<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 -------------
                                  FORM 10-KSB/A
                                 Amendment No. 1
  (Mark One)
  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.
                         For the year ended December 31, 2004
  [ ] 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         (I.R.S. Employer
        of Incorporation or Organization)   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 pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, Par value $0.01
                                (Title of class)

     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   [ ]

  <PAGE>
                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY


                                EXPLANATORY NOTE


  This amendment is being filed for the sole purpose of correcting the
  inadvertent typographical error contained in the previously-filed
  independent audit report for the year ended December 31, 2003. No
  changes to the financial statements are being made in this amendment.

  The third paragraph of the Independent Audit Report for the year
  ended December 31, 2003 filed in the 2004 10-KSB on page F-2
  previously read:

  In our opinion, the consolidated financial statements referred to
  above present fairly, in all material respects, the financial position
  of CVD Equipment Corporation and Subsidiary as of December 31, 2003,
  in conformity with accounting principles generally accepted in the
  United States of America.

  The third paragraph of the Independent Audit Report for the year ended
  December 31, 2003 filed in this 2004 10-KSB/A on page F-2 presently
  reads as follows:

  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 its subsidiary as
  of December 31, 2003 and the consolidated results of their operations
  and their cash flows for the year then ended, in conformity with
  accounting principles generally accepted in the United States of
  America.


  <PAGE>
                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                   Page No.

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

  Independent Auditor's Report                    ..................  F2

  Financial Statements:

  Consolidated Balance Sheets at December 31, 2004 and 2003   ......  F3

  Consolidated Statements of Operations for the years ended
     December 31, 2004 and 2003                   ..................  F4

  Consolidated Statements of Stockholders' Equity for the
     Years ended December 31, 2004 and 2003       ..................  F5

  Consolidated Statements of Cash Flows for the years ended
     December 31, 2004 and 2003                   ..................  F6

  Notes to Consolidated Financial Statements      ..................  F7


  <PAGE>
                                      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 sheet of CVD
  Equipment Corporation and its subsidiary as of December 31, 2004,
  and the related consolidated statements of operations,
  stockholders' equity, and cash flows for the year then ended.
  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
  audit.

  We conducted our audit 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 audit provides 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 its subsidiary
  as of December 31, 2004, and the consolidated results of their
  operations and their cash flows for the year then ended, in
  conformity with accounting principles generally accepted in the
  United States of America.






  MOORE STEPHENS, P. C.
  Certified Public Accountants.

  Cranford, New Jersey
  February 25, 2005

  <PAGE>
                                      F-2

                            INDEPENDENT AUDIT REPORT
                            ------------------------

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

  We have audited the accompanying consolidated balance sheet of CVD
  Equipment Corporation and Subsidiary (the "Company") as of December
  31, 2003, and the related consolidated statements of income,
  stockholders' equity and cash flows for the year then ended. These
  financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these
  financial statements based on our audit.

  We conducted our audit in accordance with auditing standards
  generally accepted in the United States of America. 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 financial statement
  presentation. We believe that our audit provides 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 its subsidiary
  as of December 31, 2003 and the consolidated results of their
  operations and their cash flows for the year then ended, in
  conformity with accounting principles generally accepted in the
  United States of America.


  ALBRECHT, VIGGIANO, ZURECK & COMPANY, P.C.
  Hauppauge, New York
  February 20, 2004


  <PAGE>
                                                            F-3
  <TABLE>
  <CAPTION>
                                         CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                                                Consolidated Balance Sheets
                                                 December 31, 2004 and 2003

                                                                                           2004               2003
                                                                                      -------------    -------------
  <S>                                                                                 <C>              <C>
  ASSETS
  Current Assets
       Cash and cash equivalents                                                      $    171,463     $    321,490
       Accounts receivable, net                                                          2,375,257        1,819,744
       Cost  and estimated earnings in excess of billings
          on uncompleted contracts                                                       1,110,362          575,734
       Inventories                                                                       1,823,453        1,425,851
       Other current assets                                                                110,743           74,247
                                                                                      -------------    -------------
                                                                Total Current Assets     5,591,278        4,217,066

