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<SEC-DOCUMENT>0000814676-05-000015.txt : 20051107
<SEC-HEADER>0000814676-05-000015.hdr.sgml : 20051107
<ACCEPTANCE-DATETIME>20051107163334
ACCESSION NUMBER:		0000814676-05-000015
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20050924
FILED AS OF DATE:		20051107
DATE AS OF CHANGE:		20051107

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CERAMICS PROCESS SYSTEMS CORP/DE/
		CENTRAL INDEX KEY:			0000814676
		STANDARD INDUSTRIAL CLASSIFICATION:	POTTERY & RELATED PRODUCTS [3260]
		IRS NUMBER:				042832509
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1229

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16088
		FILM NUMBER:		051183714

	BUSINESS ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		STREET 2:		PO BOX 338
		CITY:			CHARTLEY
		STATE:			MA
		ZIP:			02712
		BUSINESS PHONE:		508-222-0614

	MAIL ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		STREET 2:		PO BOX 338
		CITY:			CHARTLEY
		STATE:			MA
		ZIP:			02712
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>cps2005q310q.htm
<DESCRIPTION>FORM 10Q FOR Q3 2005
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>&lt;SUBMISSION&gt;</TITLE>
</HEAD>
<BODY LINK="#0000ff">

<B><FONT FACE="Arial"><P ALIGN="CENTER">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C.  20549</P>
<P ALIGN="CENTER">FORM 10-Q</P>
</B></FONT><FONT FACE="Arial" SIZE=2><P>(Mark One)<BR>
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 <BR>
For the period ended September 24, 2005<BR>
or</P>
<P>[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
For the transition period from          to</P>

<P>Commission file number          0-16088</P>

</FONT><B><FONT FACE="Arial"><P ALIGN="CENTER">CERAMICS PROCESS SYSTEMS CORPORATION</P>
</B></FONT><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">(Exact Name of Registrant as Specified in its Charter)</P>
</FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="50%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Delaware<BR>
</U>(State or Other Jurisdiction<BR>
of Incorporation or Organization</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">04-2832409<BR>
</U>(I.R.S. Employer<BR>
Identification No.)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2>
<P ALIGN="CENTER">111 South Worcester Street<BR>
P.O. Box 338<BR>
<U>Chartley MA<BR>
</U>(Address of principal executive offices)</P>
</FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>&nbsp;</P>
<U><P ALIGN="CENTER">02712-0338<BR>
</U>(Zip Code)</P>
<P ALIGN="CENTER"></P>
<P>&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<U><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">(508) 222-0614<BR>
</U>Registrants Telephone Number, including Area Code:</P>
<P ALIGN="CENTER"></P>
<U><P ALIGN="CENTER">Not Applicable<BR>
</U>Former Name, Former Address and Former Fiscal Year if Changed since Last Report:</P>
<P>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</P>

<P ALIGN="CENTER">APPLICABLE ONLY TO CORPORATE ISSUERS:</P>
<P>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 November 7, 2005: 13,326,209.</P>

<P ALIGN="CENTER">&nbsp;</P>
<B><P ALIGN="CENTER">PART I  FINANCIAL INFORMATION<BR>
<BR>
ITEM 1  FINANCIAL STATEMENTS (Unaudited)<BR>
<BR>
CERAMICS PROCESS SYSTEMS CORPORATION<BR>
Consolidated Balance Sheets (Unaudited)<BR>
(continued on next page)</P>
<P ALIGN="CENTER"></P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=607>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>ASSETS</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Current assets:</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          377,569 </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          457,947 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Accounts receivable-trade</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>net of allowance for doubtful accounts</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>of $12,099</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,047,653</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,311,851</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Inventories</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">639,123</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">623,095</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">57,492</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">27,376</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total current assets</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,121,837</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,420,269</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Property and equipment:</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Production equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,382,264</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,042,139</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Furniture and office equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">210,932</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">211,424</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total cost</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,593,196</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,253,563</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="52%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Accumulated depreciation</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>and amortization</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(2,592,688)</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(2,427,934)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P> Property and equipment, net </FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,000,508</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">825,629</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total assets</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       3,122,345 </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       3,245,898 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="49%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
</TABLE>

