UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the quarterly period ended June 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ____ to _____

Commission file number: 1-16525

CVD EQUIPMENT CORPORATION

(Name of Registrant in Its Charter)

New York

11-2621692

State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer

Identification No.)

355 South Technology Drive Central Islip, New York 11722

(Address of principal executive offices)

(631) 981-7081
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CVV		NASDAQ Capital Market

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act).

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,881,838 shares of Common Stock, $0.01 par value at August 12, 2025.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Index

Part I - Financial Information

	Item 1 – Condensed Consolidated Financial Statements (Unaudited)

		Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024	3

		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024	4

		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024	5

		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

	Item 3 – Quantitative and Qualitative Disclosures About Market Risk		31

	Item 4 – Controls and Procedures		31

Part II - Other Information

	Item 1 – Legal Proceedings		32

	Item 1A-Risk Factors		32

	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		32

	Item 3 – Defaults Upon Senior Securities		32

	Item 4 – Mine Safety Disclosures		32

	Item 5 – Other Information		32

	Item 6 – Exhibits		32

Signatures			33

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)

	June 30, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	7,023		$	12,598
Accounts receivable, net of allowance for credit losses		4,993			2,149
Contract assets		3,768			2,226
Inventories		2,328			2,115
Other current assets		387			898
Total current assets		18,499			19,986

Property, plant and equipment, net		11,394			11,699
Other assets		52			1
Total assets	$	29,945		$	31,686

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	939		$	679
Accrued expenses		1,583			2,236
Current maturities of long-term debt		89			87
Contract liabilities		2,017			3,135
Total current liabilities		4,628			6,137

Long-term debt, net of current portion		136			181

Total liabilities		4,764			6,318

Stockholders’ equity:
Common stock - $0.01 par value – authorized 20,000,000 shares; issued and outstanding 6,881,838 at June 30, 2025 and December 31, 2024		69			69
Additional paid-in capital		30,271			29,757
Accumulated deficit		(5,159	)		(4,458	)
Total stockholders’ equity		25,181			25,368

Total liabilities and stockholders’ equity	$	29,945		$	31,686

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share and share amounts)

(Unaudited)

	2025			2024			2025			2024
	Three months ended						Six months ended
	June 30,						June 30,
	2025			2024			2025			2024

Revenue	$	5,111		$	6,345		$	13,427		$	11,267
Cost of revenue		4,038			4,803			9,658			8,941

Gross profit		1,073			1,542			3,769			2,326

Operating expenses
Research and development		686			665			1,467			1,410
Selling and shipping		349			426			769			845
General and administrative		1,178			1,349			2,403			2,597

Total operating expenses		2,213			2,440			4,639			4,852

Operating loss		(1,140	)		(898	)		(870	)		(2,526	)

Other income (expense):
Interest income		82			145			192			302
Interest expense		(3	)		(4	)		(7	)		(10	)
Other income (expense)		-			(4	)		-			1
Total other income, net		79			137			185			293

Loss before income tax		(1,061	)		(761	)		(685	)		(2,233	)

Income tax expense		-			-			16			-

Net loss	$	(1,061	)	$	(761	)	$	(701	)	$	(2,233	)

Loss per common share - basic	$	(0.15	)	$	(0.11	)	$	(0.10	)	$	(0.33	)
Loss per common share - diluted	$	(0.15	)	$	(0.11	)	$	(0.10	)	$	(0.33	)

Weighted average common shares
Basic		6,867,868			6,816,956			6,860,846			6,813,127
Diluted		6,867,868			6,816,956			6,860,846			6,813,127

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

	Shares		Par Value		Capital		Deficit			Total
Three months ended June 30, 2025 and 2024					Additional
	Common stock				paid-in		Accumulated
	Shares		Par Value		Capital		Deficit			Total

Balance at April 1, 2025		6,881,838	$	69	$	30,021	$	(4,098	)	$	25,992
Net loss		-		-		-		(1,061	)		(1,061	)
Stock-based compensation		-		-		250		-			250
Balance at June 30, 2025		6,881,838	$	69	$	30,271	$	(5,159	)	$	25,181

Balance at April 1, 2024		6,824,511	$	68	$	28,962	$	(4,032	)	$	24,998
Net loss		-		-		-		(761	)		(761	)
Stock-based compensation		827		-		267		-			267
Balance at June 30, 2024		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504

Six months ended June 30, 2025 and 2024					Additional
	Common stock				paid-in		Accumulated
	Shares		Par Value		Capital		Deficit			Total

Balance at January 1, 2025		6,881,838	$	69	$	29,757	$	(4,458	)	$	25,368
Net loss		-		-		-		(701	)		(701	)
Stock-based compensation		-		-		514		-			514
Balance at June 30, 2025		6,881,838	$	69	$	30,271	$	(5,159	)	$	25,181

