CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Index

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

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’ Equity

(Unaudited)

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 and the effect of the novel coronavirus (COVID-19) on our business and operations, and those of our customers, suppliers and other third parties. 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. Past results are no guaranty of future performance. You should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made. When used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” “will” and similar expressions are intended to identify forward-looking statements.

Coronavirus (COVID-19)

The Company has been actively monitoring the coronavirus ("COVID-19") outbreak and its impact globally.  The Company’s primary focus to this point has been to ensure the health and safety of its employees.  To that end, the Company has adopted social distancing where appropriate, implemented travel restrictions, and has taken actions to ensure that locations and facilities are cleaned and sanitized regularly.  These are novel and challenging times and the magnitude of this crisis is requiring the Company to consider all options to promote the safety of employees, including, where appropriate, or where required to comply with foreign, national, state or local governmental authority recommendations, guidelines, and/or mandates, the temporary suspension of work at certain of the Company’s locations and production facilities to protect employees and curb the spread of the coronavirus.  All of these actions may adversely impact the Company’s operating results.  In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel. Due to the timing of the COVID-19 outbreak, the Company’s new order levels during the first half of 2020 and into the third quarter of 2020 have seen substantial reductions which have materially and adversely affected revenues commencing in our second quarter of 2020, and is anticipated to continue towards the end of 2020. While the financial results for the Company’s first quarter of 2020 reflected the initial impact of COVID-19, and the second quarter of 2020 reflected a substantial effect, we are unable to predict the extent of the impact the pandemic will have on our financial position and operating results for the remainder of 2020 and into 2021 due to numerous uncertainties, but the impact could be material during any future period affected either directly or indirectly by this pandemic.  The longer-term impacts from the outbreak are highly uncertain and cannot be predicted.

Statement of Operations

Three Months Ended June 30, 2020 vs. June 30, 2019

Revenue

Our revenue for the three months ended June 30, 2020 was $3.7 million compared to $4.9 million for the three months ended June 30, 2019, a decrease of $1.2 million or 24.4%. This was primarily attributable to decreased revenue of $.9 million from our CVD Equipment segment related to spare parts and equipment sales, and $.3 million decrease in our SDC segment.

The revenue contributed for the three months ended June 30, 2020, by the CVD Equipment segment, of $2.3 million, which totaled 61.3% of our overall revenue, was (28.6%) or ($.9 million) lower than the segment’s $3.2 million contribution made in the prior year, which totaled 64.9% of our overall revenue. This revenue decrease is the result of an increase of $.7 million and a decrease of ($1.6 million) from spare parts and equipment sales, respectively.

Revenue for our SDC segment was $1.0 million in three months ended June 30, 2020 as compared to $1.3 million in three months ended June 30, 2019, a decrease of $.3 million. This decrease was due to the timing of orders delivered, as a large order primarily completed in the three months ended March 31, 2020.

Revenues for our CVD Materials segment were $.4 million in the three months ended June 30, 2020 as compared to $.4 million for the three months ended June 30, 2019.

Gross Profit

Gross profit for the three months ended June 30, 2020 amounted to $.6 million, with a gross profit margin of 16.2%, compared to a gross profit of $.5 million and a gross profit margin of 10.0% for the three months ended June 30, 2019. We achieved improvements in our operating efficiencies with certain repeat orders, lowered our costs mostly due to the effects of certain furloughed employees during the three months ended June 30, 2020, as a result of Coronavirus mandates imposed, and achieved improved mix of product revenues resulting in our gross profit margin percentage improvement.

Research and Development, Selling and General and Administrative Expenses

Research and Development

Due to the technical development required on our custom orders, our research and development team and their expenses are charged to costs of goods sold when they are working directly on a customer project. When they are not working on a customer project, they work in our Application Laboratory and their costs are charged to research and development. For the three months ended June 30, 2020, our research and development expenses totaled $96,000 compared to $177,000 for the three months ended June 30, 2019, a decrease of $81,000, primarily due to the effects of certain furloughed employees during the three months ended June 30, 2020, as a result of Coronavirus mandates imposed.

Selling

Selling expenses were $.1 million or 3.5 % of the revenue for the three months ended June 30, 2020 as compared to $.2 million or 4.6% for the three months ended June 30, 2019. The decrease was primarily the result of reduced employee related costs, including the effects of certain furloughed employees during the three months ended June 30, 2020, as a result of Coronavirus mandates imposed, and lower trade show expenses.  

