CVD Equipment Corp – ‘10KSB’ for 12/31/06

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Annual Report by a Small Business   —   Form 10-KSB
Filing Table of Contents

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                          -- edg10ksb2006                                        

10KSB   —   Annual Filing for Cvd Equipment Corp – 2006
Document Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
 Form 10-KSB
(Mark One)                                                                  
[x]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES    
EXCHANGE ACT OF 1934.                                     
For the fiscal year ended December 31, 2006 
 [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.                                     
For the transition period from ____ to _____

Commission file number:  1-16525

 CVD EQUIPMENT CORPORATION
 (Name of Small Business Issuer  in Its Charter)

New York       11-2621692 
(State or Other Jurisdiction of                                       
    Incorporation or Organization)      (I.R.S. Employer Identification No.)

 1860 Smithtown Avenue
 Ronkonkoma, New York  11779
(Address including zip code of registrant's Principal Executive Offices)

(631) 981-7081
(Issuer's Telephone Number, Including Area Code)

 Securities registered under Section 12(b) of the Act:
   Title of each class       Name of each exchange on which registered
Common Stock, Par value $0.01        American Stock Exchange            

Securities registered under Section 12(g) of the Act: 
None    

Check whether the issuer: (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for   
such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90 days.  
                                                     Yes [x]    No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will 
be contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [ ]                           

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

State issuer's revenues for its most recent fiscal year.  $13,355,778.

   State the aggregate market value of the voting and non-voting common equity
 held by non-affiliates computed by reference to the price at which the common
 equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days. Shares of common stock held by 
each officer and director and by each person who owns 5% or more of the     
outstanding common stock have been excluded, in that such persons may be    
deemed to be affiliates. This determination of affiliate status is not      
necessarily conclusive determination for other purposes:   $ 7,227,981 at   
March 20, 2007.                                                             

State the number of shares outstanding of each of the issuer's classes of   
common equity, as of the latest practicable date: 3,298,500 shares of Common
Stock, $0.01 par value at March 20, 2007.                                   

DOCUMENTS INCORPORATED BY REFERENCE   None.               

Transitional Small Business Disclosure Format (Check one):  Yes [ ]  No [x] 
__________________________________________________________________________  

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PART I                

Item 1.         Description of Business.                                        

Unless otherwise set forth herein, when we use the term `we' or                 
any derivation thereof, we mean CVD Equipment Corporation, a New                
York corporation, formed in 1982 (the "Company").                               

We design, develop, manufacture, market, install and service                    
Chemical Vapor Deposition and gas control equipment for use in                  
manufacturing semiconductors, solar cells, carbon nanotubes,                    
nanowires and equipment for surface mounting of components onto                 
printed circuit boards.  Our products include (1) both batch and                
single wafer systems used for depositing, rapid thermal                         
processing, annealing, diffusion and etching of semiconductor                   
films, (2) gas and liquid flow control systems, (3) ultra high                  
purity gas and chemical piping delivery systems, (4) standard                   
and custom quartzware, (5) reflow furnaces and rework stations                  
and (6) carbon nanotube and nanowire deposition systems.  We                    
also provide equipment consulting and refurbishing of                           
semiconductor processing equipment.  Our products are generally                 
manufactured as standard products or customized to the                          
particular specifications of each of our customers.                             

Semiconductor components are the fundamental electronic building                
blocks used in modern electronic equipment and systems.  These                  
components are classified as either discrete devices (such as                   
transistors) or integrated circuits (in which a number of                       
transistors and other elements are combined to form a more                      
complicated electronic circuit).  In an integrated circuit,                     
these elements are formed on a small "chip" of silicon or                       
gallium arsenide, which is then encapsulated in an epoxy,                       
ceramic or metal package having lead wires for connection to a                  
circuit board.  Our products are used in the manufacture and                    
mounting of these components.                                                   

We conduct our operations through three divisions, CVD, SDC and                 
Conceptronic.  Each division operates reasonably autonomously on                
a day-to-day basis with its own operating manager and with sales                
and administration being handled by corporate managers.  There                  
is an overall corporate coordination in the day-to-day                          
administration of the business, in establishing policy and                      
consistently applying procedures.                                               

CVD Division                                                                    

Our CVD division designs and manufactures both standard and                     
custom Chemical Vapor Deposition equipment for use in the                       
semiconductor industry.  In May, 2005, we acquired certain                      
assets from First Nano, Inc., including their nanotechnology                    
process development and equipment.  First Nano developed                        
solutions for single and multiwall nanotube and nanowire                        
synthesis and manufactured chemical vapor deposition process                    
equipment suitable for the synthesis of a variety of carbon                     
nanotubes, one-dimensional and nanostructures and nanomaterials.                
This acquisition enabled the CVD division to expand on its                      
leading edge technology, which is paramount in the                              
semiconductor, optoelectronic, wireless communications,                         
nanotechnology and solar cell arenas.                                           

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SDC Division                                                                    

The Stainless Design Concepts ("SDC") division of the Company                   
designs and manufactures in its Class 100 cleanroom, ultra                      
high purity gas and chemical delivery control systems for                       
the semiconductor industry, and also provides equipment                         
consulting and refurbishing of semiconductor equipment.  The                    
field service group provides for contract maintenance, high                     
purity fabrication and equipment installations and equipment                    
removal.                                                                        

Conceptronic Division                                                           

In December 2001, we acquired the assets of the Surface Mount                   
Technology division of Research Inc., known as Research                         
International ("RI").  RI was a manufacturer of Surface Mount                   
Technology ("SMT") reflow furnaces.                                             

In June 2002, we purchased substantially all of the assets of                   
Conceptronic Inc.'s Surface Mount Technology business.                          
Conceptronic specialized in solder reflow furnaces and rework                   
stations for the printed circuit board and chip scale package                   
industries.                                                                     

In 2002 we combined the operations of RI and Conceptronic into                  
our Conceptronic division.                                                      

The startup of our Conceptronic division provided a base for us                 
to generate new and enhanced standard and custom furnace                        
products to the semiconductor, solar cell and surface mount                     
technology markets based on our own technology and technology                   
that was purchased as part of the acquisition of assets.                        

Principal Products                                                              

Chemical Vapor Deposition  - A process which passes a gaseous                   
compound over a target material surface that is heated to such a                
degree that the compound decomposes and deposits a desired layer                
onto substrate material.  The process is accomplished by                        
combining appropriate gases in a reaction chamber, of the kind                  
produced by the Company, at elevated temperatures (typically                    
300-1,800 degrees Celsius).  Our Chemical Vapor Deposition                      
systems are complete and include all necessary instrumentation,                 
subsystems and components.  We provide such standard systems and                
also specifically engineered products for particular customer                   
applications.  Some of the standard systems we offer are for                    
Silicon, Silicon-Germanium, Silicon Dioxide, Silicon Nitride,                   
Polysillicon, Liquid Phase Epitaxial, Metalorganic Chemical                     
Vapor Deposition, Carbon Nanotubes and Nanowires.                               

Our Chemical Vapor Deposition systems are available in a variety                
of models that can be used in production and laboratory                         
research.  All models can be offered with total system                          
automation, a microprocessor control system by which the user                   
can measure, predict and regulate gas flow, temperature,                        
pressure and chemical reaction rates, thus controlling the                      
process in order to enhance the quality of the materials                        
produced.  Our standard microprocessor control system is                        
extremely versatile and capable of supporting the complete                      
product line and most custom system requirements.  These                        
Chemical Vapor Deposition systems range in price from $100,000                  
to $2,500,000.                                                                  

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Rapid Thermal Processing ("RTP") -  Used to heat semiconductor                  
materials to elevated temperatures of 1,000 degrees Celsius at                  
rapid rates of up to 200 degrees Celsius per second.  Our RTP                   
systems are offered for implant activation, oxidation, silicide                 
formation and many other processes.  We offer systems that can                  
operate both at atmospheric or reduced pressures.  Our RTP                      
systems generally range in price from $75,000 to $350,000.                      

Annealing and Diffusion Furnaces - Used for diffusion,                          
oxidation, implant anneal, solder reflow and other processes.                   
The systems are normally operated at atmospheric pressure with                  
gaseous atmospheres related to the process.  An optional feature                
of the system allows for the heating element to be moved away                   
from the process chamber allowing the wafers to rapidly cool or                 
be heated in a controlled environment.  Our cascade temperature                 
control system enables more precise control of the wafers.  The                 
systems are equipped with an automatic process controller,                      
permitting automatic process sequencing and monitoring with                     
safety alarm provisions.  Our Annealing and Diffusion Furnace                   
systems generally range in price from $75,000 to $650,000.                      

Gas and Liquid Control Systems - Our standard and custom                        
designed gas and liquid control systems encompassing (1) gas                    
cylinder storage cabinets, (2) custom gas and chemical delivery                 
systems, (3) gas and liquid valve manifold boxes (VMB's) and (4)                
gas isolation boxes (GIB's) to provide safe storage and handling                
of pressurized gases and chemicals.  System design allows for                   
automatic or manual control from both a local and remote                        
location.  The price range for our Gas and Liquid Control                       
Systems are from $20,000 to $350,000.                                           

Ultra High Purity Gas and Chemical Piping and Delivery Systems -                
We provide field installation of ultra high purity piping                       
systems within a semiconductor plant for the distribution of                    
gases and chemicals to the assorted process tools.  As part of                  
field service, we also offer repair service on customer                         
equipment.                                                                      

Quartzware - We provide standard and custom fabricated                          
quartzware used in our equipment and other customer tools.  We                  
also provide repair and replacement of existing quartzware.                     

Reflow Furnaces and Rework Stations - We provide a standard line                
for the printed circuit board and chip scale package industries.                

Markets and Marketing                                                           

Due to the highly technical nature of our products, we believe                  
it is essential to contact customers directly through our sales                 
personnel and through a network of domestic and international                   
independent sale representatives and distributors specializing                  
in semiconductor equipment and supplies.  Our primary marketing                 
activities include direct sales contacts, participation in trade                
shows and our internet websites.                                                

The web sites continue to see increased traffic.  We have                       
focused our efforts on being in the top listings on many search                 
engines in order to increase the number of "hits" to our web                    
sites.                                                                          

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We are continuing to work on expanding our product offerings.                   
Many of these products are used in research and production                      
applications.  We sell our products primarily to semiconductor                  
manufacturers, institutions involved in electronic research such                
as universities, government and industrial laboratories and to                  
electronic assembly manufacturers.  We have both an                             
international and domestic customer base in excess of 350                       
customers.  For the twelve months ended December 31, 2006                       
approximately 31% of our revenues were generated from foreign                   
exports compared to 29% for the twelve months ended December 31,                
2005.  Sales to a single customer in any one year can exceed                    
10.0% of our total sales; however, we are not dependent on any                  
single customer.  In fiscal year 2006, one customer represented                 
9.0% of our total sales.  In 2005, another customer, a                          
distributor, represented 11.5% of our total sales.  No other                    
customer represented more than 6.5% or 6.8% of our total sales                  
in fiscal years 2006 or 2005, respectively.                                     

Warranties                                                                      

We warrant our equipment for a period of twelve to twenty four                  
months after shipment, depending on the product, and pass along                 
any warranties from original manufacturers of components used in                
our products.  We provide for our own equipment servicing with                  
in-house field service personnel.  Warranty costs, including                    
those incurred in fiscal year 2006, have been historically                      
insignificant and expensed as incurred.                                         

Competition                                                                     

We are subject to intense competition.  We are aware of other                   
competitors that offer a substantial number of products                         
comparable to ours.  Many of our competitors (including                         
customers who may elect to manufacture systems for internal use)                
have financial, marketing and other resources greater than ours.                
To date, we have been able to compete in markets that include                   
these competitors, primarily on the basis of price, technical                   
performance, quality and delivery.                                              

Sources of Supply                                                               

We do not manufacture many components used in producing our                     
products.  They are purchased from unrelated third-party                        
manufacturers of such equipment.  We do not have any supply                     
contracts covering these components.  We are not dependent on a                 
principal or major supplier and alternate suppliers are                         
available.  We do not use a large amount of raw or difficult to                 
obtain materials that could cause a problem in production of our                
equipment.                                                                      

We have our own fully equipped machine shop to fabricate in                     
house, the most complex designed parts of our equipment.  Our                   
investment in CNC machines for our machine shop has increased                   
our efficiencies while significantly reducing costs in                          
production.  Similarly, our own quartz shop is capable of                       
meeting our quartzware needs.                                                   

Materials procured from the outside and/or manufactured                         
internally undergo a rigorous quality control process to ensure                 
that the parts meet or exceed the most stringent specifications.                
All equipment, upon final assembly, undergoes a final series of                 
complete testing to ensure maximum product performance.                         

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Backlog                                                                         

As of December 31, 2006 our order backlog was approximately                     
$3,565,000 compared to approximately $2,648,000 at December 31                  
2005, an increase of 34.6%.  The increase can primarily be                      
attributed to our CVD Division.  This division, inclusive of its                
expanded product line of First Nano equipment, continues to                     
experience a demand for new equipment.  The timing for                          
completion of the backlog varies depending on the product mix;                  
however, there is generally a one to six month lag in the                       
completion and shipping of backlogged product.  Included in the                 
backlog are all accepted purchase orders with the exception of                  
those that are included in our percentage-of-completion.  Order                 
backlog is usually a reasonable management tool to indicate                     
expected revenues and projected profits, however it does not                    
provide an assurance of future achievement or profits as order                  
cancellations or delays are possible.                                           

Intellectual Property                                                           

We believe that while patents are useful and will be used at                    
times in the future, they are not always necessary to protect                   
our intellectual property.  We believe the collective value of                  
our proprietary information such as blueprints, specifications,                 
technical processes, cumulative employee knowledge, know-how and                
our experience provide us with a measure of protection for our                  
manufacturing and design processes.  We protect our proprietary                 
information through non-disclosure agreement and similar                        
agreements with our employees and other parties who have access                 
to such information.                                                            

Research and Development                                                        

We continue to concentrate our efforts on several research and                  
development projects.  We develop and customize equipment for                   
industry and government, university and industry research                       
laboratories around the world.  Our research, design and                        
development of equipment, which remains proprietary to us, is                   
used to improve our existing products and develop new products                  
for customers.  The amount spent on research and development was                
$513,000 (3.8% of revenue) and $500,000 (4.5% of revenue) for                   
the years ended December 31, 2006 and December 31, 2005,                        
respectively.                                                                   

Government Regulation                                                           

We know of no government requirements for approval of the sale                  
of our products or services except in some export cases, which                  
require that we apply for the appropriate export license.  As of                
December 31, 2006, there were no pending government approvals                   
for an export license.                                                          

We know of no existing or probable governmental regulations that                
would have a serious effect on our business.                                    

We have been and are in material compliance with all                            
environmental laws we know to be applicable to our business.                    

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Insurance                                                                       

Some of our products are used in connection with explosive,                     
flammable, corrosive and toxic gases.  There are potential                      
exposures to personal injury as well as property damage,                        
particularly if operated without regard to the design limits of                 
the systems and components.  We believe that our insurance                      
coverage is adequate.  We have the following types of insurance                 
coverage:                                                                       
o Product liability                                                             
o Property and contents                                                         
o General liability                                                             
o Directors and officers                                                        
o Transportation                                                                
o Business auto                                                                 
o Workers compensation                                                          
o Employee benefits liability                                                   

Employees                                                                       

At December 31, 2006, we had 108 employees, 106 of which were                   
full time personnel and 2 which were part time.  We had 60                      
people in manufacturing, 22 in engineering (including research                  
and development and efforts related to product improvement) 7 in                
field service, 5 in sales and marketing and 14 in general                       
management and administration.                                                  

Item 2.         Description of Property.                                        

We maintain our headquarters at 1860 Smithtown Avenue,                          
Ronkonkoma, New York, where we own a 50,000 square foot                         
manufacturing facility which we purchased in November, 2002.                    
Our CVD and Conceptronic divisions operate out of this facility.                
Our SDC division operates out of a 22,000 square foot                           
manufacturing facility situated on five acres of land which we                  
purchased in December 1998 and is located at 1117 Kings Highway,                
Saugerties, New York.  Both facilities are in good operating                    
condition and are adequate to meet our present needs.  Both                     
facilities are subject to mortgages which are described in Item                 
6, Management's Discussion and Analysis of Financial Condition                  
and Results of Operations, under the heading, "Liquidity and                    
Capital Resources."                                                             

Item 3.         Legal Proceedings.                                              

In September 1999, the Company was named in a lawsuit filed by                  
Precisionflow Technologies, Inc., in the United States District                 
for the Northern District of New York relating to comments                      
allegedly made by CVD's President, Leonard A. Rosenbaum,                        
concerning the intellectual property obtained in the purchase of                
assets of Stainless Design Corporation.  We promptly filed a                    
counterclaim for unauthorized use of our intellectual property.                 
The plaintiff is seeking monetary damages and injunctive relief.                
In our counter claim, we are also seeking monetary damages and                  
injunctive relief.   All pre-trial disclosure has been completed                
No trial date has been set.                                                     

In May 2002, the Company instituted a new action against                        
Precisionflow Technologies, Inc., in the United States District                 
for the Northern District of New York seeking injunctive relief and             

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monetary damages based upon copyright violations.  A motion                     
by Precisionflow Technologies, Inc. to dismiss this action has                  
been pending since June 2002.                                                   

Item 4.         Submission of Matters to a Vote of Security Holders.            

Not applicable.                                                 

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PART II                                                                         

Item 5.   Market for Registrant's Common Equity and Related Stockholder         
Matters.                                                                        

The principal market for our common stock which is traded under the symbol      
"CVV" is the American Stock Exchange.  The following table sets forth, for      
the periods indicated, the high and low closing prices of our common stock      
on the American Stock Exchange.                                                 

                                                                [Download Table]

                                                        High                Low
                                ----------   ----------                        
                                                                               
Year Ended December 31, 2006:                                                  
1st Quarter............           $ 4.21                $ 2.80                 
2nd Quarter............             4.22                  2.80                 
3rd Quarter............             3.69                  2.25                 
4th Quarter............             7.13                  3.09                 
                                                                [Download Table]

                                                        High                Low
                                ----------   ----------                        
                                                                               
Year Ended December 31, 2005:                                                  
1st Quarter............           $ 5.25                $ 0.91                 
2nd Quarter............             6.51                  2.04                 
3rd Quarter............             4.30                  1.90                 
4th Quarter............             4.60                  2.72                 

As of February 27, 2007, there were approximately 77 holders of                 
record and approximately 788 beneficial owners of our common                    
stock, and the closing sales price of our common stock as                       
reported on the American Stock Exchange was $5.84.                              

