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What changed in CVD EQUIPMENT CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CVD EQUIPMENT CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+180 added−183 removedSource: 10-K (2025-03-19) vs 10-K (2024-03-28)

Top changes in CVD EQUIPMENT CORP's 2024 10-K

180 paragraphs added · 183 removed · 144 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

70 edited+8 added−14 removed35 unchanged
Biggest changeWe have built a library of design expertise, know-how and innovative solutions to assist our customers in developing these intricate processes and to accelerate their production and commercialization. This library of equipment design solutions, along with our manufacturing and systems integration facilities, allows us to provide application-specific design, process, and manufacturing solutions to our customers.
Biggest changeKey Company Strengths Based on more than 40 years of equipment experience, we use our capabilities in process development, engineering, and vertical manufacturing to transform emerging applications into mainstream manufacturing solutions. 4 We have built a library of design expertise, know-how and innovative solutions to assist our customers in developing these intricate processes and to accelerate their production and commercialization.
The targeted growth production markets include high power electronics (both silicon carbide (SiC) and gallium nitride (GaN)), aerospace advanced materials primarily for gas turbine jet engines, and nanomaterials used in batteries.
The targeted growth production markets include aerospace advanced materials primarily for gas turbine jet engines, high power electronics (both silicon carbide (SiC) and gallium nitride (GaN)), and nanomaterials used in batteries.
The timing for completion of backlog varies depending on the product mix and can be as long as two years or as short as 30-60 days. 12 There can be no assurance that our backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable.
The timing for completion of backlog varies depending on the product mix and can be as long as two years or as short as 30-60 days. There can be no assurance that our backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable.
Due to budgetary and funding constraints, many customers are price sensitive. We believe that our systems are among the most advanced available for the targeted market and coupled with our vertical integration in engineering and manufacturing, we believe that we can compete effectively. 11 SDC’s gas management and chemical delivery control systems are among the most advanced available.
Due to budgetary and funding constraints, many customers are price sensitive. We believe that our systems are among the most advanced available for the targeted market and coupled with our vertical integration in engineering and manufacturing, we believe that we can compete effectively. SDC’s gas management and chemical delivery control systems are among the most advanced available.
Developments On May 26, 2023, we sold our Tantaline subsidiary located in Nordborg, Denmark in exchange for a nominal amount at closing and an earn-out provision based on any net income that Tantaline may earn during the five-year period ending December 31, 2027.
On May 26, 2023, we sold our Tantaline subsidiary located in Nordborg, Denmark in exchange for a nominal amount at closing and an earn-out provision based on any net income that Tantaline may earn during the five-year period ending December 31, 2027.
The process takes days to over a week to complete and yield a SiC crystal ready for further processing into wafers. 9 Rapid Thermal Processing (RTP) – Used to heat semiconductor materials to elevated temperatures of up to 1,200 ° Celsius at rapid rates of up to 200° Celsius per second.
The process takes days to over a week to complete and yield a SiC crystal ready for further processing into wafers. Rapid Thermal Processing (RTP) – Used to heat semiconductor materials to elevated temperatures of up to 1,200 ° Celsius at rapid rates of up to 200° Celsius per second.
We design, develop, and manufacture a broad range of equipment used to develop and manufacture materials and coatings for the compound semiconductor, semiconductor, aerospace, battery energy storage markets as well as advanced industrial applications, and research.
We design, develop, and manufacture a broad range of equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, aerospace, battery energy storage markets as well as advanced industrial applications, and research.
We also maintain certain trademarks relating to certain of our products and product lines and claim copyright protection for certain proprietary software and documentation. 8 While patent, copyright and trademark protections for our intellectual property are important to different degrees for our various products and solutions, we believe our future success in highly dynamic markets is most dependent upon the technical competence and creative skills of our personnel and our ability to accelerate the commercialization of next generation intellectual properties.
We also maintain certain trademarks relating to certain of our products and product lines and claim copyright protection for certain proprietary software and documentation. 10 While patent, copyright and trademark protections for our intellectual property are important to different degrees for our various products and solutions, we believe our future success in highly dynamic markets is most dependent upon the technical competence and creative skills of our personnel and our ability to accelerate the commercialization of next generation intellectual properties.
We attempt to protect our trade secrets and other proprietary information through non-disclosure agreements with our customers, suppliers, employees and consultants and other security measures. Research and Development We develop new products based on market analysis or by customer request. The technology included in our product development includes mechanical hardware, software and controls systems and overall configuration.
We strive to protect our trade secrets and other proprietary information through non-disclosure agreements with our customers, suppliers, employees and consultants and other security measures. Research and Development We develop new products based on market analysis or by customer request. The technology included in our product development includes mechanical hardware, software and controls systems and overall configuration.
Our primary marketing activities include direct sales engagement, participation in trade associations and trade shows and our internet websites. We expanded our marketing activities in 2023 through attendance at key tradeshows and online marketing. 10 Customers Our systems and products are used in both production applications and advanced materials research.
Our primary marketing activities include direct sales engagement, participation in trade associations and trade shows and our internet websites. We expanded our marketing activities through attendance at key tradeshows and online marketing. Customers Our systems and products are used in both production applications and advanced materials research.
We continue to monitor, review, and maintain ongoing compliance with the EAR with respect to our export sales. Product Liability Our products are used in our customers’ manufacturing processes, which in some cases contain explosive, flammable, corrosive, and toxic gases.
Export Administration Regulations (“EAR”). We continue to monitor, review, and maintain ongoing compliance with the EAR with respect to our export sales. Product Liability Our products are used in our customers’ manufacturing processes, which in some cases contain explosive, flammable, corrosive, and toxic gases.
Human Capital We consider our employees a vital asset to our business and strive to ensure we foster a work environment of respect, communication, objective orientation, and personal life balance. We believe this results in a higher level of employee satisfaction and hence improved performance and employment longevity. On December 31, 2023, we had 128 employees.
Human Capital We consider our employees a vital asset to our business and strive to ensure we foster a work environment of respect, communication, objective orientation, and personal life balance. We believe this results in a higher level of employee satisfaction and hence improved performance and employment longevity. On December 31, 2024, we had 118 employees.
The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 14
The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 15
Through December 31, 2023, we have received and delivered orders for 30 of our PVT150 physical vapor transport systems from one customer, which uses our systems to grow silicon carbide crystals that are made into 150 mm silicon carbide wafers for use in power electronics.
Through December 31, 2024, we have received and delivered orders for 30 of our PVT150 physical vapor transport systems from one customer, which planned to use our systems to grow silicon carbide crystals that are made into 150 mm silicon carbide wafers for use in power electronics.
The product group also consists of legacy products serving the production and R&D applications such as semiconductors, LEDs, carbon nanotubes, nanowires, solar cells and a number of other industrial & research applications. 7 Our developments and opportunities for the carbon composite business come from achievements in our Applications Laboratory.
The product group also consists of legacy products serving the production and R&D applications such as semiconductors, LEDs, carbon nanotubes, nanowires, solar cells and several other industrial & research applications. Our developments and opportunities for the carbon composite business come from achievements in our Applications Laboratory.
Definitions The use of the words “CVD,” “we,” “us,” or “our,” refers to CVD Equipment Corporation, a New York corporation incorporated on October 13, 1982, and its wholly owned subsidiaries, CVD Materials Corporation (including its wholly owned subsidiaries, and CVD MesoScribe Technologies Corporation and Tantaline CVD Holding ApS, collectively “CVD Materials”), and FAE Holdings 411519R LLC except where the context otherwise requires.
The use of the words “CVD,” “we,” “us,” or “our,” refers to CVD Equipment Corporation, a New York corporation incorporated on October 13, 1982, and its wholly owned subsidiaries, CVD Materials Corporation (including its wholly owned subsidiaries, and CVD MesoScribe Technologies Corporation (“MesoScribe”) and Tantaline CVD Holding ApS (“Tantaline”)), and FAE Holdings 411519R LLC except where the context otherwise requires.
We conduct our business through three reportable operating segments: i) CVD Equipment that supplies chemical vapor deposition, physical vapor transport and thermal process equipment; ii) SDC that designs and manufactures ultra-high purity gas and chemical delivery control systems; and iii) CVD Materials that provide products related to advanced materials and coatings.
We conduct our business through three reportable segments: i) CVD Equipment that designs and manufactures chemical vapor deposition, physical vapor transport and thermal process equipment; ii) SDC that designs and manufactures ultra-high purity gas and chemical delivery control systems; and iii) MesoScribe that provided products related to advanced materials and coatings.
In February 2024, we received an order from an additional customer for our new PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. This represents our second customer for our PVT equipment. This customer plans to evaluate our equipment for potential additional purchases of PVT equipment.
In February 2024, we received an order from an additional customer for our new PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. This represents our second customer for our PVT equipment. This customer is evaluating our equipment performance for potential additional purchases of PVT equipment.
For the year ended December 31, 2023, approximately $4.1 million or 17% of our revenues were generated by sales to customers outside the U.S., compared to approximately $4.4 million or 17% for the year ended December 31, 2022. Competition We can experience intense direct competition from both domestic and international competitors in all our product segments.
For the year ended December 31, 2024, approximately 4.3% of our revenues were generated by sales to customers outside the U.S., compared to approximately 17.2% for the year ended December 31, 2023. Competition We can experience intense direct competition from both domestic and international competitors in all our product segments.
We market and sell primarily to companies that are the engaged in producing compound semiconductor wafers, aerospace gas turbine jet engine component material, defense, battery energy storage, silicon and other microelectronic and micromechanical devices, semiconductor, universities and research centers. We have both a domestic and international customer base.
We market and sell primarily to companies that are the engaged in producing aerospace gas turbine jet engine component material, defense, compound semiconductor wafers, battery energy storage, silicon and other microelectronic and micromechanical devices, semiconductor, universities and research centers.
We believe our vertical manufacturing integration is a competitive advantage. Materials procured from suppliers and/or manufactured internally undergo a rigorous quality control process to ensure that the parts meet or exceed our requirements and those of our customers. Upon final assembly, all equipment undergoes a final series of complete testing to ensure maximum product performance.
Materials procured from suppliers and/or manufactured internally undergo a rigorous quality control process to ensure that the parts meet or exceed our requirements and those of our customers. Upon final assembly, all equipment undergoes a final series of complete testing to ensure maximum product performance.
We provide both standard and emerging applications specified products. Some of the standard systems we offer are for SiC, GaN, Aluminum Nitride (AlN), CMCs, silicon (Si), CNT, graphene, silicon nanowires. The systems are sold under the CVD and FirstNano product brands.
