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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
   
☐ 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

(Address of principal executive offices)

 

(631) 981-7081

(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 13, 2024.

 

 

 

 
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

 

Index

 

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

 

2
 

 

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 
ASSETS          
Current assets          
Cash and cash equivalents  $10,005   $14,025 
Accounts receivable, net of allowance for credit losses   5,124    1,906 
Contract assets   1,348    1,604 
Inventories   2,558    4,454 
Other current assets   892    852 
Total current assets   19,927    22,841 
           
Property, plant and equipment, net   11,909    12,166 
Other assets   10    18 
Total assets  $31,846   $35,025 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable  $1,393   $1,203 
Accrued expenses   1,903    1,765 
Current maturities of long-term debt   85    81 
Contract liabilities   3,288    4,908 
Deposit from purchaser of MesoScribe assets-Note 11   -    597 
Total current liabilities   6,669    8,554 
           
Long-term debt, net of current portion   203    268 
           
Total liabilities   6,872    8,822 
           
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 
Additional paid-in capital   29,495    28,695 
Accumulated deficit   (4,590)   (2,560)
Total stockholders’ equity   24,974    26,203 
           
Total liabilities and stockholders’ equity  $31,846   $35,025 

 

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

 

3
 

 

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   Nine months ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
                 
Revenue  $8,194   $6,234   $19,462   $19,998 
Cost of revenue   6,359    4,636    15,158    14,579 
                     
Gross profit   1,835    1,598    4,304    5,419 
                     
Operating expenses                    
Research and development   644    704    2,055    1,865 
Selling   423    434    1,268    1,281 
General and administrative   1,316    1,450    4,057    4,410 
Gain on sale of equipment-Note 11   (625)   -    (625)   - 
Loss on disposition of Tantaline   -    -    -    162 
Impairment charge   -    -    -    111 
                     
Total operating expenses, net   1,758    2,588    6,755    7,829 
                     
Operating income (loss)   77    (990)   (2,451)   (2,410)
                     
Other income (expense):                    
Interest income   136    173    438    400 
Interest expense   (5)   (6)   (14)   (18)
Foreign exchange income   -    -    -    42 
Other income   -    70    2    91 
Total other income, net   131    237    426    515 
                     
Income (loss) before income tax   208    (753)   (2,025)   (1,895)
                     
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

 

4
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

Three months ended September 30, 2024 and 2023

 

   Shares   Par Value   Capital   Earnings   Total 
   Common stock  

Additional

paid-in

   (Accumulated
Deficit)
Retained		     
   Shares   Par Value   Capital   Earnings   Total 
                     
Balance at July 1, 2024   6,825,338   $68   $29,229   $(4,793)  $24,504 
Net income   -    -    -    203    203 
Stock-based compensation   56,500    1    266    -    267 
Balance at September 30, 2024   6,881,838   $68   $29,496   $(4,590)  $24,974 
                          
Balance at July 1, 2023   6,779,063   $67   $28,185   $467   $28,719 
Net loss   -    -    -    (753)   (753)
Stock-based compensation   41,320    1    249    -    250 
Exercise of stock options and   issuance of shares   272    -    -    -    - 
Balance at September 30, 2023   6,820,655   $68   $28,434   $(286)  $28,216 

 

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 
Net 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 

 

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

 

5
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

   2024   2023 
   Nine months ended 
   September 30, 
   2024   2023 
Cash flows from operating activities:          
Net loss  $(2,030)  $(1,906)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   801    647 
Depreciation and amortization   476    545 
Gain on sale of equipment   (625)     
Loss on disposition of Tantaline   -    162 
Provision for excess and obsolete inventory   1,253    197 
Impairment charge   -    111 
Changes in assets and liabilities, net of effects of disposition of Tantaline and sale of equipment:          
Accounts receivable   (3,218)   1,163 
Contract assets   256    (725)
Inventories   633    (1,953)
Employee retention credit receivable   -    1,529 
Other current assets   48    (46)
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)
Deposits from purchaser of MesoScribe assets   -    597 
Net cash used in connection with disposition of Tantaline   -    (312)
Net cash used in investing activities   (219)   (23)
           
Cash flows from financing activities          
Payments of long-term debt   (61)   (57)
Proceeds from exercise of stock options   -    76 
Net cash (used in) provided by financing activities   (61)   19 
           
Net decrease in cash and cash equivalents   (4,020)   (80)
           
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  $2   $11 
Interest paid  $14   $18 

 

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

 

6
 

 

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 30, 2024 are not necessarily indicative of the results that can be expected for the year ending December 31, 2024.

 

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements at such date, as filed on Form 10-K with the SEC on March 28, 2024, 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 30, 2024, the Company had $10.0 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.

 

7
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Revenue Recognition

 

In accordance with FASB 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 equipment through contractual agreements. These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from 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 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 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 30, 2024 and 2023.

 

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.

 

8
 

 

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 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 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 30, 2024 and 2023, all system equipment sales were recorded over time by using an input method except for one PVT200 system that was recorded at the point in time when the equipment was transferred to the customer during the third quarter of 2024. There was one system equipment contract in 2023 where the revenue was to be recognized based on point in time. This contract was modified during the three months ended September 30, 2023 such that the revenue under this contract will be recognized over time using an input method based on the revised contract provisions. Revenues for the three months ended September 30, 2023 includes $0.8 million of revenue that was deferred as of June 30, 2023 and recognized on the date of the contract modification.

 

9
 

 

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 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 Accounting Standards

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This update is effective for our annual report for fiscal year 2025, and interim periods thereafter, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

 

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.

 

10
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 3: CONCENTRATION OF CREDIT RISK

 

Cash and cash equivalents

 

The Company had cash and cash equivalents of $10.0 million and $14.0 million at September 30, 2024 and December 31, 2023, 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 $9.4 million and $12.1 million at September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023 was $0 and $1.5 million, respectively.

 

Accounts receivable

 

The Company sells products and services to various companies across several industries in the ordinary course of business. The Company performs ongoing credit evaluations to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience, evaluation of their credit history and review of the invoicing terms of the contract to determine the financial strength of its customers.

 

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.

 

11
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 3: CONCENTRATION OF CREDIT RISK (continued)

 

At September 30, 2024, the accounts receivable balance included amounts from one customer that represented 17.2% of total accounts receivable. As of December 31, 2023, the accounts receivable balance included amounts from three customers that represented 37.6%, 13.0% and 12.8% 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 30, 2024, two customers represented 29.1% and 11.2%, respectively, of revenues, and during the nine months ended September 30, 2024, one customer represented 31.2% 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 30, 2024, and 2023 (in thousands):

 

   Over time   Point in time   Total 
   Three months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $-   $448   $448 
Aerospace   3,814    969    4,783 
Industrial   1,522    368    1,890 
Research   927    146    1,073 
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 

 

12
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 4: REVENUE RECOGNITION (continued)

 

   Over time   Point in time   Total 
   Nine months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $216   $500   $716 
Aerospace   8,285    1,488    9,773 
Industrial   4,324    1,142    5,466 
Research   2,963    544    3,507 
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. Aerospace market includes customers that manufacture aircraft engines. Industrial end market consists of various end customers in diverse industries. Research market principally represents customers such as universities and other research institutions.

 

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.

