CPS TECHNOLOGIES CORP/DE/ — Interim / Quarterly Report 2007

Aug 8, 2007

10-Q 1 cps2007q210q.htm CPS Q2 2007 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q

(Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 2007 or

[ ] 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 CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization	04-2832409 (I.R.S. Employer Identification No.)
111 South Worcester Street Norton MA (Address of principal executive offices)	02766-2102 (Zip Code)

(508) 222-0614

Registrants Telephone Number, including Area Code:

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. [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): [ ] Yes [X] No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of July 10, 2007: 12,546,959.

PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS (Unaudited) CPS TECHNOLOGIES CORPORATION Consolidated Balance Sheets (Unaudited) (continued on next page)

	June 30,	December 30,
	2007	2006
ASSETS	-------------	-------------
Current assets:
Cash and cash equivalents	$ 509,281	$ 517,540
Accounts receivable-trade
net of allowance for doubtful accounts
of $5,461	2,154,862	2,918,156
Inventories	1,471,037	862,027
Prepaid expenses	52,858	34,498
Deferred Taxes	400,000	400,000
	-------------	-------------
Total current assets	4,588,038	4,732,221
	-------------	-------------
Property and equipment:
Production equipment	4,709,665	3,902,806
Furniture and office equipment	211,984	121,349
Leasehold improvements	332,218	205,914
	-------------	-------------
Total cost	5,253,867	4,230,069
Accumulated depreciation
and amortization	(3,198,033)	(2,974,603)
Construction in progress	181,746	400,965
	-------------	-------------
Net property and equipment	2,237,580	1,656,431
	-------------	-------------
Total Assets	$ 6,825,618	$ 6,388,652
	=========	=========

See accompanying notes to consolidated financial statements.

CPS TECHNOLOGIES CORPORATION Consolidated Balance Sheets (Unaudited) (continued)

LIABILITIES AND STOCKHOLDERS`	June 30,	December 30,
EQUITY	2007	2006
	-------------	-------------
Current liabilities:
Accounts Payable	$ 682,167	$ 981,551
Accrued Expenses	450,800	514,586
Current portion of obligations
under capital leases	375,850	265,502
	-------------	-------------
Total current liabilities	1,508,817	1,761,639
Obligations under capital
leases less current portion	422,215	245,839
	-------------	-------------
Total liabilities	1,931,032	2,007,478
	-------------	-------------
Stockholders` equity:
Common stock, $0.01 par value,
authorized 15,000,000 shares;
issued 12,569,842 shares at June 30, 2007
and 12,544,842 shares at December 31, 2006	125,699	125,449
Additional paid-in capital	32,770,455	32,729,122
Accumulated deficit	(27,940,733)	(28,412,562)
Less cost of 22,883 common shares
repurchased	(60,835)	(60,835)
	-------------	-------------
Total stockholders` equity	4,894,586	4,381,174
	-------------	-------------
Total liabilities and stockholders`
equity	$ 6,825,618	$ 6,388,652
	==========	==========

See accompanying notes to consolidated financial statements.

CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations (Unaudited)

	Fiscal Quarters Ended — July 30,	July 1,	Six month Periods Ended — July 30,	July 1,
	2007	2006	2007	2006
	------------	------------	------------	------------
Product sales	$ 3,067,042	$ 2,628,020	$ 6,207,395	$ 5,134,844
Cost of product sales	2,423,716	2,089,319	4,676,075	3,867,432
	------------	------------	------------	------------
Gross Margin	643,326	538,701	1,531,320	1,267,412
Selling, general, and
administrative expense	492,908	459,311	998,852	832,039
	------------	------------	------------	------------
Operating income	150,418	79,390	532,468	435,373
Other income(expense), net	(12,946)	(8,825)	(35,831)	(15,759)
	------------	------------	------------	------------
Net income before income tax
expense	137,472	70,565	496,637	419,614
Income tax expense	5,608	6,704	24,808	31,936
	------------	------------	------------	------------
Net income	$131,864	$63,861	$471,829	$387,678
	=========	=========	=========	=========
Net income per
basic common share	$ 0.01	$ 0.01	$ 0.04	$ 0.03
	------------	------------	------------	------------
Weighted average number of
basic common shares
outstanding	12,546,959	12,518,003	12,536,519	12,423,598
	=========	=========	=========	=========
Net income per
diluted common share	$ 0.01	$ 0.00	$ 0.04	$ 0.03
	------------	------------	------------	------------
Weighted average number of
diluted common shares
outstanding	13,376,040	13,131,799	13,273,426	13,005,312
	=========	=========	=========	=========

See accompanying notes to consolidated financial statements.

