<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 ________9-30-00________
( ) 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:
2,980,750 SHARES OF COMMON STOCK, $.01 PAR VALUE AS OF 11-09-00
<PAGE> 2
CVD EQUIPMENT CORPORATION
NOTE TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING
SEPTEMBER 30, 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.
<PAGE> 4
CVD EQUIPMENT CORPORATION
BALANCE SHEETS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
2000 1999
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 966,096 $ 91,714
ACCOUNTS RECEIVABLE 835,547 1,019,771
COST IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS 1,009,273 490,214
SECURITIES AVAILABLE-FOR-SALE 257,425 297,000
INVENTORY 409,568 713,762
DEFERRED TAX ASSET 7,450 17,490
PREPAID INCOME TAXES - 12,812
OTHER CURRENT ASSETS 45,732 39,387
------------ ------------
TOTAL CURRENT ASSETS 3,531,091 2,682,150
PROPERTY, PLANT AND EQUIPMENT 2,273,462 2,204,644
DEFERRED TAX ASSET 366,833 348,768
OTHER ASSETS 141,198 177,267
------------ ------------
TOTAL ASSETS $6,312,584 $5,412,829
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 250,106 $ 171,138
ACCRUED EXPENSES 602,346 284,134
BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS 18,982 67,504
CURRENT MATURITIES OF LONG-TERM DEBT 17,842 16,936
------------ ------------
TOTAL CURRENT LIABILITIES 889,276 539,712
LONG-TERM DEBT 964,413 978,552
------------ ------------
1,853,689 1,518,264
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
COMMON STOCK - $0.01 PAR - SHARES AUTHORIZED 10,000,000;
ISSUED & OUTSTANDING 2,980,750 29,808 29,188
ADDITIONAL PAID-IN CAPITAL 2,846,120 2,838,990
RETAINED EARNINGS 1,598,092 1,061,897
ACCUMULATED OTHER COMPREHENSIVE INCOME (15,125) (35,510)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,458,895 3,894,565
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $6,312,584 $5,412,829
============ ============
</TABLE>
<PAGE> 5
CVD EQUIPMENT CORPORATION
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
THREE MONTHS ENDED
September 30
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $1,596,144 $1,419,793
REVENUE ON UNCOMPLETED CONTRACTS 861,880 294,176
------------ ------------
TOTAL REVENUES 2,458,024 1,713,969
------------ ------------
COSTS OF REVENUES
COST ON COMPLETED CONTRACTS 1,141,236 873,071
COST ON UNCOMPLETED CONTRACTS 230,097 210,499
------------ ------------
TOTAL COSTS OF REVENUES 1,371,333 1,083,570
------------ ------------
GROSS PROFIT 1,086,691 630,399
------------ ------------
OPERATING EXPENSES
SELLING AND SHIPPING 123,967 150,679
GENERAL AND ADMINISTRATIVE 446,355 333,517
------------ ------------
TOTAL OPERATING EXPENSES 570,322 484,196
------------ ------------
OPERATING INCOME 516,369 146,203
------------ ------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 12,921 8,444
INTEREST EXPENSE (17,515) (19,008)
OTHER INCOME (4,200) (7,418)
------------ ------------
TOTAL OTHER INCOME (8,794) (17,982)
------------ ------------
INCOME BEFORE TAXES 507,575 128,221
INCOME TAX (PROVISION) BENEFIT (187,730) -
------------ ------------
NET INCOME 319,845 128,221
OTHER COMPREHENSIVE INCOME, NET OF TAX
UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE 14,145 (15,845)
------------ ------------
COMPREHENSIVE INCOME $ 333,990 $ 112,376
============ ============
EARNINGS PER SHARE
BASIC $ 0.11 $ 0.04
DILUTED $ 0.10 $ 0.04
WEIGHTED AVERAGE SHARES
BASIC 2,980,750 2,918,750
DILUTED 3,229,006 2,989,114
</TABLE>
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CVD EQUIPMENT CORPORATION
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
REVENUES
REVENUE ON COMPLETED CONTRACTS $4,303,190 $3,001,719
REVENUE ON UNCOMPLETED CONTRACTS 2,063,360 941,452
------------ ------------
TOTAL REVENUES 6,366,550 3,943,171
------------ ------------
COSTS OF REVENUES
COST ON COMPLETED CONTRACTS 3,132,980 2,165,780
COST ON UNCOMPLETED CONTRACTS 853,432 533,178
------------ ------------
TOTAL COSTS OF REVENUES 3,986,412 2,698,958
------------ ------------
GROSS PROFIT 2,380,138 1,244,213
------------ ------------
OPERATING EXPENSES
SELLING AND SHIPPING 369,837 432,038
GENERAL AND ADMINISTRATIVE 1,180,456 934,988
------------ ------------
TOTAL OPERATING EXPENSES 1,550,293 1,367,026
