What changed in this filing

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Item 1. Financial Statements

2025-05-13 compared with 2024-11-13 · 427 added, 437 removed, 76 unchanged (92% of the section changed)

1 – Financial Statements

EQUIPMENT CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

thousands, except share amounts)

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands,

except share amounts)

and cash equivalents

receivable, net of allowance for credit losses

current assets

Cash and cash

Accounts receivable, net

of allowance for credit losses

Contract assets

current assets

Total current assets

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’

Current liabilities

Accounts payable

Accrued expenses

Current maturities of long-term

Contract liabilities

from purchaser of MesoScribe assets-Note 11

plant and equipment, net

and stockholders’ equity

maturities of long-term debt

current liabilities

Long-term debt, net of

current portion

Total liabilities

Stockholders’ equity:

Common stock - $ 0.01 par

value – 20,000,000 shares authorized;

issued and outstanding 6,881,838 at September 30, 2024 and 6,824,511 at December 31,

Additional paid-in capital

debt, net of current portion

Contingencies

Stockholders’

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

6,881,838 issued and outstanding at March 31, 2025 and December 31,

paid-in capital

stockholders’ equity

liabilities and stockholders’ equity

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

EQUIPMENT CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

thousands, except per share and share amounts)

The accompanying notes are an integral part of these

condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share and share amounts)

Three Months Ended

Cost of revenue

2 unchanged sentences

General and administrative

Gain on sale of equipment-Note

Loss on disposition of

Total operating expenses, net

Total operating expenses

Operating income (loss)

2 unchanged sentences

Interest expense

Foreign exchange income

other income, net

Income (loss) before income tax

Total other income, net

Income (loss) before income taxes

Income tax expense

Net income (loss)

Income (loss) per common

share - basic

Income (loss) per common

share - diluted

Weighted average common shares

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

EQUIPMENT CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

thousands, except share amounts)

months ended September 30, 2024 and 2023

Balance at July 1, 2024

Stock-based compensation

Balance at September 30, 2024

Balance at July 1, 2023

Stock-based compensation

Exercise of stock options and issuance

Balance at September 30, 2023

months ended September 30, 2024 and 2023

Income (loss) per common share - basic

Income (loss) per common share - diluted

Weighted average number of shares:

The accompanying notes are an integral part of these

condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’

(in thousands, except share amounts)

Three months ended March 31, 2025 and 2024

Balance at January 1, 2025

Stock-based compensation

Balance at September 30, 2024

Balance at March 31, 2025

Balance at January 1, 2024

1 unchanged sentence

Stock-based compensation

Exercise of stock options and issuance

Balance at September 30, 2023

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

EQUIPMENT CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Balance at March 31, 2024

The accompanying notes are an integral part of these

condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

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

Gain on sale of equipment

Loss on disposition of

Provision for excess and

obsolete inventory

Impairment charge

Provision for excess and obsolete inventory

Changes in assets and liabilities:

net of effects of disposition of Tantaline and sale of equipment:

Accounts receivable

Contract assets

Employee retention credit

Other current assets

Other noncurrent assets

Accounts payable

Accrued expenses

Net cash used in operating

Contract liabilities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and

Deposits from purchaser

of MesoScribe assets

cash used in connection with disposition of Tantaline

Net cash used in investing

Investment in captive insurance company

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Payments of long-term debt

from exercise of stock options

Net cash (used in) provided

by financing activities

Repayments of long-term debt

Net cash used in financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents

at beginning of period

Cash and cash equivalents

at end of period

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

1 unchanged sentence

Interest paid

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

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

The accompanying notes are an integral part of these

condensed consolidated financial statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

BASIS OF PRESENTATION

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

Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim

financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

They do not include all of the information

and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the interim

financials not misleading have been included and all such adjustments are of a normal recurring nature.

The operating results for the

three and nine months ended September 30, 2024 are not necessarily indicative of the results that can be expected for the year ending

December 31, 2024.

condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements at such

date, as filed on Form 10-K with the SEC on March 28, 2024, 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.