General and Administrative

General and administrative expenses for the three months ended June 30, 2020 were $1.5 million or 40.5% of revenue compared to $1.6 million or 33.2% for the three months ended June 30, 2019, a decrease of $.1 million. The decrease in these expenses is primarily the result of decreased stock compensation costs of $109,000, due to less equity grants, and decreased outside systems and finance consulting costs of $40,000, due to the completion of the Company’s system migration and finance consulting costs in 2019. These decreases were offset, in part by, an $80,000 bad debt provision related to one customer.

Operating income (loss)

With improved gross profit margins, resulting from improved product mix, and reduced expenses, our operating loss was ($1.1 million) in the three months ended June 30 2020, compared with an operating loss of ($1.5 million) in the three months ended June 30, 2019.

Other income (expenses)

Other income (expenses) were ($1,126) and ($84,207) for the three months ended June 30, 2020 and 2019, respectively. This decrease in net other expenses is primarily the result of subleasing a portion of our CVD Materials facility and receiving $107,880 in rental income during the three months ended June 30, 2020, as compared to none in three months ended June 30, 2019. As a result of lower interest rates, interest income decreased $36,585, to $5,478 for the three months ended June 30, 2020 as compared to $42,063 in 2019. In addition, Interest expense decreased $11,786 to $114,484 in the three months ended June 30, 2020, as compared to $126,270 in 2019.

Income Taxes

For the three months ended June 30, 2020, we recorded an income tax expense of $1,049 related to certain state minimum taxes as compared to an income tax benefit of $234,697 for the three months ended June 30, 2019. As of June 30, 2020 and December 31, 2019, the Company has provided a full valuation allowance against all of the net deferred tax assets. This was based on management’s assessment, including the last two years of operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. We continue to evaluate for potential utilization of the Company’s deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections and timing of orders, the commencement of operations of our CVD Materials segment and cost containment measures. For the three months ended June 30, 2019 our tax rate was primarily affected by permanent differences resulting in an effective tax rate of 14.4%.

Net income (loss)

As a result of the foregoing factors, we reported a net loss of ($1.1 million), or ($0.17) per basic and diluted share, for the three months ended June 30, 2020, as compared to a net loss of ($1.4 million), or ($0.21) per basic and diluted share for the three months ended June 30, 2019.

Six Months Ended June 30, 2020 vs. June 30, 2019

Revenue

Our revenue for the six months ended June 30, 2020 was $9.8 million compared to $8.4 million for the six months ended June 30, 2019, an increase of $1.4 million or 16.2%. This was primarily attributable to increased revenue of $1.2 million from our CVD Equipment segment related to spare parts and equipment sales, $.3 million increase in our SDC segment and a ($.1 million) decrease in our CVD Materials segment.

The revenue contributed for the six months ended June 30, 2020, by the CVD Equipment segment, of $6.4 million, which totaled 65.4% of our overall revenue, was 22.3% or $1.2 million more than the segment’s $5.2 million contribution made in the prior year, which totaled 62.1% of our overall revenue. This revenue increase is the result of an increase of $2.5 million and a decrease of ($1.3 million) from spare parts and equipment sales, respectively.

Revenue for our SDC segment was $2.7 million in the six months ended June 30, 2020 as compared to $2.3 million in the six months ended June 30, 2019, an increase of $.4 million. This increase was due to the timing of one large order primarily completed in the six months ended June 30, 2020.

Revenues for our CVD Materials segment were $.7 million in the six months ended June 30, 2020 as compared to $.9 million for the six months ended June 30, 2019, a decrease of $.2 million.

Gross Profit

Gross profit for the six months ended June 30, 2020 amounted to $2.5 million, with a gross profit margin of 26.0%, compared to a gross profit of $105,098 and a gross profit margin of 1.3% for the six months ended June 30, 2019. In addition to the higher level of sales during the six months ended June 30, 2020 increasing our gross profit, we achieved improvements in our operating efficiencies with certain repeat orders, lowered our costs mostly due to the effects of certain furloughed employees during the period, as a result of Coronavirus mandates imposed, and achieved improved mix of product revenues resulting in our gross profit margin percentage improvement.

Research and Development, Selling and General and Administrative Expenses

Research and Development

Due to the technical development required on our custom orders, our research and development team and their expenses are charged to costs of goods sold when they are working directly on a customer project. When they are not working on a customer project, they work in our Application Laboratory and their costs are charged to research and development. For the six months ended June 30, 2020, our research and development expenses totaled $210,000 compared to $341,000 for the six months ended June 30, 2019, primarily due to the effects of certain furloughed employees during the six months ended June 30, 2020, as a result of Coronavirus mandates imposed.

