What changed in this filing

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Item 9A. Controls and Procedures

2026-03-30 compared with 2025-03-19 · 552 added, 516 removed, 1040 unchanged (51% of the section changed)

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Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 13d-15(e) under

the Exchange Act of 1934, as amended, (the “Exchange Act”)).

As required by Rule 13a-15(b) under the Exchange Act, management

of the Company, under the direction of our Chief Executive Officer and Chief Financial Officer, reviewed and performed an evaluation

of the effectiveness of design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange

Act) as of December 31, 2024.

maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 13d-15(e) under the Exchange Act of 1934, as

amended, (the “Exchange Act”)).

As required by Rule 13a-15(b) under the Exchange Act, management of the Company, under the

direction of our Chief Executive Officer and Chief Financial Officer, reviewed and performed an evaluation of the effectiveness of design

and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2025.

on that review and evaluation, our Chief Executive Officer and Chief Financial Officer, along with others in our management, have determined

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Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining effective

internal control over financial reporting (as defined in Rule 13a – 15(f) of the Exchange Act).

There are inherent limitations

to the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls.

Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation.

Further, because of changes in conditions, the effectiveness of internal control may vary over time.

We have assessed the effectiveness

of our internal controls over financial reporting (as defined in Rule 13a -15(f) of the Exchange Act) as of December 31, 2024.

this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal

Control – Integrated Framework (2013)”.

Management concluded that, as of December 31, 2024, our internal control over financial

reporting was effective based on the criteria established by the COSO Internal Control Framework.

management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a

– 15(f) of the Exchange Act).

There are inherent limitations to the effectiveness of any internal control, including the possibility

of human error and the circumvention or overriding of controls.

Accordingly, even effective internal controls can provide only reasonable

assurance with respect to financial statement preparation.

Further, because of changes in conditions, the effectiveness of internal control

may vary over time.

We have assessed the effectiveness of our internal controls over financial reporting (as defined in Rule 13a -15(f)

of the Exchange Act) as of December 31, 2025.

In making this assessment, we used the criteria set forth by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO) in “Internal Control – Integrated Framework (2013)”.

Management concluded

that, as of December 31, 2025, our internal control over financial reporting was effective based on the criteria established by the COSO

Internal Control Framework.

Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control

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on Form 10-K.

in Internal Control Over Financial Reporting

has not been any change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under

the Exchange Act) during our year ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect,

our internal control over financial reporting.

Regarding Foreign Jurisdictions That Prevent Inspections.

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with the Company

Executive Officer, President, Director

of the Board of Directors, Chairman-Audit Committee

Executive Officer, President, Director

Chairman – Nominating, Governance, and Compliance Committee

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President of Manufacturing Operations

Lakios was appointed to serve as President and Chief Executive Officer of the Company on January 22, 2021, and on July 15, 2021 was

elected by the shareholders as a member of the Board of Directors.

Lakios joined the Company as Vice President Sales and Marketing

in February 2017.

Lakios has over 30 years of experience serving the aerospace, semiconductor, data storage and optical device industries

and is the holder of several patents in the field of process equipment and device structure.

From January 2015 through February 2017,

Lakios was the President and Chief Executive Officer at Sensor Electronic Technology, Inc., overseeing that company’s transition

from R&D to a leading global commercial UV LED supplier.

From 2003 to 2011 he was the Executive Vice President of Field Operations

and President and Chief Operating Officer at Imago Scientific, bringing it from pre-revenue to a commercial leadership position in the

3D atomic scale tomography field.

Lakios was previously employed at Veeco Instruments Inc.

from 1984 until 2003, where he held several

positions, including President of the Process Equipment Group and Executive Vice President of Field Operations.

He has been involved

in several acquisitions and numerous product line launches.

He received his BE in Mechanical Engineering with focus in Material Science

from SUNY Stony Brook in 1984.

Waldman was appointed a member of the Board of Directors on October 5, 2016 and currently serves as Chairman of the Board and

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Waldman has over 40 years of experience in public accounting.

Waldman is a member of the board of directors of Comtech Telecommunications Corporation since August 2015 and Lead Independent Director

from December 2021 through March 2024.

Waldman has been a member of the board of directors of Comtech Telecommunications Corporation since August 2015 and Lead Independent

Director from December 2021 through March 2024.

He serves as the chairperson of Comtech’s Audit Committee.

Waldman is a member of the

board of directors and Lead Independent Director and Audit Committee Chairperson at APYX Medical Corporation, a Nasdaq-listed advanced

energy medical technology company.

Waldman serves as a Senior Advisor at First Long Island Investors, LLC since 2016 and was previously

an Advisor to the accounting firm of EisnerAmper LLP following his role as Partner-in-Charge of Commercial Audit Practice Development

for Long Island.

Waldman served as the Managing Partner of the Long Island office of KPMG LLP from 1994 through 2006, the accounting

firm where he began his career in 1972.

Waldman is a member

of the board of directors and Lead Independent Director and Audit Committee Chairperson at APYX Medical Corporation, a Nasdaq-listed

advanced energy medical technology company.

Waldman serves as a Senior Advisor at First Long Island Investors, LLC since 2016 and

was previously an Advisor to the accounting firm of EisnerAmper LLP following his role as Partner-in-Charge of Commercial Audit Practice

Development for Long Island.

Waldman served as the Managing Partner of the Long Island office of KPMG LLP from 1994 through 2006,

the accounting firm where he began his career in 1972.

During his tenure at KPMG, Mr.

Waldman served as audit partner to a number of public and privately

held technology companies.

Waldman served as audit partner to a number of

public and privately held technology companies.

Waldman is currently Chairman of the Board of Directors of the Long Island Association and a member of the boards of directors of the

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Hofstra University in Hempstead, New York.

Waldman qualifies to serve as a director, Audit Committee Chairman and Lead Independent Director because of his significant experience

leading public company boards, his extensive relevant industry and financial and accounting expertise.

Waldman qualifies to serve as a director and Audit Committee Chairman because of his significant experience leading public company boards,

his extensive relevant industry and financial and accounting expertise.

Lakios was appointed to serve as President and Chief Executive Officer of the Company on January 22, 2021, and on July 15, 2021 was

elected by the shareholders as a member of the Board of Directors.

Lakios joined the Company as Vice President Sales and Marketing

in February 2017.

Lakios has over 30 years of experience serving the aerospace, semiconductor, data storage and optical device industries

and is the holder of several patents in the field of process equipment and device structure.

From January 2015 through February 2017,

Lakios was the President and Chief Executive Officer at Sensor Electronic Technology, Inc., overseeing that company’s transition

from R&D to a leading global commercial UV LED supplier.

From 2003 to 2011 he was the Executive Vice President of Field Operations

and President and Chief Operating Officer at Imago Scientific, bringing it from pre-revenue to a commercial leadership position in the

3D atomic scale tomography field.

Lakios was previously employed at Veeco Instruments Inc.

from 1984 until 2003, where he held several

positions, including President of the Process Equipment Group and Executive Vice President of Field Operations.

He has been involved

in several acquisitions and numerous product line launches.

He received his BE in Mechanical Engineering with focus in Material Science

from SUNY Stony Brook in 1984.

Brill was appointed a Director of the Company on March 5, 2021.

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Relations for Etsy, Inc.

ETSY), the global marketplace for unique and creative goods.

