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 June 30, 2025
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ____ to _____

Commission file number: 1-16525

CVD EQUIPMENT CORPORATION

(Name of Registrant in Its Charter)

New York	11-2621692
State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

355 South Technology Drive Central Islip, New York 11722

(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 August 12, 2025.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Index

Part I - Financial Information
	Item 1 – Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024	3
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024	4
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024	5
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	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		31
	Item 4 – Controls and Procedures		31
Part II - Other Information
	Item 1 – Legal Proceedings		32
	Item 1A-Risk Factors		32
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		32
	Item 3 – Defaults Upon Senior Securities		32
	Item 4 – Mine Safety Disclosures		32
	Item 5 – Other Information		32
	Item 6 – Exhibits		32
Signatures			33

2

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)

	June 30, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	7,023		$	12,598
Accounts receivable, net of allowance for credit losses		4,993			2,149
Contract assets		3,768			2,226
Inventories		2,328			2,115
Other current assets		387			898
Total current assets		18,499			19,986
Property, plant and equipment, net		11,394			11,699
Other assets		52			1
Total assets	$	29,945		$	31,686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	939		$	679
Accrued expenses		1,583			2,236
Current maturities of long-term debt		89			87
Contract liabilities		2,017			3,135
Total current liabilities		4,628			6,137
Long-term debt, net of current portion		136			181
Total liabilities		4,764			6,318
Stockholders’ equity:
Common stock - $0.01 par value – authorized 20,000,000 shares; issued and outstanding 6,881,838 at June 30, 2025 and December 31, 2024		69			69
Additional paid-in capital		30,271			29,757
Accumulated deficit		(5,159	)		(4,458	)
Total stockholders’ equity		25,181			25,368
Total liabilities and stockholders’ equity	$	29,945		$	31,686

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)

	Three months ended						Six months ended
	June 30,						June 30,
	2025			2024			2025			2024
Revenue	$	5,111		$	6,345		$	13,427		$	11,267
Cost of revenue		4,038			4,803			9,658			8,941
Gross profit		1,073			1,542			3,769			2,326
Operating expenses
Research and development		686			665			1,467			1,410
Selling and shipping		349			426			769			845
General and administrative		1,178			1,349			2,403			2,597
Total operating expenses		2,213			2,440			4,639			4,852
Operating loss		(1,140	)		(898	)		(870	)		(2,526	)
Other income (expense):
Interest income		82			145			192			302
Interest expense		(3	)		(4	)		(7	)		(10	)
Other income (expense)		-			(4	)		-			1
Total other income, net		79			137			185			293
Loss before income tax		(1,061	)		(761	)		(685	)		(2,233	)
Income tax expense		-			-			16			-
Net loss	$	(1,061	)	$	(761	)	$	(701	)	$	(2,233	)
Loss per common share - basic	$	(0.15	)	$	(0.11	)	$	(0.10	)	$	(0.33	)
Loss per common share - diluted	$	(0.15	)	$	(0.11	)	$	(0.10	)	$	(0.33	)
Weighted average common shares
Basic		6,867,868			6,816,956			6,860,846			6,813,127
Diluted		6,867,868			6,816,956			6,860,846			6,813,127

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 June 30, 2025 and 2024					Additional
	Common stock				paid-in		Accumulated
	Shares		Par Value		Capital		Deficit			Total
Balance at April 1, 2025		6,881,838	$	69	$	30,021	$	(4,098	)	$	25,992
Net loss		-		-		-		(1,061	)		(1,061	)
Stock-based compensation		-		-		250		-			250
Balance at June 30, 2025		6,881,838	$	69	$	30,271	$	(5,159	)	$	25,181
Balance at April 1, 2024		6,824,511	$	68	$	28,962	$	(4,032	)	$	24,998
Net loss		-		-		-		(761	)		(761	)
Stock-based compensation		827		-		267		-			267
Balance at June 30, 2024		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504

