What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-10 · 305 added, 349 removed, 190 unchanged (77% of the section changed)

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Current assets:

Cash and cash

Accounts receivable, net

of allowance for credit losses

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses

Contract assets

current assets

Current assets of discontinued operations

Assets held for sale – equipment

Other current assets

Total current assets

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’

Noncurrent assets of discontinued operations

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Accrued expenses

Current maturities of

long-term debt

current liabilities

Long-term debt, net of

current portion

Current maturities of long-term debt

Current liabilities of discontinued operations

Contract liabilities

Total current liabilities

Total liabilities

Contingencies – Note 12

Stockholders’ equity:

Common stock - $ 0.01

par value – authorized

issued and outstanding 6,937,338

September 30, 2025 and 6,881,838 at December 31, 2024

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

6,937,338 issued and outstanding at March 31, 2026 and December 31, 2025

Additional paid-in capital

Total stockholders’

Total liabilities and

stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes are an integral part of these condensed consolidated financial statements

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thousands, except per share and share amounts)

Three Months Ended

Cost of revenue

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Research and development

Selling and shipping

General and administrative

on sale of equipment

Gain on sale of equipment

Total operating expenses

Operating income (loss)

Operating loss from continuing operations

Other income (expense):

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Total other income, net

Income (loss) before income tax

Loss from continuing operations before income taxes

Income tax expense

Net loss from continuing operations

Discontinued operations:

Income from discontinued operations

Transaction costs on disposal of discontinued operations

Income from discontinued operations, net of taxes

Net income (loss)

Income (loss) per common

share-diluted

Weighted average common shares

Net income (loss) per share of common stock – basic and diluted:

Loss from continuing operations per common share

Income from discontinued operations per common share

Net income (loss) per common share

accompanying notes are an integral part of these condensed consolidated financial statements

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thousands, except share amounts)

ended September 30, 2025 and 2024

Balance at July 1, 2025

Stock-based compensation

Balance at September 30, 2025

Balance at July 1, 2024

Stock-based compensation

Balance at September 30, 2024

ended September 30, 2025 and 2024

months ended March 31, 2026 and 2025

Paid-in Capital

Balance at January 1, 2026

Stock-based compensation

Balance at September 30, 2025

Balance at March 31, 2026

Balance at January 1, 2025

Stock-based compensation

Balance at September 30, 2024

Balance at March 31, 2025

accompanying notes are an integral part of these condensed consolidated financial statements

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Consolidated Statements of Cash Flows

Three Months Ended

Cash flows from operating activities:

Adjustments to reconcile

net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in

operating activities:

Stock-based compensation

Depreciation and amortization

Provision for excess and

obsolete inventory

Gain on sales of equipment

Gain on sale of equipment

Changes in assets and liabilities:

net of effects of sale of equipment:

Accounts receivable

Contract assets

Other current assets

Accounts payable

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Contract liabilities

Net cash used in operating

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and

Investment in captive insurance

Net cash used in investing

Proceeds from assets held for sale and sale of equipment

Investment in captive insurance company

Purchases of property and equipment

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Payments of long-term debt

Repayments of long-term debt

Net cash used in financing activities

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accompanying notes are an integral part of these condensed consolidated financial statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

BASIS OF PRESENTATION

accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively the “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 the information

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.

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The operating results for the

three and nine months ended September 30, 2025 are not necessarily indicative of the results that can be expected for the year ending

December 31, 2025.

three months ended March 31, 2026 are not necessarily indicative of the results that can be expected for the year ending December 31,

condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements at such

date, as filed on Form 10-K with the SEC on March 19, 2025, but does not contain all the information and footnotes required by accounting

date, as filed on Form 10-K with the SEC on March 30, 2026, 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.

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material intercompany balances and transactions have been eliminated in consolidation.

Transformation

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 CVD Equipment division.

As part of this strategy,

the Company intends to transition the operating model for our CVD Equipment business from vertically integrated fabrication to outsourced

fabrication of certain components.

These actions are expected to reduce the Company’s fixed operating costs.

initiatives of the plan include a reduction in the CVD Equipment division’s workforce, expected to reduce annual operating

costs by approximately $ 2.0 million;

outsourcing of the fabrication operations for certain components;

and implementation of a revised sales strategy utilizing distributors and outside sales

representatives to supplement internal sales efforts.

