UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the quarterly period ended September 30, 2024
	For the quarterly period ended March 31, 2025
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the transition period from ____ to _____

Commission file number: 1-16525

CVD EQUIPMENT CORPORATION

(Name of Registrant in Its Charter)

New York

11-2621692

State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer

Identification No.)

355 South Technology Drive ~~Central Islip, New York 11722~~

Central Islip, New York 11722

(Address of principal executive offices)

(631) 981-7081 (Registrant’s Telephone Number, Including Area Code)

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CVV		NASDAQ Capital Market

Indicate by check 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 that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act).

	Large accelerated filer ☐		Accelerated filer ☐
	Non-accelerated filer ☒		Smaller reporting company ☒		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange ~~Act~~. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,881,838 shares of Common Stock, $0.01 par value at ~~November~~May 13, ~~2024~~2025.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Index

Part I - Financial Information
	Item 1 –	Condensed Consolidated Financial Statements (Unaudited)		3
	Item 1 – Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023		3
		Condensed Consolidated Balance Sheets at March 31, 2025 and December 31, 2024	3
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023		4
		Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024	4
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023		5
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2025 and 2024	5
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023		6
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024	6
		Notes to Condensed Consolidated Financial Statements	7	7
	Item 2 –	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Item 3 –	Quantitative and Qualitative Disclosures About Market Risk		33
	Item 3 – Quantitative and Qualitative Disclosures About Market Risk		27
	Item 4 –	Controls and Procedures		33
	Item 4 – Controls and Procedures		28
Part II - Other Information
	Item 1 –	Legal Proceedings		34
	Item 1 – Legal Proceedings		29
	Item 1A -	Risk Factors		34
	Item 1A-Risk Factors		29
	Item 2 –	Unregistered Sales of Equity Securities and Use of Proceeds		34
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		29
	Item 3 –	Defaults Upon Senior Securities		34
	Item 3 – Defaults Upon Senior Securities		29
	Item 4 –	Mine Safety Disclosures		34
	Item 4 – Mine Safety Disclosures		29
	Item 5 –	Other Information		34
	Item 5 – Other Information		29
	Item 6 –	Exhibits		35
	Item 6 – Exhibits		29
Signatures			30	36

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)

	September 30, 2024			December 31, 2023
	March 31, 2025			December 31, 2024
ASSETS
Assets
Current assets
Current assets:
Cash and cash equivalents	$	10,~~005~~219		$	1412,~~025~~598
Accounts receivable, net of allowance for credit losses		51,~~124~~406			12,~~906~~149
Contract assets		15,~~348~~180			12,~~604~~226
Inventories		2,~~558~~037			42,~~454~~115
Other current assets		~~892~~627			~~852~~898
Total current assets		19,~~927~~469			2219,~~841~~986
Property, plant and equipment, net		11,~~909~~559			1211,~~166~~699
Other assets		1052			181
Total assets	$	31,~~846~~080		$	3531,~~025~~686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities and stockholders’ equity
Current liabilities
Current liabilities:
Accounts payable	$	1,~~393~~145		$	~~1,203~~679
Accrued expenses		1,~~903~~864			12,~~765~~236
Current maturities of long-term debt		8588			8187
Contract liabilities		31,~~288~~832			43,~~908~~135
Deposit from purchaser of MesoScribe assets-Note 11		-			597
Total current liabilities		4,929			6,137
Total current liabilities		6,669			8,554
Long-term debt, net of current portion		159			181
Long-term debt, net of current portion		203			268
Total liabilities		5,088			6,318
Total liabilities		6,872			8,822
Contingencies – Note 11		-			-
Stockholders’ equity:
Common stock - $0.01 par value – 20,000,000 shares authorized; issued and outstanding 6,881,838 at September 30, 2024 and 6,824,511 at December 31, 2023		69			68
Common stock - $0.01 par value – 20,000,000 shares authorized; 6,881,838 issued and outstanding at March 31, 2025 and December 31, 2024		69			69
Additional paid-in capital		2930,~~495~~021			2829,~~695~~757
Accumulated deficit		(4,~~590~~098	)		(24,~~560~~458	)
Total stockholders’ equity		2425,~~974~~992			2625,~~203~~368
Total liabilities and stockholders’ equity	$	31,~~846~~080		$	3531,~~025~~686

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share and share amounts)

(Unaudited)

		2024			2023			2024			2023
	Three Months Ended March 31,
		Three months ended						Nine months ended
		2025			2024
		September 30,						September 30,
Revenue		$	8,316		$	4,922
		2024			2023			2024			2023
Cost of revenue			5,621			4,125
Revenue		$	8,194		$	6,234		$	19,462		$	19,998
Gross profit			2,695			797
Cost of revenue			6,359			4,636			15,158			14,579
Operating expenses:
Gross profit			1,835			1,598			4,304			5,419
Research and development			781			746
Operating expenses
Selling			420			419
Research and development			644			704			2,055			1,865
General and administrative			1,225			1,255
Selling			423			434			1,268			1,281
Total operating expenses			2,426			2,420
General and administrative			1,316			1,450			4,057			4,410
Operating income (loss)			269			(1,623	)
Gain on sale of equipment-Note 11			(625	)		-			(625	)		-
Other income (expense):
Loss on disposition of Tantaline			-			-			-			162
Interest income			110			157
Impairment charge			-			-			-			111
Interest expense			(3	)		(6	)
Total operating expenses, net			1,758			2,588			6,755			7,829
Total other income, net			107			151
Operating income (loss)			77			(990	)		(2,451	)		(2,410	)
Income (loss) before income taxes			376			(1,472	)
Other income (expense):
Income tax expense			16			-
Interest income			136			173			438			400
Net income (loss)		$	360		$	(1,472	)
Interest expense			(5	)		(6	)		(14	)		(18	)
Income (loss) per common share - basic		$	0.05		$	(0.22	)
Foreign exchange income			-			-			-			42
Income (loss) per common share - diluted		$	0.05		$	(0.22	)
Other income			-			70			2			91
Weighted average number of shares:
Total other income, net			131			237			426			515
Basic			6,867,713			6,809,283
Income (loss) before income tax			208			(753	)		(2,025	)		(1,895	)
Diluted			6,874,120			6,809,283
Income tax expense			5			-			5			11
Net income (loss)		$	203		$	(753	)	$	(2,030	)	$	(1,906	)
Income (loss) per common share - basic		$	0.03		$	(0.11	)	$	(0.30	)	$	(0.28	)
Income (loss) per common share - diluted		$	0.03		$	(0.11	)	$	(0.30	)	$	(0.28	)
Weighted average common shares
Basic			6,825,495			6,789,487			6,817,220			6,787,415
Diluted			6,834,627			6,789,487			6,817,220			6,787,415

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

Three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024

	Shares		Par Value		Capital		Earnings			Total
		Common stock				Additional Paid-in		Accumulated
	Common stock				Additional paid-in		(AccumulatedDeficit)Retained
		Shares		Par Value		Capital		Deficit			Total
	Shares		Par Value		Capital		Earnings			Total
Balance at January 1, 2025		6,881,838	$	69	$	29,757	$	(4,458	)	$	25,368
Balance at July 1, 2024		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504
Net income		-		-		-		360			360
Net income		-		-		-		203			203
Stock-based compensation		-		-		264		-			264
Stock-based compensation		56,500		1		266		-			267
Balance at March 31, 2025		6,881,838	$	69	$	30,021	$	(4,098	)	$	25,992
Balance at September 30, 2024		6,881,838	$	68	$	29,496	$	(4,590	)	$	24,974
Balance at January 1, 2024		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Balance at July 1, 2023		6,779,063	$	67	$	28,185	$	467		$	28,719
Balance		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Net loss		-		-		-		(~~753~~1,472	)		(~~753~~1,472	)
Stock-based compensation		41,320		1		249		-			250
Net income (loss)		-		-		-		(1,472	)		(1,472	)
Exercise of stock options and issuance of shares		272		-		-		-			-
Stock-based compensation		-		-		267		-			267
Balance at September 30, 2023		6,820,655	$	68	$	28,434	$	(286	)	$	28,216
Balance at March 31, 2024		6,824,511	$	68	$	28,962	$	(4,032	)	$	24,998
Balance		6,824,511	$	68	$	28,962	$	(4,032	)	$	24,998

Nine months ended September 30, 2024 and 2023

	Common stock				Additional paid-in		(Accumulated Deficit) Retained
	Shares		Par Value		Capital		Earnings			Total
Balance at January 1, 2024		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Net loss		-		-		-		(2,030	)		(2,030	)
Stock-based compensation		57,327		1		800		-			801
Balance at September 30, 2024		6,881,838	$	68	$	29,496	$	(4,590	)	$	24,974
Balance at January 1, 2023		6,760,938	$	67	$	27,712	$	1,620		$	29,399
Balance		6,760,938	$	67	$	27,712	$	1,620		$	29,399
Net loss		-		-		-		(1,906	)		(1,906	)
Net income (loss)		-		-		-		(1,906	)		(1,906	)
Stock-based compensation		41,320		1		646		-			647
Exercise of stock options and issuance of shares		18,397		-		76		-			76
Balance at September 30, 2023		6,820,655	$	68	$	28,434	$	(286	)	$	28,216
Balance		6,820,655	$	68	$	28,434	$	(286	)	$	28,216

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	2024			2023
	Three Months Ended
	Nine months ended
	March 31,
	September 30,
	2025			2024
	2024			2023
Cash flows from operating activities:
Net loss	$	(2,030	)	$	(1,906	)
Net income (loss)	$	360		$	(1,472	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		~~801~~264			~~647~~267
Depreciation and amortization		~~476~~185			~~545~~153
Gain on sale of equipment		(625	)
Provision for excess and obsolete inventory		-			90
Loss on disposition of Tantaline		-			162
Changes in assets and liabilities:
Provision for excess and obsolete inventory		1,253			197
Accounts receivable		743			(1,065	)
Impairment charge		-			111
Contract assets		(2,954	)		(1,085	)
Changes in assets and liabilities, net of effects of disposition of Tantaline and sale of equipment:
Inventories		78			(561	)
Accounts receivable		(3,218	)		1,163
Other assets		271			(28	)
Contract assets		256			(725	)
Accounts payable		466			611
Inventories		633			(1,953	)
Accrued expenses		(372	)		(75	)
Employee retention credit receivable		-			1,529
Contract liabilities		(1,303	)		1,122
Other current assets		48			(46	)
Net cash used in operating activities		(2,262	)		(2,043	)
Other noncurrent assets		8			-
Accounts payable		140			113
Accrued expenses		138			(729	)
Contract liabilities		(1,620	)		816
Net cash used in operating activities		(3,740	)		(76	)
Cash flows from investing activities:
Purchases of property and equipment		(219	)		(308	)
Investment in captive insurance company		(51	)		-
Deposits from purchaser of MesoScribe assets		-			597
Purchases of property and equipment		(45	)		(70	)
Net cash used in connection with disposition of Tantaline		-			(312	)
Net cash used in investing activities		(96	)		(70	)
Net cash used in investing activities		(219	)		(23	)
Cash flows from financing activities:
Cash flows from financing activities
Repayments of long-term debt		(21	)		(19	)
Payments of long-term debt		(61	)		(57	)
Net cash used in financing activities		(21	)		(19	)
Proceeds from exercise of stock options		-			76
Net decrease in cash and cash equivalents		(2,379	)		(2,132	)
Net cash (used in) provided by financing activities		(61	)		19
Cash and cash equivalents at beginning of period		12,598			14,025
Net decrease in cash and cash equivalents		(4,020	)		(80	)
Cash and cash equivalents at end of period	$	10,219		$	11,893
Cash and cash equivalents at beginning of period		14,025			14,365
Cash and cash equivalents at end of period	$	10,005		$	14,285
Supplemental disclosure of cash flow information:
Income taxes paid	$	26		$	11-
Interest paid	$	143		$	186

The accompanying notes are an integral part of these condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the interim financials not misleading have been included and all such adjustments are of a normal recurring nature. The operating results for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 are not necessarily indicative of the results that can be expected for the year ending December 31, ~~2024~~2025.