Selling

Selling expenses were $.3 million or 3.0 % of the revenue for the six months ended June 30, 2020 as compared to $.5 million or 6.0% for the six months ended June 30, 2019. The decrease was primarily the result of reduced employee related costs, including the effects of certain furloughed employees during the six months ended June 30, 2020, as a result of Coronavirus mandates imposed, and lower trade show expenses.  

General and Administrative

General and administrative expenses for the six months ended June 30, 2020 were $3.1 million or 31.3% of revenue compared to $3.4 million or 40.1% for the six months ended June 30, 2019, a decrease of $.3 million. The decrease in these expenses is primarily the result of decreased stock compensation costs of $236,000, due to less equity grants, and decreased outside systems and finance consulting costs of $161,000, due to the completion of the Company’s system migration and finance consulting costs in 2019. These decreases were offset, in part by, an $80,000 bad debt provision related to one customer.

Operating income (loss)

As a result of the increased revenues, improved gross profit margins and reduced expenses, we recorded an operating loss of ($1.0 million) for the six months ended June 30, 2020 as compared to an operating loss of ($4.1 million) for the six months ended June 30, 2019.

Other income (expenses)

Other income (expenses) were $19,000 and ($152,000) for the six months ended June 30, 2020 and 2019, respectively. This increase in income is primarily the result of subleasing a portion of our CVD Materials facility and receiving $219,000 in rental income during the six months ended June 30, 2020, as compared to none in six months ended June 30, 2019. As a result of lower interest rates, interest income decreased $59,000, to $30,000 for the six months ended June 30, 2020 as compared to $89,000 in 2019. In addition, interest expense decreased $10,000 to $231,000 for the six months ended June 30, 2020, as compared to $241,000 in 2019.

Income Taxes

For the six months ended June 30, 2020, we recorded an income tax benefit of $1.5 million as compared to $691,000 for the six months ended June 30, 2019. The income tax benefit recorded during the six months ended June 30, 2020 was the result of a change in the tax laws pursuant to the CARES Act. The Company recorded the deferred tax benefit as a discrete item on March 27, 2020, the date the CARES Act was signed into law. As of June 30, 2020 and December 31, 2019, the Company has provided a full valuation allowance against all of the net deferred tax assets. This was based on management’s assessment, including the last two years of operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. As a result of the enactment of the CARES Act, net operating losses (“NOL’s”) can now be carried back for five years and resulted in the Company recognizing approximately $1.5 million of a tax receivable. We continue to evaluate for potential utilization of the Company’s deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections and timing of orders, the commencement of operations of the CVD Materials segment and cost containment measures. For the six months ended June 30, 2019 our tax rate was primarily affected by permanent differences resulting in an effective tax rate of 16.2%.

Net income (loss)

As a result of the foregoing factors, we reported net income of $.5 million, or $0.08 per basic and diluted share, for the six months ended June 30, 2020, as compared to a net loss of ($3.6 million), or ($0.55) per basic and diluted share for the six months ended June 30, 2019.

Liquidity and Capital Resources

As of June 30, 2020, we had aggregate working capital of $11.3 million compared to aggregate working capital of $8.8 million at December 31, 2019. Our cash and cash equivalents at June 30, 2020 and December 31, 2019 were $9.4 million and $8.7 million, respectively.

Net cash used in operating activities was $.5 million. This is the result of net income, adjusted for non-cash items, of $1.3 million, a decrease in accounts receivable of $.7 million due to timing of collections, a $.1 million decrease in inventory, and other sources of $.3 million. These amounts were more than offset, in part by, an increase in taxes receivable of $1.5 million as a result of the March 27, 2020 CARES Act enactment allowing the carryback of NOL’s five years. In addition, contract assets increased $.4 million, contract liabilities decreased $.4 million, accrued expenses decreased $.5 million related to the payment of vacation and other accrued expenses, and a $.1 million decrease in deferred revenue.

Long term debt increased by $2.1 million, the result of a new loan from the Paycheck Protection Program of $2.4 million and a ($.3 million) decrease from principal payments on the mortgages related to our two facilities in Central Islip, NY, including our investment in the CVD Materials building purchased on November 30, 2017. We have continued to invest in activities primarily related to preparing CVD Materials for larger scale operations. Our total capital invested in the six months ended June 30, 2020 was $.9 million, primarily related to building improvements and machinery, and during the six months ended June 30, 2020 we received rental income of approximately $219,000.