These unaudited condensed consolidated

financial statements should be read in conjunction with that report.

material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated

financial statements for CVD Equipment Corporation and Subsidiaries (collectively “the Company”) have been prepared in accordance

with accounting principles generally accepted in the United States of America for interim financial information and with the instructions

to Form 10-Q and Article 8 of Regulation S-X.

They do not include all of the information and footnotes required by accounting principles

generally accepted in the United States of America for complete financial statements.

In the opinion of management, all adjustments (consisting

of normal recurring accruals) considered necessary in order to make the interim financials not misleading have been included and all such

adjustments are of a normal recurring nature.

The operating results for the three months ended March 31, 2025 are not necessarily indicative

of the results that can be expected for the year ending December 31, 2025.

The condensed consolidated balance sheet as of December

31, 2024 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 of the information and footnotes required by accounting principles generally accepted in the United

States of America for complete financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction

with that report.

All material intercompany balances and transactions

have been eliminated in consolidation.

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 loss.

September 30, 2024, the Company had $ 10.0 million in cash and cash equivalents.

The Company anticipates that the existing cash and cash

equivalents balance together with potential future income from operations, collections of existing accounts receivable, revenue from

its existing backlog of products as of this filing date, the sale of inventory on hand, deposits and down payments against significant

orders 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.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

Certain reclassifications have been made to the prior

period condensed consolidated financial statements to conform to the current period presentation.

These reclassifications had no effect

At March 31, 2025, the Company had $ 10.2 million in

cash and cash equivalents.

The Company anticipates that the existing cash and cash equivalents balance together with potential future

income from operations, collections of existing accounts receivable, revenue from its existing backlog of products as of this filing date,

the sale of inventory on hand, deposits and down payments against significant orders 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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:

Revenue Recognition

In 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;

(3) determine the transaction price for 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 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 as discussed below.

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

to the total estimated costs at completion of the performance obligations.

Incurred costs include all direct material and labor costs

and those indirect costs related to contract performance, such as supplies, tools, repairs and depreciation costs.

Contract material

costs are included in incurred costs when the project materials have been purchased or moved to work in process, and installed, as required

by the project’s engineering design.

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

to complete the projects.

In making such estimates, significant judgment is required to evaluate assumptions related to the costs to

complete the projects, including materials, labor and other system costs.

If the estimated total costs on any contract are greater than

the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably

There were no material impairment losses recognized on contract assets during the three and nine months ended September 30,

2024 and 2023 .

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

contract liabilities on our consolidated balance sheet.

Under typical payment terms for our contracts accounted for over time, amounts

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 Condensed Consolidated Financial Statements

and (5) recognize revenue using

one of the following two methods:

The Company designs, manufactures

and sells custom chemical vapor deposition, thermal process equipment and other equipment through contractual agreements.

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.

Under the over time method,

revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total

estimated costs at completion of the performance obligations.

Incurred costs include all direct material and labor costs and those indirect

costs related to contract performance, such as supplies, tools, repairs and depreciation costs.

Contract material costs are included in

incurred costs when the project materials have been purchased or moved to work-in-process, and installed, as required by the project’s

engineering design.

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

In making such estimates, significant judgment is required to evaluate assumptions related to the

costs to complete the projects, including materials, labor and other system costs.

If the estimated total costs on any contract are greater

than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably

There were no material impairment losses recognized on contract assets during the three months ended March 31, 2025 and 2024.

The timing of revenue recognition,

billings and collections results in accounts receivables, unbilled receivables or contract assets and contract liabilities on our consolidated

balance sheet.

Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance

with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

These contract liabilities

are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits

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.

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

the amount billed to the customer.

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

The Company typically receives down payments upon

receipt of orders 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

the next twelve months.

non-system sales of products and services, revenue is recognized at the point in time when control of the promised products or services

is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in

exchange for those products or services (the transaction price).

A performance obligation is a promise in a contract to transfer a distinct

product or service to a customer and is the unit of account under ASC 606, “Revenue from Contracts with Customers”.

any system equipment sales where the equipment would have an alternative use or where the contract provisions of the contract preclude

the use of over time revenue recognition, revenue is recognized at the point in time when control of the equipment is transferred to

the customer.