Balance at January 1, 2024		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Balance		6,824,511	$	68	$	28,695	$	(2,560	)	$	26,203
Net loss		-		-		-		(2,233	)		(2,233	)
Stock-based compensation		827		-		534		-			534
Balance at June 30, 2024		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504
Balance		6,825,338	$	68	$	29,229	$	(4,793	)	$	24,504

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

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	2025			2024
	Six months ended
	June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(701	)	$	(2,233	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		514			534
Depreciation and amortization		354			307
Changes in assets and liabilities:
Accounts receivable		(2,844	)		(3,045	)
Contract assets		(1,542	)		50
Inventories		(213	)		(204	)
Other current assets		511			260
Accounts payable		260			398
Accrued expenses		(653	)		(29	)
Contract liabilities		(1,118	)		190
Net cash used in operating activities		(5,432	)		(3,772	)

Cash flows from investing activities:
Purchases of property and equipment		(49	)		(182	)
Investment in captive insurance company		(51	)		-
Net cash used in investing activities		(100	)		(182	)

Cash flows from financing activities
Payments of long-term debt		(43	)		(40	)
Net cash used in financing activities		(43	)		(40	)

Net decrease in cash and cash equivalents		(5,575	)		(3,994	)

Cash and cash equivalents at beginning of period		12,598			14,025

Cash and cash equivalents at end of period	$	7,023		$	10,031

Supplemental disclosure of cash flow information:

Income taxes paid	$	16		$	3
Interest paid	$	7		$	10

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

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for CVD Equipment Corporation and Subsidiaries (collectively the “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the interim financials not misleading have been included and all such adjustments are of a normal recurring nature. The operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that can be expected for the year ending December 31, 2025.

The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at such date, as filed on Form 10-K with the SEC on March 19, 2025, but does not contain all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with that report.

All material intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on net loss.

Liquidity

At June 30, 2025, the Company had $7.0 million in cash and cash equivalents. The Company believes that its existing cash and cash equivalents, together with anticipated cash flows from operations, collections of outstanding accounts receivable, revenue from its current backlog, sales of inventory on hand, and deposits and down payments on significant orders, will be sufficient to fund its working capital and capital equipment needs, as well as its expected cash requirements, for at least the next 12 months from the date of issuance of these condensed consolidated financial statements.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

In accordance with FASB ASC 606 - Revenue from Contracts with Customers (“ASC 606”), the Company records revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services promised to its customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price for the contract; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue using one of the following two methods:

Over time

The Company designs, manufactures and sells custom chemical vapor deposition equipment through contractual agreements. These system sales require the Company to deliver functioning equipment that is generally completed within two to eighteen months from commencement of order acceptance. For systems sales that meet the criteria to recognize revenue over time, the Company recognizes revenue over time by using an input method based on costs incurred as it depicts the Company’s progress toward satisfaction of the performance obligation. For system sales that do not meet the criteria to recognize revenue over time based on the contract provisions, the Company recognizes revenue based on point in time.

Under the over time method, revenue arising from fixed price contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Incurred costs include all direct material and labor costs and those indirect costs related to contract performance, such as supplies, tools, repairs and depreciation costs. Contract material costs are included in incurred costs when the project materials have been purchased or moved to work in process, and installed, as required by the project’s engineering design. Cost based input methods of revenue recognition require the Company to make estimates of costs to complete the projects. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the projects, including materials, labor and other system costs. If the estimated total costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. There were no impairment losses recognized on contract assets during the three and six months ended June 30, 2025 and 2024.

The timing of revenue recognition, billings and collections results in accounts receivables, unbilled receivables or contract assets and contract liabilities on our consolidated balance sheet. Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Under ASC 606, payments received from customers in excess of revenue recognized to-date results in a contract liability. These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands which can be higher in the earlier stages of a contract. Also, advanced payments and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract.

Contract assets include unbilled amounts typically resulting from system sales under contracts and represents revenue recognized that exceeds the amount billed to the customer.

Contract liabilities include advance payments and billings in excess of revenue recognized. The Company typically receives down payments upon receipt of orders and progress payments as the system is manufactured.

Contract assets and contract liabilities are classified as current as these contracts in progress are expected to be substantially completed within the next twelve months.

Point in time

For non-system sales of products and services, revenue is recognized at the point in time when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606, “Revenue from Contracts with Customers”.

For any system equipment sales where the equipment would have an alternative use or where the contract provisions of the contract preclude the use of over time revenue recognition, revenue is recognized at the point in time when control of the equipment is transferred to the customer. For the three and six months ended June 30, 2025 and 2024, all system equipment sales were recorded over time by using an input method except a) one contract that was recorded as revenue at the point in time the equipment was transferred to the customer during the third quarter of fiscal year 2024 and b) one contract that was entered during 2024 and will be recognized as revenue after June 30, 2025 upon transfer of the equipment to the customer.