The condensed consolidated balance sheet as of December 31, ~~2023~~2024 has been derived from the audited consolidated financial statements at such date, as filed on Form 10-K with the SEC on March 28 19, ~~2024~~2025, but does not contain all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with that report.

All material intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on net loss.

Liquidity

At ~~September~~ 30March 31, ~~2024~~2025, the Company had $10.02 million in cash and cash equivalents. The Company anticipates that the existing cash and cash equivalents balance together with potential future income from operations, collections of existing accounts receivable, revenue from its existing backlog of products as of this filing date, the sale of inventory on hand, deposits and down payments against significant orders will be adequate to meet its working capital and capital equipment requirements, and its anticipated cash needs over the next 12 months from the date of issuance of these condensed consolidated financial statements.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

In ~~accordance~~ accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606 - Revenue from Contracts with Customers (“ASC 606”), the Company records revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services promised to its customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price for the contract; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue using one of the following two methods:

Over time

The Company designs, manufactures and sells custom chemical vapor deposition, thermal process equipment and other equipment through contractual agreements. These system ~~sales~~ sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. For systems sales that meet the criteria to recognize revenue over time, the Company recognizes revenue over time by using an input method based on costs incurred as it depicts the Company’s progress toward satisfaction of the performance obligation. For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions, the Company recognizes revenue based on point in time ~~as discussed below~~.

Under ~~this~~ the over time method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Incurred costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work -in -process, and installed, as required by the project’s engineering design. Cost based input methods of revenue recognition require the Company to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor and other system costs. If the estimated total costs on any contract are greater ~~than~~ than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. There were no material impairment losses recognized on contract assets during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~ 2025 and ~~2023~~2024.

The timing of revenue recognition, billings and collections results in accounts receivables, unbilled receivables or contract assets and contract liabilities on our consolidated balance sheet. Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Under ASC 606, payments received from customers in excess of revenue recognized to- date ~~results~~result in a contract liability. These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands, which can be higher in the earlier stages of a contract. Also, advanced payments and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract.

Contract assets include unbilled amounts typically resulting from system sales under contracts and represents revenue recognized that exceeds the amount billed to the customer.

Contract liabilities include advance payments and billings in excess of revenue recognized. The Company typically receives down payments upon receipt of ~~orders~~order and progress payments as the system is manufactured.

Contract assets and contract liabilities are classified as current as these contracts in progress are expected to be substantially completed within the next twelve months.

Point in time

For non-system sales of products and services, revenue is recognized at the point in time when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606, “Revenue from Contracts with Customers”. ”

For any system equipment sales where the equipment would have an alternative use or where the contract provisions of the contract preclude the use of over time revenue recognition, revenue is recognized at the point in time when control of the equipment is transferred to the customer. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, all system equipment sales were recorded over time by using an input method except for a) one ~~PVT200~~contract ~~system~~ that was recorded as revenue at the point in time ~~when~~ the equipment was transferred to the customer during the third quarter of fiscal year 2024. ~~There~~and ~~was~~b) one ~~system equipment~~ contract inthat ~~2023 where the revenue~~ was toentered ~~be recognized based on point in time. This contract was modified~~ during ~~the~~2024 ~~three~~and ~~months ended September 30, 2023 such that the revenue under this contract~~ will be recognized ~~over~~as ~~time~~revenue ~~using~~after anMarch ~~input method based on the revised contract provisions. Revenues for the three months ended September 30~~31, ~~2023~~ ~~includes~~2025 ~~$0.8~~upon ~~million~~ transfer of ~~revenue that was deferred as of June 30, 2023 and recognized on~~ the ~~date~~equipment ofto the ~~contract modification~~customer.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories

Inventories (raw materials, work-in-process and finished goods) are valued at the lower of cost (determined on the first-in, first-out method) or net realizable value. Work-in-process and finished goods inventory reflect all accumulated production costs, which are comprised of direct production costs and overhead, and is reduced by amounts recorded in cost of sales as the related revenue is recognized. Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are charged to ~~expense~~expenses as incurred and are not included in our cost of sales or work-in-process and finished goods inventory.

Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials , and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of inventory, which would be reflected in cost of sales in the period the revision is made.

Product Warranty

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance or fifteen months from the date of shipment by providing labor and parts necessary to repair the systems during the warranty period. The Company records the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in “Cost of revenue” in the condensed consolidated statements of operations. The estimated warranty cost is based on the Company’s historical cost. The Company updates its warranty estimates based on actual costs incurred.

~~Recent~~Recently Issued Accounting Standards

In ~~November~~ December 2023, the FASB issued ASU 2023-0709, ~~Segment~~Income ~~Reporting~~Taxes (Topic ~~280~~740): ~~Improvements~~Improvement to ~~Reportable~~Income ~~Segment~~Tax Disclosures. The amendments infurther ~~this~~enhance ~~update~~income tax ~~expand~~disclosures, ~~annual~~primarily ~~and~~through ~~interim~~standardization ~~disclosure~~and ~~requirements~~disaggregation ~~for~~of ~~reportable~~rate ~~segments,~~reconciliation ~~primarily~~categories ~~through~~and ~~enhanced~~income ~~disclosures about~~taxes ~~significant~~paid ~~segment~~by ~~expenses~~jurisdiction. This ~~update~~ASU is effective for ~~our~~ annual ~~report~~periods ~~for~~beginning ~~fiscal~~after ~~year~~December ~~2025~~15, ~~and interim periods thereafter~~2024, with early adoption permitted, and ~~will~~should be applied ~~retrospectively~~either prospectively toor ~~all~~retrospectively. ~~prior~~The ~~periods~~Company ~~presented~~is incurrently evaluating the ~~financial~~timing ~~statements.~~of Weadoption ~~are currently~~and ~~evaluating the~~ impact of this ASU on our ~~Consolidated~~consolidated financial ~~Financial Statements and related disclosures~~statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures. The amendments further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for our annual report for fiscal year 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. We are currently evaluating the timing of adoption and impact of this ASU on our Consolidated Financial Statements and related disclosures.

The Company believes there is no additional new accounting guidance adopted, but not yet effective, that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

~~CVD EQUIPMENT~~NOTE ~~CORPORATION~~2: ~~AND~~SUMMARY ~~SUBSIDIARIES~~OF SIGNIFICANT ACCOUNTING POLICIES (continued)

~~Notes~~In November to2024, ~~Condensed~~the ~~Consolidated~~FASB ~~Financial~~issued ASU 2024-03, “Disaggregation of Income Statements Expenses (Subtopic 220-40),” to improve income statement expenses disclosure. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for financial statements issued for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

~~(Unaudited)~~The Company believes there is no additional new accounting guidance adopted, but not yet effective, which is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

NOTE 3: CONCENTRATION OF CREDIT RISK

Cash and cash equivalents

The Company had cash and cash equivalents of $10.0 2 million and $1412.06 million at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively. The Company invests excess cash in U.S. treasury bills, certificates of deposit or deposit accounts, all with maturities of less than three months. Cash equivalents ~~consisting of U.S. treasury bills~~ were $9.45 million and $1211.1 9 million at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~ 2024, respectively.

The Company places most of its temporary cash investments ~~in the United States~~ with financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. The amount at risk at March ~~September 30~~31, ~~2024~~2025 and December 31, ~~2023~~2024 ~~was~~were $0.2 million and $10.54 million, respectively.

Accounts receivable

The Company ~~sells~~routinely ~~products~~assesses ~~and~~the ~~services~~financial tostrength of ~~various~~its ~~companies~~customers. ~~across~~In ~~several~~accordance ~~industries~~with inthe “expected credit loss” model, the ~~ordinary~~carrying ~~course~~amount of ~~business.~~accounts ~~The~~receivable ~~Company performs~~is ~~ongoing~~reduced ~~credit~~by ~~evaluations~~a tovaluation ~~assess~~allowance that reflects the ~~probability~~best estimate of the amounts the Company does not expect to collect. In addition to reviewing delinquent accounts receivable, ~~collection~~the ~~based~~Company onconsiders amany ~~number~~factors ofin ~~factors~~estimating our reserve, including ~~past~~types ~~transaction~~of customers and ~~experience~~their credit worthiness, ~~evaluation~~experience ofand ~~their~~historical ~~credit~~data ~~history~~adjusted for current conditions and reasonable supportable forecasts. The Company records an allowance for credit losses based upon a specific review of ~~the~~all ~~invoicing~~significant ~~terms~~outstanding ofinvoices. ~~the~~For ~~contract~~those toinvoices not ~~determine~~specifically reviewed, provisions are provided based upon the ~~financial~~collection ~~strength of~~history, ~~its~~current ~~customers~~economic trends and reasonable supportable forecasts.

Accounts receivables are presented net of an allowance for credit losses of approximately $36,000 at both September 30, 2024 and December 31, 2023. The allowance is based on prior experience and management’s evaluation of the collectability of accounts receivable. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers. Future changes to the estimated allowance for credit losses could be material to our results of operations and financial condition.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 3:

CONCENTRATION OF CREDIT RISK (continued)

AtAccounts receivable is presented net of an allowance ~~September~~for 30credit losses of $48,000 and $48,000 and as of March 31, 2025 and December 31, 2024, ~~the~~respectively. ~~accounts~~The allowance ~~receivable~~is ~~balance~~based ~~included~~on ~~amounts~~prior ~~from~~experience ~~one~~and ~~customer~~management’s ~~that~~evaluation ~~represented~~of 17future economic conditions.2% Measurement of ~~total~~credit ~~accounts~~losses ~~receivable.~~requires Asconsideration of ~~December~~historical ~~31,~~loss ~~2023~~experience, including the ~~accounts~~need ~~receivable~~to ~~balance~~adjust ~~included~~for ~~amounts~~changing ~~from~~business ~~three~~conditions, ~~customers~~and ~~that~~judgments ~~represented~~about ~~37.6%~~the probable effects of relevant observable data, ~~13.0%~~including present economic conditions such as delinquency rates and ~~12.8%~~the financial health of specific customers. Future changes to the estimated allowance for credit losses could be material to our results of ~~total~~operations ~~accounts~~and ~~receivable~~financial condition.

