<PAGE> 1
US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 3-31-00
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE EXCHANGE ACT
For the transition period from _____________to______________
Commission file number_______2-97210-NY____________________
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)
631-981-7081
(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:
2,926,750 SHARES OF COMMON STOCK, $.01 PAR VALUE AS OF 05-10-99
<PAGE> 2
CVD EQUIPMENT CORPORATION
NOTE TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING
MARCH 31, 2000
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, 1999. 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> 3
MANAGEMENT'S DISCUSSION
INTRODUCTION
Statements contained in this Report on Form 10-QSB that are not
historical facts are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, including
without limitation, statements regarding industry trends, strategic
business development, pursuit of new markets, competition, results from
operations, and are subject to the safe harbor provisions created by that
statute. A forward-looking statement may contain words such as
"intends", "plans", "anticipates", "believes", "expect to", or words of
similar import. Management cautions that forward-looking statements are
subject to risks and uncertainties that could cause the Company's actual
results to differ materially from those projected. These risks and
uncertainties include, but are not limited to, marketing success, product
development, production, technological difficulties, manufacturing costs,
and changes in economic conditions in the markets the Company serves.
The Company undertakes no obligation to release revisions to forward-
looking statements to reflect subsequent events, changed circumstances,
or the occurrence of unanticipated events.
FORWARD LOOKING STATEMENTS
Certain statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed
or implied by such forward looking statements. These forward looking
statements were based on various factors and were 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: competition in the
Company's existing and potential future product lines of business; the
Company's ability to obtain financing on acceptable terms if and when
needed; uncertainty as to the Company's future profitability, uncertainty
as to the future profitability of acquired businesses or product lines,
uncertainty as to any future expansion of the company. 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. The Company assumes 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.
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<TABLE>
<CAPTION>
CVD EQUIPMENT CORPORATION
BALANCE SHEETS
MARCH 31, 2000
MARCH 31 DECEMBER 31
2000 1999
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 777,553 $ 91,714
ACCOUNTS RECEIVABLE 767,992 1,019,771
COST IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS 494,691 490,214
SECURITIES AVAILABLE-FOR-SALE 297,000 297,000
INVENTORY 480,650 713,762
DEFERRED TAX ASSET 17,490 17,490
PREPAID INCOME TAXES - 12,812
OTHER CURRENT ASSETS 35,904 39,387
------------ ------------
TOTAL CURRENT ASSETS 2,871,280 2,682,150
PROPERTY, PLANT AND EQUIPMENT 2,167,243 2,204,644
DEFERRED TAX ASSET 361,563 348,768
OTHER ASSETS 158,632 177,267
------------ ------------
TOTAL ASSETS $ 5,558,718 $ 5,412,829
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 137,930 $ 171,138
ACCRUED EXPENSES 331,918 284,134
BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS 126,040 67,504
CURRENT MATURITIES OF LONG-TERM DEBT 17,230 16,936
------------ ------------
TOTAL CURRENT LIABILITIES 613,118 539,712
LONG-TERM DEBT 973,916 978,552
------------ ------------
1,587,034 1,518,264
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
COMMON STOCK - $0.01 PAR - SHARES AUTHORIZED 10,000,000;
ISSUED & OUTSTANDING 2,926,750 29,268 29,188
ADDITIONAL PAID-IN CAPITAL 2,839,910 2,838,990
RETAINED EARNINGS 1,138,016 1,061,897
ACCUMULATED OTHER COMPREHENSIVE INCOME (35,510) (35,510)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,971,684 3,894,565
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,558,718 $ 5,412,829
============ ============
</TABLE>
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<TABLE>
<CAPTION>
CVD EQUIPMENT CORPORATION
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
MARCH 31, 2000
THREE MONTHS ENDED
MARCH 31
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $ 1,321,507 $ 307,363
REVENUE ON UNCOMPLETED CONTRACTS 453,923 524,225
------------ ------------
TOTAL REVENUES 1,775,430 831,588
------------ ------------
COSTS OF REVENUES
COST ON COMPLETED CONTRACTS 935,426 461,248
COST ON UNCOMPLETED CONTRACTS 268,485 310,092
------------ ------------
TOTAL COSTS OF REVENUES 1,203,911 771,340
------------ ------------
GROSS PROFIT 571,519 60,248
------------ ------------
OPERATING EXPENSES
SELLING AND SHIPPING 122,402 99,915
GENERAL AND ADMINISTRATIVE 345,652 268,197
------------ ------------
TOTAL OPERATING EXPENSES 468,054 368,112
------------ ------------
OPERATING INCOME (LOSS) 103,465 (307,864)
------------ ------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 10,798 18,210
INTEREST EXPENSE (17,972) (4,981)
OTHER INCOME 3,080 1,791
------------ ------------
TOTAL OTHER INCOME(LOSS) (4,094) 15,020
------------ ------------
