<PAGE> 1
US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 9-30-98
( ) TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE EXCHANGE ACT
For the transition period from _____________to______________
Commission file number_____________________________________
CVD EQUIPMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
11-2621692
(IRS Employer Identification Number)
1881 LAKELAND AVENUE, RONKONKOMA, NY 11779
(Address of principal executive offices)
516-981-7081
(Issuers Telephone Number)
(Former name, former address, and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by section 13 or 15 (d) of the Exchange Act during the past
12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15 (d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,918,750 SHARES OF COMMON STOCK, $.01 PAR VALUE AS OF 11-15-98
<PAGE> 2
CVD EQUIPMENT CORPORATION
BALANCE SHEET
ASSETS
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 837,204 $ 239,476
MARKETABLE SECURITES 763,350 -
ACCOUNTS RECEIVABLE 463,695 394,065
LOAN RECEIVABLE-OFFICER - 499,154
COST IN EXCESS OF BILLINGS 1,223,723 1,391,021
INVENTORIES 84,307 135,807
DEFFERED TAXES 197,334 197,334
OTHER CURRENT ASSETS 31,014 111,091
----------- -----------
TOTAL CURRENT ASSETS 3,600,627 2,967,948
PROPERTY, PLANT, & EQUIPMENT 336,091 820,916
AT COST & NET OF ACCUMULATED DEPRECIATION
OTHER ASSETS:
OTHER 205,836 97,065
----------- -----------
TOTAL OTHER ASSETS 205,836 97,065
TOTAL ASSETS 4,142,554 3,885,929
=========== ===========
</TABLE>
<PAGE> 3
CVD EQUIPMENT CORPORATION
BALANCE SHEET
LIABILTIES & STOCKHOLDER'S EQUITY
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
CURRENT LIABILTIES:
NOTES PAYABLE $ - $ -
CURRENT MATURITIES OF LONG TERM DEBT 4,734 -
ACCOUNTS PAYABLE 66,123 96,312
DEPOSIT ON A CONTRACT FOR SALE OF REAL EST - 40,000
BILLINGS IN EXCESS OF COST - -
OTHER CURRENT LIABILITIES 182,105 119,218
----------- -----------
TOTAL CURRENT LIABILITIES 252,962 255,530
LONG TERM DEBT 17,954 -
----------- -----------
TOTAL LIABILTIES 270,916 255,530
STOCKHOLDERS EQUITY
COMMON STOCK - $.01 PAR
AUTHORIZED 10,000,000 SHARES
ISSUED & OUTSTANDING 2,918,750 SHARES 29,188 29,188
ADDITIONAL PAID-IN CAPITAL 2,784,060 2,784,060
RETAINED EARNINGS 1,045,040 817,151
UNREALIZED GAIN ON MARKETABLE SECURITIES 13,350 -
----------- -----------
TOTAL EQUITY 3,871,638 3,630,399
TOTAL LIABILTIES & EQUITY 4,142,554 3,885,929
=========== ===========
</TABLE>
<PAGE> 4
CVD EQUIPMENT CORPORATION
STATEMENT OF INCOME & RETAINED EARNINGS
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $ 502,268 $ 857,735
REVENUE ON UNCOMPLETED CONTRACTS 196,731 165,064
----------- -----------
TOTAL REVENUE 698,999 1,022,799
COST OF GOODS SOLD 453,223 597,077
----------- -----------
GROSS PROFIT 245,776 425,722
OPERATING EXPENSES
SELLING AND SHIPPING 33,154 25,746
GENERAL AND ADMINISTRATIVE 196,185 182,505
----------- -----------
TOTAL OPERATING EXPENSE 229,339 208,251
INCOME BEFORE INTEREST AND OTHER EXPENSES 16,437 217,471
OTHER INCOME (EXPENSE)
INTEREST INCOME 19,975 13,797
INTEREST EXPENSE (346) (451)
OTHER INCOME (415) -
GAIN ON SALE OF FIXED ASSET - -
----------- -----------
TOTAL OTHER INCOME 19,214 13,346
INCOME BEFORE TAXES 35,651 230,817
INCOME TAX BENEFIT (PROVISION) (7,907) (54,788)
----------- -----------
NET INCOME 27,744 176,029
RETAINED EARNINGS AT BEGINNING 1,017,296 567,038
RETAINED EARNINGS AT END $1,045,040 $ 743,067
=========== ===========