At March 31, 2025, the accounts receivable balance included an amount from four customers that totaled 15.4%, 15.1%, 15.0% and 13.6% of total accounts receivable. As of December 31, 2024, the accounts receivable balance includes amounts from three customers that represented 28.6%, 14.0% and 11.9% of total accounts receivable.

Sales concentration

Revenue from a single customer in any one period can exceed 10% of our total revenues. During the three months ended ~~September~~March 3031, ~~2024~~2025, two customers ~~represented~~exceeded 2910% of revenues, representing 41.1% and 1114.20%, ~~respectively,~~ of revenues, and during the ~~nine~~three months ended ~~September~~March 3031, 2024, ~~one~~two ~~customer~~customers ~~represented 31~~exceeded 10%, representing 29.26%, ofand 13.1% of revenues.

During the three months ended September 30, 2023, two customers represented 40.3% and 10.3% of revenues, respectively, and during the nine months ended September 30, 2023, three customers represented 16.7%, 13.9% and 11.7% of revenues, respectively.

NOTE 4: REVENUE RECOGNITION

The following table represents a disaggregation of revenue for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 and ~~2023~~2024 (in thousands):

SCHEDULE OF DISAGGREGATION OF REVENUE

	Over time		Point in time		Total
	Three months ended March 31, 2025
	Three months ended September 30, 2024
		Over time		Point in time		Total
	Over time		Point in time		Total
Energy	$	-	$	8	$	8
Energy	$	-	$	448	$	448
Aerospace		1,839		787		2,626
Aerospace		3,814		969		4,783
Industrial		4,124		407		4,531
Industrial		1,522		368		1,890
Research		753		398		1,151
Research		927		146		1,073
Total	$	6,716	$	1,600	$	8,316
Total	$	6,263	$	1,931	$	8,194

	Over time		Point in time		Total
	Three months ended September 30, 2023
	Over time		Point in time		Total
Energy	$	970	$	136	$	1,106
Aerospace		2,511		371		2,882
Industrial		695		739		1,434
Research		504		308		812
Total	$	4,680	$	1,554	$	6,234

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 4:

REVENUE RECOGNITION (continued)

	Over time		Point in time		Total
	Three months ended March 31, 2024
	Nine months ended September 30, 2024
		Over time		Point in time		Total
	Over time		Point in time		Total
Energy	$	-	$	18	$	18
Energy	$	216	$	500	$	716
Aerospace		1,802		332		2,134
Aerospace		8,285		1,488		9,773
Industrial		1,259		483		1,742
Industrial		4,324		1,142		5,466
Research		861		167		1,028
Research		2,963		544		3,507
Total	$	3,922	$	1,000	$	4,922
Total	$	15,788	$	3,674	$	19,462

	Over time		Point in time		Total
	Nine months ended September 30, 2023
	Over time		Point in time		Total
Energy	$	4,246	$	189	$	4,435
Aerospace		2,774		1,226		4,000
Industrial		5,450		1,866		7,316
Research		2,960		1,287		4,247
Total	$	15,430	$	4,568	$	19,998

The energy market includes customers involved in the manufacture of silicon carbide wafers and batteries. The aerospace market includes customers that manufacture aircraft engines. Industrial end market consists of various end customers in diverse industries. The research market principally represents customers that are universities and other research institutions.

The ~~energy~~ ~~market~~Company ~~includes~~has ~~customers~~unrecognized ~~involved~~contract inrevenue ~~the manufacture~~ of ~~silicon carbide wafers and batteries. Aerospace market includes customers~~approximately ~~that manufacture aircraft engines~~$11.2 ~~Industrial~~million ~~end~~at ~~market~~March ~~consists~~31, of2025, ~~various~~which ~~end~~it ~~customers~~expects into ~~diverse~~substantially ~~industries.~~recognize ~~Research~~as ~~market~~revenue ~~principally represents~~over ~~customers~~time ~~such~~within asthe ~~universities~~next ~~and~~eighteen ~~other research institutions~~months.

The Company has unrecognized contract revenue of approximately $17.0 million at September 30, 2024, which it expects to substantially recognize as revenue within the next twelve months based on over time revenue recognition.

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems may occur for a variety of reasons, including but not limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates may have a material effect on the Company’s ~~condensed~~ consolidated statements of operations.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 4: REVENUE RECOGNITION (continued)

Contract assets and liabilities

Contract assets and contract liabilities on input method type contracts in progress are summarized as follows as of ~~September~~March 3031, ~~2024~~2025 (in thousands):

Costs incurred on contracts in progress	$	1318,~~540~~456
Estimated earnings		68,~~672~~964
Costs and estimated earnings on uncompleted contracts	$	2027,~~212~~420
Billings to date		(2123,~~693~~557	)
Net cost in excess of billings		(13,~~481~~863	)
Deferred revenue related to non-system contracts		(459	)
Deferred revenue related to non-system contracts and a system contract to be recognized at point in time		(515	)
Contract liability in excess of contract assets	$	(13,~~940~~348	)
Included in accompanying condensed consolidated balance sheet as of September 30, 2024 under the following captions (in thousands):
Included in accompanying condensed consolidated balance sheets under the following captions (in thousands):
Contract assets	$	15,~~348~~180
Contract liabilities	$	31,~~288~~832

Of the contract liability balances at December 31, ~~2023~~2024 and ~~2022 of $4.6 million and $4.0 million~~2023, ~~respectively,~~ $41.23 million and $31.73 million was recognized as revenue during the ~~nine~~three months ended March ~~September 30~~31, 2025 and 2024, respectively. Contract assets and ~~2023~~contract liabilities at December 31, 2023 were $1.6 million and $4.9 million, respectively.

NOTE 5: INVENTORIES

~~Inventories consist~~ SCHEDULE ~~of:~~OF INVENTORIES, NET

SCHEDULE OF INVENTORIES

	March 31, 2025		December 31, 2024
Inventories consist of:
Raw materials	$	1,267	$	1,217
Work-in-process		637		765
Finished goods		133		133
Total	$	2,037	$	2,115

	September 30, 2024		December 31, 2023
Raw materials	$	1,366	$	2,351
Work-in-process		661		1,248
Finished goods		531		855
Total	$	2,558	$	4,454

Included in our inventories are finished goods and raw materials related to PVT 150/200 systems that were purchased and built, respectively, in anticipation of future orders.

14As of March 31, 2025, the net amount of PVT 150/200 systems inventory is approximately $0.4 million. If future PVT 150/200 orders do not materialize and if the Company is not otherwise able to sell this inventory, the Company could incur additional charges to further reduce the carrying value of such inventory to net realizable value. Such charges may be material to the Company’s financial position and future results of operations.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 5: INVENTORIES (continued)

Included in our inventories are finished goods and raw materials related to PVT 150 systems that were purchased and built, respectively, in anticipation of future orders. During the three months ended September 30, 2024, the Company recorded a non-cash charge to reduce the net realizable value of such inventory by approximately $1.0 million based on its assessment of the current market for silicon carbide equipment.

As of September 30, 2024, the net amount of PVT 150 systems inventory is approximately $0.7 million. If future PVT 150 orders do not materialize and if the Company is not otherwise able to sell this inventory, the Company could incur additional charges to further reduce the carrying value of such inventory to net realizable value. Such charges may be material to the Company’s financial position and future results of operations.

NOTE 6: LONG-TERM DEBT

In September 2022, the Company entered into a loan agreement to fund the acquisition of machinery. The loan amount of $432,000 , is payable in 60 equal monthly installments of $8,352 ~~and~~ and secured by equipment. The interest rate is 6%.

NOTE 7: EARNINGS PER SHARE

The calculation of basic and diluted weighted average common shares outstanding for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~ 2024 is as follows:

	2024		2023		2024		2023
	Three months ended March 31,
	Three months ended September 30,				Nine months ended September 30,
	2025		2024
	2024		2023		2024		2023
Basic weighted average common shares outstanding		6,867,713		6,809,283
Basic weighted average common shares outstanding		6,825,495		6,789,487		6,817,220		6,787,415
Dilutive effect of unrestricted restricted stock		6,407		-
Dilutive effect of unvested restricted stock		9,132		-		-		-
Diluted weighted average shares outstanding		6,874,120		6,809,283
Diluted weighted average shares outstanding		6,834,627		6,789,487		6,817,220		6,787,415

AtFor ~~September~~the 30three months ended March 31, 2025 and 2024, all stock options towere ~~purchase~~excluded ~~838,125~~in ~~shares~~the computation of ~~common~~diluted ~~stock~~earnings ~~were~~per ~~outstanding~~share ~~and~~because their ~~493,750~~effect ~~were~~was ~~exercisable~~antidilutive.

For the three and nine months ended September 30, 2024 and the three and nine months ended September 30, 2023, all stock options were excluded in the computation of diluted earnings per share because their effect was antidilutive.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

The Company recorded stock-based compensation expense for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively, that were ~~included~~ included in the following line items in our condensed consolidated statements of operations (in thousands):

	2024		2023		2024		2023
	Three months ended March 31,
	Three months ended Sept. 30,				Nine months ended Sept. 30,
	2025		2024
	2024		2023		2024		2023
Cost of revenue	$	26	$	38
Cost of revenue	$	38	$	22	$	114	$	82
Research and development		47		47
Research and development		47		47		141		113
Selling		27		27
Selling		27		30		81		72
General and administrative		164		155
General and administrative		155		150		465		380
Total	$	264	$	267
Total	$	267	$	249	$	801	$	647

Stock-based compensation expense ~~for three months ended September 30, 2024 and 2023~~ included $50,000 and $4440,~~783,~~000 ~~respectively, and~~ for the ~~nine month~~three ~~periods~~months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023 included $153~~2024,~~736~~ ~~and $124,783,~~ respectively, related to restricted stock awards that directors ~~are~~elected ~~entitled~~ to receive pursuant to the Director Compensation ~~Plan~~plan. Under this plan, each of the ~~Company’s~~five independent directors is entitled to an Annual Equity Retainer in the amount of $40,000, to be granted on the date of the Company’s annual meeting of shareholders.