We provide both standard and emerging applications specified products. Some of the standard systems we offer are for SiC, GaN, Aluminum Nitride (AlN), CMCs, silicon (Si), CNT, graphene, silicon nanowires.
Overview CVD has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York with one other location in Saugerties, New York.
Overview CVD has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York with our SDC division located in Saugerties, New York.
Together with a number of leading universities and startup companies with whom we partner from time to time, we conduct research on SiC growth, the growth and infiltration of carbon nanotubes, graphene and nanowires as well as on selected aerospace manufacturing processes.
Together with a number of leading universities and startup companies with whom we partner from time to time, we conduct research on Si deposition for both aerospace Si bond coat and microelectronic applications, SiC growth, the growth and infiltration of carbon nanotubes, graphene and nanowires as well as on selected aerospace manufacturing processes.
The Applications Laboratory, along with the sales and marketing team continue to explore carbon-based products and applications that can be made from our CNT, infiltrated carbon/CVI and carbon nano fiber technology (CNF). Some applications include CNT and infiltrated carbon/CVI based battery material and CNF capacitors for 5G technology.
The Applications Laboratory, along with the sales and marketing team continue to explore carbon-based products and applications that can be made from our CNT, infiltrated carbon/CVI and carbon nano fiber technology (CNF).
Aerospace & Defense CVD is a leading manufacturer of CVI and tow-coating systems to manufacture CMCs for aerospace gas turbine jet engine applications. Our customers include two of the leaders in aerospace gas turbine engines. We continue to engage customers in the aerospace market regarding CMCs.
Aerospace & Defense CVD is a leading manufacturer of preform CVI and tow-coating systems to manufacture CMCs for aerospace gas turbine jet engine applications. Our customers include two of the leaders in aerospace gas turbine engines. We continue to engage additional customers in the aerospace market regarding CMCs. During 2022, we received an order for a production CVI system.
During 2022, we also received an order from an aerospace company for a production chemical vapor infiltration (CVI) system that will be used to manufacture CMCs for gas turbine jet engines. In 2023, we received an order from the same aerospace company for an additional three CVI systems.
During 2022, we also received an order from an aerospace company for a production chemical vapor infiltration (CVI) system that will be used to manufacture CMCs for gas turbine jet engine components.
With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and contributing to the decarbonization of that industry. 4 Our current strategy yielded multisystem orders of PVT150 equipment that was delivered to one company that manufactures silicon carbide wafers.
With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and contributing to the decarbonization of that industry.
None of our employees were subject to a collective bargaining agreement. 13 The implementation of our business strategy depends on our ability to hire, train, and retain qualified and diverse professionals, and we must emphasize employee development and training in order to do so.
The implementation of our business strategy depends on our ability to hire, train, and retain qualified and diverse professionals, and we must emphasize employee development and training to do so.
Deposits Si on machined gas turbine jet engine CMC components and other OEM components. - Chemical Vapor Deposition/ Chemical Vapor Infiltration production coating system for multi-layer CMC coatings on SiC fiber preforms. 6 Other Markets CVD Equipment Products: - Universal liquid and gas storage cabinets, management, and delivery systems (SDC segment). - Production MOCVD Super Conducting Tape system. - ET-3000: MOCVD for compound semiconductor R&D. - ET-3000 for graphene. - ET-6000: Multi-Tube Chemical Vapor Deposition Tube furnace (metals, oxides and nitrides). - PowderCoat-300 for powder material R&D (including battery anode). - TMD: cluster tool for advanced material development.
R&D Applications: - ET-3000: Versatile CNT growth system for research and development. 7 Other Markets CVD Equipment Products: - Universal liquid and gas storage cabinets, management, and delivery systems (SDC segment). - Production MOCVD Super Conducting Tape system. - ET-3000: MOCVD for compound semiconductor R&D. - ET-3000 for graphene. - ET-6000: Multi-Tube Chemical Vapor Deposition Tube furnace (metals, oxides and nitrides). - PowderCoat-300 for powder material R&D (including battery anode). - TMD: cluster tool for advanced material development.
Our SDC products are sold on a stand-alone basis and are also integrated into certain CVD equipment. This internal supply of chemical and gas delivery systems and components provide a competitive advantage for our CVD Equipment group over its competition. SDC operates from a 22,000 square foot facility fitted with a clean room manufacturing space located in Saugerties, New York.
This internal supply of chemical and gas delivery systems and components provide a competitive advantage for our CVD Equipment group over its competition. SDC operates from a 22,000 square foot facility fitted with a clean room manufacturing space located in Saugerties, New York. MesoScribe - consisted of MesoScribe’s direct write printed electronics business.
We have conducted research and development over the last 40 years and have a wealth of technology from which systems and solutions can be derived from and productized.
Our research and development activities over have yielded a wealth of technology from which systems and solutions can be derived from and productized.
The crystal growth technique utilized a high temperature furnace to vaporize from seed granular material of SiC and further deposit out in an ordered crystal structure onto substrate wafer.
A 200 mm version called the PVT200 was developed during 2023, and the first order was received in February 2024 and delivered in 2024. The crystal growth technique utilized a high temperature furnace to vaporize from seed granular material of SiC and further deposit out in an ordered crystal structure onto substrate wafer.
In late 2023, we launched our PVT200 system designed to manufacture silicon carbide crystals for 200 mm wafer and received our first order from a second customer.
In late 2023, we launched our PVT200 system designed to manufacture silicon carbide crystals for 200 mm wafer and in mid-2024 we received our first order from a second customer. We plan to continue to support the market with our PVT 200 system and possible future product development for the PVT200 product line.
We plan to expand our marketing and future product development for the PVT product line as well as expand our product offerings to manufacturers of silicon carbide wafers. 5 EV Battery Materials / Energy Storage We have experienced increased interest and demand for nanotechnology materials including carbon nanotubes (CNTs), graphene and silicon nanowires (Si-NWs) to support the development and manufacturing for battery materials used in electric vehicles.
We will continue to monitor the market dynamics for silicon carbide wafers. EV Battery Materials / Energy Storage We have experienced increased interest and demand for nanotechnology materials including carbon nanotubes (CNTs), graphene and silicon nanowires (Si-NWs) to support the development and manufacturing for battery materials used in electric vehicles.
We had 70 employees in manufacturing, 30 in engineering (including research and development and efforts related to product improvement), 5 in field service, 9 in sales and marketing and 14 in general management, maintenance and administration, compared to 136 employees as of December 31, 2022.
We had 58 employees in manufacturing, 30 in engineering (including research and development and efforts related to product improvement), 5 in field service, 10 in sales and marketing and 15 in general management, maintenance and administration, compared to 128 employees as of December 31, 2023. None of our employees were subject to a collective bargaining agreement.
High Power Electronics Demand for silicon carbide wafers to support high power electronics for energy storage and transmission/charging resulted in a multi-system order from a US-based, silicon carbide wafer manufacturer.
Our legacy product line continues to provide advanced equipment and subsystems to enable development of emerging technology and research applications. Microelectronics / High Power Electronics Demand for silicon carbide wafers to support high power electronics for energy storage and transmission/charging resulted in a multi-system order from a US-based, silicon carbide wafer manufacturer.
We have gained this understanding as a result of having designed and built complex process gas systems for our CVD Equipment group as well as for a number of the world’s leading semiconductor, aerospace, medical, solar manufacturers, research laboratories and universities. CVD Materials consists of our MesoScribe subsidiary. There is no viable direct competitor for the MesoScribe services.
We have gained this understanding as a result of having designed and built complex process gas systems for our CVD Equipment group as well as for a number of the world’s leading semiconductor, aerospace, medical, solar manufacturers, research laboratories and universities. Sources of Supply Many of the components used in producing our products are purchased from unrelated suppliers.
CVD Equipment segment operates from our 135,000 sq. ft. facility in Central Islip, New York. SDC - designs and manufactures ultra-high purity gas and chemical delivery control systems for state-of-the-art semiconductor fabrication processes, aerospace, solar cells, LEDs, carbon nanotubes, nanowires, and a number of industrial applications.
SDC - designs and manufactures ultra-high purity gas and chemical delivery control systems for state-of-the-art semiconductor fabrication processes, aerospace, solar cells, LEDs, carbon nanotubes, nanowires, and a number of industrial applications. Our SDC products are sold on a stand-alone basis and are also integrated into certain CVD equipment.
Given the complexity and magnitude of the systems we sell, revenue from a single customer in any one year can exceed 10% of our total sales. During the year ended December 31, 2023, three customers represented 14.3%, 13.5% and 10.9% of our revenues, while in 2022 one customer represented 29.2% of our revenues.
During the year ended December 31, 2024, one customer represented 29.5% of our revenues, while in 2023 three customers represented 14.3%, 13.5% and 10.9% of our revenues.
Physical Vapor Transport (PVT) – While the PVT150 was officially launched for production in 2022, we have sold PVT systems in prior years and have pioneered both resistive heating and more effectively inductively heated PVT systems. The PVT150 system was specifically designed to address the SiC crystal growth market for 150 mm substrates or wafers.
The systems are sold under the CVD and FirstNano product brands. 9 Physical Vapor Transport (PVT) – While the PVT150 was officially launched for production in 2022, we have sold PVT systems in prior years and have pioneered both resistive heating and more effectively inductively heated PVT systems.
To support new emerging applications, we provide equipment to and collaborate with laboratory scientists to bring state-of-the-art processes from the research laboratory into production. CVD Equipment group provides process development value through our Application Laboratory where our personnel interact directly with the scientists and engineers of our customer base to develop solutions to tomorrow’s challenges today.
CVD Equipment group provides process development value through our Application Laboratory where our personnel interact directly with the scientists and engineers of our customer base to develop solutions to tomorrow’s challenges today. CVD Equipment segment operates from our 128,000 square feet facility in Central Islip, New York.
Products and Technology Chemical Vapor Deposition/Infiltration – Chemical vapor deposition is a method of coating or growing material through a chemical recombination at elevated temperatures onto or within pores of a substrate material.
We fulfilled remaining orders for MesoScribe products during 2024,completed the sales of the equipment assets and ceased operations as of September 30, 2024. Products and Technology Chemical Vapor Deposition/Infiltration – Chemical vapor deposition is a method of coating or growing material through a chemical disassociation and recombination at elevated temperatures onto or within pores of a substrate material.