 

13
 

 

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 30, 2024 (in thousands):

 

      
Costs incurred on contracts in progress  $13,540 
Estimated earnings   6,672 
Costs and estimated earnings on uncompleted contracts   20,212 
Billings to date   (21,693)
Net cost in excess of billings   (1,481)
      
Deferred revenue related to non-system contracts   (459)
Contract liability in excess of contract assets  $(1,940)
Included in accompanying condensed consolidated balance sheet as of September 30, 2024 under the following captions (in thousands):     
Contract assets  $1,348 
Contract liabilities  $3,288 

 

Of the contract liability balances at December 31, 2023 and 2022 of $4.6 million and $4.0 million, respectively, $4.2 million and $3.7 million was recognized as revenue during the nine months ended September 30, 2024 and 2023, respectively.

 

NOTE 5: INVENTORIES

 

Inventories consist of:

 

   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 

 

14
 

 

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 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 30, 2024 and 2023 is as follows:

 

   2024   2023   2024   2023 
  

Three months ended

September 30,

  

Nine months ended

September 30,

 
   2024   2023   2024   2023 
                 
Basic weighted average common shares outstanding   6,825,495    6,789,487    6,817,220    6,787,415 
Dilutive effect of unvested restricted stock   9,132    -    -    - 
Diluted weighted average shares outstanding   6,834,627    6,789,487    6,817,220    6,787,415 

 

At September 30, 2024, stock options to purchase 838,125 shares of common stock were outstanding and 493,750 were exercisable.

 

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.

 

15
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

 

The Company recorded stock-based compensation for the three and nine months ended September 30, 2024 and 2023, that were included in the following line items in our condensed consolidated statements of operations (in thousands):

 

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

 

Stock-based compensation expense for three months ended September 30, 2024 and 2023 included $50,000 and $44,783, respectively, and for the nine month periods ended September 30, 2024 and 2023 included $153,736 and $124,783, respectively, related to restricted stock awards that directors are entitled to receive pursuant to the Director Compensation Plan. Under this plan each of the Company’s 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.

 

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:

 

       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 

 

16
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 8: STOCK-BASED COMPENSATION EXPENSE (continued)

 

The following table summarizes information about the outstanding and exercisable options at September 30, 2024 by ranges of exercise prices:

 

    Options Outstanding   Options Exercisable 
        Weighted   Weighted           Weighted     
        Average   Average           Average     
Exercise   Number   Remaining   Exercise   Intrinsic   Number   Exercise   Intrinsic 
Price Range   Outstanding   Contractual   Price   Value   Exercisable   Price   Value 
$4.00-7.00    459,625    7.1   $4.55   $-    294,125   $6.07   $- 
$7.01-10.00    20,000    3.6   $8.07   $-    20,000   $8.07   $- 
$10.01-13.00    130,000    2.9   $10.62   $-    122,500   $10.55   $- 
$13.01-16.00    228,500    8.5   $14.11   $-    57,125   $14.11   $- 

 

As of September 30, 2024, there was $1.8 million of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 1.3 years.

 

NOTE 9: INCOME TAXES

 

As of September 30, 2024 and December 31, 2023, the Company has provided a full valuation allowance against its net deferred tax assets. This was based on management’s assessment, including the last six years of operating losses, 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, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections of future operating results.

 

NOTE 10: SEGMENT REPORTING

 

The Company operates through three segments: CVD Equipment, Stainless Design Concepts (“SDC”) and CVD Materials. The CVD Equipment segment manufactures and sells chemical vapor deposition, physical vapor 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 factors, of which the primary financial measure is income (loss) before taxes.

 

The Company’s corporate administration activities are reported in the “Corporate” column. These activities primarily include expenses related to certain corporate officers and support staff, expenses related to the Company’s Board of Directors, stock option expense for options and shares of 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 fees.

 

17
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 10: SEGMENT REPORTING (continued)

 

Elimination entries included in the “Eliminations” column represent intersegment revenues and cost of revenues that are eliminated in consolidation. Intersegment sales by the SDC segment to the CVD Equipment segment for the three months ended September 2024 and 2023 were $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.

 

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):

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
 Assets  $27,270   $3,805   $836   $(65)  $-   $31,846 
                               
Revenue  $5,681   $2,005   $661   $(153)  $-   $8,194 
Operating (loss) income   *(736)   538    **1,104    18    (847)   77 
Pretax (loss) income   *(741)   538    **1,104    18    (711)   208 
Depreciation and amortization  $157   $12   $-   $-   $-   $169 
Purchase of property, plant & equipment  $30   $7   $-   $-   $-   $37 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

18
 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 10: SEGMENT REPORTING (continued)

 

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

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
                         
Revenue  $12,737   $6,252   $775   $(302)  $-   $19,462 
Operating (loss) income   *(2,884)   1,884    **1,034    28    (2,513)   (2,451)
Pretax (loss) Income   *(2,894)   1,884    **1,034    28    (2,075)   (2,025)
Depreciation and amortization  $441   $35   $-   $-   $-   $476 
Purchase of property, plant & equipment  $209   $10   $-   $-   $-   $219 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

***Includes loss on sale of Tantaline of $0.2 million and impairment charge related to MesoScribe fixed assets of $0.1 million – see Note 11.

 

19
 

 

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.

 

20
 

 

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 profitability;

     
  ● uncertainty as to the general state of the silicon carbibe wafer end market;
     
  ●

competition in our existing and potential future product lines of business, including our 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; 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.

 

21

 

 

Executive Summary

 

We have served the advanced materials markets with chemical vapor and thermal process equipment for over 40 years. CVD designs, develops, and manufactures a broad range of chemical vapor deposition, gas control, and other state-of-the-art equipment and process solutions used to develop, produce and grow materials and coatings for commercial applications and research. To learn more about CVD’s systems and offerings, visit www.cvdequipment.com.

 

During the three and nine months ended September 30, 2024 and 2023:

 

●· Revenue increased by $2.0 million or 31.4% for the third quarter as compared to the prior year period due to increases in revenues from aerospace contracts in progress, our SDC segment and final sales by our MesoScribe subsidiary partially 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 margins on contracts in process offset by a $1.0 million non-cash charge to reduce certain PVT 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 systems orders from an aerospace customer and a battery 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 be used to grow silicon carbide crystals for the manufacture of 200 mm wafers. 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

 

Business Update

 

Our core strategy is to focus on growth end markets in applications related to aerospace, 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.

 

22

 

 

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 current strategy yielded multisystem orders of PVT150 equipment in 2023 and 2022 that were delivered to one company that manufactures silicon carbide wafers. Although we continue to invest in our vision for the “electrification of everything,” we have observed lower-than-anticipated industrywide electric vehicle adoption rates which may reduce demand for silicon carbide and impact sales of our PVT systems. In addition, the recent global over capacity of 150 mm silicon carbide wafers has reduced the market for 150 mm silicon carbide growth systems.

 

In February 2024, we received an order from an additional customer for our new PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. This represents our second customer for our PVT equipment. This customer plans to evaluate our equipment for potential additional purchases of PVT equipment. We shipped this unit to the customer in the third quarter of 2024.

 

We have also received orders from OneD Battery Materials in 2023, a company that is engaged in providing battery nanomaterials.