The SDC division will not be impacted by these actions.

transformation strategy also includes the exploration of strategic alternatives for businesses and product lines, including the potential

sale or divestiture of assets or business lines.

Company expects to complete the workforce reduction plan during the fourth quarter of 2025 and anticipates incurring approximately $ 0.1

million in severance and other charges.

In connection with the transformation plan, the Company

may incur non-cash impairment charges in future periods with respect to certain of its long-lived assets to the extent any such assets

are disposed of for amounts less than their book values.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

September 30, 2025, the Company had $ 8.4 million in cash and cash equivalents.

The Company believes that its existing cash and cash equivalents,

together with anticipated cash flows from operations, collections of outstanding accounts receivable, revenue from its current backlog,

sales of inventory on hand, and deposits and down payments on significant orders, will be sufficient to fund its working capital and

capital equipment needs, as well as its expected cash requirements, for at least the next 12 months from the date of issuance of these

condensed consolidated financial statements.

March 23, 2026, the Company entered into an agreement to sell its SDC business division to a third party.

The sale was completed on April

Accordingly, the financial results of the SDC business division are reflected in the consolidated condensed financial statements

as discontinued operations for all periods presented.

otherwise specified, disclosures in these condensed consolidated financial statements reflect continuing operations only.

financial information related to discontinued operations has been reclassified and separately presented in the consolidated financial

statements and accompanying notes to conform to the current period presentation.

See Note 2 for further information regarding our discontinued

Reclassifications

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

These reclassifications had no effect on net income (loss).

accordance with FASB ASC 606 - Revenue from Contracts with Customers (“ASC 606”), the Company records revenue in an amount

that reflects the consideration to which the Company expects to be entitled in exchange for goods or services promised to its customers.

Under ASC 606, the Company follows a five-step model to:

These reclassifications had no effect on net loss.

March 31, 2026, the Company had $ 8.2 million in cash and cash equivalents.

The Company also received net proceeds of approximately $ 14.8

million in April 2026 upon the sale of the SDC business division.

The Company anticipates that the existing cash and cash equivalents

balance together with collections of existing accounts receivable and contract assets, and revenue from its existing backlog of systems

as of this filing date, will be adequate to meet its working capital and capital equipment requirements, and its anticipated cash needs

over the next 12 months from the date of issuance of these condensed consolidated financial statements.

DISCONTINUED OPERATIONS

March 23, 2026, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with a buyer to

sell its SDC business division.

On April 1, 2026, the Company completed the transaction whereby substantially all the assets related

to SDC were sold.

aggregate consideration paid to the Company in connection with the transaction was $ 16.9 million and is subject to customary post-closing

At the closing, $ 0.9 million of the purchase price was placed in escrow to secure post-closing adjustments and indemnification

obligations in accordance with the Asset Purchase Agreement.

The Asset Purchase Agreement contains customary representations, warranties,

covenants and indemnification provisions.

The net cash proceeds from the sale of SDC received by the Company in April 2026, after payment

of transaction costs and employee related liabilities, were $ 14.8 million, increasing the Company’s cash balance at the time to

approximately $ 23 million.

Company retained ownership of its Saugerties, New York facility and entered into a lease agreement with the buyer of SDC, pursuant to

which the buyer will lease such facility for an initial term of two years following the closing for an initial annual rent of $ 0.2 million,

subject to customary adjustments.

transaction represents a single disposal plan that constitutes a strategic shift expected to have a material effect on our operations

and financial results.

Accordingly, the financial results of SDC are reflected in the condensed consolidated financial statements as

discontinued operations for all periods presented and the SDC assets and liabilities are considered held for sale as of March 31, 2026.

following table represents the amounts of assets and liabilities of the discontinued operations of SDC (in thousands):

SCHEDULE OF AMOUNTS OF ASSETS AND LIABILITIES OF

DISCONTINUED OPERATIONS

Accounts receivable, net of allowance for credit losses

Contract assets

Other current assets

Equipment, net

Other noncurrent assets

DISCONTINUED OPERATIONS (continued)

following table represents statements of operations information for the discontinued operations of SDC (in thousands):

ended March 31,

Cost of revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Income from discontinued operations

Transaction costs on disposal of discontinued operations

Income from discontinued operations, net of taxes

significant components included in the accompanying condensed consolidated statements of cash flow for the discontinued operations of

SDC are as follows (in thousands):

ended March 31,

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606 -

Revenue from Contracts with Customers (“ASC 606 ” ), the Company records revenue in an amount that reflects the consideration

to which the Company expects to be entitled in exchange for goods or services promised to its customers.