NYSE), the global marketplace for unique and creative goods.

She is responsible for Etsy’s external

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at the firm, Ms.

Wasser serviced clients across the globe and helped grow the firm from four to 80 employees.

Wasser serviced clients across the globe and helped grow the firm

four to 80 employees.

Deb has a B.S.

in Communications

and Business from The State University of New York at Albany.

in Communications and Business from The State University of New York at Albany.

Wasser has provided business and communications advice to Boards of Directors of publicly traded and privately held companies for over

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and advanced Research & Development.

He received his PhD in Materials Science and Engineering from Stony Brook University in 1996.

He received his PhD in Materials Science and Engineering from Stony Brook University.

Shatalov was appointed Vice President of Engineering and Technology in April 2018.

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in the semiconductor, medical device and defense equipment sectors.

Cheesman has held roles of increasing responsibility in engineering,

operations, quality and strategic sourcing, at equipment manufacturers including Veeco Instruments, Air Techniques, and Kongsberg Defense

Cheesman provides strategic leadership across all divisions related to manufacturing, quality, and continuous improvement

initiatives, with emphasis on process improvement, lean manufacturing, risk management, and collaboration.

He holds two master of science

degrees from Stony Brook University in Technology Management and Materials Science & Engineering, and a Bachelor of Science degree

in Mechanical Engineering from Virginia Tech.

His academic and professional experience is also complemented by a Six Sigma Black Belt

certification.

held roles of increasing responsibility in engineering, operations, quality and strategic sourcing, at equipment manufacturers including

Veeco Instruments, Air Techniques, and Kongsberg Defense & Aerospace.

Cheesman provides strategic leadership across all divisions

related to manufacturing, quality, and continuous improvement initiatives, with emphasis on process improvement, lean manufacturing,

risk management, and collaboration.

He holds two master of science degrees from Stony Brook University in Technology Management and Materials

Science & Engineering, and a Bachelor of Science degree in Mechanical Engineering from Virginia Tech.

His academic and professional

experience is also complemented by a Six Sigma Black Belt certification.

Proceedings Involving Directors

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oversight of management, including the following:

sessions without management and non-independent directors present are a standing Board agenda

Executive sessions of the independent directors are held at any time requested by an

independent director and, in any event, are held in connection with at least 100% of regularly

scheduled Board meetings.

Board regularly meets in executive session with the CEO without other members of management

sessions without management and non-independent directors present are a standing Board agenda item.

Executive sessions of the independent

directors are held at any time requested by an independent director and, in any event, are held in connection with at least 100%

of regularly scheduled Board meetings.

Board regularly meets in executive session with the CEO without other members of management present.

Board committee members are independent directors.

The committee chairs have authority to

hold executive sessions with management and non-independent directors present.

The committee chairs have authority to hold executive sessions with management

and non-independent directors present.

our Board has no formal policy with respect to separation of the positions of Chairman and CEO or with respect to whether the Chairman

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A copy of our Insider Trading

Policy is filed as Exhibit 19 to this Annual Report on Form 10-K.

Policy is filed as an exhibit =to this Annual Report on Form 10-K.

Board of Directors has an Audit Committee that currently consists of Lawrence J.

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year ended December 31, 2025, all of the filings for our officers, directors and ten percent shareholders were made on a timely basis.

Compensation.

Compensation Table

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officers,” for the years ended December 31, 2025 and 2024.

Name and principal position

Bonus ($) (1)

Option Awards ($) (2)

Stock Awards ($) (2)

All Other Compensation ($) (3)

and principal position

Awards ($) (2)

Other Compensation ($) (3)

Emmanuel Lakios

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Financial Officer and Executive Vice President

Vice President Sales & Marketing

Kevin Collins

Vice President & General Manager - SDC

cash bonuses under the Company’s Management Bonus Plan.

Bonuses listed for a particular

year represents amounts earned with respect to such year even though all or part of such

amounts have been paid during the following year.

columns represent the grant date fair value of the stock awards as calculated in accordance

with FASB ASC 718 (Stock Compensation).

The stock options granted in 2023 vest 25% per year

over four years and have a ten-year life.

There were no stock options granted in 2024 to

the named executive officers

other compensation consists of 1) 401(k) match in 2024 and 2023 of $10,350 and $9,900 for

Emmanuel Lakios, $8,514 and $9,179 for Richard Catalano, and $6,930 and $7,863 for Jeffrey

Brogan, respectively;

and 2) health, life and disability insurance premiums in 2024 and 2023

of $10,394 and $9,622 for Emmanuel Lakios, $18,258 and $18,022 for Richard Catalano and $0

and $648 for Jeffrey Brogan.

Bonuses listed for a particular year represents amounts earned with

respect to such year even though all or part of such amounts have been paid during the following year.

columns represent the grant date fair value of the stock awards as calculated in accordance with FASB ASC 718 (Stock Compensation).

There were no stock options granted in 2025 and 2024 to the named executive officers

other compensation consists of i) 401(k) match in 2025 and 2024 of $10,500 and $10,350 for Emmanuel Lakios, $8,817 and $8,514 for

Richard Catalano, and $7,828 and $6,630 for Kevin Collins, respectively;

and ii) health, life and disability insurance premiums in

2025 and 2024 of $11,155 and $10,394 for Emmanuel Lakios, $20,933 and $18,258 for Richard Catalano and $20,057 and $19,928 for Kevin

Agreements and Potential Payments Upon Termination or Change in Control

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Lakios Agreement contains customary non-competition, non-solicitation, and confidentiality provisions in favor of the Company.

then as set forth above, there are no arrangements for compensation of directors or Named Executive Officers and there are no employment

than as set forth above, there are no arrangements for compensation of directors or Named Executive Officers and there are no employment

contracts between the Company and its directors or any change in control arrangements.

Equity Awards

From time to time, we grant equity awards, including

stock options, to our employees, including our named executive officers.

Historically, we have typically granted new-hire option awards

on, or within the calendar quarter of, a new hire's employment start date and annual refresh employee option grants in the first quarter

of each fiscal year, which refresh grants are typically approved at a regularly scheduled meeting of the Compensation Committee occurring

in such quarter.

Also, non-employee directors receive automatic grants of initial and annual stock option awards, at the time of a director’s

initial appointment or election to the board and at the time of each annual meeting of our stockholders, respectively, pursuant to our

non-employee director compensation policy, as further described under the heading, “2024 Director Compensation” below.

We do not otherwise maintain any written policies

on the timing of awards of stock options, stock appreciation rights, or similar instruments with option-like features.

The Compensation

Committee considers whether there is any material nonpublic information (“MNPI”) about our company when determining the timing

of stock option grants and does no t seek to time the award of stock options in relation to our public disclosure of MNPI .

timed the release of MNPI for the purpose of affecting the value of executive compensation.

During fiscal 2024, the Company did not grant any equity awards to its

named executive officers.

time to time, we grant equity awards, including stock options, to our employees, including our named executive officers.

Historically,

we have typically granted new-hire option awards on, or within the calendar quarter of, a new hire’s employment start date and

annual refresh employee option grants in the first quarter of each fiscal year, which refresh grants are typically approved at a regularly

scheduled meeting of the Compensation Committee occurring in such quarter.