Six months ended June 30, 2025 and 2024					Additional
	Common stock				paid-in		Accumulated
	Shares		Par Value		Capital		Deficit			Total
Balance at January 1, 2025		6,881,838	$	69	$	29,757	$	(4,458	)	$	25,368
Net loss		-		-		-		(701	)		(701	)
Stock-based compensation		-		-		514		-			514
Balance at June 30, 2025		6,881,838	$	69	$	30,271	$	(5,159	)	$	25,181
Balance at January 1, 2024		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Net loss		-		-		-		(2,233	)		(2,233	)
Stock-based compensation		827		-		534		-			534
Balance at June 30, 2024		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504

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)

	Six months ended
	June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(701	)	$	(2,233	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		514			534
Depreciation and amortization		354			307
Changes in assets and liabilities:
Accounts receivable		(2,844	)		(3,045	)
Contract assets		(1,542	)		50
Inventories		(213	)		(204	)
Other current assets		511			260
Accounts payable		260			398
Accrued expenses		(653	)		(29	)
Contract liabilities		(1,118	)		190
Net cash used in operating activities		(5,432	)		(3,772	)
Cash flows from investing activities:
Purchases of property and equipment		(49	)		(182	)
Investment in captive insurance company		(51	)		-
Net cash used in investing activities		(100	)		(182	)
Cash flows from financing activities
Payments of long-term debt		(43	)		(40	)
Net cash used in financing activities		(43	)		(40	)
Net decrease in cash and cash equivalents		(5,575	)		(3,994	)
Cash and cash equivalents at beginning of period		12,598			14,025
Cash and cash equivalents at end of period	$	7,023		$	10,031
Supplemental disclosure of cash flow information:
Income taxes paid	$	16		$	3
Interest paid	$	7		$	10

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

6

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively the “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 six months ended June 30, 2025 are not necessarily indicative of the results that can be expected for the year ending December 31, 2025.

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

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

Reclassifications

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

Liquidity

At June 30, 2025, the Company had $7.0 million in cash and cash equivalents. The Company believes that its existing cash and cash equivalents, together with anticipated cash flows from operations, collections of outstanding accounts receivable, revenue from its current backlog, sales of inventory on hand, and deposits and down payments on significant orders, will be sufficient to fund its working capital and capital equipment needs, as well as its expected cash requirements, for at least the next 12 months from the date of issuance of these condensed consolidated financial statements.

7

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 commencement of order acceptance. For systems sales that meet the criteria to recognize revenue over time, the Company recognizes revenue over time by using an input method based on costs incurred as it depicts the Company’s progress toward satisfaction of the performance obligation. For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions, the Company recognizes revenue based on point in time.

Under the over time method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Incurred costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work in process, and installed, as required by the project’s engineering design. Cost based input methods of revenue recognition require the Company to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor and other system costs. If the estimated total costs on any contract are greater than 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 impairment losses recognized on contract assets during the three and six months ended June 30, 2025 and 2024.

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

8

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 six months ended June 30, 2025 and 2024, all system equipment sales were recorded over time by using an input method except a) one contract that was recorded as revenue at the point in time the equipment was transferred to the customer during the third quarter of fiscal year 2024 and b) one contract that was entered during 2024 and will be recognized as revenue after June 30, 2025 upon transfer of the equipment to the customer.

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.

9

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 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 annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the timing of adoption and impact of this ASU on our consolidated financial statements.

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

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

10

NOTE 3: CONCENTRATION OF CREDIT RISK

Cash and cash equivalents

The Company had cash and cash equivalents of $7.0 million and $12.6 million at June 30, 2025 and December 31, 2024, respectively. The Company invests excess cash in U.S. treasury securities, certificates of deposit or deposit accounts, all with maturities of less than three months. Cash equivalents consisting of U.S. treasury securities were $5.9 million and $11.9 million at June 30, 2025 and December 31, 2024, respectively.

The Company’s cash balances are held in United States financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. The amount at risk at June 30, 2025 and December 31, 2024 was $0.7 million and $0.4 million, respectively.

Accounts receivable

The Company routinely assesses the financial strength of its customers. In accordance with the “expected credit loss” model of ASC 326, the carrying amount of accounts receivable is reduced by a valuation allowance that reflects the best estimate of the amounts the Company does not expect to collect. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating our reserve, including types of customers and their credit worthiness, experience and historical data adjusted for current conditions and reasonable supportable forecasts. The Company records an allowance for credit losses based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided based upon the collection history, current economic trends and reasonable supportable forecasts.