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.  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.                                   

Under applicable New York law, we would not be permitted to                     
declare and pay dividends if we were insolvent, or would become                 
insolvent by payment of dividends, or if our net assets                         
remaining after payment of dividends would be less than our                     
stated capital.                                                                 

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Equity Compensation Plan Information                                            

The following table provides information about shares of our common stock       
that may be issued upon the exercise of options under all of our existing       
compensation plans as of December 31, 2006.                                     

                                                        [Enlarge/Download Table]

                            Number of securities                                            
                    to be issued upon     Weighted-average                                  
                        exercise of           exercise price of      Number of securities   
                    outstanding options,  outstanding options,   remaining available        
                        warrants and rights       warrants and rights    for future issuance
                                                                                            
Plan Category                                                                               

Equity compensation                                                                         
plans approved by          323,000                  $ 2.73                    345,250       
security holders (1)                                                                        

        Total                  323,000              $ 2.73                    345,250       
_________________________                                                                   
<FN>                                                                                        
(1) Reflects aggregate options outstanding under our Non-Qualified Stock                    
Option Plans                                                                                

Recent Sales Of Unregistered Securities                                         

None.                                                                           

Issuer Purchases Of Equity Securities                                           

None.                                                                           

Item 6. Management's Discussion and Analysis of Financial                       
Condition and Results of Operations.                                            

Except for historical information contained herein, this                        
"Management's Discussion and Analysis of Financial Condition and                
Results of Operations" contains forward-looking statements                      
within the meaning of the U.S.  Private Securities Litigation                   
Reform Act of 1995, as amended.  These statements involve known                 
and unknown risks and uncertainties that may cause our actual                   
results or outcomes to be materially different from any future                  
results, performance or achievements expressed or implied by                    
such forward-looking statements.  These forward-looking                         
statements were based on various factors and were derived                       
utilizing numerous important assumptions and other important                    
factors that could cause actual results to differ materially                    
from those in the forward-looking statements.  Important                        
assumptions and other factors that could cause actual results to                
differ materially from those in the forward-looking statements,                 
include, but are not limited to: competition in our existing and                
potential future product lines of business; our ability to                      
obtain financing on acceptable terms if and when needed;                        
uncertainty as to our future profitability, uncertainty as to                   
the future profitability of acquired businesses or product                      
lines, uncertainty as to any future expansion of the Company.                   
Other factors and assumptions not                                               

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identified above were also involved in the derivation of these                  
forward-looking statements and the failure of such assumptions to be            
realized as well as other factors may also cause actual results to              
differ materially from those projected.  We assume no obligation to             
update these forward-looking statements to reflect actual results,              
changes in assumptions, or changes in other factors affecting such              
forward-looking statements.                                                     

CVD Equipment Corporation designs, develops, manufactures,                      
markets, installs and services Chemical Vapor Deposition and gas                
control equipment for use in manufacturing semiconductors, solar                
cells, carbon nanotubes, nanowires and equipment for surface                    
mounting of components onto printed circuit boards.  Our                        
products include (1) both batch and single wafer systems used                   
for depositing, rapid thermal processing, annealing, diffusion                  
and etching of semiconductor films, (2) gas and liquid flow                     
control systems (3) ultra high purity gas and chemical piping                   
delivery systems; (4) standard and custom quartzware, (5) reflow                
furnaces and rework stations and (6) carbon nanotube and                        
nanowire deposition systems.  We also provide equipment                         
consulting, and refurbishing of semiconductor processing                        
equipment.  Our products are generally manufactured as standard                 
products, or customized to the particular specifications of each                
of its customers.                                                               

Results of Operations                                                           

Revenue for the year ended December 31, 2006 was approximately                  
$13,356,000 compared to approximately $11,225,000 for the year                  
ended December 31, 2005, representing an increase of $2,131,000                 
or 19.0%.  Revenue from the CVD division increased by                           
approximately $2,297,000 to $6,863,000 which represents 51.4% of                
our total revenues during the current fiscal year, compared to                  
$4,566,000, or 40.7% of our total revenues, for the prior fiscal                
year.  The increase in demand for customized CVD equipment and                  
gas and chemical delivery systems coupled with requests for                     
equipment provided by the First Nano product line, which we                     
acquired in May, 2005, has fueled this increase.  The annual                    
revenue for the year ended December 31, 2006, from our SDC                      
division, increased by approximately $935,000 or 42.6% to                       
$3,129,000.  This represents approximately 23.4% of our overall                 
revenue for the current fiscal year, compared to the 19.5% SDC                  
contributed in the last fiscal year.  SDC's growing reputation                  
in the industry for quality products is the primary stimulus for                
this increase.  Revenue from the Conceptronic division was                      
approximately $3,364,000 for the current fiscal year a decrease                 
of approximately $1,101,000 or 24.7% compared to $4,465,000 for                 
the year ended December 31, 2005.  The Conceptronic division is                 
continuing to improve their product offering at the same time it                
is focusing its efforts towards a more solutions oriented                       
approach with what we believe is the best heat transfer in the                  
industry and customized products.  This is being accomplished by                
taking advantage of the engineering expertise in the Company as                 
a whole rather than following much of the competition which has                 
moved manufacturing facilities to the Far East to reduce costs                  
and thus reduce selling prices.  Conceptronic has already                       
completed its first customized product sale.                                    

As a result of the increased revenues for the current year, cost                
of revenues increased to approximately $8,672,000 from                          
approximately $7,356,000 for the last fiscal year, an increase                  
of approximately $1,316,000.  The gross profit for the current                  
fiscal year increased to approximately $4,684,000 from last                     
year's $3,870,000, an increase of approximately $814,000 with an                
increase in gross profit margin to 35.1% from the 34.5%                         
experienced during the prior                                                    

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year.  We continue to achieve greater gross profit margins year                 
after year as a result of our ability to absorb those fixed costs               
through greater revenues and continuously monitoring costs.  The                
gross profit margin of the CVD division increased to 42.9% for the              
current fiscal year compared to 42.2% for the last fiscal year.                 
The SDC division's gross profit margin increased to 25.6% for the               
year ended December 31, 2006 from 19.0% for the year ended                      
December 31, 2005.  The gross profit margin of the Conceptronic                 
division decreased during the current fiscal year to 23.3% compared             
to 29.4% in fiscal 2005.  This primarily is a result of the                     
division's fixed costs having a greater impact on the reduced                   
revenues.                                                                       

Selling and shipping expenses were approximately $756,000 in the                
year ended December 31, 2006 compared to $716,000 in the year                   
ended December 31, 2005 representing an increase of 5.6%.  This                 
increase can be attributed to primarily to increased sales                      
commissions and travel costs.                                                   

General and administrative expenses were approximately                          
$2,925,000 during the year ended December 31, 2006.  This was an                
increase of approximately $394,000 or 15.6% compared to                         
approximately $2,531,000 during the year ended December 31,                     
2005.  This increase can be attributed to a combination of                      
increased payroll and benefit costs, in addition to increased                   
general insurance and utility costs.                                            

Other income for the current year increased to approximately                    
$116,000, an increase of $65,000 or 127% compared to $51,000 of                 
other income generated during the year end December 31, 2005. In                
2004, we wrote off a sale to a customer that filed a voluntary                  
petition for relief under Chapter 11 of Title 11 of the United                  
States Bankruptcy Code, in the United States Bankruptcy Court                   
for the District of Delaware. In 2006, the liquidating trust                    
distributed $92,400 to us, which represented 33% of the claim.                  

We earned minimal interest income for both 2006 and 2005 as a                   
result of the utilization of all of our available funds for                     
operations.                                                                     

We incurred approximately $224,000 of interest expense in the                   
year ended December 31, 2006, which was approximately $5,000 or                 
2.3% greater than the $219,000 incurred in the year ended                       
December 31, 2005.  The primary source of this interest expense,                
approximately $179,000 in the current year and approximately                    
$188,000 in the year ended December 31, 2005, was the interest                  
expense on the mortgages for the two buildings we own.  The                     
increase in the balance of interest expense is due to both the                  
higher average outstanding debt as well as the higher interest                  
rates on our revolving line of credit in the year ended December                
31, 2006 than in the year ended December 31, 2005.                              

At December 31, 2006, we had approximately $40,000 and $277,000                 
remaining of our federal and state net operating loss                           
carryforwards respectively.  For the twelve months ended                        
December 31, 2006, we recorded income tax expense of                            
approximately $293,000 which related to various federal, state                  
and local taxes.  The current income tax provision was reduced                  
by approximately $49,000 as a result of the use of available net                
operating losses.                                                               

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As a result of the foregoing factors, for the twelve months                     
ended December 31, 2006, we earned approximately $897,000 before                
taxes as compared to $455,000 for the twelve months ended                       
December 31, 2005.  After tax earnings for the twelve months                    
ended December 31, 2006 were approximately $604,000 as compared                 
to $391,000 after tax for the twelve months ended December 31,                  
2005 or $.19 per basic and diluted as share compared to $.13 per                
basic and $.12 per diluted share for the twelve months ended                    
December 31, 2005.  We earned approximately $239,000 or $.07 per                
basic and diluted share for the three months ended December 31,                 
2006 compared to net income of approximately $62,000 or $.02 per                
share basic and diluted for the three months ended December 31,                 
2005.                                                                           

Liquidity and Capital Resources                                                 

As of December 31, 2006, we had aggregate working capital of                    
approximately $4,151,000 compared to aggregate working capital                  
of $3,123,000 at December 31, 2005 and had available cash and                   
cash equivalents of approximately $257,000 compared to                          
approximately $265,000 in cash and cash equivalents at December                 
31, 2005.                                                                       

Accounts receivable, net of allowance for doubtful accounts                     
increased by approximately $483,000 or 25.5% at December 31,                    
2006 to $2,377,000 compared to $1,894,000 at December 31, 2005.                 
This increase is attributable to timing of shipments and                        
customer payments.                                                              

The Company sold equipment to a Customer for a purchase price of                
one hundred four thousand, four hundred eighty two (104,482)                    
shares of common stock, par value $.001 per share. Between July                 
19, 2007 and July 31, 2007, the Company has the option to demand                
that the Customer make cash payment i.e.: two hundred fifty-one                 
thousand, one hundred thirty 00/100 U.S. dollars ($251,130) for                 
the equipment, the amount that would have been required had the                 
Customer made cash payment for the equipment on July 19, 2006 in                
exchange for the return of said stock.The Customer's obligation                 
to make such payment pursuant to the terms of the option is                     
secured by a perfected lien upon the subject equipment and the                  
Company's right to execute upon the aforesaid common stock. In                  
the event the Customer does not make full payment, the Company                  
has also reserved the right to maintain plenary proceedings                     
against the Customer for the purpose of recovering such sums as                 
may be due as well as the right to obtain a deficiency judgment                 
in the event that the collateral in the equipment and stock is                  
insufficient to discharge said obligation.                                      

Inventory as of December 31, 2006 was approximately $2,705,000                  
representing an increase of approximately $637,000 or 30.8% over                
the inventory balance as of December 31, 2005.  The increase in                 
inventory was comprised of a slight increase in raw materials of                
approximately $11,000, an increase in work in process of                        
approximately $662,000 and a decrease in finished goods of                      
approximately $35,000.  The build-up in work in process is                      
indicative of an increase in orders that we are experiencing in                 
addition to our transition to building a more standardized                      
product line in order to reduce the time needed to fill a                       
customer's order.  Custom orders still comprise a significant                   
part of our revenues.  Accounts payable at December 31, 2006 was                
approximately $651,000 or 1.7% higher than it was at December                   
31, 2005.                                                                       

In  2006 our credit line with a bank which permits us to borrow                 
on a revolving basis was revised to reflect an increase in the                  
amount we are permitted to borrow from $1,000,000 to $1,250,000.                

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All financial covenants previously limiting the amounts borrowed                
were eliminated. The line of credit is subject to renewal on                    
June 1, 2007.  As of December 31, 2006, the outstanding balance                 
on this facility was $210,000 as compared to $100,000 at                        
December 31, 2005.                                                              

We also have an available $250,000 line of credit for equipment                 
purchases from the same bank permitting us to borrow up to 100%                 
of the purchase price of equipment.  The amount borrowed is                     
immediately converted into a five year term loan at the bank's                  
prime rate plus 1 1/4%.  As of December 31, 2006, there was                     
approximately $77,000 outstanding on this facility.  Borrowings                 
under this facility are collateralized by the equipment                         
purchased.                                                                      

In March, 2002, we received from General Electric Capital                       
Corporation a $2,700,000 mortgage loan, secured by the real                     
property and building and improvements to finance and improve                   
our facility in Ronkonkoma, New York.  The mortgage loan, which                 
has an outstanding balance as of December 31, 2006 of                           
$2,075,148, is payable in equal monthly installments of $22,285                 
including interest at 5.67% per annum; pursuant to an industrial                
development bond purchase agreement with the town of Islip                      
Industrial Development Agency.  The final payment is due March                  
2017.                                                                           

In April, 1999 we received from Kidco Realty Corporation a                      
$900,000 purchase money mortgage loan, secured by the real                      
property, building and improvements in Saugerties, New York.                    
The mortgage loan has an outstanding balance at December 31,                    
2006 of $810,508 and is payable in equal monthly installments of                
$5,988 including interest at 7% per annum.  The entire principal                
balance is due May 2009.                                                        

In the fourth quarter of 2006, an internal decision was made to                 
significantly broaden the First Nano product line and pursue a                  
significantly larger share of the R & D market with additional                  
equipment platforms under the First Nano brand name.  We have                   
begun to market, quote and manufacture these products. In the                   
second quarter of 2007, we plan to ship the first model of a new                
series of products intended for the R & D market.  We feel                      
comfortable we will be successful with the multiple new products                
to be offered as their design is based on building blocks we                    
have used in previous systems over the years.                                   

To support the increase in our existing product sales and the                   
development and sales of the new First Nano products, we will                   
need to increase our manufacturing capacity, hire additional                    
personnel and expand our advertising, trade shows and marketing                 
capabilities.  Additionally, our First Nano laboratory is being                 
expanded with additional laboratory test equipment and the new                  
First Nano products for demonstration to help us stay in the                    
forefront of carbon nanotube and nanowire production.                           

We believe that our cash and cash equivalent positions, cash                    
flow from operations and ability to expand our credit facilities                
will be sufficient to meet our working capital and investment                   
requirements for the next twelve months, including modest                       
growth, without shareholder dilution.                                           

Should we determine to grow our business more aggressively,                     
which may include making acquisitions, we may need to raise                     
additional funding.  For this reason, as well as other reasons                  
that arise from time to time, we may consider raising capital                   
through equity or debt financings. Any decision to raise                        
additional capital, as well as the determination of the                         
appropriate vehicle                                                             

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for doing so, will depend on market conditions, order levels,                   
opportunities presented to us and other factors.                                

Significant Accounting Policies                                                 

We continue to recognize revenues and income using the                          
percentage-of-completion method for custom production-type                      
contracts while revenues from other products are recorded when                  
such products are accepted and shipped.  Profits on custom                      
production-type contracts are recorded on the basis of our total                
estimated costs over the percentage of total costs incurred on                  
individual contracts, commencing, when progress reaches a point                 
where experience is sufficient to estimate final results with                   
reasonable accuracy.  Under this method, revenues are recognized                
based on costs incurred to date compared with total estimated                   
costs.                                                                          

The asset, "Costs and estimated earnings in excess of billings                  
on uncompleted contracts," represents revenues recognized in                    
excess of amounts billed.                                                       

The liability, "Billings in excess of costs on uncompleted                      
contracts," represents billing in excess of revenues recognized.                

Off-Balance Sheet Arrangements                                                  

None                                                                            

Item 7.         Financial Statements.                                           

The consolidated financial statements and supplementary data                    
required by this item are included in this annual report                        
beginning on page F-1.                                                          

Item 8. Changes in and Disagreements with Accountants on                        
Accounting and Financial Disclosure.                                            

None                                                                            

Item 8A.        Controls and Procedures.                                        

Evaluation of Disclosure Controls and Procedures.  The Company                  
maintains a system of disclosure controls and procedures that is                
designed to ensure that information required to be disclosed by                 
the Company in this Annual Report on Form 10-KSB, and in other                  
reports required to be filed under the Securities Exchange Act                  
of 1934, as amended (the "Exchange Act"), is recorded,                          
processed, summarized and reported within the time periods                      
specified in the rules and forms of the Securities and Exchange                 
Commission for such filings.  As required by Rule 13a-15(b)                     
under the Exchange Act, management of the Company, under the                    
direction of the Company's Chief Executive Officer and Chief                    
Financial Officer, reviewed and performed an evaluation of the                  
effectiveness of the Company's disclosure controls and                          
procedures (as defined in Rule 13a-15(e) under the Exchange Act)                
as of December 31, 2006.  Based on that review and                              

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evaluation, the Chief Executive Officer and Chief Financial Officer,            
along with the management of the Company, have determined that as               
of December 31, 2006, the disclosure controls and procedures were               
and are effective as designed to ensure that information                        
relating to the Company and its consolidated subsidiary would be                
accumulated and communicated to them, as appropriate, to allow                  
timely disclosures regarding required disclosures.                              

Changes in Internal Control Over Financial Reporting.  There                    
were no changes in our internal control over financial                          
reporting, identified in connection with the evaluation of such                 
internal control that occurred during our last fiscal quarter,                  
that have materially affected, or are reasonably likely to                      
materially affect, our internal control over financial                          
reporting.                                                                      

Item 8B.        Other Information.                                              

None                                                                            

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PART III                                                                        

Item 9. Directors, Executive Officers, Promoters, Control                       
Persons and Corporate Governance; Compliance with                               
Section 16(a) of the Exchange Act.                                              

Board of Directors and Executive Officers                                       

Our Certificate of Incorporation and Bylaws provide for our                     
Company to be managed by or under the direction of the Board of                 
Directors.  Under our Certificate of Incorporation and Bylaws,                  
the number of directors is fixed from time to time by the Board                 
of Directors.  The Board of Directors currently consists of five                
members.  Directors are elected for a period of one year and                    
thereafter serve, subject to the Bylaws, until the next annual                  
meeting at which their successors are duly elected by the                       
stockholders.                                                                   

The following table sets for the names, ages and positions with                 
the Company of each of our directors and executive officers.                    

