-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 M00ANhfwFIF+nP3wcM7svpBkkAWBcL0hPEfwPibX07/+/F5sXYGz9dIkBiVBCEq1
 Wy1RW9xQSN1I+TsgiTocMQ==

<SEC-DOCUMENT>0000814676-08-000009.txt : 20080909
<SEC-HEADER>0000814676-08-000009.hdr.sgml : 20080909
<ACCEPTANCE-DATETIME>20080909153937
ACCESSION NUMBER:		0000814676-08-000009
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20080628
FILED AS OF DATE:		20080909
DATE AS OF CHANGE:		20080909

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CPS TECHNOLOGIES CORP/DE/
		CENTRAL INDEX KEY:			0000814676
		STANDARD INDUSTRIAL CLASSIFICATION:	POTTERY & RELATED PRODUCTS [3260]
		IRS NUMBER:				042832509
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16088
		FILM NUMBER:		081062983

	BUSINESS ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		CITY:			NORTON
		STATE:			MA
		ZIP:			02766
		BUSINESS PHONE:		508-222-0614

	MAIL ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		CITY:			NORTON
		STATE:			MA
		ZIP:			02766

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CERAMICS PROCESS SYSTEMS CORP/DE/
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>qa102008q2.htm
<DESCRIPTION>AMENDMENT #1 TO FORM 10-Q FOR Q2 2008
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>&lt;SUBMISSION&gt;</TITLE>
</HEAD>
<BODY LINK="#0000ff">

<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">UNITED STATES</P>
<P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C.  20549</P>
<P ALIGN="CENTER">FORM 10-Q/A</P>
</B><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 June 28, 2008<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>

<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION</P>
</B><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">04-2832509<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>
Norton<U> 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">02766-2102<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>
<B><P ALIGN="CENTER">CPS Technologies Corporation</P>
</B><P ALIGN="CENTER">111 South Worcester Street</P>
<P ALIGN="CENTER">Norton, MA 02766-2102</P>
<P ALIGN="CENTER">Former Name, Former Address and Former Fiscal Year if Changed since Last Report<BR>
</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>Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of &quot;accelerated filer and large accelerated filer&quot; in Rule 12b-2 of the Exchange Act. (Check one):</P>
<P>Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [ ]   Smaller reporting company [X]</P>

<P>&nbsp;</P>
<P>Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):<BR>
[ ] Yes       [X] 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 July 18, 2008: 12,661,725</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">.</P>

<B><P>&nbsp;</P>
</FONT><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">EXPLANATORY NOTE</P>
</B><P ALIGN="CENTER"></P>
<P>We are filing this Amendment #1 to the Form 10-Q originally filed on August 7, 2008,  to correct a typographical error in one subtotal in the Consolidated Statements of Cash Flows.    In the Consolidated Statements of Cash Flows for the Six-Month Period Ended June 28, 2008, the &quot;Net cash provided by operating activities&quot; should be $779,815 rather than $798,815.   There are no other changes.&quot;</P>

<P>For the convenience of the reader, this Form&nbsp;10-Q/A sets forth the originally filed Form&nbsp;10-Q as amended herein, in its entirety.   </P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">PART I  FINANCIAL INFORMATION<BR>
<BR>
ITEM 1  FINANCIAL STATEMENTS (Unaudited)<BR>
<BR>
CPS TECHNOLOGIES CORPORATION<BR>
Consolidated Balance Sheets (Unaudited)<BR>
(continued on next page)</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=656>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 29,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>ASSETS</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Current assets:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $         743,827 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $         472,059 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accounts receivable-trade</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>net of allowance for doubtful accounts</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>of $5,461</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,057,714</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,389,672</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Inventories</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,570,087</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,416,264</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">27,224</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">54,791</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Deferred Taxes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">544,000</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">544,000</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total current assets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,942,852</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">4,876,786</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Property and equipment:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Production equipment</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">4,976,814</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">4,931,008</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Furniture and office equipment</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">246,547</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">211,984</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Leasehold improvements</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">385,220</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">385,220</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total cost</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,608,581</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,528,212</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accumulated depreciation</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>and amortization</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(3,735,900)</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(3,454,899)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Construction in progress</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">516,324</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">56,962</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> Net property and equipment </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,389,005</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,130,275</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> Total Assets </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       8,331,857 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       7,007,061 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
</TABLE>

