<SEC-DOCUMENT>0000814676-11-000007.txt : 20110816
<SEC-HEADER>0000814676-11-000007.hdr.sgml : 20110816
<ACCEPTANCE-DATETIME>20110816122422
ACCESSION NUMBER:		0000814676-11-000007
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20110702
FILED AS OF DATE:		20110816
DATE AS OF CHANGE:		20110816

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
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16088
		FILM NUMBER:		111039308

	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
<SEQUENCE>1
<FILENAME>q10q22011.htm
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDED JULY 2, 2011
<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><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</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 July 2, 2011<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></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638 DIR="LTR">
<TR><TD WIDTH="50%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Delaware<BR>
</U>(State or Other Jurisdiction<BR>
of Incorporation or Organization</FONT></FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">04-2832509<BR>
</U>(I.R.S. Employer<BR>
Identification No.)</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><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></FONT></TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><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></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<U><FONT FACE="Arial" SIZE=2><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>&nbsp;</P>
<P>Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] 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 August 15, 2011: 12,739,709.</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>
Balance Sheets (Unaudited)<BR>
(continued on next page)</P></B></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=662 DIR="LTR">
<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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>ASSETS</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></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="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Current assets:</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P ALIGN="RIGHT"> </FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>$        1,260,222 </FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $         1,803,222 </FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accounts receivable-trade</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" 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><FONT FACE="Arial" SIZE=2><P>net of allowance for doubtful accounts</P>
<P>of $5,000 at July 2, 2011 and</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" 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><FONT FACE="Arial" SIZE=2><P>December 25, 2010</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> 3,833,926</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,922,962</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Inventories</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,051,878</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,523,758</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">122,549</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">76,597</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Deferred taxes</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">340,079</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">354,774</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Total current assets</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,608,654</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,681,295</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Property and equipment:</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Production equipment</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">6,637,755</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">6,462,311</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Furniture and office equipment</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">337,927</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">325,880</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Leasehold improvements</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">699,832</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">677,529</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Total cost</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,675,514</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,465,720</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accumulated depreciation</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" 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><FONT FACE="Arial" SIZE=2><P>and amortization</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(5,766,655)</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(5,402,781)</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Construction in progress</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">228,363</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">121,362</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></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><FONT FACE="Arial" SIZE=2><P> Net property and equipment </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,137,222</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,184,301</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Deferred taxes, non-current portion</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">778,050</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">745,505</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P> Total assets </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       10,523,926 </FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      10,611,101 </FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
</TR>
</TABLE>