Accounts receivable is presented net of an allowance for credit losses of $48,000 as of June 30, 2025 and December 31, 2024. The allowance is based on prior experience and management’s evaluation of future economic conditions. 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.

At June 30, 2025, the accounts receivable balance included amounts from one customer that represented 31.5% of total accounts receivable. As of December 31, 2024, the accounts receivable balance includes amounts from three customers that represented 28.6%, 14.0% and 11.9% of total accounts receivable.

11

NOTE 3: CONCENTRATION OF CREDIT RISK (continued)

Sales concentration

Revenue from a single customer in any one period can exceed 10% of our total revenues. During the three months ended June 30, 2025, two customers exceeded 10% of revenues, representing 23.4% and 17.7% of revenues, and during the six months ended June 30, 2025, two customers represented 34.3% and 15.4% of revenues.

During the three months ended June 30, 2024, one customer represented 35.2% of revenues, and during the six months ended June 30, 2024, one customer represented 32.8% of revenues.

NOTE 4: REVENUE RECOGNITION

The following table represents a disaggregation of revenue for the three and six months ended June 30, 2025, and 2024 (in thousands):

	Three months ended June 30, 2025
	Over time		Point in time		Total
Energy	$	-	$	7	$	7
Aerospace		1,412		562		1,974
Industrial		1,912		316		2,228
Research		716		186		902
Total	$	4,040	$	1,071	$	5,111

	Three months ended June 30, 2024
	Over time		Point in time		Total
Energy	$	239	$	12	$	251
Aerospace		2,694		179		2,873
Industrial		1,542		300		1,842
Research		1,174		205		1,379
Total	$	5,649	$	696	$	6,345

12

NOTE 4: REVENUE RECOGNITION (continued)

	Six months ended June 30, 2025
	Over time		Point in time		Total
Energy	$	-	$	14	$	14
Aerospace		3,251		1,350		4,601
Industrial		6,036		723		6,759
Research		1,470		583		2,053
Total	$	10,757	$	2,670	$	13,427

	Six months ended June 30, 2024
	Over time		Point in time		Total
Energy	$	239	$	30	$	269
Aerospace		4,496		494		4,990
Industrial		2,801		774		3,575
Research		2,035		398		2,433
Total	$	9,571	$	1,696	$	11,267

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

The Company has unrecognized contract revenue of approximately $10.9 million at June 30, 2025, 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

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 June 30, 2025 (in thousands):

Costs incurred on contracts in progress	$	18,199
Estimated earnings		8,262
		26,461
Billings to date		(23,468	)
		2,993
Deferred revenue related to non-system contracts		(1,242	)
	$	1,751
Included in accompanying condensed consolidated balance sheet as of June 30, 2025 under the following captions (in thousands):
Contract assets	$	3,768
Contract liabilities	$	2,017

Of the contract liability balances at December 31, 2024 and 2023, $2.1 million and $2.7 million was recognized as revenue during the six months ended June 30, 2025 and 2024, respectively. Contract assets and contract liabilities at December 31, 2023 were $1.6 million and $4.9 million, respectively.

NOTE 5: INVENTORIES

Inventories consist of:

	June 30, 2025		December 31, 2024
Raw materials	$	1,134	$	1,217
Work-in-process		1,005		765
Finished goods		189		133
Total	$	2,328	$	2,115

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

14

NOTE 5: INVENTORIES (continued)

As of June 30, 2025, the net amount of PVT 150/200 systems inventory is approximately $0.4 million. If future PVT 150/200 orders do not materialize and if the Company is not otherwise able to sell this inventory, the Company could incur additional charges to further reduce the carrying value of such inventory to net realizable value. Such charges may be material to the Company’s financial position and future results of operations.

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 six months ended June 30, 2025 and 2024 is as follows:

	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Basic weighted average common shares outstanding		6,867,868		6,816,956		6,860,846		6,813,127
Dilutive effect of options and unvested restricted stock		-		-		-		-
Diluted weighted average shares outstanding		6,867,868		6,816,956		6,860,846		6,813,127

For the three and six months ended June 30, 2025 and 2024, all stock options were excluded in the computation of diluted earnings per share because their effect was antidilutive.