 

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, our orders have fluctuated based on end user market conditions, adoption of our new products and acceptance of our products. 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.

 

23

 

 

Results of Operations

 

Three Months Ended September 30, 2024 and 2023

 

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

 

  

Three months ended

September 30

     
   2024   2023   Change   Percent 
Revenue  $8,194   $6,234   $1,960    31.4%
Cost of revenue   6,359    4,636    1,723    37.2%
                     
Gross profit   1,835    1,598    237    14.8%
Gross profit percentage   22.4%   25.6%          
                     
Operating expenses:                    
Research and development   644    704    (60)   (8.5%)
Selling   423    434    (11)   (2.5%)
General and administrative   1,316    1,450    (134)   (9.2%)
Gain on sale of equipment   (625)   -    (625)   * 
                     
Total operating expenses   1,758    2,588    (830)   (32.1%)
                     
Operating income (loss)   77    (990)   1,067     *  
                     
Other income (expense):                    
Interest income   136    173    (37)   (21.4%)
Interest expense   (5)   (6)   1    (16.7%)
Other income   -    70    (70)   *  
Total other income, net   131    237    (106)   (44.7%)
                     
Income (loss) before income taxes   208    (753)   961    *  
                     
Income tax expense   5    -    5     *  
                     
Net income (loss)  $203   $(753)  $956     *  

 

* Not meaningful

 

24

 

 

  

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 months ended September 30, 2024 was $8.2 million compared to $6.2 million for the three months ended September 30, 2023, an increase of 31.4%.

 

The increase in revenue versus the prior year period was primarily attributable to higher revenue of $0.9 million from our CVD Equipment segment, a $0.4 million increase in revenue from our SDC segment, and a $0.6 million increase from our CVD Materials segment. Revenue from one aerospace customer for the three months ended September 30, 2024 represented 29.1% of our total revenues and 42.0% of CVD Equipment segment revenues.

 

The revenue contributed by the CVD Equipment segment for the three months ended September 30, 2024 of $5.7 million represented 69.3% of overall revenue as compared to $4.8 million or 76.3% of overall revenue for the three months ended September 30, 2023. The increase in revenues of $0.9 million or 18.5% resulted principally from increases in revenues from aerospace contracts in progress offset in part by lower revenue for PVT150/200 systems and spare parts.

 

There were certain customer contracts in 2023 where the revenue was to be recognized at the point in time when the equipment is transferred to the customer based on contract terms. These contracts were modified during the three months ended September 30, 2023 such that the revenue under these contracts is now being recognized over time using the input method. The Company and CVD Equipment segment revenues for the three months ended September 30, 2023 include $0.8 million of revenue that was deferred as of June 30, 2023 and recognized on the date of the contract modification.

 

The revenue contributed by the SDC segment for the three months ended September 30, 2024 of $2.0 million represented 22.6% of overall revenue as compared to $1.6 million or 22.3% of overall revenue for the three months ended September 30, 2023. Revenue for our SDC segment increased by $0.4 million or 27.5% due to higher demand for gas delivery system products as compared to the prior period.

 

25

 

 

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 months ended September 30, 2024 was $1.8 million, with a gross profit margin of 22.4%, compared to a gross profit of $1.6 million and a gross profit margin of 25.6% for the three months ended September 30, 2023. The increase in gross profit of $0.2 million was primarily due to higher revenues as well as improved margins on CVD contracts in progress and final MesoScribe sales that was partially offset by a $1.0 million non-cash charge to reduce certain PVT inventory to net realizable value.

 

Research and Development

 

For the three months ended September 30, 2024, research and development expenses were $0.6 million, or 7.9% of revenue as compared to $0.7 million, or 11.3% of revenue for the three months ended September 30, 2023, a decrease of $0.1 million or 8.5%. The decrease in 2024 was due to more engineering time being charged to cost of revenue based on contracts in progress.

 

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 revenue when work is performed directly on a customer order.

 

Selling

 

Selling expenses were $0.4 million or 5.2% of the revenue for the three months ended September 30, 2024 as compared to $0.4 million or 7.0% for the three months ended September 30, 2023. There were no significant changes in selling expenses as compared to the prior period quarter.

 

26

 

 

General and Administrative

 

General and administrative expenses for the three months ended September 30, 2024 were $1.3 million or 16.1% of revenue compared to $1.4 million or 23.3% of revenue for the three months ended September 30, 2023. The decrease in 2024 was due principally to a reduction of employee compensation and lower professional fees as compared to the prior year quarter.

 

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.

 

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 deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.

 

27

 

 

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

 

28

 

 

  

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.

 

29

 

 

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.

 

30

 

 

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 30, 2024, aggregate working capital was $13.3 million as compared to aggregate working capital of $14.3 million at December 31, 2023. Cash and cash equivalents at September 30, 2024 and December 31, 2023 were $10.0 million and $14.0 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..

 

Net cash used in investing activities for the three months ended September 30, 2024 consisted of capital expenditures of $0.2 million related to purchases of equipment, building improvements and software.

 

Net cash used in financing activities for the three months ended September 30, 2024 consisted of repayments of $0.1 million for an equipment loan.

 

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 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.

 

31

 

 

Critical Accounting Estimates

 

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. 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.

 

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

 

We believe that of our significant accounting policies, which are described in the notes to the consolidated financial statements, the following accounting policies involve a greater degree of judgments, estimates and assumptions and are considered critical accounting estimates.

 

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.

 

32

 

 

There exist many inherent risks and uncertainties in estimating revenues, expenses and progress toward completion, particularly on larger or longer-term contracts. Changes in estimates of the total sales, related costs, and progress toward completion on such contracts may significantly impact the estimated gross margins, 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. In the future, if we determine that our long-lived assets are impaired, we would be required to recognize a charge in our financial statements at the time of such determination. Any such charge could be material to our results of operations and financial condition.

 

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.

 

33

 

 

CVD EQUIPMENT CORPORATION

 

PART II

 

OTHER INFORMATION

 

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 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.

 

34

 

 

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.

 

35

 

 

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 day of November 2024.

 

  CVD EQUIPMENT CORPORATION
     
  By: /s/ Emmanuel Lakios
    Emmanuel Lakios
    President and Chief Executive Officer
    (Principal Executive Officer)

 

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

 

36

 

 

Exhibit 31.1

 

Certifications of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Emmanuel Lakios, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of CVD Equipment Corporation;

 

2.Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
b.Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 13, 2024

 

/s/ Emmanuel Lakios  
President and Chief Executive Officer  

 

 

 

 

Exhibit 31.2

 

Certifications of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Richard Catalano, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of CVD Equipment Corporation;

 

2.Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
b.Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Dated: November 13, 2024

   
/s/ Richard Catalano  
Richard Catalano  
Executive Vice President and Chief Financial Officer  
(Principal Financial Officer)  

 

 

 

 

Exhibit 32.1

 

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

I, Emmanuel Lakios, President and Chief Executive Officer of CVD Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending September 30, 2024 of CVD Equipment Corporation (the “Form 10-Q”) fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

 

Dated: November 13, 2024

 

/s/ Emmanuel Lakios  
Emmanuel Lakios  
President and Chief Executive Officer  
(Principal Executive Officer)  

 

 

 

 

Exhibit 32.2

 

