UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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________________
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Form
10-Q
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(Mark
One)
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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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For
the quarterly period ended September 30, 2009
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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For
the transition period from ____ to _____
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Commission
file number: 1-16525
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CVD
EQUIPMENT CORPORATION
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(Name
of Registrant in Its Charter)
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New
York
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11-2621692
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(I.R.S.
Employer Identification No.)
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1860
Smithtown Avenue
Ronkonkoma,
New York 11779
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(Address
including zip code of registrant’s Principal Executive
Offices)
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(631)
981-7081
(Registrant’s
Telephone Number, Including Area
Code)
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2
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3
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4
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5
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15
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20
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20
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21
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21
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21
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21
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21
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21
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21
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23
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24
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Certification
of Chief Executive Officer
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Certification
of Chief Financial Officer
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Certification
of Chief Executive Officer pursuant to U.S.C. Section 1350
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Certification
of Chief Financial Officer pursuant to U.S.C. Section 1350
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September
30, 2009
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December 31, 2008*
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(Unaudited)
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ASSETS
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Current
Assets:
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||||||||
Cash
and cash equivalents
|
$ | 4,775,353 | $ | 5,721,369 | ||||
Accounts
receivable, net
|
1,216,185 | 2,642,670 | ||||||
Cost
and estimated earnings in
excess
of billings on
uncompleted
contracts
|
5,816,431 | 3,972,533 | ||||||
Inventories
|
3,275,057 | 3,292,316 | ||||||
Deferred
income taxes – current
|
153,410 | 54,049 | ||||||
Other
current assets
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184,101 | 174,782 | ||||||
Total
Current Assets
|
15,420,537 | 15,857,719 | ||||||
Property,
plant and equipment, net
|
7,969,361 | 8,028,889 | ||||||
Deferred
income taxes-non current
|
830,455 | 772,516 | ||||||
Other
assets, net
|
447,195 | 541,404 | ||||||
Intangible
assets, net
|
63,785 | 89,822 | ||||||
Total
Assets
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$ | 24,731,333 | $ | 25,290,350 | ||||
LIABILITIES
AND STOCKHOLDERS EQUITY
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||||||||
Current
Liabilities:
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Current
maturities of long-term debt
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$ | 306,887 | $ | 348,521 | ||||
Customer
deposits and deferred revenue
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3,617,518 | 3,588,155 | ||||||
Accounts
payable and accrued expenses
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1,513,378 | 1,982,436 | ||||||
Accrued
professional fees-related party
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75,000 | 90,053 | ||||||
5,512 783 | 6,009,165 | |||||||
Long-term
debt, net of current portion
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3,918,796 | 4,135,632 | ||||||
Total
liabilities
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9,431,579 | 10,144,797 | ||||||
Commitments
and contingencies
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- | - | ||||||
Stockholders’
Equity
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||||||||
Common
stock-$0.01 par value-10,000,000
shares
authorized; issued and outstanding,
4,761,100
at September 30, 2009 and
4,749,500
at December 31, 2008
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47,611 | 47,495 | ||||||
Additional
paid-in-capital
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10,054,013 | 9,927,260 | ||||||