Under ASC 606 , the Company

follows a five-step model to:

(1) identify the contract with the customer;

(2) identify the performance obligations

in the contract;

(2) identify the performance obligations in the contract;

(3) determine the transaction price for the contract;

(4) allocate the transaction price to the performance obligations;

and (5) recognize revenue using one of the following two methods:

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 two to eighteen months from commencement of order

For systems sales that meet the criteria to recognize revenue over time, 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.

For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions, the Company recognizes

revenue based on point in time.

and (5) recognize

revenue using one of the following two methods:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Company designs, manufactures and sells custom chemical vapor deposition, thermal process equipment and other equipment through contractual

These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen

months from commencement of order acceptance.

For systems sales that meet the criteria to recognize revenue over time, 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.

For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions,

the Company recognizes revenue based on point in time.

the over time method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred

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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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cost based input methods of revenue recognition require the Company to make estimates of costs to complete the projects.

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.

were no impairment losses recognized on contract assets during the three and nine months ended September 30, 2025 and 2024 .

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.

There were no material impairment losses recognized on contract assets during the

three months ended March 31, 2026 and 2025.

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

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

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

These contract liabilities

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are generally used to meet working capital demands, which can be higher in the earlier stages of a contract.

Also, advanced payments and

deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract.

Also, advanced payments

and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract.

assets include unbilled amounts typically resulting from system sales under contracts and represents revenue recognized that exceeds

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The Company typically receives down payments upon

receipt of orders and progress payments as the system is manufactured.

receipt of order and progress payments as the system is manufactured.

assets and contract liabilities are classified as current as these contracts in progress are expected to be substantially completed within

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the customer.

For the three and nine months ended September 30, 2025 and 2024, all system equipment sales were recorded over time by

using an input method except a) one contract that was recorded as revenue at the point in time the equipment was transferred to the customer

during the third quarter of fiscal year 2024 and b) one contract that was entered during 2024 was not recognized using over time revenue

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

and gross profit recognized for this modified contract was $ 1.0 million and $ 0.6 million, respectively for the three and nine months

ended September 30, 2025.

For the three months ended March 31, 2026 and 2025, all system equipment sales were recorded over time by using an input

method except for 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 expenses 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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The Company updates its warranty estimates based on actual costs incurred.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Standards

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

Improvement to Income Tax Disclosures.

The amendments further enhance

income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid

by jurisdiction.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should

be applied either prospectively or retrospectively.

The resulting new annual disclosures requirements will be reflected in the Company’s 2025 report on Form 10-K.

Held for Sale and Discontinued Operations

and related liabilities of a qualifying business are classified as held for sale when the following conditions are met:

(i) management

has committed to a plan to sell the net assets, (ii) the net assets are available for immediate sale, (iii) there is an active program

to locate a buyer, (iv) the sale and transfer of the net assets is probable within one year, (v) the net assets are being actively marketed

for sale at a price that is reasonable in relation to the current fair value, and (vi) it is unlikely that significant changes will be

made to the plan to sell the net assets.

Assets and related liabilities which have been classified as held for sale are excluded from

the net assets and liabilities of continuing operations in the period in which the held for sale criteria was met.

A component of a business

is classified as a discontinued operation when its disposal represents a strategic shift that has or will have a major effect on our

operations and financial results.

The results of discontinued operations are reported in income/loss from discontinued operations, net

of tax on the consolidated statements of operations for all current and prior periods presented.

The results of discontinued operations

include direct costs attributable to the divested business and any gain or loss recognized in connection with the sale, or adjustment

of the carrying amount to fair value less cost to sell while being held for sale, and excludes any indirect cost allocation associated

with any shared-service or corporate functions not solely dedicated to the divested business.

Adjustments to discontinued operations

subsequent to the completion of a transaction or disposition are generally attributable to contingencies and indemnifications directly

related to the disposal transaction, operations of the discontinued operations, or settlement of obligations directly related to the

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

and liabilities of discontinued operations, including those that meet the held-for-sale criteria are presented separately in the consolidated

balance sheets.

Upon classification as held for sale, assets are measured at the lower of carrying amount or fair value less cost to

sell, and depreciation and amortization cease.