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

I, Richard Catalano, Chief Financial Officer of CVD Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending September 30, 2024 of CVD Equipment Corporation (the “Form 10-Q”) fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

 

Dated: November 13, 2024

 

/s/ Richard Catalano  
Richard Catalano  
Executive Vice President and Chief Financial Officer  
(Principal Financial Officer)  

 

 

 

v3.24.3
Cover - $ / shares
 9 Months Ended
Sep. 30, 2024
Nov. 13, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 1-16525  
Entity Registrant Name CVD EQUIPMENT CORPORATION  
Entity Central Index Key 0000766792  
Entity Tax Identification Number 11-2621692  
Entity Incorporation, State or Country Code NY  
Entity Address, Address Line One 355 South Technology Drive  
Entity Address, City or Town Central Islip  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 11722  
City Area Code (631)  
Local Phone Number 981-7081  
Title of 12(b) Security Common Stock  
Trading Symbol CVV  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   6,881,838
Entity Listing, Par Value Per Share $ 0.01  
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Current assets    
Cash and cash equivalents $ 10,005 $ 14,025
Accounts receivable, net of allowance for credit losses 5,124 1,906
Contract assets 1,348 1,604
Inventories 2,558 4,454
Other current assets 892 852
Total current assets 19,927 22,841
Property, plant and equipment, net 11,909 12,166
Other assets 10 18
Total assets 31,846 35,025
Current liabilities    
Accounts payable 1,393 1,203
Accrued expenses 1,903 1,765
Current maturities of long-term debt 85 81
Contract liabilities 3,288 4,908
Deposit from purchaser of MesoScribe assets-Note 11 597
Total current liabilities 6,669 8,554
Long-term debt, net of current portion 203 268
Total liabilities 6,872 8,822
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
Additional paid-in capital 29,495 28,695
Accumulated deficit (4,590) (2,560)
Total stockholders’ equity 24,974 26,203
Total liabilities and stockholders’ equity $ 31,846 $ 35,025
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 20,000,000 20,000,000
Common stock, shares issued 6,881,838 6,824,511
Common stock, shares outstanding 6,881,838 6,824,511
v3.24.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Revenue $ 8,194 $ 6,234 $ 19,462 $ 19,998
Cost of revenue 6,359 4,636 15,158 14,579
Gross profit 1,835 1,598 4,304 5,419
Operating expenses        
Research and development 644 704 2,055 1,865
Selling 423 434 1,268 1,281
General and administrative 1,316 1,450 4,057 4,410
Gain on sale of equipment-Note 11 (625) (625)
Loss on disposition of Tantaline 162
Impairment charge 111
Total operating expenses, net 1,758 2,588 6,755 7,829
Operating income (loss) 77 (990) (2,451) (2,410)
Other income (expense):        
Interest income 136 173 438 400
Interest expense (5) (6) (14) (18)
Foreign exchange income 42
Other income 70 2 91
Total other income, net 131 237 426 515
Income (loss) before income tax 208 (753) (2,025) (1,895)
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
v3.24.3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 67 $ 27,712 $ 1,620 $ 29,399
Balance, shares at Dec. 31, 2022 6,760,938      
Net income (loss) (1,906) (1,906)
Stock-based compensation $ 1 646 647
Stock-based compensation, shares 41,320      
Exercise of stock options and    issuance of shares 76 76
Exercise of stock options and issuance of shares, shares 18,397      
Balance at Sep. 30, 2023 $ 68 28,434 (286) 28,216
Balance, shares at Sep. 30, 2023 6,820,655      
Balance at Jun. 30, 2023 $ 67 28,185 467 28,719
Balance, shares at Jun. 30, 2023 6,779,063      
Net income (loss) (753) (753)
Stock-based compensation $ 1 249 250
Stock-based compensation, shares 41,320      
Exercise of stock options and    issuance of shares
Exercise of stock options and issuance of shares, shares 272      
Balance at Sep. 30, 2023 $ 68 28,434 (286) 28,216
Balance, shares at Sep. 30, 2023 6,820,655      
Balance at Dec. 31, 2023 $ 68 28,695 (2,560) 26,203
Balance, shares at Dec. 31, 2023 6,824,511      
Net income (loss) (2,030) (2,030)
Stock-based compensation $ 1 800 801
Stock-based compensation, shares 57,327      
Balance at Sep. 30, 2024 $ 68 29,496 (4,590) 24,974
Balance, shares at Sep. 30, 2024 6,881,838      
Balance at Jun. 30, 2024 $ 68 29,229 (4,793) 24,504
Balance, shares at Jun. 30, 2024 6,825,338      
Net income (loss) 203 203
Stock-based compensation $ 1 266 267
Stock-based compensation, shares 56,500      
Balance at Sep. 30, 2024 $ 68 $ 29,496 $ (4,590) $ 24,974
Balance, shares at Sep. 30, 2024 6,881,838      
v3.24.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash flows from operating activities:    
Net loss $ (2,030) $ (1,906)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 801 647
Depreciation and amortization 476 545
Gain on sale of equipment (625)
Loss on disposition of Tantaline 162
Provision for excess and obsolete inventory 1,253 197
Impairment charge 111
Changes in assets and liabilities, net of effects of disposition of Tantaline and sale of equipment:    
Accounts receivable (3,218) 1,163
Contract assets 256 (725)
Inventories 633 (1,953)
Employee retention credit receivable 1,529
Other current assets 48 (46)
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)
Deposits from purchaser of MesoScribe assets 597
Net cash used in connection with disposition of Tantaline (312)
Net cash used in investing activities (219) (23)
Cash flows from financing activities    
Payments of long-term debt (61) (57)
Proceeds from exercise of stock options 76
Net cash (used in) provided by financing activities (61) 19
Net decrease in cash and cash equivalents (4,020) (80)
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 2 11
Interest paid $ 14 $ 18
v3.24.3
BASIS OF PRESENTATION
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
BASIS OF PRESENTATION

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 30, 2024 are not necessarily indicative of the results that can be expected for the year ending December 31, 2024.

 

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements at such date, as filed on Form 10-K with the SEC on March 28, 2024, 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 30, 2024, the Company had $10.0 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.
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Revenue Recognition

 

In accordance with FASB 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 equipment through contractual agreements. These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from 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 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 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 30, 2024 and 2023.

 

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 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 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 30, 2024 and 2023, all system equipment sales were recorded over time by using an input method except for one PVT200 system that was recorded at the point in time when the equipment was transferred to the customer during the third quarter of 2024. There was one system equipment contract in 2023 where the revenue was to be recognized based on point in time. This contract was modified during the three months ended September 30, 2023 such that the revenue under this contract will be recognized over time using an input method based on the revised contract provisions. Revenues for the three months ended September 30, 2023 includes $0.8 million of revenue that was deferred as of June 30, 2023 and recognized on the date of the contract modification.

 

 

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 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 Accounting Standards

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This update is effective for our annual report for fiscal year 2025, and interim periods thereafter, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

 

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.
v3.24.3
CONCENTRATION OF CREDIT RISK
 9 Months Ended
Sep. 30, 2024
Risks and Uncertainties [Abstract]  
CONCENTRATION OF CREDIT RISK

NOTE 3: CONCENTRATION OF CREDIT RISK

 

Cash and cash equivalents

 

The Company had cash and cash equivalents of $10.0 million and $14.0 million at September 30, 2024 and December 31, 2023, 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 $9.4 million and $12.1 million at September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023 was $0 and $1.5 million, respectively.