Retained
earnings
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5,198,130 | 5,170,798 | ||||||
Total
Stockholders’ Equity
|
15,299,754 | 15,145,553 | ||||||
Total
Liabilities and Stockholders’ Equity
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$ | 24,731,333 | $ | 25,290,350 |
Three
Months Ended
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Nine
Months Ended
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September 30,
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September 30,
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2009
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2008
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2009
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2008
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Revenue
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$ | 3,556,782 | $ | 4,883,910 | $ | 10,983,980 | $ | 13,196,313 | ||||||||
Cost
of revenue
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2,123,899 | 3,586,660 | 7,493,649 | 9,530,480 | ||||||||||||
Gross
profit
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1,432,883 | 1,297,250 | 3,490,331 | 3,665,833 | ||||||||||||
Operating
expenses
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Selling
and shipping
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163,474 | 156,584 | 525,048 | 542,017 | ||||||||||||
General
and
Administrative
|
1,061,970 | 1,056,551 | 2,791,753 | 2,954,394 | ||||||||||||
Related
party-
professional
fees
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25,000 | 15,000 | 75,000 | 32,500 | ||||||||||||
Total
operating expenses
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1,250,444 | 1,228,135 | 3,391,801 | 3,528,911 | ||||||||||||
Operating
income
|
182,439 | 69,115 | 98,530 | 136,922 | ||||||||||||
Other
income (expense)
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||||||||||||||||
Interest
income
|
6,246 | 20,572 | 28,835 | 80,117 | ||||||||||||
Interest
expense
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(61,647 | ) | (58,418 | ) | (188,630 | ) | (162,859 | ) | ||||||||
Other
income
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10,403 | 156,556 | 22,093 | 170,073 | ||||||||||||
Total
other (expense)
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(44,998 | ) | 118,710 | (137,702 | ) | 87,331 | ||||||||||
Income
(loss) before income taxes
|
137,441 | 187,825 | (39,172 | ) | 224,253 | |||||||||||
Income
tax (expense) benefit
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(34,311 | ) | (58,770 | ) | 66,504 | (68,820 | ) | |||||||||
Net
income
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$ | 103,130 | $ | 129,055 | $ | 27,332 | $ | 155,433 | ||||||||
Basic
income per common share
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$ | 0.02 | $ | 0.03 | $ | 0.01 | $ | 0.03 | ||||||||
Diluted
income per common share
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$ | 0.02 | $ | 0.03 | $ | 0.01 | $ | 0.03 | ||||||||
Weighted
average common shares outstanding basic
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4,761,100 | 4,734,717 | 4,760,503 | 4,733,416 | ||||||||||||
Effect
of potential common share issuance:
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Stock
options
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45,846 | 50,463 | 43,787 | 36,647 | ||||||||||||
Weighted
average common shares outstanding diluted
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4,806,946 | 4,785,180 | 4,804,290 | 4,770,063 |
Nine
Months Ended
September
30,
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2009
|
2008
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Cash
flows from operating activities:
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Net
income
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$ | 27,332 | $ | 155,433 | ||||
Adjustments
to reconcile net income to net cash
(used
in) operating activities
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Stock-based
compensation expense
|
126,868 | 258,040 | ||||||
Depreciation
and amortization
|
437,354 | 386,753 | ||||||
Deferred
tax benefit
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(157,300 | ) | (138,008 | ) | ||||
Bad
debt provision
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(12,936 | ) | 19,910 | |||||
Changes
in operating assets and liabilities
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Accounts
receivable
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1,439,422 | (2,030,836 | ) | |||||
Cost
and estimated earnings in excess of billings
on
uncompleted contracts
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(1,843,898 | ) | (1,757,323 | ) | ||||
Inventories
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17,259 | 184,768 | ||||||
Other
current assets
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(9,319 | ) | 93,389 | |||||
Other
assets
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856 | 50,000 | ||||||
Customer
deposits and deferred revenue
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29,363 | 148,880 | ||||||
Accounts
payable and accrued expenses
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(484,112 | ) | 571,480 | |||||
Net
cash (used in) operating activities
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(429,111 | ) | (2,057,514 | ) | ||||
Cash