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

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Balance Sheets (Unaudited)<BR>
(concluded)<BR>
</P></B></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=656 DIR="LTR">
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>LIABILITIES AND STOCKHOLDERS`</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></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><FONT FACE="Arial" SIZE=2><P>EQUITY</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P> </FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=8>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Current liabilities:</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=8><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><FONT FACE="Arial" SIZE=2><P>Accounts payable</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $      946,095</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $       812,564 </FONT></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><FONT FACE="Arial" SIZE=2><P>Accrued expenses</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">592,622</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">884,259</FONT></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><FONT FACE="Arial" SIZE=2><P>Current portion of obligations</FONT></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><FONT FACE="Arial" SIZE=2><P>under capital leases</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">215,303</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">253,167</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Total current liabilities</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,754,020</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,949,990</FONT></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><FONT FACE="Arial" SIZE=2><P>Obligations under capital</FONT></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><FONT FACE="Arial" SIZE=2><P>leases less current portion</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">75,215</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">175,561</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Total liabilities</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,829,235</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,125,551</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Commitments</FONT></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="57%" VALIGN="TOP" COLSPAN=3 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><FONT FACE="Arial" SIZE=2><P>Stockholders` equity:</FONT></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><FONT FACE="Arial" SIZE=2><P>Common stock, $0.01 par value,</FONT></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><FONT FACE="Arial" SIZE=2><P>authorized 15,000,000 shares;</FONT></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><FONT FACE="Arial" SIZE=2><P>at July 2, 2011 and December 25, 2010;</FONT></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><FONT FACE="Arial" SIZE=2><P>issued 12,762,592 and 12,698,842 shares</FONT></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><FONT FACE="Arial" SIZE=2><P>at July 2, 2011 and December 25, 2010, respectively;</FONT></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><FONT FACE="Arial" SIZE=2><P>outstanding 12,739,709 and 12,675,959 shares</FONT></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><FONT FACE="Arial" SIZE=2><P>at July 2, 2011 and December 25, 2010, respectively;</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">127,626</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">126,989</FONT></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><FONT FACE="Arial" SIZE=2><P>Additional paid-in capital</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">33,315,598</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">33,136,420 </FONT></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><FONT FACE="Arial" SIZE=2><P>Accumulated deficit</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(24,687,698)</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(24,717,024)</FONT></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><FONT FACE="Arial" SIZE=2><P>Less cost of 22,883 common shares</FONT></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><FONT FACE="Arial" SIZE=2><P>repurchased</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(60,835)</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Total stockholders` equity</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">8,694,691</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">8,485,550</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Total liabilities and stockholders`</FONT></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><FONT FACE="Arial" SIZE=2><P> equity </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $   10,523,926 </FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $   10,611,101 </FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">==========</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">==========</FONT></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>See accompanying notes to financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Statements of Operations (Unaudited)<BR>
</P></B></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=686 DIR="LTR">
<TR><TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="28%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="34%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Fiscal Quarters Ended</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Six Month Periods Ended</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 26,</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 26,</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Revenues:</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>Product sales</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       $  4,292,369           </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       $4,970,762  </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">     $  9,340,227    </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">      $  10,006,231    </FONT></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><FONT FACE="Arial" SIZE=2><P>Research and development </FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>under cooperative agreement</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">549,391</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">215,921</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,341,878</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">589,638</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Total revenues</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       4,841,760           </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">5,186,683       </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">    10,682,105    </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">      10,595,869    </FONT></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="16%" 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="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cost of product sales</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,380,055</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">3,608,979</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,599,920</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">7,616,879</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cost of research and development</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>under cooperative agreement</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">502,289</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">193,296</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,266,709</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">544,595</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Gross Margin</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">959,416</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,384,408</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,815,476</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2,434,395</FONT></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="16%" 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="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Selling, general, and</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P ALIGN="RIGHT"> </FONT></FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></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"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P ALIGN="RIGHT"> </FONT></FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> </FONT></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><FONT FACE="Arial" SIZE=2><P>administrative expense</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">927,068</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">663,419</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,744,014</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,426,473</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Operating income</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,348 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">720,989</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">71,462</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,007,922</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 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="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="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Other income (expense), net</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(8,065)</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(7,816)</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(17,736)</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(16,476)</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Net income before income tax</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>expense</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">  24,283                       </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">713,173  </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">53,726</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">991,446</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Income tax expense</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">11,100</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">263,370</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">24,400</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">377,000</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Net income</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$13,183</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$449,803</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$29,326</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$614,446</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=7>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net income per </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=7><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=7><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><FONT FACE="Arial" SIZE=2><P>basic common share</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">$               0.04</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.05 </FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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="16%" 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="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>basic common shares</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>outstanding</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,738,390</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,624,959</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,726,168</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,624,959</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net income per</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>diluted common share</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $               0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                   0.03                </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.05 </FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Weighted average number of</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>diluted common shares</FONT></FONT></TD>
<TD WIDTH="16%" 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><FONT FACE="Arial" SIZE=2><P>outstanding</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,229,112</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,938,087</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,204,616</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,928,034</FONT></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="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>See accompanying notes to financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Statements of Cash Flows (Unaudited)<BR>
</P></B></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=656 DIR="LTR">
<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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="48%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Six Month Periods Ended</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 26,</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash flows from operating activities:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net income</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 29,326</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 614,446</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Adjustments to reconcile net income</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>to cash provided by (used in)</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>operating activities:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Depreciation &amp; amortization</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">363,874</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">358,189</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Share-based compensation</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">112,491</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,054</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Deferred taxes</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">14,200</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">--</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Excess tax benefit from stock options exercised</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(32,050)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">--</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Changes in:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accounts receivable trade</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">89,036</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(107,834)</FONT></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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Inventories</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(528,120)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">123,242</FONT></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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Prepaid expenses</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(45,970)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">14,294</FONT></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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accounts payable</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">133,531</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">37,242</FONT></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="46%" VALIGN="TOP" COLSPAN=3 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accrued expenses</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(291,637)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">398,306</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net cash provided by (used in) operating</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(155,319)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,469,939</FONT></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="42%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>activities</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash flows from investing activities:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Purchases of property and equipment</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(316,795)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(341,760)</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net cash used in investing </FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="42%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>activities</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(316,795)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(341,760)</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash flows from financing activities:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Payment of capital lease obligations</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(138,210)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(158,329)</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Excess tax benefit from stock options exercised</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">32,050</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">--</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Proceeds from issuance of common stock</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" BGCOLOR="#ffffff" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">35,274</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">--</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></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="44%" VALIGN="TOP" COLSPAN=2 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net cash used in  </FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" 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="42%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>financing activities</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(70,886)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">  (158,329)</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Net increase (decrease) in cash and cash equivalents</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">(543,000)</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">969,850</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at beginning of period</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,803,222</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,073,600</FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">---------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash and cash equivalents at end of period</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 1,260,222</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 2,043,450  </FONT></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="42%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=========</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="52%" VALIGN="TOP" COLSPAN=5 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Supplemental cash flow information:</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Cash paid for taxes</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     76,500</FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$              --</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Interest paid</FONT></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     17,736  </FONT></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     16,477  </FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="49%" VALIGN="TOP" COLSPAN=4 HEIGHT=13><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="24%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>See accompanying notes to financial statements.</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">CPS TECHNOLOGIES CORPORATION<BR>
Notes to Financial Statement<BR>
(Unaudited)</P>
</B><U><P>(1)  Nature of Business</P>
</U><P>&#9;The Company provides advanced material solutions to the electronics, robotics, automotive and other industries. The Company`s primary advanced material solution is metal matrix composites which are a combination of metal and ceramic. </P>
<P>&#9;CPS also assembles housings and packages for hybrid circuits. These housings and packages may include components made of metal-matrix composites or they may include components made of more traditional materials such as aluminum, copper-tungsten, etc.</P>
<P>&#9;The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and structural markets. In 2008 the Company also entered into a cooperative agreement with the U.S. Army to further develop its composite technology to produce armor. </P>

<U><P>(2)  Interim Financial Statements<BR>
</U>&#9;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.</P>

<P>The accompanying financial statements are unaudited.  In the opinion of management, the unaudited financial statements of CPS reflect all normal recurring adjustments which are necessary to present fairly the financial position and results of operations for such periods.</P>

<P>The Company`s balance sheet at December 25, 2010 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.</P>

<P>For further information, refer to the financial statements and footnotes thereto included CPS`s Annual Report on Form 10-K for the year ended December 25, 2010.<BR>
</P>
<P>The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&#9;</P>
<U><P>(3)  Net Income (Loss) Per Common and Common Equivalent Share<BR>
</U>&#9;Basic net income or net loss per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted net income per common share is calculated by dividing net income by the sum of the weighted average number of common shares plus additional common shares that would have been outstanding if potential dilutive common shares had been issued for granted stock option and stock purchase rights.  </P>
<P>The following table presents the calculation of both basic and diluted EPS:</P>
</FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=670 DIR="LTR">
<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><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Fiscal Quarters Ended</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Six Month Periods Ended</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 26,</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">June 26,</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="TOP" COLSPAN=2 HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Basic EPS Computation:</FONT></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><FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></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><FONT FACE="Arial" SIZE=2><P>Net income</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       13,183</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$        449,803</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$       29,326</FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$      614,446</FONT></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><FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></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><FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></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><FONT FACE="Arial" SIZE=2><P>Common shares</FONT></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><FONT FACE="Arial" SIZE=2><P>Outstanding</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,738,390</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,624,959</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,726,168 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,624,959</FONT></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><FONT FACE="Arial" SIZE=2><P>Basic EPS</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $           0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $            0.04</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">             </FONT></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $           0.00 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $            0.05 </FONT></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><FONT FACE="Arial" SIZE=2><P>Diluted EPS Computation:</FONT></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><FONT FACE="Arial" SIZE=2><P>Numerator:</FONT></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><FONT FACE="Arial" SIZE=2><P>Net income</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     13,183</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$      449,803</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     29,326</FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$     614,446</FONT></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><FONT FACE="Arial" SIZE=2><P>Denominator:</FONT></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><FONT FACE="Arial" SIZE=2><P>Weighted average</FONT></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><FONT FACE="Arial" SIZE=2><P>Common shares </FONT></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><FONT FACE="Arial" SIZE=2><P>Outstanding</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,738,390 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          12,624,959 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,726,168 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,624,959</FONT></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><FONT FACE="Arial" SIZE=2><P>Dilutive effect of stock options</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">490,722               </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">313,128               </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          478,448 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">          303,075</FONT></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><FONT FACE="Arial" SIZE=2><P>Total Shares</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">13,229,112          </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">12,938,087          </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       13,204,616 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">       12,928,034</FONT></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><FONT FACE="Arial" SIZE=2><P>Diluted EPS</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.00 </FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $                 0.03</FONT></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">                 </FONT></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.00 </FONT></FONT></TD>
<TD WIDTH="1%" VALIGN="TOP" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=15>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $              0.05 </FONT></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<U><P>(4)  Share-Based Payments</P>
</U><P>&#9;The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is recognized over the period during which an employee is required to provide services in exchange for the award, the requisite service period (usually the vesting period). The Company provides an estimate of forfeitures at initial grant date. Reductions in compensation expense associated with the forfeited options are estimated at the date of grant, and this estimated forfeiture rate is adjusted periodically based on actual forfeiture experience. The company uses the Black-Scholes option pricing model to determine the fair value of the stock options granted. </P>

<P>&#9;There were no shares granted under the 2009 Stock Incentive Plan (the &quot;Plan&quot;) during the quarters ended July 2, 2011 and June 26, 2010. During the three and six months ended July 2, 2011, the Company recognized $61,595 and $112,491, respectively, as shared-based compensation expense related to previously granted shared under the Plan. During the three and six months ended June 26, 2010, the Company recognized $19,218 and $32,054, respectively, as shared-based compensation expense related to previously granted shares under the Plan. During the three and six months ended July 2, 2011 the Company issued 20,000 and 63,750 share, respectively, as a result of option exercises.</P>

<U><P>(5)  Inventories</P>
</U><P>Inventories consist of the following:</P></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=632 DIR="LTR">
<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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P> </FONT></FONT></TD>
<TD WIDTH="54%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Raw materials</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 406,468 </FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  360,306</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Work in process</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">387,132</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">298,004</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Finished goods</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">1,258,278</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">865,448</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-----------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-----------</FONT></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><FONT FACE="Arial" SIZE=2><P>Inventories</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  2,051,878</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  1,523,758           </FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<U><P>(6)&#9;Accrued Expenses</P>
</U><P>Accrued expenses consist of the following:</P></FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=2 WIDTH=632 DIR="LTR">
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">July 2,</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">December 25,</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2011</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">2010</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P> </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">-------------</FONT></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><FONT FACE="Arial" SIZE=2><P>Accrued legal and accounting</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  59,132 </FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$  51,200 </FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accrued payroll</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">355,583</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">578,021 </FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Accrued other</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">177,907</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">255,038 </FONT></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>   </FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">------------</FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $  592,622</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT"> $ 884,259 </FONT></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><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=16>
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">=======</FONT></FONT></TD>
</TR>
</TABLE>

<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>(7)        Line of Credit and Equipment Lease Facility Agreements <A NAME="OLE_LINK2"><BR>
</U>&#9;<A NAME="OLE_LINK3"><A NAME="OLE_LINK4">The Company has a $1 million revolving line of credit and a $1.25 million equipment finance facility with Sovereign Bank through maturity in May 2012. The line of credit is secured by the accounts receivable and other assets of the Company, has an interest rate of prime plus one percent (1%) and a one-year term. Under the terms of the agreement, the Company is required to maintain its operating accounts with Sovereign Bank. The line of credit and the equipment finance facility are cross defaulted and cross collateralized. The Company is also subject to certain financial covenants within the terms of the line of credit that require the Company to maintain a targeted rolling four quarter debt service coverage ratio as well as targeted debt to equity and current ratios. At July 2, 2011, the Company was in compliance with these covenants. The Company believes but can give no assurance that it could obtain similar lease facilities from other lenders. At July 2, 2011 there were no borrowings under this line of credit. At July 2, 2011, the Company had capital lease obligations outstanding totaling $290,518 related to equipment financed by the Sovereign equipment lease and finance facility and $959,482 available remaining on the Sovereign lease line. <BR>
</A></A></FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
&#9;</A><BR>
</FONT></FONT></FONT><U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>(8)&#9;Income Taxes<BR>
</U>&#9;At December 25, 2010, the Company had approximately $1,731,000 of net operating loss carryforwards available to offset future income for U.S. Federal income tax purpose.<BR>
<BR>
&#9;The Company recorded a tax provision of $6,700 and $15,100 for federal income taxes and a tax provision of $4,400 and $9,300 for state income taxes during the three and six months ended July 2, 2011, respectively.<BR>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>The Company has a current and non-current deferred tax asset aggregating $1,118,129 and $1,100,279 on the Company`s balance sheet at July 2, 2011 and December 25, 2010, respectively. A valuation allowance is required to be established or maintained when it is `more likely than not` that all or a portion of deferred tax assets will not be realized. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining deferred tax assets and as such no valuation allowance has been provided against the deferred tax asset.</P>

<U><P>(9)&#9;Commitment</P>
</U><P>&#9;In February 2011, the Company entered into a one-year lease with five options to renew for one year periods, for approximately 13,800 square feet of rentable space inside a larger building located at 79 Walton Street, Attleboro, Massachusetts. Monthly rent, which includes utilities, is $6,900.</P>

<P>&#9;As of July 2, 2011 production equipment included $228 thousand of construction in progress and the company the Company had $230 thousand in outstanding commitments to purchase production equipment. The Company intends to finance production equipment with existing cash balances and funds generated by operations or with the Sovereign equipment finance facility.<BR>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
&#9;</P>
</FONT></FONT></FONT><B><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>ITEM 2       MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS<BR>
</P>
</B><P>&#9;The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with the financial statements of the Company and notes thereto included in this report and the Company`s Annual Report on Form 10-K for the year ended December 25, 2010.<BR>
</P>
<U><P>Forward-Looking Statements<BR>
</U>&#9;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>&#9;The critical accounting policies utilized by the Company in preparation of the accompanying financial statements are set forth in Part II, Item 7 of the Company`s Annual Report on Form 10-K for the year ended December 25, 2010, 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 25, 2010.</P>

<U><P>Overview<BR>
</U>&#9;CPS Technologies Corporation (the `Company` or `CPS`) provides advanced material solutions to the electronics, robotics, automotive and other industries.  The Company`s primary advanced material solution is metal matrix composites which are a combination of metal and ceramic.</P>

<P>&#9;CPS also assembles housings and packages for hybrid circuits. These housings and packages may include components made of metal-matrix composites or may include components made of more traditional materials such as aluminum, copper-tungsten, etc.</P>

<P>&#9;The Company sells into several end markets including the wireless communications infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic and structural markets. In 2008 the Company also entered into a cooperative agreement with the U.S. Army to further its composite technology to produce armor.  </P>

<P>The Company`s products are generally used in high-power, high-reliability applications.  These applications always involve energy use or energy generation and the Company`s products allow higher performance and improved energy efficiency.  The Company is an important participant in the growing movement towards alternative energy and &quot;green&quot; lifestyles.  For example, the Company`s products are used in mass transit, hybrid and electric cars, wind-turbines for electricity generation as well as routers and switches for the internet which in turn allows telecommuting.</P>

<P>&#9;Our primary advanced material solution is metal matrix composites (MMCs), 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 including improved thermal conductivity, thermal expansion matching, stiffness and light weight which enable higher performance and higher reliability in our customers` products.</P>

<P>&#9;Like plastics several decades ago, we believe metal-matrix composites 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>
</P>
<P>&#9;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.</P>

<P>CPS also assembles housings and packages for hybrid circuits.  These housings and packages may include components made of metal-matrix composites; they may include components made of more traditional materials such as aluminum, copper-tungsten, etc.</P>

<P>&#9;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.<BR>
</P>
<P>&#9;We are also actively working with customers in end markets at the beginning stages of the adoption lifecycle.  An example of such a market is the market for armor.  In 2008 the Company entered into a cooperative agreement with the Army Research Laboratory (&quot;ARL&quot;) to further develop large hybrid metal matrix composite modules which integrally combine metal matrix composites and ceramics by enveloping ceramic tiles with MMCs.  This system offers a lighter weight, durable, multi-hit capable and cost competitive alternative to conventional steel, aluminum and ceramic based armor systems.  CPS hybrid hard face armor modules are comprised of multiple materials completely enveloped within and mechanically and chemically bonded to lightweight and stiff aluminum metal matrix composites.</P>

<P>&#9;The Company believes that its hybrid hard face armor tiles will find application in many military vehicles as well as armored commercial vehicles.<BR>
</P>
<P>&#9; 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>
</P>
<U><P>Results of Operations for the Second Fiscal Quarter of 2011 (Q2 2011) Compared to the Second Fiscal Quarter of 2010 (Q2 2010); (all $ in 000`s)</U></FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>Total revenue was $4,842 in Q2 2011, a 7% decrease from revenue of $5,187 in Q2 2010.  The decrease in revenues is due to significantly reduced demand for lids and heatspreaders used in network and internet routers and switches offset by increased demand for baseplates for traction applications and hybrid automobile applications.   The demand for heatspreaders used in network and internet routers and switches continues to be quite volatile from quarter to quarter.  We are pleased that our diversification across multiple end markets has provided some protection against the volatility in demand in some specific end markets.</P>
<P> <BR>
&#9;Total operating expenses in Q2 2011 were $4,809, a 7% increase from total operating expenses in Q2 2010 of $4,466.   </P>

<P>Cost of product sales in Q2 2011 were $3,380, a 6% decrease from cost of product sales in Q2 2010 of $3,609.  Cost of product sales decreased due to product mix and the overall decrease of revenues during the quarter. The gross profit on product sales in Q2 2011 was 20% compared to gross profit on product sales in Q2 2010 of 27%.   This change is primarily due to fixed costs being spread over a smaller base in Q2 2011, as well as product mix.  <BR>
<BR>
&#9;Selling, general and administrative (SG&amp;A) expenses were $927 in Q2 2011, a 40% increase from SG&amp;A expenses of $663 in Q2 2010.   <A NAME="OLE_LINK1">The increase in SG&amp;A expenses is primarily the result of  compensation expense related to option grants and 401k company match, as well as increased professional expenses related to monthly and quarterly VAT returns in certain European countries.</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</P>
</FONT></FONT></FONT><U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Results of Operations for First Six Months 2011 Compared to First Six Months of 2010 (all $ in 000`s)<BR>
</P>
</U></FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>Total revenue was $10,682 in the first six months of 2011, compared to total</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>revenue of $10,596  in the first six months of 2010.    Revenues were essentially flat year to year in these six month periods.   Declines in demand for lids and heatspreaders used in network and internet routers and switches was offset by increased demand for baseplates for traction applications and hybrid automobile applications.</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </P>

<P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>Total operating expenses in the first six months of 2011 were $10,611, an 11% increase from total operating expenses of $9,588 in the first six months of 2010.   Cost of product sales in the first six months of 2011 were $7,600 and were essentially flat from cost of product</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"> </FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>sales of $7,617in the first six months of 2010. </FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">   </P>

</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Gross profit on product sales in the first six months of 2011 was 19% compared with gross profit on product sales of 24% in the first six months of 2010.   This decrease in gross profit was primarily due to a manufacturing yield problem developed in second half of 2010 and was not fully resolved until well into Q1 2011.  </FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><BR>
</P>
<P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>Selling, general and administrative (SG&amp;A) expenses were $1,744 in the first six months of 2011, an increase from SG&amp;A expenses of $1,426 in the first six months of 2010. The increase in SG&amp;A expenses is primarily the result of increased sales commissions paid due to changes in product mix,   compensation expense related to option grants and higher professional fees incurred relating to entering into a lease for additional space and obtaining VAT registration in certain European countries.<BR>
</P>
</FONT></FONT><U><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P></A></P>
</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Liquidity and Capital Resources (all $ in 000`s)</P>
</U><P>&#9;The Company`s cash and cash equivalents at July 2, 2011 were $1,260 compared to cash and cash equivalents at December 25, 2010 of $1,803, a decrease of $543 or 30%. Cash declined primarily as a result of increases in inventories and decreases in accrued expenses net of decreases in accounts receivable and increases in accounts payable. Management views this level of fluctuation as within the ordinary course of business.</P>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>&#9;Accounts receivable decreased to $3,834 at July 2, 2011 from $3,923 at December 25, 2010.  This change primarily reflects timing of collections.  The accounts receivable balance at July 2, 2011 and December 25, 2010 is net of allowance for doubtful accounts of $5.</P>