 

Accounts receivable

 

The Company sells products and services to various companies across several industries in the ordinary course of business. The Company performs ongoing credit evaluations to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience, evaluation of their credit history and review of the invoicing terms of the contract to determine the financial strength of its customers.

 

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)

 

At September 30, 2024, the accounts receivable balance included amounts from one customer that represented 17.2% of total accounts receivable. As of December 31, 2023, the accounts receivable balance included amounts from three customers that represented 37.6%, 13.0% and 12.8% 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 30, 2024, two customers represented 29.1% and 11.2%, respectively, of revenues, and during the nine months ended September 30, 2024, one customer represented 31.2% 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.

 
v3.24.3
REVENUE RECOGNITION
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION

NOTE 4: REVENUE RECOGNITION

 

The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2024, and 2023 (in thousands):

 

   Over time   Point in time   Total 
   Three months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $-   $448   $448 
Aerospace   3,814    969    4,783 
Industrial   1,522    368    1,890 
Research   927    146    1,073 
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 
   Nine months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $216   $500   $716 
Aerospace   8,285    1,488    9,773 
Industrial   4,324    1,142    5,466 
Research   2,963    544    3,507 
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. Aerospace market includes customers that manufacture aircraft engines. Industrial end market consists of various end customers in diverse industries. Research market principally represents customers such as universities and other research institutions.

 

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 30, 2024 (in thousands):

 

      
Costs incurred on contracts in progress  $13,540 
Estimated earnings   6,672 
Costs and estimated earnings on uncompleted contracts   20,212 
Billings to date   (21,693)
Net cost in excess of billings   (1,481)
      
Deferred revenue related to non-system contracts   (459)
Contract liability in excess of contract assets  $(1,940)
Included in accompanying condensed consolidated balance sheet as of September 30, 2024 under the following captions (in thousands):     
Contract assets  $1,348 
Contract liabilities  $3,288 

 

Of the contract liability balances at December 31, 2023 and 2022 of $4.6 million and $4.0 million, respectively, $4.2 million and $3.7 million was recognized as revenue during the nine months ended September 30, 2024 and 2023, respectively.

 
v3.24.3
INVENTORIES
 9 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
INVENTORIES

NOTE 5: INVENTORIES

 

Inventories consist of:

 

   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 

 

 

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.

 
v3.24.3
LONG-TERM DEBT
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
LONG-TERM DEBT

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 secured by equipment. The interest rate is 6%.

 
v3.24.3
EARNINGS PER SHARE
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
EARNINGS PER SHARE

NOTE 7: EARNINGS PER SHARE

 

The calculation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2024 and 2023 is as follows:

 

   2024   2023   2024   2023 
  

Three months ended

September 30,

  

Nine months ended

September 30,

 
   2024   2023   2024   2023 
                 
Basic weighted average common shares outstanding   6,825,495    6,789,487    6,817,220    6,787,415 
Dilutive effect of unvested restricted stock   9,132    -    -    - 
Diluted weighted average shares outstanding   6,834,627    6,789,487    6,817,220    6,787,415 

 

At September 30, 2024, stock options to purchase 838,125 shares of common stock were outstanding and 493,750 were exercisable.

 

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.
v3.24.3
STOCK-BASED COMPENSATION EXPENSE
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION EXPENSE

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

 

The Company recorded stock-based compensation for the three and nine months ended September 30, 2024 and 2023, that were included in the following line items in our condensed consolidated statements of operations (in thousands):

 

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

 

Stock-based compensation expense for three months ended September 30, 2024 and 2023 included $50,000 and $44,783, respectively, and for the nine month periods ended September 30, 2024 and 2023 included $153,736 and $124,783, respectively, related to restricted stock awards that directors are entitled to receive pursuant to the Director Compensation Plan. Under this plan each of the Company’s 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.

 

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:

 

       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 about the outstanding and exercisable options at September 30, 2024 by ranges of exercise prices:

 

    Options Outstanding   Options Exercisable 
        Weighted   Weighted           Weighted     
        Average   Average           Average     
Exercise   Number   Remaining   Exercise   Intrinsic   Number   Exercise   Intrinsic 
Price Range   Outstanding   Contractual   Price   Value   Exercisable   Price   Value 
$4.00-7.00    459,625    7.1   $4.55   $-    294,125   $6.07   $- 
$7.01-10.00    20,000    3.6   $8.07   $-    20,000   $8.07   $- 
$10.01-13.00    130,000    2.9   $10.62   $-    122,500   $10.55   $- 
$13.01-16.00    228,500    8.5   $14.11   $-    57,125   $14.11   $- 

 

As of September 30, 2024, there was $1.8 million of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 1.3 years.

 
v3.24.3
INCOME TAXES
 9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 9: INCOME TAXES

 

As of September 30, 2024 and December 31, 2023, the Company has provided a full valuation allowance against its net deferred tax assets. This was based on management’s assessment, including the last six years of operating losses, 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, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections of future operating results.

 
v3.24.3
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 10: SEGMENT REPORTING

 

The Company operates through three segments: CVD Equipment, Stainless Design Concepts (“SDC”) and CVD Materials. The CVD Equipment segment manufactures and sells chemical vapor deposition, physical vapor 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 factors, of which the primary financial measure is income (loss) before taxes.

 

The Company’s corporate administration activities are reported in the “Corporate” column. These activities primarily include expenses related to certain corporate officers and support staff, expenses related to the Company’s Board of Directors, stock option expense for options and shares of 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 fees.

 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 10: SEGMENT REPORTING (continued)

 

Elimination entries included in the “Eliminations” column represent intersegment revenues and cost of revenues that are eliminated in consolidation. Intersegment sales by the SDC segment to the CVD Equipment segment for the three months ended September 2024 and 2023 were $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.

 

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):

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
 Assets  $27,270   $3,805   $836   $(65)  $-   $31,846 
                               
Revenue  $5,681   $2,005   $661   $(153)  $-   $8,194 
Operating (loss) income   *(736)   538    **1,104    18    (847)   77 
Pretax (loss) income   *(741)   538    **1,104    18    (711)   208 
Depreciation and amortization  $157   $12   $-   $-   $-   $169 
Purchase of property, plant & equipment  $30   $7   $-   $-   $-   $37 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 10: SEGMENT REPORTING (continued)

 

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

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
                         
Revenue  $12,737   $6,252   $775   $(302)  $-   $19,462 
Operating (loss) income   *(2,884)   1,884    **1,034    28    (2,513)   (2,451)
Pretax (loss) Income   *(2,894)   1,884    **1,034    28    (2,075)   (2,025)
Depreciation and amortization  $441   $35   $-   $-   $-   $476 
Purchase of property, plant & equipment  $209   $10   $-   $-   $-   $219 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

***Includes loss on sale of Tantaline of $0.2 million and impairment charge related to MesoScribe fixed assets of $0.1 million – see Note 11.

 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 
v3.24.3
MESOSCRIBE SUBSIDIARY
 9 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
MESOSCRIBE SUBSIDIARY

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.
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Revenue Recognition

Revenue Recognition

 

In accordance with FASB 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 equipment through contractual agreements. These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from 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 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 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 30, 2024 and 2023.