flows from investing activities:
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Capital
expenditures
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(258,435 | ) | (2,948,267 | ) | ||||
Deposits
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--- | 425,312 | ||||||
Net
cash (used in) investing activities
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(258,435 | ) | (2,522,955 | ) | ||||
Cash
flows from financing activities:
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Proceeds
from loans
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--- | 2,645,000 | ||||||
Payments
of long-term debt
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(258,470 | ) | (978,377 | ) | ||||
Net
proceeds from stock options exercised
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--- | 21,000 | ||||||
Net
cash (used in) provided by financing activities
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(258,470 | ) | 1,687,623 | |||||
Net
(decrease) in cash and cash equivalents
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(946,016 | ) | (2,892,846 | ) | ||||
Cash
and cash equivalents at beginning of period
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5,721,369 | 5,110,447 | ||||||
Cash
and cash equivalents at end of period
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$ | 4,775,353 | $ | 2,217,601 | ||||
Supplemental
disclosure of cash flow information:
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Income
taxes paid
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$ | 62,975 | $ | 498,310 | ||||
Interest
paid
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188,630 | 173,048 | ||||||
September 30, 2009
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December 31, 2008
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(Unaudited)
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Costs
incurred on uncompleted contracts
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$
4,580,249
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$4,956,874
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Estimated
earnings
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4,646,374
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4,068,641
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9,226,623
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9,025,515
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Billings
to date
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(3,410,192)
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(5,052,982)
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Cost
and estimated earnings in excess of
billings
on uncompleted contracts
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$ 5,816,431
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$3,972,533
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Costs
incurred on uncompleted contracts
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$
4,580,249
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$4,956,874
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Three
Months Ended
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Nine
Months Ended
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September 30, 2009
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September 30, 2009
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As
Reported
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**Pro
Forma
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Change
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As
Reported
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**
Pro Forma
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Change
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3rd
Qtr Revenue
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3,556,782 | 3,420,791 | 135,991 | |||||||||||||||||||||
9
Mths Revenue
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10,983,980 | 10,391,957 | 592,023 | |||||||||||||||||||||
Cost
of revenue
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2,123,899 | 2,123,899 | - | 7,493,649 | 7,493,649 | - | ||||||||||||||||||
Gross
profit
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1,432,883 | 1,296,892 | 135,991 | 3,490,331 | 2,898,308 | 592,023 | ||||||||||||||||||
Operating
income
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182,439 | 46,448 | 135,991 | 98,530 | (493,493 | ) | 592,023 | |||||||||||||||||
Net
income (loss)
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103,130 | 1,088 | 102,043 | 27,332 | (473,396 | ) | 500,728 | |||||||||||||||||
Basic
income (loss) per common share
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0.02 | 0.00 | 0.02 | 0.01 | (0.10 | ) | 0.11 | |||||||||||||||||
Diluted
income (loss) per common share
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0.02 | 0.00 | 0.02 | 0.01 | (0.10 | ) | 0.11 | |||||||||||||||||
Weighted
average common shares outstanding basic
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4,761,100 | 4,761,100 | 4,760,503 | 4,760,503 | ||||||||||||||||||||
Weighted
average common shares outstanding diluted
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4,806,946 | 4,806,946 | 4,804,290 | 4,804,290 |
September 30,
2009
|
December 31,
2008
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(Unaudited)
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Raw materials