<B><FONT FACE="Arial" SIZE=2>
</B><P>See accompanying notes to consolidated financial statements.</P>

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">CERAMICS PROCESS SYSTEMS CORPORATION<BR>
Consolidated Balance Sheets (Unaudited)<BR>
(continued)</P>
<P ALIGN="CENTER"></P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=607>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>LIABILITIES AND STOCKHOLDERS`</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>EQUITY</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Current liabilities:</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Accounts payable</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          270,125 </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          498,683 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Accrued expenses</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">245,836</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">175,274</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Current portion of obligations</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>under capital leases</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">127,680</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">86,532</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total current liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">643,641</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">760,489</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Deferred revenue</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">133,884</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Obligations under capital</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>leases less current portion</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">156,247</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">109,332</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">799,888</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,003,705</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Stockholders` Equity</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Common stock, $0.01 par value,</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>authorized 15,000,000 shares;</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>issued 12,349,092 at September 24, 2005</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>and 12,316,092 at December 25, 2004</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">123,491</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">123,161</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Additional paid-in capital</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,679,094</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,657,584 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Accumulated deficit</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(30,419,293)</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(30,477,717)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Less cost of 22,883 common shares</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>repurchased</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total stockholders` equity</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,322,457</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,242,193</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total liabilities and stockholders`</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>equity</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       3,122,345 </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       3,245,898 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="50%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
</TABLE>

<B><FONT FACE="Arial" SIZE=2>
</B><P>See accompanying notes to consolidated financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CERAMICS PROCESS SYSTEMS CORPORATION<BR>
Consolidated Statements of Operations (Unaudited)</P>
<P ALIGN="CENTER"></P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=679>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Fiscal Quarters Ended</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Nine Month Periods Ended</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Product sales</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      1,654,865 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      1,804,863 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      4,866,781 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      4,881,411 </FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>License and royalty revenue</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">133,884</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">136,720</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,061</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P><A NAME="OLE_LINK1"></FONT></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P></A>Total revenue</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      1,788,749 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      1,804,863 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      5,003,501 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      4,886,472 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Cost of product sales</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,416,240</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,323,002</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,877,113</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,527,020</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Gross Margin</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">372,509</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">481,861</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,126,388</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,359,452</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Selling, general, and</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>administrative</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">358,129</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">294,554</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,050,656</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">844,996</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Operating income</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">14,380 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">187,307 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">75,732 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">514,456 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Other income (expense), net</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(4,541)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(6,741)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(17,307)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(23,462)</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $             9,839 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $         180,566 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $           58,425 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $         490,994 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Net income per </FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>basic common share</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                    -</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.01 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                    -</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>basic common shares</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,318,956</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,293,209</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,301,791</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,293,209</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Net income per</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>diluted common share</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                    -</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.01 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                    -</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>diluted common shares</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,997,544</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,714,703</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,781,043</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,436,792</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="25%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" BGCOLOR="#ffffff" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
</TABLE>

<B><FONT FACE="Arial" SIZE=2>
</B><P>See accompanying notes to consolidated financial statements.</P>

<B><P>CERAMICS PROCESS SYSTEMS CORPORATION<BR>
Consolidated Statements of Cash Flows (Unaudited)</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=557>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="40%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Nine-Month Period Ended</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash flows from operating activities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 58,425 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 490,994 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Adjustments to reconcile net income</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>(loss) to cash provided by (used in)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>operating activities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Depreciation and amortization</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">196,945 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">211,263 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Gain on sale of property and</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(158)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Changes in assets and liabilities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accounts receivable - trade</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">264,198 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(635,274)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Inventories</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(16,028)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">163,691 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(30,116)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">17,893 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accounts payable</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(228,558)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">122,284 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued expenses</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">70,561 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">98,877 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Deferred revenue</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(133,884)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net cash provided by operating</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 181,543 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 469,570 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>activities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash flows from investing activities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Additions to property and equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(198,074)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(210,979)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Proceeds from sale of property and equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,500 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net cash used in investing </FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>activities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(198,074)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(208,479)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash flows from financing activities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Payment of capital lease obligations</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(85,687)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(71,899)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Proceeds from issuance of common stock</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">21,840 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net cash provided (used) by </FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>financing activities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ (63,847)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ (71,899)</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(80,378)</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">189,192 </FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at beginning of period</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">457,947 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">189,533 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at end of period</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 377,569 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 378,725 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Non-cash financing and investing activities:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Acquisition of machinery under capital leases</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 173,750 </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            -</FONT></TD>
</TR>
</TABLE>