We have also received orders from OneD Battery Materials in 2023, a company that is engaged in providing battery nanomaterials. Both technologies are essential for the support of the EV market. These systems should provide us with standard product offering to continue to support the EV focused market as well as energy storage, power conversion and power transmission.
We have also received orders from OneD Battery Materials in 2023, a company that is engaged in providing battery nanomaterials. We also provide a line of CVD systems which are used to develop and produce material for the anode portion of batteries. Both technologies are essential for the support of the EV market.
With respect to our sales to customers located in China or elsewhere outside the United States, products which (i) are manufactured in the United States, (ii) incorporate controlled U.S. origin parts, technology, or software, or (iii) are based on U.S. technology, are subject to the U.S. Export Administration Regulations (“EAR”).
Utilizing our in-house safety team, engineering expertise and consultants as required, we continue to monitor and comply with applicable Environmental Health and Safety regulations at our facilities as well as the installation of equipment at our customer facilities. 13 With respect to our sales to customers located in China or elsewhere outside the United States, products which (i) are manufactured in the United States, (ii) incorporate controlled U.S. origin parts, technology, or software, or (iii) are based on U.S. technology, are subject to the U.S.
We maintain strong environmental, health and safety protocols that focus on implementing policies and training programs, as well as performing self-audits to ensure our colleagues and partners leave the workplace safely on a daily basis.
We maintain strong environmental, health and safety protocols that focus on implementing policies and training programs, as well as performing self-audits to ensure our colleagues and partners leave the workplace safely on a daily basis. 14 Employee Compensation Management continues to review our employee compensation programs to better align the compensation of our employees with our objectives, performance, and personal performance, and to provide the proper short-term and long-term incentives to attract, retain and motivate them to achieve superior results.
Backlog As of December 31, 2023, our backlog was approximately $18.4 million, compared to $17.8 million as of December 31, 2022, an increase of $0.6 million. Our backlog at December 31, 2023 consists of approximately $16.3 million remaining performance obligations for contracts in progress and the balance of approximately $2.1 million represents orders received from customers.
Our backlog at December 31, 2024 consists of approximately $17.4 million remaining performance obligations for system contracts in progress and not yet started and the balance of approximately $1.9 million represents other non-system orders received from customers.
These factors reduce cost, improve quality, and reduce the time it takes between customers’ orders and the shipment of our products. Our Application Laboratory allows customers the option to bring their process tools to our laboratory and to work collaboratively with our scientists and engineers to optimize process performance.
Our proprietary real-time software allows for rapid configuration, and provides our customers with enabling tools to understand, optimize and repeatedly control their processes. These factors reduce cost, improve quality, and reduce the time it takes between customers’ orders and the shipment of our products.
On August 8, 2023, we entered into an agreement with a third party to sell certain assets and license certain proprietary information of MesoScribe. We will continue to fulfill remaining orders for MesoScribe products through the end of 2024 at which time we plan to cease the remaining operations of MesoScribe and dispose of any remaining equipment.
Developments On August 8, 2023, we entered into an agreement with a third party to sell certain assets and license certain propriety information of our MesoScribe subsidiary. We fulfilled remaining orders for MesoScribe products during 2024 and sold certain equipment resulting in the recognition of a gain on sale of equipment in 2024.
Furthermore, with our proprietary solutions and expanded focus on “ enabling tomorrow’s technologies ” TM we have been developing a new customer base in addition to growing with our existing customers. Key Growth Strategies Our core strategy is to focus on growth market applications in end markets related to the “electrification of everything,” aerospace and industrial applications.
The performance and success of our products has historically driven repeat orders from existing customers as well as generated business from new customers. Furthermore, with our proprietary solutions and expanded focus on “ enabling tomorrow’s technologies ” TM we have been developing a new customer base in addition to growing with our existing customers.
The phrase “electrification of everything” refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles (“EVs”), and many other applications.
The phrase “electrification of everything” within the microelectronics market refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles (“EVs”) and many other applications. Our strategy yielded multisystem orders of PVT150 equipment that was delivered to one company in 2022 and 2023 that manufactures silicon carbide wafers.
Designed to provide enhanced process parameter control it allows existing and future customers the ability to tightly control and monitor the crystal growth process for 150mm substrates. A 200 mm version called the PVT200 was developed during 2023 and the first order was received in February 2024.
The PVT150 system was specifically designed to address the SiC crystal growth market for 150 mm substrates or wafers. Designed to provide enhanced process parameter control it allows existing and future customers the ability to tightly control and monitor the crystal growth process for 150mm substrates.
We maintain a fully equipped machine shop that we use to fabricate a significant portion of our metal components in-house, including the most intricately designed parts of our equipment. We expanded our machine shop in 2022 to allow us to expand our ability to fabricate parts. Our quartz fabrication capability is currently sufficient to meet our quartzware needs.
We expanded our machine shop in 2022 to allow us to expand our ability to fabricate parts. Our quartz fabrication capability is currently sufficient to meet our quartzware needs. We believe our vertical manufacturing integration is a competitive advantage.
Our core competencies in equipment and software design, manufacturing and process development are used to engineer our finished products and to accelerate the commercialization path of our customer base. Our proprietary real-time software allows for rapid configuration, and provides our customers with enabling tools to understand, optimize and repeatedly control their processes.
This library of equipment design solutions, along with our manufacturing and systems integration facilities, allows us to provide application-specific design, process, and manufacturing solutions to our customers. Our core competencies in equipment and software design, manufacturing and process development are used to engineer our finished products and to accelerate the commercialization path of our customer base.
Our major targeted markets are further described as follows (the term “legacy product” refers to products and systems within our product offerings that we have produced in our history): Major Target Markets: Description and Growth Drivers: CVD Equipment Products and Services: High Power Electronics The shift to electrification has the objectives of reducing emissions and reducing dependency on fossil fuels.
Our major targeted markets are further described as follows (the term “legacy product” refers to products and systems within our product offerings that we have produced in our history): Major Target Markets: Description and Growth Drivers: CVD Equipment Products and Services: Aerospace, Defense and Industrial Next generation gas turbine jet engines are incorporating CMC material for the hot section or exhaust of the engine to improve fuel efficiency.
CVD Materials - consist of MesoScribe’s direct write printed electronics business. MesoScribe provides MesoPlasma™ printing services and products (heaters, antennas, and sensors) to aerospace, satellite, power generation, defense, and other markets requiring high performance. MesoScribe operations are located at our main facility in Central Islip, New York.
MesoScribe provided MesoPlasma™ printing services and products (heaters, antennas, and sensors) to aerospace, satellite, power generation, defense, and other markets requiring high performance. MesoScribe operations were located at our main facility in Central Islip, New York. On August 8, 2023, we entered into an agreement with a third party to sell certain assets and license certain proprietary information of MesoScribe.
Manufacturing these standardized systems in higher volumes may provide us the flexibility to reduce both the cost and delivery time of our systems. These systems, which we market and sell under the CVD, FirstNano and EasyTube® product names, are sold to commercial companies, universities and research laboratories in the United States and throughout the world.
These systems, which we market and sell under the CVD, FirstNano and EasyTube® product names, are sold to commercial companies, universities and research laboratories in the United States and throughout the world. Sales of our proprietary standard systems, custom systems and process solutions have been driven by our installed customer base, which includes many Fortune 500 companies.
Our proprietary systems leverage the technological expertise that we have developed through designing these custom systems into a broader standardized product line. The standard product line can be configured from a wide range of available options to meet diverse product and budgetary requirements.
Historically, we manufactured products for research and development on an application-specific basis to meet an individual customer’s specific research and production requirements. Our proprietary systems leverage the technological expertise that we have developed through designing these custom systems into a broader standardized product line.
We plan to expand our product offerings in the power electronics market to build off the introduction of the PVT150 and PVT200 systems. We are also evaluating our ability to provide other equipment used in the manufacturing process of silicon carbide wafers.
These systems should provide us with standard product offering to continue to support the EV focused market as well as energy storage, power conversion and power transmission. We are also evaluating our ability to provide other equipment used in the manufacturing process of silicon carbide wafers.
EV Battery Materials / Energy Storage The shift to electrification also requires improvements in energy storage, specifically with the use of novel anode materials. Production Applications: - PowderCoat-1100 production system launched in 2021 grows Si nanowires on carbon nanoparticles. - Carbon-150: Single substrate system for CNT growth.
Production Applications: - PVT150 SiC crystal growth system launched in 2022. - PVT200 SiC crystal growth system launched in 2023. - HVPE400: polycrystalline GaN (legacy product). EV Battery Materials / Energy Storage The shift to electrification also requires improvements in energy storage, specifically with the use of novel anode materials.
Versatile substrate format, on wafer or foil. - Carbon-300: Multiple substrate batch tube system for CNT growth. Versatile substrate format, on wafer or foil. R&D Applications: - ET-3000: Versatile CNT growth system for research and development.
Production Applications: - PowderCoat-1100 production system launched in 2021 grows Si nanowires on carbon nanoparticles. - Carbon-150: Single substrate system for CNT growth. Versatile substrate format, on wafer or foil. - Carbon-300: Multiple substrate batch tube system for CNT growth. Versatile substrate format, on wafer or foil.
During 2022, we received an order for a production CVI system valued at approximately $3.7 million. We received an additional order for three CVI systems during 2023 from the same customer. These systems will be used to manufacture CMCs for aerospace gas turbine jet engines.
We received additional orders from the same aerospace company for three CVI systems in 2023 and one additional CVI system in 2024. These systems will be used to manufacture CMCs for aerospace gas turbine jet engines. 6 We believe our future growth will be derived from production applications in our major target markets.
The decisions to sell our Tantaline subsidiary and wind down the operations of MesoScribe were based on our ongoing strategy to focus on the equipment business consisting of the CVD Equipment and SDC segments. 3 Key Company Strengths Based on more than 40 years of equipment experience, we use our capabilities in process development, engineering, and vertical manufacturing to transform emerging applications into mainstream manufacturing solutions.
The decisions to sell our Tantaline subsidiary and close down the operations of MesoScribe were based on our strategy to focus on the equipment business consisting of the CVD Equipment and SDC segments.
Bookings During 2023, bookings of new orders from customers was approximately $25.8 million, representing a decrease of approximately 22.1% compared to 2022 bookings of $33.1 million. The decline in bookings was related to $8.8 million of orders of PVT150 systems that were received in 2022 as compared to no such orders in 2023.
Bookings During 2024, bookings of new orders from customers was approximately $28.1 million, representing an increase of approximately 8.9% compared to 2023 bookings of $25.8 million. The increase in bookings of $2.3 million was related to an increase in aerospace and industrial orders.
