemical company based in Japan.

We also see manufacturers in China seeking to penetrate our markets.

We believe they offer their products at lower prices, but they have generally not yet been to be able to provide the delivery, performance, quality and reliability required by the market.

The market for hermetic packages is much more fragmented.

There are a number of different hermetic package types, allowing different manufacturers to specialize in a particular area of the hermetic package market.

Some of these companies are competitors of CPS, while others focus on product types not sold by CPS.

CPS continues to expand our technical competence to increase our offerings in areas in which we previously did not participate.

Based on these increased offerings, combined with our emphasis on quality and customer service, we expect to see continued growth in our hermetic package product line.

Our main domestic competitors in this arena include Egide, Ametek, and Qnnect (formerly Hermetic Solutions Group).

The company does not currently have orders to produce its HybridTech Armor® panels as the aircraft carrier order has been completed.

We continue to work with Kinetic Protection, the Navy’s prime contractor, to get new orders for other classes of Navy ships.

To our knowledge, we do not have any direct competitors who produce encapsulated armor.

Our competition in this area consists of alternatives to our HybridTech Armor® which involve tradeoffs regarding cost, weight, anti-ballistic properties, etc.

As CPS expands its armor capabilities, we could begin to see more direct competition from more established armor producers.

Government Regulation

We produce non-nuclear, non-medical hazardous waste in our development and manufacturing operations.

The disposal of such waste is governed by state and federal regulations.

Various customers, vendors, and collaborative development agreement partners of CPS may reside abroad, thereby possibly requiring export and import by CPS of raw materials, intermediate products, and finished products, as well as potential technology transfer abroad under collaborative development agreements.

These types of activities are regulated by bureaus within the Departments of Commerce, State and Treasury.

Intellectual Property

CPS’s intellectual property consists primarily of proprietary processes and technical know-how.

Some of this intellectual property is protected by the filing and maintenance of patents, both domestically and internationally.

In other cases, we believe we are better served by reliance on trade secret protection.

In all cases, we seek protection for our technological developments to preserve our competitive position.

As of December 27, 2025, the Company had 8 United States patents.

In addition, the Company had several international patents covering the same subject matter as the U.S.

CPS has also applied for patent protection for its nuclear shielding solution.

We intend to continue to apply for domestic and foreign patent protection in appropriate cases.

The Company’s intellectual property portfolio provides competitive differentiation, protects innovation, and supports commercialization.

Key proprietary manufacturing processes include the Company's Quickset™ Injection Molding Process (for precision MMC components with superior thermal and structural performance) and QuickCast™ Pressure Infiltration Process (for complex MMC parts with uniform properties and high strength-to-weight ratios).

Proprietary processes such as these allow CPS to offer unique solutions that are difficult for competitors to replicate.

Ongoing R&D, including funded SBIR/STTR contracts, helps enhance the Company's IP portfolio, supporting new product development and potential expansion into new markets.

Regulatory and Environmental Matters

Regulatory Compliance

CPS operates in industries subject to aerospace, defense, electronics, and international trade regulations.

Certain activities, such as the import/export of raw materials, intermediate products, and finished goods, may require compliance with U.S.

Departments of Commerce, State, and Treasury regulations.

Work in the aerospace and defense sector also subjects CPS to government requirements for handling controlled unclassified information (CUI);

more information about this is provided in the cybersecurity section of this document.

Environmental Compliance

The Company produces non-nuclear, non-medical hazardous waste in its R&D and manufacturing operations.

Disposal of this waste is governed by federal and state environmental regulations.

CPS actively manages hazardous materials and byproducts to ensure compliance with all applicable laws and minimize environmental impact.

As of December 27, 2025, we had 117 permanent full-time employees.

107 were engaged in manufacturing and engineering and 10 in sales and administration, including finance, human resources and general management.

We also have approximately 48 manufacturing people working with us through temporary employment agencies.

We also have approximately 33 manufacturing personnel who are employed through temporary employment agencies.

During 2025, the Company continued its efforts to increase factory efficiency both in terms of employee training as well as increased automation.

None of our employees is covered by a collective bargaining agreement.

None of our employees are covered by a collective bargaining agreement.

We consider our relations with our employees to be excellent.

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What changed 10-K

Item 1. Business