CVD EQUIPMENT CORP

Previous wording

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 guarantee of future results.

Current wording

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.

Previous wording

CVD Equipment Corporation (“CVD” or the “Company”) has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York.

Current wording

CVD has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York.

Previous wording

On November 6, 2025, our Board of Directors approved a comprehensive strategy to transform our Company in response to the continued fluctuations in our order rates and the recent decline in the bookings of our CVD Equipment division. As part of this strategy, we transitioned our operating model for our CVD Equipment business from vertically integrated fabrication to outsourced fabrication of certain components to reduce our fixed operating costs.

Current wording

On November 6, 2025, our Board of Directors approved a comprehensive strategy to transform our Company in response to the continued fluctuations in our order rates and the recent and continued decline in the bookings of our CVD Equipment division. As part of this strategy, we transitioned our operating model for our CVD Equipment business from vertically integrated fabrication to outsourced fabrication of certain components to reduce our fixed operating costs.

Previous wording

The transformation strategy also includes the exploration of strategic alternatives for businesses and product lines, including the potential sale or divestiture of assets or business lines.

Current wording

The transformation strategy also includes the exploration of strategic alternatives for remaining business and product lines, including the potential sale, divestiture or acquisition of assets or business lines.

Previous wording

On March 23, 2026, we entered into an asset purchase agreement with a third party to sell our SDC business division (“SDC”). The purchase price was approximately $16.9 million in cash, subject to customary purchase price adjustments. The transaction closed on April 1, 2026.

Current wording

On March 23, 2026, we entered into an asset purchase agreement with a third party to sell our SDC business division (“SDC”). The purchase price was approximately $17.4 million in cash, subject to customary purchase price adjustments. The transaction closed on April 1, 2026.

Previous wording

The net cash proceeds from the sale of SDC we received in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million. Following the sale of SDC, CVD Equipment has approximately $23 million in cash and no long-term debt. We expect to use the proceeds from the transaction to enhance financial flexibility and support initiatives aimed at creating shareholder value.

Current wording

The net cash proceeds from the sale of SDC we received in April 2026, after payment of transaction costs and employee related liabilities, were $15.7 million. The Company expects to pay approximately $0.7 million in estimated income taxes related to the gain on the sale of SDC in the third quarter of 2026. Following the sale of SDC, the Company has $23.5 million in cash and no long-term debt as of June 30, 2026. We expect to use the proceeds from the transaction to enhance our financial flexibility as we continue to evaluate strategic opportunities for the CVD Equipment business, its product lines, and our facilities and possible acquisition of other product lines or businesses

Previous wording

We retained ownership of our Saugerties, New York facility, which will be leased to the acquiring company for an initial term of two years.

Current wording

We retained ownership of our Saugerties, New York facility following the sale of SDC, which is leased to the acquiring company for an initial term of two years at fair market value.

Previous wording

With the sale of our SDC business and the cessation of our MesoScribe business in 2024, we have one reportable segment consisting of our CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport and thermal process equipment.

Current wording

With the sale of our SDC business and the cessation of our MesoScribe business in 2024, we have one reportable segment consisting of our CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport and thermal process equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, battery energy storage markets as well as advanced industrial applications, and research.

Previous wording

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.

Current wording

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

Previous wording

We operate in a challenging and uncertain global economic environment. Recent and potential actions by the U.S. federal administration, including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory or responsive actions by other governments, may adversely affect our supply chain, costs, demand for our products, receipt of orders and results of operations. In addition, we face ongoing risks related to geopolitical instability, including conflicts and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.

Current wording

We continue to operate in a challenging and uncertain global economic environment. Recent and potential actions by the U.S. federal administration, including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory or responsive actions by other governments, may adversely affect our supply chain, costs, demand for our products, receipt of orders and results of operations. In addition, we face ongoing risks related to geopolitical instability, including conflicts and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.

Previous wording

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the quarters ended March 31, 2026 and 2025 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages). Unless otherwise specified, our discussion below reflects continuing operations only. Prior period financial information related to discontinued operations has been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation.

Current wording

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the three months ended June 30, 2026 and 2025 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

Previous wording

Our revenue for the quarter ended March 31, 2026, was $1.8 million compared to $6.3 million for the quarter ended March 31, 2025, a decrease of 70.9%.

Current wording

Our revenue for the three months ended June 30, 2026 was $2.0 million compared to $3.4 million for the three months ended June 30, 2025, a decrease of $1.4 million or 42.6%.