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

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Consolidated Balance Sheets (Unaudited)<BR>
(continued)<BR>
</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=656>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>LIABILITIES AND STOCKHOLDERS`</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 29,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>EQUITY</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Current liabilities:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accounts Payable</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      614,893</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       508,129 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued Expenses</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">688,557</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">488,047</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Current portion of obligations</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>under capital leases</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">291,870</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">331,233</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total current liabilities</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,595,320</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,327,409</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Obligations under capital</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>leases less current portion</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">247,829</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">273,638</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total liabilities</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,843,149</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,601,047</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Stockholders` equity:</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Common stock, $0.01 par value,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>authorized 15,000,000 shares;</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>issued 12,638,842 shares at June 28, 2008</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>and 12,574,842 shares at December 29, 2007</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">126,389</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">125,749</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Additional paid-in capital</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,897,616</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,805,064 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accumulated deficit</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(26,474,462)</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(27,463,964)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Less cost of 22,883 common shares</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>repurchased</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total stockholders` equity</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">6,448,708</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,406,014</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Total liabilities and stockholders`</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> equity </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $    8,331,857 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $   7,007,061 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="51%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">==========</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<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)<BR>
</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=686>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="35%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Fiscal Quarters Ended</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Six month Periods Ended</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 30,</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 30,</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Product sales</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       4,472,069           </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       3,067,042           </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$      7,887,825    </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       6,207,395    </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Cost of product sales</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,101,750</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,423,716</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,455,145</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">4,676,075</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Gross Margin</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,370,319</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">643,326</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,432,680</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,531,320</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Selling, general, and</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>administrative expense</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">721,968</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">492,908</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,296,500</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">998,852</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Operating income</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">648,351 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">150,418</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,136,180</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">532,468</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Other income(expense), net</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(10,554)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(12,946)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(22,678)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(35,831)</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income before income tax</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>expense</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">  637,797                       </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">        137,472                       </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,113,502</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">496,637</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Income tax expense</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">71,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,608</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">124,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">24,808</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$566,797</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$131,864</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$989,502</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$471,829</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income per </FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>basic common share</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.05 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.01 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.08 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>basic common shares</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,562,508</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,546,959</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,557,234</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,536,519</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Net income per</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>diluted common share</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.04 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.01 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.07 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>diluted common shares</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,219,672</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,376,040</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,246,310</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,273,426</FONT></TD>
</TR>
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="2%" 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="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>See accompanying notes to consolidated financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Consolidated Statements of Cash Flows (Unaudited)<BR>
</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=656>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="51%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Six-Month Period Ended</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 30,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash flows from operating activities:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$989,502</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$471,829  </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Adjustments to reconcile net income</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>to cash provided by</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>operating activities:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Depreciation &amp; amortization</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">281,002</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">232,083  </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Share-based compensation</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">22,254</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">25,291</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Tax benefit from stock options</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">6,298</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,242</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Changes in operating assets and liabilities:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Accounts receivable trade</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(668,042)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">763,294</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Inventories</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(153,823)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(609,010)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(4,650)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(18,360) </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Accounts payable</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">106,764</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(299,385) </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="44%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Accrued expenses</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">200,510</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(63,785) </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Net cash provided by operating</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">779,815</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">505,199</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>activities</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash flows from investing activities:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Purchases of property and