                                                                [Download Table]

Name                 Age        Position(s) with the Company              
-------------------- --- -------------------------------------------------
                                                                          
Leonard A. Rosenbaum 61  Director, Chief Executive Officer, President     
Alan H. Temple Jr.       73      Director, Chairman-Compensation Committee
Martin J. Teitelbaum 57  Director, Assistant Secretary                    
Conrad Gunther       60  Director, Chairman-Audit Committee               
Bruce T. Swan        74  Director, Chairman-Nominating, Governance and    
                             Compliance Committee                         
Glen R. Charles      53  Chief Financial Officer, Secretary               

Leonard A. Rosenbaum                                                            

Leonard A. Rosenbaum founded the Company in 1982 and has been                   
its President, Chief Executive Officer and has served as a                      
member of the Board of Directors since that date.  From 1971                    
until the time of his affiliation with the Company in 1982, Mr.                 
Rosenbaum was President, Director and principal stockholder of                  
Nav-Tec Industries, a manufacturer of semiconductor processing                  
equipment similar to the type of equipment presently                            
manufactured by the Company.  From 1966 to 1971, Mr. Rosenbaum                  
was employed by a division of General Instrument, a manufacturer                
of semiconductor materials and equipment.                                       

Alan H. Temple Jr.                                                              

Alan H. Temple Jr. has served as a member of the Board of                       
Directors since 1987.  Mr. Temple earned an MBA at Harvard                      
University and has been President of Harrison Homes Inc., a                     
building and consulting firm located in Pittsford, New York                     
since 1977.                                                                     

Martin J. Teitelbaum                                                            

Martin J. Teitelbaum has served as a member of the Board of                     
Directors since 1985.  Mr. Teitelbaum is an attorney, who since                 
1988, has conducted his own private practice, the Law                           

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Offices of Martin J. Teitelbaum.  Prior to establishing his own                 
firm, from 1977 to 1987, Mr. Teitelbaum was a partner in the law                
firm of Guberman and Teitelbaum.  Mr. Teitelbaum became a member                
of the Board of Directors for the Company in 1985.  He is presently             
the Assistant Secretary of the Company, a position Mr. Teitelbaum               
also held from 1986 to 1998.                                                    

Conrad Gunther                                                                  

Conrad Gunther has served as a member of the Board of Directors                 
since 2000.  Mr. Gunther has extensive experience in mergers and                
acquisitions and raising capital through both public and private                
means.  He also has extensive experience in executive management                
in the banking industry as well as serving on the Board of                      
Directors of Reliance Bancorp, Childrobics and GVC Venture Corp,                
all public companies.  For the past five years, Mr. Gunther has                 
been the President of E-Billsolutions, a company that provides                  
credit card processing to Internet, mail order and telephone                    
order merchants.                                                                

Bruce T. Swan                                                                   

Bruce T. Swan has served as a member of the Board of Directors                  
since September 2003.  Mr. Swan has extensive banking, export                   
and international credit experience and has been retired for                    
more than five years.  He previously has held the positions of                  
Deputy Manager at Brown Brothers Harriman and Co., Assistant                    
Treasurer at Standard Brands Incorporated, Assistant Treasurer                  
at Monsanto Corporation, Vice President and Treasurer at AM                     
International Inc. and President and Founder of Export                          
Acceptance Company.  Mr. Swan, earned his MBA from Harvard                      
University and is a former adjunct faculty member of New York                   
University's Stern School of Business Administration.                           

Glen R. Charles                                                                 

Glen R. Charles has been the Chief Financial Officer and                        
Secretary of the Company since January, 2004.  From 2002 until                  
he joined the Company, he was the Director of Financial                         
Reporting for Jennifer Convertibles, Inc., the owner and                        
licensor of the largest group of sofabed specialty retail stores                
in the United States.  From 1994 to 2002, he was the Chief                      
Financial Officer of Trans Global Services, Inc., a provider of                 
temporary technical services to the aerospace, aircraft,                        
electronics and telecommunications markets.  Mr. Charles has                    
also had his own business in the private practice of accounting.                

Code Of Ethics                                                                  

The Company has adopted a Corporate Code of Conduct and Ethics                  
that applies to its employees, senior management, and Board of                  
Directors, including the Chief Executive Officer and Chief                      
Financial Officer.  The Corporate Code of Conduct and Ethics is                 
available on our web site, http://www.cvdequipment.com, by                      
clicking on "About Us" and then clicking on "Corporate                          
Overview."                                                                      

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Audit Committee                                                                 

The Board of Directors has an Audit Committee that consists of                  
Conrad Gunther, Alan H. Temple Jr., Bruce T. Swan and Martin J.                 
Teitelbaum.  During the fiscal year ended December 31, 2006, the                
Audit Committee held six meetings.  The Board of Directors has                  
adopted a revised written charter for the Audit Committee.                      
Pursuant to the revised Audit Committee Charter, the Audit                      
Committee is directly responsible for the appointment,                          
compensation, retention and oversight of the work of any                        
registered public accounting firm engaged for the purpose of                    
preparing or issuing an audit report or performing other audit,                 
review or attest services for the Company, and each such                        
independent auditor shall report directly to the Committee.  The                
Audit Committee also reviews with management and the independent                
auditor, the Company's annual audited financial statements, the                 
scope and results of annual audits and the audit and non audit                  
fees of the independent public accountants.  Furthermore, the                   
committee reviews the adequacy of our internal control                          
procedures, the structure of our financial organization and the                 
implementation of our financial and accounting policies.                        
Messrs. Gunther, Temple and Swan are "independent" under the                    
requirements of the American Stock Exchange.                                    

The Board of Directors has determined that Conrad Gunther is an                 
"audit committee financial expert" as that term is defined in                   
the rules and regulations of the Securities and Exchange                        
Commission.                                                                     

Section 16(a) Beneficial Ownership Reporting Compliance                         

The rules of the Securities and Exchange Commission require us                  
to disclose late filings of reports of stock ownership and                      
changes in stock ownership by our directors, officers and ten                   
percent stockholders.  To our knowledge, based solely on our                    
review of (a) the copies of such reports and amendments thereto                 
furnished to us and (b) written representations that no other                   
reports were required, during our fiscal year ended December 31,                
2006, all of the filings for our officers, directors and ten                    
percent stockholders were made on a timely basis, except for the                
following: two reports filed by Mr. Bruce T. Swan on Form 4, one                
filed on March 16, to report an exercise of common stock options                
and a second on December 13, 2006 to report a donation of 1,000                 
shares of common stock; and one report filed by Mr. Alan H.                     
Temple Jr. on Form 4 on September 27, 2006 to report an exercise                
of common stock options.                                                        

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Item 10.        Executive Compensation.                                         

Summary Compensation Table                                                      

The following table sets forth the compensation of our chief                    
executive officer and chief financial officer, our "named                       
executive officers," for the year ended December 31, 2006.  The                 
Company has no executive officers other than the named executive                
officers.                                                                       

                                                                [Download Table]

                                          Option                        
Name and                         Salary   Awards                        
principal position             Year        ($)    ($)(1)        Total($)
-------------------------  ----  -------  -------   --------            
                                                                        
Leonard A. Rosenbaum       2006  162,742   28,138       190,880         
President and                                                           
Chief Executive Officer                                                 

Glen R. Charles            2006  115,337        5,063   120,400         
Secretary and                                                           
Chief Financial Officer                                                 
<FN>                                                                    
For the year ended December 31, 2006 Mr. Rosenbaum and Mr.              
Charles were paid base salaries of $162,742 and $115,337                
respectively.                                                           
(1)     Amounts shown do not reflect compensation actually              
received by the named executive officer. Instead, the amounts           
shown are the compensation costs recognized by CVD in fiscal            
2006 for option awards as determined pursuant to FAS 123R. These        
compensation costs reflect option awards granted prior to fiscal        
2006. The assumptions used to calculate the value of option             
awards are set forth under Note 13 of the Notes to Consolidated         
Financial Statements.                                                   

Outstanding Equity Awards at December 31, 2006                                  

                                                                [Download Table]

                                                   OPTION AWARDS                   
            ----------------------------------------------------------------       
            Number of     Number of                                                
            Securities    Securities                                               
            Underlying    Underlying                                               
            Unexercised   Unexercised                                              
            Options       Options            Option            Option              
            Exercisable   Unexercisable   Exercise Price     Expiration            
Name            (#)                (#)             ($)              Date           
----------  ------------  -------------   --------------    ------------           
                                                                                   
Leonard A.         10,000               -                  2.00           8/1/2007 
Rosenbaum          15,000               -                  1.40           9/23/2010
                    7,000            14,000                4.10           9/13/2012

Glen R. Charles 3,750        11,250                2.26           6/16/2012        

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2006 Director Compensation                                                      

                                                                [Download Table]

                        Option Awards ($)                       
Name                          (1)                  Total ($)    
----------------------  ------------------   -------------      
                                                                
Alan H. Temple Jr.               28,138              28,138     
Martin J. Teitelbaum         28,138                  28,138     
Conrad Gunther               28,138                  28,138     
Bruce T. Swan                28,138                  28,138     
<FN>                                                            
(1)     Amounts shown do not reflect compensation actually      
received by the named director. Instead, the amounts shown are  
the compensation costs recognized by CVD in fiscal 2006 for     
option awards as determined pursuant to FAS 123R. These         
compensation costs reflect option awards granted prior to fiscal
2006. The assumptions used to calculate the value of option     
awards are set forth under Note 13 of the Notes to Consolidated 
Financial Statements.                                           

Directors of the Company are not regularly compensated for being                
on the Board of Directors and the directors did not receive any                 
compensation in 2006.  However, the Stock Option Committee which                
is comprised of all of the members of the Board of Directors                    
with the exception of Leonard A. Rosenbaum, has the authority to                
grant stock options to members from time to time.  No stock                     
options were granted to directors in 2006.  In September, 2005                  
the Stock Option Committee granted non-qualified stock options                  
to purchase 21,000 shares of the Company's common stock to each                 
member of the board of directors.  These options were issued at                 
a grant price equal to the then current market price of $4.10.                  
These options became exercisable as to 33.3% of the underlying                  
shares on December 13, 2005.  The options become exercisable                    
with respect to the remaining 14,000 underlying shares with                     
options to purchase 1,750 shares becoming exercisable every 3                   
months beginning January 13, 2007.  These options expire on                     
September 13, 2012.                                                             

Item 11.        Security Ownership of Certain Beneficial Owners and             
Management and Related Stock Holder Matters.                                    

The following table sets forth, as of March 10, 2007,                           
information regarding the beneficial ownership of our common                    
stock by (a) each person who is known to us to be the owner of                  
more than five percent of our common stock, (b) each of our                     
directors, (c) each of the named executive officers, and (d) all                
directors and executive officers and executive employees as a                   
group.  For purposes of the table, a person or group of persons                 
is deemed to have beneficial ownership of any shares that such                  
person has the right to acquire within 60 days of March 10,                     
2007.                                                                           

                                                                [Download Table]

                            Amounts and Nature of       Percent of Class  
Name of Beneficial Owner        Beneficial Ownership (1)               (%)
--------------------------  ------------------------   ------------------ 
                                                                          
Leonard A. Rosenbaum             1,325,350 (2)                40.2        
Alan H. Temple Jr.                     170,500 (3)                     5.2
Martin J. Teitelbaum                61,500 (4)                 1.9        
Conrad Gunther                      35,500 (2)                 1.1        

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Bruce T. Swan                       24,500 (3)                 0.7        
Glen R. Charles                      3,750 (5)                 0.1        
All directors and executive                                               
officers and executive                                                    
employees as a group                                                      
(five (5) persons)                   1,621,100                    49.2    
<FN>                                                                      
______________________________                                            
(1) All of such shares are owned directly with sole voting and investment 
power, unless otherwise noted below.                                      

(2) Includes 35,500 shares of our common stock underlying currently       
exercisable options.                                                      

(3) Includes 15,500 shares of our common stock underlying currently       
exercisable options.                                                      

(4) Includes 2,000 shares held by Mr. Teitelbaum's wife as to which       
beneficial ownership thereof is disclaimed by Mr. Teitelbaum and          
35,500 shares of our common stock underlying currently exercisable        
options.                                                                  

(5) Includes 3,750 shares of our common stock underlying currently        
exercisable options.                                                      

See Item 5, Market for Registrant's Common Equity and Related                   
Stockholder Matters, under the heading "Equity Compensation Plan                
Information" for information regarding our securities authorized                
for issuance under equity compensation plans.                                   

Item 12.        Certain Relationships and Related Transactions, and             
Director Independence.                                                          

Related Person Transactions                                                     

The Company has not had any transactions since the beginning of                 
the 2006 fiscal year, and there are no transactions currently                   
proposed, in which a related person had or will have a direct or                
indirect material interest.                                                     

Director Independence                                                           

The members of our Board of Directors are Leonard A. Rosenbaum,                 
Alan H. Temple Jr., Martin J. Teitelbaum, Conrad Gunther and                    
Bruce T. Swan.  Messrs. Gunther, Temple, Swan and Teitelbaum are                
"independent" under the requirements of the American Stock                      
Exchange.  Messr. Rosenbaum is not independent under such                       
requirements.                                                                   

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PART IV                                                                         

Item 13.        Exhibits.                                                       

3.1      Certificate of Incorporation dated October 12, 1982 of Certificate of  
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.2      Certificate of Amendment dated April 25, 1985 of Certificate of        
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.3      Certificate of Amendment dated August 12, 1985 of Certificate of       
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.4      Bylaws of CVD Equipment Corporation, incorporated herein by reference  
to our Registration No. 2-97210-NY.                                   

10.1 Form of Non-Qualified Stock Option Agreement with certain directors,       
officers and employees of CVD Equipment Corporation incorporated      
herein by reference to our Registration Statement on Form S-8         
No. 33-30501, filed August 15, 1989.*                                 

10.2 Purchase a 22,000 square foot facility from Kidco Realty incorporated      
herein by reference to our Form 8-K filed on December 31, 1998.       

10.3 CVD Equipment Corporation 2001 Stock Option Plan.*                         

10.4 Form of Non-Qualified Stock Option Agreement.*                             

21.1 Subsidiaries.                                                              

23.1 Consent of Moore Stephens, P.C.                                            

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.         

31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.         

32.1 Section 1350 Certification of Principal Executive Officer.                 

32.2 Section 1350 Certification of Principal Financial Officer.                 
___________________                                                             
* Management contract or compensatory plan or arrangement                       
required.                                                                       

Item 14.        Principal Accountant Fees and Services.                         

The following presents fees for professional audit services                     
rendered by Moore Stephens, P.C. for the audit of our financial                 
statements for the years ended December 31, 2006 and December                   
31, 2005.                                                                       

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Audit Fees                                                                      

The aggregate fees billed by Moore Stephens, P.C. for audit work                
performed in the preparation and review of our annual financial                 
statements and review of financial statements included in our                   
quarterly reports filed with the Securities and Exchange                        
Commission for fiscal years 2006 and 2005 were $76,750 and                      
$77,250, respectively.                                                          

Audit- Related Fees                                                             

We did not incur any audit-related fees in 2006 or 2005.                        

Tax Fees                                                                        

Tax fees consisted primarily of tax preparation of the 2004 and                 
2005 annual tax returns.  The aggregate fees billed by Moore                    
Stephens P.C. for such services were $8,500 in 2006 and $10,215                 
in 2005.                                                                        

All Other Fees                                                                  

None                                                                            

Audit Committee Approval                                                        

The engagement of the Company's independent auditors is pre-                    
approved by the Company's Audit Committee.  The Audit Committee                 
pre-approves all fees billed and all services rendered by the                   
Company's independent auditors.                                                 

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SIGNATURES                                                                      

In accordance with Section 13 or 15(d) of the Securities                        
Exchange Act of 1934, the registrant has duly caused this report                
to be signed on its behalf by the undersigned, thereunto duly                   
authorized.                                                                     

CVD EQUIPMENT CORPORATION   

By: /s/ Leonard A. Rosenbaum    
Name: Leonard A. Rosenbaum          
      Title: President and Chief Executive Officer

In accordance with the Securities Exchange Act of 1934, this report has         
been signed below by the following persons on behalf of the registrant and      
in the capacities and on the dates indicated below.                             

                                                        [Enlarge/Download Table]

        NAME                                    POSITION                             DATE
-----------------------  --------------------------------------  --------------          
                                                                                         
/s/ Leonard A Rosenbaum  President, Chief Executive Officer and  March 26, 2007          
Leonard A. Rosenbaum     Director (Principal Executive Officer)                          

/s/ Alan H. Temple Jr.   Director                                    March 26, 2007      
Alan H. Temple Jr.                                                                       

/s/ Martin J. Teitelbaum Director and Assistant Secretary            March 26, 2007      
Martin J. Teitelbaum                                                                     

/s/ Conrad Gunther       Director                                    March 26, 2007      
Conrad Gunther                                                                           

/s/ Bruce T. Swan            Director                                March 26, 2007      
Bruce T. Swan                                                                            

/s/ Glen R. Charles      Chief Financial Officer and Secretary   March 26, 2007          
Glen R. Charles          (Principal Financial and Accounting                             
                          Officer)                                                       

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EXHIBIT INDEX                                                                   

3.1      Certificate of Incorporation dated October 12, 1982 of Certificate of  
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.2      Certificate of Amendment dated April 25, 1985 of Certificate of        
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.3      Certificate of Amendment dated August 12, 1985 of Certificate of       
Corporation incorporated herein by reference to Exhibit 3.1 to our    
Registration No. 2-97210-NY.                                          

3.4      Bylaws of CVD Equipment Corporation, incorporated herein by reference  
to our Registration No. 2-97210-NY.                                   

10.1 Form of Non-Qualified Stock Option Agreement with certain directors,       
officers and employees of CVD Equipment Corporation incorporated      
herein by reference to our Registration Statement on Form S-8         
No. 33-30501, filed August 15, 1989.*                                 

10.2 Purchase a 22,000 square foot facility from Kidco Realty incorporated      
herein by reference to our Form 8-K filed on December 31, 1998.       