  Property, plant and equipment, net                                                     5,153,017        5,400,032

  Deferred income taxes                                                                    300,743          440,362

  Other assets                                                                             398,587          144,458

  Intangible assets, net                                                                   109,558          122,977
                                                                                      -------------    -------------
                                                                        Total Assets  $ 11,553,183     $ 10,324,895
                                                                                      =============    =============

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
       Current maturities of long-term debt                                           $    213,394     $    177,381
       Short-term notes payable                                                            850,000              -
       Accounts payable                                                                    725,706          520,525
       Accrued expenses                                                                    584,443          426,838
       Accrued professional fees - related party                                            41,626           40,578
       Customer Deposits                                                                   298,152           20,595
       Billings in excess of costs on uncompleted contracts                                    -            174,068
                                                                                      -------------    -------------

                                                           Total Current Liabilities     2,713,321        1,359,985
  Long-term Debt, net of current portion                                                 3,140,628        3,336,400
  Commitments and Contingencies                                                                -                -
                                                                                      -------------    -------------
                                                                   Total Liabilities  $  5,853,949     $  4,696,385
                                                                                      -------------    -------------


  Stockholders' Equity:
       Common stock - $0.01 par value -10,000,000 shares authorized;
       3,039,100 shares issued & outstanding
       at December 31, 2004 and 2003                                                        30,391           30,391
       Additional paid-in capital                                                        2,902,149        2,902,149
       Retained earnings                                                                 2,766,694        2,695,970
                                                                                      -------------    -------------
                                                          Total Stockholders' Equity     5,699,234        5,628,510
                                                                                      -------------    -------------

                                          Total Liabilities and Stockholders' Equity  $ 11,553,183     $ 10,324,895
                                                                                      =============    =============
  <FN>    See Notes to Consolidated Financial Statements
  </TABLE>
  <PAGE>
                                                                     F-4
  <TABLE>
  <CAPTION>
                                         CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                                           Consolidated Statements of Operations
                                           Years ended December 31, 2004 and 2003

                                                                                          2004             2003
                                                                                      -------------    -------------
  <S>                                                                                 <C>              <C>
  Revenue
       Revenue on completed contracts                                                 $  7,647,369     $  9,065,679
       Revenue on uncompleted contracts                                                  2,226,223          722,260
                                                                                      -------------    -------------
                                                                                         9,873,592        9,787,939
                                                                                      -------------    -------------
  Costs of revenue
       Cost on completed contracts                                                       5,406,889        7,180,226
       Cost on uncompleted contracts                                                     1,142,057          303,771
                                                                                      -------------    -------------
                                                                                         6,548,946        7,483,997
                                                                                      -------------    -------------
  Gross profit                                                                           3,324,646        2,303,942
                                                                                      -------------    -------------
  Operating expenses
       Selling and shipping                                                                691,281          740,266
       General and administrative                                                        2,225,250        2,123,603
       Related party - professional fees                                                    26,464           40,578
                                                                                      -------------    -------------

  Total operating expenses                                                               2,942,995        2,904,447

  Operating income (loss)                                                                  381,651         (600,505)
                                                                                      -------------    -------------
  Other income (expense)
       Interest income                                                                         752            1,243
       Interest expense                                                                   (212,547)        (208,944)
       Other income                                                                         26,001          310,042
                                                                                      -------------    -------------
  Total other (expense) income, net                                                       (185,794)         102,341
                                                                                      -------------    -------------

  Income (loss) before income tax (expense) benefit                                        195,857         (498,164)
  Income tax (expense) benefit                                                            (125,133)         161,214
                                                                                      -------------    -------------