To expand our presence into our major target markets, we are developing a line of proprietary standard use products to complement our customized legacy systems. Historically, we manufactured products for research and development on an application-specific basis to meet an individual customer’s specific research and production requirements.
Our Application Laboratory allows customers the option to bring their process tools to our laboratory and to work collaboratively with our scientists and engineers to optimize process performance. To expand our presence into our major target markets, we are developing a line of proprietary standard use products to complement our customized legacy systems.
Aerospace, Defense and Industrial Next generation gas turbine jet engines are incorporating CMC material for the hot section or exhaust of the engine to improve fuel efficiency. Silicon carbide coating is use as a protective barrier in many OEM components used in LED and other applications. Production and R&D Applications: - Fiber tow coat system.
Production and R&D Applications: Silicon carbide coating is used as a protective barrier in many OEM equipment components used in LED and other applications. - Fiber tow coat system. Mass production system for multi-layer coating for CMCs. - Silicon bond coat environmental barrier depositing system.
In February 2024, we received a multisystem order from an industrial customer for approximately $10 million that will be used for depositing a silicon carbide protective coating on OEM components. We have generally gained new customers through our industry reputation, as well as limited print advertising and trade show attendance.
We received additional orders from the same aerospace company for three CVI systems in 2023 and one CVI system in 2024. 5 In February 2024, we received a multisystem order from an industrial customer for approximately $10 million that will be used for depositing a silicon carbide protective coating on OEM components and the units are expected to be delivered over 18 to 24 months period.
Major Target Markets Our major target markets are high power electronics, EV battery materials / energy storage and aerospace, defense and industrial applications – all of which have the objective of improving energy efficiency.
We have generally gained new customers through our industry reputation, as well as limited print advertising and trade show attendance. We have increased the number of trade shows and industry conferences we attend in 2024. Major Target Markets Our major target markets are aerospace & defense and industrial, microelectronics / high power electronics, and EV battery materials / energy storage.
We are not dependent on a principal or major supplier and alternate suppliers are available. Historically, subject to lead times, the components and raw materials we used in manufacturing our products were readily obtainable.
Historically, subject to lead times, the components and raw materials we used in manufacturing our products were readily obtainable. 12 We maintain a fully equipped machine shop that we use to fabricate a significant portion of our metal components in-house, including the most intricately designed parts of our equipment.
This has driven the demand for electric vehicle and associated high power electronics used in charging and motor power conversion. Production Applications: - PVT150 SiC crystal growth system launched in 2022. - PVT200 SiC crystal growth system launched in 2023. - HVPE400: polycrystalline GaN (legacy product).
Microelectronics / High Power Electronics The shift to electrification has the objectives of reducing emissions and reducing dependency on fossil fuels. This has driven the demand for electric vehicle and associated high power electronics used in charging and motor power conversion.
Removed
The decision to sell Tantaline was based on our ongoing strategy to focus on the equipment business consisting of the CVD Equipment and SDC segments and reduce its focus on the non-core CVD Materials business. On August 8, 2023, we entered into an agreement with a third party to sell certain assets and license certain propriety information of MesoScribe.
Added
The standard product line can be configured from a wide range of available options to meet diverse product and budgetary requirements. Manufacturing these standardized systems in higher volumes may provide us the flexibility to reduce both the cost and delivery time of our systems as well as leverage our engineering development cost.
Removed
We will continue to fulfill remaining orders for MesoScribe products through the end of 2024 at which time we plan to cease the remaining operations of MesoScribe and dispose of any remaining equipment.
Added
Key Growth Strategies Our core strategy is to focus on growth applications in end markets related to aerospace, microelectronics, and industrial applications.
Removed
Sales of our proprietary standard systems, custom systems and process solutions have been driven by our installed customer base, which includes Fortune 500 companies. The performance and success of our products has historically driven repeat orders from existing customers as well as generated business from new customers.
Added
We have observed lower-than-anticipated industrywide electric vehicle sales which may reduce demand for silicon carbide and negatively impact sales of our PVT systems. In addition, the recent global over capacity of 150 mm silicon carbide wafers has reduced the market for 150 mm silicon carbide growth systems.
Removed
We have increased the number of trade shows and industry conferences in 2023. In addition, we added to our sales and marketing team in 2022 and expanded our sales team in early 2023.
Added
Deposits Si on machined gas turbine jet engine CMC components and other OEM components. - Chemical Vapor Deposition/ Chemical Vapor Infiltration production coating system for multi-layer CMC coatings on SiC fiber preforms. - Chemical Vapor Deposition production coating system for high volume low cost deposition of SiC coating.
Removed
We received two system orders in 2021 to deposit coatings onto powders used in silicon-graphite anodes, including a production system and a second for research and material development. We received additional system orders from this customer in 2023 that were completed during 2023.
Added
Some applications include CNT and infiltrated carbon/CVI based battery material and CNF capacitors for 5G technology. 8 To support new emerging applications, we provide equipment to and collaborate with laboratory scientists to bring state-of-the-art processes from the research laboratory into production.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeInsufficient orders would result in under-utilization of our manufacturing facilities and infrastructure and will negatively affect our financial position and results of operations. We might require additional financing. Our continuing operating losses may make it difficult for us to obtain financing on commercially reasonable terms, if at all.
Biggest changeWhether and to what extent our customers place orders for any specific products, and the mix and quantities of products included in those orders are factors beyond our control. Insufficient orders would result in under-utilization of our manufacturing facilities and infrastructure and will negatively affect our financial position and results of operations. We might require additional financing.
Our manufacturing facilities are located in Central Islip, New York and Saugerties, New York could be affected by multiple weather risks, most notably hurricanes for our Central Islip facility which is located on Long Island, New York.
Our manufacturing facilities are in Central Islip, New York and Saugerties, New York and could be affected by multiple weather risks, most notably hurricanes for our Central Islip facility which is located on Long Island, New York.
The industries in which we operate are characterized by ongoing factors, including: ● global and regional economic developments and conditions including in Europe and Asia; ● governmental budgetary and political constraints; ● changes in the capacity utilization and production volume for research and industrial applications in the markets in which we operate; ● the profitability and capital resources of manufacturers in the markets in which we operate; ● changes in technology; ● the availability of funds for research and development; and ● the effects of supply chain disruptions.
The industries in which we operate are characterized by ongoing factors, including: ● global and regional economic developments and conditions including in Europe and Asia; ● governmental budgetary and political constraints; 17 ● changes in the capacity utilization and production volume for research and industrial applications in the markets in which we operate; ● the profitability and capital resources of manufacturers in the markets in which we operate; ● changes in technology; ● the availability of funds for research and development; and ● the effects of supply chain disruptions.
If an export regulatory body determines that any of our shipments violate applicable export regulations, we could be fined significant sums and our export capabilities could be restricted, which could have a material adverse impact on our business. 22 Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
If an export regulatory body determines that any of our shipments violate applicable export regulations, we could be fined significant sums and our export capabilities could be restricted, which could have a material adverse impact on our business. Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
The length of the sales cycle depends on the size and complexity of the project, the customer’s in-depth evaluation of our products, and, in some cases, the protracted nature of a bidding process. 15 Because a significant portion of our operating expenses are fixed, we have and may continue to incur substantial expense before we earn associated revenue.
The length of the sales cycle depends on the size and complexity of the project, the customer’s in-depth evaluation of our products, and, in some cases, the protracted nature of a bidding process. Because a significant portion of our operating expenses are fixed, we have and may continue to incur substantial expense before we earn associated revenue.
If customer cancellations occur, they could result in the loss of anticipated sales without allowing us sufficient time to reduce our operating expenses. If any of our customers cancel or fail to accept a large system order, our financial position and results of operations could be materially and adversely affected.
If customer cancellations occur, they could result in the loss of anticipated sales without allowing us sufficient time to reduce our operating expenses. 16 If any of our customers cancel or fail to accept a large system order, our financial position and results of operations could be materially and adversely affected.
Since part of our growth strategy is based on sales of research equipment to produce carbon nanotubes and the sale of such materials, the determination that these materials are harmful could adversely affect the expansion of our business. Risk related to our stock The price of our common shares is volatile and could decline significantly.
Since part of our growth strategy is based on sales of research equipment to produce carbon nanotubes and the sale of such materials, the determination that these materials are harmful could adversely affect the expansion of our business. 27 Risk related to our stock The price of our common shares is volatile and could decline significantly.
If the availability of funds or the demand for capital equipment in the markets in which we operate declines, the demand for our products would also decline and our financial position and results of operations could be harmed. 16 The demand for our products and the profitability of our products can change significantly from period to period because of numerous factors.
If the availability of funds or the demand for capital equipment in the markets in which we operate declines, the demand for our products would also decline and our financial position and results of operations could be harmed. The demand for our products and the profitability of our products can change significantly from period to period because of numerous factors.
There is a risk that larger, better financed competitors will develop and market more advanced products than those we currently offer, or that competitors with greater financial resources may decrease prices, thereby putting us under financial pressure. 18 Risks related to manufacturing and our supply chain Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs, while the failure to estimate customer demand accurately could result in excess or obsolete inventory.
There is a risk that larger, better financed competitors will develop and market more advanced products than those we currently offer, or that competitors with greater financial resources may decrease prices, thereby putting us under financial pressure. 19 Risks related to manufacturing and our supply chain Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs, while the failure to estimate customer demand accurately could result in excess or obsolete inventory.
Our business could be seriously harmed if we are unable to sell our products at favorable prices, or if our products are not accepted by the markets in which we operate. 21 We have made investments in our proprietary technologies.
Our business could be seriously harmed if we are unable to sell our products at favorable prices, or if our products are not accepted by the markets in which we operate. We have made investments in our proprietary technologies.
In addition, we may incur higher operating expenses during the period required to correct the problem. 17 We may not be able to keep pace with the rapid change in the technology we use in our products.
In addition, we may incur higher operating expenses during the period required to correct the problem. We may not be able to keep pace with the rapid change in the technology we use in our products.
Our success depends on our ability to identify, hire, train and retain qualified engineering personnel with experience in equipment design. Specifically, we need to continue to attract and retain mechanical, electrical, software and field service engineers to work with our direct sales force to technically qualify and perform on new sales opportunities and orders, and to demonstrate our products. 27
Our success depends on our ability to identify, hire, train and retain qualified engineering personnel with experience in equipment design. Specifically, we need to continue to attract and retain mechanical, electrical, software and field service engineers to work with our direct sales force to technically qualify and perform on new sales opportunities and orders, and to demonstrate our products. 28
While we have taken actions to mitigate the potential negative impacts to our revenue and profitability, there can be no assurance of the ultimate impact and the length of time that the supply chain factors may impact our revenues and profitability. 19 Inflation has and may continue to adversely affect our business, financial condition, and results of operations.