For the nine months ended September 30, 2024, the Company granted 5,000 stock options, vesting 25% per year over four years, with a ten-year life. The Company determined the weighted average fair value of stock options granted was $3.30 and is based upon weighted average assumptions below.15

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS

Stock price	$	4.75
Exercise price	$	4.75
Dividend yield		0	%
Expected volatility		77	%
Risk-free interest rate		4.12	%
Expected life (in years)		6.00

The following table summarizes stock options awards through September 30, 2024:

SCHEDULE OF STOCK OPTIONS AWARDS

				Weighted
	Stock Option			Average
	Awards			Exercise
	(in shares)			Price
Outstanding at January 1, 2024		846,875			8.20
Granted		5,000			4.75
Forfeited		(13,750	)		7.94
Outstanding at September 30, 2024		838,125		$	8.18

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 8:

STOCK-BASED COMPENSATION EXPENSE (continued)

The following table summarizes ~~information~~stock ~~about~~options ~~the~~awards ~~outstanding~~for ~~and~~the ~~exercisable~~three ~~options~~months atended ~~September~~March 3031, ~~2024 by ranges of exercise prices~~2025:

SCHEDULE OF STOCK OPTIONS AWARDS

				Weighted
	Stock Option			Average
	Awards			Exercise
	(in shares)			Price
Outstanding at January 1, 2025		823,125		$	8.24
Forfeited		(7,125	)		11.65

Outstanding at March 31, 2025		816,000			8.21

The following table summarizes information about the outstanding and exercisable options at March 31, 2025 by ranges of exercise prices:

		~~Options Outstanding~~		Options Outstanding						~~Options Exercisable~~		Options Exercisable
				Weighted		~~Weighted~~						~~Weighted~~
				Average		~~Average~~						~~Average~~
Exercise		Number		Remaining		Exercise		Intrinsic		Number		Exercise		Intrinsic
				Remaining		Weighted						Weighted
Price Range		Outstanding		Contractual		Price		Value		Exercisable		Price		Value
				Contractual		Average						Average
$	4.00-7.00		459,625		7.1	$	4.55	$	-		294,125	$	6.07	$	-
Exercise		Number		Life in		Exercise		Intrinsic		Number		Exercise		Intrinsic
$	7.01-10.00		20,000		3.6	$	8.07	$	-		20,000	$	8.07	$	-
Price Range		Outstanding		Years		Price		Value		Exercisable		Price		Value
$	104.0100-137.00		~~130~~444,000		26.97	$	104.6254	$	-		~~122~~288,500	$	104.5546	$	-
$	137.01-1610.00		~~228~~20,~~500~~000		83.51	$	148.1107	$	-		5720,~~125~~000	$	148.1107	$	-
$	10.01-13.00		125,000		2.2	$	10.57	$	-		125,000	$	10.57	$	-
$	13.01-16.00		227,000		8.0	$	14.11	$	-		113,500	$	14.11	$	-

As of ~~September~~March 3031, ~~2024~~2025, there was $1.83 million of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 1.39 years.

NOTE 9: INCOME TAXES

As of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, the Company has provided a full valuation allowance against its net deferred tax assets. ~~This~~ This was based on management’s assessment, including ~~the~~operating ~~last~~losses ~~six~~in ~~years~~recent ~~of operating losses~~years, that it is more likely than not that the net deferred tax assets may not be realized in the future. Management continues to evaluate for potential utilization of the Company’s net deferred tax ~~asset~~assets, which ~~has~~have been fully reserved for, on a quarterly basis, reviewing our economic models, including projections of future operating results.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods. The effective tax rate and income tax expense for the three months ended March 31, 2025 was 4.3% and $16,000, respectively.

NOTE 10: SEGMENT REPORTING

The Company ~~operates~~has ~~through~~determined ~~three~~that ~~segments:~~it ~~CVD~~has ~~Equipment,~~three ~~Stainless Design Concepts (“SDC”) and CVD Materials. The CVD Equipment~~reportable ~~segment manufactures and sells chemical vapor deposition~~segments, ~~physical~~organized ~~vapor~~primarily transport and similar equipment. The SDC segment designs and manufactures ultra-high purity gas and chemical delivery control systems. The CVD Materials segment provides material coatings for aerospace, medical, electronic and other applications and is not considered a core business of the Company. The Company evaluates performance based on ~~several~~product ~~factors~~offerings, ofas ~~which the primary financial measure is income (loss) before taxes.~~follows:

~~The Company’s~~● ~~corporate~~CVD ~~administration~~Equipment ~~activities~~– ~~are~~manufactures ~~reported~~chemical invapor ~~the “Corporate” column. These activities primarily include expenses related to certain corporate officers and support staff~~deposition, ~~expenses~~physical ~~related~~vapor totransport ~~the Company’s Board of Directors, stock option expense for options~~ and ~~shares~~thermal ofprocess restricted stock granted to corporate administration employees and board members, certain consulting expenses, investor and shareholder relations activities, and all the Company’s legal, auditing and professional feesequipment.

●

SDC - manufactures ultra-high purity gas and chemical delivery control systems.

●

MesoScribe - provided electronic printing services and products (heaters, antennas, and sensors).

Both CVD Equipment and SDC also sell spares and parts and provide services related to the equipment each segment sells. One other business, Tantaline, did not meet the quantitative threshold for separate reporting and has been reflected as “Other” below.

The chief operating decision maker (“CODM”) of the Company is the Company’s chief executive officer. The CODM assesses performance and decides how to allocate resources, including employees, financial or capital resources, based on segment net income (loss). The CODM considers actual-to-actual variances on a quarterly basis when making decisions about allocating capital and other resources to the segments and to assess the performance for each segment.

Financial results for the reportable segments and other business are prepared on a basis consistent with the internal disaggregation of financial information to assist the CODM is making internal operating decisions.

Certain income and expenses are excluded from segment net income (loss) and included in the unallocated amounts in the reconciliation of reportable segment net income (loss) to net loss. These items are not used by the CODM in allocating resources or evaluating the results of the segments and include the following: corporate expenses consisting of employment costs of executives, finance, information technology and human resources; board of director fees; professional fees; shareholder and investor relations expense; directors’ and officers’ insurance; interest income and income tax expense. Segment income (loss) from operations may not be consistent with measures used by other companies.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 10:

SEGMENT REPORTING (continued)

~~Elimination entries~~The ~~included~~following inprovides ~~the “Eliminations” column represent intersegment revenues and cost of revenues that are eliminated in consolidation. Intersegment sales by the SDC~~ segment toinformation ~~the~~as ~~CVD Equipment segment for the three months ended September 2024 and~~described ~~2023~~below ~~were~~(in $151,000 and $184,000, respectively and $298,000 and $450,000 for the nine months ended September 30, 2024 and 2023, respectively. Intersegment sales by the CVD Equipment segment to the SDC segment for the three months ended September 30, 2024 and 2023 were $5,000 and $39,000, respectively and $5,000 and $104,000 for the nine months ended September 30, 2024 and 2023, respectively.thousands):

The following table presents certain information regarding the Company’s segments as of and for the three months ended September 30, 2024 and 2023 (in thousands):

SCHEDULE OF SEGMENTS

2024


	For the three months ended March 31, 2025
	CVD		SDC		MesoScribe		Total
Segment revenue	$	6,314	$	2,142	$	22	$	8,478
Less:
Cost of revenue		4,530		1,251		1		5,782
Research and development		734		47		-		781
Selling		367		53		-		420
General and administrative		177		202		-		379
Interest expense		3		-		-		3
Segment net income	$	503	$	589	$	21	$	1,113
Segment assets	$	18,430	$	3,012	$	-	$	21,442
Capital expenditures	$	39	$	6	$	-	$	45
Depreciation and amortization	$	172	$	13	$	-	$	185

	CVD Equipment			SDC		CVD Materials			Eliminations			Corporate			Consolidated
	For the three months ended March 31, 2024
Assets	$	27,270		$	3,805	$	836		$	(65	)	$	-		$	31,846
	CVD			SDC		MesoScribe			Total
Revenue	$	5,681		$	2,005	$	661		$	(153	)	$	-		$	8,194
Segment revenue	$	2,946		$	1,932	$	59		$	4,937
Operating (loss) income		*(736	)		538		**1,104			18			(847	)		77
Less:
Pretax (loss) income		*(741	)		538		**1,104			18			(711	)		208
Cost of revenue		3,052			1,016		72			4,140
Depreciation and amortization	$	157		$	12	$	-		$	-		$	-		$	169
Research and development		678			68		-			746
Purchase of property, plant & equipment	$	30		$	7	$	-		$	-		$	-		$	37
Selling		373			46		-			419
General and administrative		225			170		12			407
Interest expense		6			-		-			6
Segment net income	$	(1,388	)	$	632	$	(25	)	$	(781	)
Segment assets	$	20,159		$	3,882	$	183		$	24,224
Capital expenditures	$	70		$	-	$	-		$	70
Depreciation and amortization	$	141		$	12	$	-		$	153

~~2023~~The following table presents a reconciliation of revenue of reportable segments to consolidated revenue (in thousands):

	CVD Equipment			SDC		CVD Materials			Eliminations			Corporate			Consolidated
Assets	$	32,915		$	4,237	$	177		$	(102	)	$	-		$	37,227
Revenue	$	4,795		$	1,572	$	90		$	(223	)	$	-		$	6,234
Operating (loss) income		(323	)		436		(35	)		(76	)		(992	)		(990	)
Pretax (loss) income		(262	)		434		(31	)		(76	)		(818	)		(753	)
Depreciation and amortization	$	137		$	12	$	4		$	-		$	-		$	153
Purchase of property, plant & equipment	$	83		$	-	$	-		$	-		$	-		$	83

* Includes a $1.0 million non-cash charge to reduce certain inventory to net realizable value – see Note 5.


	Three months ended March 31,
	2025			2024
Revenue of reportable segments	$	8,478		$	4,937
Intersegment revenue		(162	)		(15	)
Consolidated total revenue	$	8,316		$	4,922

**Intersegment ~~Includes~~revenues ~~gain~~are ondetermined ~~sale~~based ofon ~~equipment~~similar product ofsales ~~$0.6 million related~~ to ~~MesoScribe~~external –customers ~~see~~of ~~Note~~the 11Company.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 10:

SEGMENT REPORTING (continued)

The following table presents ~~certain~~a ~~information~~reconciliation ~~regarding~~of ~~the~~net ~~Company’s~~income ~~segments~~(loss) as of ~~and~~reportable ~~for~~segments ~~the~~to ~~nine~~consolidated ~~months~~net ~~ended~~loss ~~September 30, 2024 and 2023~~ (in ~~thousands~~thousand):

~~2024~~ SCHEDULE OF RECONCILIATION OF NET INCOME (LOSS) OF REPORTABLE SEGMENTS TO CONSOLIDATED NET LOSS

	CVD Equipment			SDC			CVD Materials		Eliminations			Corporate			Consolidated
	Three months ended March 31,
Revenue	$	12,737		$	6,252		$	775	$	(302	)	$	-		$	19,462
	2025			2024
Operating (loss) income		*(2,884	)		1,884			**1,034		28			(2,513	)		(2,451	)
Net income (loss) of reportable segments	$	1,113		$	(781	)
Pretax (loss) Income		*(2,894	)		1,884			**1,034		28			(2,075	)		(2,025	)
Unallocated amounts:
Depreciation and amortization	$	441		$	35		$	-	$	-		$	-		$	476
Corporate expenses		(847	)		(848	)
Purchase of property, plant & equipment	$	209		$	10		$	-	$	-		$	-		$	219
Interest income		110			157
Income tax (expense) benefit		(16	)		-
Consolidated net loss	$	360		$	(1,472	)

~~2023~~The following table presents a reconciliation of total assets of reportable segments to consolidated total assets (in thousands):

	CVD Equipment			SDC		CVD Materials			Eliminations			Corporate			Consolidated
Revenue	$	13,774		$	5,679	$	1,009		$	(554	)	$	-		$	19,998
Operating (loss) income		(581	)		1,430		***(178	)		(104	)		(2,977	)		(2,410	)
Pretax (loss) Income		(518	)		1,430		***(126	)		(104	)		(2,577	)		(1,895	)
Depreciation and amortization	$	404		$	36	$	105		$	-		$	-		$	545
Purchase of property, plant & equipment	$	298		$	10	$	-		$	-		$	-		$	308

* Includes a $1.0 million non-cash charge to reduce certain inventory to net realizable value – see Note 5.