Also, non-employee directors receive automatic grants of initial

and annual stock option awards, at the time of a director’s initial appointment or election to the board and at the time of each

annual meeting of our stockholders, respectively, pursuant to our non-employee director compensation policy, as further described under

the heading, “2025 Director Compensation” below.

do not otherwise maintain any written policies on the timing of awards of stock options, stock appreciation rights, or similar instruments

with option-like features.

The Compensation Committee considers whether there is any material nonpublic information (“MNPI”)

about our company when determining the timing of stock option grants and does no t seek to time the award of stock options in relation

to our public disclosure of MNPI.

We have no t timed the release of MNPI for the purpose of affecting the value of executive compensation.

During fiscal years 2025 and 2024, the Company did not grant any equity awards to its named executive officers.

Equity Awards at December 31, 2025

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Richard Catalano

Kevin Collins

Director Compensation

following table sets forth a summary of the compensation we paid to our non-employee directors in 2025.

Option Awards

Restricted Stock Awards

Andrew Africk

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Non-Executive Chairman is entitled to Board leadership compensation in the amount of $48,000.

Nielsen retired from the Board of Directors on August 9, 2024 and Andrew Africk was appointed to the Board of Directors on May 28,

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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March 30, 2026.

Name and Address of Beneficial Owner (1)

Amounts and Nature of Beneficial Ownership (2)

Percent of Class (%)

5% or Greater Shareholder:

Leviticus Partners, L.P.

Name and Address of Beneficial

and Nature of Beneficial Ownership (2)

Directors and Executive Officers:

Andrw Africk / ADA Partners LP

Andrew Africk / ADA Partners LP

1,314,840 (4)

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Warren Cheesman

All directors and executive officers and executive employees as a group (eleven persons)

All directors and

executive officers and executive employees as a group (eleven persons)

Less than 1% of the outstanding common stock or less than 1% of the voting power

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Lotfi and Ms.

Wasser is c/o CVD Equipment Corporation, 355 South Technology Drive, Central

Islip, New York 11722.

Wasser is c/o CVD Equipment

Corporation, 355 South Technology Drive, Central Islip, New York 11722.

The address of Mr.

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1117 Old Kings Highway, Saugerties, NY 12477.

The address of Andrew Africk / ADA Partners is c/o

Searay Capital, 111 West 67 th Street, New York, NY 10023.

The address of Leviticus

Partners, L.P.

is 200 Park Avenue, Suite 1700, New York, NY 10166.

of such shares are owned directly with sole voting and investment power, unless otherwise

The address of Andrew Africk / ADA Partners is c/o Searay Capital, 111 West 67 th

Street, New York, NY 10023.

of such shares are owned directly with sole voting and investment power, unless otherwise noted below.

not include unvested options to purchase the following shares of our common stock:

Lakios – 37,500;

Collins – 7,500;

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Waldman – 2,775;

Africk – 2,775;

Brill – 2,775;

Lotfi – 2,825 and Wasser – 2,825.

include shares to be issued per Director compensation agreement related to the Annual Equity

Retainer in the amount of $40,000, to be determined at the 2025 Annual Meeting of Shareholders.

– 2,775 and Wasser – 2,775.

Does not include shares to be issued per Director compensation agreement related to the Annual

Equity Retainer in the amount of $40,000, to be determined at the 2026 Annual Meeting of Shareholders.

Waldman’s ownership

includes 15,000 vested and exercisable options to purchase shares of common stock.

Compensation Plan Information Table

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existing compensation plans as of December 31, 2025.

Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)

Weighted-average exercise price of outstanding options, warrants and rights (2)

Number of securities remaining available for future issuance

of securities to be issued upon exercise of outstanding options, warrants and rights (1)

Weighted-average

exercise price of outstanding options, warrants and rights (2)

of securities remaining available for future issuance

Plan Category

Equity compensation plans approved by security holders

Equity compensation

plans not approved by security holders

aggregate options outstanding under our 2007 Share Incentive Plan, 2016 Equity Incentive

Plan and 2022 Equity Incentive Plan.

(2) Calculation

Equity compensation plans approved

by security holders

Equity compensation plans not approved

by security holders

aggregate options outstanding under our 2007 Share Incentive Plan, 2016 Equity Incentive Plan and 2022 Equity Incentive Plan.

is exclusive of the value of any unvested restricted stock awards.

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Accountant Fees and Services.

following presents fees for professional audit services rendered by Marcum, LLP, Certified Public Accountants, the Company’s independent

registered public accounting firm for the years ended December 31, 2024 and 2023.

following presents fees for professional audit services rendered by CBIZ CPAs P.C., Certified Public Accountants, the Company’s

independent registered public accounting firm for the year ended December 31, 2025 and Marcum, LLP, Certified Public Accountants, the

Company’s independent registered public accounting firm for the year ended December 31, 2024.

Audit-related fees

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Audit-related

of the audit of the Company’s defined contribution 401(k) plan and fees associated with registration statements and comfort letter.

of the audits of the Company’s defined contribution 401(k) plan.

Committee Approval

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Financial Statement Schedules

**Certificate of Incorporation, dated October 12, 1982

**Certificate of Amendment of Certificate of Incorporation, dated April 25, 1985.

**Certificate of Amendment of Certificate of Incorporation, dated August 12, 1985.

**Certificate of Amendment of Certificate of Incorporation, dated June 30, 1989.

Certificate of Incorporation, dated October 12, 1982 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024).

Certificate of Amendment of Certificate of Incorporation, dated April 25, 1985 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024).

Certificate of Amendment of Certificate of Incorporation, dated August 12, 1985 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024).

Certificate of Amendment of Certificate of Incorporation, dated June 30, 1989 (Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024).

Certificate of Amendment of the Certificate of Incorporation, dated December 9, 2016 (Incorporated herein by reference the Company’s Current Report on Form 8-K filed on December 14, 2016).

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(Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 16, 2021).

10.8 Assignment, Assumption and Amendment Agreement dated as of July 26, 2021, by and between Town of Islip Industrial Development Agency, 555N Research Corporation and Steel 555 NRP, LLC.

(Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A filed with the Commission on March 1, 2022).

Second Amended and Restated Lease and Project Agreement, dated as of July 1, 2021, by and between Town of Islip Industrial Development Agency and FAE HOLDINGS 411519R, LLC.

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(Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A filed with the Commission on March 1, 2022).

19 **Insider Trading Policy

Insider Trading Policy (Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024).

List of Subsidiaries

23.1 **Consent

of Marcum, LLP, Certified Public Accountants and Advisors, A Professional Corporation (S-8).

13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1 **Section

1350 Certification of Principal Executive Officer.

32.2 **Section

1350 Certification of Principal Financial Officer.

**Consent of CBIZ CPAs, P.C.

**Consent of Marcum, LLP

**Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

**Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

**Section 1350 Certification of Principal Executive Officer.

**Section 1350 Certification of Principal Financial Officer.

CVD Equipment Corporation Executive Compensation Clawback Policy (Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Commission on March 28, 2024).

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its behalf by the undersigned, thereunto duly authorized.

March 19, 2025

EQUIPMENT CORPORATION

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and in the capacities and on the dates indicated below.