10.3 CVD Equipment Corporation 2001 Stock Option Plan.*                         

10.4 Form of Non-Qualified Stock Option Agreement .*                            

21.1 Subsidiaries.                                                              

23.1 Consent of Moore Stephens, P.C.                                            

31.3 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.         

31.4 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.         

32.1 Section 1350 Certification of Principal Executive Officer.                 

32.2 Section 1350 Certification of Principal Financial Officer.                 
___________________                                                             
* Management contract or compensatory plan or arrangement required.             

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1/5                                                     Exhibit 10.3

CVD EQUIPMENT CORPORATION 

2001 STOCK OPTION PLAN

1.   Establishment and Purpose.                                             

(a)  Establishment.   This CVD EQUIPMENT CORPORATION 2001         
Stock Option Plan was adopted effective July 23, 2001   
(the "Plan").                                           

(b)  Purpose.   The purpose of the Plan is to attract,            
retain and reward employees and other persons providing 
services to CVD Equipment Corporation, a corporation    
organized under the laws of the State of New York, and  
any successor corporation thereto (collectively         
referred to as the "Company"), and any present or       
future parent and/or subsidiary corporations of such    
corporation (all of which along with the Company being  
individually referred to as a "Participating Company"   
and collectively referred to as the "Participating      
Company Group"), and to motivate such persons to        
contribute to the growth and profits of the             
Participating Company Group in the future. For purposes 
of the Plan, a parent corporation and a subsidiary      
corporation shall be as defined in Sections 424(e) and  
424(f) of the Internal Revenue Code of 1986, as amended 
(the "Code").                                           

2.   Administration.                                                        

(a)  Administration by Board and/or Committee.   The Plan         
shall be administered by the Board of Directors of the  
Company (the "Board") and/or by a duly appointed        
committee of the Board, consisting of two or more non-  
employee directors, having such powers as shall be      
specified by the Board. Any subsequent references       
herein to the Board shall also mean the committee if    
such committee has been appointed and, unless the       
powers of the committee have been specifically limited, 
the committee shall have all of the powers of the Board 
granted herein, including without limitation, the power 
to terminate or amend the Plan at any time, subject to  
the terms of the Plan and any applicable limitations    
imposed by law. All questions of interpretation of the  
Plan or of any options granted under the Plan (an       
"Option") shall be determined by the Board, and such    
determinations shall be final and binding upon all      
persons having an interest in the Plan and/or any       
Option.                                                 

(b)  Options Authorized.   Options may be either incentive        
stock options as defined in Section 422 of the Code     
("Incentive Stock Options") or non-statutory stock      
options.                                                

(c)  Authority of Officers.   Any officer of a Participating      
Company shall have the authority to act on behalf of    
the Company with respect to any matter, right,          
obligation or election which is the responsibility of   
or which is allocated to the Company herein, provided   
the officer has apparent authority with respect to such 
matter, right, obligation or election.                  

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2/5                                                     Exhibit 10.3

(d)  Rule 16b-3.   with respect to the participation in the       
Plan of officers or directors of the Company subject to 
Section 16 of the Securities Exchange Act of 1934, as   
amended (the "Exchange Act"), the Plan shall be         
administered in compliance with the requirements of     
Rule 16b-3, as promulgated under the Exchange Act and   
amended from time to time or any successor rule or      
regulation ("Rule 16b-3").                              

3.   Eligibility.   Options may be granted to employees                     
(including officers) and directors of the Participating Company             
Group or to individuals or entities who are rendering services              
as consultants, advisors, or other independent contractors to               
the Participating Company Group. The Board shall, in its sole               
discretion, determine which persons shall be granted Options (an            
"Optionee"). Notwithstanding the foregoing, Incentive Stock                 
Options may be granted only to employees (including officers) of            
the Participating Company Group. Eligible persons may be                    
granted more than one (1) Option.                                           

4.   Shares Subject to Option.   Options shall be for the                   
purchase of shares of the authorized but unissued common stock              
or treasury shares of common stock of the Company (the "Stock"),            
subject to adjustment as provided in paragraph 10 below. The                
maximum number of shares of Stock which may be issued under the             
Plan shall be 300,000 shares. In the event that any outstanding             
Option for any reason expires or is terminated or cancelled                 
and/or shares of Stock subject to repurchase are repurchased by             
the Company, the shares allocable to the unexercised portion of             
such Option, or such repurchased shares, may again be subject to            
a new Option only if the grant of such new Option and issuance              
of such shares pursuant to such new Option would not cause the              
Plan or any Option granted under the Plan to contravene Rule                
16b-3                                                                       

5.   Time for Granting Options.   All Options shall be granted,             
if at all, within ten (10) years from the date the Plan is                  
adopted by Board and approved by the shareholders of the                    
Company.                                                                    

6.   Terms, Conditions and Form of Options and Exercise.                    
Subject to the provisions of the Plan, the Board shall determine            
for each Option (which need not be identical) the number of                 
shares of Stock for which the Option shall be granted, the                  
exercise price of the Option, the timing and terms of                       
exercisability and vesting of the Option, the time of expiration            
of the Option, the effect of the Optionee's termination of                  
employment or termination of consulting or other services,                  
whether the Option is treated as an Incentive Stock Option or as            
a non-statutory stock option, the method for satisfaction of any            
tax withholding obligation arising in connection with the                   
option, including by the withholding or delivery of shares of               
stock, and all other terms and conditions of the Option not                 
inconsistent with the Plan. Options granted pursuant to the Plan            
shall be evidenced by written agreements specifying the number              
of shares of Stock covered thereby, in such form as the Board               
shall from time to time establish, which agreements may                     
incorporate all or any of the terms of the Plan by reference                
and shall comply with and be subject to the following terms and             
conditions:                                                                 

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(a)  Exercise Price.   The exercise price for each Option         
shall be established in the sole discretion of the      
Board; provided however, that (i) the exercise price    
per share shall be not less than the closing price of a 
share of Stock on the date of the granting of the       
Option, as reported by the American Stock Exchange; and 
(ii) no Incentive Stock Option granted to an Optionee   
who at the time the Option is granted owns stock        
possessing more than ten percent (10%) of the total     
combined voting power of all classes of stock of a      
Participating Company within the meaning of Section     
422(b)(6) of the Code (a "Ten Percent Optionee") shall  
have an exercise price per share less than one hundred  
ten percent (110%) of the price described in clause     
(i), above.  Notwithstanding the foregoing, an Option   
(whether an Incentive Stock Option or a non-statutory   
stock option) may be granted with an exercise price     
lower than the minimum exercise price set forth above   
if such Option is granted pursuant to an assumption or  
substitution for another option in a manner qualifying  
with the provisions of Section 424(a) of the Code.      

(b)  Exercise Period of Options.   The Board shall have the       
power to set, including by amendment of an Option, the  
time or times within each Option shall be exercisable   
or the event or events upon the occurrence of which all 
or a portion of each Option shall be exercisable and    
term of each Option; provided however, that (i) no      
Option shall be exercisable after the expiration of ten 
(10) years after the date such Option is granted, and   
(ii) no Incentive Stock Option granted to a Ten Percent 
Owner Optionee shall be exercisable after the           
expiration of five (5) years after the date such Option 
is granted.                                             

(c)  Payment of Exercise Price.                                   

(i)   Forms of Payment Authorized.   Payment of the     
exercise price for the number of shares of Stock being  
purchased pursuant to any Option shall be made (i) in   
cash, (ii) in whole shares of Stock owned by the        
Optionee prior to exercising the Option, (iii) by       
having the Company withhold a number of shares of Stock 
from the exercise, equal in value to the exercise       
price, or (iv) in a combination of cash and delivery of 
shares of Stock, or cash and the withholding of shares  
of Stock. The Company shall establish procedures in     
connection with payments pursuant to (ii), (iii), and   
(iv), above, to ensure that the Plan does not become    
subject to variable accounting by virtue of such        
payment methods. The value of any share of Stock        
delivered or withheld in payment of the exercise price  
shall be the closing price of a share of Stock on the   
date of exercise, as reported by the exchange on which  
the Stock is then traded, and if it is traded on more   
than one exchange, the highest closing price so         
reported. The Board may at any time or from time to     
time grant options which do not permit all of the       
foregoing forms of consideration to be used in payment  
of the exercise price and/or which otherwise restrict   
one or more forms of consideration.                     

(ii)  Tender of Company Stock.   Notwithstanding the    
foregoing, an Option may not be exercised by tender to  
the Company of shares of Stock to the extent such       
tender of Stock would constitute a violation of the     
provisions of any law, regulation and/or agreement      
restricting the redemption of the Company's Stock.      

(d)  Payment of Taxes.   In order to enable the Company to        
meet any applicable federal, state or local withholding 
tax requirements arising as a result of the exercise of 
an Option, an Optionee shall either (a) pay the Company 
the amount of tax to be withheld, (b) elect             

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4/5                                                     Exhibit 10.3

 to satisfy such obligation by having the Company withhold
shares of Stock that otherwise would be delivered to the
Optionee pursuant to the exercise of the Option for     
which the tax is being withheld,  provided that         
withholding by such method shall be limited to the      
minimum required applicable tax withholding, (c) by     
delivering to the Company other shares of Stock of the  
Company owned by the Optionee prior to exercising the   
Option, or (d) by making a payment to the Company       
consisting of a combination of cash and such shares of  
Stock. Such an election shall be made in such a manner  
as may be prescribed by the Board and the Board shall   
have the right, in its discretion, to disapprove such   
election. The value of any share of Stock to be         
withheld by the Company or delivered to the Company     
pursuant to this Section 6(c) shall be the closing      
price of a share of Stock, as reported by the exchange  
on which the Stock is then traded, and if it is traded  
on more than one exchange, the highest closing price so 
reported.                                               

7.   Standard Terms of Stock Option.   Unless otherwise provided            
for by the board in the grant of an Option, any Option granted              
hereunder shall be exercisable for a term of ten (10) years.                

8.   Authority to Vary Terms.   The Board shall have the                    
authority from time to time to vary the terms of Options granted            
to different individuals or of different Options granted to the             
same individual; provided, however, that the terms and                      
conditions of all such Options shall be in accordance with the              
terms of the Plan. This authority shall include, without                    
limitation, the authority to include in any Option terms                    
accelerating, terminating or otherwise changing, the                        
exercisability of any Option in the event of the proposed                   
dissolution or liquidation of the Company, or in the event of               
the proposed sale of all or substantially all of the assets of              
the Company, or the merger of the Company with or into another              
corporation, or in the event of an initial public offering of               
the stock of the Company.                                                   

9.   Fair Market Value Limitation.   To the extent that the                 
aggregate fair market value (determined at the time the Option              
is granted) of stock with respect to which Incentive Stock                  
Options are exercisable by an Optionee for the first time during            
any calendar year (under all stock option plans of the Company,             
including the Plan) exceeds One Hundred Thousand Dollars                    
($100,000), such Options shall be treated as non-statutory stock            
options. This paragraph shall be applied by taking Incentive                
Stock Options into account in the order in which they were                  
granted.                                                                    

10.  Effect of Change in Stock Subject to Plan.   Appropriate               
adjustments shall be made in the number and class of shares of              
Stock subject to the Plan and to any outstanding Options and in             
the exercise price of any outstanding Options in the event of a             
stock dividend, stock split, reverse stock split,                           
recapitalization, combination, reclassification, or like change             
in the capital structure of the Company (a "Recapitalization                
Event").                                                                    

In the event a majority of the shares which are of the same                 
class as the shares that are subject to outstanding options are             
exchanged for, converted into, or otherwise becomes shares of               
another corporation (the "New Shares"), the Company may                     
unilaterally amend the outstanding Options                                  

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5/5                                                     Exhibit 10.3

to provide that such Options are exercisable for New shares.                
In the event of any such amendment, the number of shares and                
the exercise price of the outstanding Options shall be adjusted             
in a fair and equitable manner.                                             

11.     Options Non-Transferable.   During the lifetime of the              
Optionee, the Option shall be exercisable only by the Optionee.             
No Option shall be assignable or transferable by the Optionee               
except by will or by the laws of descent and distribution.                  

12.     Termination or amendment of Plan or Options.   The Board            
may terminate or amend the Plan or any Option at any time;                  
provided, however, that without the approval of the Company's               
stockholders, there shall be (a) no increase in the total number            
of shares of Stock covered by the Plan (except by operation of              
the provisions of paragraph 10 above), (b) no change in the                 
class eligible to receive Incentive Stock Options and (c) no                
expansion in the class eligible to receive non-statutory stock              
options. In any event, no amendment may adversely affect any                
then outstanding Option or any unexercised portion thereof,                 
without the consent of the Optionee, unless such amendment is               
required to enable an Option designated as an Incentive Stock               
Option to qualify as an Incentive Stock Option.                             

13.     Applicable Law.   This Plan will be governed by the laws of         
the State of New York.                                                      

IN WITNESS WHEREOF, the undersigned Secretary of the Company                
certifies that the foregoing CVD Equipment Corporation 2001                 
Stock Option Plan was duly adopted by the Board of Directors of             
the Company on the 23rd day of July, 2001.                                  

Name:  Sharon Canese                                                        

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1/7                                             Exhibit 10.4

CVD EQUIPMENT CORPORATION           
2001 "KEY EMPLOYEE"           

STOCK OPTION AGREEMENT            

STOCK OPTION AGREEMENT dated ______________ between CVD                     
EQUIPMENT CORPORATION, a New York Corporation (hereinafter                  
called the "Company"), and ___________________, an officer,                 
director or salaried employee of the Company or one of its                  
subsidiaries (the "Optionee"). The Company's Stock Option                   
Committee (the "Committee") has determined that the Optionee is             
one of the personnel of the Company or one of its subsidiaries              
that the objectives of the Company's 2001 "Key Employee" Stock              
Option Plan (the "Plan") will be furthered by granting to the               
Optionee an option pursuant to the Plan.                                    

In consideration of the foregoing and of the mutual undertakings            
set forth in this Stock Option Agreement, the Company and the               
Optionee agree as follows:                                                  

SECTION 1.  GRANT OF OPTION.                                                

The Company hereby grants to the Optionee an "option" to                    
purchase ____________ shares of the Common Stock of the Company,            
at the price per share of ______.                                           

SECTION 2.  EXERCISABILITY.                                                 

2.1 The option shall become exercisable with respect to ___%      
of the shares of Common Stock on ____________. With     
respect to the remaining shares, an additional ___% of  
such shares become exercisable on ____________, and     
additional ___% on ____________, so that the option     
becomes exercisable in full by ____________.            
2.2 The option may be partially exercised from time to time       
within the percentage limitations on exercisability set 
forth in Section 2.1, but not at any time as to less    
than 100 shares unless the remaining shares which have  
become so purchasable are less than 100 shares.         
2.3 Subject to Section 4, the option shall expire and cease       
to be exercisable seven years after the date of this    
Agreement, or on such earlier date as may be provided   
herein.                                                 

SECTION 3.  METHOD OF EXERCISE.                                             

The option or any part thereof may be exercised only by the                 
giving of written notice to the Company, which notice shall                 
state the election to exercise the options and the number of                
whole shares of Common Stock with respect to which the option is            
being exercised. Such notice must be accompanied by payment of              
the full purchase price for the number of shares purchased. Such            
payment shall be made (a) by certified or official bank check               
payable to the Company (or the equivalent thereof acceptable to             
the Company), or (b) with the consent of the Committee, by                  
delivery of previously acquired shares of Common Stock having               
fair market value (determined as of the date such option is                 
exercised) equal to all or part of the purchase price and, if               

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2/7                                             Exhibit 10.4

applicable, of a certified or official bank check (or the                   
equivalent thereof acceptable to the Company) for any remaining             
portion of the purchase price. As soon as practicable after it              
receives payment of the purchase price, the Company shall,                  
subject to the provisions of Section 5, deliver to the Optionee             
a certificate or certificates for the shares of Common Stock so             
purchased.                                                                  

SECTION 4.  TERMINATION OF EMPLOYMENT OR SERVICE; DEATH.                    

4.1 If the Optionee's employment or service shall terminate       
by reason of dismissal for cause or resignation without 
prior consent of the Company, the option granted hereby 
shall terminate and expire on the day the Optionee's    
employment or service terminates.                       
4.2 If the Optionee's employment or service shall terminate       
other than by reason of death, dismissal for cause or   
resignation without the Company's prior consent, the    
Optionee may thereafter exercise the option only on the 
following terms and conditions: (a) such exercise may   
be made only to the extent that the Optionee was        
entitled to exercise such option on the date his        
employment or service terminates; and (b) such exercise 
must be made by the earlier of the expiration date of   
such option (determined pursuant to Section 2) or the   
90th day after his employment or service terminates;    
and (c) the Board of Directors has not determined that  
the Optionee has caused hardship to the Company by      
performance or non-performance of any action or deed,   
past or present.                                        
4.3 If the Optionee dies while in the employ or service of        
the Company or a subsidiary, or during the 90-day       
period after his employment or service terminates for   
any reason other than dismissal for cause or            
resignation from employment without the Company's prior 
consent, the option granted hereby shall be             
exercisable, but only within one year after the date of 
the Optionee's death, to the extent that the Optionee   
was entitled to exercise such option on the date of     
death. Any such exercise following the Optionee's death 
may be made only by such Optionee's personal            
representative, unless the Optionee's will specifically 
disposes of such option, in which case such exercise    
shall be made only by the recipient of such specific    
disposition. If the Optionee's personal representative  
or the recipient of a specific disposition under the    
Optionee's will shall be entitled to exercise any       
option pursuant to the preceding sentence, such         
representative or recipient shall be bound by all the   
terms and conditions of the Plan and this Agreement     
which would have applied to the Optionee's exercise of  
the option granted hereby (if he had lived), including  
without limitation, the provisions of Sections 2,4.5    
and 9.                                                  
4.4 The Optionee shall be deemed to have terminated               
employment or service when the Optionee ceases to be    
employed by or serve as a director of the Company and   
all of its subsidiaries. The Committee may in its       
discretion determine (a) whether any leave of absence   
constitutes a termination of employment or service      
within the meaning of this Agreement, and (b) the       
impact, if any, of any such leave of absence on the     
option granted under this Agreement.                    