15

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

The Company recorded stock-based compensation for the three and six months ended June 30, 2025 and 2024, respectively, that were included in the following line items in our condensed consolidated statements of operations (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Cost of revenue	$	26	$	38	$	52	$	76
Research and development		45		47		92		94
Selling		21		27		48		54
General and administrative		158		155		322		310
Total	$	250	$	267	$	514	$	534

Stock-based compensation expense for three months ended June 30, 2025 and 2024 included $50,000 and $57,423, respectively, and for the six month periods June 30, 2025 and 2024 included $100,000 and $103,736, 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.

The following table summarizes stock options awards through June 30, 2025:

				Weighted
	Stock Option			Average
	Awards			Exercise
	(in shares)			Price
Outstanding at January 1, 2025		823,125		$	8.20
Forfeited		(15,500	)		11.04
Outstanding at June 30, 2025		807,625			8.19

The following table summarizes information about the outstanding and exercisable options at June 30, 2025 by ranges of exercise prices:

		Options Outstanding								Options Exercisable
				Weighted		Weighted						Weighted
Exercise				Average		Average						Average
Price		Number		Remaining		Exercise		Intrinsic		Number		Exercise		Intrinsic
Range		Outstanding		Contractual		Price		Value		Exercisable		Price		Value
$	4.00-7.00		442,125		6.5	$	4.54	$	-		311,625	$	4.46	$	-
$	7.01-10.00		20,000		2.8	$	8.07	$	-		20,000	$	8.07	$	-
$	10.01-13.00		120,000		1.7	$	10.52	$	-		120,000	$	10.57	$	-
$	13.01-16.00		225,500		7.7	$	14.11	$	-		112,000	$	14.11	$	-

16

NOTE 8: STOCK-BASED COMPENSATION EXPENSE (continued)

As of June 30, 2025, there was $1.1 million of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 1.6 years.

NOTE 9: INCOME TAXES

As of June 30, 2025 and December 31, 2024, the Company has provided a full valuation allowance against its net deferred tax assets. This was based on management’s assessment, including the last four 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 has determined that it has three reportable segments, organized primarily based on product offerings, as follows:

● CVD Equipment – manufactures chemical vapor deposition, physical vapor transport and thermal process equipment.

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

● MesoScribe – provided electronic printing services and products (heaters, antennas, and sensors). The operations of MesoScribe were closed down during 2024.

Both CVD Equipment and SDC also sell spares and parts and provide services related to the equipment each segment sells.

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

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

17

NOTE 10: SEGMENT REPORTING (continued)

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

The following provides segment information as described below (in thousands):

	For the three months ended June 30, 2025
	CVD			SDC			MesoScribe			Total
Segment revenue	$	3,403		$	1,734		$	9		$	5,146
Less:
Cost of revenue		(2,928	)		(1,142	)		(3	)		(4,073	)
Research and development		(639	)		(47	)		-			(686	)
Selling		(282	)		(67	)		-			(349	)
General and administrative		(169	)		(247	)		-			(416	)
Interest expense		(3	)		-			-			(3	)
Segment net income (loss)	$	(618	)	$	231		$	6		$	(381	)
Segment assets	$	20,022		$	3,923		$	-		$	23,945
Capital expenditures	$	4		$	-		$	-		$	4
Depreciation and amortization	$	156		$	13		$	-		$	169

	For the three months ended June 30, 2024
	CVD			SDC			MesoScribe			Total
Segment revenue	$	4,107		$	2,315		$	55		$	6,477
Less:
Cost of revenue		(3,586	)		(1,285	)		(64	)		(4,935	)
Research and development		(599	)		(66	)		-			(665	)
Selling		(375	)		(51	)		-			(426	)
General and administrative		(257	)		(198	)		(36	)		(491	)
Other expense		(4	)		-			-			(4	)
Interest expense		(4	)		-			-			(4	)
Segment net income (loss)	$	(718	)	$	715		$	(45	)	$	(48	)
Segment assets	$	19,460		$	4,310		$	222		$	23,992
Capital expenditures	$	108		$	4		$	-		$	112
Depreciation and amortization	$	142		$	12		$	-		$	154

18

NOTE 10: SEGMENT REPORTING (continued)

The following provides segment information as described below (in thousands):