Inventories

Inventories (raw materials, work-in-process and finished goods) are valued at the lower of cost (determined on the first-in, first-out method) or net realizable value. Work-in-process and finished goods inventory reflect all accumulated production costs, which are comprised of direct production costs and overhead, and is reduced by amounts recorded in cost of sales as the related revenue is recognized. Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are charged to expense as incurred and are not included in our cost of sales or work-in-process and finished goods inventory.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of inventory, which would be reflected in cost of sales in the period the revision is made.

Product Warranty

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance or fifteen months from the date of shipment by providing labor and parts necessary to repair the systems during the warranty period. The Company records the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in “Cost of revenue” in the condensed consolidated statements of operations. The estimated warranty cost is based on the Company’s historical cost. The Company updates its warranty estimates based on actual costs incurred.

Recent Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures. The amendments further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the timing of adoption and impact of this ASU on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statements Expenses (Subtopic 220-40),” to improve income statement expenses disclosure. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for financial statements issued for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

The Company believes there is no additional new accounting guidance adopted, but not yet effective, which is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

NOTE 3: CONCENTRATION OF CREDIT RISK

Cash and cash equivalents

The Company had cash and cash equivalents of $7.0 million and $12.6 million at June 30, 2025 and December 31, 2024, respectively. The Company invests excess cash in U.S. treasury securities, certificates of deposit or deposit accounts, all with maturities of less than three months. Cash equivalents consisting of U.S. treasury securities were $5.9 million and $11.9 million at June 30, 2025 and December 31, 2024, respectively.

The Company’s cash balances are held in United States financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. The amount at risk at June 30, 2025 and December 31, 2024 was $0.7 million and $0.4 million, respectively.

Accounts receivable

The Company routinely assesses the financial strength of its customers. In accordance with the “expected credit loss” model of ASC 326, the carrying amount of accounts receivable is reduced by a valuation allowance that reflects the best estimate of the amounts the Company does not expect to collect. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating our reserve, including types of customers and their credit worthiness, experience and historical data adjusted for current conditions and reasonable supportable forecasts. The Company records an allowance for credit losses based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided based upon the collection history, current economic trends and reasonable supportable forecasts.

Accounts receivable is presented net of an allowance for credit losses of $48,000 as of June 30, 2025 and December 31, 2024. The allowance is based on prior experience and management’s evaluation of future economic conditions. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers. Future changes to the estimated allowance for credit losses could be material to our results of operations and financial condition.

At June 30, 2025, the accounts receivable balance included amounts from one customer that represented 31.5% of total accounts receivable. As of December 31, 2024, the accounts receivable balance includes amounts from three customers that represented 28.6%, 14.0% and 11.9% of total accounts receivable.

NOTE 3: CONCENTRATION OF CREDIT RISK (continued)

Sales concentration

Revenue from a single customer in any one period can exceed 10% of our total revenues. During the three months ended June 30, 2025, two customers exceeded 10% of revenues, representing 23.4% and 17.7% of revenues, and during the six months ended June 30, 2025, two customers represented 34.3% and 15.4% of revenues.

During the three months ended June 30, 2024, one customer represented 35.2% of revenues, and during the six months ended June 30, 2024, one customer represented 32.8% of revenues.

NOTE 4: REVENUE RECOGNITION

The following table represents a disaggregation of revenue for the three and six months ended June 30, 2025, and 2024 (in thousands):

SCHEDULE OF DISAGGREGATION OF REVENUE

	Over time		Point in time		Total
	Three months ended June 30, 2025
	Over time		Point in time		Total

Energy	$	-	$	7	$	7
Aerospace		1,412		562		1,974
Industrial		1,912		316		2,228
Research		716		186		902
Total	$	4,040	$	1,071	$	5,111

	Over time		Point in time		Total
	Three months ended June 30, 2024
	Over time		Point in time		Total

Energy	$	239	$	12	$	251
Aerospace		2,694		179		2,873
Industrial		1,542		300		1,842
Research		1,174		205		1,379
Total	$	5,649	$	696	$	6,345

NOTE 4: REVENUE RECOGNITION (continued)

	Over time		Point in time		Total
	Six months ended June 30, 2025
	Over time		Point in time		Total

Energy	$	-	$	14	$	14
Aerospace		3,251		1,350		4,601
Industrial		6,036		723		6,759
Research		1,470		583		2,053
Total	$	10,757	$	2,670	$	13,427

	Over time		Point in time		Total
	Six months ended June 30, 2024
	Over time		Point in time		Total

Energy	$	239	$	30	$	269
Aerospace		4,496		494		4,990
Industrial		2,801		774		3,575
Research		2,035		398		2,433
Total	$	9,571	$	1,696	$	11,267

The energy market includes customers involved in the manufacture of silicon carbide wafers and batteries. The aerospace market includes customers that manufacture aircraft engines. The industrial end market consists of various end customers in diverse industries. The research market principally represents customers such as universities and other research institutions.

