CPS TECHNOLOGIES CORP/DE/ Stock Compensation Disclosure

(8) Share-Based Compensation Plans

 

The Company adopted the 2020 Equity Incentive Plan ("2020 Plan") on March 3, 2020. Under the terms of the 2020 Plan all of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock awards, or other stock-based awards. Some outstanding options are non-statutory stock options; some are incentive stock options.  All options granted are exercisable at the fair market value of the stock on the date of grant and expire ten years from the date of grant. The options granted to employees generally vest in equal annual installments over a four or five-year period. The options granted to directors generally vest immediately on date of grant. Certain options also remain issued and outstanding under the 2009 Stock Incentive Plan.

 

Under the 2020 Plan a total of 1,500,000 shares of common stock are available for issuance, of which 415,620 shares remain available for grant as of December 27, 2025.

 

A summary of stock option activity as of December 27, 2025 and changes during the year then ended is presented below:

 

						Weighted				Weighted
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Shares				Price				Life (years)				Value
Outstanding at beginning of year			938,300			$	2.64
Granted			195,780			$	1.63
Exercised			(21,280	)		$	1.47
Expired			(45,000	)		$	2.85
Outstanding at end of year			1,067,800			$	2.47				6.94			$	907,909
Options exercisable at year-end			622,500			$	2.47				6.20			$	558,295

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following table presents the annualized weighted average values of the significant assumptions used to estimate the fair values of the options granted during 2025 and 2024:

 

		2025					2024
Risk-free interest rate		4.16%	-	4.33%			4.16%	-	4.33%
Expected life in years		5.2	-	7.0			5	-	7.6
Expected volatility			56.7%					61.2%
Expected dividend yield			0					0
Weighted average fair value of grants			$0.92					$2.29

 

All options are granted with an exercise price equal to the fair market value of the underlying common stock on the date of grant.

 

The Company recognized $273,028 and $310,094 as stock based compensation expense in 2025 and 2024, respectively.  As of December 27, 2025, there was $468,773 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan; that cost is expected to be recognized over a weighted average period of 1.87 years.