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3/7                                             Exhibit 10.4

SECTION 5.  RESTRICTIONS                                                    

5.1 Notwithstanding any other provision(s) of this                
Agreement, the options herein granted are contingent    
upon (a) the shares of Common Stock reserved for        
issuance upon the exercise of the within option having  
been duly listed, subject to official notice of         
issuance, upon NASDAQ and (b) a registration statement  
under the Securities Act of 1933 with respect to such   
shares having become effective-unless the Committee     
shall, upon the advice of counsel, determine that such  
listing and/or registration is neither necessary nor    
desirable.                                              
5.2 Notwithstanding any other provision(s) of this                
Agreement, if the Committee shall at any time determine 
that any Consent (as hereinafter defined) is necessary  
or desirable as a condition of, or in connection with,  
the issuance or transfer of shares of Common Stock or   
the taking of , or in connection with, the issuance or  
transfer of shares of Common Stock or the taking of any 
action in connection with, the issuance or transfer of  
shares of Common Stock or the taking of any other       
action in connection with this Agreement or the Plan,   
then such action shall not be taken, in whole or in     
part, unless and until such Consent shall have been     
effected or obtained to the full satisfaction of the    
Committee.                                              
5.3 For purposes of Section 5.2, the term "Consent" means         
(a) any and all listings, registrations or              
qualifications in respect thereof upon any securities   
exchange or under any federal, state or local law, rule 
or regulation, (b) any and all written agreements and   
representations by the Optionee with respect to the     
disposition of shares of Common Stock, or with respect  
to any other matter, which the Committee shall deem     
necessary or desirable to comply with the terms of any  
such listing, registration or qualification or          
registration be made and (c) any and all consents,      
clearances and approvals by any governmental or other   
regulatory bodies in respect of any action taken or to  
be  taken under the Plan or this Agreement.             

SECTION 6.  NONTRANSFERABILITY AND NONASSIGNABILITY.                        

No right granted to the Optionee under the Plan or this                     
agreement shall be assignable or transferable (whether by                   
operation of law or otherwise and whether voluntarily or                    
involuntarily), other than by will or by the laws of descent and            
distribution. During the life of the Optionee, all rights                   
granted to the Optionee under the Plan or under this Agreement              
shall be exercisable only by the Optionee during his lifetime or            
after death by his legal representative.                                    

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4/7                                             Exhibit 10.4

SECTION 7.  WITHHOLDING TAXES.                                              

Whenever shares of Common Stock are to be delivered upon                    
exercise of the option granted hereby, the Company shall be                 
entitled to require as a condition of delivery that the Optionee            
remit to the Company an amount sufficient to satisfy all                    
federal, state and other governmental withholding tax                       
requirements related thereto.                                               

SECTION 8.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.                     

In the event of any increase or decrease, after the date of this            
Agreement, in the number of issued shares of Common Stock                   
resulting from stock dividends, split-up, recapitalization,                 
acquisition of stock, separation, or liquidation, the Committee             
shall proportionately adjust the number of shares subject to the            
option, the purchase price set forth in Section 1, and any and              
all other matters deemed appropriate by the Committee; provided,            
however, that any option to purchase fractional shares resulting            
from any such adjustment shall be eliminated.                               

SECTION 9.  REORGANIZATION.                                                 

9.1 In the event that the Company is merged or consolidated       
with another corporation and (i) the Company is not the 
surviving corporation or (ii) the Company shall be the  
surviving corporation and there shall be any change in  
the shares of Common Stock by reason of such merger or  
consolidation, or in the event of the reorganization or 
liquidation of the Company (each such event being       
hereinafter referred to as a "Reorganization Event") or 
in the event that the Board of Directors of the Company 
shall propose that the Company enter into a             
Reorganization Event, then the Committee may in its     
discretion (i) by written notice to the Optionee,       
provide that the option granted hereby will be          
terminated unless exercised within 30 days (or such     
longer period as the Committee shall determine in its   
sole discretion) after the date of such notice, and/or  
(ii) advance any one or more of the dates upon which    
such option shall become exercisable in whole or in     
part. Wherever deemed appropriate by the committee, any 
such action may be made conditional upon the            
consummation of the applicable Reorganization Event.    
9.2 Notwithstanding the provisions of paragraph 9.1, if any       
"corporate transaction" as defined in Section 1.425-1   
of the Treasury Regulations promulgated under the       
Internal Revenue Code of 1954 occurs after the date     
hereof and in connection therewith the Company and      
another corporation enter into an agreement providing   
for the issuance of substitute stock options in         
exchange for the Option or for the assumption of such   
Option, in either case giving the employee the right to 
purchase the largest whole number of shares of stock of 
the Company or of any other corporation at the lowest   
option price permitted by said Section 1.425-1, the     
Option shall, from and after the effective date of such 
corporate transaction, be deemed to provide for the     
purchase of such number of shares of such option price  
as shall be agreed upon by the Company and such other   
corporation, and the term "Company" herein shall mean   
the issuer of the stock then covered by the             

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5/7                                             Exhibit 10.4

 Option and the term "Common Stock" shall mean such stock.

SECTION 10.  (RESERVED).                                                    

SECTION 11. RIGHT OF DISCHARGE RESERVED.                                    

Nothing in the Plan or in this Agreement shall confer upon the              
Optionee the right to continue in the employ or service of the              
Company or any of its subsidiaries, or affect any right which               
the Company or any of its subsidiaries may have to terminate the            
employment or service of the Optionee.                                      

SECTION 12.  NO RIGHTS AS A STOCKHOLDER.                                    

Neither the Optionee nor any person succeeding to the Optionee's            
rights hereunder shall have any rights as a stockholder with                
respect to any shares subject to the option until the date of               
the issuance of a stock certificate to him or her for such                  
shares. Except for adjustments made pursuant to Section 8 or 9,             
no adjustment shall be made for dividends, distributions or                 
other rights (whether ordinary or extraordinary, and whether in             
cash, securities or other property) for which the record date is            
prior to the date such stock certificate is issued.                         

SECTION 13.  NATURE OF PAYMENTS.                                            

13.1 Any and all payments of shares of Common Stock               
hereunder shall be granted, transferred or paid on      
consideration of services performed by the Optionee for 
the Company or for its subsidiaries.                    
13.2 Any and all issuance of shares of Common Stock               
hereunder shall constitute a special incentive payment  
to the Optionee. Such issuances and payments shall not, 
unless otherwise determined by the Committee, be taken  
into account in computing the amount of salary or       
compensation of the Optionee for the purposes of        
determining any pension, retirement, death or other     
benefits under (i) any pension, retirement, life        
insurance or other benefit plan of the Company or any   
subsidiary or (ii) any agreement between the Company or 
any subsidiary, on the one hand, and the Optionee, on   
the other hand.                                         

SECTION 14.  COMMITTEE DETERMINATIONS.                                      

The Committee's determinations under the Plan and this Agreement            
need not be uniform and may be made by it selectively among                 
persons who receive awards under the Plan (whether or not such              
persons are similarly situated). All decisions, interpretations             
and determinations by the Committee with regard to any question             
or matter arising hereunder or under the Plan shall be                      
conclusive and binding upon the Company and the Optionee.                   

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6/7                                             Exhibit 10.4

SECTION 15.  DEFINITION OF SUBSIDIARY.                                      

The term "subsidiary" as used in the Agreement means any                    
corporation of which , at the time of reference, 50% or more of             
the shares entitled to vote generally in an election of                     
directors are owned directly or indirectly by the Company or any            
subsidiary.                                                                 

SECTION 16.  DEFINITION OF COMMON STOCK.                                    

The term "common Stock" as used in this Agreement means the                 
shares of the common stock of the Company as constituted on the             
date of this Agrement and any other shares into which such                  
common stock shall thereafter be changed by reason of                       
recapitalization, merger, consolidation, split-up, combination,             
exchange of shares or the like. Shares of stock that shall be               
transferable pursuant to the option shall be authorized and                 
unissued or treasury shares of the Company's Common Stock.                  

SECTION 17.  PLAN PROVISIONS TO PREVAIL.                                    

This Agreement shall be subject to all of the terms and                     
provisions of the Plan. Without limiting generality of the                  
foregoing, by entering into this Agreement the Optionee agrees              
that no member of the Committee shall be liable for any action              
or determination made in good faith with respect to the Plan or             
any award thereunder or this Agreement. In the event there is               
any inconsistency between the provision of this Agreement and               
the Plan, the provisions of the Plan shall govern.                          

SECTION 18.  SECTION HEADINGS.                                              

The Section headings contained herein are for the purposed of               
convenience only and are not intended to define or limit the                
contents of said Sections.                                                  

SECTION 19.  NOTICES.                                                       

Any notice to be given to the Company hereunder shall be in                 
writing and shall be addressed to CVD Equipment Corporation,                
1860 Smithtown Avenue, Ronkonkoma, NY 11779 or at such other                
address as the Company may hereafter designate to the Optionee              
by notice as provided herein. Any notice to be given to the                 
Optionee hereunder shall be addressed to the Optionee at the                
address set forth beneath his signature hereto, or at such other            
address as the Optionee may hereafter designate to the Company              
by notice as provided herein. Notices hereunder shall be deemed             
to hav been duly given when personally delivered or mailed by               
registered or certified mail to the party entitled to receive               
the same.                                                                   

SECTION 20.  SUCCESSORS AND ASSIGNS.                                        

This Agreement shall be binding upon and inure to the benefit of            
the parties hereto and the successors and assigns of the Company            
and, to the extent set forth in Section 6, the heirs and                    
personal representatives of the Optionee.                                   

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7/7                                             Exhibit 10.4

SECTION 21.  OTHER PAYMENTS OR AWARDS.                                      

Nothing contained in this Agreement shall be deemed in any way              
to limit or restrict the Company or any subsidiary from making              
any award or payment to the Optionee under any other plan,                  
arrangement or understanding, whether now existing or hereafter             
in effect.                                                                  

SECTION 22.  OPTION NONQUALIFIED.                                           

The option granted hereby is intended to be a non-qualified                 
option subject to the provisions of Section 83 of the Internal              
Revenue Code of 1954 (or corresponding provisions of subsequent             
law), and is intended not to qualify for statutory, qualified,              
restricted, or incentive stock option treatment under current               
and/or pending law, or for any similar special tax treatment                
under subsequent law. The Optionee hereby consents to any                   
modification of this Agreement which the Company may hereafter              
adopt in order to ensure such treatment as a nonqualified                   
option; provided, that except as this Agreement or the Plan may             
otherwise permit, any such modification shall not (a) reduce the            
number of shares subject to the option granted hereby, (b)                  
increase the option exercise price or (c) shorten the period                
within which the option may be exercised.                                   

IN WITNESS WHEREOF, the parties hereto have executed this                   
Agreement as of the date and year first above written.                      

KEY EMPLOYEE:                                                               

ADDRESS:                                                                    

KEY EMPLOYEE SIGNATURE:  __________________________                         

BY ___________________________ Leonard A. Rosenbaum, President              

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Exhibit 21.1

SUBSIDIARIES        

CVD Materials Corporation, a New York corporation, is a wholly owned            
subsidiary of CVD Equipment Corporation.                                        

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          

We consent to the incorporation by reference in the Registration                
Statement of CVD Equipment Corporation on Form S-8, pertaining                  
to the 2001 Stock Option Plan of CVD Equipment Corporation, of                  
our report dated March 9, 2007, relating to the consolidated                    
financial statements of CVD Equipment Corporation included in                   
the Annual Report on Form 10-KSB for the year ended December 31,                
2006.                                                                           

                  MOORE STEPHENS, P.C.
                          Certified Public Accountants

Cranford, New Jersey                                                            
March 19, 2007                                                                  

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Exhibit 31.1

Certification of Principal Executive Officer      
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002     

I, Leonard A. Rosenbaum, the principal executive officer of CVD Equipment       
Corporation, certify that:                                                      
1. I have reviewed this annual report on Form 10-KSB of CVD Equipment           
Corporation;                                                                    
2.      Based upon my knowledge, this report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to      
make the statements made, in light of the circumstances under which such        
statements were made, not misleading with respect to the period covered by      
this report;                                                                    
3       Based upon my knowledge, the financial statements, and other financial  
information included in this report, fairly present in all material             
respects the financial condition, results of operations and cash flows of       
the registrant as of, and for, the periods presented in this report;            
4.      The registrant's other certifying officer and I are responsible for     
establishing and maintaining disclosure controls and procedures (as defined     
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:     
(a)     Designed such disclosure controls and procedures, or caused such        
disclosure controls and procedures to be designed under our supervision, to     
ensure that material information relating to the registrant, including its      
consolidated subsidiaries, is made known to us by others within those           
entities, particularly during the period in which this report is being          
prepared;                                                                       
(b)     Intentionally omitted.                                                  
(c)     Evaluated the effectiveness of the registrant's disclosure              
controls and procedures and presented in this report our conclusions about      
the effectiveness of the disclosure controls and procedures, as of the end      
of the period covered by this report based on such evaluation; and              
(d)     Disclosed in this report any change in the registrant's internal        
control over financial reporting that occurred during the registrant's most     
recent fiscal quarter (the registrant's fourth fiscal quarter in the case       
of an annual report) that has materially affected, or is reasonably likely      
to materially affect, the registrant's internal control over financial          
reporting; and                                                                  
5.      The small business issuer's other certifying officer and I have         
disclosed, based on our most recent evaluation of internal control over         
financial reporting, to the registrant's auditors and the audit committee       
of the registrant's board of directors (or persons performing the               
equivalent functions):                                                          
(a)      All significant deficiencies and material weaknesses in the            
design or operation of internal control over financial reporting which are      
reasonably likely to adversely affect the registrant's ability to record,       
process, summarize and  report financial data; and                              
(b)      Any fraud, whether or not material, that involves management or        
other employees who have a significant role in the registrant's internal        
control over financial reporting.                                               

Dated: March 26, 2007           /s/   Leonard A. Rosenbaum                      
                                 ---------------------------------
                                  President, Chief Executive Office and Director

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Exhibit 31.2
Certification of Principal Financial Officer      
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   

I, Glen R. Charles, the principal financial officer of CVD Equipment            
Corporation certify that:                                                       
1.      I have reviewed this annual report on Form 10-KSB of CVD Equipment      
Corporation;                                                                    
2.      Based upon my knowledge, this report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to      
make the statements made, in light of the circumstances under which such        
statements were made, not misleading with respect to the period covered by      
this report;                                                                    
3       Based upon my knowledge, the financial statements, and other financial  
information included in this report, fairly present in all material             
respects the financial condition, results of operations and cash flows of       
the registrant as of, and for, the periods presented in this report;            
4.      The registrant's other certifying officer and I are responsible for     
establishing and maintaining disclosure controls and procedures (as defined     
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:     
(a)     Designed such disclosure controls and procedures, or caused such        
disclosure controls and procedures to be designed under our supervision, to     
ensure that material information relating to the registrant, including its      
consolidated subsidiaries, is made known to us by others within those           
entities, particularly during the period in which this report is being          
prepared;                                                                       
(b)     Intentionally omitted.                                                  
(c)     Evaluated the effectiveness of the registrant's disclosure              
controls and procedures and presented in this report our conclusions about      
the effectiveness of the disclosure controls and procedures, as of the end      
of the period covered by this report based on such evaluation; and              
(d)     Disclosed in this report any change in the registrant's internal        
control over financial reporting that occurred during the registrant's most     
recent fiscal quarter (the registrant's fourth fiscal quarter in the case       
of an annual report) that has materially affected, or is reasonably likely      
to materially affect, the registrant's internal control over financial          
reporting; and                                                                  
5.      The registrant's other certifying officer and I have disclosed, based   
on our most recent evaluation of internal control over financial reporting,     
to the registrant's auditors and the audit committee of the registrant's        
board of directors (or persons performing the equivalent functions):            
(a)      All significant deficiencies and material weaknesses in the            
design or operation of internal control over financial reporting which are      
reasonably likely to adversely affect the registrant's ability to record,       
process, summarize and  report financial data; and                              
(b)      Any fraud, whether or not material, that involves management or        
other employees who have a significant role in the registrant's internal        
control over financial reporting.                                               

Dated: March 26, 2007           /s/   Glen R. Charles                           
                           ---------------------------
                       Chief Financial Officer

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Exhibit 32.1

Certification of Principal Executive Officer      
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  
Section 906 of the Sarbanes-Oxley Act of 2002     

I, Leonard A. Rosenbaum, President and Chief Executive Officer of CVD           
Equipment Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350,      
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that      
to my knowledge, the annual report on Form 10-KSB for the period ending         
December 31, 2006 of CVD Equipment Corporation (the "Form 10-KSB") fully        
complies with the requirements of Section 13(a) or 15(d) of the Securities      
Exchange Act of 1934 and the information contained in the Form 10-KSB           
fairly presents, in all material respects, the financial condition and          
results of operations of CVD Equipment Corporation.                             

Dated: March 26, 2007   /s/   Leonard A. Rosenbaum                              
    Leonard A. Rosenbaum
Chief Executive Officer         
             (Principal Executive Officer)

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Exhibit 32.2

Certification of Principal Financial Officer      
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  
Section 906 of the Sarbanes-Oxley Act of 2002     

I, Glen R. Charles, Chief Financial Officer of CVD Equipment Corporation,       
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge, the        
annual report on Form 10-KSB for the period ending December 31, 2006 of CVD     
Equipment Corporation (the "Form 10-KSB") fully complies with the               
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of        
1934 and the information contained in the Form 10-KSB fairly presents, in       
all material respects, the financial condition and results of operations of     
CVD Equipment Corporation.                                                      

Dated: March 26, 2007   /s/   Glen R. Charles                                   
Glen R. Charles 
Chief Financial Officer         
             (Principal Financial Officer)

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CVD EQUIPMENT CORPORATION AND SUBSIDIARY            
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS            

                                                                        Page No.