Any impairment losses or subsequent measurement adjustments are recognized in the results

of discontinued operations in the period in which they are identified.

Cash flows attributable to discontinued operations are presented

separately in the consolidated statements of cash flows, or otherwise disclosed, for all periods presented.

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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each interim and annual income statement’s expense caption, as applicable.

authoritative guidance can be applied prospectively or retrospectively and will be effective for financial statements issued for annual

periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15,

2027, with early adoption permitted.

The Company is currently in the process of evaluating the impact of adoption on its consolidated

financial statements.

This authoritative guidance can be applied prospectively

or retrospectively and will be effective for financial statements issued for annual periods beginning after December 15, 2026, and interim

reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently

in the process of evaluating the impact of adoption on its consolidated financial statements.

Company believes there is no additional new accounting guidance adopted, but not yet effective, which is relevant to the readers of our

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and cash equivalents

Company had cash and cash equivalents of $ 8.4 million and $ 12.6 million at September 30, 2025 and December 31, 2024, respectively.

Company invests excess cash in U.S.

treasury securities, certificates of deposit or deposit accounts, all with maturities of less than

three months.

Cash equivalents consisting of U.S.

treasury securities were $ 7.6 million and $ 11.9 million at September 30, 2025 and December

31, 2024, respectively.

Company’s cash balances are held in United States financial institutions, which from time to time may exceed the Federal Deposit

Company had cash and cash equivalents of $ 8.2 million and $ 8.7 million at March 31, 2026 and December 31, 2025, respectively.

invests excess cash in U.S.

treasury bills, certificates of deposit or deposit accounts, all with maturities of less than three months.

Cash equivalents were $ 7.9 million and $ 8.2 million at March 31, 2026 and December 31, 2025, respectively.

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, 2025 and December 31, 2024 was $ 0.7 million and $ 0.4 million, respectively.

CONCENTRATION OF CREDIT RISK (continued)

There were no amounts at risk at March 31, 2026 and December 31, 2025.

Company routinely assesses the financial strength of its customers .

In accordance with the “expected credit loss”

model of ASC 326, the carrying amount of accounts receivable is reduced by a valuation allowance that reflects the best estimate of the

amounts the Company does not expect to collect.

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

model, the carrying amount of accounts receivable is reduced by a valuation allowance that reflects the best estimate of the amounts

the Company does not expect to collect.

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

conditions and reasonable supportable forecasts .

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history, current economic trends and reasonable supportable forecasts.

receivable is presented net of an allowance for credit losses of $ 23,000 and $ 48,000 as of September 30, 2025 and December 31, 2024,

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 customers.

Future changes to the estimated allowance for credit losses

could be material to our results of operations and financial condition.

September 30, 2025, the accounts receivable balance included amounts from three customers that represented 47.4 %, 11.3 %, and 13.1 % of

total accounts receivable.

As of December 31, 2024, the accounts receivable balance includes amounts from three customers that represented

28.6 %, 14.0 % and 11.9 % of total accounts receivable.

receivable is presented net of an allowance for credit losses of $ 15,000 as of both March 31, 2026 and December 31, 2025.

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 customers.

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

financial condition.

CONCENTRATION OF CREDIT RISK (continued)

March 31, 2026, the accounts receivable balance included amounts from four customers that totaled 25.7 %, 18.1 %, 14.4 % and 11.6 % of total

accounts receivable.

As of December 31, 2025 , the accounts receivable balance included amounts

from two customers that totaled 57.0 % and 28.2 % of total accounts receivable.

concentration

from a single customer in any one period can exceed 10 % of our total revenues.

During the three months ended September 30, 2025, three

customers exceeded 10 % of revenues, representing 22.7 %, 19.1 %, and 13.6 % of revenues, and during the nine months ended September 30,

2025, two customers represented 30.2 % and 16.7 % of revenues.

the three months ended September 30, 2024, two customers represented 29.1 % and 11.2 % of revenues, and during the nine months ended September

30, 2024, one customer represented 31.2 % of revenues.