The Company has unrecognized contract revenue of approximately $10.9 million at June 30, 2025, which it expects to substantially recognize as revenue within the next twelve months based on over time revenue recognition.

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems may occur for a variety of reasons, including but not limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates may have a material effect on the Company’s condensed consolidated statements of operations.

NOTE 4: REVENUE RECOGNITION (continued)

Contract assets and liabilities

Contract assets and contract liabilities on input method type contracts in progress are summarized as follows as of June 30, 2025 (in thousands):


Costs incurred on contracts in progress	$	18,199
Estimated earnings		8,262
		26,461
Billings to date		(23,468	)
Net cost in excess of billings		2,993

Deferred revenue related to non-system contracts		(1,242	)
	$	1,751
Included in accompanying condensed consolidated balance sheet as of June 30, 2025 under the following captions (in thousands):
Contract assets	$	3,768
Contract liabilities	$	2,017

Of the contract liability balances at December 31, 2024 and 2023, $2.1 million and $2.7 million was recognized as revenue during the six months ended June 30, 2025 and 2024, respectively. Contract assets and contract liabilities at December 31, 2023 were $1.6 million and $4.9 million, respectively.

NOTE 5: INVENTORIES

Inventories consist of:

SCHEDULE OF INVENTORIES

	June 30, 2025		December 31, 2024

Raw materials	$	1,134	$	1,217
Work-in-process		1,005		765
Finished goods		189		133
Total	$	2,328	$	2,115

Included in our inventories are finished goods and raw materials related to PVT 150/200 systems that were purchased and built, respectively, in anticipation of future orders.

NOTE 5: INVENTORIES (continued)

As of June 30, 2025, the net amount of PVT 150/200 systems inventory is approximately $0.4 million. If future PVT 150/200 orders do not materialize and if the Company is not otherwise able to sell this inventory, the Company could incur additional charges to further reduce the carrying value of such inventory to net realizable value. Such charges may be material to the Company’s financial position and future results of operations.

NOTE 6: LONG-TERM DEBT

In September 2022, the Company entered into a loan agreement to fund the acquisition of machinery. The loan amount of $432,000, is payable in 60 equal monthly installments of $8,352 and secured by equipment. The interest rate is 6%.

NOTE 7: EARNINGS PER SHARE

The calculation of basic and diluted weighted average common shares outstanding for the three and six months ended June 30, 2025 and 2024 is as follows:

	2025		2024		2025		2024
	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Basic weighted average common shares outstanding		6,867,868		6,816,956		6,860,846		6,813,127
Dilutive effect of options and unvested restricted stock		-		-		-		-
Diluted weighted average shares outstanding		6,867,868		6,816,956		6,860,846		6,813,127

For the three and six months ended June 30, 2025 and 2024, all stock options were excluded in the computation of diluted earnings per share because their effect was antidilutive.

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

The Company recorded stock-based compensation for the three and six months ended June 30, 2025 and 2024, respectively, that were included in the following line items in our condensed consolidated statements of operations (in thousands):

	2025		2024		2025		2024
	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Cost of revenue	$	26	$	38	$	52	$	76
Research and development		45		47		92		94
Selling		21		27		48		54
General and administrative		158		155		322		310

Total	$	250	$	267	$	514	$	534

Stock-based compensation expense for three months ended June 30, 2025 and 2024 included $50,000 and $57,423, respectively, and for the six month periods June 30, 2025 and 2024 included $100,000 and $103,736, respectively, related to restricted stock awards that directors are entitled to receive pursuant to the Director Compensation Plan. Under this plan each of the Company’s independent directors is entitled to an Annual Equity Retainer in the amount of $40,000, to be granted on the date of the Company’s annual meeting of shareholders.

The following table summarizes stock options awards through June 30, 2025:

SCHEDULE OF STOCK OPTIONS AWARDS

				Weighted
	Stock Option			Average
	Awards			Exercise
	(in shares)			Price

Outstanding at January 1, 2025		823,125		$	8.20
Forfeited		(15,500	)		11.04
Outstanding at June 30, 2025		807,625			8.19

The following table summarizes information about the outstanding and exercisable options at June 30, 2025 by ranges of exercise prices:

Options Outstanding

Options Exercisable

Weighted

Exercise

Average

Price

Number

Remaining

Exercise

Intrinsic

Number

Exercise

Intrinsic

Range

Outstanding

Contractual

Price

Value

Exercisable

Price

Value

4.00-7.00

442,125

6.5

4.54

311,625

4.46