Report of Independent Registered Public Accounting Firm...........  F1          

Financial Statements:                                                           

Consolidated Balance Sheets at December 31, 2006 and 2005.........  F2          

Consolidated Statements of Operations for the years ended                       
December 31, 2006 and 2005.....................................  F3       

Consolidated Statements of Stockholders' Equity for the                         
Years ended December 31, 2006 and 2005.........................  F4       

Consolidated Statements of Cash Flows for the years ended                       
December 31, 2006 and 2005.....................................  F5       

Notes to Consolidated Financial Statements........................  F6          

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F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                         

To the Board of Directors and Stockholders of                                   
CVD Equipment Corporation                                       
Ronkonkoma, New York                                            

We have audited the accompanying consolidated balance sheets of CVD             
Equipment Corporation and Subsidiary as of December 31, 2006 and 2005, and      
the related consolidated statements of operations, stockholders' equity,        
and cash flows for each of the two years in the period ended December 31,       
2006.  These consolidated financial statements are the responsibility of        
the company's management.  Our responsibility is to express an opinion on       
these consolidated financial statements based on our audits.                    

We conducted our audits in accordance with the standards of the Public          
Company Accounting Oversight Board (United States).  Those standards            
require that we plan and perform the audit to obtain reasonable assurance       
about whether the consolidated financial statements are free of material        
misstatement.  An audit includes examining, on a test basis, evidence           
supporting the amounts and disclosures in the consolidated financial            
statements.  An audit also includes assessing the accounting principles         
used and significant estimates made by management, as well as evaluating        
the overall consolidated financial statement presentation.  We believe that     
our audits provide a reasonable basis for our opinion.                          

In our opinion, the consolidated financial statements referred to above         
present fairly, in all material respects, the consolidated financial position   
of CVD Equipment Corporation and Subsidiary as of December 31, 2006 and 2005,   
and the consolidated results of their operations and their cash flows for       
each of the two years in the period ended December 31 2006, in conformity       
with accounting principles generally accepted in the United States of           
America.                                                                        

                                                            MOORE STEPHENS, P.C.
                                                   Certified Public Accountants.

Cranford, New Jersey                                                            
March 9, 2007                                                                   

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F-2

                           CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                           Consolidated Balance Sheets
                          December 31, 2006 and 2005

                                                          [Enlarge/Download Table]
                                                                                               
                                                                                               

                                                                        2006           2005    
                                                                   -------------  -------------
                                                                                               
ASSETS                                                                                         
Current Assets                                                                                 
     Cash and cash equivalents                                     $    257,341   $    265,454 
     Accounts receivable, net                                         2,377,069      1,893,665 
     Investments                                                        251,130             -  
     Cost and estimated earnings in excess of billings                                         
        on uncompleted contracts                                        716,663        595,067 
     Inventories                                                      2,704,506      2,067,255 
     Other current assets                                               118,300         49,597 
                                                                   -------------  -------------

     Total Current Assets                                             6,425,009      4,871,038 

Property, plant and equipment, net                                    4,778,807      5,090,536 

Deferred income taxes - non-current                                     899,904        241,988 

Other assets                                                            708,114        610,304 

Intangible assets, net                                                  105,775         96,141 
                                                                   -------------  -------------
     Total Assets                                                  $ 12,917,609   $ 10,910,007 
                                                                   =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY                                                           
Current Liabilities                                                                            
     Current maturities of long-term debt                          $    223,653   $    217,204 
     Short-term notes payable                                           210,000        100,000 
     Short-term debt                                                      2,109             -  
     Accounts payable                                                   640,771        639,619 
     Accrued expenses                                                   686,771        642,115 
     Accrued professional fees - related party                           35,000         35,260 
     Customer deposits                                                       -              -  
     Deferred revenue                                                   212,250        114,140 
     Deferred tax liability-current                                     263,396             -  
                                                                   -------------  -------------

     Total Current Liabilities                                        2,273,950      1,748,338 
Long-term Debt, net of current portion                                2,776,801      2,923,424 
Deferred tax liability-long-term                                        666,948             -  
                                                                   -------------  -------------
     Total Liabilities                                                5,717,699      4,671,762 
                                                                   -------------  -------------

Commitments and Contingencies                                                -              -  

Stockholders' Equity:                                                                          
     Common stock - $0.01 par value -10,000,000 shares authorized;                             
     issued & outstanding, 3,250,500 shares at December 31, 2006                               
     and 3,127,800 shares at December 31, 2005                           32,505         31,278 
     Additional paid-in capital                                       3,405,474      3,049,362 
     Retained earnings                                                3,761,931      3,157,605 
                                                                   -------------  -------------
     Total Stockholders' Equity                                       7,199,910      6,238,245 
                                                                   -------------  -------------

     Total Liabilities and Stockholders' Equity                    $ 12,917,609   $ 10,910,007 
                                                                   =============  =============

<FN>                                                                                           
  See Notes to Consolidated Financial Statements                                               
                                                                              
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F-3

                           CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                           Consolidated Statements of Operations
                          Years ended December 31, 2006 and 2005

                                                                  [Download Table]
                                                                              
                                                                              

                                                       2006           2005    
                                                  -------------  -------------
                                                                              
Revenue                                           $ 13,355,778   $ 11,225,316 

Costs of revenue                                     8,671,839      7,355,679 

Gross profit                                         4,683,939      3,869,637 
                                                  -------------  -------------

Operating expenses                                                            
     Selling and shipping                              756,122        716,377 
     General and administrative                      2,899,702      2,495,432 
     Related party - professional fees                  25,000         35,260 
                                                  -------------  -------------

Total operating expenses                             3,680,824      3,247,069 

Operating income                                     1,003,115        622,568 
                                                  -------------  -------------

Other income (expense)                                                        
     Interest income                                       866            763 
     Interest expense                                 (223,509)      (219,255)
     Other income                                      116,441         51,405 
                                                  -------------  -------------
Total other (expense), net                            (106,202)      (167,087)
                                                  -------------  -------------

Income before income tax                               896,913        455,481 
Income tax (expense)                                  (292,587)       (64,570)
                                                  -------------  -------------

Net income                                        $    604,326   $    390,911 
                                                  =============  =============

Basic earnings per common share                   $      0.19    $      0.13  
Diluted earnings per common share                 $      0.19    $      0.12  

Weighted average common shares outstanding                                    
basic earnings per share                             3,169,177      3,097,698 

Weighted average common shares outstanding                                    
diluted earnings per share                           3,263,533      3,220,097 

<FN>                                                                          
  See Notes to Consolidated Financial Statements                              
                                                                              
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F-4

                            CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                           Consolidated Statements of Stockholders' Equity
                            Years ended December 31, 2006 and 2005
  
                                                        [Enlarge/Download Table]
                                                                                                                
                                                                                                                
                                                                   Additional                             Total 
                                          Common Stock               Paid -In        Retained      Stockholders'
                                       Shares         Amount          Capital        Earnings            Equity 
                                  --------------  --------------  --------------  --------------  --------------
                                                                                                                
Balance - December 31, 2004          3,039,100     $    30,391     $ 2,902,149     $ 2,766,694     $ 5,699,234  

Exercise of stock options               88,700             887         147,213                         148,100  

Net Income                                                                             390,911         390,911  
                                  --------------  --------------  --------------  --------------  --------------
Balance - December 31, 2005          3,127,800     $    31,278     $ 3,049,362     $ 3,157,605     $ 6,238,245  

Exercise of stock options              122,700           1,227         186,848                         188,075  

Stock based compensation expense                                       169,264                         169,264  

Net Income                                                                             604,326         604,326  
                                  --------------  --------------  --------------  --------------  --------------
Balance - December 31, 2006          3,250,500     $    32,505     $ 3,405,474     $ 3,761,931     $ 7,199,910  

<FN>                                                                                                            
The accompanying notes are an integral part of the consolidated financial statements                            
                                                                              
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F-5

                           CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                           Consolidated Statements of Cash Flows
                          Years ended December 31, 2006 and 2005

                                                          [Enlarge/Download Table]
                                                                                          
                                                                                          

                                                                  2006           2005     
                                                              -------------  -------------
                                                                                          
Cash flows from operating activities:                                                     
     Net income                                               $    604,326   $    390,911 
     Adjustments to reconcile net income                                                  
     to net cash provided by (used in) operating activities:                              
     Depreciation and amortization                                 358,050        350,143 
     Stock based compensation expense                              169,264             -  
     Deferred tax provision                                        272,428         58,755 
     Bad debt provision                                             (1,380)       (15,131)
     Changes in operating assets and liabilities                                          
     Accounts receivable                                          (482,024)       496,723 
     Investments                                                  (251,130)               
     Cost in excess of billings on uncompleted contracts          (121,596)       515,295 
     Inventory                                                    (552,354)      (243,802)
     Other current assets                                          (68,703)        61,146 
      Accounts payable                                              11,152        (86,087)
      Accrued expenses                                             132,508        165,445 
      Customer Deposits                                                 -        (298,152)
      Billing in excess of costs on uncompleted contracts               -              -  
                                                              -------------  -------------
Net cash provided by operating activities                           70,541      1,395,246 
                                                              -------------  -------------

Cash flows from investing activities:                                                     
     Capital expenditures                                         (224,903)      (485,961)
     Deposits                                                      (13,762)            -  
                                                              -------------  -------------
Net cash used in investing activities                             (238,665)      (485,961)
                                                              -------------  -------------

Cash flows from financing activities                                                      
     Proceeds of short-term borrowings                           1,690,309        685,000 
     Payments of short-term borrowings                          (1,578,199)    (1,435,000)
     Proceeds of long-term debt                                     90,000             -  
     Payments of long-term debt                                   (230,174)      (213,394)
     Net proceeds from stock options exercised                     188,075        148,100 
                                                              -------------  -------------
Net cash provided by (used in)  financing activities               160,011       (815,294)
                                                              -------------  -------------

Net (decrease) increase in cash and cash equivalents                (8,113)        93,991 

Cash and cash equivalents at beginning of year                     265,454        171,463 
                                                              -------------  -------------

Cash and cash equivalents at end of year                      $    257,341   $    265,454 
                                                              =============  =============

<FN>                                                                                      
  See Notes to Consolidated Financial Statements                                          
                                                                              
F-6 

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 1 - Business Description                                               

CVD Equipment Corporation and Subsidiary (the "Company"), a New York        
corporation, was organized and commenced operations in October 1982. Its    
principal business activities include the manufacturing of chemical vapor   
deposition equipment, customized gas control systems, the manufacturing of  
process equipment suitable for the synthesis of a variety of one-           
dimensional nanostructures and nanomaterials and a line of furnaces all of  
which are used primarily to produce semiconductors and other electronic     
components. The Company engages in business throughout the United States    
and the world.                                                              

Note 2 - Summary of Significant Accounting Policies                         

Principles of Consolidation                                                 

The consolidated financial statements include the accounts of CVD           
Equipment Corporation and its wholly owned subsidiary. In December 1998, a  
subsidiary, Stainless Design Concepts, Ltd., was formed as a New York       
Corporation. In April 1999, this subsidiary was merged into CVD Equipment   
Corporation. The Company has one inactive subsidiary, CVD Materials         
Corporation as of December 31, 2006 and 2005.  All significant              
intercompany accounts and transactions have been eliminated in              
consolidation.                                                              

Use of Estimates                                                            

The preparation of financial statements in conformity with accounting       
principles generally accepted in the United States of America requires      
management to make estimates and assumptions that affect the reported       
amounts of assets and liabilities and disclosure of contingent assets and   
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could  
differ from those estimates. Estimates are used when accounting for certain 
items such as revenues on long-term contracts recognized on the percentage- 
of-completion method, allowances for doubtful accounts, depreciation and    
amortization, tax provisions and product warranties.                        

Revenue and Income Recognition                                              

The Company recognizes revenues and income using the percentage-of-         
completion method for custom production-type contracts while revenues from  
other products are recorded when such products are accepted and shipped.    
Profits on custom production-type contracts are recorded on the basis of the
Company's estimates of the percentage-of-completion of individual contracts,
commencing when progress reaches a point where experience is sufficient to  
estimate final results with reasonable accuracy. Under this method, revenues
are recognized based on costs incurred to date compared with total estimated
costs.                                                                      
F-7 

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

The asset, "Costs and estimated earnings in excess of billings on           
uncompleted contracts," represents revenues recognized in excess of amounts 
billed.                                                                     

The liability, "Billings in excess of costs on uncompleted contracts,"      
represents amounts billed in excess of revenues earned.                     

Investments                                                                 

Investments in unconsolidated companies in which the Company owns less then 
a 20% interest or otherwise does not exercise a significant influence are   
carried at cost.                                                            

Inventories                                                                 

Inventories are valued at the lower of cost (determined on the first-in,    
first-out method) or market.                                                

Reclassifications                                                           

Certain items have been reclassified in the 2005 financial statements to    
conform to the 2006 presentation. These reclassifications have no effect on 
the net income previously reported.                                         

Income Taxes                                                                

Deferred tax assets and liabilities are determined based on the estimated   
future tax effects of temporary differences between the financial statements
and tax bases of assets and liabilities, as measured by the current enacted 
tax rates. Deferred tax expense (benefit) is the result of changes in the   
deferred tax assets and liabilities. A valuation allowance is not considered
necessary by management since it is more likely than not that the deferred  
tax asset will be realized. An allowance may be necessary in the future     
based on changes in economic conditions.                                    

Property, Plant and Equipment                                               

Property, plant and equipment are stated at cost, net of accumulated        
depreciation and amortization. Expenditures for maintenance and repairs are 
charged against operations as incurred. The cost of certain labor and       
overhead which is expected to benefit future periods has been capitalized   
and amortized. Depreciation and amortization are computed by the straight-  
line method for financial statement purposed over the following estimated   
useful lives:                                                               

F-8 

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005
  
                                                                [Download Table]
                                                             
                                                             

                                                Estimated    
                                                Useful Life  
                                              ---------------
                                                             
        Buildings                                  39 years  
        Building improvements                    5-39 years  
        Machinery and equipment                     8 years  
        Capitalized labor and overhead              3 years  
                                                                              
                                                                  [Download Table]
                                                             
                                                             

                                                Estimated    
                                                Useful Life  
                                              ---------------
                                                             

        Furniture and fixtures                     8 years   
                Computer equipment                 5 years   
                Transportation equipment           3 years   
                                                                              
Software Capitalization                                                     

The Company follows Statement of Position 98-1, Accounting for Costs of     
Computer Software Developed or Obtained for Internal Use. This standard     
requires certain direct development costs associated with internal-use      
software to be capitalized including external direct costs of material and  
services and payroll costs for employees devoting time to the software      
projects. These costs totaled $123,115 and $252,483 for the years ended     
December 31, 2006 and 2005 respectively and are included in Other Assets.   
All software is amortized straight-line over its useful life of three years.
Amortization expense related to software totaled $37,194 and $47,446 for the
years ended December 31, 2006 and 2005, respectively.                       

Intangible Assets                                                           

The cost of intangible assets is being amortized on a straight-line basis   
over their useful lives ranging from 5 to 15 years. Amortization expense    
recorded by the Company in 2006 and 2005 totaled $18,027 and $13,416        
respectively.                                                               

Bad Debts                                                                   

Accounts receivables are presented net of an allowance for doubtful accounts
of $7,217 and $8,597 as of December 31, 2006 and 2005, respectively. The    
allowance is based on prior experience and management's evaluation of the   
collectibility of accounts receivable. Management believes the allowance is 
adequate. However, future estimates may change based on changes in economic 
and customer conditions.                                                    

F-9 

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Product Warranty                                                            

The Company records warranty costs as incurred and does not provide for     
possible future costs. Management estimates such costs not to be material   
based on prior experience. However, it is reasonably possible that this     
estimate may change in the future.                                          

Advertising Costs                                                           

The company expenses advertising and trade show costs which are not expected
to benefit future periods. These expenses which are included in selling and 
shipping expenses were $57,508 and $53,492 in 2006 and 2005, respectively.  

Earnings Per Share                                                          

Basic net earnings per common share is computed by dividing the net income  
by the weighted average number of shares of common stock outstanding during 
each period. Diluted earnings per share reflects the dilutive effect of the 
assumed exercise of options. Items which may dilute earnings per share in   
future periods are disclosed in Note 13.                                    

Cash and Cash Equivalents                                                   

The Company considers all highly liquid financial instruments purchased with
an original maturity of three months or less at the date of purchase to be  
cash equivalents.                                                           

Concentration of Credit Risk                                                

Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of cash, cash equivalents, and accounts    
receivable. The Company places its cash equivalents with high credit-quality
financial institutions and invests its excess cash primarily in money market
instruments. The Company has established guidelines relative to credit      
ratings and maturities that seek to maintain stability and liquidity. The   
Company sells products and services to various companies across several     
industries in the ordinary course of business. The Company routinely        
assesses the financial strength of its customers and maintains allowances   
for anticipated losses. Generally, the Company does not require collateral  
or other security to support trade receivables. See Note 15 for             
concentration details.                                                      

F-10

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Fair value of Financial Instruments                                         

The carrying amounts of financial instruments including cash and cash       
equivalents, accounts receivable, other assets, accounts payable and accrued
expenses, approximate fair value due to the relatively short maturity of    
these instruments. The carrying value of long-term debt approximates fair   
value based on borrowing rates currently available for loans with similar   
terms and maturities.                                                       

Stock-Based Compensation                                                    

On January 1, 2006, the Company adopted the provisions of SFAS No. 123-R    
"Share-Based Payment" using the modified prospective method. SFAS No. 123-  
R requires companies to recognize the cost of employee services received    
in exchange for awards of equity instruments based upon the grant date      
fair value of those awards. Under the modified prospective method of        
adopting SFAS No. 123-R, the Company recognized compensation cost for all   
share-based payments granted after January 1, 2006, plus any awards         
granted to employees prior to January 1, 2006 that remain unvested at that  
time. Under this method of adoption, no restatement of prior periods is     
made.                                                                       

Prior to January 1, 2006 the Company recognized the cost of employee        
services received in exchange for equity instruments in accordance with     
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued     
Employees" (APB 25). APB 25 required the use of the intrinsic value method, 
which measures compensation cost as the excess, if any, of the quoted market
price of the stock over the amount the employee must pay for the stock.     
Compensation expense was measured under APB 25 on the date the shares were  
granted. Under APB 25, no compensation expense was recognized for stock     
options.                                                                    

Shipping and Handling                                                       

It is the Company's policy to include freight in total sales. The amount    
included in sales was $34,214 and $33,540 for the years ended December 31,  
2006 and 2005, respectively. Included in selling and shipping is $98,138 and
$87,844 for shipping and handling costs for 2006 and 2005, respectively.    