For the three and nine months ended September 30, 2024 and 2023, all system equipment sales were recorded over time by

using an input method except for one PVT200 system that was recorded at the point in time when the equipment was transferred to the customer

during the third quarter of 2024.

There was one system equipment contract in 2023 where the revenue was to be recognized based on point

This contract was modified during the three months ended September 30, 2023 such that the revenue under this contract will be

recognized over time using an input method based on the revised contract provisions.

Revenues for the three months ended September 30,

2023 includes $ 0.8 million of revenue that was deferred as of June 30, 2023 and recognized on the date of the contract modification.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

Under ASC 606, payments received

from customers in excess of revenue recognized to date result in a contract liability.

These contract liabilities are not considered to

represent a significant financing component of the contract because we believe these cash advances and deposits 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.

Contract assets include unbilled

amounts typically resulting from system sales under contracts and represents revenue recognized that exceeds the amount billed to the

Contract liabilities include

advance payments and billings in excess of revenue recognized.

The Company typically receives down payments upon receipt of order and

progress payments as the system is manufactured.

Contract assets and contract

liabilities are classified as current as these contracts in progress are expected to be substantially completed within the next twelve

Point in time

For non-system sales of products

and services, revenue is recognized at the point in time when control of the promised products or services is transferred to the Company’s

customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services

(the transaction price).

A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and

is the unit of account under ASC 606, “Revenue from Contracts with Customers.”

For any system equipment

sales where the equipment would have an alternative use or where the contract provisions of the contract preclude the use of over time

revenue recognition, revenue is recognized at the point in time when control of the equipment is transferred to the customer.

three months ended March 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 the third quarter

of fiscal year 2024 and b) one contract that was entered during 2024 and will be recognized as revenue after March 31, 2025 upon transfer

of the equipment to the customer.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(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.

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

if less than cost.

The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials

and other qualitative factors.

Unanticipated changes in demand for the Company’s products may require a write down of inventory,

which would be reflected in cost of sales in the period the revision is made.

Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance or fifteen months

from the date of shipment by providing labor and parts necessary to repair the systems during the warranty period.

The Company records

the estimated warranty cost when revenue is recognized on the related system.

Warranty cost is included in “Cost of revenue”

in the condensed consolidated statements of operations.

Inventories (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 expenses as

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

Obsolete inventory or inventory

in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost.

Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative

Unanticipated changes in demand for the Company’s products may require a write down of inventory, which would be reflected

in cost of sales in the period the revision is made.

Product Warranty

The Company typically provides

standard warranty coverage on its systems for one year from the date of final acceptance or fifteen months from the date of shipment by

providing labor and parts necessary to repair the systems during the warranty period.

The Company records the estimated warranty cost

when revenue is recognized on the related system.

Warranty cost is included in “Cost of revenue” in the condensed consolidated

statements of operations.

The estimated warranty cost is based on the Company’s historical cost.

The Company updates its warranty estimates based on actual costs incurred.

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 2025, and interim periods thereafter,

with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

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

The Company updates its warranty

estimates based on actual costs incurred.

Issued Accounting Standards

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 our annual report for fiscal year 2026, with early adoption permitted, and should

be applied either prospectively or retrospectively.

We are currently evaluating the timing of adoption and impact of this ASU on our

Consolidated Financial Statements and related disclosures.

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

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 Company is currently evaluating the timing of adoption and impact of this ASU on our consolidated

financial statements.

However, there are numerous new proposals under development which, if and when enacted, may have a significant

impact on our financial reporting.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

expenses disclosure.

The standard requires more detailed information related to the types of expenses, including (among other items) the

amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim

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

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.

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

However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our

financial reporting.

CONCENTRATION OF CREDIT RISK

and cash equivalents

Company had cash and cash equivalents of $ 10.0 million and $ 14.0 million at September 30, 2024 and December 31, 2023, respectively.

Company invests excess cash in U.S.

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

Cash equivalents consisting of U.S.

treasury bills were $ 9.4 million and $ 12.1 million at September 30, 2024 and December 31,

2023, respectively.

Company places most of its temporary cash investments in the United States with financial institutions, which from time to time may exceed

the Federal Deposit Insurance Corporation limit.

The amount at risk at September 30, 2024 and December 31, 2023 was $ 0 and $ 1.5 million,

respectively.

Company sells products and services to various companies across several industries in the ordinary course of business.

The Company performs

ongoing credit evaluations to assess the probability of accounts receivable collection based on a number of factors, including past transaction

experience, evaluation of their credit history and review of the invoicing terms of the contract to determine the financial strength

Cash and cash equivalents

The Company had cash and cash equivalents of $ 10.2

million and $ 12.6 million at March 31, 2025 and December 31, 2024, respectively.

The Company 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 $ 9.5 million and $ 11.9

million at March 31, 2025 and December 31, 2024, respectively.

The Company places most of its temporary cash investments

with financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit.

The amount at risk at

March 31, 2025 and December 31, 2024 were $ 0.2 million and $ 0.4 million, respectively.

Accounts receivable

The Company routinely assesses the financial strength

of its customers .

receivables are presented net of an allowance for credit losses of approximately $ 36,000 at both September 30, 2024 and December 31,

The allowance is based on prior experience and management’s evaluation of the collectability of accounts receivable.

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.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

In accordance with the “expected credit loss” 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 .

Company records an allowance for credit losses based upon a specific review of all significant outstanding invoices.

For those invoices

not specifically reviewed, provisions are provided based upon the collection history, current economic trends and reasonable supportable

CONCENTRATION OF CREDIT RISK (continued)

September 30, 2024, the accounts receivable balance included amounts from one customer that represented 17.2 % of total accounts receivable.

As of December 31, 2023, the accounts receivable balance included amounts from three customers that represented 37.6 %, 13.0 % and 12.8 %

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, 2024, two

customers represented 29.1 % and 11.2 %, respectively, of revenues, and during the nine months ended September 30, 2024, one customer represented

31.2 % of revenues.

the three months ended September 30, 2023, two customers represented 40.3 % and 10.3 % of revenues, respectively, and during the nine months

ended September 30, 2023, three customers represented 16.7 %, 13.9 % and 11.7 % of revenues, respectively.

Accounts receivable is presented net of an allowance

for credit losses of $ 48,000 and $ 48,000 and as of March 31, 2025 and December 31, 2024, respectively.

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 condition.

At March 31, 2025, the accounts receivable balance

included an amount from four customers that totaled 15.4 %, 15.1 %, 15.0 % and 13.6 % of total accounts receivable.

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 .

Sales concentration

Revenue from a single customer in any one period can

exceed 10 % of our total revenues.

During the three months ended March 31, 2025, two customers exceeded 10 % of revenues, representing 41.1 %

and 14.0 % of revenues, and during the three months ended March 31, 2024, two customers exceeded 10 %, representing 29.6 %, and 13.1 % of

REVENUE RECOGNITION

following table represents a disaggregation of revenue for the three and nine months ended September 30, 2024, and 2023 (in thousands):

The following table represents a disaggregation of

revenue for the three months ended March 31, 2025 and 2024 (in thousands):

SCHEDULE OF DISAGGREGATION OF REVENUE

months ended September 30, 2024

months ended September 30, 2023

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

Three months ended March 31, 2025

Point in time

REVENUE RECOGNITION (continued)

months ended September 30, 2024

months ended September 30, 2023

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

Aerospace market includes customers

that manufacture aircraft engines.

Three months ended March 31, 2024

Point in time

The energy market

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

The aerospace market includes customers that manufacture

aircraft engines.

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

Research market principally

represents customers such as universities and other research institutions.

Company has unrecognized contract revenue of approximately $ 17.0 million at September 30, 2024, which it expects to substantially recognize

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

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.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

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, 2024 (in thousands):

The research market principally represents

customers that are universities and other research institutions.