Chairman of the Board

Emmanuel Lakios

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Executive Officer)

Chairman of the Board

Andrew Africk

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Report of Independent Registered Public Accounting Firm (PCAOB ID Number 199 )

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 )

Consolidated Balance Sheets as of December 31, 2025 and 2024

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on the Financial Statements

have audited the accompanying consolidated balance sheets of CVD Equipment Corporation and Subsidiaries (the “Company”) as

of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity and cash flows

for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period

ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

have audited the accompanying consolidated balance sheet of CVD Equipment Corporation (the “Company”) as of December 31,

2025, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended December

31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audit,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and

the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally

accepted in the United States of America.

also have audited the adjustments to the 2024 financial statements to retrospectively apply the change in accounting for income taxes

as a result of the adoption of Accounting Standards Update No.

2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures

, as described in Note 2 and 9.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged

to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to the adjustments

and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

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securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

As part of our audit

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

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Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

We believe that our audit provides

a reasonable basis for our opinion.

Audit Matters

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to actual cost incurred subsequent to December 31, 2025.

have served as the Company’s auditor since 2019.

CBIZ CPAs P.C.

have served as the Company’s auditor since 2019 (such date takes into account the acquisition of the attest business of Marcum

llp by CBIZ CPAs P.C.

effective November 1, 2024).

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

Equipment Corporation

Opinion on the Financial Statements

We have audited, before the effects of the adjustments to retrospectively

apply the change in accounting described in Note 2 and 9, the balance sheet of CVD Equipment Corporation as of December 31, 2024, and

the related statements of income, changes in shareholders’ equity, and cash flows for the year then ended (the 2024 financial statements

before the effects of the adjustments discussed in Note 2 and 9 are not presented herein).

The 2024 financial statements are the responsibility

of the company’s management.

Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the 2024 financial statements, before the effects of the

adjustments to retrospectively apply the change in accounting described in Note 2 and 9, present fairly, in all material respects, the

financial position of CVD Equipment Corporation as of December 31, 2024, and the results of its operations and its cash flows for the

year then ended in conformity with U.S.

generally accepted accounting principles.

We were not engaged to audit, review, or apply any procedures to the adjustments

to retrospectively apply the change in accounting described in Note 2 and 9 and, accordingly, we do not express an opinion or any other

form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by CBIZ

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with

respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of

its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over

financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor from 2019 through 2025.

March 19, 2025

EQUIPMENT CORPORATION AND SUBSIDIARIES

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Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses

Cash and cash

Accounts receivable, net

of allowance for credit losses

Contract assets

Other current assets

Assets held for sale

current assets

Total current assets

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

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Accrued expenses

Current maturities of long-term debt

Deposits from purchasers of MesoScribe assets – note 14

Contract liabilities

Current maturities of long-term

Total current liabilities

Long-term debt, net of current portion

Total liabilities

Commitments and contingencies (see note 15)

Long-term debt, net of

current portion

Contingencies (see note 14)

Stockholders’ equity:

Common stock - $ 0.01 par value – 20,000,000 shares authorized;

Common stock - $ 0.01

par value – 20,000,000 shares authorized;

issued and outstanding 6,937,338 at December 31, 2025 and 6,881,838 at December 31,

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of the consolidated financial

Total stockholders’

Total liabilities and

stockholders’ equity

accompanying notes are an integral part of the consolidated financial statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

6 unchanged sentences

General and administrative

Gain on sales of equipment

Loss on disposition of Tantaline

Impairment charge

Total operating expenses, net

Impairment charges

on sales of equipment

Total operating expenses,

Operating loss

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Interest income

Interest expenses

Foreign exchange income

Interest expense

Total other income, net

Loss before income tax

Income tax expense (benefit)

Income tax expense

Loss per common share:

Weighted average number of shares:

The accompanying notes are an integral part of the consolidated financial

accompanying notes are an integral part of the consolidated financial statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

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thousands, except share amounts)

Retained Earnings

Balance at January 1, 2024

Stock-based compensation

Exercise of stock options and issuance of shares

Balance at December 31, 2024

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Balance at December 31, 2025

The accompanying notes are an integral part of the consolidated financial

accompanying notes are an integral part of the consolidated financial statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile

net loss to net cash used in operating activities:

Stock-based compensation

Depreciation and amortization

Provision for excess and obsolete inventory

Provision for bad debt

Gain on sales of equipment

Loss on disposition of Tantaline

Impairment charge

Changes in operating assets and liabilities, net of effects of disposition of Tantaline and sales of equipment:

Provision for excess and

obsolete inventory

Provision (recovery) for

Impairment charges

Gains on sales of equipment

Changes in operating assets

and liabilities

Accounts receivable

Contract assets

Employee retention credit receivable

Accounts payable

Accrued expenses

Contract liabilities

Net cash used in operating activities

Net cash used in operating

Cash flows from investing activities:

Purchase of property and equipment

Net proceeds from sales of equipment

Net cash used in disposition of Tantaline

Net cash provided by (used in) investing activities

Purchase of property and

Investment in captive insurance

proceeds from sales of equipment

Net cash (used in) provided

by investing activities

Cash flows from financing activities:

Payments of long-term debt

Proceeds from exercise of stock options

Net cash used in financing activities

of long-term debt

Net cash used in financing

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash and cash equivalents

at beginning of year

Cash and cash equivalents

at end of year

Supplemental disclosure of cash flow information:

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Interest paid

Inventory transferred to property, plant and equipment

The accompanying notes are an integral part of the consolidated financial

Non-cash investing and

financing activities:

Property, plant and

equipment transferred to assets held for sale

Inventory transferred

to property, plant and equipment

accompanying notes are an integral part of the consolidated financial statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

4 unchanged sentences

Its principal business activities include

designing, developing, and manufacturing a broad range of chemical vapor deposition, physical vapor

transport, gas control, and other equipment and process solutions used to develop and manufacture materials and coatings for industrial

applications and research.

The Company’s products are used in production environments as well as research and development centers,

both academic and corporate.

designing, developing, and manufacturing a broad range of chemical vapor deposition, physical vapor transport, gas control, and other

equipment and process solutions used to develop and manufacture materials and coatings for industrial applications and research.

Company’s products are used in production environments as well as research and development centers, both academic and corporate.

On March 23, 2026, the Company entered into an agreement to sell its SDC business division to a subsidiary of the Atlas Copco Group.

See Note 15 – Subsequent Event.

2 - Summary of Significant Accounting Policies

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Reclassifications

addition, certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period

presentation.

reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation.

These reclassifications had no effect on net loss.

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to complete the projects.

In making such estimates, significant judgment is required to

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.

There were no material impairment losses recognized

on contract assets during the year ended December 31, 2024 and 2023.

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

There were no material impairment losses recognized on contract assets during the years ended December 31, 2025 and 2024.

timing of revenue recognition, billings and collections results in accounts receivables, unbilled receivables or contract assets and

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are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

2 - Summary of Significant Accounting Policies (continued)

ASC 606, payments received from customers in excess of revenue recognized to-date results in a contract liability.

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the amount billed to the customer.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

2 - Summary of Significant Accounting Policies (continued)

liabilities include advance payments and billings in excess of revenue recognized.

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For the years ended December 31, 2025 and 2024, all system equipment sales were recorded over time by using an input method

except for a) one contract that was recorded as revenue at the point in time the equipment was transferred to the customer during 2024

and b) one contract that was entered during 2024 and will be recognized as revenue after December 31, 2024 upon transfer of the equipment

to the customer.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

2 - Summary of Significant Accounting Policies (continued)

except for a) one contract in 2025 and one contract in 2024 that was recorded as revenue at the point in time the equipment was transferred

to the customer and b) one contract that was entered during 2024 and was not recognized as revenue using over time revenue recognition

until July 2025 when a contract modification was entered into with the customer to change certain contract provisions.