 

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 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 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 30, 2024 and 2023, all system equipment sales were recorded over time by using an input method except for one PVT200 system that was recorded at the point in time when the equipment was transferred to the customer during the third quarter of 2024. There was one system equipment contract in 2023 where the revenue was to be recognized based on point in time. This contract was modified during the three months ended September 30, 2023 such that the revenue under this contract will be recognized over time using an input method based on the revised contract provisions. Revenues for the three months ended September 30, 2023 includes $0.8 million of revenue that was deferred as of June 30, 2023 and recognized on the date of the contract modification.

 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 
Inventories

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 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

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 Accounting Standards

Recent Accounting Standards

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This update is effective for our annual report for fiscal year 2025, and interim periods thereafter, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

 

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.
v3.24.3
REVENUE RECOGNITION (Tables)
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
SCHEDULE OF DISAGGREGATION OF REVENUE

The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2024, and 2023 (in thousands):

 

   Over time   Point in time   Total 
   Three months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $-   $448   $448 
Aerospace   3,814    969    4,783 
Industrial   1,522    368    1,890 
Research   927    146    1,073 
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 
   Nine months ended September 30, 2024 
   Over time   Point in time   Total 
Energy  $216   $500   $716 
Aerospace   8,285    1,488    9,773 
Industrial   4,324    1,142    5,466 
Research   2,963    544    3,507 
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 
SCHEDULE OF COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS

Contract assets and contract liabilities on input method type contracts in progress are summarized as follows as of September 30, 2024 (in thousands):

 

      
Costs incurred on contracts in progress  $13,540 
Estimated earnings   6,672 
Costs and estimated earnings on uncompleted contracts   20,212 
Billings to date   (21,693)
Net cost in excess of billings   (1,481)
      
Deferred revenue related to non-system contracts   (459)
Contract liability in excess of contract assets  $(1,940)
Included in accompanying condensed consolidated balance sheet as of September 30, 2024 under the following captions (in thousands):     
Contract assets  $1,348 
Contract liabilities  $3,288 
v3.24.3
INVENTORIES (Tables)
 9 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
SCHEDULE OF INVENTORIES

 

   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 
v3.24.3
EARNINGS PER SHARE (Tables)
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
SCHEDULE OF BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

The calculation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2024 and 2023 is as follows:

 

   2024   2023   2024   2023 
  

Three months ended

September 30,

  

Nine months ended

September 30,

 
   2024   2023   2024   2023 
                 
Basic weighted average common shares outstanding   6,825,495    6,789,487    6,817,220    6,787,415 
Dilutive effect of unvested restricted stock   9,132    -    -    - 
Diluted weighted average shares outstanding   6,834,627    6,789,487    6,817,220    6,787,415 
v3.24.3
STOCK-BASED COMPENSATION EXPENSE (Tables)
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
SCHEDULE OF STOCK BASED COMPENSATION EXPENSE

 

   2024   2023   2024   2023 
   Three months ended Sept. 30,   Nine months ended Sept. 30, 
   2024   2023   2024   2023 
                 
Cost of revenue  $38   $22   $114   $82 
Research and development   47    47    141    113 
Selling   27    30    81    72 
General and administrative   155    150    465    380 
                     
Total  $267   $249   $801   $647 
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 
SCHEDULE OF STOCK OPTIONS AWARDS

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

 

       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 
SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS RANGES OF EXERCISE PRICES

The following table summarizes information about the outstanding and exercisable options at September 30, 2024 by ranges of exercise prices:

 

    Options Outstanding   Options Exercisable 
        Weighted   Weighted           Weighted     
        Average   Average           Average     
Exercise   Number   Remaining   Exercise   Intrinsic   Number   Exercise   Intrinsic 
Price Range   Outstanding   Contractual   Price   Value   Exercisable   Price   Value 
$4.00-7.00    459,625    7.1   $4.55   $-    294,125   $6.07   $- 
$7.01-10.00    20,000    3.6   $8.07   $-    20,000   $8.07   $- 
$10.01-13.00    130,000    2.9   $10.62   $-    122,500   $10.55   $- 
$13.01-16.00    228,500    8.5   $14.11   $-    57,125   $14.11   $- 
v3.24.3
SEGMENT REPORTING (Tables)
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
SCHEDULE OF SEGMENTS

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):

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
 Assets  $27,270   $3,805   $836   $(65)  $-   $31,846 
                               
Revenue  $5,681   $2,005   $661   $(153)  $-   $8,194 
Operating (loss) income   *(736)   538    **1,104    18    (847)   77 
Pretax (loss) income   *(741)   538    **1,104    18    (711)   208 
Depreciation and amortization  $157   $12   $-   $-   $-   $169 
Purchase of property, plant & equipment  $30   $7   $-   $-   $-   $37 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

 

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

NOTE 10: SEGMENT REPORTING (continued)

 

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

 

2024

 

   CVD Equipment   SDC   CVD Materials   Eliminations   Corporate   Consolidated 
                         
Revenue  $12,737   $6,252   $775   $(302)  $-   $19,462 
Operating (loss) income   *(2,884)   1,884    **1,034    28    (2,513)   (2,451)
Pretax (loss) Income   *(2,894)   1,884    **1,034    28    (2,075)   (2,025)
Depreciation and amortization  $441   $35   $-   $-   $-   $476 
Purchase of property, plant & equipment  $209   $10   $-   $-   $-   $219 

 

2023

 

   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.

 

**Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.

 