	For the six months ended June 30, 2025
	CVD			SDC			MesoScribe			Total
Segment revenue	$	9,718		$	3,876		$	31		$	13,625
Less:
Cost of revenue		(7,458	)		(2,394	)		(4	)		(9,856	)
Research and development		(1,373	)		(94	)		-			(1,467	)
Selling		(649	)		(120	)		-			(769	)
General and administrative		(345	)		(449	)		-			(794	)
Interest expense		(7	)		-			-			(7	)
Segment net income	$	(114	)	$	819		$	27		$	732
Capital expenditures	$	43		$	6		$	-		$	49
Depreciation and amortization	$	328		$	26		$	-		$	354

	For the six months ended June 30, 2024
	CVD			SDC			MesoScribe			Total
Segment revenue	$	7,054		$	4,246		$	114		$	11,414
Less:
Cost of revenue		(6,650	)		(2,301	)		(137	)		(9,088	)
Research and development		(1,276	)		(134	)		-			(1,410	)
Selling		(747	)		(98	)		-			(845	)
General and administrative		(475	)		(368	)		(48	)		(891	)
Other income		1			-			-			1
Interest expense		(10	)		-			-			(10	)
Segment net income	$	(2,103	)	$	1,345		$	(71	)	$	(829	)
Capital expenditures	$	178		$	4		$	-		$	182
Depreciation and amortization	$	283		$	24		$	-		$	307

Intersegment revenues are determined based on similar product sales to external customers of the Company.

The following table presents a reconciliation of net income (loss) of reportable segments to consolidated net loss (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024
Net income (loss) of reportable segments	$	(381	)	$	(48	)	$	732		$	(829	)
Unallocated amounts:
Corporate expenses		(762	)		(858	)		(1,609	)		(1,706	)
Interest income		82			145			192			302
Income tax (expense) benefit		-			-			(16	)		-
Consolidated net loss	$	(1,061	)	$	(761	)	$	(701	)	$	(2,233	)

19

NOTE 10: SEGMENT REPORTING (continued)

The following table presents revenue by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
United States	$	4,630	$	5,822	$	12,585	$	10,143
North America, excluding US		-		16		3		16
Europe, Middle East and Africa		386		220		564		343
Asia-Pacific		95		287		275		765
Consolidated total revenue	$	5,111	$	6,345	$	13,427	$	11,267

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

NOTE 11: RISKS AND CONTINGENCIES

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

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

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

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

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 growth and return to consistent profitability;

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

● competition in our existing and potential future product lines of business, including our aerospace equipment and PVT150 / PVT200 systems;

● uncertainty as to our ability to identify and develop new products for growth markets;

● our ability to obtain financing on acceptable terms if and when needed;

● our ability to attract and retain key personnel and employees;

● uncertainty as to changes to international trade policies including the imposition of tariffs; and

● uncertainty as to our ability to adequately obtain raw materials and on commercially reasonable terms.

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

21

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.

Executive Summary

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

We design, develop, and manufacture a broad range of equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, aerospace, battery energy storage markets as well as advanced industrial applications including nuclear, and research.

We conduct our business through three reportable segments: (i) CVD Equipment that designs and manufactures chemical vapor deposition, physical vapor transport and thermal process equipment; (ii) SDC that designs and manufactures ultra-high purity gas and chemical delivery control systems; and (iii) MesoScribe that provided products related to advanced materials and coatings. The operations of MesoScribe were closed down during 2024.

During the quarter ended June 30, 2025:

● Revenue decreased by $1.2 million or 19.4% as compared to the second quarter of 2025 due to lower system revenues at both our CVD Equipment and SDC segments.

● Gross profit decreased by $0.5 million or 30.4% due to lower revenues.

● Total bookings for the second quarter of 2025 were approximately $4.5 million as compared to bookings of $3.2 million in the second quarter of 2024.

● Total bookings for the first half of 2025 were approximately $7.3 million as compared to bookings of $16.9 million in the first half of 2024.

● Backlog declined from $13.8 million at March 31, 2025 to $13.2 million at June 30, 2025 due to lower orders in our CVD Equipment segment.

● Cash and cash equivalents at June 30, 2025 was $7.0 million as compared to $12.6 million at December 31, 2024.