While we have taken actions to mitigate the potential negative impacts to our revenue and profitability, there can be no assurance of the ultimate impact and the length of time that the supply chain factors, including tariffs, may impact our revenues and profitability. Inflation has and may continue to adversely affect our business, financial condition, and results of operations.
The health and environmental effects of nanotechnology are unknown. There is no scientific agreement on the health effects of nanomaterials in general and carbon nanotubes but some scientists believe that in some cases, nanomaterials may be hazardous to an individual’s health or to the environment.
There is no scientific agreement on the health effects of nanomaterials in general and carbon nanotubes but some scientists believe that in some cases, nanomaterials may be hazardous to an individual’s health or to the environment.
The market price of our common shares could fluctuate significantly in response to several factors, including, among others: ● difficult macroeconomic conditions, unfavorable geopolitical events, and general stock market uncertainties, such as those occasioned by a global liquidity crisis and a failure of large financial institutions; ● an offering of our common shares to raise capital; ● receipt of large orders or cancellations of orders for our products; ● issues associated with the performance and reliability of our products; ● actual or anticipated variations in our results of operations; ● announcements of financial developments or technological innovations; ● changes in recommendations and/or financial estimates by investment research analysis; ● strategic transactions, such as acquisitions, divestitures, or spin-offs; ● offerings of our securities; ● the occurrence of major catastrophic events; and ● volatile trading volumes. 26 Significant price and value fluctuations have occurred with respect to our publicly traded securities and those of technology companies generally.
The market price of our common shares could fluctuate significantly in response to several factors, including, among others: ● difficult macroeconomic conditions, unfavorable geopolitical events, and general stock market uncertainties, such as those occasioned by a global liquidity crisis and a failure of large financial institutions; ● an offering of our common shares to raise capital; ● receipt of large orders or cancellations of orders for our products; ● issues associated with the performance and reliability of our products; ● actual or anticipated variations in our results of operations; ● announcements of financial developments or technological innovations; ● changes in recommendations and/or financial estimates by investment research analysis; ● strategic transactions, such as acquisitions, divestitures, or spin-offs; ● offerings of our securities; ● the occurrence of major catastrophic events; and ● volatile trading volumes.
Acquisitions involve numerous risks, which include but are not limited to: ● difficulties and increased costs in connection with the integration of the personnel, operations, technologies, services and products of the acquired companies into our existing facilities and operations; ● diversion of management’s attention from other operational matters; ● failure to commercialize the acquired technology; ● the potential loss of key employees of the acquired companies; ● lack of synergy, or inability to realize expected synergies, resulting from the acquisitions; ● the risk that the issuance of our common stock, if any, in an acquisition or merger could be dilutive to our shareholders; ● the inability to obtain and protect intellectual property rights in key technologies; and ● the acquired assets becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired assets.
In the past, we have made acquisitions of other businesses with synergistic products, services and technologies, and plan to continue to do so in the future. 26 Acquisitions involve numerous risks, which include but are not limited to: ● difficulties and increased costs in connection with the integration of the personnel, operations, technologies, services and products of the acquired companies into our existing facilities and operations; ● diversion of management’s attention from other operational matters; ● failure to commercialize the acquired technology; ● the potential loss of key employees of the acquired companies; ● lack of synergy, or inability to realize expected synergies, resulting from the acquisitions; ● the risk that the issuance of our common stock, if any, in an acquisition or merger could be dilutive to our shareholders; ● the inability to obtain and protect intellectual property rights in key technologies; and ● the acquired assets becoming impaired as a result of technological advancements or worse-than-expected performance of the acquired assets.
We may, in the future, identify deficiencies in controls over financial reporting. While we have concluded that, as of December 31, 2023, our disclosure and reporting controls were effective as included in Part II, Item 9A, there can be no assurance that material weaknesses will not be identified in the future.
While we have concluded that, as of December 31, 2024, our disclosure and reporting controls were effective as included in Part II, Item 9A, there can be no assurance that material weaknesses will not be identified in the future.
If we do identify material weaknesses in our internal controls over financial reporting in the future, our ability to analyze, record and report financial information free of material misstatements, and to prepare our financial statements within the time periods specified by the rules and forms of the SEC, may likely be adversely affected. 24 We have and may continue to be required to take impairment charges on assets.
If we do identify material weaknesses in our internal controls over financial reporting in the future, our ability to analyze, record and report financial information free of material misstatements, and to prepare our financial statements within the time periods specified by the rules and forms of the SEC, may likely be adversely affected.
If we are not able to negotiate the necessary licenses on commercially reasonable terms or successfully defend our position, our ability to utilize such intellectual property could substantially inhibit our access to certain markets and our ability to compete in these markets which could have a material adverse effect on our financial position and results of operations.
If we are not able to negotiate the necessary licenses on commercially reasonable terms or successfully defend our position, our ability to utilize such intellectual property could substantially inhibit our access to certain markets and our ability to compete in these markets which could have a material adverse effect on our financial position and results of operations. 23 We may be unable to obtain required export licenses for the sale of our products.
In addition, if we need to rapidly increase our business and manufacturing capacity to meet increases in demand or expedited shipment schedules, this may exacerbate any interruptions in our manufacturing operations and supply chain and the associated effect on our working capital. We are presently experiencing supply chain delays and cost increases that may adversely affect our business.
In addition, if we need to rapidly increase our business and manufacturing capacity to meet increases in demand or expedited shipment schedules, this may exacerbate any interruptions in our manufacturing operations and supply chain and the associated effect on our working capital. 20 Supply chain delays and cost increases that may adversely affect our business, including potential cost increases from the imposition of tariffs.
While we regularly evaluate the nature and limits of our insurance coverages, there can be no assurance that our existing policies of insurance will be adequate to protect us from all liabilities that we might incur in connection with the manufacture and sale of our products in the event of a successful product liability claim or series of successful claims against us. 25 The health and environmental effects of nanotechnology are unknown, and this uncertainty could adversely affect the expansion of our business.
While we regularly evaluate the nature and limits of our insurance coverages, there can be no assurance that our existing policies of insurance will be adequate to protect us from all liabilities that we might incur in connection with the manufacture and sale of our products in the event of a successful product liability claim or series of successful claims against us.
We do, however, maintain a backup power source at our Central Islip facility, are working to establish deeper redundancies between our New York facilities to help mitigate this risk. 20 Risks related to cybersecurity, intellectual property and regulatory compliance If we are subject to cyberattacks, we could incur substantial costs and, if such attacks are successful, we could incur significant liabilities, reputational harm, and disruption to our operations.
We do, however, maintain a backup power source at our Central Islip facility. Risks related to cybersecurity, intellectual property and regulatory compliance If we are subject to cyberattacks, we could incur substantial costs and, if such attacks are successful, we could incur significant liabilities, reputational harm, and disruption to our operations.
During 2023, three customers represented 14.3%, 13.5% and 10.9% of our total revenues. The loss of a major customer would have to be replaced by others, and our inability to do so may have a material adverse effect on our business and financial condition.
During 2024, one customer represented 29.5% of our total revenues. The loss of a major customer would have to be replaced by others, and our inability to do so may have a material adverse effect on our business and financial condition.
We may be unable to obtain required export licenses for the sale of our products. Whether with respect to sales to customers located in China or otherwise, products which (i) are manufactured in the United States, (ii) incorporate controlled U.S. origin parts, technology, or software, or (iii) are based on U.S. technology, are subject to the U.S.
Whether with respect to sales to customers located in China or otherwise, products which (i) are manufactured in the United States, (ii) incorporate controlled U.S. origin parts, technology, or software, or (iii) are based on U.S. technology, are subject to the U.S.
We can provide no assurance, that these objectives can be met in a timely manner in response to changes within the industry cycles in which we operate. If we fail to respond to these cyclical changes, our business could be seriously harmed.
We can provide no assurance, that these objectives can be met in a timely manner in response to changes within the industry cycles in which we operate.
In addition, breaches of our security measures and the unapproved dissemination of proprietary information or sensitive data about us, our customer, or other third parties, could expose us, our customers, or other third parties to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation, or otherwise harm our business.
In addition, breaches of our security measures and the unapproved dissemination of proprietary information or sensitive data about us, our customer, or other third parties, could expose us, our customers, or other third parties to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation, or otherwise harm our business. 22 Our financial position and results of operations may be materially harmed if we are unable to recoup our investment in research and development.
Our failure or inability to comply with existing or future environmental regulations could result in significant remediation liabilities, the imposition of fines or the suspension or termination of development, manufacturing, or use of certain of our products, or affect the operation of our facilities, use or value of our real property, each of which could damage our financial position and results of operations.
Our failure or inability to comply with existing or future environmental regulations could result in significant remediation liabilities, the imposition of fines or the suspension or termination of development, manufacturing, or use of certain of our products, or affect the operation of our facilities, use or value of our real property, each of which could damage our financial position and results of operations. 24 Regulations related to conflict minerals will force us to incur additional expenses, may make our supply chains more complex, and may result in damage to our relationships with customers.
We are required to assess our long-lived assets, including acquired intangible assets and property, plant and equipment, for recoverability and impairment whenever there are indicators or impairment, such as an adverse change in business climate.
We have and may continue to be required to take impairment charges on assets. We are required to assess our long-lived assets, consisting of our property, plant and equipment, for recoverability and impairment whenever there are indicators or impairment, such as an adverse change in business climate.
The time required to design, order parts and materials and to manufacture, assemble and install our products, may in turn lead to delays or shortages in the availability of some products.
We provide complex products that often require substantial lead-time for design, ordering parts and materials, and for assembly and installation. The time required to design, order parts and materials and to manufacture, assemble and install our products, may in turn lead to delays or shortages in the availability of some products.
The price of our common shares is likely to be volatile in the future. In the past, securities class action litigation often has been brought against a company following periods of volatility in the market price of its securities.
Significant price and value fluctuations have occurred with respect to our publicly traded securities and those of technology companies generally. The price of our common shares is likely to be volatile in the future. In the past, securities class action litigation often has been brought against a company following periods of volatility in the market price of its securities.