***Includes loss on sale of Tantaline of $0.2 million and impairment charge related to MesoScribe fixed assets of $0.1 million – see Note 11.
v3.24.3
BASIS OF PRESENTATION (Details Narrative) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Accounting Policies [Abstract]    
Cash and cash equivalents $ 10,005 $ 14,025
v3.24.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2023
Accounting Policies [Abstract]          
Contract assets, impairment loss $ 0 $ 0 $ 0 $ 0  
Deferred revenue         $ 800
Standard product warranty description     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.    
v3.24.3
CONCENTRATION OF CREDIT RISK (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Concentration Risk [Line Items]          
Cash and cash equivalents $ 10,005,000   $ 10,005,000   $ 14,025,000
Cash, uninsured amount 0   0   1,500,000
Allowance for credit losses $ 36,000   $ 36,000   $ 36,000
Accounts Receivable [Member] | One Customer [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage     17.20%    
Accounts Receivable [Member] | Customer One [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage         37.60%
Accounts Receivable [Member] | Customer Two [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage         13.00%
Accounts Receivable [Member] | Customer Three [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage         12.80%
Revenue Benchmark [Member] | One Customer [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage     31.20%    
Revenue Benchmark [Member] | Customer One [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage 29.10% 40.30%   16.70%  
Revenue Benchmark [Member] | Customer Two [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage 11.20% 10.30%   13.90%  
Revenue Benchmark [Member] | Customer Three [Member] | Customer Concentration Risk [Member]          
Concentration Risk [Line Items]          
Concentration risk, percentage       11.70%  
US Treasury Bill Securities [Member]          
Concentration Risk [Line Items]          
Cash equivalents $ 9,400,000   $ 9,400,000   $ 12,100,000
v3.24.3
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Total $ 8,194 $ 6,234 $ 19,462 $ 19,998
Energy [Member]        
Disaggregation of Revenue [Line Items]        
Total 448 1,106 716 4,435
Aerospace [Member]        
Disaggregation of Revenue [Line Items]        
Total 4,783 2,882 9,773 4,000
Industrial [Member]        
Disaggregation of Revenue [Line Items]        
Total 1,890 1,434 5,466 7,316
Research [Member]        
Disaggregation of Revenue [Line Items]        
Total 1,073 812 3,507 4,247
Transferred over Time [Member]        
Disaggregation of Revenue [Line Items]        
Total 6,263 4,680 15,788 15,430
Transferred over Time [Member] | Energy [Member]        
Disaggregation of Revenue [Line Items]        
Total 970 216 4,246
Transferred over Time [Member] | Aerospace [Member]        
Disaggregation of Revenue [Line Items]        
Total 3,814 2,511 8,285 2,774
Transferred over Time [Member] | Industrial [Member]        
Disaggregation of Revenue [Line Items]        
Total 1,522 695 4,324 5,450
Transferred over Time [Member] | Research [Member]        
Disaggregation of Revenue [Line Items]        
Total 927 504 2,963 2,960
Transferred at Point in Time [Member]        
Disaggregation of Revenue [Line Items]        
Total 1,931 1,554 3,674 4,568
Transferred at Point in Time [Member] | Energy [Member]        
Disaggregation of Revenue [Line Items]        
Total 448 136 500 189
Transferred at Point in Time [Member] | Aerospace [Member]        
Disaggregation of Revenue [Line Items]        
Total 969 371 1,488 1,226
Transferred at Point in Time [Member] | Industrial [Member]        
Disaggregation of Revenue [Line Items]        
Total 368 739 1,142 1,866
Transferred at Point in Time [Member] | Research [Member]        
Disaggregation of Revenue [Line Items]        
Total $ 146 $ 308 $ 544 $ 1,287
v3.24.3
SCHEDULE OF COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]    
Costs incurred on contracts in progress $ 13,540  
Estimated earnings 6,672  
Costs and estimated earnings on uncompleted contracts 20,212  
Billings to date (21,693)  
Net cost in excess of billings (1,481)  
Deferred revenue related to non-system contracts (459)  
Contract liability in excess of contract assets (1,940)  
Contract assets 1,348 $ 1,604
Contract liabilities $ 3,288 $ 4,908
v3.24.3
REVENUE RECOGNITION (Details Narrative) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]        
Unrecognized contract revenue $ 17.0      
Contract liability     $ 4.6 $ 4.0
Contract liability revenue recognized $ 4.2 $ 3.7    
v3.24.3
SCHEDULE OF INVENTORIES (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Inventory Disclosure [Abstract]    
Raw materials $ 1,366 $ 2,351
Work-in-process 661 1,248
Finished goods 531 855
Total $ 2,558 $ 4,454
v3.24.3
INVENTORIES (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Dec. 31, 2023
Inventory [Line Items]      
Non-cash charge to reduce net realizable value $ 1,000 $ 1,000  
Inventories 2,558 2,558 $ 4,454
PVT 150 Systems [Member]      
Inventory [Line Items]      
Non-cash charge to reduce net realizable value 1,000    
Inventories $ 700 $ 700  
v3.24.3
LONG-TERM DEBT (Details Narrative) - Loan Agreement to Fund Machinery Acquisition [Member]
 1 Months Ended
Sep. 30, 2022
USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Loan principal amount $ 432,000
Loan payment term 60
Loan, monthly installment amount $ 8,352
Loan interest rate 6.00%
v3.24.3
SCHEDULE OF BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Earnings Per Share [Abstract]        
Basic weighted average common shares outstanding 6,825,495 6,789,487 6,817,220 6,787,415
Dilutive effect of unvested restricted stock 9,132
Diluted weighted average shares outstanding 6,834,627 6,789,487 6,817,220 6,787,415
v3.24.3
EARNINGS PER SHARE (Details Narrative) - shares
Sep. 30, 2024
Dec. 31, 2023
Earnings Per Share [Abstract]    
Stock options outstanding 838,125 846,875
Stock options exercisable 493,750  
v3.24.3
SCHEDULE OF STOCK BASED COMPENSATION EXPENSE (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total $ 267 $ 249 $ 801 $ 647
Cost of Revenue [Member]        
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total 38 22 114 82
Research and Development Expense [Member]        
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total 47 47 141 113
Selling Expense [Member]        
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total 27 30 81 72
General and Administrative Expense [Member]        
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total $ 155 $ 150 $ 465 $ 380
v3.24.3
SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS (Details)
 9 Months Ended
Sep. 30, 2024
$ / shares
Share-Based Payment Arrangement [Abstract]  
Stock price $ 4.75
Exercise price $ 4.75
Dividend yield 0.00%
Expected volatility 77.00%
Risk-free interest rate 4.12%
Expected life (in years) 6 years
v3.24.3
SCHEDULE OF STOCK OPTIONS AWARDS (Details)
 9 Months Ended
Sep. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward]  
Stock Option Awards Outstanding, beginning balance | shares 846,875
Stock Option Awards, Granted | shares 5,000
Stock Option Awards, Forfeited | shares (13,750)
Stock Option Awards Outstanding, ending balance | shares 838,125
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]  
Weighted Average Exercise Price Outstanding, beginning balance | $ / shares $ 8.20
Weighted Average Exercise Price, Granted | $ / shares 4.75
Weighted Average Exercise Price, Forfeited | $ / shares 7.94
Weighted Average Exercise Price Outstanding, ending balance | $ / shares $ 8.18
v3.24.3
SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS RANGES OF EXERCISE PRICES (Details)
 9 Months Ended
Sep. 30, 2024
USD ($)
$ / shares
shares
Exercise Price Range One [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price range, lower limit $ 4.00
Exercise price range, upper limit $ 7.00
Number of options outstanding | shares 459,625
Number of options outstanding, weighted average remaining contractual term 7 years 1 month 6 days
Number of options outstanding, weighted average exercise price $ 4.55
Number of options outstanding, intrinsic value | $
Number of options exercisable | shares 294,125
Number of options exercisable, weighted average exercise price $ 6.07