Previous wording

Our order backlog at March 31, 2026, was approximately $4.7 million as compared to December 31, 2025, of $4.7 million. Our order backlog at March 31, 2026, consists of approximately $2.6 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $2.0 million represents other orders received from customers. As of March 31, 2026, one industrial customer represented 14.7% of our backlog and one aerospace customer represented 32.8% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

Current wording

Our order backlog at June 30, 2026 was approximately $3.9 million as compared to $4.6 million at March 31, 2026. Our order backlog at June 30, 2026 consists of approximately $2.7 million related to remaining performance obligations of contracts in progress and the balance of approximately $1.1 million represents other orders received from customers. As of June 30, 2026, one aerospace customer represented 36.0% of our backlog.

Previous wording

For the quarter ended March 31, 2026, research and development expenses were $0.7 million, or 39.4% of revenue as compared to $0.7 million, or 11.6% of revenue for the quarter ended March 31, 2025. During the current quarter there was less time charged to contracts in progress that was offset by lower personnel costs.

Current wording

For the three months ended June 30, 2026, research and development expenses were $0.7 million, or 35.1% of revenue as compared to $0.6 million, or 18.8% of revenue for the three months ended June 30, 2025, an increase of $46,000 or 7.2%. The increase in 2026 was the result of less hours being charged to cost of revenue for contracts in progress partially offset by a reduction in personnel.

Previous wording

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 cost of revenue when work is performed directly on a customer order.

Current wording

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.

Previous wording

Selling expenses were $0.2 million or 13.0% of revenue for the quarter ended March 31, 2026 as compared to $0.4 million or 5.8% of revenue for the quarter ended March 31, 2025. The decrease was primarily due to lower personnel costs.

Current wording

Selling expenses were $0.2 million or 11.9% of the revenue for the three months ended June 30, 2026 as compared to $0.3 million or 8.4% of revenue for the three months ended June 30, 2025, a decrease of $50,000 or 17.7%. The decrease was the result of a reduction in personnel.

Previous wording

The decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings. The decrease was partially offset by $0.3 million benefit from a contract modification during the quarter. Revenue from three customers represented 227.2%, 21.7% and 17.3%, respectively, of our total revenues.

Current wording

The decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings. Revenue from three customers represented 39.4%, 20.9% and 14.3% of our revenues, respectively.

Previous wording

Gross profit for the quarter ended March 31, 2026, was $0.1 million, with a gross profit margin of 8.0%, compared to a gross profit of $1.7 million and a gross profit margin of 27.4% for the quarter ended March 31, 2025. The decrease in gross profit of $1.6 million was primarily the result of lower system revenue and lower absorption of fixed manufacturing costs. Gross profit during the quarter ended March 31, 2026, benefited by $0.3 million from a contract modification.

Current wording

Gross profit for the six months ended June 30, 2026 was $0.5 million, with a gross margin of 12.6%, compared to a gross profit of $2.3 million and a gross margin of 23.5% for the six months ended June 30, 2025. The decrease in gross profit of $1.8 million was principally due to lower system revenues.

Previous wording

During the quarter ended March 31, 2026, we recognized a gain of $46,000 on the sale of equipment that was no longer necessary for our business.

Current wording

We recognized a gain of $46,000 on the sale of equipment that was no longer necessary for our business during the first quarter of 2026.

Previous wording

Net cash used in operating activities for the quarter ended March 31, 2026 was $0.9 million. This decrease was principally due to net loss of $1.6 million and a $0.3 million increase in contract assets due to revenue recognized on contracts in progress. These decreases were partially offset by non-cash expense items of $0.3 million, decrease in inventory of $0.3 million, a decrease in accounts receivable of $0.2 million and an increase of $0.3 million in accrued expenses.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was $1.3 million. This use of net cash was principally due to the net loss from continuing operations of $3.1 million, a $0.9 million increase in accounts receivable and a $0.3 million reduction in accounts payable. These decreases were partially offset by non-cash expense items of $0.7 million, decrease in contract assets of $1.7 million, and a decrease in inventory of $0.4 million.

Previous wording

Net cash used in financing activities for the quarter ended March 31, 2026 consisted of the full repayment of an equipment loan in the amount of $181,000. As of March 31, 2026, we have no outstanding debt.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 consisted of the full repayment of an equipment loan in the amount of $181,000. As of June 30, 2026, we have no outstanding debt.

Previous wording

We 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.

Current wording

We 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 financial 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.

Previous wording

This discussion and analysis of our financial condition and results of operations is based on our 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.

Current wording

This 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.

Previous wording

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.

Current wording

In accordance with U.S. GAAP, we base our 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.

Previous wording

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. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.

Current wording

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. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.