	Three months ended March 31,
	2025		2024
Total assets of reportable segments	$	21,442	$	24,224
Unallocated amounts:
Cash equivalents		9,550		11,129
Other current assets		88		90
Consolidated total assets	$	31,080	$	35,443

**The following ~~Includes~~table ~~gain~~presents onrevenue ~~sale~~by ofgeographic ~~equipment~~area of(in ~~$0.6 million related to MesoScribe – see Note 11.~~thousands):

~~***~~ SCHEDULE ~~Includes~~OF ~~loss~~REVENUE onBY ~~sale~~GEOGRAPHIC ~~of Tantaline of $0.2 million and impairment charge related to MesoScribe fixed assets of $0.1 million – see Note 11.~~AREA


	Three months ended March 31,
	2025		2024
United States	$	8,137	$	4,768
North America, excluding US		3		1
Europe, Middle East and Africa		55		54
Asia-Pacific		121		99
Consolidated total revenue	$	8,316	$	4,922

For geographical reporting, revenues are attributed to the location in which the customer facility is located. All the Company’s long-lived assets are located in the United States.

NOTE 11: RISKS AND CONTINGENCIES

The Company operates in a challenging economic environment as the global economy continues to confront the impacts of recent executive orders by the U.S. federal administration regarding tariffs on imports from various countries including the European Union, Canada, Mexico, and China and the potential impact of actions taken by other countries in response to the announced tariffs, geopolitical conflicts and general inflationary pressures. The specific impacts on the Company have included:

	●	Tariffs may make the Company’s products less cost competitive and reduce gross margins. The impact on the Company’s business related to these or any other tariffs that may be imposed, is uncertain and depends on multiple factors, including the duration and expansion of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures by impacted trade partners, and related inflationary effects. In addition, economic uncertainties may potentially affect our future order rate.

	●	Significant geopolitical developments across Europe and Asia (including the war in Ukraine) have and may continue to restrict the Company’s ability to procure raw materials and components such as nickel and integrated circuits, as well as impacting the Company’s ability to sell its products into China, Russia and other Eastern European and Asian regions.

While management has initiated actions to mitigate the potential negative impacts to its revenue and profitability, the Company is unable to predict the impact that the above uncertainties may have on its future results of operations and cash flows.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11: MESOSCRIBE SUBSIDIARY

On August 8, 2023, the Company entered into a Purchase and License Agreement (the “Agreement”) with a third-party. Pursuant to the Agreement, the Company would sell certain proprietary assets relating to its plasma spray technology and material deposition system and grant a non-exclusive license to use certain of the Company’s related intellectual property as more fully described in the Agreement, for an aggregate purchase price of $0.9 million. The purchase price was payable in several installments and contingent upon certain performance metrics and other milestones.

The Company received payments under the Agreement in the amount of $0.6 million which had been reflected as “deposit from purchaser” in the accompanying consolidated balance sheet as of December 31, 2023.

During the three months ended September 30, 2024, the Company and the purchaser amended the agreement to reduce the purchase price to $0.8 million and the purchaser accepted the equipment. The Company recorded a net gain of sale of equipment of $0.6 million for the three and nine months ended September 30, 2024 representing the purchase price less the net book value of the assets sold.

The Company fulfilled its final orders for MesoScribe products during the three months ended September 30, 2024 and recorded revenues of $0.7 million. The Company has ceased operations of MesoScribe as of September 30, 2024.

The revenue and net income (loss) of MesoScribe were $0.7 million and $1.1 million, respectively, for the three months ended September 30, 2024 (includes final sales and gain on sale of equipment) and $0.8 million and $1.0 million, respectively, for the nine months ended September 30, 2024.

The total assets and total liabilities of the MesoScribe subsidiary were $0.8 million and $0.1 million, respectively, as of September 30, 2024 and $0.2 million and $0.7 million as of December 31, 2023.

During the nine months ended September 30, 2023, the Company recorded an impairment charge of $0.1 million for certain equipment of MesoScribe based on its decision to cease the remaining operations in 2024.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Except for historical information contained herein, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements involve known and unknown risks and uncertainties that may cause our actual results or outcomes to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on various factors and are derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Important assumptions and other factors that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to:

● uncertainty as to our future growth and return to consistent profitability; ● uncertainty as to the general state of the silicon ~~carbibe~~carbide wafer end market; ● competition in our existing and potential future product lines of business, including our aerospace equipment and PVT150 / PVT200 systems; ● uncertainty as to our ability to identify and develop new products for growth markets; ● our ability to obtain financing on acceptable terms if and when needed; ● our ability to attract and retain key personnel and employees; ● uncertainty as to changes to international trade policies including the imposition of tariffs; and ● uncertainty as to our ability to adequately obtain raw materials and on commercially reasonable terms.

Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. We assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements. Past performance is no guaranty of future results.

You should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made. When used with this Report, the words “believes”, “anticipates”, “expects”, “estimates”, “plans”, “intends”, “will” and similar expressions are intended to identify forward-looking statements.

2120

Executive Summary

WeCVD ~~have~~has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. ~~CVD~~We ~~designs,~~are ~~develops, and~~headquartered ~~manufactures~~in aCentral ~~broad range of chemical vapor deposition~~Islip, ~~gas~~New ~~control,~~York ~~and~~with ~~other~~our ~~state-of-the-art~~SDC ~~equipment~~division ~~and~~located ~~process~~in ~~solutions used to develop~~Saugerties, ~~produce~~New ~~and grow materials and coatings for commercial applications and research~~York. ~~To learn more about CVD’s systems and offerings, visit www.cvdequipment.com.~~

~~During~~We ~~the~~design, ~~three~~develop, and ~~nine~~manufacture ~~months~~a ~~ended~~broad ~~September~~range 30of equipment used to develop and produce materials and coatings for the aerospace, ~~2024~~compound semiconductor, semiconductor, aerospace, battery energy storage markets as well as advanced industrial applications, and ~~2023:~~research.

●·We conduct ~~Revenue~~our ~~increased~~business bythrough ~~$2.0~~three ~~million~~reportable orsegments: ~~31.4%~~(i) ~~for~~CVD ~~the~~Equipment ~~third~~that ~~quarter~~designs asand ~~compared~~manufactures tochemical ~~the~~vapor ~~prior year period due to increases in revenues from aerospace contracts in progress~~deposition, ~~our~~physical vapor ~~SDC~~transport ~~segment~~ and ~~final~~thermal ~~sales~~process byequipment; ~~our~~(ii) ~~MesoScribe~~SDC ~~subsidiary~~that ~~partially~~designs ~~offset by lower revenues of spare parts. ● Gross margin increased by $0.2 million or 14.8% in the third quarter as compared to the prior period quarter due to higher revenues~~ and ~~improved~~manufactures ~~margins on contracts in process offset by a $1.0 million non~~ultra-~~cash~~high ~~charge~~purity togas ~~reduce~~and ~~certain~~chemical ~~PVT~~delivery inventory to net realizable value. ● Total bookings for the third quarter of 2024 were approximately $4.1 million as compared to $4.4 million in the prior year period. ● Total bookings for the nine months ended September 30, 2024 were $21.0 million as compared to $15.8 million in the prior year period. ● Bookings in 2024 included a $10.0 million multisystem order from an industrial customer that will be used to deposit a silicon carbide protective coating on OEM components. ● Bookings in 2023 included $8.7 million of multiple control systems; ~~orders from an aerospace customer~~ and a(iii) ~~battery~~MesoScribe ~~nanomaterial production system of $1.8 million. ● During the first quarter of 2024, we received an order from an additional customer for our new PVT200 system~~ that ~~will~~provided beproducts ~~used~~related to ~~grow~~advanced ~~silicon~~materials ~~carbide~~and ~~crystals for the manufacture of 200 mm wafers~~coatings. This unit was shipped to the customer in the third quarter of 2024. ● Our backlog increased from $18.4 million at December 31, 2023 to $19.8 million at September 30, 2024. ● Cash balance at September 30, 2024 was $10.0 million as compared to $14.0 million at December 31, 2023

During the quarter ended March 31, 2025:

	●	Revenue increased by $3.3 million or 69.0% as the first quarter of 2025 benefited from revenues from aerospace and industrial contracts in progress and from our SDC segment.

	●	Gross margin increased by $1.8 million or 238.1% due to overall higher revenues, improved absorption of overhead and improved margins on contracts in progress.

	●	Total bookings for the first quarter of 2025 were approximately $2.8 million as compared to bookings of $13.6 million in the first quarter of 2024.

	●	Bookings in the first quarter of 2024 included a $10.0 million multisystem order from an industrial customer that will be used to deposit a silicon carbide protective coating on OEM components.

	●	Backlog declined from $19.4 million at December 31, 2024 to $13.8 million at March 31, 2025 due to lower orders in our CVD Equipment segment. In early April 2025, we received a $1.2 million semiconductor system order.

	●	Cash and cash equivalents at March 31, 2025 was $10.2 million.

Business Update

Our core strategy is to focus on growth end markets in applications related to aerospace, ~~the~~microelectronics including markets related to the “electrification of everything,” and industrial applications. With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and to produce specialty coatings for advanced high temperature environments.

2221

The phrase “electrification of everything” refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles (“EVs”), and many other applications.