  Net income (loss)                                                                   $     70,724     $   (336,950)
                                                                                      =============    =============


  Basic income (loss) per common share                                                $       0.02     $      (0.11)
  Diluted income (loss)per common share                                               $       0.02     $      (0.11)

  Weighted average common shares outstanding
  basic income per share                                                                 3,039,100        3,039,100

  Weighted average common shares outstanding
  diluted income per share                                                               3,053,494        3,039,100





  <FN>    See Notes to Consolidated Financial Statements
  </TABLE>
  <PAGE>
                                                            F-5
  <TABLE>
  <CAPTION>
                                          CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                                      Consolidated Statements of Stockholder's' Equity
                                           Years ended December 31, 2004 and 2003


                                                                      Additional                            Total
                                    Common Stock                        Paid -In        Retained    Shareholder's
                                           Shares        Amount          Capital        Earnings           Equity
                                       --------------------------   -------------   -------------   --------------
  <S>                                  <C>          <C>             <C>             <C>              <C>
  Balance - December 31, 2002             3,039,100   $   30,391    $  2,902,149    $  3,032,920     $  5,965,460

  Net loss                                                                              (336,950)        (336,950)

  Balance - December 31, 2003             3,039,100       30,391       2,902,149       2,695,970        5,628,510

  Net income                                                                              70,724           70,724

  Balance - December 31, 2004             3,039,100   $   30,391    $  2,902,149    $  2,766,694     $  5,699,234






















  <FN>

  See Notes to Consolidated Financial Statements
  </TABLE>

  <PAGE>
                                                            F-6
  <TABLE>
  <CAPTION>
                                         CVD EQUIPMENT CORPORATION  AND SUBSIDIARY
                                           Consolidated Statements of Cash Flows
                                           Years ended December 31, 2004 and 2003

                                                                                          2004             2003
                                                                                      -------------    -------------
  <S>                                                                                 <C>              <C>
  Cash flows from operating activities:
       Net income (loss)                                                              $     70,724     $   (336,950)
       Adjustments to reconcile net income (loss)
       to net cash (used in) provided by operating activities:
       Depreciation and amortization                                                       356,884          351,579
       Deferred tax (benefit) provision                                                    139,619          (96,288)
       Bad debt provision                                                                    4,430            1,241
       Changes in operating assets and liabilities
       Accounts receivable                                                                (559,942)          31,808
       Cost in excess of billings on uncompleted contracts                                (534,628)         207,912
       Inventory                                                                          (397,602)         597,636
       Other current assets                                                                (36,496)         119,985
       Other assets                                                                       (302,694)         (45,902)
        Accounts payable                                                                   205,181         (417,529)
        Accrued expenses                                                                   158,655          130,712
        Customer Deposits                                                                  277,557           20,595
        Billing in excess of costs on uncompleted contracts                               (174,068)          27,681
                                                                                      -------------    -------------
    Net cash (used in) provided by operating activities                                   (792,380)         592,480
                                                                                      -------------    -------------

  Cash flows from investing activities:
       Capital expenditures                                                                (47,886)         (67,403)
                                                                                      -------------    -------------
  Net cash used in investing activities                                                    (47,886)         (67,403)
                                                                                      -------------    -------------

  Cash flows from financing activities
       Proceeds of short-term borrowings                                                 1,425,000        1,024,000
       Payments of short-term borrowings                                                  (575,000)      (1,374,000)
       Proceeds of long-term debt                                                           26,460              -
       Payments of long-term debt                                                         (186,221)        (177,124)
                                                                                      -------------    -------------
  Net cash provided by (used in) financing activities                                      690,239         (527,124)
                                                                                      -------------    -------------

  Net decrease in cash and cash equivalents                                               (150,027)          (2,047)

  Cash and cash equivalents at beginning of year                                           321,490          323,537
                                                                                      -------------    -------------

  Cash and cash equivalents at end of year                                            $    171,463     $    321,490
                                                                                      =============    =============





  <FN>    See Notes to Consolidated Financial Statements
  </TABLE>
  <PAGE>
                                      F-7

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  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 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, 2004 and 2003.  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 long-term contracts, allowance for doubtful accounts, depreciation
  and amortization , taxes and 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.