We evaluate potential acquisitions of businesses and technologies, and we consider targeted acquisitions that expand our core competencies to be an important part of our future growth strategy. In the past, we have made acquisitions of other businesses with synergistic products, services and technologies, and plan to continue to do so in the future.
We evaluate potential acquisitions of businesses and technologies, and we consider targeted acquisitions that expand our core competencies to be an important part of our future growth strategy.
At certain times, increases in demand for capital equipment can result in longer lead-times for many important system components, which may cause delays in meeting shipments to our customers. The delay in the shipment of even a few systems could cause significant variations in our quarterly revenue, operating results and the market value of our common stock.
At certain times, increases in demand for capital equipment can result in longer lead-times for many important system components, which may cause delays in meeting shipments to our customers.
These requirements could limit the pool of suppliers that can provide conflict-free minerals, and we may be unable to obtain conflict-free minerals at competitive prices, which could increase our costs and adversely affect our manufacturing operations and our profitability. 23 Risks related to financial and accounting matters Cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues.
These requirements could limit the pool of suppliers that can provide conflict-free minerals, and we may be unable to obtain conflict-free minerals at competitive prices, which could increase our costs and adversely affect our manufacturing operations and our profitability.
Periodic local or international economic downturns, trade balance issues and political instability, as well as fluctuations in interest and currency exchange rates, could negatively affect our business and results of operations. The majority of our sales to date have been primarily priced in U.S. dollars.
Periodic local or international economic downturns, trade balance issues and political instability including trade disruptions and the imposition of tariffs, as well as fluctuations in interest and currency exchange rates. Any significant increases in tariffs on a broad array of goods, could negatively affect our business and results of operations.
Our manufacturing facilities are in Central Islip, New York and Saugerties, New York could be affected due to multiple weather risks, including risks to our Central Islip facility from hurricanes and similar phenomena.
The delay in the shipment of even a few systems could cause significant variations in our quarterly revenue, operating results and the market value of our common stock. 21 Our manufacturing facilities in Central Islip, New York and Saugerties, New York could be affected due to multiple weather risks, including risks to our Central Islip facility from hurricanes and similar phenomena.
While our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future. Such risks include possible losses due to both currency exchange rate fluctuations and from possible social and political instability.
The majority of our sales to date have been primarily priced in U.S. dollars. While our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future.
If adequate financing is not available when required on commercially reasonable terms, if at all, our business and operations may be materially and adversely affected. In addition, we could issue additional common stock, to fund our growth initiatives and operations which could materially dilute the ownership interests of the then existing shareholders.
In addition, we could issue additional common stock, to fund our growth initiatives and operations which could materially dilute the ownership interests of the then existing shareholders. We may, in the future, identify deficiencies in controls over financial reporting.
We do not have long-term volume production contracts with our customers, and we do not control the timing or volume of orders placed by our customers. Whether and to what extent our customers place orders for any specific products, and the mix and quantities of products included in those orders are factors beyond our control.
If we fail to respond to these cyclical changes, our business could be seriously harmed. 25 We do not have long-term volume production contracts with our customers, and we do not control the timing or volume of orders placed by our customers.
Removed
Our reputation and operating performance may be negatively affected if our products are not timely delivered. We provide complex products that often require substantial lead-time for design, ordering parts and materials, and for assembly and installation.
Added
Such risks include possible losses due to both currency exchange rate fluctuations and from possible social and political instability. United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business. There have been significant changes and proposed changes in recent years to U.S. trade policies, tariffs, and treaties affecting imports.
Removed
Our financial position and results of operations may be materially harmed if we are unable to recoup our investment in research and development.
Added
Any significant increases in tariffs on a broad array of important goods, could negatively affect our business and results of operations. In response to the tariffs announced by the U.S., China and other countries have imposed or proposed additional tariffs on certain exports from the United States.
Removed
We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible.
Added
There is current uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs and we cannot predict whether, and to what extent, U.S. trade policies will change in the future, including as a result of changes by the new U.S. presidential administration.
Removed
Regulations related to conflict minerals will force us to incur additional expenses, may make our supply chains more complex, and may result in damage to our relationships with customers.
Added
A significant proportion of our materials and components are manufactured in China and other regions outside of the United States. Accordingly, such U.S. policy changes have made it and may continue to make it difficult or more expensive for us to obtain certain products manufactured outside the United States, which could affect our revenue and profitability.
Added
Any of these factors could depress economic activity and restrict our access to suppliers or customers and could have a material adverse effect on our business, financial condition, and results of operations. 18 Our reputation and operating performance may be negatively affected if our products are not timely delivered.
Added
In addition, political and trade tensions have resulted in the imposition of tariffs which may affect our supply chain and the costs of components and materials. . Any significant increases in tariffs on components and materials that we purchase could negatively affect our business and results of operations.
Added
Risks related to financial and accounting matters Cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues.
Added
Our continuing operating losses may make it difficult for us to obtain financing on commercially reasonable terms, if at all. If adequate financing is not available when required on commercially reasonable terms, if at all, our business and operations may be materially and adversely affected.
Added
The health and environmental effects of nanotechnology are unknown, and this uncertainty could adversely affect the expansion of our business. The health and environmental effects of nanotechnology are unknown.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo manage our material risks from cybersecurity threats and to protect against, detect, and prepare to respond to cybersecurity incidents, we undertake the below listed activities: ● Monitor emerging data protection laws and implement changes to our compliance processes; ● Conduct annual cybersecurity assessments for employees who use our system to evaluate training needs; ● Conduct onboarding and cyber security training for all employees on an ongoing basis; ● Conduct regular phishing email simulations for all employees; and ● Carry cybersecurity risk insurance that protects against the potential losses from a cybersecurity incident.
Biggest changeTo manage our material risks from cybersecurity threats and to protect against, detect, and prepare to respond to cybersecurity incidents, we undertake the below listed activities: ● Monitor emerging data protection laws and implement changes to our compliance processes; ● Conduct periodic cybersecurity assessments for employees who use our system to evaluate training needs; ● Conduct onboarding and cyber security training for all employees on an ongoing basis; ● Conduct regular phishing email simulations for all employees; and ● Carry cybersecurity risk insurance that protects against the potential losses from a cybersecurity incident.
We describe whether and how risks from cybersecurity threats have or are reasonably likely to affect our financial position, results of operations, and cash flows under the heading “Risk related to cybersecurity, intellectual property and regulatory compliance,” which is included as part of Item 1A.
We decide whether and how risks from cybersecurity threats have or are reasonably likely to affect our financial position, results of operations, and cash flows under the heading “Risk related to cybersecurity, intellectual property and regulatory compliance,” which is included as part of Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters, research and development, manufacturing and process coating facilities as of December 31, 2023 are as follows: Owned Locations Size (sf) Segment Mortgage/Loan Principal use Central Islip, NY 128,000 CVD Equipment / CVD Materials No Corporate headquarters; R&D; Manufacturing Saugerties, NY 22,000 SDC No Manufacturing; Administration
Biggest changeItem 2. Properties Our corporate headquarters, research and development, manufacturing and process coating facilities as of December 31, 2024 are as follows: Owned Locations Size (sf) Segment Mortgage/Loan Principal use Central Islip, NY 128,000 CVD Equipment / MesoScribe No Corporate headquarters; R&D; Manufacturing Saugerties, NY 22,000 SDC No Manufacturing; Administration

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of March 25, 2024, there were approximately 55 holders of record and approximately 3,544 beneficial owners of our common stock, and the closing sales price of our common stock as reported on the NASDAQ Capital Market was $4.93.
Biggest changeStockholders As of March 18, 2025, there were approximately 55 holders of record and approximately 3,544 beneficial owners of our common stock. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
Our dividend policy with respect to our common stock is within the discretion of the Board of Directors and its policy with respect to dividends in the future will depend on numerous factors, including earnings, financial requirements, and general business conditions. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
Our dividend policy with respect to our common stock is within the discretion of the Board of Directors and its policy with respect to dividends in the future will depend on numerous factors, including earnings, financial requirements, and general business conditions.
Dividend Policy We have never paid dividends on our common stock and we do not anticipate paying dividends on common stock at the present time. We currently intend to retain earnings, if any, for use in our business. There can be no assurance that we will ever pay dividends on our common stock.
We currently intend to retain earnings, if any, for use in our business. There can be no assurance that we will ever pay dividends on our common stock.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is traded on the NASDAQ Capital Market under the symbol “CVV”. Dividend Policy We have never paid dividends on our common stock, and we do not anticipate paying dividends on common stock at the present time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2023 December 31, 2022 Change Percent Revenue $ 24,109 $ 25,813 $ (1,704 ) (7 %) Cost of revenue 19,038 19,186 (148 ) (1 %) Gross profit 5,071 6,627 (1,556 ) (24 %) Operating expenses Research and development 2,596 1,906 690 36 % Selling 1,632 1,216 416 34 % General and administrative 5,451 5,328 123 2 % Loss on disposition of Tantaline 162 - 162 * Impairment charge 111 - 111 * Total operating expenses 9,952 8,450 1,502 18 % Operating loss (4,881 ) (1,823 ) (3,058 ) (168 %) Other income (expense): Interest income 577 162 415 256 % Interest expense (23 ) (8 ) (15 ) 188 % Employee retention credits - 1,529 (1,529 ) (100 %) Foreign exchange loss 42 (95 ) 137 * Other income 91 15 76 * Total other income, net 687 1,603 (916 ) (57 %) Loss before income tax (4,194 ) (220 ) (3,974 ) * Income tax (benefit) expense (14 ) 4 (18 ) * Net loss $ (4,180 ) $ (224 ) $ (3,956 ) * * Not meaningful 32 Revenue December 31, 2023 December 31, 2022 Change Percent CVD Equipment $ 16,334 $ 16,674 $ (340 ) (2 %) SDC 7,139 6,541 598 9 % CVD Materials 1,184 3,171 (1,987 ) (63 %) Intersegment sales elimination (548 ) (573 ) 25 * Total $ 24,109 $ 25,813 $ (1,704 ) (7 %) * Not meaningful Our revenue for the year ended December 31, 2023 was $24.1 million compared to $25.8 million for the year ended December 31, 2022, a decrease of $1.7 million or 7%.