(raw materials, work-in-process and finished goods) are valued at the lower of cost (determined on the first-in, first-out method) or

net realizable value.

Work-in-process and finished goods inventory reflect all accumulated production

costs, which are comprised of direct production costs and overhead, and is reduced by amounts recorded in cost of sales as the related

revenue is recognized.

Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are

charged to expense as incurred and are not included in our cost of sales or work-in-process and finished goods inventory.

Work-in-process and finished goods inventory reflect all accumulated production costs, which are comprised of direct

production costs and overhead, and is reduced by amounts recorded in cost of sales as the related revenue is recognized.

Indirect costs

relating to long-term contracts, which include expenses such as general and administrative, are charged to expense as incurred and are

not included in our cost of sales or work-in-process and finished goods inventory.

inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value

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updates its warranty estimates based on actual costs incurred.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

2 - Summary of Significant Accounting Policies (continued)

tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statements

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is more likely than not that future tax benefits will not be utilized based on a lack of sufficient positive evidence.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

2 - Summary of Significant Accounting Policies (continued)

Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines

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to be disposed of are reported at the lower of their carrying value or net realizable value.

See Note 5 for impairment of long-lived

assets recorded during the year ended December 31, 2025.

Plant and Equipment

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2 - Summary of Significant Accounting Policies (continued)

earnings per common share is computed by dividing the net income by the weighted average number of shares of common stock outstanding

earnings per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding

during each period.

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the Company does not expect to collect.

In addition to reviewing delinquent accounts receivable, the Company consider many factors in

In addition to reviewing delinquent accounts receivable, the Company considers many factors in

estimating our reserve, including types of customers and their credit worthiness, experience and historical data adjusted for current

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2 - Summary of Significant Accounting Policies (continued)

receivable is presented net of an allowance for credit losses of $ 48,000 , $ 36,000

as of December 31, 2024, 2023 and 2022, respectively.

The allowance is based on prior

experience and management’s evaluation of future economic conditions.

Measurement of credit losses requires consideration of

historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects

of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific

Future changes to the estimated allowance for credit losses could be material to our results of operations and financial

The provision for bad debt expense was $ 13,000 and

the years ended December 31, 2024 and 2023, respectively.

receivable is presented net of an allowance for credit losses of $ 30,000 , $ 48,000 and $ 36,000 as of December 31, 2025, 2024 and 2023,

respectively.

The allowance is based on prior experience and management’s evaluation of future economic conditions.

of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions,

and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates

and the financial health of specific customers.

Future changes to the estimated allowance for credit losses could be material to our

results of operations and financial condition.

The (recovery) provision for bad debt expense was ($ 18,000 ) and $ 13,000 for the years

ended December 31, 2025 and 2024, respectively.

Company has accounts receivables from certain customers that exceed 10 % of total accounts receivable.

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Concentrations

to a single customer in any one year can exceed 10 % of our total sales.

There was one customer of the CVD Equipment segment in the year

ended December 31, 2024 that represented 29.5 % of our revenues, while there were three customers of the CVD Equipment segment in the

year ended December 31, 2023 that represented 14.3 %, 13.5 % and 10.9 % of our revenues.

The loss of a large customer could have a material

adverse effect on the Company’s business and financial condition.

for a single customer in any one year can exceed 10 % of our total sales.

There were two customers in the year ended December 31, 2025

that represented 27.6 % and 13.7 % of our revenues, while there was one customer that represented 29.5 % of our revenues in the year ended

December 31, 2024.

The loss of a large customer could have a material adverse effect on the Company’s business and financial condition.

sales to customers represented approximately 5.4 % and 4.3 % of sales years ended December 31, 2025 and 2024 respectively.

in both 2025 and 2024 were primarily to customers in Europe and Asia.

All contracts except those entered into by the Company’s

subsidiary in Denmark are denominated in U.S.

The Company has not entered into any foreign exchange contracts.

Company relies on suppliers to manufacture many of the components and subassemblies used in its products.

Quality or performance failures

of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s

ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results.

Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited

number of sources.

The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in

the manufacturing and delivery of its products or cause it to carry excess or obsolete inventory and could cause it to redesign its products.

Value of Financial Instruments

carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, and accounts payable, approximate

fair value due to the relatively short-term maturity of these instruments.

The carrying value of long-term debt approximates fair value

based on prevailing borrowing rates currently available for loans with similar terms and maturities.

EQUIPMENT CORPORATION AND SUBSIDIARIES

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2 - Summary of Significant Accounting Policies (continued)

Value of Financial Instruments

carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable, contract assets

and contract liabilities approximate fair value due to the relatively short-term maturity of these instruments.

The carrying value of

long-term debt approximates fair value based on prevailing borrowing rates currently available for loans with similar terms and maturities.

Company records stock-based compensation in accordance with the provisions set forth in ASC 718, “Stock Compensation”.

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and $ 73,000 for the years ended December 31, 2025 and 2024, respectively.

Adopted Accounting Standards

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures

about significant segment expenses.

This update is effective for our annual report for fiscal year 2024, and interim periods thereafter,

and was applied retrospectively to the fiscal year 2024 financial statements..

The Company adopted ASU 2023-07 in 2024 and the required

disclosures are included in Note 13.

Issued Accounting Standards

Adopted Accounting Standard

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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taxes paid by jurisdiction.

This ASU is effective for our annual report for fiscal year 2026, with early adoption permitted, and should

be applied either prospectively or retrospectively.

The Company is currently evaluating the timing of adoption and impact of this ASU

on our consolidated financial statements.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

2 - Summary of Significant Accounting Policies (continued)

The expanded annual disclosures are effective for the year ended December 31, 2025 and were applied retrospectively.

See Note 9 – Income Taxes.

Issued Accounting Standards

November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statements Expenses (Subtopic 220-40),” to improve

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impact on our financial reporting.

following table represents a disaggregation of revenue from contracts by end markets for the years ended December 31, 2024 and 2023 (in

Schedule of Disaggregation of Revenue

Point in time

Year Ended December 31, 2024

Point in time

Year Ended December 31, 2023

Point in time

EQUIPMENT CORPORATION AND SUBSIDIARIES

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31, 2025 and 2024

3 – Revenue (continued)

following table represents a disaggregation of revenue from contracts by end markets for the years ended December 31, 2025 and 2024 (in

Schedule of Disaggregation of Revenue

Ended December 31, 2025

Ended December 31, 2024

energy market includes customers involved in the manufacture of silicon carbide wafers and batteries.

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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 financial position and results of operations.

assets and contract liabilities on input method type contracts in progress are summarized at December 31 as follows (in thousands):

of Cost and Estimated Earnings in Excess of Billings

Costs incurred on contracts in progress

product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes

other information used to estimate costs.

Changes in estimates may have a material effect on the Company’s consolidated financial

position and results of operations.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

3 – Revenue (continued)

assets and contract liabilities on input method type contracts in progress are summarized for the years ended December 31, 2025 and 2024

as follows (in thousands):

Schedule of Cost and Estimated Earnings in Excess of Billings

Costs incurred on contracts in

Estimated earnings

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Net cost in excess of billings

Deferred revenue related to non-systems contracts

Deferred revenue related

to other contracts

liability in excess of contract assets

Included in accompanying consolidated balance sheets under the following captions (in thousands):

Contract assets

Contract liabilities

the contract liability balances at December 31, 2023 and December 31, 2022, $ 4.7

million and $ 3.7

million was recognized as revenue during the years ended December 31, 2024 and 2023, respectively.