We have a loan agreement with HSBC USA, N.A. (the “HSBC”) which is secured by a mortgage on our Central Islip headquarters at 355 South Technology Drive. The loan is payable in 120 consecutive equal monthly installments of $25,000 in principal plus interest and a final balloon payment upon maturity in March 2022. The balances as of June 30, 2020 and December 31, 2019 were approximately $2.3 million and $2.4 million respectively. Interest accrues on the loan, at our option, at the variable rate of LIBOR plus 1.75% or Prime less 0.5% (1.93% and 3.49% at June 30, 2020 and December 31, 2019, respectively).

 On November 30, 2017, we purchased the premises located at 555 North Research Place, Central Islip, NY which is intended to house the CVD Materials segment. The purchase price of the land and the building was $13,850,000 exclusive of closing costs.

As part of the acquisition, our newly formed wholly-owned subsidiary, 555 N Research Corporation (the” Assignee”) and the Islip IDA, entered into a Fee and Leasehold Mortgage and Security Agreement (the ”Loan”) with HSBC in the amount of $10,387,500, which was used to finance a portion of the purchase price to acquire the premises located at 555 North Research Place, Central Islip, New York (the ”Premises”). The Loan was evidenced by the certain note, dated November 30, 2017 (the ”Note”), by and between Assignee and the Bank, and secured by a certain Fee and Leasehold Mortgage and Security Agreement, dated November 30, 2017 (the “Mortgage”), as well as a collateral Assignment of Leases and Rents (“Assignment of Leases”).

The Note is payable in 60 consecutive equal monthly installments of $62,481, including interest. The balances as of June 30, 2020 and December 31, 2019 were approximately $9.5 million and $9.7 million respectively. The Note bears interest for each Interest Period (as defined in the Note), at the fixed rate of 3.9148%. The maturity date for the Note is December 1, 2022. As a condition of the Bank making the Loan, we were required to guaranty Assignee’s obligations under the Loan.

On August 5, 2019, the Company entered into a Mortgage Modification Agreement which replaced the former covenant with a Minimum Liquid Assets covenant. The Company is in compliance with its obligations under the mortgage at June 30, 2020.

The Company has been actively monitoring the coronavirus ("COVID-19") outbreak and its impact globally.  The Company’s primary focus to this point has been to ensure the health and safety of its employees.  To that end, the Company has adopted social distancing where appropriate, implemented travel restrictions, and has taken actions to ensure that locations and facilities are cleaned and sanitized regularly.  These are novel and challenging times and the magnitude of this crisis is requiring the Company to consider all options to promote the safety of employees, including, where appropriate, or where required to comply with foreign, national, state or local governmental authority recommendations, guidelines, and/or mandates, the temporary suspension of work at certain of the Company’s locations and production facilities to protect employees and curb the spread of the coronavirus.  All of these actions may adversely impact the Company’s operating results.  In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel. Due to the timing of the COVID-19 outbreak, the Company’s new order levels during the first half of 2020 and into the third quarter of 2020 have seen substantial reductions which have materially and adversely affected revenues commencing in our second quarter of 2020, and is anticipated to continue towards the end of 2020. While the financial results for the Company’s first quarter of 2020 reflected the initial impact of COVID-19, and the second quarter of 2020 reflected a substantial effect, we are unable to predict the extent of the impact the pandemic will have on our financial position and operating results for the remainder of 2020 and into 2021 due to numerous uncertainties, but the impact could be material during any future period affected either directly or indirectly by this pandemic.  The longer-term impacts from the outbreak are highly uncertain and cannot be predicted.

At December 31, 2019 we had reduced our employee headcount by 13% to 172 as compared to December 31, 2018. Since March 16, 2020, as a result of Coronavirus mandates imposed, we have furloughed a substantial portion of our work force reducing to levels deemed to support essential services, and continue to assess this on a weekly basis. During these unprecedented times we are continuing to evaluate our staffing levels to support the continued operations, including the level of current and expected orders.

On April 21, 2020, the Company entered into a loan agreement (the “Loan Agreement”) with HSBC Bank USA, National Association pursuant to which the Company was granted a loan in the principal amount of $2,415,970, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted by the United States Congress on March 27, 2020.