  <PAGE>
                                      F-8

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  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.

  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 2003 financial statements
  to conform to the 2004 presentation. These reclassifications have no
  effect on the net (loss) 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:
  <TABLE>
  <CAPTION>
                                                          Estimated
                                                          Useful Life
                                                          ------------
                  <S>                                     <C>
                  Buildings                                39 years
                  Building improvements                    39 years
                  Machinery and equipment                   8 years
                  Capitalized labor and overhead            3 years
  </TABLE>
  <PAGE>
                                      F-9

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003


  <TABLE>
  <CAPTION>
                                                          Estimated
                                                          Useful Life
                                                          ------------
                  <S>                                     <C>
                  Furniture and fixtures                   8 years
                  Computer equipment                       5 years
                  Transportation equipment                 3 years
  </TABLE>

  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 $235,217
  and $55,408 for the years ended December 31, 2004 and 2003
  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 $40,299 and $31,111
  for the years ended December 31, 2004 and 2003, 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 2004 and 2003 totaled
  $13,419 and $13,416 respectively.

  Bad Debts

  Accounts receivables are presented net of an allowance for doubtful
  accounts of $23,728 and $19,298 as of December 31, 2004 and 2003,
  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 conditions.

  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.

  <PAGE>
                                      F-10

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Advertising Costs

  The company expenses advertising costs which are not expected to
  benefit future periods. Advertising expenses included in selling and
  shipping expenses were $21,765 and $16,143 in 2004 and 2003,
  respectively. The Company capitalizes certain advertising costs
  included in Other Assets, totaling $63,849 to develop a web site and
  to print brochures expected to be used in the future. Capitalized
  advertising costs are amortized straight-line over three years.
  Amortization expense related to advertising costs totaled $390 and
  $1,428 in 2004 and 2003, respectively. These costs have been fully
  amortized as of December 31, 2004.

  Interest Capitalization

  The Company follows the policy of capitalizing interest as a
  component of the cost of property, plant and equipment constructed
  for its own use. The amount is included in building improvements.
  During the years ended December 31, 2004 and 2003, the Company did
  not capitalize any interest.

  Income Per Share

  Basic net income (loss) per common share is computed by dividing the
  net income (loss) by the weighted average number of shares of common
  stock outstanding during each period. Diluted income per share for
  2004 reflects the dilutive effect of the assumed exercise of options.
  Potentially dilutive shares related to the exercise of stock options
  were excluded from the diluted loss per share calculation for the
  year ended December 31, 2003, because their effects would have been
  antidilutive.

  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 safety 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 customer receivables.
  See Note 14 for concentration details.

  <PAGE>
                                      F-11

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  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 fair value of securities
  available-for-sale is estimated based on quoted market prices. 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

  The Company accounts for stock-based employee compensation under
  Accounting Principles Board ("APB") Opinion No. 25. "Accounting for
  Stock Issued to Employees", and related interpretations. The Company
  has adopted the disclosure-only provisions of Statement of Financial
  Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
  Compensation" and SFAS No. 148, "Accounting for Stock-Based
  Compensation - Transition and Disclosure", which was released in
  December 2002 as an amendment of SFAS No. 123. No stock-based
  employee compensation cost is reflected in net income (loss), as all
  options granted under the plans had an exercise price at least equal
  to the market value of the underlying common stock on the date of
  grant.

  Shipping and Handling

  It is the Company's policy to include freight in total sales. The
  amount included in sales was $18,304 and $48,288 for the years ended
  December 31, 2004 and 2003, respectively. Included in selling and
  shipping is $58,629 and $91,516 for shipping and handling costs for
  2004 and 2003, respectively.