CPS TECHNOLOGIES CORPORATION Consolidated Statements of Cash Flows (Unaudited)

	Six-Month Period Ended — June 30,	July 1,
	2007	2006
	---------	---------
Cash flows from operating activities:
Net income	$471,829	$387,678
Adjustments to reconcile net income
to cash provided by
operating activities:
Depreciation & amortization	232,083	156,336
Share-based compensation	25,291	--
Tax benefit from stock options	3,242	--
Changes in operating assets and liabilities:
Accounts receivable trade	763,294	(374,427)
Inventories	(609,010)	61,457
Prepaid expenses	(18,360)	(7,515)
Accounts payable	(299,385)	142,346
Accrued expenses	(63,785)	108,797
	---------	---------
Net cash provided by operating	505,199	474,672
activities
	---------	---------
Cash flows from investing activities:
Purchases of property and equipment	(387,517)	(368,306)
	---------	---------
Net cash used in investing
activities	(387,517)	(368,306)
	---------	---------
Cash flows from financing activities:
Payment of capital lease obligations	(138,991)	(109,262)
Proceeds from issuance of common stock	13,050	35,236
	---------	---------
Net cash used by
financing activities	(125,941)	(74,026)
	---------	---------
Net increase (decrease) in cash and cash equivalents	(8,259)	32,340
Cash and cash equivalents at beginning of period	517,540	747,542
	---------	---------
Cash and cash equivalents at end of period	$ 509,281	$ 779,882
	=========	=========
Supplemental cash flow information:
Acquisition of machinery under capital leases	$ 425,715	$ --
Cash paid for taxes	$ 120,000	$ 17,000
Interest paid	$ 37,094	$ 15,759

See accompanying notes to consolidated financial statements.

CPS TECHNOLOGIES CORPORATION Notes to Consolidated Financial Statement (Unaudited)

(1) Nature of Business

CPS Technologies Corporation (the Company or CPS) (formerly Ceramics Process Systems Corporation) provides advanced material solutions to the electronics, robotics, automotive and other industries.

(2) Interim Consolidated Financial Statements

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 consolidated 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, 2006 has been derived from the audited consolidated 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 consolidated financial statements and footnotes thereto included in the Registrant`s Annual Report on Form 10-K for the year ended December 30, 2006.

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

(3) Net Income (Loss) Per Common and Common Equivalent Share

Basic net income or net loss per common share is calculated by dividing net income or loss 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 option and stock purchase rights. Common stock equivalents are excluded from the diluted calculations if a net loss is incurred as they would be anti-dilutive.

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

	Quarters Ended — June 30,	July 01,	Six-Month Periods Ended — June 30,	July 01,
	2007	2006	2007	2006
	------------	------------	------------	------------
Basic EPS Computation:
Numerator:
Net income	$ 131,864	$ 63,861	$ 471,829	$ 387,678
Denominator:
Weighted average
Common shares
Outstanding	12,546,959	12,518,003	12,536,519	12,423,598
Basic EPS	$ 0.01	$ 0.01	$ 0.04	$ 0.03
Diluted EPS Computation:
Numerator:
Net income	131,864	63,861	471,829	387,678
Denominator:
Weighted average
Common shares
Outstanding	12,546,959	12,518,003	12,536,519	12,423,598
Dilutive effect of Stock options	829,081	613,796	736,907	581,714
Total Shares	13,376,040	13,131,799	13,273,426	13,005,312
Diluted EPS	$ 0.01	$ 0.00	$ 0.04	$ 0.03