~~Our~~In ~~current~~February ~~strategy~~2024, ~~yielded~~we ~~multisystem~~received ~~orders~~an oforder ~~PVT150~~from ~~equipment~~a incustomer ~~2023~~for ~~and~~our ~~2022~~PVT200 ~~that~~system ~~were~~used ~~delivered~~ to ~~one~~grow ~~company~~silicon ~~that~~carbide ~~manufactures~~crystals for the manufacture of ~~silicon~~200 ~~carbide~~mm wafers. ~~Although~~We weshipped ~~continue~~this unit to ~~invest~~the customer in ~~our vision for~~ the ~~“electrification~~third quarter of ~~everything,”~~2024. wePVT150 ~~have~~/ ~~observed lower-than-anticipated~~PVT200 ~~industrywide~~systems ~~electric~~may ~~vehicle~~provide ~~adoption~~us ~~rates~~with ~~which~~standard product ~~may~~offerings ~~reduce~~to ~~demand~~continue ~~for~~to ~~silicon~~support ~~carbide~~the ~~and~~EV ~~impact~~focused ~~sales~~market ofas ~~our PVT~~well ~~systems.~~as Inenergy ~~addition~~storage, ~~the~~power ~~recent~~conversion ~~global~~and ~~over~~power ~~capacity~~transmission. ofWe plan ~~150~~to mmevaluate ~~silicon~~the ~~carbide~~market ~~wafers~~conditions ~~has~~and ~~reduced~~opportunities ~~the~~to ~~market~~expand ~~for~~our ~~150~~product mmofferings ~~silicon carbide~~in ~~growth~~the ~~systems~~power electronics market.

In February 2024, we received ana multisystem order from an ~~additional~~industrial customer for ~~our~~approximately ~~new~~$10.0 ~~PVT200~~million ~~system~~that ~~used~~will tobe ~~grow~~used ~~silicon carbide crystals~~ for ~~the~~depositing ~~manufacture~~a ofsilicon ~~200~~carbide mmprotective ~~wafers.~~coating ~~This~~on ~~represents~~OEM ~~our~~components ~~second~~and ~~customer~~the ~~for~~units ~~our~~are ~~PVT~~expected ~~equipment. This customer plans~~ to ~~evaluate~~be ~~our~~delivered ~~equipment for~~over ~~potential~~18 ~~additional purchases of PVT equipment. We shipped this unit~~ to ~~the~~24 ~~customer~~months ~~in the third quarter of 2024~~period.

WeIn ~~have~~November ~~also~~2024, we received ~~orders~~a follow-on order from ~~OneD~~an ~~Battery~~aerospace ~~Materials~~company infor ~~2023,~~an aadditional ~~company~~CVI 3500 system that iswill ~~engaged~~be inused ~~providing~~by ~~battery~~our ~~nanomaterials~~customer to produce ceramic matrix composite materials.

Both technologies are essential for the support of the EV market. These systems should provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission. We plan to evaluate opportunities to expand our product offerings in the power electronics market to build off the introduction of the PVT150 and PVT200 systems. We are also evaluating our ability to provide other equipment used in the manufacturing process of silicon carbide wafers.

During 2022, we also received an order from an aerospace company for a production chemical vapor infiltration (CVI) system that will be used to manufacture CMCs for gas turbine jet engines. In 2023, we received an order from the same aerospace company for an additional three CVI systems and in November 2024 we received an order for an additional CVI system.

In February 2024, we received a multisystem order from an industrial customer for approximately $10.0 million that will be used for depositing a silicon carbide protective coating on OEM components.

We have generally gained new customers through our industry reputation, as well as print advertising and trade show attendance. We have increased the number of trade shows and industry conferences we attend.

~~Historically,~~The ~~our~~global ~~orders~~economy ~~have~~continues ~~fluctuated~~to ~~based~~confront onthe ~~end~~impacts ~~user~~of ~~market~~recent ~~conditions,~~executive ~~adoption~~orders ofby ~~our~~the ~~new~~U.S. ~~products~~federal ~~and~~administration ~~acceptance~~regarding oftariffs ~~our~~on ~~products. The order~~imports ~~rate~~from asvarious ~~well~~countries asincluding ~~other~~the ~~factors~~European inUnion, ~~our~~Canada, ~~manufacturing~~Mexico, ~~process~~and ~~ultimately~~China ~~impacts~~and the ~~timing~~potential impact of ~~revenue~~actions ~~recognition,~~taken ~~whether~~by ~~accounted~~other ~~for~~countries ~~over~~in ~~time~~response orto atthe aannounced ~~point in time~~tariffs. ~~Accordingly,~~Tariffs ~~orders~~may ~~received~~make ~~from~~our ~~customers~~products ~~and~~less ~~the~~cost ~~corresponding~~competitive ~~revenue~~and ~~recognized~~reduce ~~may~~gross ~~fluctuate from quarter to quarter~~margins. The ~~sales~~impact ~~cycle~~on ~~for~~ our business ~~equipment~~related isto ~~typically~~these ~~six~~or ~~months,~~any ~~but~~other ~~can~~tariffs ~~range~~that upmay tobe ~~twelve to eighteen months~~imposed, ~~depending on~~is ~~the~~uncertain ~~application~~ and ~~product~~depends ~~stage~~on ofmultiple ~~the~~factors, ~~equipment.~~including ~~The~~the ~~order cycle to manufacture~~ duration and ~~test~~expansion aof ~~system~~current ~~also~~tariffs, ~~will~~future ~~vary~~changes ~~from six~~ to ~~eighteen months~~tariff ~~for~~rates, ~~our~~scope ~~CVD~~or ~~Equipment~~enforcement, ~~segment~~retaliatory ~~and~~measures ~~two~~by toimpacted ~~twelve~~trade ~~months for our SDC segment~~partners, ~~depending on system complexity~~ and ~~magnitude~~related ofinflationary ~~the system~~effects.

23Historically, our orders have fluctuated based on end user market conditions, adoption of our new products and acceptance of our products. The current economic uncertainty regarding tariffs may potentially affect our future order rate. The order rate as well as other factors in our manufacturing process ultimately impacts the timing of revenue recognition, whether accounted for over time or at a point in time. Accordingly, orders received from customers and the corresponding revenue recognized may fluctuate from quarter to quarter. The sales cycle for our equipment is typically six months, but can range up to twelve to eighteen months, depending on the application and product stage of the equipment. The order cycle to manufacture and test a system also will vary from six to eighteen months for our CVD Equipment segment and two to twelve months for our SDC segment, depending on system complexity and magnitude of the system.

Results of Operations

~~Three~~Quarters ~~Months~~ Ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the ~~three~~quarters ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

	Three months ended September 30
	March 31
	2024			2023			Change			Percent
	2025			2024			Change			Percent
Revenue	$	8,~~194~~316		$	64,~~234~~922		$	13,~~960~~394			3169.40	%
Cost of revenue		65,~~359~~621			4,~~636~~125			1,~~723~~496			3736.23	%
Gross profit		12,~~835~~695			~~1,598~~797			~~237~~1,898			14238.81	%
Gross profit percentage		2232.4	%		2516.62	%
Operating expenses:
Research and development		~~644~~781			~~704~~746			~~(60~~35	)		(84.57	%)
Selling		~~423~~420			~~434~~419			~~(11~~1	)		(20.52	%)
General and administrative		1,~~316~~225			1,~~450~~255			(~~134~~30	)		(9.2.4	%)
Gain on sale of equipment		(625	)		-			(625	)		*
Total operating expenses		2,426			2,420			6			0.2	%
Total operating expenses		1,758			2,588			(830	)		(32.1	%)
Operating income (loss)		269			(1,623	)		1,892			*
Operating income (loss)		77			(990	)		1,067			*
Other income (expense):
Interest income		~~136~~110			~~173~~157			(3747	)		(2129.49	%)
Interest expense		(53	)		(6	)		13			(1650.70	%)
Other income		-			70			(70	)		*
Total other income, net		107			151			(44	)		(29.1	%)
Total other income, net		131			237			(106	)		(44.7	%)
Income before income taxes		376			(1,472	)		1,848			*
Income (loss) before income taxes		208			(753	)		961			*
Income tax expense		16			-			16			100.0	%
Income tax expense		5			-			5			*
Net income (loss)	$	360		$	(1,472	)	$	1,832			*
Net income (loss)	$	203		$	(753	)	$	956			*
* Not meaningful
Revenue
CVD Equipment	$	6,314		$	2,947		$	3,367			114.3	%
SDC		2,142			1,931			211			10.9	%
MesoScribe		22			59			(37	)		(62.7	%)
Intersegment sales elimination		(162	)		(15	)		(147	)		*
Total	$	8,316		$	4,922		$	3,394			69.0	%

* Not meaningful

2423

	Three months ended September 30
	2024			2023			Change		Percent
Revenues
CVD Equipment	$	5,684		$	4,795		$	889		18.5	%
SDC		2,005			1,572			433		27.5	%
CVD Materials		661			90			571		634.4	%
Intersegment sales elimination		(156	)		(223	)		67		*
Total	$	8,194		$	6,234		$	1,960		31.4	%

* Not meaningful

Revenue

Our revenue for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 was $8.23 million compared to $64.29 million for the ~~three~~quarter ~~months~~ ended ~~September 30~~March 31, ~~2023~~2024, an increase of 3169.40%.

The increase in revenue versus the prior year period was primarily attributable to higher revenue of $03.94 million from ~~our~~the CVD Equipment segment,. aRevenue ~~$0.4~~from ~~million~~one ~~increase~~industrial incustomer ~~revenue~~for ~~from~~the ~~our~~quarter ~~SDC~~ended ~~segment~~March 31, ~~and~~2025 arepresented $041.61% ~~million~~of ~~increase~~our ~~from~~total ~~our~~revenues and 54.1% of CVD ~~Materials~~Equipment segment revenues. Revenue from one aerospace customer for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 represented 2914.10% of our total revenues and 4218.05% of CVD Equipment segment revenues.

The revenue contributed by ~~the~~our CVD Equipment segment for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 of $56.73 million (net of intersegment sales of $4,000) represented 6975.39% of overall revenue as compared to $42.89 million or 7659.39% of overall revenue for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2023~~2024. The increase in external revenues of $03.94 million or 18114.51% resulted principally from increases in revenues from aerospace and industrial contracts in progress ~~offset~~and infrom ~~part~~the bysales ~~lower revenue~~of ~~for~~parts ~~PVT150/200 systems~~ and ~~spare parts~~spares.