  Recently Issued Accounting Standards

  In November 2004, the Financial Accounting Standards Board
  ("FASB") issued Statement of Financial Accounting Standards
  ("SFAS NO. 151"), "Inventory Costs-an amendment to ARB No.43,"
  effective for inventory costs incurred during fiscal years
  beginning after June 15, 2005. This statement provides guidance
  to clarify the accounting for abnormal amounts of idle facility
  expense, freight handling costs, and wasted material (spoilage),
  among other production costs. Provisions of ARB No. 43 stated
  that under some circumstances, items such as idle facility
  expense, excessive spoilage and other costs may be so abnormal
  as to require treatment as current period charges. This
  statement requires that those items be recognized as current
  period charges regardless of whether they meet the criterion of
  "so abnormal." In addition, SFAS 151 requires that allocation of
  fixed production overheads to the costs of conversion be based
  on the normal capacity of the production facilities. Adoption of
  the Statement is not expected to have a material impact on the
  financial statements of the Company.

  <PAGE>
                                      F-12

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  In November 2004, the FASB issued SFAS No. 152 "Accounting for
  Real Estate Time-Sharing Transactions-An amendment of SFAS NO.
  66 and 67. This Statement amends SFAS No. 66. "Accounting for
  Sales of Real Estate," to reference the financial accounting and
  reporting guidance for real estate time-sharing transactions
  that is provided in AICPA Statement of Position (SOP) 04-2,
  Accounting for Real Estate Time-Sharing Transactions. This
  Statement also amends SFAS No. 67, "Accounting for Costs and
  Initial Rental Operations of Real Estate Projects," to state the
  guidance for (a) incidental costs and (b) costs incurred to sell
  real estate projects does not apply to real estate time-sharing
  transactions. The accounting for those operations and costs is
  subject to guidance in SOP 04-2, effective for financial
  statements with fiscal years beginning after June 15, 2005.
  Adoption of this Statement is not expected to have a material
  impact on the financial statements of the Company.

  In November 2004, the FASB issued SFAS No. 153, "Exchanges of
  Nonmonetary Assets-an amendment to APB No. 29," effective for
  nonmonetary asset exchanges occurring in fiscal years beginning
  after June 15, 2005. This Statement amends Opinion No. 29 to
  eliminate the exception for nonmonetary exchanges of similar
  productive assets and replaces it with a general exception for
  exchanges of nonmonetary assets that do not have commercial
  substance. A nonmonetary exchange has commercial substance if
  the future cash flows of the entity are expected to change
  significantly as a result of the exchange. Adoption of this
  Statement is not expected to have a material impact on the
  financial statements of the Company.

  In December 2004, the FASB issued Statement of Financial Accounting
  Standard No. 123R (SFAS 123R), "Share-Based Payment." Under previous
  practice, the reporting entity could account for share-based payment
  under the provisions of Accounting Principles Board Opinion No. 25,
  "Accounting for Stock Issued to Employees" and disclose share-based
  compensation as if accounted for under the provisions of Statement of
  Financial Accounting Standard No. 123 (SFAS No. 123), " Accounting
  for Stock-Based Compensation." Under the provisions of SFAS No. 123R,
  a public entity is required to measure the cost of employee services
  received in exchange for an award of equity instruments based on the
  grant-date fair value of the award. That cost is recognized over the
  period during which an employee is required to provide service in
  exchange for the award.

  The Company expects to adopt SFAS No. 123R effective with the
  beginning of the quarter ended March 31, 2006. Adoption of the
  standard is currently expected to reduce future earnings by an amount
  consistent with the reductions shown in recent pro forma disclosures
  provided under the provisions of SFAS No. 123. Application of this
  pronouncement requires significant judgement regarding the
  assumptions used in the selected option pricing model, including
  stock price volatility and employee exercise behavior. Most of these
  inputs are either highly dependent on the current economic
  environment at the date of grant or forward-looking over the expected
  term of the award. As a result, the actual impact of adoption on
  future earnings could differ significantly from our current estimate.