Contract assets and contract

liabilities at December 31, 2022 were $ 2.2

Included in accompanying consolidated balance

sheets under the following captions (in thousands):

the contract liability balances at December 31, 2024 and December 31, 2023, $ 3.1 million and $ 4.9 million were recognized as revenue

during the years ended December 31, 2025 and 2024, respectively.

Contract assets and contract liabilities at December 31, 2023 were $ 1.6

million and $ 4.9 million, respectively.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

4 - Inventories

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Finished goods

in inventories are finished goods and raw materials related to PVT 150 systems that were purchased and built, respectively, in anticipation

of future orders.

During the year ended December 31, 2024, the Company recorded a non-cash charge to reduce the net realizable value

of such inventory by approximately $ 1.3 million based on its assessment of the current market for silicon carbide equipment.

of December 31, 2024, the net amount of PVT 150 systems inventory is approximately $ 0.5 million.

If future PVT 150 orders do not materialize

and if the Company is not otherwise able to sell this inventory, the Company could incur additional charges to further reduce the carrying

value of such inventory to net realizable value.

Such charges may be material to the Company’s financial position and future results

of operations.

5 – Property, Plant and Equipment

the year ended December 31, 2024, the Company recorded a non-cash charge to reduce the net realizable value of its inventory by approximately

$ 1.6 million.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

5 – Property, Plant and Equipment and Assets Held for Sale

classes of property, plant and equipment consist of the following as of December 31 (in thousands):

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Construction in progress

Totals at cost

accumulated depreciation

Property, plant and equipment, net

Property, plant and

equipment, net

and equipment also include furniture and fixtures and software.

expense was $ 0.7 million and $ 0.7 million for the years ended December 31, 2025 and 2024, respectively.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

5 – Property, Plant and Equipment (continued)

2025 and 2024, two PVT units were transferred from inventory to property, plant and equipment totaling $ 0.2 million and $ 0.1 million,

respectively.

The unit transferred in 2025 is included in construction in progress at December 31, 2025.

This equipment is and will be

used internally to further the research and development of products used to grow silicon carbide crystals.

November 6, 2025, the Company’s Board of Directors approved a comprehensive strategy to transform the Company in response to the

continued fluctuations in order rates and the recent decline in the bookings of the Company’s CVD Equipment division.

this strategy, the Company transitioned the operating model for the CVD Equipment business from vertically integrated fabrication to

outsourced fabrication of certain components.

At December 31, 2025, the Company classified certain excess manufacturing equipment as

held for sale with a fair value of $ 0.5 million based on an agreement the Company entered in January 2026 with a third-party to sell

the equipment for this amount.

The Company recorded an impairment charge of $ 0.2 million related to this equipment and related capitalized

software during the year ended December 31, 2025.

Company entered into an agreement with the Town of Islip Industrial Development Agency (Islip IDA) in July 2021 under which the Company

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have a material adverse effect on the Company’s financial position and future results of operations and cash flows.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

6 – Accrued Expenses

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Accrued material purchases

Total accrued expenses

7 – Long-term Debt

debt as of December 31 consist of the following (in thousands, except percentages and amounts in notes):

debt consists of the following as of December 31 (in thousands):

Schedule of Long Term Debt

Equipment loan payable in monthly repayments of $ 8

including interest at 6 % per annum

Equipment loan payable

current maturities

Long-term debt, net of current maturities

September 2022 , the Company entered into a loan agreement to fund the acquisition of equipment in the amount of $ 0.4 million.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

7 – Long-term Debt (continued)

maturities of long-term debt as of December 31, 2024 are as follows (in thousands):

Schedule of Maturities of Long Term Debt

Long-term debt, net

of current maturities

September 2022 , the Company entered into a loan agreement to fund the acquisition of equipment in the amount of $ 0.4 million payable

in monthly repayment of $ 8,000 including interest at 6 % per annum.

February 2026, the Company repaid the loan in full in anticipation of selling the equipment as discussed in Note 5.

Accordingly, the

entire balance as of December 31, 2025 has been classified as a current liability.

8 – Earnings per Share

calculation of basic and diluted weighted average common shares outstanding as of December 31 is as follows (in thousands):

calculation of basic and diluted weighted average common shares outstanding for the years ended December 31, 2025 and 2024 is as follows

(in thousands):

Schedule of Basic and Diluted Weighted Average Common Shares Outstanding

Basic weighted average shares outstanding

Effect of potentially dilutive share-based awards

Effect of potentially

dilutive share-based awards

Diluted weighted average shares outstanding

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per share because their effect was antidilutive.

9 – Income Taxes

before income taxes are as follows:

Schedule of Loss Before Income Taxes

EQUIPMENT CORPORATION AND SUBSIDIARIES

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31, 2025 and 2024

9 – Income Taxes (continued)

expense/(benefit) for income taxes for the years ended December 31 includes the following (in thousands):

Schedule of Components of Income Tax Expense (Benefit)

Total current tax provision

Total deferred tax provision

Income tax expense (benefit)

reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31 is as follows (in thousands):

Schedule of Effective Income Tax Rate Reconciliation

Expected provision at federal statutory tax rate at 21 %

Increase in valuation allowance

State and local taxes

Federal research and development credits

Non-deductible expenses

Disposition of Tantaline

Income tax expense (benefit)

9 – Income Taxes

before income taxes for the years ended December 31, 2025 and 2024 consist of the following (in thousands):

Schedule of Loss Before Income Taxes

components of income tax expense for the years ended December 31, 2025 and 2024 consist of the following (in thousands):

Schedule of Components of Income Tax Expense

Total current tax expense

deferred tax expense

Total income tax expense

tax paid (net of refunds) were as follows (in thousands):

Schedule of Income

Tax Paid Net of Refunds

State and local:

South Carolina

Total income taxes paid,

the year ended December 31, 2025, we adopted ASU 2023-09 to enhance the income tax disclosures regarding income taxes paid and the rate

reconciliation disclosure.

The provision for income taxes reconciles to the amount computed by applying the U.S.

federal statutory rate

of 21 % to income (loss) before income taxes as follows (in thousands):

EQUIPMENT CORPORATION AND SUBSIDIARIES

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9 – Income Taxes (continued)

tax effects of temporary differences giving rise to significant portions of the net deferred taxes as of December 31 are as follows (in

Schedule of Effective Income Tax Rate Reconciliation

Expected provision at federal

statutory tax rate

State and local taxes, net of federal effect

Change in valuation allowance

Nontaxable and nondeductible items:

Stock-based compensation

Other Nontaxable and nondeductible items

Research and development credits

Income tax expense

(1) State taxes in

California comprise the majority (greater than 50%) of the state tax effect in the category.

income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of our deferred

tax assets for federal and state income taxes are as follows (in thousands):

Schedule of Deferred Tax Assets and Liabilities

Deferred income tax assets:

Net operating loss carryforwards

R&D tax credit carryforwards

Net operating

loss carryforwards

Research and development

tax credit carryforwards

Compensation costs

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Intangible assets

Capitalized research and development

Capitalized research and

Allowance for doubtful

Inventory capitalization

Deferred income tax assets

valuation allowance

Deferred income tax assets, net of valuation allowance

Deferred incomes tax liability:

income tax assets, net of valuation allowance

Deferred income tax liabilities:

Property, plant and equipment

Prepaid expenses

Deferred income tax asset, net

income tax asset, net

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

9 – Income Taxes (continued)

required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets

in the “change in valuation allowance” line of the rate reconciliation.