The PPP loan, the obligation of which is represented by a note issued by the Company, matures on April 21, 2022 and bears interest at a rate of 1% per annum. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, all or a portion of the Loan may be forgiven, based upon payments made in the first twenty-four weeks following receipt of the proceeds, related to payroll costs, continue group health care benefits, utilities and mortgage interest on other debt obligations incurred before February 15, 2020.

As a result of the March 27, 2020 CARES Act enactment allowing the carryback of NOL’s five years, the Company recognized a $1.5 million tax benefit, and expects to receive these funds during the second half of 2020.

Due to the timing of the COVID-19 outbreak, our new orders during the first half of 2020, and into the beginning of the third quarter 2020 have decreased substantially which have resulted in substantial reductions in revenues resulting in operating losses commencing in our second quarter of 2020. The ongoing impact that COVID-19 has had on our business has made the conditions to operate very challenging. In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel. While we continue to monitor and take action to reduce our expenses, we have secured a $2.4 million loan under PPP and have recognized a $1.5 million tax receivable from the NOL 5 year carryback. We believe that our cash and cash equivalent positions and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months of the filing of this Form 10-Q. Should the current environment continue longer or worsen, we will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs, as well as compliance with our loan covenant.

Off-Balance Sheet Arrangements.

We have no off-balance sheet arrangements at this time.

Item 3.               Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.               Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 13d-15(e) under the Exchange Act of 1934, as amended, (the “Exchange Act”)). As required by Rule 13a-15(b) under the Exchange Act, our management, under the direction of our Chief Executive Officer and Chief Financial Officer, reviewed and performed an evaluation of the effectiveness of design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Report”).

Based on that review and evaluation, our Chief Executive Officer and Chief Financial Officer, along with others in our management, have determined that as of the end of the period covered by this Report on Form 10-Q the disclosure controls and procedures were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosures.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act that occurred during the most recent fiscal quarter 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.

CVD EQUIPMENT CORPORATION

PART II

OTHER INFORMATION

None.

The following risk factor is in addition to the risk factors previously disclosed in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2020. The risk factor set forth below should be read in conjunction with the risk factors section and the Management's Discussion and Analysis section included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2020.

A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide may adversely affect our business.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the recent outbreak of coronavirus disease (COVID-19) which has spread from China to the rest of the world.  Outbreaks such as these have resulted, and can continue to result, in governments around the world implementing increasingly stringent measures to help control the spread, including quarantines, "shelter in place" and "stay at home" orders, travel restrictions, business curtailments, school closures, and other measures.  These actions with respect to the COVID-19 outbreak have negatively impacted, and could continue to have negative impacts on, our operations, supply chain, transportation networks, customers and employees.  The COVID-19 outbreak has materially and adversely affected, and any continuing economic downturn as a result of this pandemic could continue to adversely affect, demand for our products, and negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers. In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel.

Since the end of our first quarter 2020, we have begun to see the impacts of COVID-19 on our markets and operations, including significant decreases in demand, supply chain disruptions, and logistics constraints.  Given government mandates and concerns over employee safety, some of our production facilities were closed or significantly slowed production during the end of the first quarter 2020 and into the second quarter 2020.  The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects.  While we expect this matter to materially and adversely impact our financial results, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time.

Except as noted above, there have been no other material changes to the risk factors disclosed in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2020.

None.

None.

Not applicable.     

None.

________________

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be filed or part of a registration statement of prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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 14^th day of August 2020.

EXHIBIT INDEX

________________

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be filed or part of a registration statement of prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

Exhibit 31.1

Certifications of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Leonard A. Rosenbaum, certify that:

Dated: August 14, 2020

/s/ Leonard A. Rosenbaum

----------------------------------------

  President, Chief Executive Officer and Director

Exhibit 31.2

Certifications of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas McNeill, certify that:

Dated: August 14, 2020

   /s/ Thomas McNeill

----------------------------------------

Thomas McNeill

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 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, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending June 30, 2020 of CVD Equipment Corporation (the “Form 10-Q") 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-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

Dated: August 14, 2020                      /s/ Leonard A. Rosenbaum

 Leonard A. Rosenbaum

 Chief Executive Officer

 (Principal Executive Officer)

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Thomas McNeill, Chief Financial Officer of CVD Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the quarterly report on Form 10-Q for the period ending June 30, 2020 of CVD Equipment Corporation (the “Form 10-Q") 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-Q fairly presents, in all material respects, the financial condition and results of operations of CVD Equipment Corporation.

Dated: August 14, 2020                      /s/ Thomas McNeill

Thomas McNeill

Chief Financial Officer

(Principal Financial Officer)