F-11

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Recently Issued Accounting Standards                                        

In February 2006, the Financial Accounting Standards Boards ("FASB")        
issued Statement No. 155, Accounting for Certain Hybrid Financial           
Instruments, an amendment of FASB No. 133, Accounting for Derivative        
Instruments and Hedging Activities, and FASB No. 140, Accounting for        
Transfers and Servicing of Financial Assets and Extinguishments of          
Liabilities.  FASB No. 155 provides the framework for fair value re-        
measurement of any hybrid financial instrument that contains an embedded    
derivative that otherwise would require bifurcation, as well as             
establishing a requirement to evaluate interests in securitized financial   
assts to identify interests.  FASB No. 155 further amends FASB No. 140 to   
eliminate the prohibition on a qualifying special purpose entity's holding  
a derivative financial instrument that pertains to a beneficial interest    
other than another derivative financial instrument.  The guidance in FASB   
No.155 also clarifies which interest-only strips and principal-only strips  
are not subject to the requirements of FASB No. 133 and which               
concentrations of credit risk in the form of subordination are not          
embedded derivatives.  This Statement is effective for financial            
instruments acquired or issued after the beginning of an entity's first     
fiscal year that begins after September 15, 2006.  FASB No. 155 is not      
expected to have a material impact on the Company's consolidated financial  
statements.                                                                 

In March 2006, FASB issued Statement No. 156 ("FASB No. 156"), Accounting   
for the Servicing of Financial Assets, an amendment of FASB Statement No.   
140.  FASB No. 156 requires the recognition of a servicing asset or         
servicing liability under certain circumstances when an obligation to       
service a financial asset occurs by entering into a service contract.       
FASB No.156 also requires all separately recognized servicing assets and    
servicing liabilities to be initially measured at fair value utilizing the  
amortization method or the fair market value method.  FASB No. 156 is       
effective at the beginning of the first fiscal year that begins after       
September 15, 2006.  FASB No. 156 is not expected to have a material        
effect on the Company's consolidated financial statements.                  

In June 2006, FASB issued Interpretation No. 48, Accounting for             
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109.  
This interpretation clarifies the accounting for the uncertainty in income  
taxes recognized in an enterprise's financial statements in accordance      
with FASB Statement No. 109, Accounting for Income Taxes.  This             
interpretation prescribes a recognition threshold and measurement attribute 
for the financial statement recognition and measurement of a tax position   
taken or expected to be taken in a tax return.  This interpretation also    
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.  FASB             
Interpretation No. 48 is not expected to have a material impact on the      
Company's consolidated financial statements.                                

F-12

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

In September 2006, FASB issued Statement No. 157, Fair Value Measurements.  
This Statement defines fair value, establishes a framework for measuring    
fair value in generally accepted accounting principles, and expands         
disclosures about fair value measurements.  This Statement applies under    
other accounting pronouncements that require or permit fair value           
measurements.  The other accounting pronouncements affected include         
Statements No. 107, Disclosures about Fair Value of Financial Instruments;  
No. 115, Accounting for Certain Investments; No. 124, Accounting for        
Certain Investments Held by Not-for-Profit Organizations; No. 133,          
Accounting for Derivative Instruments and Hedging Activities.  Statement    
No. 157 is effective for financial statements issued for fiscal years       
after November 15, 2007 and interim periods within those fiscal years.      
Statement No. 157 is not expected to have a material impact on the          
Company's consolidated financial statements.                                

In September 2006, the Securities and Exchange Commission issued Staff      
Accounting Bulletin No. 108 ("SAB 108") which provides guidance on the      
consideration of the effects of prior year misstatements when quantifying   
misstatements in current year financial statements.  SAB 108 recommends     
using both the "rollover" and "iron curtain" approaches when quantifying    
misstatements from prior years to determine materiality.  If the            
misstatement in the current year financial statements is material after     
the application of both the "rollover" and "iron curtain"                   

approaches, the prior year financial statements should be corrected, even   
though such revision previously was and continues to be immaterial to the   
prior year financial statements.  If the cut-off error that existed in the  
prior year was not discovered until the current year, a separate analysis   
of the prior year (and any other prior year in which previously             
undiscovered errors existed) would need to be performed to determine        
whether such prior year financial statements were materially misstated.     
If a material misstatement did occur, then the prior year financial         
statements would need to be restated.  SAB 108 is effective for fiscal      
years ended after November 15, 2006.  SAB 108 is not expected to have a     
material impact on the Company's consolidated financial statements.         

In February 2007, FASB issued Statement No. 159 ("FASB 159"), The Fair      
Value Option for Financial Assets and Financial Liabilities - Including an  
Amendment of FASB Statement No. 115.  The fair value option established by  
this statement permits all entities to choose to measure eligible items at  
fair value at specified election dates.  A business entity shall report     
unrealized gains and losses on items for which the fair value option has    
been elected in earnings at each subsequent reporting date.  The            
measurement option is applied to:                                           

F-13

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

1. Recognized financial assets and financial liabilities except for:        

a.   An investment in a subsidiary that the entity is required to 
consolidate                                             

b.   An interest in a variable interest entity that the entity is 
required to consolidate                                 

c.   Employees' and plans' obligations for pension benefits, other
         postretirement benefits, post-employment benefits, employee stock
    option and stock purchase plans, and other forms of deferred
compensation arrangements.                              

     d.   Financial assets and financial liabilities recognized under leases
   as defined in FASB Statement No. 13, Accounting for Leases.

     e.   Deposit liabilities, withdrawable on demand, of banks, savings and
    loan associates, credit unions, and other similar depository
institutions.                                           

     f.   Financial instruments that are in whole, or in part, classified by
the user as a component of shareholders' equity.        

2. Firm commitments that would otherwise not be recognized at inception and 
that involve only financial instruments.                          

3. Nonfinancial insurance contracts and warranties that the insurer can     
settle by paying a third party to provide those goods or services.

4. Host financial instruments resulting from separation of an embedded      
nonfinancial derivative instrument from a nonfinancial hybrid     
instrument.                                                       

The fair value option:                                                      

1. May be applied instrument by instrument, with a few exceptions, such as  
investments other wise accounted for by the equity method         

2. Is irrevocable (unless a new election date occurs)                       

3. Is applied only to entire instruments and not to portions of instruments 

The Statement is effective as of the beginning of an entity's first fiscal  
    year that begins after November 15, 2007.  FASB 159 is not expected to
have a material impact on the Company's consolidated financial    
statements.                                                       

F-14

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 3 - Supplemental Cash Flow Information                                 

During 2006, certain assets in property, plant and equipment, with a net    
book value of $84,897 were reclassified into inventory. Options to purchase 
10,000 common shares were issued to an employee. The option price for all   
options granted was equal to or greater than the fair market value per share
on the date the option was granted and no compensation cost was recognized. 

During 2005, options to purchase 176,500 common shares were issued to       
certain employees and members of the board of directors. The option price   
for all options granted in 2005 was equal to or greater than the fair market
value per share on the date the option was granted and no compensation cost 
was recognized.                                                             
  
                                                                [Download Table]
                                                                         
                                                                         
                                                  2006           2005    
                                              ------------   ------------
                                                                         
Cash paid during the year for:                                           
    Income taxes, net of refunds              $   10,047      $   4,509  
    Interest                                     222,861        212,547  
                                                                              
Note 4 - Investments                                                        

The Company sold equipment to a Customer for a purchase price of one        
hundred four thousand, four hundred eighty two (104,482) shares of common   
stock, par value $.001 per share. Between July 19, 2007 and July 31, 2007,  
the Company has the option to demand that the Customer make cash payment    
i.e.: two hundred fifty-one thousand, one hundred thirty 00/100 U.S.        
dollars ($251,130) for the equipment, the amount that would have been       
required had the Customer made cash payment for the equipment on July 19,   
2006 in exchange for the return of said stock. The Customer's obligation    
to make such payment pursuant to the terms of the option is secured by a    
perfected lien upon the subject equipment and the Company's right to        
execute upon the aforesaid common stock. In the event the Customer does     
not make full payment, the Company has also reserved the right to maintain  
plenary proceedings against the Customer for the purpose of recovering      
such sums as may be due as well as the right to obtain a deficiency         
judgment in the event that the collateral in the equipment and stock is     
insufficient to discharge said obligation.                                  

F-15

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 5 - Uncompleted Contracts                                              

                                                                  [Download Table]
                                                                               
                                                                               
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:                                                                    
                                                  2006           2005          
                                              ------------   ------------      
                                                                               
Costs incurred on uncompleted contracts       $ 1,509,672    $   961,735       
        Estimated earnings                      2,015,836        901,390       
                                              ------------   ------------      
                                                3,525,508      1,863,125       

        Billings to date                       (2,808,845)    (1,268,058)      
                                              ------------   ------------      
                                              $   716,663    $   595,067       
                                              ============   ============      
                                                                              
                                                                  [Download Table]
                                                                         
                                                                         
                                                  2006           2005    
                                              ------------   ------------
                                                                         
Included in accompanying balance sheets                                  
   Under the following captions:                                         

   Costs and estimated earnings in excess                                
       of billings on uncompleted contracts   $   716,663    $   595,067 
   Billings in excess of costs and estimated                             
       earnings on uncompleted contracts            ---            ---   
                                              ------------   ------------
                                              $   716,663    $   595,067 
                                              ============   ============
                                                                              
Note 6 - Inventory                                                          
  
                                                                [Download Table]
                                                                         
                                                                         
                                                     December 31,        
                                                   2006         2005     
                                              ------------   ------------
                                                                         
Raw materials                                 $   860,085    $   849,355 
Work-in-process                                 1,515,460        854,115 
Finished goods                                    328,961        363,785 
                                              ------------   ------------
                                              $ 2,704,506    $ 2,067,255 
                                              ============   ============
                                                                              
F-16

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 7 - Property, Plant and Equipment                                      
  
                                                                [Download Table]
                                                                             
                                                                             
Major classes of property, plant and equipment consist of the following:     
                                                   2006         2005         
                                              ------------   ------------    
                                                                             
Land                                          $   760,000    $   760,000     
Buildings                                       2,815,839      2,815,839     
Building improvements                           1,398,054      1,394,976     
Machinery and equipment                         1,379,656      1,347,842     
Capitalized labor and overhead                    216,602        216,602     
Furniture and fixtures                            236,419        226,022     
Computer equipment                                250,419        221,635     
Transportation equipment                           74,709         74,709     
Demo equipment                                       -            42,776     
Lab equipment                                        -            42,121     
                                              ------------   ------------    
        Totals at Cost                          7,131,698      7,142,487     
Accumulated depreciation and amortization      (2,352,910)    (2,051,951)    
                                              ------------   ------------    
                                              $ 4,778,788    $ 5,090,536     
                                              ------------   ------------    
Depreciation and amortization expense         $   300,924    $   287,404     
                                              ============   ============    
<FN>                                                                         
During 2006, certain assets in property, plant and equipment, with a net book
value of $84,897 were reclassified into inventory.                           
                                                                              
Note 8 - Intangible Assets                                                  
  
                                                        [Enlarge/Download Table]
                                                                                     
                                                                                     
Intangible assets are summarized as follows:                                         
December 31, 2006                                                                    
-----------------                                                                    
                       Weighted Average              Accumulated   Net of Accumulated
Intangible Asset       Amortization Period    Cost   Amortization  Amortization      
---------------------- --------------------------------------------------------------
                                                                                     
Licensing Agreement             5            10,000     10,000              0        
Patents & Copyrights           14            32,019     16,924         15,095        
Intellectual Property          15           100,000     36,669         63,331        
Certifications                  3            27,661      4,610         23,051        
Other                           5            21,492     17,194          4,298        
                                        ---------------------------------------------
          Totals               11           191,172     85,397        105,775        
                                                                              
F-17

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005
  
                                                        [Enlarge/Download Table]
                                                                                     
                                                                                     
December 31, 2005                                                                    
-----------------                                                                    
                       Weighted Average              Accumulated   Net of Accumulated
Intangible Asset       Amortization Period    Cost   Amortization  Amortization      
---------------------- --------------------------------------------------------------
                                                                                     
Licensing Agreement             5            10,000     10,000              0        
Patents & Copyrights           14            32,019     14,472         17,547        
Intellectual Property          15           100,000     30,002         69,998        
Other                           5            21,492     12,896          8,596        
                                        ---------------------------------------------
          Totals               13           163,511     67,370         96,141        
                                                                              
The estimated amortization expense related to intangible assets for each    
of the five succeeding fiscal years and thereafter as of December 31, 2006  
is as follows:                                                              
  
                                                                [Download Table]
                                                           
                                                           
Year Ended                                                 
December 31,                                               
                                                           
2007                                            $   22,638 
2008                                                18,339 
2009                                                12,229 
2010                                                 7,619 
2011                                                 7,619 
Thereafter                                          37,331 
                                                -----------
   Total                                        $  105,775 
                                                ===========
                                                                              
Note 9 - Financing Arrangements                                             

The Company has a line of credit with a bank which allows the Company to    
borrow up to $1,250,000 until June 1, 2007. Interest is payable on any      
unpaid principal balance at the bank's prime rate plus _ of 1%. The         
balances outstanding on this facility as of December 31, 2006 and 2005      
were $210,000 and $100,000, respectively. The prime rate was 8.25% and      
7.25% at December 31, 2006 and 2005 respectively. The weighted average      
interest rate on the Company's short-term borrowings for 2006 and 2005 was  
7.96% and 6.19% respectively.                                               

F-18

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 10 - Long-term Debt                                                    
  
                                                        [Enlarge/Download Table]
                                                                                         
                                                                                         
Long-term debt consists of the following:                                                
                                                                2006            2005     
                                                           --------------  --------------
                                                                                         
KIDCO REALTY CORP.                                                                       
     $900,000 purchase money mortgage secured by                                         
     real property, building and improvements in                                         
     Saugerties, New York; payable in equal monthly                                      
     installments of $5,988 including interest at 7%                                     
     per annum; entire principal comes due in                                            
     May 2009.                                             $    810,508    $    825,068  

GENERAL ELECTRIC CAPITAL CORPORATION                                                     
     $2,700,000 mortgage payable secured by real                                         
     property, building and improvements in                                              
     Ronkonkoma, New York; payable in equal                                              
     monthly installments of $22,285, including                                          
     interest at 5.67% per annum; pursuant to an                                         
     installment sale agreement with the Town of                                         
     Islip Industrial Development Agency; final                                          
     payment due March 2017.                                                             
                                                              2,075,148       2,220,402  

NORTH FORK BANK                                                                          
     Sixty month installment note; payable in                                            
     monthly installments of $4,922, including                                           
     interest at 7.74% per annum; final payment                                          
     due August 2007; collateralized by                                                  
     equipment costing $244,239.                                                         
                                                                 37,768          90,900  

NORTH FORK BANK                                                                          
     Sixty month installment note, payable                                               
     in monthly installments of $1,776, including                                        
     interest at 6.75% per annum; final payment due                                      
     January 2011, collateralized by equipment                                           
     costing $90,000.                                            77,030            ---   

                                    F-19                                                 

                  CVD EQUIPMENT CORPORATION AND SUBSIDIARY                               
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
                         December 31, 2006 and 2005                                      

                                                                2006            2005     
                                                           --------------  --------------
KEY EQUIPMENT FINANCE                                                                    
     Twenty-four month installment note, payable                                         
     in monthly installments if $1,123, including                                        
     interest at 1.9% per annum; final payment due                                       
     May 2006, collateralized by software                                                
     costing $26,460.                                                                    
                                                                   ---            4,258  
                                                           --------------  --------------
                                                              3,000,454       3,140,628  
     Less: Current maturities                                   223,653         217,204  
                                                           --------------  --------------
                                                           $  2,776,801    $  2,923,424  
                                                           ==============  ==============
                                                                              
                                                                  [Download Table]
                                                                
                                                                
Future maturities of long-term debt as follows:                 
                                                                
        Year ended December 31, 2007                $   223,653 
        Year ended December 31, 2008                    197,123 
        Year ended December 31, 2009                    969,252 
        Year ended December 31, 2010                    202,446 
        Year ended December 31, 2011                    196,184 
                                   Thereafter         1,211,796 
                                                    ------------
                                                    $ 3,000,454 
                                                    ============
                                                                              
Note 11 - Earnings per Share                                                

The calculation of basic and diluted weighted average common shares         
outstanding is as follows:                                                  
  
                                                                [Download Table]
                                                                         
                                                                         
                                                   2006         2005     
                                              ------------   ------------
                                                                         
Weighted average common shares outstanding                               
basic earnings per share                         3,169,177      3,097,698

Effect of potential common share issuance:                               
        Stock options                               94,356        122,399
                                              ------------   ------------
Weighted average common shares outstanding                               
Diluted earnings per share                       3,263,533      3,220,097
                                              ============   ============

                                                                              
F-20

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Outstanding options to purchase 117,500 and 136,000 shares at December 31,  
2006 and December 31, 2005, respectively, were not included in the          
earnings per share calculation, because the exercise price was higher than  
the market price.                                                           

Note 12 - Income Taxes                                                      

The provision (benefit) for income taxes includes the following:            
  
                                                                [Download Table]
                                                                         
                                                                         
                                                   2006         2005     
                                              ------------   ------------
                                                                         
        Current:                                                         
            Federal                           $    18,437    $      ---  
            State                                   1,722          5,815 
                                              ------------   ------------
                Total Current Provision            20,159          5,815 
        Deferred:                                                        
            Federal                               223,888         81,305 
            State                                  48,540        (22,550)
                                              ------------   ------------
                Total Deferred Provision          272,428         58,755 
                                              ------------   ------------
                                              $   292,587    $    64,570 
                                              ============   ============
                                                                              
The Company has New York State investment tax credit carryforwards of       
approximately $263,000 that may be offset against future state tax          
liabilities through the year 2019 and other state tax credits totaling      
approximately $327,000 which may be carried forward indefinitely. The       
Company accounts for investment tax credits primarily by the flow-through   
method.                                                                     