INCOME BEFORE TAXES 99,371 (292,844)
INCOME TAX BENEFIT (PROVISION) (23,252) -
------------ ------------
NET INCOME (LOSS) 76,119 (292,844)
OTHER COMPREHENSIVE INCOME, NET OF TAX
UNREALIZED LOSS ON SECURITIES AVAILABLE FOR SALE - (3,811)
------------ ------------
COMPREHENSIVE INCOME $ 76,119 $ (296,655)
============ ============
EARNINGS PER SHARE
BASIC $0.03 $(0.10)
DILUTED $0.02 $(0.10)
WEIGHTED AVERAGE SHARES
BASIC 2,926,750 2,918,750
DILUTED 3,079,390 2,992,144
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
MARCH 31, 2000
THREE MONTHS ENDED
MARCH 31
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ 76,119 $ (292,844)
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DEFERRED TAX PROVISION (benefit) (12,795) -
DEPRECIATION AND AMORTIZATION 61,820 52,391
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES 251,779 179,445
COST IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS (4,477) 551,657
INVENTORY 233,112 1,332
PREPAID INCOME TAXES 12,808 -
OTHER CURRENT ASSETS 3,482 14,595
OTHER ASSETS 7,129 (33,165)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE (33,208) 69,704
ACCRUED EXPENSES 47,785 83,788
BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS 58,536 (46,993)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 702,090 579,910
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENSE...EQUIPMENT (12,910) (7,485)
SALE OF SECURITIES - 250,000
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (12,910) 242,515
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
PAYMENTS ON SHORT-TERM BORROWINGS - (300,000)
PROCEEDS (PAYMENTS) - CURRENT 294 (1,181)
PAYMENTS - LONGTERM (4,635) -
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 1,000 -
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (3,341) (301,181)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 685,839 521,244
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE QUARTER 91,714 127,489
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE QUARTER $ 777,553 $ 648,733
============ ============
</TABLE>
<PAGE> 7
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
REVENUE
An increase in volume resulted in revenue for the first quarter 2000
being $1,775,430, which was a 113% increase from first quarter 1999
revenues of $831,588.
COSTS AND EXPENSES
The actual cost of revenue increased from $1,203,911 in the first quarter
of 2000 when compared to $771,340 in the first quarter of 1999. Of this
$432,571 increase, $191,000 is attributed to material and $232,000 to
work-in-process completion.
Selling and shipping expenses increased to $122,402 in the first quarter
of 2000 from $99,915 in the first quarter of 1999. Of this $22,487
increase, $11,000 is attributed to salaries, $7,000 freight expense and
$4,000 to travel expense.
General and Administrative expenses increased to $345,652 in the first
quarter of 2000 from $268,197 in the first quarter of 1999. Of this
$77,455 increase, $11,000 is attributed to legal fees, $ 5,000 to
accounting fees, $49,000 to salaries, and $10,000, to depreciation
expenses.
Interest expense increased by $12,991 from first quarter 1999 to first
quarter 2000, because the company's average outstanding debt increased.
This was mainly due to the mortgage on the SDC facility acquired on April
1999.
The significant increase in Costs and Expenses in the first quarter of
2000 over prior periods is associated with the startup of our new
Engineering Consulting Services division located at 1117 Kings Highway,
Saugerties, NY 12477. The new division became fully operational during
the first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
By first quarter ending 2000, the Company's cash position increased to
$777,553 from $91,714 at the beginning of the year. The increase in cash
is largely attributed to the increase in revenues and decrease in account
receivables.
At the end of first quarter 2000, the Company's account receivable
position decreased to $767,992 from $ 1,019,771 at the beginning of the
quarter. This decrease was attributable to timing of customer payments
and billings.
At the close of first quarter 2000, the Company's backlog increased to
$2,168,363 from $1,740,830 at the beginning of the quarter. This increase
is due to an increase in orders.
<PAGE> 8
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
10th day of May 2000.
CVD EQUIPMENT CORPORATION
By: /s/ Leonard A. Rosenbaum
Leonard A. Rosenbaum
President and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Leonard A. Rosenbaum President, Chief Executive Officer and Director
Leonard A. Rosenbaum
/s/ Mitchell Drucker Chief Financial Officer
Mitchell Drucker
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 777,553
<SECURITIES> 297,000
<RECEIVABLES> 1,285,093
<ALLOWANCES> 22,410
<INVENTORY> 480,650
<CURRENT-ASSETS> 2,871,280
<PP&E> 3,286,518
<DEPRECIATION> 1,119,275
<TOTAL-ASSETS> 5,558,718
<CURRENT-LIABILITIES> 613,118
<BONDS> 0
0
0
<COMMON> 29,268
<OTHER-SE> 3,942,416
<TOTAL-LIABILITY-AND-EQUITY> 5,558,718
<SALES> 1,775,430
<TOTAL-REVENUES> 1,775,430
<CGS> 1,203,911
<TOTAL-COSTS> 1,203,911
<OTHER-EXPENSES> 468,054
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,972
<INCOME-PRETAX> 99,371
<INCOME-TAX> 23,252
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,119
<EPS-BASIC> .03
<EPS-DILUTED> .02
</TABLE>