Biggest changeDecember 31, 2024 December 31, 2023 Change Percent Revenue $ 26,876 $ 24,109 $ 2,767 11.5 % Cost of revenue 20,545 19,038 1,507 7.9 % Gross profit 6,331 5,071 1,260 24.8 % Operating expenses Research and development 2,627 2,596 31 1.2 % Selling 1,656 1,632 24 1.5 % General and administrative 5,181 5,451 (270 ) (5.0 %) Gain on sales of equipment (717 ) - (717 ) * Loss on disposition of Tantaline - 162 (162 ) * Impairment charge - 111 (111 ) * Total operating expenses 8,747 9,952 (1,205 ) (12.1 %) Operating loss (2,416 ) (4,881 ) 2,465 50.5 % Other income (expense): Interest income 559 577 (18 ) (3.1 %) Interest expense (19 ) (23 ) 4 (17.4 %) Foreign exchange income - 42 (42 ) * Other income 2 91 (89 ) * Total other income, net 542 687 (145 ) (21.1 %) Loss before income tax (1,874 ) (4,194 ) 2,320 (55.3 %) Income tax expense (benefit) 24 (14 ) 38 * Net loss $ (1,898 ) $ (4,180 ) $ 2,282 54.6 % * Not meaningful 33 Revenue December 31, 2024 December 31, 2023 Change Percent CVD Equipment $ 18,288 $ 16,334 $ 1,954 12.0 % SDC 8,444 7,139 1,305 18.3 % MesoScribe 778 722 56 7.8 % Tantaline - 462 (462 ) (100.0 %) Intersegment sales elimination (634 ) (548 ) (86 ) 15.7 % Total $ 26,876 $ 24,109 $ 2,767 11.5 % Our revenue for the year ended December 31, 2024 was $26.9 million compared to $24.1 million for the year ended December 31, 2023, an increase of $2.8 million or 11.5%.
If the estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and can be reasonably estimated. 37 We have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years.
If the estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and can be reasonably estimated. We have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years.
Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.
Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment. 38
GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S.
Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter. 33 Gross Profit Gross profit for the year ended December 31, 2023 amounted to $5.1 million, with a gross profit margin of 21%, compared to a gross profit of $6.6 million and a gross profit margin of 26% for the year ended December 31, 2022.
Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter. 34 Gross Profit Gross profit for the year ended December 31, 2024 amounted to $6.3 million, with a gross profit margin of 23.6%, compared to a gross profit of $5.1 million and a gross profit margin of 21.0% for the year ended December 31, 2023.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. 37 We consider the following estimates within our significant accounting policies to be critical because of their complexity and the high degree of judgment involved in maintaining them.
One aerospace customer represented 49.2% of our backlog as of December 31, 2023. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition.
As of December 31, 2024, one industrial customer represented 41.8% of our backlog and one aerospace customer represented 27.1% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition.
Our order backlog at December 31, 2023 was approximately $18.4 million as compared to December 31, 2022 of $17.8 million. Our order backlog at December 31, 2023 consists of approximately $16.3 million related to remaining performance obligations of contracts in progress and the balance of approximately $2.1 million represents other orders received from customers.
Our order backlog at December 31, 2024 was approximately $19.4 million as compared to December 31, 2023 of $18.4 million. Our order backlog at December 31, 2024 consists of approximately $17.4 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $1.9 million represents other orders received from customers.
Our cash and cash equivalents at December 31, 2023 and 2022 were $14.0 million and $14.4 million, respectively.
Our cash and cash equivalents at December 31, 2024 and 2023 were $12.6 million and $14.0 million, respectively.
The systems will be used by our customer to manufacture CMCs for their gas turbine jet engines. ● Increased our backlog from $17.8 million to $18.4 million. ● Cash balance at December 31, 2023 was $14.0 million. 30 Business Update Our core strategy is to focus on growth market applications in end-user markets related to the “electrification of everything,” aerospace and industrial applications.
This is the fifth system purchased by this customer that will be used by our customer to manufacture CMCs for their gas turbine jet engines. ● Our backlog increased from $18.4 million to $19.4 million, an increase of $0.8 million or 4.9%. ● Cash balance at December 31, 2024 was $12.6 million as compared to $14.0 million at December 31, 2023 31 Business Update Our core strategy is to focus on growth end markets in applications related to aerospace, microelectronics including markets related to the “electrification of everything,” and industrial applications.
With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials or CMCs that will be used in next generation jet engines with the objective of reducing jet fuel consumption and contributing to the decarbonization of that industry.
With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and to produce specialty coatings for advanced high temperature environments.
Under this method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
We recognize revenue over time by using an input method based on costs incurred as it depicts our progress toward satisfaction of the performance obligation. Under this method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
We will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs. 36 Critical Accounting Policies and Estimates Use of Estimates This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S.
Critical Accounting Estimates Use of Estimates This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP.
Income Taxes Income tax (benefit) expense for the years ended December 31, 2023 and 2022, was ($14,000) and $4,000, respectively. We continue to evaluate for potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.
We continue to evaluate for potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.
To remain competitive in the acquisition and retention of our employees, we have reviewed and adjusted salaries and implemented bonus incentives to mitigate the potential negative impacts of inflation on our employees. 35 Liquidity and Capital Resources As of December 31, 2023, we had aggregate working capital of $14.3 million compared to aggregate working capital of $15.5 million at December 31, 2022.
To remain competitive in the acquisition and retention of our employees, we have reviewed and adjusted salaries and implemented bonus incentives to mitigate the potential negative impacts of inflation on our employees.
General and Administrative General and administrative expenses for the year ended December 31, 2023 were $5.5 million or 22.6% of revenue compared to $5.3 million or 20.6% of revenue for the year ended December 31, 2022, an increase of $0.1 million.
General and Administrative General and administrative expenses for the year ended December 31, 2024 were $5.2 million or 19.3% of revenue compared to $5.4 million or 22.6% of revenue for the year ended December 31, 2023, a decrease of $0.3 million. The decrease in 2024 was due to lower employee compensation and lower professional fees.
The decrease in revenue versus the prior year period was primarily attributable to decreased revenue of $0.3 million from the CVD Equipment segment related to lower equipment sales and spare parts, $2.0 million decrease from our CVD Materials segment due to the disposition of Tantaline and wind down of MesoScribe’s operations, offset by a $0.6 million increase in revenue from our SDC segment due to higher demand.
The increase in revenue versus the prior year period was primarily attributable to higher revenue of $1.9 million from our CVD Equipment segment and a $1.3 million increase in revenue from our SDC segment, offset by lower Tantaline revenues of $0.5 million that was sold in May 2023.
Net cash used in operating activities during 2023 was $0.2 million and was principally due to the net loss of $4.2 million, decrease in contract assets of $0.6 million, increase in inventories of $1.9 million, decrease in accrued expenses of $0.7 million (primarily due to payment of 2022 bonus) offset by a decrease in accounts receivable of $1.8 million, collection of employee retention credit receivable of $1.5 million, an increase in contract liabilities of $0.9 million and non-cash items of $2.0 million.
Net cash used in operating activities during 2024 was $1.5 million and was principally due to the net loss of $1.9 million and reductions in contract assets and liabilities of $2.4 million, offset by a reduction in inventory of $0.6 million, and non-cash items of $2.6 million including a provision for excess and obsolete inventory of $1.6 million.
The revenue contributed by the CVD Equipment segment for the year ended December 31, 2023 represented 67% of overall revenue as compared to 65% of overall revenue for the year ended December 31, 2022. The decrease in revenues of $0.3 million or 2% resulted from lower PVT150 revenues offset by an increase in aerospace revenue.
The revenue contributed by our CVD Equipment segment for the year ended December 31, 2024 of $18.3 million represented 68.1% of overall revenue as compared to $16.2 million (net of intersegment sales of $0.1 million) or 67.8% of overall revenue for the year ended December 31, 2023.
Selling Selling expenses were $1.6 million or 6.8% of the revenue for the year ended December 31, 2023 as compared to $1.2 million or 4.7% for the year ended December 31, 2022. The increase in 2023 was primarily the result of increased personnel and employee-related costs during to support increased marketing efforts.
Selling Selling expenses were $1.7 million or 6.2% of the revenue for the year ended December 31, 2024 as compared to $1.6 million or 6.8% for the year ended December 31, 2023. There were no significant changes in selling expenses as compared to the prior year.
Research and Development For the year ended December 31, 2023, research and development expenses were $2.6 million, or 10.8% of revenue as compared to $1.9 million, or 7.4% for the year ended December 31, 2022. The increase in 2023 was the result of increased personnel and employee-related costs to develop new products for key growth markets.
Research and Development For the year ended December 31, 2024, research and development expenses were $2.6 million, or 9.8% of revenue as compared to $2.6 million, or 10.8% for the year ended December 31, 2023. There were no significant changes in research and development expenses as compared to the prior year.
The revenue contributed by the SDC segment for the year ended December 31, 2023 represented 28% of overall revenue as compared to 25% of overall revenue for the year ended December 31, 2022.
The revenue contributed by our SDC segment for the year ended December 31, 2024 of $7.8 million (net of intersegment sales of $0.6 million) represented 29.1% of overall revenue as compared to $6.7 million (net of intersegment sales of $0.4 million) or 27.8% of overall revenue for the year ended December 31, 2023.
In February 2024, we received a multisystem order for approximately $10 million that will be used for depositing a silicon carbide protective coating on OEM components. 31 Results of Operations Years Ended December 31, 2023 and 2022 The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).
The order cycle to manufacture and test a system also will vary from six to eighteen months for our CVD Equipment segment and two to twelve months for our SDC segment, depending on system complexity and magnitude of the system. 32 Results of Operations Years Ended December 31, 2024 and 2023 The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for the years ended December 31, 2024, and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).
The phrase “electrification of everything” refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles or EVs, and many other applications.
The phrase “electrification of everything” refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles (“EVs”), and many other applications. Our current strategy yielded multisystem orders of PVT150 equipment in 2023 and 2022 that were delivered to one company that planned to use our systems to manufacture silicon carbide wafers.
For information on the Company’s significant accounting policies and estimates refer to Note 2 “Summary of Significant Accounting Policies” including the “Use of Estimates” section, in the consolidated financial statements. Revenue Recognition We design, manufacture, and sell custom chemical vapor deposition equipment through contractual agreements.
See Note 2 – “Summary of Significant Accounting Policies” of our Consolidated Financial Statements for additional information regarding our accounting policies Revenue Recognition We design, manufacture, and sell custom chemical vapor deposition equipment through contractual agreements. These system sales require us to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance.
We launched our marketing campaign for the PVT150 in the latter part of 2022 as we seek orders from other potential customers. We also developed and launched our new PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers in 2023. In February 2024, we received our first order for a PVT200.
In February 2024, we received an order from an additional customer for our new PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. This represents our second customer for our PVT equipment. This customer plans to evaluate our equipment for potential additional purchases of PVT equipment.