(4) Share-Based Payments

The Company maintains a stock incentive plan (the "Plan"), which is described more fully in Note 5 to the consolidated financial statements in the 2006 Annual Report filed on Form10-K. Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123, "Share-Based Payments (revised 2004)," (SFAS No. 123R) which requires the Company to measure 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). Under SFAS No. 123R, the Company provides an estimate of forfeitures at initial grant date. The Company elected the modified prospective transition method under SFAS No. 123R and accordingly has not restated periods prior to adoption. There were no shares granted under the Plan during the quarters ended June 30, 2007 and July 1, 2006. During the three and six months ended June 30, 2007, the Company recognized $15,122 and $25,281 respectively as shared-based compensation expense related to previously granted shares under the Plan. There was no share-based compensation expense recognized during the quarter ended July 1, 2006.

(5) Inventories

Inventories consist of the following:

	June 30,	December 30,
	2007	2006
	-------------	-------------
Raw materials	$ 184,384	$ 149,143
Work in process	357,639	220,644
Finished goods	929,014	492,240
	-----------	-----------
Inventories	$ 1,471,037	$ 862,027
	=======	=======

(6) Accrued Expenses

Accrued expenses consist of the following:

	June 30,	December 30,
	2007	2006
	-------------	-------------
Accrued legal and accounting	$ 38,970	$ 52,685
Accrued payroll	315,165	283,785
Accrued other	96,665	97,450
Accrued income tax payable	--	80,666
	------------	------------
	$ 450,800	$ 514,586
	=======	=======

(7) Line of Credit and Equipment Lease Facility Agreements

In April 2005, the Company entered into line of credit and equipment lease agreements with Sovereign Bank. The line of credit is a revolving credit facility allowing the Company to borrow up to 80% of eligible accounts receivable, up to a maximum of $1 million, subject to the Company complying with certain covenants. The line of credit has a one year term and has been extended to May 2008. As of June 30, 2007 there were no borrowings under the line of credit.

The equipment lease facility allows the Company to lease up to $1.5 million of eligible capital equipment from Sovereign Bank. As of June 30, 2007, the Company has leased capital equipment with a net carrying value of $1,084 thousand from Sovereign Bank under the lease facility agreement.

(8) Income Taxes

At December 30, 2006, the Company had approximately $8,000,000 of net operating loss carryforwards available to offset income for U.S. Federal income tax purpose. The Company has established a valuation allowance against this and its other deferred tax assets.

The Company recorded a tax provision of $2,733 and $9,933 for federal income taxes for the three and six months ended June 30, 2007, respectively. This provision is based on the federal corporate alternative minimum tax rate rather than the statutory graduated tax rates. The Company believes it will be able to use net operating loss carryforwards to offset federal taxes, other than the corporate alternative minimum tax, in fiscal 2007.

The Company reduced the valuation allowance against deferred tax assets at the end of 2006 resulting in a deferred tax asset account of $400,000 on the Company`s Consolidated Balance Sheet as of year-end 2006. The Company will continue to consider the need and amount of the valuation allowance against the deferred tax assets based upon its ongoing assessment of historical and projected taxable income.

The Company recorded a tax provision of $2,875 and $14,875 for state income taxes during the three and six months ended June 30, 2007.

ITEM 2 MANAGEMENTS 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 consolidated 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, 2006.

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. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or changed circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Critical Accounting Policies

The critical accounting policies utilized by the Company in preparation of the accompanying consolidated financial statements are set forth in Part II, Item 7 of the Companys Annual Report on Form 10-K for the year ended December 30, 2006, under the heading "Managements Discussion and Analysis of Financial Condition and Results of Operations". There have been no material changes to these policies since December 30, 2006.

Overview

CPS Technologies Corporation (the Company or CPS) (formerly Ceramics Process Systems Corporation) provides advanced material solutions to the electronics, robotics, automotive and other industries. Our primary advanced material solution is metal matrix composites, a new class of materials which are a combination of metal and ceramic. CPS has a leading, proprietary position in metal matrix composites. Metal matrix composites have several superior properties compared to conventional materials - improved thermal conductivity, thermal expansion matching, stiffness and light weight - which enable higher performance and higher reliability in our customers` products.

