CVD EQUIPMENT CORP 10-Q

Item 1 – Financial Statements CVD EQUIPMENT CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) September 30, 2020 December 31, 2019 ASSETS Current Assets Cash and cash equivalents $ 8,187,497 $ 8,664,253 Accounts receivable, net 1,672,914 2,545,537 Contract assets 993,841 512,952 Inventories, net 1,444,735 1,709,713 Taxes Receivable 713,027 - Other current assets 417,688 733,337 Total Current Assets 13,429,702 14,165,792 Property, plant and equipment, net 32,363,977 32,102,335 Other assets 13,748 13,748 Intangible assets, net 358,677 441,177 Total Assets $ 46,166,104 $ 46,723,052 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 440,400 $ 535,394 Accrued expenses 1,505,312 1,902,858 Current maturities of long-term debt 681,222 674,593 Contract Liabilities 85,734 845,653 Deferred revenue 777,924 1,429,583 Total Current Liabilities 3,490,592 5,388,081 Long-term debt, net of current portion 13,285,144 11,377,126 Total Long-Term Liabilities 13,285,144 11,377,126 Total Liabilities 16,775,736 16,765,207 Commitments and contingencies (see note 12) Stockholders’ Equity: Common stock - $0.01 par value – 20,000,000 shares authorized; issued and outstanding 6,640,935 at September 30, 2020 and 6,623,793 at December 31, 2019 66,409 66,237 Additional paid-in capital 26,919,496 26,719,554 Retained earnings 2,404,463 3,172,054 Total Stockholders’ Equity 29,390,368 29,957,845 Total Liabilities and Stockholders’ Equity $ 46,166,104 $ 46,723,052 The accompanying notes are an integral part of these condensed consolidated financial statements 3 CVD EQUIPMENT CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenue $ 3,993,204 $ 5,704,882 $ 13,748,448 $ 14,100,261 Cost of revenue 3,557,413 4,305,059 10,775,618 12,595,340 Gross profit 435,791 1,399,823 2,972,830 1,504,921 Operating expenses Research and development 90,227 112,724 300,162 453,724 Selling and shipping 142,306 175,760 439,346 680,183 General and administrative 1,595,911 1,359,910 4,650,067 4,728,021 Total operating expenses 1,828,444 1,648,394 5,389,575 5,861,928 Operating loss (1,392,653 ) (248,571 ) (2,416,745 ) (4,357,007 ) Other income (expense): Interest income 30,348 26,774 60,728 115,643 Interest expense (104,041 ) (124,449 ) (336,107 ) (365,255 ) Other Income 174,705 207,237 394,938 207,237 Total other income (expense), net 101,012 109,562 119,559 (42,375 ) Loss before income tax (1,291,641 ) (139,009 ) (2,297,186 ) (4,399,382 ) Income tax benefit - (1,000 ) (1,529,595 ) (691,697 ) Net loss $ (1,291,641 ) $ (138,009 ) $ (767,591 ) $ (3,707,685 ) Basic loss per common share $ (0.19 ) $ (0.02 ) $ (0.12 ) $ (0.57 ) Diluted loss per common share $ (0.19 ) $ (0.02 ) $ (0.12 ) $ (0.57 ) Weighted average common shares Outstanding-basic 6,640,228 6,556,767 6,633,694 6,550,279 Weighted average common shares Outstanding-diluted 6,640,228 6,556,767 6,633,694 6,550,279 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 (Unaudited) Three months ended September 30, 2020 and 2019 Common stock Shares Par Value Additional paid-in Capital Retained Earnings Total Balance at July 1, 2020 6,639,685 $ 66,396 $ 26,860,747 $ 3,696,104 $ 30,623,247 Net loss - - - (1,291,641 ) (1,291,641 ) Share-Based Compensation 1,250 13 58,749 - 58,762 Balance at September 30, 2020 6,640,935 $ 66,409 $ 26,919,496 $ 2,404,463 $ 29,390,368 Balance at July 1, 2019 6,555,150 $ 65,551 $ 26,525,521 $ 5,930,036 $ 32,521,108 Net loss - - - (138,009 ) (138,009 ) Share-Based Compensation 9,416 94 98,905 - 98,999 Balance at September 30, 2019 6,564,566 $ 65,645 $ 26,624,426 $ 5,792,027 $ 32,482,098 Nine months ended September 30, 2020 and 2019 Common stock Shares Par Value Additional paid-in Capital Retained Earnings Total Balance at January 1, 2020 6,623,793 $ 66,237 $ 26,719,554 $ 3,172,054 $ 29,957,845 Net loss - - - (767,591 ) (767,591 ) Share-Based Compensation 17,142 172 199,942 - 200,114 Balance at September 30, 2020 6,640,935 $ 66,409 $ 26,919,496 $ 2,404,463 $ 29,390,368 Balance at January 1, 2019 6,535,888 $ 65,358 $ 26,148,256 $ 9,499,712 $ 35,713,326 Net loss - - - (3,707,685 ) (3,707,685 ) Share-Based Compensation 28,678 287 476,170 - 476,457 Balance at September 30, 2019 6,564,566 $ 65,645 $ 26,624,426 $ 5,792,027 $ 32,482,098 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 (Unaudited) Nine Months Ended September 30, 2020 2019 Cash flows from operating activities: Net loss $ (767,591 ) $ (3,707,685 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation 200,114 476,458 Depreciation and amortization 1,023,757 798,206 Deferred income tax benefit - (699,000 ) Recovery on contingent earnout - (200,000 ) Bad debt expense 120,160 - (Increase)/decrease in operating assets Accounts receivable 752,463 993,042 Contract assets (480,889 ) (1,229,987 ) Inventories 264,978 92,658 Tax receivable (713,027 ) - Other current assets 315,649 411,690 Other assets - 29,635 Increase/(decrease) in operating liabilities Accounts payable (94,994 ) 317,881 Accrued expenses (397,546 ) 203,205 Contract liabilities (759,919 ) (393,191 ) Deferred revenue (651,659 ) 814,126 Total adjustments (420,913 ) 1,614,723 Net cash used in operating activities (1,188,504 ) (2,092,962 ) Cash flows from investing activities: Capital expenditures (1,202,899 ) (2,115,733 ) Net cash used in investing activities (1,202,899 ) (2,115,733 ) Cash flows from financing activities Proceeds from Payroll Protection Plan Loan 2,415,970 - Payments of long-term debt (501,323 ) (491,601 ) Net cash provided by (used) in financing activities 1,914,647 (491,601 ) Net decrease in cash and cash equivalents (476,756 ) (4,700,296 ) Cash and cash equivalents at beginning of period 8,664,253 11,439,361 Cash and cash equivalents at end of period $ 8,187,497 $ 6,739,065 Supplemental disclosure of cash flow information: Income taxes paid $ - $ - Interest paid $ 336,107 $ 365,255 Supplemental disclosure of non-cash investing and financing activities: Capitalization of right to use Asset $ - $ 103,937 The accompanying notes are an integral part of these condensed consolidated financial statements 6 CVD EQUIPMENT CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 1: BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively “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 nine months ended September 30, 2020 are not necessarily indicative of the results that can be expected for the year ending December 31, 2020. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at such date, 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. For further information, please refer to the consolidated financial statements and notes thereto included in the Company’ Annual Report on Form 10-K for the year ended December 31, 2019, including the accounting policies followed by the Company as set forth in Note 2 to the consolidated financial statements contained therein. All material intercompany balances and transactions have been eliminated in consolidation. In addition, certain reclassifications have been made to prior period consolidated financial statements to conform to the current period presentation. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition 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 three to eighteen months from commencement of order acceptance. 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. 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. 7 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition (continued) 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, 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. “Contract assets,” include unbilled amounts typically resulting from system sales under contracts and revenue recognized exceeds the amount billed to the customer. The amount may not exceed their estimated net realizable value. Contract assets are classified as current based on our contract operating cycle. “Contract liabilities,” include advance payments and billings in excess of revenue recognized. Contract liabilities are classified as current based on our contract operating cycle and reported on a contract-by-contract basis, net of revenue recognized, at the end of each reporting period. For outright sales of products, revenue is recognized when control of the promised products or services is transferred to our customers, in an amount that reflects the consideration we expect 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”. Recent Accounting Standards In June 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326), which require that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the increase or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. On November 15, 2019, the FASB delayed the effective date for smaller reporting companies. The amendments in this update are now effective for fiscal years beginning after December 15, 2022 and interim periods within those annual periods. Early adoption for fiscal years beginning after December 15, 2018 is permitted. We are currently evaluating the effect of this update on our consolidated financial statements. 8 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting Standards (continued) In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes. The amendments in this update remove certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and amends existing guidance to improve consistent application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted in any interim period. We are evaluating the effect of ASU 2019-12 on our consolidated financial statements. We believe there is no additional new accounting guidance adopted, but not yet effective that 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. NOTE 3: CONCENTRATION OF CREDIT RISK Cash and cash equivalents The Company had cash and cash equivalents of $8.2 million and $8.7 million at September 30, 2020 and December 31, 2019, respectively. The Company invests excess cash in U.S. treasury bills, certificates of deposit or money market accounts, all with original maturities of less than three months. Cash equivalents were $1.0 million and $2.1 million, at September 30, 2020 and December 31, 2019, respectively. The Company places most of its temporary cash investments with financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. The amount at risk at September 30, 2020 and December 31, 2019 was $6,570,000 and $5,198,000, respectively. 9 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 September 30, 2020, two customers exceeded 10%, and represented 13.5% and 12.5% revenues, and during the nine months ended September 30, 2020 three customers represented 21.0%, 12.8% and 12.0% of revenues. During the three and nine months ended September 30, 2019, two customers represented 42.8% and 28.1% of revenues, respectively. Accounts receivable The Company sells products and services to various companies across several industries in the ordinary course of business. The Company performs ongoing credit evaluations to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience, evaluation of their credit history and review of the invoicing terms of the contract to determine the financial strength of its customers. The Company also maintains allowances for anticipated losses. At September 30, 2020, two customers exceeded 10% of the accounts receivable balance, representing 25.7% in total, and at December 31, 2019 three customers represented approximately 61% of the accounts receivable balance. 10 NOTE 4: REVENUE DISAGGREGATION The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ending September 30, 2020 Over time Point in time Total Aerospace $ 181 $ 1,252 $ 1,433 Industrial $ 217 $ 1,451 $ 1,668 Research $ 571 $ 321 $ 892 Total $ 969 $ 3,024 $ 3,993 Three Months ending September 30, 2019 Over time Point in time Total Aerospace $ 1,080 $ 1,426 $ 2,506 Industrial $ 476 $ 1,387 $ 1,863 Research $ 493 $ 843 $ 1,336 Total $ 2,049 $ 3,656 $ 5,705 Nine Months Ending September 30, 2020 Over time Point in time Total Aerospace $ 1,502 $ 5,246 $ 6,748 Industrial $ 741 $ 2,592 $ 3,333 Research $ 2,566 $ 1,101 $ 3,667 Total $ 4,809 $ 8,939 $ 13,748 Nine Months ending September 30, 2019 Over time Point in time Total Aerospace $ 1,880 $ 2,529 $ 4,409 Industrial $ 1,741 $ 3,989 $ 5,730 Research $ 1,685 $ 2,276 $ 3,961 Total $ 5,306 $ 8,794 $ 14,100 11 NOTE 4: REVENUE DISAGGREGATION (continued) The Company has unrecognized contract revenue of approximately $2.7 million at September 30, 2020, which it expects to recognize as revenue within the next twelve months. 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 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 consolidated statements of operations. Contract Assets and Liabilities Contract assets consist of (i) retainage which represent the earned, but unbilled, portion for which payment is deferred by the customer until certain contractual milestones are met; and (ii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for long-term contracts. Contract liabilities consist of customer advances and billings in excess of revenue recognized. During the nine months ended September 30, 2020 and 2019, the increase in contract assets of approximately $.5 million and $1.2 million, respectively, was the result of work performed in excess of billings which are based upon project milestones. During the nine months ended September 30, 2020 and 2019, the decrease in contract liabilities of ($.8 million) and ($.4 million), respectively, was primarily due to timing of invoicing for those projects. NOTE 5: INVENTORIES, NET Inventories consist of: September 30, 2020 December 31, 2019 Raw materials $ 1,150,339 $ 1,281,250 Work-in-process 294,396 428,463 Inventories $ 1,444,735 $ 1,709,713 12 NOTE 6: ACCOUNTS RECEIVABLE, NET Accounts receivable are presented net of an allowance for doubtful accounts of approximately $144,000 and $24,000 as of September 30, 2020 and December 31, 2019, respectively. The allowance is based on prior experience and management’s evaluation of the collectability of accounts receivable. Management believes the allowance is adequate. However, future estimates may change based on changes in future economic conditions. NOTE 7: LONG-TERM DEBT The Company has a loan agreement with HSBC which is secured by a mortgage against our Central Islip, NY headquarters. The loan is payable in 120 consecutive equal monthly installments of $25,000 in principal plus interest and a final balloon payment upon maturity in March 2022. The balances as of September 30, 2020 and December 31, 2019 were approximately $2.1 million and $2.4 million respectively. Interest accrues on the loan, at our option, at the variable rate of LIBOR plus 1.75% or Prime less 0.5% (1.90% and 3.49% at September 30, 2020 and December 31, 2019, respectively). On November 30, 2017, the Company purchased the premises located at 555 North Research Place, Central Islip, NY. The purchase price of the building was $13,850,000 exclusive of closing costs. The Company’s wholly-owned subsidiary, 555 N Research Corporation (the “Assignee”) and the Islip IDA, entered into a Fee and Leasehold Mortgage and Security Agreement (the ”Loan”) with HSBC in the amount of $10,387,500, which was used to finance a portion of the purchase price to acquire the premises located at 555 North Research Place, Central Islip, New York. The Loan was evidenced by the certain note, dated November 30, 2017 (the “Note”), by and between Assignee and the Bank, and secured by a certain Fee and Leasehold Mortgage and Security Agreement (the “Mortgage”), dated November 30, 2017, as well as a collateral Assignment of Leases and Rents. The Note is payable in 60 consecutive equal monthly installments of $62,481 including interest and a final balloon payment upon maturity in December 2022. The balance outstanding as of September 30, 2020 and December 31, 2019 were approximately $9.4 million and $9.7 million respectively. The Note bears interest for each Interest Period (as defined in the Note), at the fixed rate of 3.9148%. As a condition of the Bank making the Loan, the Company was required to guaranty Assignee’s obligations under the Loan pursuant that certain Unlimited Guaranty, dated November 30, 2017 (the “Guaranty”). On May 31, 2019, the Company entered into two sublease agreements for a portion of the CVD Materials facility, located at 555 North Research Place. On October 30, 2019, the Tenant exercised its right to terminate the eastside Lease, which termination was effective as of December 31, 2019 (the “Termination”). On June 12, 2020 the same Tenant signed a new short-term lease for the six-month period July 1, 2020 to December 31, 2020. During the three and nine months ended September 30, 2020 the Company recognized $175,000 and $395,000, respectively, of rental income which commenced in June 2019. The Tenant has exercised its first option to renew the westside lease for a term of one year beginning July 1, 2020 and ending June 30, 2021. 13 NOTE 7: LONG-TERM DEBT (continued) On August 5, 2019, the Company entered into a Mortgage Modification Agreement which replaced the former covenant with a Minimum Liquid Assets (“MLC”) covenant, and on October 22, 2020, the Company entered into a Second Mortgage Modification Agreement modifying certain MLC balances. The Company is in compliance with its financial covenant under the mortgage at September 30, 2020. On April 21, 2020, the Company entered into a loan agreement (the “Loan Agreement”) with HSBC Bank USA, National Association pursuant to which the Company was granted a loan in the principal amount of $2,415,970, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted by the United States Congress on March 27, 2020. The PPP loan, the obligation of which is represented by a note issued by the Company, matures on April 21, 2022 and bears interest at a rate of 1% per annum. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, all or a portion of the Loan may be forgiven, based upon payments made in the first twenty-four weeks following receipt of the proceeds, related to payroll costs, continue group health care benefits, utilities and mortgage interest on other debt obligations incurred before February 15, 2020. NOTE 8: STOCK-BASED COMPENSATION EXPENSE The Company recorded as part of general and administrative expense $65,000 and $206,000 during the three and nine months ended September 30, 2020, respectively, and during the three and nine months ended September 30, 2019, $99,000 and $476,000, respectively, for the cost of employee and director services received in exchange for equity instruments based on the grant-date fair value of those instruments. NOTE 9: INCOME TAXES As of September 30, 2020 and December 31, 2019, the Company has provided a full valuation allowance against all of the net deferred tax assets. This was based on management’s assessment, including the last two years of operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted by the United States Congress. As a result of the enactment of the CARES Act, net operating losses (“NOL’s”) can now be carried back for five years and resulted in the Company recognizing approximately $1.5 million of a tax benefit, of which $.8 million is a receivable at September 30, 2020. We continue to evaluate for potential utilization of the Company’s deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections and timing of orders, the commencement of operations of the CVD Materials segment and cost containment measures. 14 NOTE 10: EARNINGS PER SHARE Basic earnings per share is computed by dividing net earnings available to common shareholders (the numerator) by the weighted average number of common shares outstanding (the denominator) for the period presented. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. Stock options to purchase 417,000 shares of common stock were outstanding and 292,000 were exercisable during the three and nine months ended September 30, 2020. Stock options to purchase 447,930 shares were outstanding and 267,930 were exercisable during the three and nine months ended September 30, 2019. For the three and nine months ended September 30, 2020, 417,000 stock options, and for the three and nine months ended September 30, 2019, 447,930 stock options were not included in the computation of diluted earnings per share as their effect would have been anti-dilutive. The dilutive potential common shares on options is calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potential dilutive effect of the securities. NOTE 11: SEGMENT REPORTING The Company operates through three (3) segments: CVD Equipment (“CVD”), Stainless Design Concepts (“SDC”) and CVD Materials (“Materials”). The CVD segment is utilized for chemical vapor deposition equipment manufacturing. SDC is the Company’s ultra-high purity manufacturing division in Saugerties, New York for gas control systems. The Materials segment was established to provide material coatings for aerospace, medical, electronic and other applications. The Company evaluates performance based on several factors, of which the primary financial measure is income or (loss) before taxes. The Company’s corporate administration activities are reported in the Eliminations and Unallocated column. These activities primarily include intercompany profit, expenses related to certain corporate officers and support staff, expenses related to the Company’s Board of Directors, stock option expense for shares granted to corporate administration employees, certain consulting expenses, investor and shareholder relations activities, and all of the Company’s legal, auditing and professional fees, and interest expense. 15 NOTE 11: SEGMENT REPORTING (continued) Three Months Ended September 3 0 , ( In thousands ) Eliminations* and 2020 CVD SDC Materials Unallocated Consolidated Assets $ 34,888 $ 6,202 $ 5,076 $ - $ 46,166 Revenue 2,308 826 990 (131 ) 3,993 Operating loss (283 ) (111 ) (261 ) (738 ) (1,393 ) Pretax loss (267 ) (111 ) (176 ) (738 ) (1,292 ) 201 9 Assets $ 36,389 $ 6,689 $ 6,465 $ (9 ) $ 49,534 Revenue 4,376 1,100 404 (175 ) 5,705 Operating income/(loss) 231 254 (137 ) (597 ) (249 ) Pretax income/(loss) 226 260 (28 ) (597 ) (139 ) Nine Months Ended September 30, (In thousands) Eliminations* and 2020 CVD SDC Materials Unallocated Consolidated Revenue 8,686 3,661 1,791 (390 ) 13,748 Operating income/(loss) 10 556 (754 ) (2,229 ) (2,417 ) Pretax income/(loss) 10 564 (642 ) (2,229 ) (2,297 ) 2019 Revenue 9,588 3,778 1,375 (641 ) 14,100 Operating income/(loss) (2,328 ) 936 (464 ) (2,501 ) (4,357 ) Pretax income/(loss) (2,297 ) 951 (552 ) (2,501 ) (4,399 ) *All elimination entries represent intersegment revenues eliminated in consolidation for external financial reporting. 16 NOTE 12: SIGNIFICANT EVENTS- CORONAVIRUS (COVID-19) The Company has been actively monitoring the coronavirus (COVID-19) outbreak and resulting pandemic and its impact on both the global economic and operating environment and specifically on its impact to the Company, its employees, its operations and its financial condition. In March 2020, the World Health Organization recognized the COVID-19 outbreak as a pandemic based on the global spread of the disease, the severity of illnesses it causes and its effects on society. In response to the COVID-19 outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations, including complete or partial government shutdowns of many schools and businesses, including our Company, and advising or requiring individuals to limit or forego their time outside of their homes. Accordingly, the COVID-19 outbreak has severely restricted the level of economic activity in many countries, including the United States, and continues to materially and adversely impact global economic activity. In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel. The Company’s new order levels during the first nine months of 2020 and into the fourth quarter of 2020 have seen substantial reductions which have materially and adversely affected revenues commencing in our second quarter of 2020, and is anticipated to continue towards the end of 2020. While the financial results for the Company’s first quarter of 2020 reflected the initial impact of COVID-19, and the nine months ended September 30, 2020 reflected a substantial adverse effect, we are unable to predict the extent of the impact the pandemic will have on our financial position and operating results for the remainder of 2020 and into 2021 due to numerous uncertainties, but the impact could be material during any future period affected either directly or indirectly by this pandemic. The Company intends to continue to evaluate the various government sponsored plans and programs put in place in response to the COVID-19 pandemic and further plans to take advantage of any such government benefits reasonably available to it. Moreover, the Company will continue to monitor developments in that area as new government initiatives are passed.