~~There~~The ~~were~~revenue ~~certain~~contributed ~~customer~~by ~~contracts~~our inSDC ~~2023~~segment ~~where~~for the ~~revenue~~quarter ~~was~~ended toMarch be31, ~~recognized~~2025 atof ~~the~~$2.0 ~~point~~million in(net ~~time~~of ~~when~~intersegment ~~the~~sales ~~equipment~~of is$0.2 million) ~~transferred~~represented to23.9% ~~the~~of ~~customer~~overall ~~based~~revenue onas ~~contract~~compared ~~terms~~to $1.9 ~~These~~million ~~contracts~~(net ~~were~~of ~~modified~~intersegment ~~during~~sales ~~the~~of ~~three~~$15,000) ~~months~~or ~~ended~~38.9% ~~September~~of ~~30,~~overall ~~2023 such~~revenue ~~that~~ for the ~~revenue~~year ~~under~~quarter ~~these~~ended ~~contracts~~March is31, ~~now being recognized over time using the input method~~2024. ~~The~~External ~~Company~~revenue ~~and CVD Equipment segment revenues~~ for ~~the~~our ~~three~~SDC ~~months~~segment ~~ended~~increased ~~September~~by ~~30, 2023 include~~ $0.81 million ofor ~~revenue~~3.5% ~~that was deferred~~ as ofcustomer ~~June~~demand ~~30, 2023~~for ~~and~~gas ~~recognized~~delivery onsystem ~~the~~products ~~date~~was ofconsistent with the ~~contract~~prior ~~modification~~year quarter.

~~The~~Our ~~revenue~~order ~~contributed~~backlog byat ~~the~~March ~~SDC~~31, ~~segment~~2025 ~~for~~was ~~the~~approximately ~~three~~$13.8 ~~months~~million ~~ended~~as ~~September~~compared 30to December 31, 2024 of $219.04 million ~~represented 22~~.6% ofOur ~~overall~~order ~~revenue~~backlog asat ~~compared~~March to31, 2025 consists of approximately $112.63 million orrelated ~~22.3%~~to remaining performance obligations of ~~overall~~contracts ~~revenue~~in ~~for~~progress and not yet started and the ~~three~~balance ~~months~~of ~~ended~~approximately ~~September~~$1.5 ~~30,~~million ~~2023~~represents other orders received from customers. ~~Revenue~~As ~~for~~of ~~our~~March ~~SDC~~31, ~~segment~~2025, ~~increased~~one byindustrial $0customer represented 32.47% ~~million~~of orour 27backlog and one aerospace customer represented 30.51% ~~due~~of toour ~~higher~~backlog. ~~demand~~Historically, ~~for~~our ~~gas~~revenues and ~~delivery~~orders ~~system~~have ~~products~~fluctuated based on changes in order rate as ~~compared~~well toas other factors in our manufacturing process that impacts the ~~prior~~timing of ~~period~~revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

The revenue contributed by the CVD Materials segment for the three months ended September 30, 2024 of $0.6 represented 8.1% of our overall revenue as compared to $0.1 million or 1.4% of overall revenue for the three months ended September 30, 2023. The increase of $0.6 million was due to the final sales to an aerospace company and MesoScribe ceased operations as of September 30, 2024.

Our order backlog at September 30, 2024 was approximately $19.8 million as compared to December 31, 2023 of $18.4 million. Our backlog at September 30, 2024 consists of approximately $17.0 million related to remaining performance obligations of contracts in progress and not yet started that will be recognized over time with the balance of approximately $2.8 million representing other orders received from customers. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impact the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

Gross Profit

Gross profit for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 was $12.87 million, with a gross profit margin of 2232.4%, compared to a gross profit of $10.6 8 million and a gross profit margin of 2516.62% for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2023~~2024. The increase in gross profit of $01.2 9 million was primarily the ~~due~~result toof higher overall revenues, improved absorption of overhead as well as improved margins on ~~CVD~~ contracts in progress ~~and~~as ~~final MesoScribe sales that~~compared ~~was partially offset by a $1.0 million non-cash charge~~ to ~~reduce~~contracts ~~certain~~in ~~PVT~~progress ~~inventory~~in tothe ~~net~~prior ~~realizable~~year ~~value~~quarter.

Research and Development

For the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025, research and development expenses were $0.68 million, or 7.9.4% of revenue as compared to $0.7 million, or 1115.32% ~~of revenue~~ for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2023,~~2024. aThe ~~decrease~~increase ofin ~~$0.1~~2025 ~~million~~of ~~or 8~~4.57%. ~~The decrease in 2024~~ was ~~due~~the toresult ~~more~~of ~~engineering~~less ~~time~~amounts ~~being~~ charged to cost of revenue during ~~based~~the ~~on contracts in progress~~quarter.

General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to ~~costs~~cost of revenue when work is performed directly on a customer order.

Selling

Selling expenses were $0.4 million or 5.21% of ~~the~~ revenue for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 aswas ~~compared~~consistent towith such expenses of $0.4 million or 78.05% of revenue for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2023~~2024. ~~There were no significant changes in selling expenses as compared to the prior period quarter.~~

General and Administrative

General and administrative expenses ~~for the three months ended September 30, 2024~~ were $1.32 million or 1614.17% of revenue ~~compared to $1.4 million or 23.3% of revenue~~ for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2023.~~2025 ~~The decrease in 2024~~ was ~~due~~consistent ~~principally~~with tosuch ~~a reduction~~ expenses of ~~employee compensation~~$1.3 ~~and~~million ~~lower~~or ~~professional~~25.5% ~~fees~~of asrevenue ~~compared~~for to the ~~prior~~quarter ~~year~~ended ~~quarter~~March 31, 2024.

~~Gain~~Other onIncome, ~~Sale of Equipment~~Net

~~During~~Other ~~the~~income, ~~three~~net ~~months~~was $107,000 for the quarter ended ~~September~~March 3031, ~~2024,~~2025 weas ~~recognized~~compared ato ~~gain~~other income, net of $0151,000 for the quarter ended March 31, 2024.6 ~~million~~Other onincome ~~the~~consists ~~sale~~principally of ~~equipment~~interest ~~related~~earned toon ~~our~~amounts ~~MesoScribe~~invested ~~subsidiary representing~~in ~~the~~U.S. ~~sale~~treasury ~~price~~securities ofand ~~$0.8~~was ~~million~~lower ~~less~~than the prior ~~costs~~period ofdue ~~the~~to ~~equipment~~less ~~sold~~funds ofavailable ~~$0.2~~for ~~million~~investment.

Other Income (Expense), Net

Other income (expense), net was $0.1 million and $0.2 million for three months ended September 30, 2024 and 2023, respectively. Other income is principally interest income on treasury bills. Interest income was lower than the prior period due to less amounts invested and lower interest rates.

Income Taxes

We continue to evaluate the potential utilization of our net deferred tax asset, which has been fully reserved for, on a quarterly basis, by by reviewing our economic models, including projections of future operating results.

Nine Months Ended September 30, 2024 versus September 30, 2023

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

	Nine months ended September 30
	2024			2023			Change			Percent
Revenue	$	19,462		$	19,998		$	(536	)		(2.7	%)
Cost of revenue		15,158			14,579			579			4.0	%
Gross profit		4,304			5,419			(1,115	)		(20.6	%)
Gross profit percentage		22.1	%		27.1	%
Operating expenses:
Research and development		2,055			1,865			190			10.2	%
Selling		1,268			1,281			(13	)		(1.0	%)
General and administrative		4,057			4,410			(353	)		(8.0	%)
Gain on sale of equipment		(625	)		-			(625	)		*
Loss on disposition of Tantaline		-			162			(162	)		(100.0	%)
Impairment charge		-			111			(111	)		(100.0	%)
Total operating expenses		6,755			7,829			(1,074	)		(13.7	%)
Operating loss		(2,451	)		(2,410	)		(41	)		1.7	%
Other income (expense):
Interest income		438			400			38			9.5	%
Interest expense		(14	)		(18	)		4			(22.2	%)
Foreign exchange income		-			42			(42	)		(100.0	%)
Other income		2			91			(89	)		(97.8	%)
Total other income, net		426			515			(89	)		(17.3	%)
Loss before income taxes		(2,025	)		(1,895	)		(130	)		6.9	%
Income tax expense		5			11			(6	)		(54.5	%)
Net loss	$	(2,030	)	$	(1,906	)	$	(124	)		6.5	%

* Not meaningful

	Nine months ended September 30
	2024			2023			Change			Percent
Revenue
CVD Equipment	$	12,738		$	13,774		$	(1.036	)		(7.5	%)
SDC		6,252			5,679			573			10.1	%
CVD Materials		775			1,099			(324	)		(29.5	%)
Intersegment sales elimination		(303	)		(554	)		251			*
Total	$	19,462		$	19,998		$	(536	)		(2.7	%)

* Not meaningful

Revenue

Our revenue for the nine months ended September 30, 2024 was $19.5 million compared to $20.0 million for the nine months ended September 30, 2023, a decrease of 2.7%.

The decrease in revenue versus the prior year period was primarily attributable to lower revenues of $1.0 million from our CVD Equipment segment and $0.3 million from our CVD Materials segment, offset in part by a $0.6 million increase in revenue from our SDC segment. Revenue from one aerospace customer for the nine months ended September 30, 2024 represented 31.2% of our total revenues and 47.7% of CVD Equipment segment revenues.

The revenue contributed by the CVD Equipment segment for the nine months ended September 30, 2024 of $12.7 million represented 65.2% of overall revenue as compared to $13.8 million or 68.4% of overall revenue for the nine months ended September 30, 2023. The decrease in revenues of $1.0 million or 7.5% resulted principally from lower PVT150 systems and revenue from spares and parts offset by increases in revenues from aerospace contracts in progress.

The revenue contributed by the SDC segment for the nine months ended September 30, 2024 of $6.3 million represented 30.6% of overall revenue as compared to $5.7 million or 26.1% of overall revenue for the nine months ended September 30, 2023. Revenue for our SDC segment increased by $0.6 million or 10.1% due to higher demand for gas delivery system products as compared to the prior period.

The revenue contributed by the CVD Materials segment for the nine months ended September 30, 2024 of $0.8 million represented 4.0% of our overall revenue as compared to $1.1 million or 5.5% of overall revenue for the nine months ended September 30, 2023. The decrease of $0.3 million was principally due to the disposition of Tantaline in May 2023 and the wind down of MesoScribe’s operations.

Gross Profit

Gross profit for the nine months ended September 30, 2024 was $4.3 million, with a gross profit margin of 22.1%, compared to a gross profit of $5.4 million and a gross profit margin of 27.1% for the nine months ended September 30, 2023. The decrease in gross profit of $1.1 million was primarily the result of lower revenue and lower gross margins on CVD Equipment contracts and a $1.0 million non-cash charge to reduce certain PVT inventory to net realizable value partially offset by improved in gross margins on SDC revenues and final MesoScribe sales.

Research and Development

For the nine months ended September 30, 2024, research and development expenses were $2.1 million, or 10.6% of revenue as compared to $1.9 million, or 9.3% for the nine months ended September 30, 2023, an increase of $0.2 million or 10.2%. The increase in 2024 was the result of lower costs allocated to cost of revenue and a recruitment fee for engineering staff.

General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to costs of goods sold when work is performed directly on a customer order.

Selling

Selling expenses were $1.3 million or 6.5% of revenue for the nine months ended September 30, 2024 as compared to $1.3 million or 6.4% for the nine months ended September 30, 2023. There were no significant changes in selling expenses as compared to the prior period.

