CPS Technologies (CPSH) FY2025 10-K Risk Factors: 11 New, 6 Dropped

What the changes say

CPS Technologies faces manufacturing vendor risks, potential facility relocation disruptions, and new cybersecurity compliance costs under CMMC.

What changed since the prior 10-K

New

New
We rely on outside vendors for certain steps in our manufacturing process, and any inability or unwillingness of these vendors to provide services at a reasonable cost could negatively affect our business
We rely on sole-sourced vendors for manufacturing steps like plating, exposing us to price increases and delivery delays that could hurt margins.
New
Our success depends heavily on the contributions of key executives and employees, and we may be unable to retain them or recruit suitable replacements
Our niche MMC business requires specialized engineering and production talent that is difficult to retain and recruit against larger competitors.
New
The Company’s reliance on aging equipment and capital-intensive processes may require significant ongoing investment and expose it to operational and financial risks
Aging equipment and facilities increase the risk of operational breakdowns and may require capital investments we cannot afford.
New
We are considering moving to a larger facility, and the relocation and transition process could be costly, disruptive to our operations, and may adversely affect our ability to manufacture products and achieve expected financial and operational benefits, which could hurt our short-term and long-term results
Relocating to a larger facility near our current location could cause manufacturing disruptions, quality issues, and higher-than-expected costs.
New
Fluctuations in the prices and availability of raw materials may adversely affect margins, operating results, and cash flows
Volatility in raw material prices and supply shortages could increase production costs and disrupt manufacturing schedules.
New
In addition, ongoing geopolitical conflicts, such as the Russia‑Ukraine war and tensions in the Middle East, continue to contribute to uncertainty in global markets, supply chains, and trade flows, even for companies without substantial direct exposure to the affected regions
Geopolitical conflicts like the Russia-Ukraine war and Middle East tensions continue to create uncertainty in our supply chains and trade flows.
New
Market conditions in the industries in which we operate are volatile, and the demand for our products and their profitability can fluctuate significantly
Volatile market conditions, government budgetary constraints, and fluctuating R&D funding can significantly impact demand for our products.
New
We operate in highly competitive markets, have fewer resources than some competitors, and may be subject to future import duties that could adversely affect our business
We face well-resourced competitors and potential EU import duties on our exported MMC products.
New
the occurrence of major catastrophic events, such as the COVID-19 pandemic
Volatility in our common stock price could lead to costly securities class action litigation and divert management's attention.
New
Claims related to product defects, safety, or performance could result in significant costs, reputational harm, and operational disruption
Product liability, warranty, or recall claims could result in significant costs, reputational damage, and insurance shortfalls.
New
Compliance with U.S. government requirements for handling controlled unclassified information (CUI) could increase CPS’s operating costs
Complying with the U.S. Department of Defense's CMMC cybersecurity requirements for handling controlled unclassified information will increase operating costs.

Dropped

Dropped
Our dependence on outside vendors to perform particular steps in our manufacturing process could negatively impact us should those vendors be unable or unwilling to provide such service at a reasonable cost
Dropped
Our success is highly dependent on managerial contributions of key individuals and we may be unable to retain these individuals or recruit others
Dropped
The conditions of the markets in which we operate are volatile. The demand for our products and the profitability of our products can change significantly from period to period as a result of numerous factors
Dropped
We face significant competition, are relatively small in size and have fewer resources in comparison with some of our competitors
Dependence on outside vendors for manufacturing steps like plating could negatively impact us.
Dropped
Continued growth could result in the need to move or expand our facilities. The costs of such a move or expansion could be significant to our profitability
Success depends on key managerial and engineering individuals who may leave.
Dropped
the occurrence of major catastrophic events, including the effects of a possible resurgence of the novel coronavirus (COVID-19)