equipment</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(507,515)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(387,517)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Net cash used in investing </FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>activities</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(507,515)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(387,517)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash flows from financing activities:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Payment of capital lease obligations</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(65,172)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(138,991)</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Proceeds from issuance of common stock</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">64,640</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,050</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Net cash used by </FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>financing activities</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(532)</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">  (125,941)  </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">271,768</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(8,259) </FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at beginning of period</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">472,059</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">517,540  </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at end of period</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 743,827</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 509,281  </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="39%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
<TR><TD WIDTH="49%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Supplemental cash flow information:</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Acquisition of machinery under capital leases</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$   117,484</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  425,715</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Prepaid expense transferred to equipment</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     32,217</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Cash paid for taxes</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     52,426</FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  120,000</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P>Interest paid</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     23,109  </FONT></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$    37,094</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="46%" VALIGN="TOP" COLSPAN=4 HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>See accompanying notes to consolidated financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Notes to Consolidated Financial Statement<BR>
(Unaudited)</P>
</B><U><P>(1)  Nature of Business</P>
</U><P>CPS Technologies Corporation (the `Company` or `CPS`) (formerly Ceramics Process Systems Corporation) provides advanced material solutions to the electronics, robotics, automotive and other industries.<BR>
</P>
<U><P>(2)  Interim Consolidated Financial Statements<BR>
</U>As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles.<BR>
</P>
<P>The accompanying financial statements are unaudited.  In the opinion of management, the unaudited consolidated financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods.<BR>
</P>
<P>The Company`s balance sheet at December 29, 2007 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 29, 2007.<BR>
<BR>
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)  Net Income (Loss) Per Common and Common Equivalent Share<BR>
</U>Basic net income or net loss per common share is calculated by dividing net income or loss by the weighted average number of common shares outstanding during the period.  Diluted net income per common share is calculated by dividing net income by the sum of the weighted average number of common shares plus additional common shares that would have been outstanding if potential dilutive common shares had been issued for granted stock option and stock purchase rights.  </P>
<P>The following table presents the calculation of both basic and diluted EPS:</P>
</FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=670>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="35%" VALIGN="TOP" COLSPAN=3 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Quarters Ended</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="32%" VALIGN="TOP" COLSPAN=3 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Six-Month Periods Ended</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 30,</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 30,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Basic EPS Computation:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$         566,797</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$            131,864  </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$        989,502</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$           471,829            </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Common shares</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,562,508 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,546,959 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,557,234 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,536,519 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Basic EPS</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                 0.05 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                 0.01 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.08 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Diluted EPS Computation:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Net income</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">566,797</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">131,864  </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">989,502</FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">471,829 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Common shares </FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Outstanding</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,562,508 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,546,959 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,557,234 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,536,519 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Dilutive effect of Stock options</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">657,164               </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">             829,081 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          689,076 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">         736,907 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Total Shares</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,219,672          </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,376,040            </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       13,246,310 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       13,273,426 </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15><P></P></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P>Diluted EPS</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                 0.04 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                 0.01 </FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.07 </FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.04 </FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<U><P>(4)  Share-Based Payments</P>
</U><P>The Company maintains a stock incentive plan (the &quot;Plan&quot;), which is described more fully in Note 5 to the consolidated financial statements in the 2007 Annual Report filed on Form10-K.  Effective January&nbsp;1, 2006, the Company adopted the provisions of SFAS No.&nbsp;123, &quot;Share-Based Payments (revised 2004),&quot; (SFAS No. 123R) which requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). Under SFAS No.&nbsp;123R, the Company provides an estimate of forfeitures at initial grant date. The Company elected the modified prospective transition method under SFAS No. 123R and accordingly has not restated periods prior to adoption. There were no shares granted under the Plan during the quarters ended 
June 28, 2008 and June 30, 2007. During the three and six months ended June 28, 2008, the Company recognized $12,135 and $22,254 respectively as shared-based compensation expense related to previously granted shared under the Plan. During the three and six months ended June 30, 2007, the Company recognized $15,122 and $25,281 respectively as shared-based compensation expense related to previously granted shares under the Plan. <BR>
</P>
<U><P>(5)  Inventories</P>
</U><P>Inventories consist of the following:</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=632>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 29,</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Raw materials</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 343,761 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  257,387</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Work in process</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">378,398</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">273,197</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Finished goods</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">847,928</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">885,680</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Inventories</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  1,570,087 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  1,416,264           </FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="54%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<U><P>(6)&#9;Accrued Expenses</P>
</U><P>Accrued expenses consist of the following:</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=632>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 28,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 29,</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2008</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2007</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P> </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued legal and accounting</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  40,026 </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  51,950 </FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued payroll</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">427,140</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">311,324 </FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued other</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">108,945</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">77,573 </FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>Accrued income tax payable</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">112,446</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">47,200</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P>   </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $  688,557</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 488,047 </FONT></TD>
</TR>
<TR><TD WIDTH="57%" 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="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
</TABLE>