------------ ------------
OPERATING INCOME (LOSS) 829,845 (122,813)
------------ ------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 37,020 38,279
INTEREST EXPENSE (53,057) (35,529)
OTHER INCOME 8,947 (2,312)
------------ ------------
TOTAL OTHER (LOSS) INCOME (7,090) 438
------------ ------------
INCOME(LOSS) BEFORE TAXES 822,755 (122,375)
INCOME TAX (PROVISION) BENEFIT (286,561) 556
------------ ------------
NET INCOME (LOSS) 536,194 (121,819)
OTHER COMPREHENSIVE INCOME, NET OF TAX
UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE 20,385 (34,640)
------------ ------------
COMPREHENSIVE INCOME (LOSS) $ 556,579 $ (156,459)
============ ============
EARNINGS PER SHARE
BASIC $ 0.18 $ (0.04)
DILUTED $ 0.17 $ (0.04)
WEIGHTED AVERAGE SHARES
BASIC 2,980,750 2,918,750
DILUTED 3,190,691 2,991,337
</TABLE>
<PAGE> 7
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 319,845 $ 128,221
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEFERRED TAX 545 -
DEPRECIATION AND AMORTIZATION 73,317 58,208
LOSS ON SALE OF SECURITIES 4,200 -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES 672,718 (620,429)
COST IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS (535,710) 56,506
INVENTORY 27,231 (19,714)
PREPAID INCOME TAXES - 50,794
OTHER CURRENT ASSETS (24,336) (25,365)
OTHER ASSETS (2,377) 465
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 46,088 (83,099)
ACCRUED EXPENSES 180,595 83,584
BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS (13,774) -
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 748,342 (370,829)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENSEEQUIPMENT (137,239) (42,143)
CAPITAL EXPENSEBUILDING - (108,000)
PROCEEDS FROM SALE OF SECURITIES 65,800 150,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (71,439) (143)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS - CURRENT 310 89,498
(PAYMENTS) PROCEEDS - LONGTERM (4,782) 79,468
PROCEEDS FROM EXERCISE OF STOCK OPTIONS - -
------------ ------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (4,472) 168,966
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 672,431 (202,006)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE QUARTER 293,665 345,571
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE QUARTER $ 966,096 $ 143,565
============ ============
</TABLE>
<PAGE> 8
CVD EQUIPMENT CORPORATION
STATEMENT OF CASH FLOWS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
2000 1999
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ 536,194 $ (121,819)
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DEFERRED TAX (18,065) -
DEPRECIATION AND AMORTIZATION 199,798 172,628
LOSS ON SALE OF SECURITIES 4,200 -
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLES 184,224 (664,301)
COST IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS (519,059) 729,659
INVENTORY 304,194 (45,636)
PREPAID INCOME TAXES 12,808 43,606
OTHER CURRENT ASSETS (6,347) (9,492)
OTHER ASSETS 1,549 (40,550)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 78,969 81,222
ACCRUED EXPENSES 318,212 83,186
BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS (48,522) (46,993)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,048,155 181,510
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENSEEQUIPMENT (234,092) (73,283)
CAPITAL EXPENSEBUILDING - (1,508,000)
PROCEEDS FROM SALE OF SECURITIES 65,800 650,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (168,292) (931,283)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS (PAYMENTS) - CURRENT 907 (201,187)
(PAYMENTS) PROCEEDS - LONGTERM (14,138) 967,036
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 7,750 -
------------ ------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (5,481) 765,849
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 874,382 16,076
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 91,714 127,489
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 966,096 $ 143,565
============ ============
</TABLE>
<PAGE> 9
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000
REVENUE
An increase in volume resulted in revenue for the third quarter 2000 being
$2,458,024 which was a 43% increase from third quarter 1999 revenues of
$1,713,969.