During the three months ended March 31, 2026, three customers

exceeded 10 % of revenues, representing 27.2 %, 21.7 % and 17.3 % of revenues, and during the three months ended March 31, 2025, three customers

exceeded 10 % of revenues, representing 54.0 %, 18.4 % and 11.7 % of revenues

REVENUE RECOGNITION

following table represents a disaggregation of revenue for the three and nine months ended September 30, 2025, and 2024 (in thousands):

following table represents a disaggregation of revenue for the three months ended March 31, 2026 and 2025 (in thousands):

SCHEDULE OF DISAGGREGATION OF REVENUE

Point in time

months ended September 30, 2025

Three months ended March 31, 2026

Point in time

months ended September 30, 2024

Point in time

months ended September 30, 2025

Three months ended March 31, 2025

Point in time

months ended September 30, 2024

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

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that manufacture aircraft engines.

The industrial end market consists of various end customers in diverse industries.

Industrial end market consists of various end customers in diverse industries.

The research market

principally represents customers such as universities and other research institutions.

REVENUE RECOGNITION (continued)

Company has unrecognized contract revenue of approximately $ 5.3 million at September 30, 2025 of contracts in progress that it expects

to substantially recognize as revenue within the next twelve months based on over time revenue recognition.

principally represents customers that are universities and other research institutions.

Company has unrecognized contract revenue of approximately $ 2.6 million at March 31, 2026, which it expects to substantially recognize

as revenue over time within the next eighteen months.

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.

in estimates for sales of systems may 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

Changes in estimates may have a material effect on the Company’s condensed consolidated statements of operations.

toward contract completion and to calculate the corresponding amount of revenue to recognize.

in estimates for sales of systems may 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

The Company recorded a cumulative catch up adjustment of $ 0.3 million to increase revenue during the three months ended March 31, 2026

as a result of a contract modification.

REVENUE RECOGNITION (continued)

assets and liabilities

assets and contract liabilities on input method type contracts in progress are summarized as follows as of September 30, 2025 (in thousands):

OF COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS

Costs incurred

on contracts in progress

assets and contract liabilities on input method type contracts in progress are summarized as follows as of March 31, 2026 (in thousands):

Schedule of Cost and Estimated Earnings in Excess of Billings

Costs incurred on contracts in progress

Estimated earnings

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Billings to date

cost in excess of billings

revenue related to non-system contracts

Net cost in excess of billings

Deferred revenue related to non-system contracts

liability in excess of contract assets

in accompanying condensed consolidated balance sheet as of September 30, 2025 under the following captions (in thousands):

the contract liability balances at December 31, 2024 and 2023, $ 2.4 million and $ 2.7 million was recognized as revenue during the nine

months ended September 30, 2025 and 2024, respectively.

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

and $ 4.9 million, respectively.

SCHEDULE OF INVENTORIES

Included in accompanying condensed consolidated balance sheets

under the following captions (in thousands):

Contract assets

Contract liabilities

the contract liability balances at December 31, 2025 and 2024, $ 0.2 million and $ 1.3 million was recognized as revenue during the three

months ended March 31, 2026 and 2025, respectively.

Contract assets and contract liabilities at December 31, 2024 were $ 2.1 million and

$ 3.0 million, respectively.

Schedule of Inventories, net

Raw materials

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Finished goods

in our inventories are finished goods and raw materials related to PVT 150/200 systems that were purchased and built, respectively, in

anticipation of future orders.

of September 30, 2025, the net amount of PVT 150/200 systems inventory is approximately $ 0.4 million.

If future PVT 150/200 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.

LONG-TERM DEBT

September 2022, the Company entered into a loan agreement to fund the acquisition of machinery.

The remaining loan balance of $ 203,000

is payable in equal monthly installments of $ 8,352 and secured by equipment.

The interest rate is 6 %.

The loan amount of $ 432,000 was payable

in 60 equal monthly installments of $ 8,352 and secured by equipment.

The interest rate was 6 %.

This loan was fully repaid during the

three months ended March 31, 2026.

EARNINGS PER SHARE

calculation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2025 and

2024 is as follows:

calculation of basic and diluted weighted average common shares outstanding for the three months ended March 31, 2026 and 2025 is as

Schedule of Basic and Diluted Weighted Average Common Shares Outstanding

months ended September

months ended September 30,

Basic weighted average common

shares outstanding

Dilutive effect of

unvested restricted stock

ended March 31,

Basic weighted average common shares

Dilutive effect of stock options

Dilutive effect of unvested restricted stock

Diluted weighted average shares outstanding

the three and nine months ended September 30, 2025 and 2024, all stock options were excluded in the computation of diluted earnings per

share because their effect was antidilutive.

EARNINGS PER SHARE (continued)

As the result of the losses from

continuing operations for the three months ended March 31, 2026 and 2025, all stock options and unvested restricted stock were

excluded from the computation diluted per share amounts for the loss from continuing operations, income from discontinued operations

and net income (loss).

STOCK-BASED COMPENSATION EXPENSE

Company recorded stock-based compensation for the three and nine months ended September 30, 2025 and 2024, respectively, that were included

in the following line items in our condensed consolidated statements of operations (in thousands):

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE

Three months ended

September 30,

Nine months ended

September 30,

Cost of revenue

Research and development

General and administrative

compensation expense for three months ended September 30, 2025 and 2024 included $ 50,000 and $ 50,000 , respectively, and for the nine

month periods ended September 30, 2025 and 2024 included $ 150,000 and $ 153,736 , respectively, related to restricted stock awards that

directors are entitled to receive pursuant to the Director

Compensation Plan.

Under this plan each of the five Company’s independent directors is entitled to an Annual Equity Retainer in

the amount of $ 40,000 , to be granted on the date of the Company’s annual meeting of shareholders.

following table summarizes stock options activity through September 30, 2025:

SCHEDULE OF STOCK OPTIONS AWARDS

following table summarizes stock options awards for the three months ended March 31, 2026:

OF STOCK OPTIONS AWARDS

Outstanding at January 1, 2026

Outstanding at September

following table summarizes information about the outstanding and exercisable options at September 30, 2025 by ranges of exercise prices:

Outstanding at March 31, 2026

following table summarizes information about the outstanding and exercisable options at March 31, 2026 by ranges of exercise prices:

SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS RANGES OF EXERCISE PRICES

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13.01 - 16.00

$ 10.01 - 13.00

$ 13.01 - 16.00

STOCK-BASED COMPENSATION EXPENSE (continued)

of September 30, 2025, there was $ 0.9 million of unrecognized compensation costs related to stock options expected to be recognized over

of March 31, 2026, there was $ 0.6 million of unrecognized compensation costs related to stock options expected to be recognized over

a weighted average period of 0.9 years.

of September 30, 2025 and December 31, 2024, the Company has provided a full valuation allowance against its net deferred tax assets.

This was based on management’s assessment, including the last four years of operating losses, that it is more likely than not that

the net deferred tax assets may not be realized in the future.

STOCK-BASED COMPENSATION EXPENSE (continued)

Company recorded stock-based compensation expense for the three months ended March 31, 2026 and 2025, respectively, that were included

in the following line items in our condensed consolidated statements of operations (in thousands):

SCHEDULE OF STOCK BASED COMPENSATION

ended March 31,

Cost of revenue

Research and development

General and administrative

related to discontinued operations were $ 12,000 and $ 15,000 for the three months ended March 31, 2026 and 2025, respectively.

compensation expense included $ 50,000

for both three months ended March 31,

2026 and 2025, related to restricted stock awards that directors elected to receive pursuant to

the Director Compensation plan.

Under this plan, each of the five independent directors is entitled to an Annual Equity Retainer in the

amount of $ 40,000 ,

to be granted on the date of the Company’s annual meeting of shareholders.

of March 31, 2026 and December 31, 2025, the Company has provided a full valuation allowance against its net deferred tax assets.

was based on management’s assessment, including operating losses in recent years, that it is more likely than not that the net

deferred tax assets may not be realized in the future.

Management continues to evaluate for potential utilization of the Company’s

net deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections

net deferred tax assets, which have been fully reserved for, on a quarterly basis, reviewing our economic models, including projections

of future operating results.

SEGMENT REPORTING

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.

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

– provided electronic printing services and products (heaters, antennas, and sensors).

The operations of MesoScribe were ceased

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

the sale of the Company’s SDC business in 2026 and the cessation of its MesoScribe business in 2024, the Company has one reportable

segment consisting of its CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport, thermal process and related equipment.

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

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performance and decides how to allocate resources, including employees, financial or capital resources, based on segment net income (loss).

The CODM considers actual-to-actual variances on a quarterly basis when making decisions about allocating capital and other resources

The CODM considers budget-to-actual variances on a quarterly basis when making decisions about allocating capital and other resources

to the segments and to assess the performance for each segment.

results for the reportable segments are prepared on a basis consistent with the internal disaggregation of financial

information to assist the CODM in making internal operating decisions.