<U><FONT FACE="Arial" SIZE=2>
<P>(7)        Line of Credit and Equipment Lease Facility Agreements <A NAME="OLE_LINK2"><BR>
</U>In April 2005, the Company entered into line of credit and equipment lease agreements with Sovereign Bank.  The line of credit is a revolving credit facility allowing the Company to borrow up to 80% of eligible accounts receivable, up to a maximum of $1 million, subject to the Company complying with certain covenants.  The line of credit has a one year term and has been renewed each year since 2005.  In Q2 2008 it was renewed to May 2009. As of June 28, 2008 there were no borrowings under the line of credit.<BR>
<BR>
The equipment lease facility allows the Company to lease up to $1.5 million of eligible capital equipment from Sovereign Bank.  As of June 28, 2008, the Company has leased capital equipment with a net carrying value of $719 thousand from Sovereign Bank under the lease facility agreement, and $781 thousand of availability for future use under the lease facility agreement.</A><BR>
<BR>
<U>(8)&#9;Income Taxes<BR>
</U>At December 29, 2007, the Company had approximately $7,000,000 of net operating loss carryforwards available to offset income for U.S. Federal income tax purpose. The Company has established a valuation allowance against this and its other deferred tax assets.<BR>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</FONT><FONT FACE="Arial" SIZE=2>The Company recorded a tax provision of $12,000 and $21,000 for federal income taxes for the three and six months ended June 28, 2008, respectively.  This provision is based on the federal corporate alternative minimum tax rate rather than the statutory graduated tax rates.  The Company believes it will be able to use net operating loss carryforwards to offset federal taxes, other than the corporate alternative minimum tax, in fiscal 2008.<BR>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</FONT><FONT FACE="Arial" SIZE=2>The Company reduced the valuation allowance against deferred tax assets at the end of 2007 resulting in a deferred tax asset account of $544,000 on the Company`s Consolidated Balance Sheet as of year-end 2007.  The Company will continue to consider the need and amount of the valuation allowance against the deferred tax assets based upon its ongoing assessment of historical and projected taxable income.<BR>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</FONT><FONT FACE="Arial" SIZE=2>The Company recorded a tax provision of $59,000 and $103,000 for state income taxes during the three and six months ended June 28, 2008, respectively.</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
<BR>
</P>
</FONT><B><FONT FACE="Arial" SIZE=2><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 29, 2007.<BR>
</P>
<U><P>Forward-Looking Statements<BR>
</U>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<BR>
</U>The critical accounting policies utilized by the Company in preparation of the accompanying consolidated financial statements are set forth in Part II, Item 7 of the Company`s Annual Report on Form 10-K for the year ended December 29, 2007, under the heading &quot;Management`s Discussion and Analysis of Financial Condition and Results of Operations&quot;.  There have been no material changes to these policies since December 29, 2007.</P>