</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>Inventories increased to $2,052 at July 2, 2011 from $1,524 at December 25, 2010.  Raw materials increased primarily as a result of the need to prepare for supplier factory maintenance shutdowns in the first week of Q3 2011. Work in process inventory increased primarily as a result of management`s decision to build work in process and prepare for the Company`s factory maintenance shutdown the fist week of Q3 2011.  Finished goods inventory increased at the Company`s Norton location due to timing of shipments. Of the total finished goods inventory of $1,258 at July 2, 2011, $347 was located at customers` locations pursuant to consigned inventory agreements. Of the total finished goods inventory of $865 at December 25, 2010, $397 was located at customers` locations pursuant to consigned inventory agreements.</P>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
<P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>The Company financed its working capital during Q2 2011 and the six months ended July 2, 2011 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 2011 from these same sources.</P>

<P>&#9;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>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT></FONT></FONT><U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Contractual Obligations</P>
</U></FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>The Company has a $1 million revolving line of credit and a $1.25 million equipment finance facility with Sovereign Bank through maturity in May 2012. The line of credit is secured by the accounts receivable and other assets of the Company, has an interest rate of prime plus one percent (1%) and a one-year term. Under the terms of the agreement, the Company is required to maintain its operating accounts with Sovereign Bank. The line of credit and the equipment finance facility are cross defaulted and cross collateralized. The Company is also subject to certain financial covenants within the terms of the line of credit that require the Company to maintain a targeted rolling four quarter debt service coverage ratio as well as targeted debt to equity and current ratios. At July 02, 2011, the Company was in compliance with these covenants. At July 2, 2011 there were no borrowings under this line of credit. </P>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
<P>&#9;</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>As of July 2, 2011 production equipment included $228 thousand of construction in progress and  the Company had $230 thousand in outstanding commitments to purchase production equipment.  The Company intends to finance production equipment with existing cash balances and funds generated by operations or with the Sovereign equipment finance facility.</P>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>&#9;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>&#9;In February 2011, the Company entered into a one-year lease, with five options to renew for one year periods, for approximately 13,800 square feet of rentable space inside a larger building located at 79 Walton Street, Attleboro, Massachusetts to be used primarily for armor development activities. Monthly rent, which includes utilities, is $6,900.</P>
</FONT></FONT><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000"><FONT FACE="Arial" SIZE=2 COLOR="#ff0000">
</FONT></FONT></FONT><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>The Company`s contractual obligations at July 2, 2011 consist of the following:</P>
</FONT></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=589 DIR="LTR">
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=3>
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Payments Due by Period</U></FONT></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Remaining in</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2012 -</FONT></FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2015 -</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">Total</U></FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2011</U></FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 2014</U></FONT></FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<U><FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">FY 1016</U></FONT></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P>Capital lease obligations including interest</FONT></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 302,490</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$121,367</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 181,123</FONT></FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ --</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>Purchase commitments for production equipment</FONT></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 230,194</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 230,194</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ --</FONT></FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ --</FONT></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2>
<P>Operating lease obligation for facilities</FONT></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$727,467</FONT></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$106,400</FONT></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 433,567</FONT></FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE=2><FONT FACE="Arial" SIZE=2><P ALIGN="RIGHT">$ 187,500</FONT></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2><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 4T&#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 communicated 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 2009 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;(REMOVED AND RESERVED)<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<BR>
</B> </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>
<B>
<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;August 16, 2011<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>
<P>(Principal Executive Officer and Principal Financial Officer)<BR>
</P></FONT></FONT></BODY>
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<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exhibit311.htm
<DESCRIPTION>EXHIBIT 31.1 CEO
<TEXT>
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<TITLE>EXHIBITS 31</TITLE>
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<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;<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;August 16,2011<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>
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<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>exhibit312.htm
<DESCRIPTION>EXHIBIT 31.2 CFO
<TEXT>
<HTML>
<HEAD>
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>EXHIBITS 31</TITLE>
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<BODY>

<FONT FACE="Arial" SIZE=2><P>EXHIBIT 31.2</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;<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;August 16, 2011<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>
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</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 for the three month and six month periods ended July 2, 2011 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;August 16, 2011<BR>
/s/&#9;Grant C. Bennett<BR>
Grant C. Bennett<BR>
President and Treasurer</P>

<P>&nbsp;</P>
<P>&nbsp;</P></DIR>
</DIR>
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</SEC-DOCUMENT>