COSTS AND EXPENSES
The actual cost of revenue increased to $1,371,333 in the third quarter of
2000 when compared to $1,083,570 in the third quarter of 1999. Of this
$287,763 increase, $28,000 is attributed to travel, $47,000 to work-in-process
completion, $176,000 to salaries and $16,000 to manufacturing supplies.
Selling and shipping expenses decreased to $123,967 in the third quarter of
2000 from $150,679 in the third quarter of 1999. Of this $26,712 decrease,
$14,000 is attributed to salaries, $19,000 to travel expense, which was offset
by an increase of $7,000 to freight expense.
General and Administrative expenses increased to $446,355 in the third quarter
of 2000 from $333,517 in the third quarter of 1999. Of this $112,838 increase,
$37,000 is attributed to shareholders expense, $31,000 to legal fees, and
$58,000 to salaries, which was offset by a decrease of $22,000 to bad debt.
Interest expense decreased by $1,493 from third quarter 1999 to third quarter
2000, because the company's average short-term debt decreased.
In addition, some of the increase in Costs and Expenses in the third 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.
<PAGE> 10
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
REVENUE
An increase in volume resulted in revenue for nine months ending 2000 being
$6,366,550 which was a 61% increase from nine month ending 1999 revenues of
$3,943,171.
COSTS AND EXPENSES
The actual cost of revenue increased to $3,986,412 in the nine months ending
of 2000 when compared to $2,698,958 in the nine months ending of 1999. Of this
$1,287,454 increase, $478,000 is attributed to material, $350,000 to work-in-
process completion and $350,000 to salaries.
Selling and shipping expenses decreased to $369,837 in the nine months ending
of 2000 from $432,038 in the nine months ending of 1999. Of this $62,201
decrease, $83,000 is attributed to salaries and $11,000 to travel expense,
which was offset by an increase of $19,000 to commissions and $15,000 to
freight expense.
General and Administrative expenses increased to $1,180,456 in the nine months
ending of 2000 from $934,988 in the nine months ending of 1999. Of this
$245,468 increase, $38,000 is attributed to shareholders expense, $23,000 to
depreciation expense, $52,000 to legal fees, and $132,000 to salaries.
Interest expense increased by $17,528 from nine months ending 1999 to nine
months ending 2000. This was mainly due to the mortgage on the SDC facility
acquired on April 1999. Hence, the interest expense for 1999 commenced in
April 1999 and is not a full year.
In addition, some of the increase in Costs and Expenses in the nine months
ending 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 nine months ending 2000, the Company's cash position increased to $966,096
from $91,714 at the beginning of the year. The increase in cash is largely
attributed to the increase in revenues, which was offset by a decrease in
account receivables and an increase in capital expenditures.
At the end of nine months of 2000, the Company's account receivable position
decreased to $835,547 from $ 1,019,771 at the beginning of the year. This
decrease was attributable to timing of customer payments and billings.
Capital expenditures increased by $234,092, because the Company purchased a
$75,000 vertical machining center, a $81,000 turning machining center and a
$47,000 truck.
At the close of the nine months of 2000, the Company's backlog increased to
$4,896,480 from $1,317,522 at the beginning of the year. This increase is due
to an increase on orders.
<PAGE> 11
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 14th day of
November 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