<U><P>Overview<BR>
</U>CPS Technologies Corporation (the `Company` or `CPS`) (formerly Ceramics Process Systems Corporation) provides advanced material solutions to the electronics, robotics, automotive and other industries.  Our primary advanced material solution is metal matrix composites, a new class of materials which are a combination of metal and ceramic.  CPS has a leading, proprietary position in metal matrix composites.   Metal matrix composites have several superior properties compared to conventional materials - improved thermal conductivity, thermal expansion matching, stiffness and light weight - which enable higher performance and higher reliability in our customers` products.<BR>
<BR>
Like plastics many years ago, this new class of materials will penetrate many end markets over many years.  CPS management believes our business model of providing advanced material solutions to a portfolio of high growth end markets which are, at any point in time, in various stages of the technology adoption lifecycle, provides CPS with the opportunity for sustained growth and a diversified customer base.  We believe we have validated this model as we are now supplying customers at all stages of the technology adoption lifecycle.<BR>
<BR>
CPS is the leader in supplying metal matrix composites to certain high growth electronics end markets which are well along in the adoption lifecycle and therefore generating significant demand.  These end markets include high-performance integrated circuits and circuit boards used in internet switches and routers, as well as motor controllers used in high-speed electric trains, subway cars and wind turbines.  CPS supplies heat spreaders, lids and baseplates to customers in these end markets.  CPS is a fully qualified manufacturer for many of the world`s largest electronics OEMs.<BR>
<BR>
Concurrently, CPS is participating in certain end markets that are at an earlier stage of the adoption lifecycle.   Management believes these end markets will generate additional growth longer-term.  An example of such an end market is motor controllers for hybrid automotives and trucks; CPS has been supplying prototypes into this end market for several years.   Management believes that several of the programs for which we are selling prototypes will enter volume production in the future.<BR>
<BR>
We are also actively working with customers in end markets at the beginning stages of the adoption lifecycle.  An example is CPS`s HybridTech armor technology which has the potential for greater multi-hit capability, lighter weight and lower costs than conventional armor.<BR>
<BR>
Our products are manufactured by proprietary processes we have developed including the QuicksetTM Injection Molding Process (`Quickset Process`) and the QuickCastTM Pressure Infiltration Process (`QuickCast Process`).<BR>
<BR>
CPS was incorporated in Massachusetts in 1984 as Ceramics Process Systems Corporation and reincorporated in Delaware in April 1987 through a merger into a wholly-owned Delaware subsidiary organized for purposes of the reincorporation.  In July 1987, CPS completed our initial public offering of 1.5 million shares of our Common Stock.   In March 2007, Ceramics Process Systems Corporation was renamed CPS Technologies Corporation.<BR>
</P>
<U><P>Results of Operations for the Second Fiscal Quarter of 2008 (Q2 2008) Compared to the Second Fiscal Quarter of 2007 (Q2 2007)<BR>
</U><BR>
Total revenue was $4,472 thousand in Q2 2008, a 46% increase from revenue of $3,067 thousand in Q2 2007.  The increase in revenues came from all product families except baseplates for cellular telephone basestations which continued to decline as these specific products near their end of life.   We supply components to OEMs; each of our products has a specific life cycle.   The revenue growth in Q2 came primarily from products introduced 1-2 years ago which have now entered the growth phase of their product life cycles; this is particularly the case for specific flip-chip heat spreaders used in high-performance switches and routers which generated the greatest growth in Q2.  Demand for baseplates used in motor controllers also increased as did demand for hermetic metal packages.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P><BR>
</FONT><FONT FACE="Arial" SIZE=2>Total operating expenses in Q2 2008 were $3,824 thousand, a 31% increase from total operating</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>expenses in</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>Q2 2007 of $2,917 thousand</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">.   </FONT><FONT FACE="Arial" SIZE=2>Cost of product sales in Q2 2008 were $3,102 thousand, a 28% increase from cost of product sales in Q2 2007 of $2,424 thousand.   Cost of product sales</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>increased primarily as a result of increased unit shipments.   The gross profit on product sales in Q2 2008</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>was 31% compared to gross profit on product sales in Q2 2007 of 21%. The increase in gross profit is primarily the result of improved labor utilization and fixed costs being spread ove
r increased unit shipments; overhead increased at a much lower rate than did unit shipments.<BR>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</FONT><FONT FACE="Arial" SIZE=2>Selling, general and administrative (SG&amp;A) expenses were $722 thousand in Q2 2008, a 46% increase</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>from SG&amp;A expenses of $493 thousand in Q2 2007</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">.   <A NAME="OLE_LINK1"></FONT><FONT FACE="Arial" SIZE=2>The increase in SG&amp;A expenses is primarily the result of higher commissions paid to sales representatives, higher sales promotion expenses, and higher fees for external professional services.<BR>
</P>
<U><P>Results of Operations for First Six Months 2008 Compared to First Six Months of 2007<BR>
</P>
</U><P>Total revenue was $7,888 thousand in the first six months of 2008, a 27% increase from total revenue of $6,207 thousand in the first six months of 2007.   The increase in revenues came from all product families except baseplates for cellular telephone basestations which continued to decline as these specific products near their end of life.  Demand was up in the first six months of 2008 compared to the same period a year ago for flip-chip heat spreaders used in high-performance switches and routers, baseplates used in motor control modules, and hermetic metal packages.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>Total operating expenses in the first six months of 2008 were $6,752 thousand, a 19% increase</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>from total operating expenses of $5,675 thousand in the first six months of 2007</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">.   </FONT><FONT FACE="Arial" SIZE=2>Cost of product sales</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>in the first six months of 2008 were $5,455 thousand, a 17% increase from cost of product sales of</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>$4,676 thousand in the first six months of 2007</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">.   </FONT><FONT FACE="Arial" SIZE=2>Cost of product sales increased primarily as a result of increased unit shipments.   Gross profit on product sales in the first six months of 2008 was 31% compared with gross profit on product sales of 25% in the first six mont
hs of 2007. The increase in gross profit on product sales is primarily the result of improved labor utilization in the first months of 2008 compared to the first six months of 2007, and fixed costs being spread over increased unit shipments.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>Selling, general and administrative (SG&amp;A) expenses were $1,297 thousand in the first six months of 2008, a 30% increase from SG&amp;A expenses of $999 thousand in the first six months of 2007. The increase in SG&amp;A expenses is primarily the result of accruing for compensation expense for bonuses paid, higher commissions paid to sales representatives and higher sales promotion expenses and higher salary costs associated with increased personnel additions in the sales function.</P>
</FONT><U><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P></A></P>