NET INCOME PER SHARE
BASIC $ 0.01 $ 0.06
DILUTED $ 0.01 $ 0.06
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 2,918,750 2,918,750
=========== ===========
</TABLE>
<PAGE> 5
CVD EQUIPMENT CORPORATION
STATEMENT OF INCOME & RETAINED EARNINGS
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $ 855,157 $1,779,785
REVENUE ON UNCOMPLETED CONTRACTS 1,715,049 1,424,612
----------- -----------
TOTAL REVENUE 2,570,206 3,204,397
COST OF GOODS SOLD 1,764,474 1,948,992
----------- -----------
GROSS PROFIT 805,732 1,255,405
OPERATING EXPENSES
SELLING AND SHIPPING 118,870 95,473
GENERAL AND ADMINISTRATIVE 602,340 521,825
----------- -----------
TOTAL OPERATING EXPENSE 721,210 617,298
INCOME BEFORE INTEREST AND OTHER EXPENSES 84,522 638,107
OTHER INCOME (EXPENSE)
INTEREST INCOME 54,025 35,427
INTEREST EXPENSE (959) (4,826)
OTHER INCOME 1,871 1,094
GAIN ON SALE OF FIXED ASSET 164,442 -
----------- -----------
TOTAL OTHER INCOME 219,379 31,695
INCOME BEFORE TAXES 303,901 669,802
INCOME TAX BENEFIT (PROVISION) (76,013) (109,980)
----------- -----------
NET INCOME 227,888 559,822
RETAINED EARNINGS AT BEGINNING 817,152 183,245
RETAINED EARNINGS AT END $1,045,040 $ 743,067
=========== ===========
NET INCOME PER SHARE
BASIC $ 0.08 $ 0.19
DILUTED $ 0.07 $ 0.19
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 2,918,750 2,918,750
=========== ===========
</TABLE>
<PAGE> 6
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
NET INCOME $ 27,744 $ 176,029
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
GAIN ON SALE OF FIXED ASSET - -
DEPRECIATION 29,625 31,663
DEFERRED TAX BENEFIT - -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES (187,478) 262,939
COST IN EXCESS OF BILLINGS 231,951 (354,624)
INVENTORIES (4,257) (6,483)
OTH CURRENT ASSETS 20,128 5,647
OTHER ASSETS (47,516) (44,280)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE (124,917) (54,815)
BILLINGS IN EXCESS OF COST - -
OTH CURRENT LIABILITIES (36,920) 85,752
----------- -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (91,640) 101,828
CASH FLOWS FROM INVESTING ACTIVITES:
OFFICER LOAN RECEIVABLE - 287
MARKETABLE SECURITIES - -
CAPITAL EXPENDITURES (32,138) (17,173)
PROCEEDS FROM SALE OF FIXED ASSET - -
----------- -----------
NET CASH USED IN INVESTING ACTIVITES (32,138) (16,886)
CASH FLOWS FROM FINANCING ACTIVITES:
INCREASE (DECREASE) IN:
NOTES PAYABLE - -
DEBT-CURRENT 69 (35,827)
DEBT-LONG TERM (1,210) -
----------- -----------
NET CASH USED IN FINANCING ACTIVITES (1,141) (35,827)
----------- -----------
NET (DECREASE) INCREASE IN CASH (124,919) 49,115
CASH AT BEGINNING OF PERIOD 962,123 482,063
CASH AT END OF PERIOD 837,204 531,178
=========== ===========
</TABLE>
<PAGE> 7
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
NET INCOME $ 227,888 $ 559,822
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
GAIN ON SALE OF FIXED ASSET (164,442) -
DEPRECIATION 87,036 94,586
DEFERRED TAX BENEFIT - -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES (69,630) 364,562
COST IN EXCESS OF BILLINGS 167,299 (163,026)
INVENTORIES 51,500 (46,483)
OTH CURRENT ASSETS 71,343 (7,204)
OTHER ASSETS (108,770) 6,405
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE (30,189) (45,709)
BILLINGS IN EXCESS OF COST - (41,090)
OTH CURRENT LIABILITIES 22,887 (73,151)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 254,922 648,712
CASH FLOWS FROM INVESTING ACTIVITES:
OFFICER LOAN RECEIVABLE 507,888 (5,171)