Revenue for our SDC segment increased $0.6 million or 9% due to increased orders and demand for the SDC’s products during 2023 as compared to the prior year.
External revenue for our SDC segment increased by $1.1 million or 16.4% due to higher demand for gas delivery system products as compared to the prior period.
The revenue contributed by the CVD Materials segment for the year ended December 31, 2023 represented 5% of our overall revenue as compared to 12% of overall revenue for the year ended December 31, 2022 The decrease of $2.0 million was principally due to the disposition of Tantaline in May 2023 and the wind down of MesoScribe’s operations.
The revenue contributed by our MesoScribe segment for the year ended December 31, 2024 of $0.8 represented 2.9% of our overall revenue as compared to $0.7 million or 3.0% of overall revenue for the year ended December 31, 2023. MesoScribe fulfilled its final orders during 2024 and ceased operations.
Loss on Disposition of Tantaline This expense represents the net loss on the sale of our Tantaline subsidiary including professional fees. 34 Impairment Charge This expense represents the loss on the impairment of certain assets of MesoScribe based on the decision to wind down its operations.
Impairment Charge This expense represents the loss on the impairment of certain assets of MesoScribe based on the decision to wind down its operations made in 2023. Other Income, Net Other income, net was $0.5 million for the year ended December 31, 2024 as compared to other income, net of $0.7 million for the year ended December 31, 2023.
Revenue from one aerospace customer in 2023 represented 13.5% of our total revenues and 20.1% of CVD Equipment segment revenues. Sales of PVT150 systems made to one customer in 2023 and 2022 represented 14.3% and 29.2%, respectively, of our total revenues and 21.2% and 45.2%, respectively, of CVD Equipment segment revenues.
Revenue from one aerospace customer for the year ended December 31, 2024 represented 29.5% of our total revenues and 43.4% of CVD Equipment segment revenues.
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To learn more about CVD’s systems and offerings, visit www.cvdequipement.com.
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During 2024: ● Revenue increased by $2.8 million or 11.5% as compared to the prior year due to increases in revenues from aerospace and industrial contracts in progress and our SDC segment that was partially offset by lower revenues of spare parts and lower revenues from Tantaline that was sold in May 2023. ● Gross margin increased by $1.3 million or 24.8% as compared to the prior year due to higher revenues and improved margins on contracts in process offset by a $1.3 million non-cash charge to reduce certain PVT inventory to net realizable value. ● Total bookings for 2024 were approximately $28.1 million as compared to $25.8 million in 2023, an increase of $2.3 million or 8.9%. ● Bookings in 2024 included a $10.0 million multisystem order from an industrial customer that will be used to deposit a silicon carbide protective coating on OEM components. ● Bookings in 2024 also included a $3.5 million order from a major aerospace company for the production of CVI systems.
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During 2023: ● Revenue declined by $1.7 million or 6.6% as the prior year benefited from a large number of PVT150 orders. ● Gross margin declined by $1.6 million or 23.5% due to cost overruns experienced on one large contract. ● Total bookings for 2023 were approximately $25.8 million, a decrease of $7.3 million or 22.1% as compared to 2022.
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Although we continue to invest in our vision for the “electrification of everything,” we have observed lower-than-anticipated industrywide electric vehicle sales which may reduce demand for silicon carbide and impact sales of our PVT systems. In addition, the current global over capacity of 150 mm silicon carbide wafers has reduced the market for 150 mm silicon carbide growth systems.
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Bookings for 2022 included orders for PVT equipment as compared to none in 2023. ● Received $8.7 million in orders from a major aerospace company for the production of CVI systems.
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We shipped this unit to the customer in the third quarter of 2024. Both technologies are essential for the support of the EV market. These systems should provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission.
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During 2021, we received the first six (6) orders for our PVT150 system that is used by our customer to grow silicon carbide crystals and received an additional 24 orders from the same customer in 2022. The crystals would be further processed into 150 mm silicon carbide wafers and later processed into integrated circuits and other devices.
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We plan to evaluate opportunities to expand our product offerings in the power electronics market to build off the introduction of the PVT150 and PVT200 systems. We are also evaluating our ability to provide other equipment used in the manufacturing process of silicon carbide wafers.
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Devices based on silicon carbide have been shown to reduce energy consumption in EVs and reduce the need for additional cooling elements. While we did not receive any additional orders from this customer, we remain in continuing discussions regarding potential additional orders.
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During 2022, we also received an order from an aerospace company for a production chemical vapor infiltration (CVI) system that will be used to manufacture CMCs for gas turbine jet engines.
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This is our second customer for PVT equipment. This customer plans to evaluate our equipment with the objective to select a vendor for potential additional purchases of PVT equipment.
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In 2023, we received an order from the same aerospace company for an additional three CVI systems and in November 2024 we received an order from the same aerospace company for an additional CVI system.
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During 2022, we completed the production of a system for a customer that deposits coatings onto powders used in silicon-graphite anodes that has the objective of increasing EV battery performance while lowering cost. We received two additional orders from this customer in 2023 that were completed during the year.
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In February 2024, we received a multisystem order from an industrial customer for approximately $10.0 million that will be used for depositing a silicon carbide protective coating on OEM components and the units are expected to be delivered over 18 to 24 months period.
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During 2023, we also received a total $10.6 million of aerospace orders from multiple customers, reflecting continuing strong interest in the application of CMCs in gas turbine jet engines.
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We have generally gained new customers through our industry reputation, as well as print advertising and trade show attendance. We have increased the number of trade shows and industry conferences we attend. Historically, our orders have fluctuated based on end user market conditions, adoption of our new products and acceptance of our products.
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The decrease in gross profit of $1.6 million was primarily due to significant cost overruns on one contract and lower PVT150 and CVD Materials revenues as compared to 2022.
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The order rate as well as other factors in our manufacturing process ultimately impacts the timing of revenue recognition, whether accounted for over time or at a point in time. Accordingly, orders received from customers and the corresponding revenue recognized may fluctuate from quarter to quarter.
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The increase in expenses was principally due to increases in stock-based compensation of $0.2 million, higher professional fees of $0.3 million, and increase in 401(k) match of $0.2 million, offset by lower bonus expense of $0.4 million and lower expenses for CVD Materials of $0.1 million due to the disposition of Tantaline.
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The sales cycle for our equipment is typically six months, but can range up to twelve to eighteen months, depending on the application and product stage of the equipment.
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Other Income, Net Other income, net was $0.7 million for the year ended December 31, 2023 as compared to other income, net of $1.6 million for the year ended December 31, 2022. The increase in interest income of $0.4 million was due to higher interest rates and increased amounts invested in U.S. treasury bills.
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The increase in external revenues of $2.1 million or 11.3% resulted principally from increases in revenues from aerospace and industrial contracts in progress offset in part by lower revenue for PVT150/200 systems and spare parts.
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During 2022, we conducted an analysis to determine if we were entitled to an employee retention credit (“ERC”) under the Coronavirus Aid, Relief, and Economic Security Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Plan Act of 2021.
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The increase in gross profit of $1.3 million was primarily due to higher revenues as well as improved margins on CVD contracts in progress and final MesoScribe sales that was partially offset by a $1.3 million non-cash charge to reduce certain PVT inventory to net realizable value.
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Based on our analysis, we determined that we were entitled to an ERC of approximately $1.5 million related to payroll paid in the first and third quarters of 2021 under the applicable Internal Revenue Service regulations and . we recognized other income of this amount during the year ended December 31, 2022. This amount was collected in July 2023.
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Gain on Sales of Equipment During 2024, we recognized a gain of $0.6 million on the sale of equipment related to MesoScribe representing the sale price of $0.8 million less the costs of the equipment sold of $0.2 million.
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The increase in inventory was related to the production of PVT150 systems in anticipation of potential future orders and increases related to new system orders. Net cash used in investing activities during 2023 was $0.1 million. Capital expenditures of $0.4 million related to purchases of manufacturing equipment and building improvements.
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We also recognized a gain of $42,000 on the sale of equipment by our CVD Equipment. 35 Loss on Disposition of Tantaline This expense of $162,000 represents the net loss on the sale of our Tantaline subsidiary including professional fees. This disposition was completed in 2023.
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The disposition of Tantaline resulted in a cash outflow of $0.3 million based on the terms of the agreement. We received $0.6 million of deposits from the purchaser of certain MesoScribe equipment as described below.
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Other income is principally interest income on treasury bills. Income Taxes Income tax expense (benefit) for the years ended December 31, 2024 and 2023, was $24,000 and $(14,000) respectively.
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Cash flows from financing activities during 2023 was not significant and included $0.1 million of proceeds from the exercise of employee stock options and $0.1 million of repayment of an equipment loan. On August 4, 2023, we entered into a Purchase and License Agreement with a third-party.
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Any significant increases in tariffs on goods that we purchase could negatively affect our business and results of operations by increasing the cost to manufacture our products. 36 Liquidity and Capital Resources As of December 31, 2024, we had aggregate working capital of $13.9 million compared to aggregate working capital of $14.3 million at December 31, 2023.
Removed
Pursuant to the Purchase and License Agreement, we will sell certain proprietary assets relating to its plasma spray technology and material deposition system and grant a non-exclusive license to use certain of our related intellectual property as more fully described in the Purchase and License Agreement, for an aggregate purchase price of $0.9 million.
Added
Net cash provided by investing activities for the year ended December 31, 2024 consisted of proceeds from the sales of equipment of $0.2 million offset by capital expenditures of $0.1 million. Net cash used in financing activities for the year ended December 31, 2024 consisted of repayments of $0.1 million for an equipment loan.
Removed
The purchase price is payable in several installments and contingent upon certain performance metrics and other milestones. During the year ended December 31, 2023, we received payments under the Purchase and License Agreement in the amount of $0.6 million which is reflected as deposits from purchaser in the accompanying consolidated balance sheet as of December 31, 2023.
Added
We will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs.
Removed
We expect the transaction to be completed during 2024. We expect to continue to fulfill remaining customer orders for MesoScribe products through the end of 2024 at which time it plans to cease the remaining operations of MesoScribe and dispose of any remaining equipment.
Removed
We believe that of our significant accounting policies, which are described in the notes to the consolidated financial statements, the following accounting policies involve a greater degree of judgments, estimates and assumptions. Accordingly, these are the policies that we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Removed
These system sales require us to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. We recognize revenue over time by using an input method based on costs incurred as it depicts our progress toward satisfaction of the performance obligation.

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