Reworded

100% rewritten
Broad economic disruptions or global health concerns could materially harm our business
Updated to focus on general widespread economic instability and future COVID-19 resurgences slowing economic activity and disrupting supply chains.
Was: Business or economic disruptions or global health concerns could seriously harm our business
99% rewritten
Our investments in proprietary technologies may lose value if we are unable to adequately protect our intellectual property or if we are accused of infringing the intellectual property rights of third parties, which could result in costly litigation
Added specific risks of third parties developing similar technologies or accusing us of intellectual property infringement.
Was: We have made investments in our proprietary technologies. If third parties violate our proprietary rights, or accuse us of infringing upon their proprietary rights, such events could result in a loss of value of some of our intellectual property or costly litigation
98% rewritten
Cyber-attacks or security breaches could result in substantial costs, significant liabilities, reputational harm, and disruption to our operations
Expanded cybersecurity risks to explicitly mention ransomware and the need for significant resources to address vulnerabilities.
Was: If we are subject to cyber-attacks, we could incur substantial costs and, if such attacks are successful, we could incur significant liabilities, reputational harm, and disruption to our operations
98% rewritten
Acquisitions may increase our operating costs, divert management’s attention from other priorities, and expose us to additional risks
Added risks of potential shareholder dilution from stock issuance and impairment of acquired assets.
Was: Acquisitions can result in an increase in our operating costs, divert management’s attention away from other operational matters and expose us to other associated risks
97% rewritten
Changes in trade policy could materially affect our business
Streamlined trade policy risk regarding raw material tariffs and export disadvantages.
Was: Changes in trade policy could seriously impact our business
97% rewritten
Volatile and cyclical demand for our products may make it difficult to accurately budget expenses, which are partially based on projected revenues
Added that we generally lack long-term production contracts, leading to underutilized facilities when orders drop.
Was: Volatile and cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues
96% rewritten
We may face increasing price pressure, which could adversely affect our margins
Added that inflationary pressures may further intensify pricing competition from price-sensitive customers.
Was: We may experience increasing price pressure
95% rewritten
Our lengthy and variable sales cycle makes it difficult to accurately forecast financial results
Refined wording on the lengthy sales cycle requiring customer component redesigns before adoption.
Was: Our lengthy and variable sales cycle makes it difficult to predict our financial results
94% rewritten
Fluctuations in foreign exchange rates could negatively affect our competitiveness against foreign-based competitors
Was: Fluctuations in foreign exchange rates can negatively impact our ability to compete against foreign based competitors
91% rewritten
The price of our common shares is volatile and could decline significantly
85% rewritten
Manufacturing interruptions or delays could impair our ability to meet customer demand and increase operating costs
Was: Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs
83% rewritten
Our customer base is highly concentrated, and any significant changes in ordering patterns, delays, or order cancellations could materially and adversely affect our business and results of operations
Was: We have a highly concentrated customer base so that changes in ordering patterns, delays or order cancellations could have a material adverse effect on our business and results of operations

All 23 risk factors

Headings as the filing states them, in filing order.

Other

01Our customer base is highly concentrated, and any significant changes in ordering patterns, delays, or order cancellations could materially and adversely affect our business and results of operations83% rewritten
02Our lengthy and variable sales cycle makes it difficult to accurately forecast financial results95% rewritten
03Fluctuations in foreign exchange rates could negatively affect our competitiveness against foreign-based competitors94% rewritten
04We rely on outside vendors for certain steps in our manufacturing process, and any inability or unwillingness of these vendors to provide services at a reasonable cost could negatively affect our businessNew
05Our success depends heavily on the contributions of key executives and employees, and we may be unable to retain them or recruit suitable replacementsNew
06The Company’s reliance on aging equipment and capital-intensive processes may require significant ongoing investment and expose it to operational and financial risksNew
07We are considering moving to a larger facility, and the relocation and transition process could be costly, disruptive to our operations, and may adversely affect our ability to manufacture products and achieve expected financial and operational benefits, which could hurt our short-term and long-term resultsNew
08Fluctuations in the prices and availability of raw materials may adversely affect margins, operating results, and cash flowsNew
09Broad economic disruptions or global health concerns could materially harm our business100% rewritten
10In addition, ongoing geopolitical conflicts, such as the Russia‑Ukraine war and tensions in the Middle East, continue to contribute to uncertainty in global markets, supply chains, and trade flows, even for companies without substantial direct exposure to the affected regionsNew
11Changes in trade policy could materially affect our business97% rewritten
12Acquisitions may increase our operating costs, divert management’s attention from other priorities, and expose us to additional risks98% rewritten
13Market conditions in the industries in which we operate are volatile, and the demand for our products and their profitability can fluctuate significantlyNew
14Volatile and cyclical demand for our products may make it difficult to accurately budget expenses, which are partially based on projected revenues97% rewritten
15We operate in highly competitive markets, have fewer resources than some competitors, and may be subject to future import duties that could adversely affect our businessNew
16We may face increasing price pressure, which could adversely affect our margins96% rewritten
17Manufacturing interruptions or delays could impair our ability to meet customer demand and increase operating costs85% rewritten
18Our investments in proprietary technologies may lose value if we are unable to adequately protect our intellectual property or if we are accused of infringing the intellectual property rights of third parties, which could result in costly litigation99% rewritten
19The price of our common shares is volatile and could decline significantly91% rewritten
20the occurrence of major catastrophic events, such as the COVID-19 pandemicNew
21Claims related to product defects, safety, or performance could result in significant costs, reputational harm, and operational disruptionNew
22Cyber-attacks or security breaches could result in substantial costs, significant liabilities, reputational harm, and disruption to our operations98% rewritten
23Compliance with U.S. government requirements for handling controlled unclassified information (CUI) could increase CPS’s operating costsNew

Other CPS Technologies 10-Ks

FY2024 10-K risk factors
18 risks
Customer concentration is high, with three customers accounting for 58% of revenue in 2024. Manufacturing relies heavily on specific, sometimes sole-source, approved vendor steps like plating. Sales cycles are lengthy and variable, often requiring customer product redesigns.
Filed Mar 17, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.