General and Administrative

General and administrative expenses for the nine months ended September 30, 2024 were $4.1 million or 20.8% of revenue compared to $4.4 million or 22.1% of revenue for the nine months ended September 30, 2023, a decrease of $0.4 million. The decrease in expenses was principally due to lower salaries of $0.1 million due to sale of Tantaline, lower bonuses and commissions of $0.1 million and lower professional fees of $0.1 million, offset by higher stock-based compensation expense of $0.1 million.

Gain on Sale of Equipment

During the three months ended September 30, 2024, we recognized a gain of $0.6 million on the sale of equipment related to our MesoScribe subsidiary representing the sale price of $0.8 million less the costs of the equipment sold of $0.2 million.

Loss on disposition of Tantaline

This item represents the net loss on the sale of our Tantaline subsidiary including professional fees.

Impairment Charge

This item represents the loss on the impairment of certain assets of MesoScribe based on the decision to dispose of the subsidiary.

Other Income (Expense), Net

Other income (expense), net was $0.4 million and $0.5 million for the nine month periods ended September 30, 2024 and 2023, respectively. Other income is principally interest income on treasury bills. The reduction in other income, net was due to foreign exchange gain recorded and interest income on the employee retention credit received in 2023.

Income Taxes

We continue to evaluate the potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2024~~2025, aggregate working capital was $1314.35 million as compared to aggregate working capital of $1413.38 million at December 31, ~~2023~~2024. Cash and cash equivalents at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 were $10.02 million and $1412.06 million, respectively.

Net cash used in operating activities for the nine months ended September 30, 2024 was $3.7 million. This decrease was principally due to the net loss of $2.0 million, an increase in accounts receivable of $3.2 million, reduction in contract liabilities of $1.6 million offset by a reduction in inventory of $0.6 million and non-cash items of $2.5 million including a provision for excess and obsolete inventory of $1.0 million..25

Net cash used in ~~investing~~operating activities for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 ~~consisted~~was of$2.3 ~~capital~~million. ~~expenditures~~This decrease was principally due to the increase in contract assets of $3.0 million and a decrease in contract liabilities of $1.23 million ~~related~~ due to ~~purchases~~revenue recognized on contracts in progress. These decreases were offset by net income of ~~equipment~~$0.4 million, ~~building~~non-cash ~~improvements~~expense items of $0.4 million and ~~software~~a decrease in accounts receivable of $0.7 million.

Net cash used in ~~financing~~investing activities for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2024~~2025 consisted of ~~repayments~~capital expenditures of $~~0.1~~29,000 ~~million~~related ~~for~~to anpurchases of property and equipment ~~loan~~ and investment in a captive insurance company related to our health insurance program of $51,000.

WeNet ~~believe that our~~ cash ~~and~~used ~~cash~~in ~~equivalent~~financing ~~positions~~activities ~~and our projected cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements~~ for the ~~next~~quarter ~~twelve~~ended ~~months~~March ~~from~~31, ~~the~~2025 ~~filing~~consisted of ~~this~~repayments ~~Form~~of ~~10-Q.~~an Weequipment ~~will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs~~loan.

31We believe that our cash and cash equivalent positions and our projected cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months from the filing of these condensed consolidated financial statements included in this Form 10-Q. We will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs.

Critical Accounting Estimates

~~This~~Use ~~discussion and analysis~~ of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.Estimates

WeThis ~~consider~~discussion anand ~~accounting~~analysis ~~estimate~~of tothe beCompany’s ~~critical~~financial ~~if:~~condition ~~(1)~~and results of operations is based on the ~~accounting~~Company’s ~~estimate~~consolidated financial ~~requires~~statements, uswhich tohave ~~make~~been ~~assumptions~~prepared ~~about~~in ~~matters~~accordance ~~that~~with ~~were highly~~generally ~~uncertain~~accepted ataccounting ~~the~~principles ~~time~~in the ~~accounting~~United ~~estimate~~States ~~was~~of ~~made~~America, or ~~and~~U.S. ~~(2)~~GAAP. ~~changes~~The inpreparation ~~the~~of ~~estimate~~these ~~that~~financial ~~are~~statements ~~reasonably~~requires ~~likely~~us to ~~occur~~make ~~from period~~estimates toand ~~period,~~assumptions orthat ~~use~~affect the reported amounts of ~~different~~assets ~~estimates~~and ~~that~~liabilities, wedisclosure ~~reasonably~~of ~~could~~contingent ~~have~~assets ~~used~~and inliabilities at the ~~current~~date ~~period,~~of ~~would~~the ~~have~~financial astatements ~~material~~and ~~impact~~the reported amounts onof ~~our~~revenue ~~financial~~and ~~condition~~expenses orduring ~~results~~the ofreported ~~operations~~periods.

WeIn ~~believe~~accordance ~~that~~with ofU.S. ~~our~~GAAP, ~~significant~~the ~~accounting~~Company ~~policies,~~bases ~~which~~its ~~are~~estimates ~~described~~on inhistorical ~~the~~experience ~~notes~~and toon ~~the~~various ~~consolidated~~other ~~financial~~assumptions ~~statements,~~ the ~~following~~Company believes ~~accounting~~are ~~policies~~reasonable ~~involve~~under athe ~~greater~~circumstances. ~~degree~~Actual ofresults ~~judgments,~~may ~~estimates~~differ ~~and~~from ~~assumptions~~these ~~and~~estimates ~~are~~under ~~considered~~different ~~critical~~assumptions ~~accounting~~or ~~estimates~~conditions.

We consider the following estimates within our significant accounting policies to be critical because of their complexity and the high degree of judgment involved in maintaining them. See Note 2 – “Summary of Significant Accounting Policies” of our Consolidated Financial Statements for additional information regarding our accounting policies.

Revenue Recognition

We design, manufacture, and sell custom chemical vapor deposition equipment through contractual agreements. These system sales require us to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. We recognize revenue over time by using an input method based on costs incurred as it depicts our progress toward satisfaction of the performance obligation. Under this method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.

Incurred costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work-in-process as required by the project’s engineering design. Cost based input methods of revenue recognition require us to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor, and other system costs. If the estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and can be reasonably estimated.26

32Incurred costs include all direct material and labor costs, and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work-in-process as required by the project’s engineering design. Cost based input methods of revenue recognition require us to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor, and other system costs. If the estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and can be reasonably estimated.

~~There~~We have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years. Historically, we have demonstrated an ability to accurately estimate total revenues and total expenses relating to our long-term contracts. However, there exist many inherent risks and uncertainties in estimating revenues, expenses, and progress toward completion, particularly on larger or or longer-term contracts. ~~Changes~~If inwe ~~estimates~~do ofnot estimate the total sales, related costs, and progress toward completion on such contracts, ~~may significantly impact~~ the estimated gross margins may be significantly impacted, or losses may need to be recognized in future periods. Any such resulting changes in margins or contract losses could be material to our results of operations and financial condition.

Inventory Valuation

Inventories (raw materials, work-in-process and finished goods) are valued at the lower of cost (determined on the first-in, first-out method) or net realizable value. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of inventory, which would be reflected in cost of sales in the period the revision is made. Any such charge could be material to our results of operations and financial condition.

Long-Lived Assets

Long-lived assets consist primarily of property, plant and equipment. Long-lived assets are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists pursuant to the requirements of ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets.” If the asset is determined to be impaired, the impairment loss is measured on the excess of it carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. InIt ~~the~~is ~~future,~~not ifpossible wefor ~~determine~~us ~~that our long-lived assets are impaired, we would be required~~ to ~~recognize~~predict athe ~~charge~~likelihood of inany ~~our~~possible ~~financial~~future ~~statements~~impairments ator, ~~the~~if ~~time of~~ such ~~determination.~~an ~~Any~~impairment ~~such charge~~were ~~could be material~~ to ~~our~~occur, ~~results~~the magnitude of ~~operations~~any ~~and financial condition~~impairment.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 13d-15(e) under the Exchange Act of 1934, as amended, (the “Exchange Act”)). As required by Rule 13a-15(b) under the Exchange Act, our management, under the direction of our Chief Executive Officer and Chief Financial Officer, reviewed and performed an evaluation of the effectiveness of design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Report”).

Based on that review and evaluation, our Chief Executive Officer and Chief Financial Officer, along with others in our management, have determined that as of the end of the period covered by this Report on Form 10-Q the disclosure controls and procedures were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosures.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

Limitations on the Effectiveness of Controls

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

3328

CVD EQUIPMENT CORPORATION

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1.		Legal Proceedings.

		None.

Item 1A.		Risk Factors.

		There have been no other material changes to the risk factors disclosed in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 19, 2025.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.

		None.

Item 3.		Defaults Upon Senior Securities.

		None.

Item 4.		Mine Safety Disclosures.

		Not applicable.

Item 5.		Other Information.

		None.

Item 6.		Exhibits

31.1*		Certification of Emmanuel Lakios, Chief Executive Officer, dated May 13, 2025

31.2*		Certification of Richard Catalano, Chief Financial Officer, dated May 13, 2025

32.1*		Certification of Emmanuel Lakios, Chief Executive Officer, dated May 13, 2025, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Richard Catalano, Chief Financial Officer, dated May 13, 2025, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

None.

101.1**		Inline XBRL Instance.

101.SCH**		Inline XBRL Taxonomy Extension Schema.

101.CAL**		Inline XBRL Taxonomy Extension Calculation.

101.DEF**		Inline XBRL Taxonomy Extension Definition.

101.LAB**		Inline XBRL Taxonomy Extension Labels.

101.PRE**		Inline XBRL Taxonomy Extension Presentation.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Item 1A. Risk Factors.

There have been no other material changes to the risk factors disclosed in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6.	Exhibits
31.1*	Certification of Emmanuel Lakios, Chief Executive Officer, dated November 13, 2024
31.2*	Certification of Richard Catalano, Chief Financial Officer, dated November 13, 2024
32.1*	Certification of Emmanuel Lakios, Chief Executive Officer, dated November 13, 2024, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Richard Catalano, Chief Financial Officer, dated November 13, 2024, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1**	Inline XBRL Instance.
101.SCH**	Inline XBRL Taxonomy Extension Schema.
101.CAL**	Inline XBRL Taxonomy Extension Calculation.
101.DEF**	Inline XBRL Taxonomy Extension Definition.
101.LAB**	Inline XBRL Taxonomy Extension Labels.
101.PRE**	Inline XBRL Taxonomy Extension Presentation.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be filed or part of a registration statement of prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

3529

SIGNATURES

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, this ~~13th~~133h day of ~~November~~May ~~2024~~2025.

CVD EQUIPMENT CORPORATION By: /s/ Emmanuel Lakios Emmanuel Lakios President and Chief Executive Officer (Principal Executive Officer) By: /s/ Richard Catalano Richard Catalano Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

~~By: /s/ Richard Catalano Richard Catalano Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)~~30

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