Like plastics 80 years ago, this new class of materials will penetrate many end markets over many years. CPS management believes our business model of providing advanced material solutions to a portfolio of high growth end markets which are, at any point in time, in various stages of the technology adoption lifecycle, provides CPS with the opportunity for sustained growth and a diversified customer base. We believe we have validated this model as we are now supplying customers at all stages of the technology adoption lifecycle.

CPS is the leader in supplying metal matrix composites to certain high growth electronics end markets which are well along in the adoption lifecycle and therefore generating significant demand. These end markets include high-performance integrated circuits and circuit boards used in internet switches and routers, as well as motor controllers used in high-speed electric trains, subway cars and wind turbines. CPS supplies heat spreaders, lids and baseplates to customers in these end markets. CPS is a fully qualified manufacturer for many of the world`s largest electronics OEMs.

Concurrently, CPS is participating in certain end markets that are at an earlier stage of the adoption lifecycle. Management believes these end markets will generate additional growth longer-term. An example of such an end market is motor controllers for hybrid automotives and trucks; CPS has been supplying prototypes into this end market for several years. Management believes that several of the programs for which we are selling prototypes will enter volume production in the future.

We are also actively working with customers in end markets at the beginning stages of the adoption lifecycle. Two examples include robotics components where the greater stiffness-to- weight ratio of metal matrix composites allows a significant performance improvement, and armor where CPS` hybrid armor technology has the potential for greater multi-hit capability, lighter weight and lower costs.

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, CPS Superconductor Corporation (a wholly owned subsidiary) was renamed CPS Technologies Corporation, and the parent Company, Ceramics Process Systems Corporation was merged into it. This resulted in the Company assuming the name CPS Technologies Corporation, and Ceramics Process Systems Corporation ceasing to exist.

Results of Operations for the Second Fiscal Quarter of 2007 (Q2 2007) Compared to the Second Fiscal Quarter of 2006 (Q2 2006)

Total revenue was $3,067 thousand in Q2 2007, a 17% increase from revenue of $2,628 thousand in Q2 2006. Revenue growth was strongest in lids and heat spreaders, revenue from baseplates used in motor controllers also increased while revenue from cellular telephone basestations declined.

In addition, in Q2 2007 the Company achieved several design wins, particularly for baseplates used in motor controllers. In Q2 2007 the Company was active in working with several first-tier automotive suppliers in the development and production qualification of motor controller baseplates for hybrid vehicle applications, both trucks and cars. Management believes that as some or all of these specific products enter serial production they will generate meaningful growth for the Company in the future.

Total operating expenses in Q2 2007 were $2,917 thousand, a 14% increase from total operating expenses in Q2 2006 of $2,549 thousand. Cost of product sales in Q2 2007 were $2,424 thousand, a 16% increase from cost of product sales in Q2 2006 of $2,089 thousand. Cost of product sales increased primarily as a result of increased unit shipments. The gross profit on product sales in Q2 2007 of approximately 21% essentially remained constant compared to gross profit on product sales in Q2 2006.

Selling, general and administrative (SG&A) expenses were $493 thousand in Q2 2007, a 7% increase from SG&A expenses of $459 thousand in Q2 2006. The increase in SG&A expenses is primarily the result of higher commissions paid to sales representatives, higher sales promotion expenses, higher fees for external professional services and higher legal fees primarily related to the Company`s name change in Q2 2007.

Results of Operations for First Six Months 2007 Compared to First Six Months of 2006

Total revenue was $6,207 thousand in the first six months of 2007, a 21% increase from total revenue of $5,135 thousand in the first six months of 2006. The increase in revenues came primarily from higher demand for existing products and secondarily from demand for new products which entered production in the first six months of 2006. The largest increase in demand was for lids and heatspreaders for application-specific integrated circuits; demand also increased for baseplates used in motor controllers.

Total operating expenses in the first six months of 2007 were $5,675 thousand, a 21% increase from total operating expenses of $4,699 thousand in the first six months of 2006. Cost of product sales in the first six months of 2007 were $4,676 thousand, a 21% increase from cost of product sales of $3,867 thousand in the first six months of 2006. Cost of product sales increased primarily as a result of increased unit shipments. Gross profit on product sales in the first six months of 2007 was 25% compared with gross profit on product sales of 25% in the first six months of 2006. This gross profit margin remained constant.