Business Update

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

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.

In February 2024, we received an order from a customer for our PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. We shipped this unit to the customer in the third quarter of 2024. PVT150 / PVT200 systems may provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission. In addition, SiC semiconductors specifically help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers. We plan to evaluate the market conditions and opportunities to expand our product offerings in the power electronics market.

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 and the units are expected to be delivered over 18 to 24 months period. In early July 2025, we shipped the first of the CVD4000™ SiC coating reactor systems to our industrial customer.

In November 2024, we received a follow-on order from an aerospace company for an additional CVI 3500 system that will be used by our customer to produce ceramic matrix composite materials.

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.

The global economy continues to confront the impacts of recent executive orders by the U.S. federal administration regarding tariffs on imports from various countries including the European Union, Canada, Mexico, and China and the potential impact of actions taken by other countries in response to the announced tariffs. Tariffs may make our products less cost competitive and reduce gross margins. The impact on our business related to these or any other tariffs that may be imposed, is uncertain and depends on multiple factors, including the duration and expansion of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures by impacted trade partners, and related inflationary effects.

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

23

Results of Operations

Three Months Ended June 30, 2025 and 2024

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

	Three months ended June 30
	2025			2024			Change			Percent
Revenue	$	5,111		$	6,345		$	(1,234	)		(19.4	)%
Cost of revenue		4,038			4,803			(765	)		(15.9	)%
Gross profit		1,073			1,542			(469	)		(30.4	)%
Gross margin		21.0	%		24.3	%
Operating expenses:
Research and development		686			665			21			3.1	%
Selling		349			426			(77	)		(18.1	)%
General and administrative		1,178			1,349			(171	)		(12.7	)%
Total operating expenses		2,213			2,440			(227	)		(9.3	)%
Operating loss		(1,140	)		(898	)		(242	)		(26.9	)%
Other income (expense):
Interest income		82			145			(63	)		(43.4	)%
Interest expense		(3	)		(4	)		1			*
Other income (expense)		-			(4	)		4			*
Total other income, net		79			137			(58	)		(42.3	)%
Loss before income taxes		(1,061	)		(761	)		(300	)		(39.4	)%
Income tax expense		-			-						*
Net loss	$	(1,061	)	$	(761	)	$	(300	)		(39.4	)%

* Not meaningful

24

	Three months ended June 30
	2025			2024			Change			Percent
Revenues
CVD Equipment	$	3,403		$	4,107		$	(704	)		(17.1	)%
SDC		1,734			2,315			(581	)		(25.1	)%
MesoScribe		9			55			(46	)		(83.6	)%
Intersegment sales elimination		(35	)		(132	)		97			73.5	)%
Total	$	5,111		$	6,345		$	(1,234	)		(19.4	)%

Revenue

Our revenue for the three months ended June 30, 2025 was $5.1 million compared to $6.3 million for the three months ended June 30, 2024, a decrease of $1.2 million or 19.4%.

The decrease in revenue versus the prior year period was primarily attributable to lower revenue of $0.7 million from our CVD Equipment segment and lower revenue of $0.6 million from our SDC segment. Revenue from one industrial customer for the quarter ended June 30, 2025 represented 23.4% of our total revenues and 35.2% of CVD Equipment segment revenues. Revenue from one aerospace customer for the quarter ended June 30, 2025 represented 17.7% of our total revenues and 26.6% of CVD Equipment segment revenues.

The revenue contributed by our CVD Equipment segment for the quarter ended June 30, 2025 of $3.4 million (net of intersegment revenue of $8,000) represented 66.4% of overall revenue as compared to $4.1 million (net of intersegment revenue of $0) or 64.7% of overall revenue for the quarter ended June 30, 2024. The decrease in revenues of $0.7 million or 17.4% resulted principally from lower revenues from system contracts in progress of $1.1 million offset by an increase in non-system revenue of $0.4 million.

The revenue contributed by our SDC segment for the quarter ended June 30, 2025 of $1.7 million (net of intersegment sales of $27,000) represented 33.4% of overall revenue as compared to $2.2 million (net of intersegment sales of $132,000) or 34.4% of overall revenue for the year quarter ended June 30, 2025. SDC segment revenue decreased by $0.6 million or 25.1% due to less contracts in progress during the quarter.