SEGMENT REPORTING (continued)

income and expenses are excluded from segment net income (loss) and included in the unallocated amounts in the reconciliation of reportable

segment net income (loss) to net income (loss).

These items are not used by the CODM in allocating resources or evaluating the results

of the segments and include the following:

corporate expenses consisting of employment costs of executives, finance, information technology

and human resources;

board of director fees;

professional fees;

shareholder and investor relations expense;

directors’ and officers’

interest income and income tax expense.

Segment income (loss) from operations may not be consistent with measures used by

other companies.

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

SCHEDULE OF SEGMENT INFORMATION

the three months ended September 30, 2025

Segment revenue

Cost of revenue

and development

and administrative

Gain on equipment

and amortization

the three months ended September 30, 2024

Segment revenue

Cost of revenue

Research and development

General and administrative

Gain on equipment

Segment net income (loss)

Segment assets

Capital expenditures

Depreciation and amortization

SEGMENT REPORTING (continued)

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

the nine months ended September 30, 2025

Segment revenue

Cost of revenue

Research and development

General and administrative

Segment net income

Capital expenditures

Depreciation and amortization

the nine months ended September 30, 2024

Segment revenue

Cost of revenue

Research and development

General and administrative

Gain on Equipment

Segment net income (loss)

Capital expenditures

Depreciation and amortization

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 income (loss) (in thousands):

OF RECONCILIATION OF NET INCOME (LOSS) OF REPORTABLE SEGMENTS TO CONSOLIDATED NET LOSS

months ended September

months ended September 30,

Net income (loss) of reportable

Unallocated amounts:

Corporate expenses

Interest income

Income tax (expense)

Consolidated net income (loss)

SEGMENT REPORTING (continued)

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

SCHEDULE OF REVENUE BY GEOGRAPHIC AREA

months ended September 30,

Three months ended

United States

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RISKS AND CONTINGENCIES

Company operates in a challenging economic environment as the global economy continues to confront the impacts of recent executive orders

federal administration regarding tariffs on imports from various countries including the European Union, Canada, Mexico,

and China and the potential impact of actions taken by other countries in response to the announced tariffs, geopolitical conflicts and

general inflationary pressures.

Other economic challenges include the effects of the current U.S.

government shutdown and the ongoing

geopolitical developments across Europe and Asia including the war in Ukraine.

The specific impacts on the Company have included:

may make the Company’s products less cost competitive and reduce gross margins.

impact on the Company’s business related to these or any other tariffs that may be

imposed is uncertain and depends on multiple factors, including the duration and expansion

of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures

by impacted trade partners, and related inflationary effects.

In addition, economic uncertainties

may potentially affect our future order rate.

September 30, 2025, the continuing resolution (CR) allowing U.S.

government departments and

agencies to operate through the end of the government fiscal year expired and the U.S.

shut down most of its operations.

As a result of the U.S.

government shutdown, our business

and results of operations may be impacted by the disruptions to federal government offices,

workers, and operations, including disruptions relating to the funding of research activities

to both universities and companies that may result in delays in new orders or the loss of

We may also experience similar impacts in the event of a series of short-term continuing

resolutions rather than full-year fiscal year 2026 appropriations.

Generally, the significance

of these impacts will primarily be based on the length of the shutdown and timing of passage

of a new CR or a full budget.

● Significant

geopolitical developments across Europe and Asia 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.

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.

Company operates in a challenging and uncertain global economic environment.

Recent and potential actions by the U.S.

federal administration,

including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory

or responsive actions by other governments, may adversely affect the Company’s supply chain, costs, demand for its products, receipt

of orders and results of operations.

In addition, the Company faces ongoing risks related to geopolitical instability, including conflicts

and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.

factors contributing to economic uncertainty include inflationary pressures, elevated interest rates, disruptions in global logistics,

labor market challenges, and potential changes in fiscal, tax, or regulatory policies.

These conditions may impact customer spending

decisions, order rates, project timing, and the availability and cost of materials and components used in the Company’s products.

management continuously evaluates these conditions and has taken, and may take, actions intended to mitigate the potential adverse effects

on the Company’s business, there can be no assurance that such actions will be successful.

The Company is unable to predict the

ultimate impact of these risks and uncertainties on its future results of operations, financial position, or cash flows.

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-Q

Item 1. Financial Statements