  <PAGE>
                                      F-13

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 3 - Supplemental Cash Flow Information

  During 2003, options to purchase 87,500 common shares were issued to
  certain employees and members of the board of directors. The option
  price for all options granted in 2003 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.
  <TABLE>
  <CAPTION>
                                                    2004           2003
                                                ------------   ------------
  <S>                                           <C>            <C>
  Cash paid during the year for:
      Income taxes, net of refunds              $     3,256    $   (61,621)
      Interest                                      212,547        208,944
  <FN>
  Note 4 - Uncompleted Contracts
  </TABLE>


  Costs, estimated earnings, and billings on uncompleted contracts are
  summarized as follows:
  <TABLE>
  <CAPTION>
                                                    2004           2003
                                                ------------   ------------
  <S>                                           <C>            <C>
  Costs incurred on uncompleted contracts       $ 1,142,057    $   303,772
          Estimated earnings                      1,084,166        951,894
                                                ------------   ------------
                                                  2,226,223      1,255,666
          Billings to date                       (1,115,861)      (854,000)
                                                ------------   ------------
                                                $ 1,110,362    $   401,666
                                                ============   ============

  Included in accompanying balance sheets
      Under the following captions:

      Costs and estimated earnings in excess
        of billings on uncompleted contracts    $ 1,110,362    $   575,734
      Billings in excess of costs and estimated
        earnings on uncompleted contracts             ---         (174,068)
                                                ------------   ------------
                                                $ 1,110,362    $   401,666
                                                ------------   ------------
  </TABLE>


  <PAGE>
                                      F-14

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 5 - Inventory
  <TABLE>
  <CAPTION>
                                                        December 31,
                                                    2004           2003
                                                ------------   ------------
  <S>                                           <C>            <C>
  Raw materials                                 $   628,934    $   777,893
  Work-in-process                                   686,325        108,350
  Finished goods                                    508,194        539,608
                                                ------------   ------------
                                                $ 1,823,453    $ 1,425,851
                                                ------------   ------------
  </TABLE>

  Note 6 - Property, Plant and Equipment
  Major classes of property, plant and equipment consist of the
  following:
  <TABLE>
  <CAPTION>
                                                    2004           2003
                                                ------------   ------------
  <S>                                           <C>            <C>
  Land                                          $   760,000    $   760,000
  Buildings                                       2,815,839      2,815,839
  Building improvements                           1,378,552      1,372,505
  Machinery and equipment                         1,246,470      1,222,587
  Capitalized labor and overhead                    216,602        216,602
  Furniture and fixtures                            224,542        214,903
  Computer equipment                                201,377        193,063
  Transportation equipment                           74,709         74,709
                                                ------------   ------------
          Totals at Cost                          6,918,091      6,870,208
  Accumulated depreciation and amortization      (1,765,074)    (1,470,176)
                                                ------------   ------------
                                                $ 5,153,017    $ 5,400,032
  Depreciation and amortization expense         $   294,901    $   297,747
                                                ------------   ------------

  </TABLE>

  <PAGE>
                                      F-15

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 7 - Intangible Assets

  Intangible assets are summarized as follows:
  <TABLE>
  <CAPTION>
  December 31, 2004

                         Weighted Average                   Accumulated    Net of Accumulated
  Intangible Asset       Amortization Period      Cost      Amortization   Amortization
  -----------------      -------------------   ----------   ------------   ------------------
  <S>                    <C>                   <C>          <C>            <C>
  Licensing Agreement             5               10,000         10,000                0
  Patents & Copyrights           14               32,019         12,021           19,998
  Intellectual Property          15              100,000         23,335           76,665
  Other                           5               21,492          8,597           12,895


  Totals                         13              163,511         53,953          109,558
  </TABLE>