As of December 31, 2006, the Company had federal and state net operating    
loss (NOL's) carryforwards totaling approximately $40,000 and $277,000,     
respectively. These NOL's were incurred in the 2003 tax year and may be     
used to offset taxable income in future periods through 2023. Current       
federal and state income tax expenses are net of tax benefits from net      
operating loss carry forwards of approximately $163,000 and $143,000        
respectively.                                                               

The difference between the provision for income taxes at the Company's      
effective income tax rate and the federal statutory rate of 34% is as       
follows:                                                                    

                                                                  [Download Table]
                                                                         
                                                                         
                                                   2006         2005     
                                              ------------   ------------
                                                                         

        Statutory rate                           34%            34%      
        State taxes, net of federal benefits      7%             5%      
        Benefit of federal and state                                     
        net operating loss carryforwards        ( 6%)          (23%)     
        Investment and other tax credits        ( 2%)          ( 2%)     
                                              ------------   ------------
                                        Totals   33%            14%      
                                                                              
                            F-21

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

The tax effects of temporary differences giving rise to significant         
portions of deferred taxes are as follows:                                  
  
                                                                [Download Table]
                                                                         
                                                                         
                                                   2006         2005     
                                              ------------   ------------
                                                                         

        Allowance for doubtful accounts       $     2,834    $     3,377 
        Inventory capitalization                  103,435         76,330 
        Deferred revenue                         (791,821)      (354,066)
        Net operating loss                         34,600         26,790 
        Depreciation and amortization            (173,123)      (225,141)
        Investment and other tax credits          589,768        588,908 
            Compensation costs                     66,487           --   
            Vacation Accrual                      129,720        118,130 
            Other                                   7,660          7,660 
                                              ------------   ------------
         Net deferred tax (liability) asset   $   (30,440)   $   241,988 
                                              ============   ============
                                                                              
Management believes the deferred tax asset will more likely than not be     
realized. In assessing the likelihood of realization, management considers  
estimates of future taxable income. However, it is at least reasonably      
possible that management's estimate of future realization may change in     
future periods.                                                             

Note 13 - Stock Option Plans                                                

On June 15, 1989 the Company instituted a non-qualified stock option plan   
(the "Plan"). In connection therewith, 700,000 shares of the Company's      
common stock are reserved for issuance pursuant to options that may be      
granted under the Plan through June 30, 2009. On June 3, 1996, the Company  
issued 84,000 options which expire ten years from the date of grant. None   
of these options were exercisable until June 3, 1999. The option price was  
less than the fair market value per share on the date the 1996 options      
were granted. On April 15, 1998, 140,000 options were granted to employees  
under this plan. Options granted in 1998 vest straight-line over a four-    
year period following the date of grant and expire five years after the     
date of grant. On July 16, 1999, 52,500 options were granted to employees   
under this Plan. Options granted in 1999 vest                               
incrementally over four-year periods following the date of grant and        
expire seven years after the date of grant. On February 2, 2000, 242,000    
options were granted to employees under this plan.                          
On May 7, 2000 and August 8, 2000, a total of 80,000 options were granted   
to employees. On October 26, 2000, 3,500 options were granted to            
employees. All options vest over a four-year period. All options granted    
in 2000 expire seven years after the date of grant. The option price        

F-22

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

for options granted in 1999 and 2000 is an amount per share of not less     
than the fair market value per share on the date the option is granted. On  
April 1, 2003, the Company granted 12,500 options to employees under this   
plan which expire April 1, 2008, and on September 23, 2003 granted 75,000   
options to directors which expire on September 23, 2010. On June 17, 2005   
and August 4, 2005, 56,500 and 15,000 options respectively, were granted    
to employees under this plan, which expire on June 16, 2012 and August 3,   
2012. All of these options vest equally over a four-year period. On         
September 13, 2005 105,000 options were granted to directors which vest     
over three years and expire on September 12, 2012. On June 22, 2006 10,000  
options which vest equally over a four-year period were granted to an       
employee under the plan which expires on June 21, 2013.                     

In November 2006, the Company registered a non-qualified stock option plan  
that the shareholders had approved in July 2001, covering key employees,    
officers, directors and other persons that may be considered as service     
providers to the Company. Options will be awarded by the Board of           
Directors or by a committee appointed by the board. Under the plan, an      
aggregate of 300,000 shares of Company common stock, $.01 par value, are    
reserved for issuance or transfer upon the exercise of options which are    
granted. Unless otherwise provided in the option agreement, options         
granted under the plan shall become exercisable in 25% installments         
commencing one year from the anniversary date of the grant.                 

The purchase price of the common stock under each option shall be no lower  
than the average bid price per share, calculated on a monthly basis, that   
the common stock (as reported by AMEX) traded during the calendar year      
immediately preceding the year in which the option is granted. The stock    
options generally expire five years after the date of grant. The stock      
option plan shall terminate on July 22, 2011. No options have been granted  
under the July 2001 plan.                                                   

A summary of stock option activity related to the Company's Plan is as      
follows:                                                                    
  
                                                        [Enlarge/Download Table]
                                                                                                                 
                                                                                                                 
                                 Beginning     Granted      Exercised     Canceled      Ending                   
                                  Balance      During        During        During       Balance                  
                                Outstanding    Period        Period        Period       Outstanding   Exercisable
                               ------------  ------------  ------------  ------------  ------------  ------------
                                                                                                                 
Year ended December 31, 2005                                                                                     
Number of shares                   355,400       176,500        88,700           -0-       443,200       276,700 
Weighted average exercise price                                                                                  
Per share                        $    1.69     $    3.42     $    1.67     $     -0-     $    2.39     $    2.03 
Year ended December 31, 2006                                                                                     
Number of shares                   443,200        10,000       122,700         7,500       323,000       196,875 
Weighted average exercise price                                                                                  
 per share                       $    2.39     $    3.00     $    1.53     $    2.26     $    2.73     $    2.30 
                                                                              
F-23

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

                                                          [Enlarge/Download Table]
                                                                                          
                                                                                          
The following table summarizes information about the options at December 31, 2006.        

                                Options Outstanding                Options Exercisable    
                  ------------------------------------------   ---------------------------
                                   Weighted                                               
                                   Average      Weighted                        Weighted  
                                  Remaining     Average                         Average   
     Exercise        Number      Contractual    Exercise        Number          Exercise  
    Price Range    Outstanding      Life        Price           Exercisable     Price     
  --------------  -------------  -------------  ------------   -------------  ------------
                                                                                          
   $1.25 - $1.50     55,000       3.74 years        $  1.40         55,000        $  1.40 
   $1.51 - $1.75     48,000        .09 years        $  1.75         48,000        $  1.75 
   $2.00 - $2.75     76,500       3.55 years        $  2.16         41,625        $  2.07 
   $3.00 - $3.25     28,500       5.31 years        $  3.07          7,250        $  3.16 
   $3.75 - $4.00     10,000       1.25 years        $  3.88         10,000        $  3.88 
   $4.00 - $4.25    105,000       5.70 years        $  4.10         35,000        $  4.10 
                                                                              
On January 1, 2006, the Company adopted the provisions of SFAS No. 123-R    
"Share-Based Payment" using the modified prospective method. SFAS No. 123-  
R requires companies to recognize the cost of employee services received    
in exchange for awards of equity instruments based upon the grant date      
fair value of those awards. Under the modified prospective method of        
adopting SFAS No. 123-R, the Company recognized compensation cost for all   
share-based payments granted after January 1, 2006, plus any awards         
granted to employees prior to January 1, 2006 that remain unvested at that  
time. Under this method of adoption, no restatement of prior periods is     
made.                                                                       

Prior to January 1, 2006 the Company recognized the cost of employee        
services received in exchange for equity instruments in accordance with     
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued     
Employees" (APB 25). APB 25 required the use of the intrinsic value         
method, which measures compensation cost as the excess, if any, of the      
quoted market price of the stock over the amount the employee must pay for  
the stock. Compensation expense was measured under APB 25 on the date the   
shares were granted. Under APB 25, no compensation expense was recognized   
for stock options.                                                          

The intrinsic value of the 122,700 and 88,700 options exercised during the  
years ended December 31, 2006 and 2005, was $188,075 and $148,100           
respectively.                                                               

During the current period ended December 31, 2006 the Company recorded      
into selling and general administrative expense  approximately $169,000,    
for the cost of employee services received in exchange for equity           
instruments based on the grant-date fair value of those instruments in      
accordance with the provisions of SFAS No. 123-R.                           

F-24

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

During the period ended December 31, 2005 had the cost of employee          
services received in exchange for equity instruments been recognized based  
on the grant-date fair value of those instruments in accordance with the    
provisions of SFAS No. 123, the Company's net income and earnings per       
share would have been impacted as shown in the following table.             

The weighted average grant date fair value of options granted during 2005   
was $3.42.                                                                  
  
                                                                [Download Table]
                                                                   
                                                                   
                                                          2005     
                                                     --------------
                                                                   
        Net income as reported                       $    390,911  

        Add: Stock-based employee compensation                     
        expense included in reported net income,                   
        net of related tax effects                            -0-  

        Deduct: Total stock-based employee                         
        compensation expense determined under                      
        fair value based method for all awards, net                
        of related tax effects                       $    (92,284) 
                                                     --------------
        Pro-forma net income (loss)                  $    298,627  
                                                     ==============

                                                                              
                                                                  [Download Table]
                                                                   
                                                                   
Earnings per share:                                       2005     
                                                     --------------
                                                                   

             Basic-as reported                           $ .13     
                                                         -----     
             Basic-pro form                              $ .10     
                                                         -----     

             Diluted -as reported                        $ .12     
                                                         -----     
             Diluted -pro forma                          $ .09     
                                                         -----     
                                                                              
The fair value used in the pro forma data was estimated by using the Black- 
Scholes option-pricing model which took into account as of the grant date,  
the exercise price and the expected life of the option, the current price of
the underlying stock and its expected volatility, expected dividends on the 
stock and the risk-free interest rate for the expected term of the option.  
The following is the average of the data used for the following items.      
  
                                                                [Download Table]
                                                                         
                                                                         
                    Risk-Free                     Expected      Expected 
Year Ended          Interest Rate  Expected Life  Volatility    Dividends
------------------  -------------  -------------  -----------  ----------
                                                                         
December 31, 2006          2.5%       3.9 Years      126.54%      None   
December 31, 2005          2.5%       5.7  Years     126.54%      None   
                                                                              
F-25

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 14 - Defined Contribution Plan                                         

On August 1, 1998, the Company adopted a 401(k) Plan for the benefit of     
all eligible employees. All employees as of the effective date of the       
401(k) Plan became eligible. An employee who became employed after August   
1, 1998, would become a participant after three months of continuous        
service.                                                                    

Participants may elect to contribute from their compensation any amount up  
to the maximum deferral allowed by the Internal Revenue Code. Employer      
contributions are optional. During the years ended December 31, 2006 and    
2005 the Company incurred administrative costs totaling $2,394 and $1,805   
respectively. No employer contribution has been made for 2006 and 2005.     

Note 15 - Concentration of Credit Risk                                      

Cash                                                                        

The Company places most of its temporary cash investments with two          
financial institutions. Balances may exceed the Federal Deposit Insurance   
Corporation limit. The amount at risk at December 31, 2006 and at December  
31, 2005 was approximately $257,000 and $283,000 respectively. The Company  
has not experienced any loss to date as a result of this policy.            

Significant Customers                                                       

The Company's sales encompass markets wherein the demands of any one        
customer may vary greatly due to changes in technology. In 2006, one        
customer, from the CVD division, represented $1,204,000 or 9% of our total  
revenues and approximately $281,000 or 11% of our total billed and          
unbilled receivables at December 31, 2006. In 2005, one customer, from the  
Conceptronic division represented approximately $1,347,000 or 12% of the    
Company's total revenue for that year and $417,000 or 22% of the Company's  
total billed and unbilled receivables at December 31, 2005. One other       
customer from the CVD division represented approximately $284,000 or 15%    
of the total billed and unbilled receivables at December 31, 2005           

Export Sales                                                                

Export sales to unaffiliated customers represented approximately 31% and    
29% of sales for the years ended December 31, 2006 and 2005, respectively,  
Export sales in 2006 were primarily to customers in Europe and Asia . In    
2005 export sales were primarily to customers in Asia. All contracts are    
denominated in U.S. dollars. The Company does not enter into any foreign    
exchange contracts.                                                         

F-26

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

Note 16 - Related Party Transactions                                        

The general counsel for the Company is also a director. The Company         
incurred legal fees for his professional services of approximately $25,000  
and $35,000 for the years ended December 31, 2006 and 2005, respectively.   
As of December 31, 2006 and 2005, the Company owed the general counsel      
approximately $35,000 and $35,000 respectively.                             

Note 17 - Other Income                                                      

Other income for the year ended December 31, 2006 was approximately         
$116,000. In 2004, the Company wrote off a sale to a customer that filed a  
voluntary petition for relief under Chapter 11 of Title 11 of the United    
States Bankruptcy Code, in the United States Bankruptcy Court for the       
District of Delaware. In 2006, the liquidating trust distributed $92,400    
to the Company, which represented 33% of the claim.                         

Note 18 - Segment Reporting                                                 

The Company adopted SFAS 131, "Disclosures about Segments of an Enterprise  
and Related Information." The Company operates through (3) segments, CVD,   
SDC and Conceptronic. The CVD division is utilized for silicon, silicon     
germanium, silicon carbide and gallium arsenide processes.  SDC is the      
Company's ultra-high purity manufacturing division in Saugerties, New York. 
Conceptronic is a manufacturer of Surface Mount Technology equipment. The   
accounting policies of CVD, SDC and Conceptronic are the same as those      
described in the summary of significant accounting policies (see Note 2).   
The Company evaluates performance based on several factors, of which the    
primary financial measure is earnings before taxes.                         

The following table presents certain information regarding the Company's    
segments as of December 31, 2006 and for the year then ended:               
  
                                                        [Enlarge/Download Table]
                                                                                                      
                                                                                                      
                             CVD             SDC         Conceptronic    Eliminations    Consolidated 
                        --------------  --------------  --------------  ------------------------------
                                                                                                      
Assets                  $ 11,946,392    $  2,364,017    $  2,693,397    $ (4,086,197)   $ 12,917,609  
                        ==============  ==============  ==============  ==============  ==============

Revenue                 $  6,902,521    $  3,650,190    $  3,386,998    $   (583,931)   $ 13,355,778  
Interest Income                  231             635             -0-                             866  
Interest Expense              77,934          68,002          77,573                         223,509  
Depreciation and                                                                                      
amortization                 214,254         119,574          24,222                         358,050  
Capital                                                                                               
   expenditures              205,294          19,609             -0-                         224,903  

Pretax (loss) earnings     1,233,982         148,627        (485,696)                        896,913  
                                                                              
F-27

CVD EQUIPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006 and 2005

The following table presents certain information regarding the Company's    
segments as of December 31, 2005 and for the year then ended:               
  
                                                        [Enlarge/Download Table]
                                                                                                      
                                                                                                      
                             CVD             SDC         Conceptronic    Eliminations    Consolidated 
                        --------------  --------------  --------------  ------------------------------
                                                                                                      
Assets                  $  9,736,996    $  2,060,657    $  2,741,119    $ (3,628,765)   $ 10,910,007  
                        ==============  ==============  ==============  ==============  ==============

Revenue                 $  4,589,205    $  3,033,751    $  4,611,452    $ (1,009,092)   $ 11,225,316  
Interest Income                  522             241             -0-                             763  
Interest Expense              77,056          65,213          76,986                         219,255  
Depreciation and                                                                                      
amortization                 201,481         124,195          24,467                         350,143  
Capital                                                                                               
   expenditures              476,371           9,590             -0-                         485,961  

Pretax earnings (loss)       640,331        (165,301)        (19,549)                        455,481  
                                                                              
Note 19 - Commitments and Contingencies                                     

Legal Proceedings                                                           
On September 24, 1999 the Company was named in a lawsuit.  The nature of    
this legal proceeding focused on the intellectual property obtained during  
the purchase of assets of Stainless Design Corporation.  On November 10,    
1999, the Company responded with a counterclaim.  It is the Company's       
legal counsels' belief that the lawsuit against the Company is without      
merit.  The Company considers its potential exposure to be negligible       
and/or covered by insurance.                                                
In May 2002, the Company instituted a new action against Precisionflow      
Technologies, Inc., in the United States District for the Northern          
District of New York also seeking injunctive relief and monetary damages    
based upon additional copyright violations. A motion by Precisionflow       
Technologies, Inc. to dismiss this action has been pending since June       
2002.                                                                       

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		6/21/13		50
		9/13/12		21					4
		9/12/12		50
		8/3/12		50
		6/16/12		50
		7/22/11		50
		9/23/10		50
		6/30/09		50					10-Q
		4/1/08		50
		12/31/07		50					10KSB,  10KSB/A
		11/15/07		50					10QSB,  NT 10-Q
		7/31/07		13		50			4
		7/19/07		13		50
		6/1/07		14		50			8-K
Filed on:		3/26/07		25		44
		3/20/07		1
		3/19/07		40
		3/10/07		21
		3/9/07		40		46
		2/27/07		9
		1/13/07		21
For Period End:		12/31/06		1		50
		12/13/06		19					4
		11/15/06		50					10QSB
		9/27/06		19					4,  4/A
		9/15/06		50
		7/19/06		13		50
		1/1/06		50
		12/31/05		5		50			10KSB
		12/13/05		21
		8/4/05		50					DEF 14A
		6/17/05		50
		9/23/03		50					3,  4
		4/1/03		50
		7/23/01		27
		10/26/00		50
		8/8/00		50
		5/7/00		50
		2/2/00		50
		11/10/99		50
		9/24/99		50
		7/16/99		50
		6/3/99		50
		12/31/98		23		26			10KSB40,  NT 10-K
		8/1/98		50
		4/15/98		50
		6/3/96		50
									List all Filings

3 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/27/23  CVD Equipment Corp.               10-K       12/31/22   81:6.5M                                   RDG Filings/FA
 3/31/22  CVD Equipment Corp.               10-K       12/31/21   77:6.6M                                   RDG Filings/FA
 3/31/21  CVD Equipment Corp.               10-K       12/31/20   74:13M                                    RDG Filings/FA