</FONT><FONT FACE="Arial" SIZE=2><P>Liquidity and Capital Resources</P>
</U><P>The Company`s cash and cash equivalents at June 28, 2008 were $744 thousand compared to cash and cash equivalents at December 29, 2007 of $472 thousand, an increase of $272 thousand or 58%. </P>

<P>Accounts receivable increased to $3,058 thousand at June 28, 2008 from $2,390 thousand at</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT><FONT FACE="Arial" SIZE=2>December 29, 2007.</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">  </FONT><FONT FACE="Arial" SIZE=2>This change reflects increased shipments in Q2 2008 compared to Q4 2007, as well as the timing of shipments and collections.</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">  </FONT><FONT FACE="Arial" SIZE=2>The accounts receivable balance at June 28, 2008 and December 29, 2007 is net of allowance for doubtful accounts of $5 thousand.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>Inventories increased to $1,570 thousand at June 28, 2008 from $1,416 thousand at December 29, 2007.  Raw materials inventory increased primarily due to purchased components used in the Company`s hermetic packaging products; work-in-process inventory increased to support higher unit shipments; finished goods inventory decreased at the Company`s Norton location due to timing of shipments. Of the total finished goods inventory of $848 thousand at June 28, 2008, $567 thousand was located at customers` locations pursuant to consigned inventory agreements. Of the total finished goods inventory of $886 thousand at December 29, 2007, $515 thousand was located at customers` locations pursuant to consigned inventory agreements.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>The Company financed its working capital during Q2 2008 and the six months ended June 28, 2008 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 2008 from these same sources.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>The Company continues to sell to a limited number of customers and the loss of any one of these customers could cause the Company to require additional external financing. Failure to generate sufficient revenues, raise additional capital or reduce certain discretionary spending could have a material adverse effect on the Company`s ability to achieve its business objectives.</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 and has been renewed each year since 2005.  In Q2 2008 the term was extended to May 2009.   As of June 28, 2008 there were no borrowings under the line of credit. </P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>The equipment lease facility allows the Company to lease up to $1.5 million of eligible capital equipment.  As of June 28, 2008, the Company has leased capital equipment with a carrying value of $719 thousand from Sovereign Bank under the lease facility agreement, and $781 thousand of availability for future use under the lease facility agreement.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>As of June 28, 2008 production equipment included $516 thousand of construction in progress, and in addition, the Company had outstanding commitments to purchase $176 thousand of production equipment.  The Company intends to finance production equipment in construction in progress and outstanding commitments under the lease agreement with existing cash balances and funds generated by operations.</P>
</FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT><FONT FACE="Arial" SIZE=2><P>In July 2006 the Company entered into a lease for its current operating facilities of approximately 37,520 square feet of rentable space located on approximately seven acres at its current site in Norton, MA.  The term of the lease is ten years.  The lease is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities.  The Company also has an option to buy the property and a first right of refusal during the term of the lease.  Annual rental payments are $100 thousand in year one increasing to $150 thousand in year ten.</P>

