<SEC-DOCUMENT>0000814676-14-000062.txt : 20141030
<SEC-HEADER>0000814676-14-000062.hdr.sgml : 20141030
<ACCEPTANCE-DATETIME>20141030164521
ACCESSION NUMBER:		0000814676-14-000062
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20140927
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20141030
DATE AS OF CHANGE:		20141030

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:			1227

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16088
		FILM NUMBER:		141183736

	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>8-K
<SEQUENCE>1
<FILENAME>k10282014cc.htm
<DESCRIPTION>FORM 8K OCTOBER 28, 2014 CONFERENCE CALL
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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549<BR>
</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>FORM 8-K<BR STYLE="mso-special-character: line-break">
<BR STYLE="mso-special-character: line-break">
</B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">Current Report<BR>
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">Date of Report (Date of earliest event
reported):  October 28, 2014</P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>CPS TECHNOLOGIES
CORPORATION<BR>
</B></FONT>(Exact Name of Registrant as Specified in its Charter)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Delaware</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">0-16088</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">04-2832509</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">(State or other jurisdiction of incorporation)</P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Commission File Number)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(IRS Employer Identification No.)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">111 South Worcester Street, Norton, Massachusetts</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">02766</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Zip Code)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Registrant&rsquo;s telephone number, including area code</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">508-222-0614</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Former name or former address, if changed since last report.)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<U>see</U> General Instruction
A.2. below):</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Soliciting material pursuant to Rule 14a-12 under the exchange
Act (17 CFR 240.14a-12)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Pre-commencement communications pursuant to rule 14d-2(b)
under the<BR>
Exchange Act (17CFR 240.14d-2(b))</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; border-bottom: Black 0.75pt solid">[ ]&#9;Pre-commencement communications
pursuant to Rule 13e-4(c) under the<BR>
Exchange Act (17 CFR 240.13e-4(c)).</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">Item 2.02 &#9;Results of Operations and Financial Condition</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">The Company hosted a conference call on October 28, 2014 to
review the Third Quarter 2014 results and to answer questions from investors. A transcript of this
conference call is attached hereto as Exhibit 99 and is incorporated herein by reference. The information furnished under
Item 2.02, including the Exhibit attached hereto, shall not be deemed &lsquo;filed&rsquo; for any purpose, including for
purposes of Section 18 of the Securities and Exchange Act of 1934 (the &ldquo;Exchange Act&rdquo;) or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of
1933 or the Exchange Act, regardless of any general incorporation language in such filing.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"></P>

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<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>SIGNATURE</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in">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>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

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    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><B><U>CPS Technologies Corporation<BR>
</U></B>(Registrant)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Date: October&nbsp;30, 2014</TD>
    <TD STYLE="width: 49%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><P STYLE="margin-top: 0; margin-bottom: 0">/s/
Ralph M. Norwood</P>
                                                                                          <P STYLE="margin-top: 0; margin-bottom: 0">Ralph M. Norwood</P>
                                                                                          <P STYLE="margin-top: 0; margin-bottom: 0">Chief
Financial Officer<BR STYLE="mso-special-character: line-break"></P></TD></TR>
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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">EXHIBIT INDEX</P>

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        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">EXHIBIT NUMBER</P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P></TD>
    <TD STYLE="width: 80%; padding-right: 5.4pt; padding-left: 5.4pt">DESCRIPTION</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">99</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Transcript of conference call held   October 28, 2014.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>