Selling, general and administrative (SG&A) expenses were $999 thousand in the first six months of 2007, a 20% increase from SG&A expenses of $832 thousand in the first six months of 2006. The increase in SG&A expenses is primarily the result of accruing for benefits paid pursuant to a severance agreement, higher commissions paid to sales representatives and higher sales promotion expenses and higher salary costs associated with increased personnel additions in the sales function.

Liquidity and Capital Resources

The Company`s cash and cash equivalents at June 30, 2007 were $509 thousand compared to cash and cash equivalents at December 30, 2006 of $518 thousand, a decrease of $9 thousand or 2%.

Accounts receivable declined to $2,156 thousand at June 30, 2007 from $2,918 thousand at December 30, 2006. This change reflects a timing of shipments and collections. The accounts receivable balance at June 30, 2007 and December 30, 2006 is net of allowance for doubtful accounts of $5 thousand.

Inventories increased to $1,471 thousand at June 30, 2007 from $862 thousand at December 30, 2006. Raw materials inventory increased primarily due to purchased components used in the Companys hermetic packaging product line; work-in-process inventory increased to support higher unit shipments; and finished goods inventory increased 89% primarily due to increased inventory being held at customers locations on consignment. This inventory is shipped under existing purchase orders and per customers` requests.

The Company financed its working capital during Q2 2007 and the six months ended June 30, 2007 with existing cash balances and funds generated by operations. The Company expects it will continue to be able to fund its working capital requirements for the remainder of 2007 from these same sources.

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.

Contractual Obligations

In April 2005, the Company entered line of credit and equipment lease agreements with Sovereign Bank. The line of credit is a revolving credit facility allowing the Company to borrow up to 80% of eligible accounts receivable, up to a maximum of $1 million, subject to the Company complying with certain covenants. The line of credit has a one-year term. In Q2 the term was extended to May 2008. As of June 30, 2007 there were no borrowings under the line of credit.

The equipment lease facility allows the Company to lease up to $1.5 million of eligible capital equipment. As of June 30, 2007, the Company has leased capital equipment with a carrying value of $1,084 thousand under the lease facility agreement.

As of June 30, 2007 production equipment included $182 thousand of construction in progress, and in addition, the Company had outstanding commitments to purchase $18 thousand of production equipment. The Company intends to finance production equipment in construction in progress and outstanding commitments under the lease agreement with existing cash balances and funds generated by operations.

In July 2006 the Company entered into a lease for its current operating facilities of approximately 37,520 square feet of rentable space located on approximately seven acres at its current site in Norton, MA. The term of the lease is ten years. The lease is a 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 buy the property and a first right of refusal during the term of the lease. Annual rental payments are $100 thousand in year one increasing to $150 thousand in year ten.

The Company`s contractual obligations at June 30, 2007 consist of the following:

		Payments Due by Period — Remaining in	FY 2008 -	FY 2011 -	FY 2014 and
	Total	FY 2007	FY 2010	FY 1013	beyond
Capital lease obligations including interest	$ 879,365	$221,546	$ 657,819	$ --	$ --
Purchase commitments for production equipment	$ 18,400	$ 18,400	$ --	$ --	$ --
Operating lease obligation for facilities at 111 South Worcester Street, Norton, MA.	$1,150,000	$ 55,000	$ 353,000	$ 407,000	$ 335,000

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not significantly exposed to the impact of interest rate changes or foreign currency fluctuations. The Company has not used derivative financial instruments.

ITEM 4 CONTROLS AND PROCEDURES

(a) The Companys Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the Companys 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 officer has concluded that, as of the Evaluation Date, 1) the Companys 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 Companys 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.

ITEM 1A RISK FACTORS There have been no material changes to the risk factors as discussed in our 2006 Form 10-K

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES None.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.

ITEM 5 OTHER INFORMATION Not applicable.

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits:

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

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

1. Reports on Form 8-K

On August 8, 2007 the Company filed a report on Form 8-K relating to the announcement of its financial results for the quarter ended June 30, 2007 as presented in a press release dated August 7, 2007.

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 8, 2007 /s/ Grant C. Bennett Grant C. Bennett President