<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 6-30-98
( ) 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 8-15-98
<PAGE> 2
CVD EQUIPMENT CORPORATION
BALANCE SHEET
ASSETS
JUNE 30,1998
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 962,123 $ 239,476
ACCOUNTS RECEIVABLE 276,216 394,065
LOAN RECEIVABLE-OFFICER - 499,154
COST IN EXCESS OF BILLINGS 1,455,674 1,391,021
INVENTORIES 80,049 135,807
DEFFERED TAXES 197,334 197,334
OTHER CURRENT ASSETS 51,143 111,091
----------- -----------
TOTAL CURRENT ASSETS 3,022,539 2,967,948
PROPERTY, PLANT, & EQUIPMENT 333,578 820,916
AT COST & NET OF ACCUMULATED DEPRECIATION
OTHER ASSETS:
MARKETABLE SECURITIES 757,500 -
OTHER 158,321 97,065
----------- -----------
TOTAL OTHER ASSETS 915,821 97,065
TOTAL ASSETS 4,271,938 3,885,929
=========== ===========
</TABLE>
<PAGE> 3
CVD EQUIPMENT CORPORATION
BALANCE SHEET
LIABILTIES & STOCKHOLDER'S EQUITY
JUNE 30,1998
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
CURRENT LIABILTIES:
NOTES PAYABLE $ - $ -
CURRENT MATURITIES OF LONG TERM DEBT 4,665 -
ACCOUNTS PAYABLE 191,040 96,312
DEPOSIT ON A CONTRACT FOR SALE OF REAL EST - 40,000
BILLINGS IN EXCESS OF COST - -
OTHER CURRENT LIABILITIES 219,025 119,218
----------- -----------
TOTAL CURRENT LIABILITIES 414,730 255,530
LONG TERM DEBT 19,164 -
----------- -----------
TOTAL LIABILTIES 433,894 255,530
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 1,017,296 817,151
UNREALIZED GAIN ON MARKETABLE SECURITIES 7,500 -
----------- -----------
TOTAL EQUITY 3,838,044 3,630,399
TOTAL LIABILTIES & EQUITY 4,271,938 3,885,929
=========== ===========
</TABLE>
<PAGE> 4
CVD EQUIPMENT CORPORATION
STATEMENT OF INCOME & RETAINED EARNINGS
JUNE 30,1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $ 137,427 $ 838,083
REVENUE ON UNCOMPLETED CONTRACTS 852,199 236,684
----------- -----------
TOTAL REVENUE 989,626 1,074,767
COST OF GOODS SOLD 704,049 646,850
----------- -----------
GROSS PROFIT 285,577 427,917
OPERATING EXPENSES
SELLING AND SHIPPING 42,607 31,852
GENERAL AND ADMINISTRATIVE 207,747 173,630
----------- -----------
TOTAL OPERATING EXPENSE 250,354 205,482
INCOME BEFORE INTEREST AND OTHER EXPENSES 35,223 222,435
OTHER INCOME (EXPENSE)
INTEREST INCOME 19,206 11,343
INTEREST EXPENSE (362) (1,599)
OTHER INCOME 1,786 541
GAIN ON SALE OF FIXED ASSET - -
----------- -----------
TOTAL OTHER INCOME 20,630 10,285
INCOME BEFORE TAXES 55,853 232,720
INCOME TAX BENEFIT (PROVISION) (14,804) (54,642)
----------- -----------
NET INCOME 41,049 178,078
RETAINED EARNINGS AT BEGINNING 976,247 388,960
RETAINED EARNINGS AT END $1,017,296 $ 567,038
=========== ===========
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
JUNE 30,1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $ 352,889 $ 922,050
REVENUE ON UNCOMPLETED CONTRACTS 1,518,318 1,259,548
----------- -----------
TOTAL REVENUE 1,871,207 2,181,598
COST OF GOODS SOLD 1,311,251 1,351,915
----------- -----------
GROSS PROFIT 559,956 829,683
OPERATING EXPENSES
SELLING AND SHIPPING 85,715 69,726
GENERAL AND ADMINISTRATIVE 406,155 339,321
----------- -----------
TOTAL OPERATING EXPENSE 491,870 409,047
INCOME BEFORE INTEREST AND OTHER EXPENSES 68,086 420,636
OTHER INCOME (EXPENSE)
INTEREST INCOME 34,050 21,630
INTEREST EXPENSE (613) (4,375)
OTHER INCOME 2,286 1,094
GAIN ON SALE OF FIXED ASSET 164,442 -
----------- -----------
TOTAL OTHER INCOME 200,165 18,349
INCOME BEFORE TAXES 268,251 438,985
INCOME TAX BENEFIT (PROVISION) (68,106) (55,192)
----------- -----------
NET INCOME 200,145 383,793
RETAINED EARNINGS AT BEGINNING 817,151 183,245
RETAINED EARNINGS AT END $1,017,296 $ 567,038
=========== ===========
NET INCOME PER SHARE
BASIC $ 0.07 $ 0.13
DILUTED $ 0.06 $ 0.13
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
JUNE 30,1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
NET INCOME $ 41,047 $ 218,078
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
GAIN ON SALE OF FIXED ASSET - -
DEPRECIATION 28,872 31,628
DEFERRED TAX BENEFIT - -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES 50,039 (19,440)
COST IN EXCESS OF BILLINGS (646,620) 294,420
INVENTORIES 8,995 3,618
OTH CURRENT ASSETS (3,090) (8,312)
OTHER ASSETS (48,412) 9,120