<B><FONT FACE="Arial" SIZE=2>
</B><P>See accompanying notes to consolidated financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CERAMICS PROCESS SYSTEMS CORPORATION<BR>
Notes to Consolidated Financial Statement<BR>
(Unaudited)</P>
</B><U><P>(1)  Nature of Business</P>
</U><P>Ceramics Process Systems Corporation  (the `Company` or `CPS`) produces products used in various end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market and other microelectronic and capital equipment markets.  The Company develops, manufactures, and markets advanced metal-matrix composite components primarily to house, interconnect and thermally manage microelectronic devices.  The Company`s products are typically in the form of housings, packages, lids, substrates, thermal planes, or heat sinks, and are used in applications where thermal management and/or weight are important considerations.<BR>
</P>
<P>The Company`s products are manufactured by proprietary processes the Company has developed including the QuicksetTM Injection Molding Process (`Quickset Process`) and the QuickCastTM Pressure Infiltration Process (`QuickCast Process`).<BR>
</P>
<U><P>(2)  Interim Consolidated Financial Statements</P>
</U><P>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 accounting principles generally accepted in the United States of America.<BR>
</P>
<P>The accompanying consolidated financial statements for the fiscal quarters and nine months ended September 24, 2005 and September 25, 2004 are unaudited.  In the opinion of management, the unaudited consolidated financial statements of CPS reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position and results of operations for such periods.<BR>
</P>
<P>The Company`s consolidated balance sheet at December 25, 2004 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.<BR>
</P>
<P>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 25, 2004.<BR>
</P>
<P>The consolidated financial statements include the accounts of CPS and its wholly-owned subsidiary, CPS Superconductor Corporation.  All significant intercompany balances and transactions have been eliminated.   The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.<BR>
</P>
<U><P>(3)  Recent Accounting Pronouncements</P>
</U><P>&#9;On December 16, 2004, the FASB issued SFAS No. 123 (Revised 2004), "Share-Based Payment", (SFAS No. 123(R)), which is an Amendment of FASB Statements Nos. 123 and 95. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) that provides interpretive guidance regarding the interaction between SFAS 123(R) and certain SEC rules and regulations and provides the SEC staff`s views regarding the valuation of share-based payment arrangements for public companies. The fair-value-based method of expense recognition in SFAS No. 123(R) is similar to the fair-value-based method described in SFAS No. 123 in most respects. Pursuant to rules adopted by the SEC in April 2005, the effective date for SFAS No. 123(R) has been deferred to the first quarter of fiscal year 2006. If we had included the fair value of employee stock options in our financial statements, our net income for the quarters ended June 25, 2005 and June 26, 2004 would have been as disclosed in Note 4.<BR>
</P>
<P>&#9;In March 2005, the FASB issued FASB Interpretation No. 47 ("FIN 47"), Accounting for Conditional Asset Retirement Obligations, which is an interpretation of FASB Statement No. 143 ("SFAS 143").  The interpretation  clarifies that the term conditional asset retirement obligation, as used in SFAS 143, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The interpretation is effective no later than the end of fiscal years ending after December 15, 2005. The Company does not expect adoption to have a significant impact on its results of operations or financial position.<BR>
</P>
<U><P> (4)  Net Income Per Common and Common Equivalent Share</P>
</U><P>Basic EPS excludes the effect of any dilutive options, warrants or convertible securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.  Diluted EPS is computed by dividing net income by the sum of the weighted average number of common shares and common share equivalents computed using the average market price for the period under the treasury stock method requirements.<BR>
</P>
<P>The following table presents the calculation of both basic and diluted EPS:</P>
</FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=643>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Quarters Ended</FONT></TD>
<TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Nine-Month Periods Ended</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Basic EPS Computation:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          9,839 </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      180,566 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      58,425 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       490,994 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>common shares</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,318,956</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,293,209 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">      2,301,791 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       2,293,209 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Basic EPS</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                  - </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $            0.01 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                  - </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $             0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Diluted EPS Computation:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Net