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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>cc10282014cct.htm
<DESCRIPTION>CONFERENCE CALL HOSTED ON OCTOBER 28, 2014
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CPS TECHNOLOGIES CORP.</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Moderator:&#9;Ralph Norwood</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>October 28, 2014</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>4:30 p.m. ET</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/200% Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Good afternoon. My name is Cathy and I will be your conference operator today. At this time, I would like to welcome everyone
to this CPS Technologies Corporation third Quarter Conference Call.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>All lines have been placed on mute to prevent any background noise. After the speakers&rsquo; remark, there will be a questions
and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone
keypad. If you would like to withdraw your question, press pound key. Thank you.</TD></TR></TABLE>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Mr. Norwood, you may begin your conference.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Thank you,
operator. Good afternoon. Before we begin the business portion of the call, I would like to point out to all of you that the statements
in this conference call, that are not strictly historical, are forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, and should be considered as subject to the many uncertainties that exist in CPS' operations and
environment.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>These uncertainties include economic conditions, market demands and competitive factors. Such factors could cause actual results
to differ materially from those and any forward-looking statements.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Now, I would like to turn the call over to Grant to offer his perspective on the 3rd quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Thank you
Ralph. Welcome to each of you. We're pleased to report a very strong quarter, particularly in terms of revenues. In fact, revenues
in the quarter just ended are the highest in our history and the represent a good bounce back from the lower revenues in the second
quarter.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>I do want to reiterate that there is inherent volatility in our business as a result, of programs beginning and ending, seasonality
in some product lines and variations in the manufacturing schedules of our customers.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We believe it is much more appropriate to take a longer-term view than read too much into any single quarter. In the spirit
of a longer-term view, may I comment on three developments in the quarter just ended, which will have, we believe, a long-term
impact on the Company. Two of these developments relate to demand and revenue and one relates to our board of directors.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>First, we've mentioned in previous calls that we've been shipping prototypes and qualification components and samples into
the oil and gas services industry. We mentioned last quarter that we had begun manufacturing scale up. Our primary products in
this area are sealers in the form of balls or spheres used for temporarily sealing off lower zones in a wellbore from the flow
of liquid injected into the well in hydraulic fracturing or fracking.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>I'm pleased to report that in the 3rd quarter, revenues from this product line grew to just over $500,000. We're still in a
scale up mode and there will certainly be volatility in the oil and gas industry. But nonetheless, we are indeed off and running
in a product line that will generate revenues, meaningful revenues, for we believe many years to come.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The second development is on October 15<SUP>th</SUP> we issued a press release relating to a contract we've signed with Raytheon
for high performance baseplates used in the Air and Missile Defense Radar Program of the U.S. Navy. This program is known by its
initials AMDR.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The AMDR is an active electronically scanned array, Air and Missile Defense Radar under development for the Navy. It will provide
integrated air and missile defense and even periscope detection, initially for the Flight III Arleigh Burke class destroyers. The
order that we announced related to the engineering and manufacturing development phase of the program.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>There, of course, is no guarantee, but we're very confident that we will receive production orders as this overall program
goes into production phase. The initial installation on ships in scheduled to begin in 2016, meaning demand for production quantities
for our components will begin approximately a year from now in the third or fourth quarter of 2015.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Once in production, our initial estimates indicate revenue from this program over the initial four or five years of production,
will be approximately $17 million. We anticipate that the AMDR will be used in many different applications over a very long period
of time and won't be limited to this initial phase of production that we just described.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>As we indicated, the order that we have received is for the engineering and manufacturing development phase, approximately
$600,000 worth of demand. About half of that order has been shipped and the remainder of it will be shipped in the fourth quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>These two programs are, we believe, illustrative of the growth potential of the Company. In both cases, we begin initial work
over three years ago and we're now starting to see the fruits of those efforts.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Since our last call, I've been joining our sales personnel in China, in Japan and in Europe, in addition to visiting customers
here in the U.S. We're continuing to strengthen our sales marketing efforts, particularly, through bringing on board new commissioned