MARKETABLE SECURITIES (750,000) -
CAPITAL EXPENDITURES (153,151) (47,893)
PROCEEDS FROM SALE OF FIXED ASSET 715,381 -
NET CASH PROVIDED BY (USED IN) ----------- -----------
INVESTING ACTIVITIES 320,118 (53,064)
CASH FLOWS FROM FINANCING ACTIVITES:
INCREASE (DECREASE) IN:
NOTES PAYABLE - -
DEBT-CURRENT 4,734 (131,682)
DEBT-LONG TERM 17,954 -
NET CASH PROVIDED BY (USED IN) ----------- -----------
FINANCING ACTIVITIES 22,688 (131,682)
----------- -----------
NET INCREASE IN CASH 597,728 463,966
CASH AT BEGINNING OF PERIOD 239,476 67,212
CASH AT END OF PERIOD 837,204 531,178
=========== ===========
</TABLE>
<PAGE> 8
CVD EQUIPMENT CORPORATION
NOTE TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
BASIS OF FINANCIAL STATEMENTS
The financial data is subject to year end audit and does not claim
to be a complete presentation since note disclosure under generally
accepted accounting procedures is not included. Note disclosures
required under generally accepted accounting procedures are included
in the Company's audited financial statements filed as part of Form
10-KSB for the year ended December 31, 1997. Form 10-QSB should be
read in conjunction with these financial statements.
The results of operations for the three months are not necessarily
indicative of those for the full year. In the opinion of management,
the accompanying unaudited financial statements contain all adjustments
necessary to fairly present the financial position and the results of
operation for the periods indicated.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL OPERATIONS
CONDITIONS AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998
Revenue for the third quarter of 1998 was $698,999. This is a decrease
of 31.7% when compared to the third quarter of 1997. Gross profit for the
third quarter of 1998 is 35% versus 42% in the comparable period one year
ago.
Selling and G & A expense are higher for the third quarter when compared
with last year. For 1998, there was $229,339 expensed to these accounts
versus $208,251 in 1997. Of this $21,000 increase, $19,000 is attributed
to payroll expense.
Total other income is higher for the third quarter when compared with
last year. For 1998, there was $19,214 booked to the accounts versus
$13,346 in 1997. This $6,000 increase is attributed mainly to interest
income.
Liquidity
CVD's cash position decreased by $124,919 for the quarter. This was
mainly attributed to a lower Accounts Payable.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
CVD EQUIPMENT CORPORATION
(Registrant)
/s/ LEONARD A. ROSENBAUM
-------------------------------
Leonard A. Rosenbaum
President, CEO
/s/ SHARON CANESE
-------------------------------
Sharon Canese
Chief Financial Officer
Date: November 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 837,204
<SECURITIES> 763,350
<RECEIVABLES> 1,687,418
<ALLOWANCES> 0
<INVENTORY> 84,307
<CURRENT-ASSETS> 3,600,627
<PP&E> 1,703,237
<DEPRECIATION> 1,367,146
<TOTAL-ASSETS> 4,142,554
<CURRENT-LIABILITIES> 252,962
<BONDS> 0
0
0
<COMMON> 2,813,248
<OTHER-SE> 1,058,390
<TOTAL-LIABILITY-AND-EQUITY> 4,142,554
<SALES> 855,157
<TOTAL-REVENUES> 2,570,206
<CGS> 1,764,474
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 721,210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 959
<INCOME-PRETAX> 303,901
<INCOME-TAX> 76,013
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,888
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
</TABLE>