income </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$          9,839 </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$        80,556 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$        58,425</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       490,994 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>common shares </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,318,956 </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,293,209 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,301,791 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">     12,293,209 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Stock options</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">         678,588 </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">         421,494 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">           479,252 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">            143,583 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Total Shares</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,997,544 </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,714,703 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    12,781,043 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">     12,436,792 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P>Diluted EPS</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                  - </FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $            0.01 </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                  - </FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $             0.04 </FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>Options to purchase 1,252,363 shares of common stock at a weighted-average price of $0.56 were outstanding at September 24, 2005.  Options to purchase 1,156,113 shares of common stock at a weighted-average price of $0.57 were outstanding at September 25, 2004.<BR>
</P>
<P>The Company accounts for its stock-based compensation plans under Accounting Principles Board (APB) Opinion No. 25, &quot;Accounting for Stock Issued to Employees&quot;.  Accordingly, no stock-based employee compensation cost is reflected in net income as all options granted had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant.  The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, &quot;Accounting for Stock-based Compensation,&quot; to stock-based employee compensation for the fiscal quarter and nine-month periods ended September 24, 2005:<BR>
</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=610>
<TR><TD WIDTH="3%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="32%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Fiscal Quarters Ended</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Nine month Periods Ended</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 25,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income as reported</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            9,839</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      180,566 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       58,425</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      490,994 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Deduct total stock-based employee</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>compensation expense</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>determined under </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>fair value method for all awards</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(15,624)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(4,914)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(59,595)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(52,676)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Proforma net income</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$          (5,785)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       175,652</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       (1,170)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       438,318</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Earnings per share, as reported</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$             0.01 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$             0.01 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Earnings per share, pro forma</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$             0.01 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$             0.01 </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$                   -  </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            0.04 </FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><P><BR>
</P>
<U><P>(5)  Inventories<BR>
</U>Inventories consist of the following:<BR>
</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=470>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Raw materials</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $           34,708 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $           40,831 </FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Work in process</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">            174,343 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">            146,715 </FONT></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Finished goods</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">            430,072 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">            435,549 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          639,123 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          623,095 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>&nbsp;</P>