sales representatives and providing greater training and support. There are additional programs, analogous to those I described,
in our pipelines.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The third item, yesterday we announced that Thomas Culligan was elected to our Board of Directors. Tom recently retired as
the CEO of Raytheon International Incorporated and concurrently, the Senior Vice President, responsible for strategy for the Raytheon
Company.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Previously he served in senior management positions at Honeywell, Allied Signal and McDonnell Douglas. Tom brings deep experience
in selling and marketing into the electronics and aerospace industries worldwide.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>He also brings deep experience in strategy formulation in managing in a high-tech environment. We believe his interest in joining
CPS is in it of itself a strong signal of the future potential of CPS.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Let me pause now and turn the call back over to Ralph for a review of the results of the quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Thank you
Grant. Revenues for the quarter totaled $6.1 million. This was a two percent increase over the third quarter last year, which at
the time was an all time record both in revenues and profits.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Gross margin decreased 22 percent of revenue compared with 29 percent in the third quarter a year ago. There were several factors,
which contributed to this lower gross margin percentage. Nearly half of the difference of seven percent was due to higher labor
and material cost.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our manufacturing process is complex one. We have product mix issues and it just so happened last year, we had a particularly
and usually good quarter and this year it didn't break quite as well and we operated somewhat below our standards.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>In addition, we also were affected by unfavorable product mix, where we sold a greater portion of lower margin products. And
we also, lost little over a half a percent due to small changes in pricing versus last year.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Selling general and administrative expenses in the quarter declined four percent from a year ago. This reflects lower sales
commissions as even though, our revenues were about the same, we sold fewer products this year, which carried a commission. We
also had less spending in legal fees and lower accruals for bonuses.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>As a result, of these factors we generated an operating profit for the quarter of $322,000 or five percent of sales. This was
down from the record operating profit last year, we earned in the third quarter of $659,000.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Now, turning to the balance sheet, we ended the quarter with $1.1 million of cash, no bank borrowings and we were almost completely
free of the balances we owed on capital leases. That will go to zero in the fourth quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our receivables totaled $4.6 million at the end of September, representing day sales outstanding of 68 days, which is in line
with historic ratios. Our inventories came down a bit to $2.6 million and a good way to look at the inventories is our turnover,
which exceeded seven times over the last four quarters. This is enviable ratio for most manufacturing companies.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Capital expenditures totaled a $105,000 in the quarter, somewhat below depreciation. And finally, on the asset side, you'll
see $2.3 million of differed taxes, as an asset. And as I've mentioned the past, this is significant and will shield us from paying
taxes over the next $6 million plus of operating income.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Turning to the liability side payables and accruals in total amounted to $3.0 million about 10 percent higher than a year ago;
but nonetheless, they are consistent with historic payment terms.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>And as I referenced earlier we ended the quarter with no bank debt our capital leases were down to $14,000n and we had an untapped
committed line of credit of $2 million with Santander.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Finally, at the end of the quarter, our current ratio was a healthy 3.0, coimpared with 2.5 a year ago, and our debt to equity
is a low 0.3. At this point, I'd like to turn the call back to Grant.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Thank you,
Ralph. I spoke earlier about the longer-term. Let me just comment on the short-term outlook. Again, I reiterate that there is inherent
volatility in our quarterly results, and it's much more appropriate in our opinion to take a longer period of time to understand
the fundamental trends in the Company.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our revenues were down a little bit in Q2, up quite strongly in this quarter. And as we look to the fourth quarter, we do have
some indications, especially, from our European customers, that shipments will be closer to the level they were a year ago in the
fourth quarter then they were in the most recent quarter, namely the third quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>If you read the newspaper, Europe continues to struggle with growth and that's the feedback that our European customers are
giving us in the very short-term. That being said and for the reasons I outlined earlier, we are more optimistic than ever as we
look into 2015.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The two specific programs I referred to, the oil and gas ball sealers and the Raytheon contract, will add two new long-term
and significant revenue streams that will allow us to continue to diversify our product line. And as I indicated, we're continuing
to accelerate ourselves in marketing efforts.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Lastly, let me just update you on our listing application with NASDAQ. We now have three independent directors and so the last