Our order backlog at June 30, 2025 was approximately $13.2 million as compared to $13.8 million at March 31, 2025. Our order backlog at June 30, 2025 consists of approximately $12.0 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $1.2 million represents non-system orders received from customers. As of June 30, 2025, one industrial customer represented 25.6% of our backlog and one aerospace customer represented 25.7% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

25

Gross Profit

Gross profit for the three months ended June 30, 2025 was $1.1 million, with a gross margin of 20.9%, compared to a gross profit of $1.6 million and a gross margin of 24.3% for the three months ended June 30, 2024. The decrease in gross profit of $0.5 million was principally due to lower system revenues in our CVD Equipment and SDC segments offset by higher non-system revenues in our CVD Equipment segment.

Research and Development

For the three months ended June 30, 2025, research and development expenses were $0.7 million, or 13.1% of revenue as compared to $0.7 million, or 10.5% of revenue for the three months ended June 30, 2024, an increase of $21,000 or 3.1%. The increase in 2025 was the result of less hours being charged to cost of revenue for contracts in progress offset by a reduction in personnel.

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 $0.3 million or 6.8% of the revenue for the three months ended June 30, 2025 as compared to $0.4 million or 6.7% of revenue for the three months ended June 30, 2024, a decrease of $0.1 million or 18.1%. The decrease was the result of a reduction in personnel.

General and Administrative

General and administrative expenses for the three months ended June 30, 2025 were $1.2 million or 24% of revenue compared to $1.4 million or 23.0% of revenue for the three months ended June 30, 2024, a decrease of $0.2 million or 12.7%. The decrease in 2025 was due principally to a lower professional costs.

Other Income (Expense), Net

Other income (expense) consist principally of interest income on U.S. treasury securities and was lower than the prior year quarter due to less funds available for investment.

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.

26

Six Months Ended June 30, 2025 versus June 30, 2024

The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

	Six months ended June 30
	2025			2024			Change			Percent
Revenue	$	13,427		$	11,267		$	2,160			19.2	%
Cost of revenue		9,658			8,941			717			8.0	%
Gross profit		3,769			2,326			1,443			61.9	%
Gross margin		28.1	%		20.7	%
Operating expenses:
Research and development		1,467			1,410			57			4.0	%
Selling		769			845			(76	)		(8.9	)%
General and administrative		2,403			2,597			(194	)		(7.4	)%
Total operating expenses		4,639			4,852			(213	)		(4.4	)%
Operating loss		(870	)		(2,526	)		1,656			65.5	)%
Other income (expense):
Interest income		192			302			(110	)		(36.4	)%
Interest expense		(7	)		(10	)		3			*
Other income		-			1			(1	)		*
Total other income, net		185			293			(108	)		(36.8	)%
Loss before income taxes		(685	)		(2,233	)		1,547			69.3	%
Income tax expense		16			-			16			*
Net loss	$	(701	)	$	(2,233	)	$	1,532			68.1	%

* Not meaningful

27

	Six months ended June 30
	2025			2024			Change			Percent
Revenue
CVD Equipment	$	9,718		$	7,054		$	2,664			37.8	%
SDC		3,876			4,246			(370	)		(8.7	)%
MesoScribe		31			114			(83	)		(72.8	)%
Intersegment sales elimination		(198	)		(147	)		(51	)		(34.7	)%
Total	$	13,427		$	11,267		$	2,160			19.2	%

Revenue

Our revenue for the six months ended June 30, 2025 was $13.4 million compared to $11.3 million for the six months ended June 30, 2024, an increase of $2.2 million or 19.2%.

The increase in revenue versus the prior year period was primarily attributable to higher revenues of $2.7 million from our CVD Equipment segment offset by lower revenues of $0.4 million from our SDC segment. Revenue from one industrial customer for the six months ended June 30, 2025 represented 34.3% of our total revenues and 47.6% of CVD Equipment segment revenues. Revenue from one aerospace customer for the six months ended June 30, 2025 represented 15.4% of our total revenues and 21.4% of CVD Equipment segment revenues.