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$1,681,988
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$
1,396,960
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Work-in-process
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1,373,595
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1,713,953
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Finished goods
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219,474
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181,403
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$3,275,057
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$ 3,292,316
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September 30, 2009
|
December 31, 2008
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|||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Description
|
Level (1)
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Level (2)
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Level (3)
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Total
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Level (1)
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Level (2)
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Level (3)
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Total
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Assets:
|
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Cash
equivalents
|
$ | 2,932,955 | $ | --- | --- | $ | 2,932,955 | $ | 5,321,190 | $ | --- | --- | $ | 5,321,190 | ||||||||||||||||||
Total
Liabilities
|
$ | --- | $ | --- | $ | --- | $ | --- | $ | --- | $ | --- | $ | --- | $ | --- | ||||||||||||||||
Nine
Months Ended September 30,
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2009
|
2008
|
||||||||
(Unaudited)
|
(Unaudited)
|
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Current:
|
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Federal
|
$ | (73,561 | ) | $ | (153,673 | ) | |||
State
|
(17,235 | ) | (53,154 | ) | |||||
Total
Current (Provision)
|
(90,796 | ) | (206,827 | ) | |||||
Deferred:
|
|||||||||
Federal
|
131,368 | 137,436 | |||||||
State
|
25,932 | 571 | |||||||
Total
Deferred Benefit
|
$ | 157,300 | $ | 138,007 | |||||
Income
tax Benefit (Provision)
|
$ | 66,504 | $ | (68,820 | ) |
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
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2009
|
2008
|
2009
|
2008
|
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Numerator:
|
||||||||||||||||
Net
income used in calculation of basic and diluted earnings per
share
|
$ | 103,130 | $ | 129,055 | $ | 27,332 | $ | 155,433 | ||||||||
|
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Denominator:
|
||||||||||||||||
Weighted-average
common shares outstanding
|
||||||||||||||||
Used
in calculation of basic earnings per share
|
4,761,100 | 4,734,717 | 4,760,503 | 4,733,416 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options and equivalents
|
45,846 | 50,463 | 43,787 | 36,647 | ||||||||||||
Weighted-average
common shares used in calculation of diluted
|
||||||||||||||||
earnings
per share
|
4,806,946 | 4,785,180 | 4,804,290 | 4,770,063 | ||||||||||||
Net
income per share:
|
||||||||||||||||
Basic
|
$ | 0.02 | $ | 0.03 | $ | 0.01 | $ | 0.03 | ||||||||
Diluted
|
$ | 0.02 | $ | 0.03 | $ | 0.01 | $ | 0.03 |
2009
|
CVD
|
SDC
|
Conceptronic
|
Eliminations*
|
Consolidated
|
|||||||||||||||
Revenue
|
$ | 8,490,954 | $ | 2,191,730 | $ | 697,651 | $ | (396,355 | ) | $ | 10,983,980 | |||||||||
Pretax
earnings
|
471,546 | (303,604 | ) | (207,114 | ) | ( 39,172 | ) | |||||||||||||
2008
|
||||||||||||||||||||
Revenue
|
$ | 8,087,216 | $ | 3,583,107 | $ | 2,068,886 | $ | (542,896 | ) | $ | 13,196,313 | |||||||||
Pretax
earnings
|
243,028 | 242,459 | (261,234 | ) | 224,253 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||
September 30, 2009
|
September 30, 2009
|
|||||||||||||||||||||||
As
Reported
|
**Pro Forma
|
Change
|
As
Reported
|
**Pro
Forma
|
Change
|
|||||||||||||||||||
3rd
Qtr Revenue
|
3,556,782 | 3,420,791 | 135,991 |
|
||||||||||||||||||||
9
Mths Revenue
|
10,983,980 | 10,391,957 | 592,023 | |||||||||||||||||||||
Cost
of revenue
|
2,123,899 | 2,123,899 | - | 7,493,649 | 7,493,649 | - | ||||||||||||||||||
Gross
profit
|
1,432,883 | 1,296,892 | 135,991 | 3,490,331 | 2,898,308 | 592,023 | ||||||||||||||||||
Operating
income
|
182,439 | 46,448 | 135,991 | 98,530 | (493,493 | ) | 592,023 | |||||||||||||||||
Net
income (loss)
|
103,130 | 1,088 | 102,043 | 27,332 | (473,396 | ) | 500,728 | |||||||||||||||||
Basic
income (loss) per common share
|
0.02 | 0.00 | 0.02 | 0.01 | (0.10 | ) | 0.11 | |||||||||||||||||
Diluted
income (loss) per common share
|
0.02 | 0.00 | 0.02 | 0.01 | (0.10 | ) | 0.11 | |||||||||||||||||
Weighted
average common shares outstanding basic
|
4,761,100 | 4,761,100 | 4,760,503 | 4,760,503 | ||||||||||||||||||||
Weighted
average common shares outstanding diluted
|
4,806,946 | 4,806,946 | 4,804,290 | 4,804,290 |
31.1
|
Certification
of Chief Executive Officer – pursuant to Rule 13a-14(a) of the
Exchange Act.
|
31.2
|
Certification
of Chief Financial Officer – pursuant to Rule 13a-14(a) of the Exchange
Act.
|
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
|
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)
|
||
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
*
|