The following table presents a reconciliation of

the total change in the valuation allowance (in thousands):

of Change in Valuation Allowance

Beginning balance

Change charged to income

charged to currency translation adjustment

Ending balance

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets

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be required to reduce our existing valuation allowance resulting in less income tax expense.

the year ended December 31, 2024, the valuation allowance increased by approximately $ 0.5

million from the prior year primarily the result of capitalized research and development costs.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

9 – Income Taxes (continued)

the years ended December 31, 2025 and 2024 , the valuation allowance increased by approximately $ 0.2 million and $ 0.5 million, respectively,

from the prior year primarily from current year operating losses for which no tax benefit was provided.

December 31, 2025, the Company had $ 5.9 million of U.S.

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As of December 31, 2025 and 2024, the Company had no uncertain tax positions.

The Company does not

expect that its unrecognized tax benefits will significantly increase or decrease within twelve months.

Company files federal income tax returns and income tax returns in various state and local tax jurisdictions.

tax years open to examination are 2021 to 2024.

The Company’s state and local tax years that are open to tax examination are generally

2020 to 2024.

Inflation Reduction Act (“IRA”) and Chips and Science Act (“CHIPS Act”) were both enacted in August 2022.

IRA introduced new provisions including a 15 % corporate alternative minimum tax for certain large corporations that have at least an

average of $1 billion adjusted financial statement income over a consecutive three-tax-year period and a 1 % excise tax surcharge on stock

The CHIPS Act provides a variety of incentives associated with investments in domestic semiconductor manufacturing and related

Both the IRA and CHIPS Act are applicable for tax years beginning after December 31, 2022 and had no impact to the Company’s

consolidated financial statements for the years ended December 31, 2024 and 2023.

10 – Employee Retention Credit

2022, the Company conducted an analysis as to whether it was entitled to employee retention credits (“ERC”) under the CARES

Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Plan Act of 2021.

Based on the analysis,

the Company determined that it was entitled to an ERC of approximately $ 1.5 million and recognized a receivable of $ 1.5 million as of

December 31, 2022.

The Company received the ERC credit in July 2023.

July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H.

14” (the Act) was enacted.

Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development

costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S.

taxation on international

The enacted legislation did not have a material impact on the Company’s effective tax rate for the year ended December

EQUIPMENT CORPORATION AND SUBSIDIARIES

23 unchanged sentences

provided, however, that such purchase price shall not be less than the fair market value of the shares on the date such option is granted.

The stock options generally expire seven to ten years after the date of grant.

The stock options generally expire 7

years after the date of grant.

of December 31, 2025 , there were 48,698 shares available for grant under the 2016 Equity Incentive Plan and 98,180 shares available

for grant under the 2022 Equity Incentive Plan.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

11 – Stock-Based Compensation (continued)

Company recorded stock-based compensation of $ 0.9 million and $ 1.1 million for the years ended December 31, 2025 and 2024, respectively,

4 unchanged sentences

General and administrative

Total stock-based compensation expense

compensation expense in both years included approximately $ 0.2 million related to restricted stock awards pursuant to a Director Compensation

stock-based compensation expense

compensation expense in both years included approximately $ 0.2 million related to restricted stock awards pursuant to the Director Compensation

plan discussed below.

The Company recognizes forfeitures of stock awards as they occur.

the year ended December 31, 2024, the Company granted 5,000 stock options, vesting 25 % per year over four years, with a ten-year life.

The Company determined the fair value of stock options granted during the year ended December 31, 2024 is based upon weighted average

assumptions as provided below.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

10 – Stock-Based Compensation (continued)

the year ended December 31, 2024, the Company granted 5,000

stock options, vesting 25 %

per year over four years, with a 10 ten-year life.

The Company determined the fair value of stock options granted based upon weighted

average assumptions as provided below.

Schedule of Weighted Average Assumptions

8 unchanged sentences

the Company’s common stock over the respective expected term.

The Company has 823,125 of outstanding stock options under the three

The Company has 803,875 outstanding stock options under the three

plans at December 31, 2025.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

11 – Stock-Based Compensation (continued)

following table summarizes stock options awards for the years ended December 31, 2025 and 2024:

9 unchanged sentences

Schedule of Outstanding and Exercisable Options Ranges of Exercise Prices

Options Outstanding

Options Exercisable

10.01 - 13.00

13.01 - 16.00

$ 10.01 - 13.00

$ 13.01 - 16.00

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

10 – Stock-Based Compensation (continued)

of December 31, 2025, there was $ 0.7 million of unrecognized compensation costs related to stock options expected to be recognized over

3 unchanged sentences

meeting of shareholders.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

11 – Stock-Based Compensation (continued)

following table summarizes restricted stock awards for the years ended December 31, 2025 and 2024:

1 unchanged sentence

Average Grant

Restricted Stock

Unvested outstanding at January

2 unchanged sentences

Forfeited or cancelled

Unvested outstanding at December 31, 2024

Unvested outstanding

at December 31, 2025

fair value of the restricted stock awards is recorded as stock-based compensation expense over the 1 one-year vesting period and totaled

$ 0.2 million for the both years ending December 31, 2024 and 2023, respectively.

$ 0.2 million for both years ending December 31, 2025 and 2024, respectively.

11 – Defined Contribution Plan

8 unchanged sentences

matching contributions to the 401(k) plan.

discretionary employer contribution has been made for 2024 and 2023.

12 - Reportable Segments

Company has determined that it has three reportable segments, organized primarily based on product offerings, as follows:

EQUIPMENT CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2025 and 2024

13 - Reportable Segments

Company has determined that it has three reportable segments, organized primarily based on product offerings, as follows:

Equipment – manufactures chemical vapor deposition, physical vapor transport and thermal

process equipment.

12 - Reportable Segments (continued)

Equipment – manufactures chemical vapor deposition, physical vapor transport and thermal process equipment.

- manufactures ultra-high purity gas and chemical delivery control systems.

1 unchanged sentence

CVD Equipment and SDC also sell spares and parts and provide services related to the equipment each segment sells.

One other business,

Tantaline, did not meet the quantitative threshold for separate reporting and has been reflected as “Other” below.

chief operating decision maker (“CODM”) of the Company is the Company’s chief executive officer.

18 unchanged sentences

other companies.