The revenue contributed by the CVD Equipment segment for the six months ended June 30, 2025 of $9.7 million (net of intersegment revenue of $12,000) represented 72.3% of overall revenue as compared to $7.1 million (net of intersegment revenue of $0) or 62.6% of overall revenue for the six months ended June 30, 2024. The increase in revenues of $2.6 million or 37.8% resulted principally due higher contract revenues from contracts in progress of $1.7 million and higher non-system revenues of $1.0 million.

The revenue contributed by the SDC segment for the six months ended June 30, 2025 of $3.7 million (net of intersegment revenue of $0.2 million) represented 27.5% of overall revenue as compared to $4.2 million (net of intersegment revenue of $0.1 million) or 36.4% of overall revenue for the six months ended June 30, 2024. Revenue for our SDC segment decreased by $0.4 million or 8.7% due to due to less contracts in progress during the period.

Gross Profit

Gross profit for the six months ended June 30, 2025 was $3.7 million, with a gross margin of 28.1%, compared to a gross profit of $2.3 million and a gross margin of 20.7% for the six months ended June 30, 2024. The increase in gross profit of $1.4 million was principally due to higher system and non-system revenues in our CVD Equipment segment offset by lower revenues in our SDC segment.

28

Research and Development

For the six months ended June 30, 2025, research and development expenses were $1.4 million, or 10.9% of revenue as compared to $1.4 million, or 12.5% of revenue for the six months ended June 30, 2024, an increase of $57,000 or 4%. The increase in 2025 was the result of less hours being charged to cost of revenue for contracts in progress offset by a reduction in personnel.

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 $0.7 million or 5.7% of the revenue for the six months ended June 30, 2025 as compared to $0.8 million or 7.4% of revenue for the six months ended June 30, 2024, a decrease of $0.1 million or 8.9%. The decrease was the result of a reduction in personnel.

General and Administrative

General and administrative expenses for the six months ended June 30, 2025 were $2.4 million or 18.2% of revenue compared to $2.6 million or 23% of revenue for the six months ended June 30, 2024, a decrease of $0.2 million or 4.4%. The decrease in expenses was principally due lower professional fees and lower bonus accrual.

Other Income (Expense), Net

Other income (expense) consist principally of interest income on U.S. treasury securities and was lower than the prior year quarter due to less funds available for investment.

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 June 30, 2025, aggregate working capital was $13.9 million as compared to aggregate working capital of $13.8 million at December 31, 2024. Cash and cash equivalents at June 30, 2025 and December 31, 2024 were $7.0 million and $12.6 million, respectively.

Net cash used in operating activities for the six months ended June 30, 2025 was $5.4 million. This decrease was principally due to the net loss of $0.7 million, an increase in accounts receivable of $2.8 million, an increase in contract assets of $1.5 million and a decrease in contract liabilities of $1.1 million offset by non-cash items of $0.9 million.

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Net cash used in investing activities for the six months ended June 30, 2025 consisted of capital expenditures of $49,000 related to purchases of property and equipment and investment in a captive insurance company related to our self-insured health benefits program of $51,000.

Net cash used in financing activities for the six months ended June 30, 2025 consisted of repayments of $43,000 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 these financial condensed consolidated financial statements included in this Form 10-Q. We will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs.

Critical Accounting Estimates

Use of 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, we base our estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

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

Revenue Recognition

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

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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.

We have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years. Historically, we have demonstrated an ability to accurately estimate total revenues and total expenses relating to our long-term contracts. However, there exist many inherent risks and uncertainties in estimating revenues, expenses, and progress toward completion, particularly on larger or longer-term contracts. If we do not estimate the total sales, related costs, and progress toward completion on such contracts, the estimated gross margins may be significantly impacted, or losses may need to be recognized in future periods. Any such resulting changes in margins or contract losses could be material to our results of operations and financial condition.

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

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.

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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 19, 2025.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6.	Exhibits
31.1*	Certification of Emmanuel Lakios, Chief Executive Officer, dated August 12, 2025
31.2*	Certification of Richard Catalano, Chief Financial Officer, dated August 12, 2025
32.1*	Certification of Emmanuel Lakios, Chief Executive Officer, dated August 12, 2025, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Richard Catalano, Chief Financial Officer, dated August 12, 2025, 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.

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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 12^th day of August 2025.

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)

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