Number of options exercisable, intrinsic value | $
Exercise Price Range Two [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price range, lower limit $ 7.01
Exercise price range, upper limit $ 10.00
Number of options outstanding | shares 20,000
Number of options outstanding, weighted average remaining contractual term 3 years 7 months 6 days
Number of options outstanding, weighted average exercise price $ 8.07
Number of options outstanding, intrinsic value | $
Number of options exercisable | shares 20,000
Number of options exercisable, weighted average exercise price $ 8.07
Number of options exercisable, intrinsic value | $
Exercise Price Range Three [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price range, lower limit $ 10.01
Exercise price range, upper limit $ 13.00
Number of options outstanding | shares 130,000
Number of options outstanding, weighted average remaining contractual term 2 years 10 months 24 days
Number of options outstanding, weighted average exercise price $ 10.62
Number of options outstanding, intrinsic value | $
Number of options exercisable | shares 122,500
Number of options exercisable, weighted average exercise price $ 10.55
Number of options exercisable, intrinsic value | $
Exercise Price Range Four [Member]  
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price range, lower limit $ 13.01
Exercise price range, upper limit $ 16.00
Number of options outstanding | shares 228,500
Number of options outstanding, weighted average remaining contractual term 8 years 6 months
Number of options outstanding, weighted average exercise price $ 14.11
Number of options outstanding, intrinsic value | $
Number of options exercisable | shares 57,125
Number of options exercisable, weighted average exercise price $ 14.11
Number of options exercisable, intrinsic value | $
v3.24.3
STOCK-BASED COMPENSATION EXPENSE (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]        
Stock based compensation expenses $ 267,000 $ 249,000 $ 801,000 $ 647,000
Stock option granted     5,000  
Weighted average fair value of stock options granted     $ 4.75  
Directors [Member]        
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]        
Annual equity retainer amount 40,000   $ 40,000  
Restricted Stock [Member] | Director [Member]        
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]        
Stock based compensation expenses 50,000 $ 44,783 $ 153,736 $ 124,783
Share-Based Payment Arrangement, Option [Member]        
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]        
Stock option granted     5,000  
Stock option vesting percentage     25.00%  
Expiration period     10 years  
Weighted average fair value of stock options granted     $ 3.30  
Unrecognized compensation costs $ 1,800,000   $ 1,800,000  
Unrecognized compensation costs, weighted average recoginition period     1 year 3 months 18 days  
v3.24.3
SCHEDULE OF SEGMENTS (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Segment Reporting Information [Line Items]          
Assets $ 31,846,000 $ 37,227,000 $ 31,846,000 $ 37,227,000 $ 35,025,000
Revenue 8,194,000 6,234,000 19,462,000 19,998,000  
Operating (loss) income 77,000 (990,000) (2,451,000) (2,410,000)  
Pretax (loss) income 208,000 (753,000) (2,025,000) (1,895,000)  
Depreciation and amortization 169,000 153,000 476,000 545,000  
Purchase of property, plant & equipment 37,000 83,000 219,000 308,000  
Operating Segments [Member] | CVD Equipment [Member]          
Segment Reporting Information [Line Items]          
Assets 27,270,000 32,915,000 27,270,000 32,915,000  
Revenue 5,681,000 4,795,000 12,737,000 13,774,000  
Operating (loss) income (736,000) [1] (323,000) (2,884,000) [2] (581,000)  
Pretax (loss) income (741,000) [1] (262,000) (2,894,000) [2] (518,000)  
Depreciation and amortization 157,000 137,000 441,000 404,000  
Purchase of property, plant & equipment 30,000 83,000 209,000 298,000  
Operating Segments [Member] | SDC [Member]          
Segment Reporting Information [Line Items]          
Assets 3,805,000 4,237,000 3,805,000 4,237,000  
Revenue 2,005,000 1,572,000 6,252,000 5,679,000  
Operating (loss) income 538,000 436,000 1,884,000 1,430,000  
Pretax (loss) income 538,000 434,000 1,884,000 1,430,000  
Depreciation and amortization 12,000 12,000 35,000 36,000  
Purchase of property, plant & equipment 7,000 10,000 10,000  
Operating Segments [Member] | CVD Materials [Member]          
Segment Reporting Information [Line Items]          
Assets 836,000 177,000 836,000 177,000  
Revenue 661,000 90,000 775,000 1,009,000  
Operating (loss) income 1,104,000 [3] (35,000) 1,034,000 [4] (178,000) [5]  
Pretax (loss) income 1,104,000 [3] (31,000) 1,034,000 [4] (126,000) [5]  
Depreciation and amortization 4,000 105,000  
Purchase of property, plant & equipment  
Intersegment Eliminations [Member]          
Segment Reporting Information [Line Items]          
Assets (65,000) (102,000) (65,000) (102,000)  
Revenue (153,000) (223,000) (302,000) (554,000)  
Operating (loss) income 18,000 (76,000) 28,000 (104,000)  
Pretax (loss) income 18,000 (76,000) 28,000 (104,000)  
Depreciation and amortization  
Purchase of property, plant & equipment  
Intersegment Eliminations [Member] | CVD Equipment [Member]          
Segment Reporting Information [Line Items]          
Revenue (151,000) (184,000) (298,000) (450,000)  
Intersegment Eliminations [Member] | SDC [Member]          
Segment Reporting Information [Line Items]          
Revenue 5,000 39,000 5,000 104,000  
Segment Reporting, Reconciling Item, Corporate Nonsegment [Member]          
Segment Reporting Information [Line Items]          
Assets  
Revenue  
Operating (loss) income (847,000) (992,000) (2,513,000) (2,977,000)  
Pretax (loss) income (711,000) (818,000) (2,075,000) (2,577,000)  
Depreciation and amortization  
Purchase of property, plant & equipment  
[1] Includes a $1.0 million non-cash charge to reduce certain inventory to net realizable value – see Note 5.
[2] Includes a $1.0 million non-cash charge to reduce certain inventory to net realizable value – see Note 5.
[3] Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.
[4] Includes gain on sale of equipment of $0.6 million related to MesoScribe – see Note 11.
[5] Includes loss on sale of Tantaline of $0.2 million and impairment charge related to MesoScribe fixed assets of $0.1 million – see Note 11.
v3.24.3
SCHEDULE OF SEGMENTS (Details) (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Non-cash charge to reduce net realizable value $ 1,000   $ 1,000  
Gain on sale of equipment 625 625
Gain on sale of business (162)
Impairment charge 111
Tantaline [Member]        
Gain on sale of business       200
Meso Scribe Technologies Inc [Member]        
Gain on sale of equipment $ 600   $ 600  
Impairment charge       $ 100
v3.24.3
SEGMENT REPORTING (Details Narrative)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2024
USD ($)
Segment
Sep. 30, 2023
USD ($)
Segment Reporting Information [Line Items]        
Number of operating segments | Segment     3  
Sales $ 8,194,000 $ 6,234,000 $ 19,462,000 $ 19,998,000
Intersegment Eliminations [Member]        
Segment Reporting Information [Line Items]        
Sales (153,000) (223,000) (302,000) (554,000)
Intersegment Eliminations [Member] | CVD Equipment [Member]        
Segment Reporting Information [Line Items]        
Sales (151,000) (184,000) (298,000) (450,000)
Intersegment Eliminations [Member] | SDC [Member]        
Segment Reporting Information [Line Items]        
Sales $ 5,000 $ 39,000 $ 5,000 $ 104,000
v3.24.3
MESOSCRIBE SUBSIDIARY (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Aug. 08, 2023
Deposits from purchaser of equipment     $ 597  
Gain on sale of equipment 625 625    
Revenue 8,194 6,234 19,462 19,998    
Net income (loss) 203 (753) (2,030) (1,906)    
Assets 31,846 37,227 31,846 37,227 35,025  
Liabilities 6,872   6,872   8,822  
Impairment charge 111    
Meso Scribe Technologies Inc [Member]            
Aggregate purchase price 800   800     $ 900
Deposits from purchaser of equipment         600  
Gain on sale of equipment 600   600      
Revenue 700   800      
Net income (loss) 1,100   1,000      
Assets 800   800   200  
Liabilities $ 100   $ 100   $ 700  
Impairment charge       $ 100    
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