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

13 - Reportable Segments (continued)

following provides segment information as described below (in thousands):

Schedule of Segments

For the year ended December 31, 2024

the year ended December 31, 2025

Segment revenue

2 unchanged sentences

General & administrative

Gain on sales of equipment

Impairment charge

Interest expense

Segment net income (loss)

2 unchanged sentences

Depreciation & amortization

For the year ended December 31, 2023

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

12 - Reportable Segments (continued)

the year ended December 31, 2024

Segment revenue

2 unchanged sentences

General & administrative

Impairment charge

Interest expense

Gain on sales of equipment

Segment net income (loss)

2 unchanged sentences

Depreciation & amortization

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

13 - Reportable Segments (continued)

following table presents a reconciliation of revenue of reportable segments to consolidated revenue (in thousands):

Schedule of Reconciliation of Revenue of Reportable Segments to Consolidated Revenue

Year ended December 31,

ended December 31,

Revenue of reportable segments

Other - Tantaline

Intersegment revenue

1 unchanged sentence

revenues are determined based on similar product sales to external customers of the Company.

following table presents a reconciliation of net income (loss) of reportable segments to consolidated net loss (in thousand):

following table presents a reconciliation of net income (loss) of reportable segments to consolidated net loss (in thousands):

Schedule of Reconciliation of Net Income (Loss) of Reportable Segments to Consolidated Net Loss

Year ended December 31,

Net income (loss) of reportable segments

ended December 31,

Net income (loss) of reportable

Unallocated amounts:

Corporate expenses

Other - Tantaline

Unallocated amounts

Interest income

Income tax (expense) benefit

Consolidated net loss

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2025 and 2024

12 - Reportable Segments (continued)

following table presents a reconciliation of total assets of reportable segments to consolidated total assets (in thousands):

Schedule of Reconciliation of Total Assets of Reportable Segments to Consolidated Total Assets

Year ended December 31,

ended December 31,

Total assets of reportable segments

1 unchanged sentence

Cash equivalents

Other current assets

Consolidated total assets

EQUIPMENT CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 and 2023

13 - Reportable Segments (continued)

following table presents a revenue by geographic area (in thousands):

current assets

following table presents revenue by geographic area (in thousands):

Schedule of Revenue by Geographic Area

Year ended December 31,

ended December 31,

United States

1 unchanged sentence

Europe, Middle East and Africa

Consolidated total revenue

total revenue

geographic reporting, revenues are attributed to the location in which in the customer facility is located.

8 unchanged sentences

upon certain performance metrics and other milestones.

Company received payments under the Agreement in the amount of $ 0.6 million which had been reflected as “deposits from purchaser”

in the accompanying consolidated balance sheet as of December 31, 2023.

Company fulfilled remaining orders for MesoScribe products during 2024 at which time it ceased operations of MesoScribe and recorded

a $ 0.7 million gain upon the completion of the sale of the equipment during the year ended December 31, 2024.

During the year ended December

31, 2023, the Company recorded an impairment charge of $ 0.1 million for other equipment of MesoScribe.

revenues and net income of MesoScribe were $ 0.8 million and $ 1.1 million for the year ended December 31, 2024, including the gain on

sale of equipment of $ 0.7 million.

revenues and net income of MesoScribe were $ 0.7 million and $ 33,000 for the year ended December 31, 2023, including the impairment charge

of $ 0.1 million.

revenues and net income of MesoScribe were $ 0.1 million and $ 0.1 million for the year ended December 31, 2025 consisting principally

of a license agreement fee.

EQUIPMENT CORPORATION AND SUBSIDIARIES

2 unchanged sentences

13 – MesoScribe and Tantaline (continued)

total assets and total liabilities of the MesoScribe subsidiary were $ 0.6

million and $ 0 ,

respectively, as of December 31, 2024 and $ 0.2

respectively, as of December 31, 2023.

revenues and net income of MesoScribe were $ 0.8 million and $ 1.1 million for the year ended December 31, 2024, including the gain on

sale of equipment of $ 0.7 million.

The total assets and total liabilities of the MesoScribe subsidiary were $ 0.6 million and $ 0 , respectively,

as of December 31, 2024.

May 26, 2023, the Company sold its Tantaline subsidiary located in Nordborg, Denmark in exchange for a nominal amount at closing and

an earn-out provision based on any net income that Tantaline may earn during the five-year period ending December 31, 2027.

recorded a loss of $ 0.2 million upon the sale.

Any earn-out amounts will be recognized when and if any such amounts become probable of

The Company received a $ 6,000 earn-out payment in 2024 based on the results of Tantaline’s operations for the year ended

December 31, 2023.

the loss on disposition of $ 0.2 million, the revenues and net income of Tantaline were $ 0.5 million and $ 0.1 million, respectively, for

the year ended December 31, 2023.

amounts will be recognized when and if any such amounts become probable of receipt.

To date, the Company has received a $ 6,000 earn-out

payment in 2024 based on the results of Tantaline’s operations for the year ended December 31, 2023.

14 – Risks and Uncertainties

3 unchanged sentences

have included:

● Significant

geopolitical developments across Europe and Asia (including the war in Ukraine) have and

may continue to restrict the Company’s ability to procure raw materials and components

such as nickel and integrated circuits, as well as impact the Company’s ability to

sell its products into China, Russia and other Eastern European and Asian regions.

chain disruptions have led to much longer lead times to acquire raw materials for production

and has led to inflationary pressures in both materials and labor.

These supply chain disruptions

have impacted the Company’s ability to recognize revenue timelier as it delays the

Company’s manufacturing processes.

geopolitical developments across Europe and Asia (including the war in Ukraine and Iran) have and may continue to restrict the Company’s

ability to procure raw materials and components such as nickel and integrated circuits, as well as impact the Company’s ability

to sell its products into China, Russia and other Eastern European and Asian regions.

chain disruptions have led to much longer lead times to acquire raw materials for production and has led to inflationary pressures

in both materials and labor.

These supply chain disruptions have impacted the Company’s ability to recognize revenue timelier

as it delays the Company’s manufacturing processes.

Company relies on suppliers to manufacture many of the components and subassemblies used in its products.

Quality or performance failures

of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s

ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results.

Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited

number of sources.

The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in

the manufacturing and delivery of its products or cause it to carry excess or obsolete inventory and could cause it to redesign its products.

management has initiated actions to mitigate the potential negative impacts to its revenue and profitability, the Company is unable to

predict the impact that the above uncertainties may have on its future results of operations and cash flows.

15 – Subsequent Event

March 23, 2026, the Company entered into an Asset Purchase Agreement (the “APA”) with a subsidiary of the Atlas Copco Group (the “Buyer”)

under which the Company agreed to sell to the Buyer all of the assets related to the Company’s SDC business and the Buyer will

assume certain specified liabilities, in each case as set forth in the APA (collectively, the “Transaction”).

will retain ownership of its Saugerties, New York facility, which will be leased to the Buyer for an initial term of two years following

the closing of the transaction.

aggregate consideration payable to the Company will be approximately $ 16.9 million (the “Purchase Price”), subject to certain

purchase price adjustments as defined in the APA.

the closing of the Transaction (the “Closing”), the Buyer will place $ 900,000 of the Purchase Price in escrow to cover post-Closing

adjustments and indemnification obligations under the APA.

The escrow will be released as described in the APA.

APA contains customary indemnification provisions pursuant to which the parties agree to indemnify each other for certain matters, including,

among other things, breaches of certain representations, warranties and covenants in connection with the Transaction.

APA contains customary representations, warranties and covenants of the parties, including, among other things, covenants regarding the

operations of SDC between signing of the APA and the Closing, delivery of consents and approvals, and employee-related matters.

is also subject to customary closing conditions, including the receipt of necessary third-party consents, the absence of any legal restraint

prohibiting the transaction, and the satisfaction of other conditions customary for transactions of this nature.

Buyer and the Company are required to use their reasonable best efforts to consummate the Transaction which is expected to occur during

the second quarter of 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures