UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____ to _____
Commission file number: 1-16525
CVD EQUIPMENT CORPORATION
(Name of Small Business Issuer in Its Charter)
New York 11-2621692
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1860 Smithtown Avenue
Ronkonkoma, New York 11779
(Address including zip code of registrant's Principal
Executive Offices)
(631) 981-7081
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Act:
Common Stock, Par value $0.01
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether issuer is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,127,800 shares
of Common Stock, $0.01 par value at November 11, 2005.
__________________________________________________________________________
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
Index
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets at September 30, 2005 (Unaudited)
and December 31, 2004 2
Comparative Consolidated Statements of Operations (Unaudited) for
the three and nine months ended September 30, 2005 and 2004 3
Comparative Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 2005 and 2004 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3 - Controls and Procedures 14
Part II - Other Information 15
Item 1 - Legal Proceedings 15
Item 2 - Changes in Securities and Use of Proceeds 15
Item 3 - Defaults Upon Senior Securities 15
Item 4 - Submission of Matters to a Vote of Security Holders 15
Item 5 - Other Information 15
Item 6 - Exhibits and Reports Filed on Form 8-K 16
Signatures 17
Exhibit Index 18
Certification of Chief Executive Officer 19
Certification of Chief Financial Officer 20
Certification of Chief Executive Officer pursuant to U.S.C. Section 1350 21
Certification of Chief Financial Officer pursuant to U.S.C. Section 1350 22
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 2005
(Unaudited) December 31, 2004
------------------ -----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 748,116 $ 171,463
Accounts receivable, net 1,846,873 2,375,257
Cost in excess of billings on uncompleted contracts 324,568 1,110,362
Inventories 2,047,420 1,823,453
Other current assets 79,529 110,743
------------------ -----------------
Total current assets 5,046,506 5,591,278
Property, plant and equipment, net 4,970,288 5,153,017
Deferred income taxes 399,262 300,743
Other assets 566,884 398,587
Intangible assets, net 99,496 109,558
------------------ -----------------
Total assets $ 11,082,435 $ 11,553,183
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 217,250 $ 213,394
Short-term notes payable - 850,000
Accounts payable 733,905 725,706
Accrued expenses 666,379 584,443
Accrued professional fees - related party - 41,626
Customer deposits 102,400 298,152
Deferred revenue 208,190 -
------------------ -----------------
Total current liabilities 1,928,124 2,713,321
Long-term debt, net of current portion 2,977,917 3,140,628
------------------ -----------------
Total liabilities 4,906,040 5,853,949
------------------ -----------------
Commitments and contingencies - -
Stockholders' Equity
Common stock, par value $.01 per share, authorized 10,000,000 shares;
issued and outstanding, 3,127,800 shares at September 30, 2005 and
3,039,100 shares at December 31, 2004 31,278 30,391
Additional paid-in capital 3,049,362 2,902,149
Retained earnings 3,095,755 2,766,694
------------------ -----------------
Total stockholders' equity 6,176,395 5,699,234
------------------ -----------------
Total liabilities and stockholders' equity $ 11,082,435 $ 11,553,183
================== =================
See notes to the consolidated financial statements
2
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Revenue: $ 2,851,327 $ 1,629,315 $ 8,257,961 $ 5,547,848
Cost of Revenue 1,914,357 1,157,412 5,335,413 3,930,543
-------------- -------------- -------------- --------------
Gross profit 936,970 471,903 2,922,548 1,617,305
-------------- -------------- -------------- --------------
Operating expenses
Selling and shipping 181,752 179,425 518,716 489,118
General and administrative 684,955 578,733 1,823,125 1,622,420
Related party - professional fees 15,000 - 50,000 25,000
-------------- -------------- -------------- --------------
Total operating expenses 881,707 758,158 2,391,841 2,136,538
Operating income (loss) 55,263 (286,255) 530,707 (519,233)
-------------- -------------- -------------- --------------
Other income (expense)
Interest income 53 173 761 518
Interest expense (50,591) (53,768) (169,629) (164,634)
Other income 19,726 11,181 34,060 21,081
-------------- -------------- -------------- --------------
Total other (expense) (30,812) (42,414) (134,808) (143,035)
Income (loss) before income taxes 24,451 (328,669) 395,899 (662,268)
Income tax benefit (provision) $ 10,338 $ (2,136) $ (66,830) $ (3,256)
-------------- -------------- -------------- --------------
Net income (loss) $ 34,789 $ (330,805) $ 329,069 $ (665,524)
============== ============== ============== ==============
Basic income (loss) per common share $ 0.01 $ (0.11) $ 0.11 $ (0.22)
============== ============== ============== ==============
Diluted income (loss) per common share $ 0.01 $ (0.11) $ 0.10 $ (0.22)
============== ============== ============== ==============
Weighted average common shares outstanding
basic income (loss) per share 3,122,463 3,039,100 3,087,553 3,039,100
Effect of potential common share issuance:
Stock options 152,340 - 107,012 -
-------------- -------------- -------------- --------------
Weighted average common shares outstanding
diluted income (loss) per share 3,274,803 3,039,100 3,194,565 3,039,100
============== ============== ============== ==============
See notes to the consolidated financial statements
3
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30
2005 2004
-------------- --------------
Cash flows from operating activities
Net income (loss) $ 329,069 $ (665,524)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 265,212 267,425
Deferred tax provision (98,519) -
Bad debt provision (620) (5,427)
Changes in operating assets and liabilities:
Accounts receivable 529,004 728,329
Cost in excess of billings on uncompleted contracts 785,794 575,734
Inventory (223,966) (965,840)
Other current assets 31,214 (37,199)
Accounts payable 8,199 (7,159)
Accrued expenses 40,307 407,191
Customer deposits (195,752) -
Billing in excess of costs on uncompleted contracts - (174,068)
Deferred revenue 208,190 -
-------------- --------------
Net cash provided by (used in) operating activities 1,678,132 123,462
-------------- --------------
Cash flows from investing activities:
Capital expenditures (240,725) (228,664)
-------------- --------------
Net cash used in investing activities (240,725) (228,664)
-------------- --------------
Cash flows from financing activities:
Proceeds from short-term borrowings 585,000 875,000
Payments of short-term borrowings (1,435,000) (575,000)
Proceeds from long-term debt - 26,460
Payments of long-term debt (158,854) (145,803)
Net proceeds from stock options exercised 148,100 -
-------------- --------------
Net cash (used in) provided by financing activities (860,754) 180,657
-------------- --------------
Net increase in cash and cash equivalents 576,653 75,455
Cash and cash equivalents at beginning of period 171,463 321,490
-------------- --------------
Cash and cash equivalents at end of period $ 748,116 $ 396,945
============== ==============
See notes to consolidated financial statements
4
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements 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-QSB and Item 310(b) of Regulation S-B.
Accordingly, 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, 2005 are not necessarily indicative of the results
that can be expected for the year ending December 31, 2005.
The balance sheet as of December 31, 2004 has been derived from the
audited financial statements at such date, but does not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements.
The accounting policies followed by the Company are set forth in Note 2 to
the Company's consolidated financial statements in the December 31, 2004
Form 10-KSB.
For further information, please refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report
of Form 10-KSB for the year ended December 31, 2004.
Intercompany transactions have been eliminated in consolidation.
Certain reclassifications have been made to prior period financial
statements to conform to the current year presentation.
5
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Income Recognition
------------------------------
The Company recognizes revenues and income using the percentage-of-
completion method for custom production-type contracts while revenues from
other products are recorded when such products are accepted and shipped.
Profits on custom production-type contracts are recorded on the basis of
the Company's estimates of the percentage-of-completion of individual
contracts, commencing when progress reaches a point where experience is
sufficient to estimate final
results with reasonable accuracy. Under this method, revenues are
recognized based on costs incurred to date compared with total estimated
costs.
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of
amounts billed.
The liability, "Billings in excess of costs on uncompleted contracts"
represents amounts billed in excess of revenues earned.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid financial instruments purchased
with an original maturity of three months or less at the date of purchase
to be cash equivalents.
New Accounting Pronouncements
-----------------------------
In May 2005, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 154 "Accounting Changes and Error
Corrections" ("SFAS 154"). SFAS 154 changes the requirements for the
accounting for and reporting of a change in accounting principle. SFAS 154
requires that the cumulative effect of voluntarily changing to a new
accounting principle be applied retroactively to prior period financial
statements. Prior to the effective date of SFAS 154, the cumulative effect
of voluntarily changing to a new accounting principle was included in the
operating results of the period in which such change was adopted. SFAS 154
is effective for fiscal years beginning after December 15, 2005. The
Company expects that the adoption of SFAS 154 will not have a significant
impact on its financial statements.
6
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: UNCOMPLETED CONTRACTS
Costs, estimated earnings and billings on uncompleted contracts are
summarized as follows:
September 30, 2005 December 31, 2004
------------------ -----------------
Costs incurred on uncompleted contracts $ 327,660 $ 1,142,057
Estimated earnings 318,058 1,084,166
------------------ -----------------
645,718 2,226,223
Billings to date (321,150) (1,115,861)
------------------ -----------------
$ 324,568 $ 1,110,362
------------------ -----------------
Included in accompanying balance sheets
Under the following captions:
Costs and estimated earnings in excess
of billings on uncompleted contracts $ 324,568 $ 1,110,362
Billings in excess of costs and estimate
earnings on uncompleted contracts 0 0
------------------ -----------------
$ 324,568 $ 1,110,362
------------------ -----------------
NOTE 4: ACQUISITION OF ASSETS
On May 26, 2005, the Company purchased from First Nano, Inc. certain of
their Nanotechnology process development and equipment assets. The
purchase was made with cash funds from the Company and the assumption of
certain liabilities, both of which are considered to be insignificant to
the overall operations of the business. First Nano develops solutions for
single and multiwall nanotube and nanowire synthesis and manufactures
chemical vapor deposition process equipment suitable for the synthesis of
a variety of carbon nanotubes, one-dimensional and nanostructures and
nanomaterials.
7
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: INVENTORY
Inventories consist of the following:
September 30, 2005 December 31, 2004
------------------ -----------------
Raw materials $ 530,248 $ 628,934
Work-in-process 1,052,988 686,325
Finished goods 464,184 508,194
------------------ -----------------
$ 2,047,420 $ 1,823,453
------------------ -----------------
NOTE 6: BAD DEBTS
Accounts receivables are presented net of an allowance for doubtful
accounts of $23,108 and $23,728 as of September 30, 2005 and December 31,
2004, respectively. The allowance is based on prior experience and
management's evaluation of the collectibility of accounts receivable.
Management believes the allowance is adequate. However, future estimates
may change based on changes in economic conditions.
NOTE 7: SHORT TERM BORROWINGS
September 30, 2005 December 31, 2004
------------------ -----------------
$ 0 $ 850,000
The Company has a line of credit with a bank permitting it to borrow on a
revolving basis amounts up to the lesser of $1,000,000 or the availability
under the borrowing base formula until June 1, 2006. The borrowing base
shall not exceed 75% of eligible accounts receivable, defined as accounts
receivable not aged more than ninety days from invoice date. Interest is
payable on any unpaid principal balance at the bank's prime rate plus _ of
1%. As of September 30, 2005, $0 was outstanding on this facility. The
prime rate was 6.75% and 5.25% and the amount outstanding on the facility
was $0 and $850,000 on September 30, 2005 and December 31, 2004
respectively. Borrowings are collateralized by the Company's assets
8
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: STOCK OPTION PLANS
The Company accounts for the stock option plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations. The following table illustrates
the effect on net income and earnings per share if the Company had applied
the fair value recognition provisions of FASB Statement No. 123,
accounting for Stock-based Compensation, to stock-based employee
compensation.
Three months ended September 30, Nine months ended September 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income (loss), as reported $ 34,789 $ (330,805) $ 329,069 $ (665,524)
Add: Stock-based employee
compensation expense included in
reported net income, net of
related tax effects - - - -
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects (30,467) (3,213) (34,846) (72,532)
------------ ------------ ------------ ------------
Pro forma net income (loss) $ 4,322 $ (334,018) $ 294,223 $ (738,056)
------------ ------------ ------------ ------------
Earnings (loss) per share:
Basic-as reported $ 0.01 $ (0.11) $ 0.11 $ (0.22)
------------ ------------ ------------ ------------
Basic-pro forma $ 0.00 $ (0.11) $ 0.10 $ (0.24)
------------ ------------ ------------ ------------
Diluted-as reported $ 0.01 $ (0.11) $ 0.10 $ (0.22)
------------ ------------ ------------ ------------
Diluted-pro forma $ 0.00 $ (0.11) $ 0.09 $ (0.24)
------------ ------------ ------------ ------------
9
CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: INCOME TAXES
The provision (benefit) for income taxes includes the following:
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
------------------ ------------------
Current:
Federal $ (115,701) $ 130,876
State ( 4,459) 34,473
------------------ ------------------
Total Current Provision (120,160) 165,349
Deferred:
Federal 87,539 ( 73,230)
State 22,283 ( 25,289)
------------------ ------------------
Total Deferred (Benefit) 109,822 ( 98,519)
------------------ ------------------
$ (10,338) $ 66,830
------------------ ------------------
The Company's federal and state net operating loss carry forwards of
approximately $800,000 have been utilized through September 30, 2005. For
the nine months ended September 30, 2005, the Company recorded a current
income tax expense of approximately $67,000, which related to various
federal, state and local taxes. The current income tax provision was
reduced by approximately $335,000 as a result of the use of available net
operating losses.
10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and accompanying notes filed as part
of this report.
Except for historical information contained herein, this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contains forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995, as amended. These statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance, or achievements of the Company to
be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements.
These forward-looking statements were based on various factors and were
derived utilizing numerous important assumptions and other important
factors that could cause actual results to differ materially from those in
the forward-looking statements. Important assumptions and other factors
that could cause actual results to differ materially from those in the
forward-looking statements, include but are not limited to: competition in
the Company's existing and potential future product lines of business; the
Company's ability to obtain financing on acceptable terms if and when
needed; uncertainty as to the Company's future profitability, uncertainty
as to the future profitability of acquired businesses or product lines,
uncertainty as to any future expansion of the Company. Other factors and
assumptions not identified above were also involved in the derivation of
these forward-looking statements and the failure of such assumptions to be
realized as well as other factors may also cause actual results to differ
materially from those projected. The Company assumes no obligation to
update these forward looking statements to reflect actual results, changes
in assumptions or changes in other factors affecting such forward-looking
statements.
Results of Operations
Revenue for the three month period ended September 30, 2005 was $2,851,327
compared to $1,629,315 for the three month period ended September 30,
2004, an increase of 75.2%. The Company continues to experience an
increase in sales that began during the fourth quarter of 2004.
Revenue for the nine months ended September 30, 2005 was approximately
$8,258,000 representing an increase of approximately $2,710,000 or 48.8%
over the revenue of $5,548,000 earned during the nine months ended
September 30, 2004. The Company is experiencing an increase in the number
of inquiries and proposal submissions which has resulted in an increase in
revenue during the current nine month period.
The Company's gross profit increased to approximately $937,000 during the
three months ended September 30, 2005, an increase of approximately
$465,000 or 98.5% compared to the gross profit of approximately $472,000
for three months ended September 30, 2004. This increase is
11
attributable to the Company's continuous and successful efforts to reduce
the direct costs incurred in manufacturing the product lines. In addition,
the increased revenue enables the Company to better absorb the fixed costs
incurred.
The Company generated a gross profit of approximately $2,923,000 and a
gross profit margin of 35.4% for the nine months ended September 30, 2005
compared to a gross profit of approximately $1,617,000 and a gross profit
margin of 29.1% for the nine months ended September 30, 2004 as a result
of the Company's ability to more readily absorb those fixed costs through
greater revenues and continuous cost reductions in the product lines.
Selling and shipping expenses for the three and nine months ended
September 30, 2005 were $181,752 and $518,716, respectively. This
represents a marginal 1.3% increase over the same three month period one
year ago and a 6.0% increase over the same nine month period one year ago.
The increase is a result of the increase in costs associated with trade
shows attended by the Company as well as additional shipping costs
associated with the increased revenues.
The Company incurred approximately $700,000 of general and administrative
expenses during the quarter ended September 30, 2005, representing an
increase of 20.7% or approximately $120,000 compared to the approximately
$579,000 of general and administrative expenses incurred in the quarter
ended September 30, 2004. This increase is a result of a combination of
increased personnel as well as various increases in employee benefit
costs, insurance, professional fees and energy costs.
General and administrative expenses for the nine months ended September
30, 2005 were approximately $1,873,000 compared to approximately
$1,647,000 incurred during the nine months ended September 30, 2004, an
increase of 13.7%. This increase is also attributable to the increases
experienced in additional personnel, employee benefit costs, insurance,
professional fees and energy costs
Interest expense for the three months ended September 30, 2005 decreased
to $50,591 compared to $53,768. This is a result of reduced borrowing by
the Company during the current three month period.
Interest expense for the nine months ended September 30, 2005 was $169,629
which amounted to an increase of $4,995 or 3.0% compared to $164,634 for
the nine months ended September 30, 2004. This increase is a result of
increased borrowing by the Company earlier in the current year as well as
the higher interest rates charged by the Company's lender due to the
increase in the prime rate of interest. The prime rate of interest is
currently 6.75% compared to 4.75% a year earlier.
The Company's federal and state net operating loss carry forwards of
approximately $800,000 have been utilized through September 30, 2005. For
the nine months ended September 30, 2005, the Company recorded income tax
expense of approximately $67,000 which related to various federal, state
and local taxes. The current income tax provision was reduced by
approximately $335,000 as a result of the use of available net operating
losses.
12
As a result of the foregoing factors, for the three and nine months ended
September 30, 2005, earned approximately $35,000 and $329,000,
respectively compared to net losses of approximately $331,000 and $666,000
for the same periods, respectively, one year ago. The increase in earnings
is primarily attributable to both the increase in revenues during the
current period and the cost reductions achieved in manufacturing.
Liquidity and Capital Resources
As of September 30, 2005, the Company had an aggregate working capital of
approximately $3,118,000 compared to $2,878,000 at December 31, 2004 an
increase of $240,000. This increase was the result of the following: our
net income, after adding back depreciation and amortization, increased
working capital by approximately $594,000. The increase in working capital
also included approximately $148,000 in net proceeds from the exercise of
our stock options. These increases were partially offset by an investment
in capitalized software of $205,000 and by an additional $35,000 for the
acquisition of equipment. The remaining decrease in working capital of
$262,000 was due to changes in other current assets and liabilities.
Accounts receivable as of September 30, 2005 was $1,846,873 compared to
$2,375,257 as of December 31, 2004. This decrease is attributable to
timing of customer payments.
As of September 30, 2005 the Company's backlog was approximately
$2,473,000, an increase of $43,000 or 1.8% compared to $2,430,000 at
December 31, 2004. The timing for completion of the backlog varies
depending on the product mix, however, there is generally a one to six
month lag in the completion and shipping of backlogged product.
The Company has a line of credit with a bank permitting it to borrow on a
revolving basis amounts up to the lesser of $1,000,000 or the availability
under the borrowing base formula until June 1, 2006. The borrowing base
shall not exceed 75% of eligible accounts receivable, defined as accounts
receivable not aged more than ninety days from invoice date. Interest is
payable on any unpaid principal balance at the bank's prime rate plus _ of
1%. As of September 30, 2005, $0 was outstanding on this facility.
Borrowings are collateralized by the Company's assets.
The Company believes that its cash, cash equivalents and available credit
facilities will be sufficient to meet its working capital and investment
requirements for the next twelve months. However, future growth, including
potential acquisitions, may require additional funding, and from time to
time the Company may need to raise capital through additional equity or
debt financing.
13
Item 3. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, conducted an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures, as
required by Exchange Act Rule 13a-15, as of the end of the period covered
by this report. Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that our disclosure controls
and procedures were effective to insure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified by the SEC's rules and forms.
Changes in Internal Controls
There were no significant changes in the Company's internal controls over
financial reporting that occurred during the three and nine months ended
September 30, 2005 that have materially affected, or are reasonably likely
to materially affect, the internal controls over financial reporting.
Limitations on the Effectiveness of Controls
We believe that a control system, no matter how well designed and
operated, cannot provide absolute assurance that the objectives of the
control systems are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within a company have been detected.
14
CVD EQUIPMENT CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
At our annual meting of stockholders, which was held
on September 13, 2005, our stockholders:
(1) Elected five nominees for directors to serve for a term
ending in 2006;
(2) Approved the selection of Moore Stephens, P.C. as the
Company's independent registered public accounting firm for
the year ending December 31, 2005.
The following tables show the common stock votes cast with
respect to the proposals identified above:
Election of Directors: Withheld
---------------------- For Authority
------------ ------------
Leonard A. Rosenbaum 2,871,908 16,460
Martin J. Teitelbaum 2,971,998 16,370
Alan H. Temple Jr. 2,871,448 16,920
Conrad J. Gunther 2,870,048 18,320
Bruce T. Swan 2,869,448 18,920
Proposal 2: For Against Abstentions
------------ ------------ ------------
2,886,228 2,140 0
Item 5. Other Information.
None.
15
Item 6. Exhibits and Reports Filed on Form 8-K
(a) Exhibits filed with this report:
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Certification of Chief Executive Officer pursuant to U.S.C. Section
1350
32.2 Certification of Chief Financial Officer pursuant to U.S.C. Section
1350
(b) Reports on Form 8-K
None
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, this 14th day of November 2005.
CVD EQUIPMENT CORPORATION
By: /s/ Leonard A. Rosenbaum
------------------------
Leonard A. Rosenbaum
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Glen R. Charles
------------------------
Glen R. Charles
Chief Financial Officer
(Principal Financial and
Accounting Officer)
17
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
31.1 Certification of Chief Executive Officer *
31.2 Certification of Chief Financial Officer *
32.1 Certification of Chief Executive Officer pursuant to U.S.C.
Section 1350 *
32.2 Certification of Chief Financial Officer pursuant to U.S.C.
Section 1350 *
* Filed herewith
18
Exhibit 31.1
Certifications Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
I, Leonard A. Rosenbaum, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CVD Equipment
Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrants' board of directors (or persons performing the equivalent
functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Dated: November 14, 2005
/s/ Leonard A. Rosenbaum
---------------------------
President, Chief Executive Officer and Director
19
Exhibit 31.2
Certifications Pursuant to Rule 13A-14 or 15D-14 of the Securities exchange
act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
I, Glen R. Charles, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CVD Equipment
Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrants' board of directors (or persons performing the equivalent
functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls over financial reporting.
Dated: November 14, 2005
/s/ Glen R. Charles
----------------------
Chief Financial Officer
20
Exhibit 32.1
Certification of Principal Executive Officer
Pursuant to U.S.C. Section 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
I, Leonard A. Rosenbaum, President and Chief Executive Officer of CVD
Equipment Corporation, hereby certify, to my knowledge, that the quarterly
report on Form 10-QSB for the period ending September 30, 2005 of CVD
Equipment Corporation (the "Form 10-QSB") fully complies with the
requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of
1934 and the information contained in the Form 10-QSB fairly presents, in
all material respects, the financial condition and results of operations
of CVD Equipment Corporation.
Dated: November 14, 2005 /s/ Leonard A. Rosenbaum
Leonard A. Rosenbaum
Chief Executive Officer
(Principal Executive Officer)
21
Exhibit 32.2
Certification of Principal Financial Officer
Pursuant to U.S.C. Section 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
I, Glen R. Charles, Chief Financial Officer of CVD Equipment Corporation,
hereby certify, to my knowledge, that the quarterly report on Form 10-QSB
for the period ending September 30, 2005 of CVD Equipment Corporation (the
"Form 10-QSB") fully complies with the requirements of Section 13 (a) or
15 (d) of the Securities Exchange Act of 1934 and the information
contained in the Form 10-QSB fairly presents, in all material respects,
the financial condition and results of operations of CVD Equipment
Corporation.
Dated: November 14, 2005 /s/ Glen R. Charles
Glen R. Charles
Chief Financial Officer
(Principal Financial Officer)
22