The Company has unrecognized contract revenue of approximately

$ 11.2 million at March 31, 2025, which it expects to substantially recognize as revenue over time within the next eighteen months.

Judgment is required to evaluate assumptions including

the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate

the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems 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 operations.

Contract assets and liabilities

Contract assets and contract liabilities

on input method type contracts in progress are summarized as follows as of March 31, 2025 (in thousands):

OF COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS

incurred on contracts in progress

Costs and estimated earnings on uncompleted contracts

Costs incurred on contracts in progress

Estimated earnings

Costs and estimated earnings

on uncompleted contracts

Billings to date

Net cost in excess of billings

revenue related to non-system contracts

Contract liability in excess

of contract assets

Included in accompanying

condensed consolidated balance sheet as of September 30, 2024 under the following captions (in thousands):

the contract liability balances at December 31, 2023 and 2022 of $ 4.6 million and $ 4.0 million, respectively, $ 4.2 million and $ 3.7 million

was recognized as revenue during the nine months ended September 30, 2024 and 2023, respectively.

SCHEDULE OF INVENTORIES

revenue related to non-system contracts and a system contract to be recognized at point in time

liability in excess of contract assets

Included in accompanying condensed consolidated balance

sheets under the following captions (in thousands):

Contract assets

Contract liabilities

Of the contract

liability balances at December 31, 2024 and 2023, $ 1.3 million and $ 1.3 million was recognized as revenue during the three months ended

March 31, 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, NET

March 31, 2025

December 31, 2024

Inventories consist of:

Raw materials

1 unchanged sentence

Finished goods

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

INVENTORIES (continued)

in our 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 three months ended September 30, 2024, the Company recorded a non-cash charge to reduce the net realizable

value of such inventory by approximately $ 1.0 million based on its assessment of the current market for silicon carbide equipment.

of September 30, 2024, the net amount of PVT 150 systems inventory is approximately $ 0.7

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.

Included 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.

As of March 31, 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

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 loan amount of $ 432,000

is payable in 60

equal monthly installments of $ 8,352

and secured by equipment.

In September 2022, the Company entered into a loan

agreement to fund the acquisition of machinery.

The loan amount of $ 432,000 , is payable in 60 equal monthly installments of $ 8,352 and

secured by equipment.

The interest rate is 6 %.

EARNINGS PER SHARE

calculation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2024 and

2023 is as follows:

calculation of basic and diluted weighted average common shares outstanding for the three months ended March 31, 2025 and 2024 is as

SCHEDULE OF BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic weighted average common shares outstanding

Dilutive effect of unvested

restricted stock

Diluted weighted average shares outstanding

September 30, 2024, stock options to purchase 838,125 shares of common stock were outstanding and 493,750 were exercisable.

the three and nine months ended September 30, 2024 and the three and nine months ended September 30, 2023, all stock options were excluded

in the computation of diluted earnings per share because their effect was antidilutive.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

ended March 31,

weighted average common shares

effect of unrestricted restricted stock

weighted average shares outstanding

the three months ended March 31, 2025 and 2024, all stock options were excluded in the computation of diluted earnings per share because

their effect was antidilutive.

STOCK-BASED COMPENSATION EXPENSE

Company recorded stock-based compensation for the three and nine months ended September 30, 2024 and 2023, that were included

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

Company recorded stock-based compensation expense for the three months ended March 31, 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

months ended Sept.

Cost of revenue

Research and development

General and administrative

compensation expense for three months ended September 30, 2024 and 2023 included $ 50,000 and $ 44,783 , respectively, and for the nine

month periods ended September 30, 2024 and 2023 included $ 153,736 and $ 124,783 , respectively, related to restricted stock awards that

directors are entitled to receive pursuant to the Director Compensation Plan.

Under this plan each of the 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.

the nine months ended September 30, 2024, the Company granted 5,000 stock options, vesting 25 % per year over four years, with a ten-year

The Company determined the weighted average fair value of stock options granted was $ 3.30 and is based upon weighted average assumptions

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS

Exercise price

Dividend yield

Expected volatility

Risk-free interest rate

Expected life (in years)

following table summarizes stock options awards through September 30, 2024:

ended March 31,

and development

and administrative

compensation expense included $ 50,000 and $ 40,000 for the three months ended March 31, 2025 and 2024, respectively, 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.

COMPENSATION EXPENSE (continued)

following table summarizes stock options awards for the three months ended March 31, 2025:

SCHEDULE OF STOCK OPTIONS AWARDS

Outstanding at January 1, 2024

Outstanding at September

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

STOCK-BASED COMPENSATION EXPENSE (continued)

following table summarizes information about the outstanding and exercisable options at September 30, 2024 by ranges of exercise prices:

at January 1, 2025

at March 31, 2025

following table summarizes information about the outstanding and exercisable options at March 31, 2025 by ranges of exercise prices:

SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS RANGES OF EXERCISE PRICES

Options Outstanding

Options Exercisable

$ 4.00 - 7.00

2 unchanged sentences

$ 13.01 - 16.00

of September 30, 2024, there was $ 1.8 million of unrecognized compensation costs related to stock options expected to be recognized over

of March 31, 2025, there was $ 1.3 million of unrecognized compensation costs related to stock options expected to be recognized over

a weighted average period of 1.9 years.

of September 30, 2024 and December 31, 2023, the Company has provided a full valuation allowance against its net deferred tax assets.

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

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

of March 31, 2025 and December 31, 2024, 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.

the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year.

This estimate is used

to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

The effective tax rate and

income tax expense for the three months ended March 31, 2025 was 4.3 % and $ 16,000 , respectively.

SEGMENT REPORTING

Company operates through three segments:

CVD Equipment, Stainless Design Concepts (“SDC”) and CVD Materials.

The CVD Equipment

segment manufactures and sells chemical vapor deposition, physical vapor transport and similar equipment.

The SDC segment designs and

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

The CVD Materials segment provides material coatings for aerospace,

medical, electronic and other applications and is not considered a core business of the Company.

The Company evaluates performance based

on several factors, of which the primary financial measure is income (loss) before taxes.

Company’s corporate administration activities are reported in the “Corporate” column.

These activities primarily include

expenses related to certain corporate officers and support staff, expenses related to the Company’s Board of Directors, stock option

expense for options and shares of restricted stock granted to corporate administration employees and board members, certain consulting

expenses, investor and shareholder relations activities, and all the Company’s legal, auditing and professional fees.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

The Company has determined that it has three reportable

segments, organized primarily based on product offerings, as follows:

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

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

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

Both 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.

The chief operating decision maker (“CODM”)

of the Company is the Company’s chief executive officer.

The CODM assesses 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 to the segments and to assess the performance for each segment.

Financial results for the reportable segments and

other business are prepared on a basis consistent with the internal disaggregation of financial information to assist the CODM is making

internal operating decisions.

Certain 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 loss.

items are not used by the CODM in allocating resources or evaluating the results of the segments and include the following:

expenses consisting of employment costs of executives, finance, information technology and human resources;

board of director fees;

shareholder and investor relations expense;

directors’ and officers’ insurance;

interest income and income tax expense.

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

SEGMENT REPORTING (continued)

entries included in the “Eliminations” column represent intersegment revenues and cost of revenues that are eliminated

in consolidation.

Intersegment sales by the SDC segment to the CVD Equipment segment for the three months ended September 2024 and

2023 were $ 151,000

and $ 184,000 ,

respectively and $ 298,000

and $ 450,000

for the nine months ended September 30, 2024 and 2023, respectively.

Intersegment sales by the CVD Equipment segment to the SDC

segment for the three months ended September 30, 2024 and 2023 were $ 5,000

and $ 39,000 ,

respectively and $ 5,000

and $ 104,000

for the nine months ended September 30, 2024 and 2023, respectively.

following table presents certain information regarding the Company’s segments as of and for the three months ended September 30,

2024 and 2023 (in thousands):

The following provides segment information as described

below (in thousands):

SCHEDULE OF SEGMENTS

Operating (loss) income

Pretax (loss) income

Depreciation and amortization

Purchase of property, plant & equipment

Operating (loss) income

Pretax (loss) income

Depreciation and amortization

Purchase of property, plant & equipment

* Includes a $ 1.0

million non-cash charge to reduce certain inventory to net realizable value – see Note 5.