remaining qualification is for our stock price to close about $3 for five consecutive trading days. Once that occurs we will shortly
thereafter be listed on NASDAQ.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>At this point, let me turn the call over to the operator, who will queue up any questions you have.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. We ask that
you limit your questions to two. If you have any additional questions, you may reenter the queue by pressing star-one again. We
will pause for just a moment to compile the Q&amp;A roster.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Your first question comes from the line of Walter Scheneker with MAZ Partners.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Walter Scheneker:&#9;Hi, a
couple of questions -- I'll be limited, you can cut me off when you want to. On the oil and gas sealing balls, $500,000, as you
understand it and I realized this variability would cover how many wells? Just trying to get a sense of what the market might be.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Ralph, do
you want to comment on that?</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;That's a
good question Walt and let me just do a calculation..</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Walter Scheneker:&#9;Because
they're not reusable correct? They're consumed each time they are used.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Yes, they
are consumed. They are consumed.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Let me just
say --order of magnitude--50.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Walter Scheneker:&#9;OK.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;That would
be my guess.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Walter Scheneker:&#9;And secondly,
on Raytheon, moving down the big new things. The order you announced is basically, a development order. The comment, which I was
very pleased with is 17 million over five years, of the five years, which is a production order. That is just the for destroyers,
correct?</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;That's correct.
This radar is a scalable radar, meaning it can be used with a smaller array or can be used with a very extensive array. The Arleigh
Burke class of destroyers will be the first of the Navy ships to be equipped with the radar. We have projections regarding the
rate at which those ships will be outfitted with the radar.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>But everyone we speak to in the community indicates that the radar will be used in many other applications. So, we believe
this is a very significant long-term opportunity for us. The component we're making is a very high performance component and the
selection by Raytheon and the Navy of this component is a powerful corroboration of the benefits that our technology brings.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Walter Scheneker:&#9;OK. And
last question and then I'll pass to someone else. Could you just give us any update on what progress we are making in getting some
significant business into the Japanese market?</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Yes. The
crisp answer is the clock is ticking. What I mean by that is that process we have initiated to have the patent reexamined and hopefully
declared invalid is proceeding. Those proceedings march to their own timetable, but we continue to believe that we'll have resolution
by the end of the year.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in">In the meantime, I was just in Japan and I reaffirmed
that there are significant opportunities for us there.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Your next question comes from the line of Michael Epstein with Northeast Securities.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Michael Epstein:&#9;Grant
and Ralph. OK. Nice quarter, but how do we accelerate the growth of the Company and get our sales more recognized by the marketplace.
Also, let me thank Mr. Culligan for joining the board. His credentials seem impeccable and I want to thank him for that.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The hybrid auto industry still is a big market. Where is our big potential? And what are we doing to go after it?</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;We are very
excited that in virtually all of the segments in which we participate, we see significant growth. The single segment today is the
traction baseplate segment. Baseplates used primarily in trains, but as I've indicated before the same modules are used in wind
turbines for electricity generation. They're increasingly used in electricity substations, as part of the grid. They're used in
high power industrial applications.</P>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>I was just in China. I was calling on the large railway manufactures in China. Market researchers indicate that that market
is growing a minimum of 15 percent to 20 percent per annum. We certainly want to hold or gain additional market share and ride
that growth.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The hybrid automobile industry is also, in absolute terms, a growth industry and I think it's important recognize that we are
ambivalent as to whether the car is a hybrid car, a battery powered electric car or a fuel cell electric car. We're ambivalent
in the sense that if the car has an electric motor that's used for propulsion, it needs a motor controller and that's where are
parts are used.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The industry continues to be one where every manufacturer is still developing custom solutions. So there are few standards
and we are one of many solutions, but we remain very positive that for some segments of the market we have the preferred solution.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Lids and heat spreaders is the most volatile part of our business because those products have a shorter lifetime. But nonetheless,
the move to higher power integrated circuits bodes well for us. We believe demand for our oil and gas products will continue to
grow and although, it is the sealer balls or spheres that account for our revenue today there will be other products in the future.</TD></TR></TABLE>

<P STYLE="font: 12pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our development activities in armor continue to progress and there is certainly great opportunity there.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Michael Epstein:&#9;Thank
you.</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Your next question comes from line of David Birnie a private</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Investor.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">(David Birnie):&#9;Good afternoon.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Hi (David),</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Hi David</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">(David Birnie):&#9;How are
you?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Very good.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">(David Birnie):&#9;Good, part
of my question was answered, but in regard to this patent issue in Japan, if I remember correctly, in the last conference call,
I believe, you mentioned that there was going to be a hearing in September. I believe, that's what you said.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Did that hearing take place? And can you give us any kind of idea, whether you're getting a feedback as far as how the hearing
went or anything like that? That's one of my questions and just in follow-up to that, in terms of the Japanese market, assuming
that you prevail in this patent suit, how significant do you think that would be in terms of your revenues?</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett::&#9;There was
a hearing in September. It was a hearing where legal documents were exchanged. It was not one from which we can draw any conclusions.
But it simply was a hearing wherein the processes moved forward.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>In Japan baseplates for traction applications are viewed by all of our customers as critical components. Therefore our customers
would like two suppliers.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in">We are the primary supplier in Europe and our Japanese
competitor is often a second source.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We, at a minimum, have an opportunity to be a second source to all of the Japanese module manufacturers.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We also believe because our product and our process technology generates some benefits compared to the competition, that we
have the opportunity in some cases to become the primary source. In total, the Japanese market is approximately the same size as
the European market.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">(David Birnie):&#9;Do you
see any kinds of openings here as far as the automobile market in Japan?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett::&#9;We are
talking to both tier one suppliers in the Japanese auto industry and we are talking to the automakers themselves. I believe that
there are opportunities there.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">(David Birnie):&#9;And you
are still sticking by that you expect a resolution of this by the end of this year?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Yes. Let
me clarify that CPS is not being sued. Simply, the competition has claimed that our products violate their patent and that has
created some concern and anxiety in the marketplace. We believe that those assertions were entirely unfounded. We have concluded
the most appropriate way to remove any uncertainty is to have the patent reexamined and we believe that it will be found to be
invalid.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;David let
me just elaborate a bit on what Grant said, as far as Japan and the automotive market. We're speaking to all the large module manufacturers;
they make modules for the traction market and for the automotive market. We believe that HEVs, electric vehicles, and fuel cell
vehicles, where Toyota is a putting a great emphasis on, will grow as a market share. All of those performed better with an AlSiC
Baseplate.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>So we see AlSiC as a baseplate increasing market share and surely, they would all want a second source. So, not immediately,
but certainly as you look down the road, that should provide large opportunities for us as well.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>And your next question comes from the line of Fred Milligan with Wunderlich Securities.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Fred Milligan:&#9;Hey guys.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Hi Fred,</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Fred Milligan:&#9;In fracking
how many customers do you have?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett::&#9;We are
working with one major company, who is a distributor and a manufacturer. We are partnered with Parker Hannifin. They have distribution
centers worldwide serving the oil and gas industry. We are essentially the manufacturing partner for them and they in turn really
are serving the industry on a worldwide basis.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Fred, as
you know, Schlumberger, Halliburton, Baker Hughes and Parker are the four biggies that are selling to the oil drillers.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Fred Milligan:&#9;Does Parker
Hannifin have an exclusive with you guys?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;We do have.
Yes, I'm not at liberty to go into details on the agreement. But in short, we have an agreement whereby we are working together
currently on an exclusive basis.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Which is
bounded by time and by type of products. So it's not forever and for all products. But for the time being that's the only company
we are working directly with.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Fred Milligan:&#9;You did
over six million in this quarter and the Raytheon order didn't have any impact on the quarter itself?</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;No, that's
not true. We said the Raytheon AMDR Program will generate $600K this year; about half in Q3 and about half in Q4.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Once again, to ask the question please press star, then the number one. The next question comes from (inaudible).</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Male:</TD><TD>Good afternoon guys. Nice quarter.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Hi.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Male:</TD><TD>Most of my questions were answered, but I had one regarding the Infineon International Rectifier merger and whether or not
you thought that would have any effect on your business?</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett::&#9;I'm smiling
here. The answer is yes, it is positive news for us. We really enjoyed meeting with International Rectifier after their acquisition
by Infineon was announced because Infineon gave us permission to describe to International Rectified the products we are providing
to Infineon.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Male:</TD><TD>Great, thank you.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>At this time, there are no questions. I'll turn the call back to the presenters for any closing remarks.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Thank you
very much for your participation. Our objective in this call was to share a little more specifically some of the long-term growth
opportunities that we have. We thank you for your questions on that topic. We look forward to speaking with you again in a quarter.
And with that we'll sign off.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Thank you
all.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Thank you. This concludes today's conference call. You may now disconnect.</TD></TR></TABLE>

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