<U><P>(6)&#9;Accrued Expenses<BR>
</U>Accrued expenses consist of the following:</P>
</FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=470>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">September 24,</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2005</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2004</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued legal and accounting</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">              35,750 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">              43,151 </FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued payroll</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          179,587 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          109,233 </FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued other</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">              30,499 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">              22,890 </FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>   </FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          245,836 </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $          175,274 </FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="26%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<U><P>(7)        Line of Credit and Equipment Lease Facility Agreements </P>
</U><P><A NAME="OLE_LINK2">In April 2004, 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.   The equipment lease facility allows the Company to lease up to $600 thousand of eligible capital equipment from Sovereign Bank.  As of September 24, 2005 there were no borrowings under the line of credit.  As of September 24, 2005, the Company has leased capital equipment amounting to $174 thousand from Sovereign Bank under the lease facility agreement.</A><BR>
</P>
<B>
<P>ITEM 2       MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS<BR>
</P>
</B><P>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 25, 2005.<BR>
</P>
<U><P>Forward-Looking Statements</P>
</U><P>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.<BR>
</P>
<U><P>Critical Accounting Policies</P>
</U><P>&#9;The critical accounting policies utilized by the Company in preparation of the accompanying consolidated financial statements are set forth in Part I, Item 7 of the Company`s Annual Report on Form 10-K for the year ended December 25, 2004, under the heading &quot;Management`s Discussion and Analysis of Financial Condition and Results of Operations&quot;.  There have been no changes to these policies since December 25, 2004.<BR>
</P>
<U><P>Results of Operations for Third Fiscal Quarter of 2005 (Q3 2005) Compared to the Third Fiscal Quarter of 2004 (Q3 2004)</P>
</U><P>Total revenue was $1,789 thousand in Q3 2005, a 1% decrease from total revenue of $1,805 thousand in Q3 2004.  Lower product revenue resulting from reduced prices and changes in product mix was almost fully offset by license revenue of $134 thousand.  The $134 thousand of license revenue results from the recognition of revenue which was previously deferred.<BR>
</P>
<P>Cost of product sales and selling, general and administrative expenses in Q3 2005 aggregated to $1,774 thousand, a 10% increase from expenses in Q3 2004 of $1,618 thousand.   Cost of product sales in Q4 2005 were $1,416 thousand, an increase of 7% from cost of product sales in Q3 2004 of $1,323 thousand.   All three components of cost of product sales, raw materials, labor and manufacturing overhead, increased in Q3 2005 compared to Q3 2004.   Labor and manufacturing overhead increased primarily as a result of hiring additional employees; raw materials expense increased primarily as a result of price increases by our raw material vendors.  In Q3 2005 the Company hired additional employees in anticipation of forecasted increases in demand from a major customer; these forecasted increases in demand did not occur in Q3 2005, but were delayed.  Management believes the forecasted increases in demand will occur in Q4 2005.   Gross profit on product sales in Q3 2005 was 14% compared to gross profit on product sa
les in Q3 2004 of 27%.   This decrease in gross profit is the result of increased cost of product sales,  reduced prices and changes in product mix.<BR>
</P>
<P> Selling, general and administrative (SG&amp;A) expenses were $358 thousand in Q3 2005, a 22% increase from SG&amp;A expenses of $295 thousand in Q3 2004.   The increase in SG&amp;A expenses is primarily the result of higher commissions paid to sales representatives and higher sales promotion expenses resulting from greater participation in trade shows and conferences.<BR>
</P>
<U><P>Results of Operations for First Nine Months of 2005 Compared to First Nine Months of 2004</P>
</U><P>Total revenue was $5,004 thousand in the first nine months of 2005,  a 2% increase from total revenue of $4,886 thousand in the first nine months of 2004.   Comparing the first nine months of 2005 with the first nine months of 2004, unit shipments increased by 22% while product revenues declined slightly, primarily due to price reductions that went into effect at the end of 2004 and secondarily due to changes in product mix.  The decline in product revenues was offset by license revenues of $137 thousand of which $134 thousand resulted from the recognition of revenue which was previously deferred revenue in prior financial statements. Unit growth was highest for lids and heat spreaders for application-specific integrated circuits, whereas unit shipments declined for heat spreaders for cellular basestations.<BR>
</P>
<P>Cost of product sales and selling, general and administrative  expenses in the first nine months of 2005 aggregated $4,928 thousand, a 13% increase from expenses of $4,372 thousand in the first nine months of 2004.   Cost of product sales in the first nine months of 2005 were $3,877 thousand, a 10% increase from cost of product sales in the first nine months of 2004 of $3,527 thousand.   Cost of product sales increased primarily as a result of increased unit shipments.   Gross profit on product sales in the first nine months of 2005 was 20%  compared to gross profit on product sales in the first nine months of 2004 of 28%. This decline in gross profit is primarily the result of price reductions that went into effect at the end of 2004.<BR>
</P>
<P> Selling, general and administrative (SG&amp;A) expenses were $1,051 thousand in the first nine months of 2005, a 24% increase from SG&amp;A expenses of $845 thousand in the first nine months of 2004. The increase in SG&amp;A expenses is primarily the result of higher commissions paid to sales representatives and higher sales promotion expenses resulting from greater participation in trade shows and conferences.<BR>
</P>
<U><P>Liquidity and Capital Resources</P>
</U><P>The Company`s cash balance and cash equivalents at September 24, 2005 was $378 thousand compared to a cash balance and cash equivalents of $458 thousand at December 25, 2004, a decrease of $80 thousand or 18%.  This $80 thousand decline is the net result of operations generating cash of $182 thousand, additions to property and equipment consuming cash of $198 thousand, payment of capital lease obligations consuming cash of $86 thousand, and the issuance of common stock pursuant to the exercise of employee stock options generating cash of $22 thousand.<BR>
</P>
<P>Accounts receivable were $1,048 thousand at September 24, 2005 compared to $1,312 thousand at December 25, 2004, a decline of 20%.  This change reflects lower revenues in Q3 2005 compared to Q4 2004.   The accounts receivable balance at September 24, 2005 and December 25, 2004 is net of allowance for doubtful accounts of $12 thousand.<BR>
</P>
<P>Inventories increased very slightly to $639 thousand at September 24, 2005 from $623 thousand at December 25, 2004.  The increase of $16 thousand is typical month-to-month volatility associated with the consigned inventory programs the Company has entered into with several customers.<BR>
</P>
<P>The Company financed its working capital during Q3 2005 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 2005 from these same sources.<BR>
</P>
<U><P>Contractual Obligations</P>
</U><P>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.   The equipment lease facility allows the Company to lease up to $600 thousand of eligible capital equipment.  As of September 24, 2005 there were no borrowings under the line of credit.  As of September 24, 2005 the Company has leased capital equipment amounting to $174 thousand under the Sovereign lease facility agreement.<BR>
</P>
<P>As of September 24, 2005, the principal balance on all existing leases was $284 thousand.<BR>
</P>
<P>As of September 24, 2005 production equipment included $358 thousand of construction in progress, and in addition, the Company had outstanding commitments to purchase $6 thousand of production equipment.  The Company intends to use the equipment lease agreement to finance $280 thousand of construction in progress.<BR>
</P>
<P>The Company`s contractual obligations at September 24, 2005 consist of the following:<BR>
</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="59%" VALIGN="TOP" COLSPAN=4>
<U><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Payments Due by Period</U></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Remaining in</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2006 -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2009 -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P>FY 2012 and</FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Total</U></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2005</U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2008</U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 1011</U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">beyond</U></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Capital lease obligations              including interest</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 307,908</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 39,039</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 268,869</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           -</FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><P>Purchase commitments for production equipment</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 5,774</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  5,774</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           -</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>ITEM 3&#9;&#9;QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK<BR>
</P>
<P>The Company is not significantly exposed to the impact of interest rate changes and foreign currency fluctuations.  The Company has not used derivative financial instruments.<BR>
</P>
<P>ITEM 4&#9;&#9;CONTROLS AND PROCEDURES<BR>
</P>
<P>(a)&#9;The Company`s Chief Executive Officer and Principal 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 &quot;Exchange Act&quot;)) as of the end of the period covered by this Form 10-Q (the &quot;Evaluation Date&quot;).  Based on such evaluation, such officer has 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 communicat
ed to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.</P>

<P>(b)&#9;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.<BR>
 </P>

<B><P ALIGN="CENTER">PART II OTHER INFORMATION<BR>
</P>
</B><P>ITEM 1&#9;&#9;LEGAL PROCEEDINGS<BR>
&#9;None.</P>

<P>ITEM 2&#9;&#9;CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES.<BR>
&#9;None.</P>

<P>ITEM 3&#9;&#9;DEFAULTS UPON SENIOR SECURITIES<BR>
&#9;None.</P>

<P>ITEM 4&#9;&#9;SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS<BR>
&#9;Not applicable.</P>

<P>ITEM 5&#9;&#9;OTHER INFORMATION<BR>
&#9;Not applicable.</P>

<P>ITEM 6&#9;&#9;EXHIBITS AND REPORTS ON FORM 8-K: <BR>
(a)&#9;Exhibits: </P>
<P>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<BR>
</P>
<P>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<BR>
</P>
<P>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<BR>
</P>
<OL START=2 TYPE="a">

<LI>Reports on Form 8-K<BR>
On November 7, 2005, the Company filed a report on Form 8-K relating to the announcement of its financial results for the fiscal quarter ended September 24, 2005, as presented in a press release dated November 7, 2005.</LI></OL>

<B>
<P ALIGN="CENTER">SIGNATURES<BR>
</P>
</B><P>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.<BR>
</P>
<B><U><P>Ceramics Process Systems Corporation</B><BR>
</U>(Registrant)</P>
<P ALIGN="CENTER"></P>
<P>Date:&#9;November 7, 2005<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President</P>
</FONT><FONT FACE="Courier New" SIZE=2></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exhibit311.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>EXHIBIT 31</TITLE>
</HEAD>
<BODY>

<FONT FACE="Arial" SIZE=2><P>EXHIBIT 31.1</P>
<B><P ALIGN="CENTER">CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002<BR>
</P>
</B><P>I, Grant C. Bennett, certify that:<BR>
</P>
<OL>

<LI>I have reviewed this quarterly report on Form 10-Q;<BR>
</LI>
<LI>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;<BR>
</LI>
<LI>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;<BR>
</LI>
<LI>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)) for the registrant and have:<BR>
</LI></OL>
<DIR>
<DIR>

<P>a)&#9;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;<BR>
</P>
<P>b)&#9;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 &quot;Evaluation Date&quot;); and<BR>
</P>
<P>c)&#9;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.<BR>
</P></DIR>
</DIR>

<OL START=5>

<LI>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):<BR>
</LI></OL>
<DIR>
<DIR>

<P>a)&#9;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<BR>
</P>
<P>b)&#9;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.</P>
</DIR>
</DIR>

<P>Date:&#9;November 7, 2005<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer<BR>
</P>
</FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>exhibit312.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>EXHIBIT 31</TITLE>
</HEAD>
<BODY>

<FONT FACE="Arial" SIZE=2><P>EXHIBIT 31.2</P>
<B><P ALIGN="CENTER">CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002<BR>
</P>
</B><P>I, Grant C. Bennett, certify that:<BR>
</P>
<OL>

<LI>I have reviewed this quarterly report on Form 10-Q;<BR>
</LI>
<LI>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;<BR>
</LI>
<LI>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;<BR>
</LI>
<LI>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)) for the registrant and have:<BR>
</LI></OL>
<DIR>
<DIR>

<P>a)&#9;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;<BR>
</P>
<P>b)&#9;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 &quot;Evaluation Date&quot;); and<BR>
</P>
<P>c)&#9;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.<BR>
</P></DIR>
</DIR>

<OL START=5>

<LI>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):<BR>
</LI></OL>
<DIR>
<DIR>

<P>a)&#9;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<BR>
</P>
<P>b)&#9;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.</P>
</DIR>
</DIR>

<P>Date:&#9;November 7, 2005<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett</P>
<P>President and Treasurer</P>

<P>&nbsp;</P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>exhibit321.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>Exhibit 32</TITLE>
</HEAD>
<BODY>

<FONT FACE="Arial" SIZE=2>
<P>Exhibit 32.1</P>
<B><P ALIGN="CENTER">CERTIFICATION PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002<BR>
</P>
</B><P>In connection with the Quarterly Report of Ceramics Process Systems Corporation (the &quot;Company&quot;) on Form 10-Q for the three and nine month periods ended September 24, 2005 as filed with the Securities and Exchange Commission on the date hereof (the &quot;Report&quot;), I, Grant C. Bennett, President and Treasurer 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:<BR>
</P>
<OL>

<LI>The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and<BR>
</LI>
<LI>The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.<BR>
</LI></OL>
<DIR>
<DIR>

<P>Date:&#9;November 7, 2005<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>
</DIR>
</DIR>
</FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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