<P>The Company`s contractual obligations at June 28, 2008 consist of the following:</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 2009 -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2012 -</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P>FY 2015 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 2008</U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2011</U></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 1014</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">$ 584,176</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 181,688</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 402,488</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">$  176,221</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  176,221</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>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2>
<P>Operating lease obligation for facilities at 111 South Worcester Street, Norton, MA.</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$1,040,000</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 57,500</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 368,000</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 427,000</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 187,500</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2>
<P>&nbsp;</P>
<B><P>ITEM 3&#9;&#9;QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</P>
</B>
<P>The Company is not significantly exposed to the impact of interest rate changes or foreign currency fluctuations.  The Company has not used derivative financial instruments.</P>

<B><P>ITEM 4&#9;&#9;CONTROLS AND PROCEDURES</P>
</B>
<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.</P>

<P ALIGN="CENTER">&nbsp;</P>
<B><P ALIGN="CENTER">PART II OTHER INFORMATION</P>

<P>ITEM 1&#9;&#9;LEGAL PROCEEDINGS<BR>
</B>&#9;None.</P>

<B><P>ITEM 1A&#9;RISK FACTORS<BR>
</B>&#9;There have been no material changes to the risk factors as discussed in our 2007 Form 10-K</P>

<B><P>ITEM 2&#9;&#9;UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.<BR>
</B>&#9;None.</P>

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

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

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

<B><P>ITEM 6&#9;&#9;EXHIBITS AND REPORTS ON FORM 8-K: <BR>
</B>(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</LI></OL>

<P>&#9;On August 7, 2008 the Company filed a report on Form 8-K relating to the announcement of its financial results for the quarter ended June 28, 2008 as presented in a press release dated August 7, 2008.</P>

<B><P>&nbsp;</P>
<P ALIGN="CENTER">SIGNATURES</P>
<P ALIGN="CENTER"></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.</P>

<B><U><P>CPS TECHNOLOGIES CORPORATION</B><BR>
</U>(Registrant)</P>
<P ALIGN="CENTER"></P>
<P>Date:&#9;September 9, 2008<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President<BR>
</P></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>EXHIBITS 31</TITLE>
</HEAD>
<BODY>

<FONT FACE="Arial" SIZE=2><P>EXHIBIT 31.1</P>

<B><P ALIGN="CENTER">CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER</P>
<P ALIGN="CENTER"> 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/A;<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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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;</P>

<P>b)&#9;Designed such internal control over financial reporting,  or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;<BR>
</P>
<P>c)&#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>d)&#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;September 9, 2008<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</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>EXHIBITS 31</TITLE>
</HEAD>
<BODY>

<FONT FACE="Arial" SIZE=2><P>EXHIBIT 31.1</P>

<B><P ALIGN="CENTER">CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER</P>
<P ALIGN="CENTER"> 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/A;<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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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;</P>

<P>b)&#9;Designed such internal control over financial reporting,  or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;<BR>
</P>
<P>c)&#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>d)&#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;September 9, 2008<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</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>&lt;SUBMISSION&gt;</TITLE>
</HEAD>
<BODY LINK="#0000ff">

<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 CPS Technologies Corporation (the &quot;Company&quot;) on Form 10-Q/A for the three month and six month periods ended June 28, 2008 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;September 9, 2008<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>

<P>&nbsp;</P>
<P>&nbsp;</P></DIR>
</DIR>
</FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