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 30,105 (28,072)
BILLINGS IN EXCESS OF COST - (18,144)
OTH CURRENT LIABILITIES 63,621 (102,848)
----------- -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (475,443) 380,048
CASH FLOWS FROM INVESTING ACTIVITES:
OFFICER LOAN RECEIVABLE - 282
MARKETABLE SECURITIES (750,000) -
CAPITAL EXPENDITURES (35,140) (20,339)
PROCEEDS FROM SALE OF FIXED ASSET - -
----------- -----------
NET CASH USED IN INVESTING ACTIVITES (785,140) (20,057)
CASH FLOWS FROM FINANCING ACTIVITES:
INCREASE (DECREASE) IN:
NOTES PAYABLE - -
DEBT-CURRENT 90 (58,470)
DEBT-LONG TERM (1,586) -
----------- -----------
NET CASH USED IN FINANCING ACTIVITES (1,496) (58,470)
----------- -----------
NET (DECREASE) INCREASE IN CASH (1,262,079) 301,521
CASH AT BEGINNING OF PERIOD 2,224,202 180,542
CASH AT END OF PERIOD 962,123 482,063
=========== ===========
</TABLE>
<PAGE> 7
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
JUNE 30,1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
NET INCOME $ 200,144 $ 423,793
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
GAIN ON SALE OF FIXED ASSET (164,442) -
DEPRECIATION 57,411 62,923
DEFERRED TAX BENEFIT - -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES 117,848 101,623
COST IN EXCESS OF BILLINGS (64,652) 191,598
INVENTORIES 55,757 (40,000)
OTH CURRENT ASSETS 51,215 (12,851)
OTHER ASSETS (61,255) 10,685
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 94,728 9,106
BILLINGS IN EXCESS OF COST - (41,090)
OTH CURRENT LIABILITIES 59,808 (158,903)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 346,562 546,884
CASH FLOWS FROM INVESTING ACTIVITES:
OFFICER LOAN RECEIVABLE 507,888 (5,458)
MARKETABLE SECURITIES (750,000) -
CAPITAL EXPENDITURES (121,013) (30,720)
PROCEEDS FROM SALE OF FIXED ASSET 715,381 -
NET CASH PROVIDED BY (USED IN) ----------- -----------
INVESTING ACTIVITIES 352,256 (36,178)
CASH FLOWS FROM FINANCING ACTIVITES:
INCREASE (DECREASE) IN:
NOTES PAYABLE - -
DEBT-CURRENT 4,665 (95,855)
DEBT-LONG TERM 19,164 -
NET CASH PROVIDED BY (USED IN) ----------- -----------
FINANCING ACTIVITIES 23,829 (95,855)
----------- -----------
NET INCREASE IN CASH 722,647 414,851
CASH AT BEGINNING OF PERIOD 239,476 67,212
CASH AT END OF PERIOD 962,123 482,063
=========== ===========
</TABLE>
<PAGE> 8
CVD EQUIPMENT CORPORATION
NOTE TO FINANCIAL STATEMENTS
JUNE 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 JUNE 30, 1998
Revenue for the second quarter of 1998 was $989,626. This is a decrease
of 7.9% when compared to the second quarter of 1997. Gross profit for the
second quarter of 1998 is 29% versus 40% in the comparable period one year
ago. A substantial portion of the increase in the cost of goods sold is
material expense.
Selling and G & A expense are higher for the second quarter when compared
with last year. For 1998, there was $250,354 expensed to these accounts
versus $205,482 in 1997. Of this $45,000 increase, $20,000 is attributed
to payroll expense and $12,000 to investor relations' expense.
Total other income is higher for the second quarter when compared with
last year. For 1998, there was $20,630 booked to the accounts versus
$10,285 in 1997. This $10,000 increase is attributed mainly to an
increase in interest income.
Liquidity
CVD's cash position decreased by $1.3 million for the quarter. This was
mainly attributed to $750,000 invested in Marketable Securities
(preferred stock).
<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: August 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 962,123
<SECURITIES> 0
<RECEIVABLES> 1,731,890
<ALLOWANCES> 0
<INVENTORY> 80,049
<CURRENT-ASSETS> 3,022,539
<PP&E> 1,671,101
<DEPRECIATION> 1,337,523
<TOTAL-ASSETS> 4,271,938
<CURRENT-LIABILITIES> 414,730
<BONDS> 0
0
0
<COMMON> 2,813,248
<OTHER-SE> 1,017,296
<TOTAL-LIABILITY-AND-EQUITY> 4,271,938
<SALES> 352,889
<TOTAL-REVENUES> 1,871,207
<CGS> 1,311,251
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 491,870
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 613
<INCOME-PRETAX> 268,251
<INCOME-TAX> 79,657
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200,145
<EPS-PRIMARY> .07
<EPS-DILUTED> .06
</TABLE>