** Includes gain on

sale of equipment of $ 0.6 million related to MesoScribe – see Note 11.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

SEGMENT REPORTING (continued)

following table presents certain information regarding the Company’s segments as of and for the nine months ended September 30,

2024 and 2023 (in thousands):

Operating (loss) income

Pretax (loss) Income

For the three months ended March 31, 2025

Segment revenue

Cost of revenue

Research and development

General and administrative

Interest expense

Segment net income

Segment assets

Capital expenditures

Depreciation and amortization

Purchase of property, plant & equipment

Operating (loss) income

Pretax (loss) Income

For the three months ended March 31, 2024

Segment revenue

Cost of revenue

Research and development

General and administrative

Interest expense

Segment net income

Segment assets

Capital expenditures

Depreciation and amortization

Purchase of property, plant & equipment

* Includes a $ 1.0

million non-cash charge to reduce certain inventory to net realizable value – see Note 5.

** Includes gain on

sale of equipment of $ 0.6 million related to MesoScribe – see Note 11.

*** Includes loss on

sale of Tantaline of $ 0.2 million and impairment charge related to MesoScribe fixed assets of $ 0.1 million – see Note 11.

EQUIPMENT CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

MESOSCRIBE SUBSIDIARY

August 8, 2023, the Company entered into a Purchase and License Agreement (the “Agreement”) with a third-party.

to the Agreement, the Company would sell certain proprietary assets relating to its plasma spray technology and material deposition system

and grant a non-exclusive license to use certain of the Company’s related intellectual property as more fully described in the

Agreement, for an aggregate purchase price of $ 0.9 million.

The purchase price was payable in several installments and contingent 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 “deposit from purchaser”

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

the three months ended September 30, 2024, the Company and the purchaser amended the agreement to reduce the purchase price to $ 0.8 million

and the purchaser accepted the equipment.

The Company recorded a net gain of sale of equipment of $ 0.6 million for the three and nine

months ended September 30, 2024 representing the purchase price less the net book value of the assets sold.

Company fulfilled its final orders for MesoScribe products during the three months ended September 30, 2024 and recorded revenues of

$ 0.7 million.

The Company has ceased operations of MesoScribe as of September 30, 2024.

revenue and net income (loss) of MesoScribe were $ 0.7 million and $ 1.1 million, respectively, for the three months ended September 30,

2024 (includes final sales and gain on sale of equipment) and $ 0.8 million and $ 1.0 million, respectively, for the nine months ended

September 30, 2024.

total assets and total liabilities of the MesoScribe subsidiary were $ 0.8 million and $ 0.1 million, respectively, as of September 30,

2024 and $ 0.2 million and $ 0.7 million as of December 31, 2023.

the nine months ended September 30, 2023, the Company recorded an impairment charge of $ 0.1 million for certain equipment of MesoScribe

based on its decision to cease the remaining operations in 2024.

The 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

Three months ended

Revenue of reportable segments

Intersegment revenue

Consolidated total revenue

Intersegment revenues are determined based on similar

product sales to external customers of the Company.

REPORTING (continued)

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

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

Three months ended

Net income (loss) of reportable segments

Unallocated amounts:

Corporate expenses

Interest income

Income tax (expense) benefit

Consolidated net loss

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

Three months ended

Total assets of reportable segments

Unallocated amounts:

Cash equivalents

Other current assets

Consolidated total assets

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

SCHEDULE OF REVENUE BY GEOGRAPHIC AREA

Three months ended

United States

North America, excluding US

Europe, Middle East and Africa

Consolidated total revenue

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

All the Company’s long-lived

assets are located in the United States.

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.

The specific impacts on the Company have included:

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

The 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.

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 impacting 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.

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