  <TABLE>
  <CAPTION>
  December 31, 2003

                         Weighted Average                   Accumulated    Net of Accumulated
  Intangible Asset       Amortization Period      Cost      Amortization   Amortization
  -----------------      -------------------   ----------   ------------   ------------------
  <S>                    <C>                   <C>          <C>            <C>
  Licensing Agreement             5               10,000         10,000                0
  Patents & Copyrights           14               32,019          9,568           22,451
  Intellectual Property          15              100,000         16,668           83,332
  Other                           5               21,492          4,298           17,194


  Totals                         13              163,511         40,534          122,977
  </TABLE>
  The estimated amortization expense related to intangible assets
  for each of the five succeeding fiscal years and thereafter as
  of December 31, 2004 is as follows:
  <TABLE>
  <CAPTION>
  Year Ended
  December 31,
  <C>                                             <C>
  2005                                            $   13,417
  2006                                                13,417
  2007                                                13,417
  2008                                                 9,119
  2009                                                 7,619
  Thereafter                                          52,569

     Total                                        $  109,558
  </TABLE>

  <PAGE>
                                      F-16

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 8 - Financing Arrangements

  The Company has a line of credit with a bank which allows the
  Company to borrow up to $1,000,000 until June 1, 2005. Interest
  is payable on any unpaid principal balance at the bank's prime
  rate plus 3/4 of 1%. As of December 31, 2004 and 2003 $850,000 and
  $0 was outstanding on this facility. The prime rate was 5.25%
  and 4.0% at December 31, 2004 and 2003 respectively. The
  weighted average interest rate on the Company's short-term
  borrowings for 2004 and 2003 was 5.46% and 4.80% respectively.

  Note 9 - Long-term Debt
  <TABLE>
  <CAPTION>
  Long-term debt consists of the following:
                                                                          2004            2003
                                                                     -------------   -------------
  <S>                                                                <C>             <C>
  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.                                                     $    838,645    $    851,308

  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.                                          2,357,668       2,476,851


  NORTH FORK BANK
       Sixty month installment note; payable in
       monthly installments of $4,922, including
       interest at 7.74% per annum; final payment
       due October 2007; collateralized by
       equipment costing $244,239.                                        140,087         185,622

  </TABLE>
  <PAGE>
                                      F-17

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  <TABLE>
  <CAPTION>
                                                                          2004            2003
                                                                     -------------   -------------
  <S>                                                                <C>             <C>
  KEY EQUIPMENT FINANCE
       Twenty-four month installment note, payable
       In monthly installments of $1,123, including
       Interest at 1.9% per annum; final payment due
       May 2006, collateralized by software
       costing $26,460.                                                    17,622               0
                                                                     -------------   -------------

                                                                        3,354,022       3,513,781
       Less: Current maturities                                           213,394         177,381
                                                                     -------------   -------------
                                                                     $  3,140,628    $  3,336,400
                                                                     -------------   -------------


  Future maturities of long-term debt as follows:

          Year ended December 31, 2005                               $    213,394
          Year ended December 31, 2006                                    217,204
          Year ended December 31, 2007                                    207,088
          Year ended December 31, 2008                                    179,394
          Year ended December 31, 2009                                    950,276
                                     Thereafter                         1,586,666
                                                                     -------------
                                                                     $  3,354,022
                                                                     =============
  </TABLE>
  Note 10 - Income per Share

  The calculation of basic and diluted weighted average common
  shares outstanding is as follows:
  <TABLE>
  <CAPTION>
                                                                          2004            2003
                                                                     -------------   -------------
  <S>                                                                <C>             <C>
  Weighted average common shares outstanding
  basic income per share                                                3,039,100       3,039,100

  Effect of potential common share issuance:
          Stock options                                                    14,394           ---
                                                                     -------------   -------------

  Weighted average common shares outstanding
  Diluted income per share                                              3,053,494       3,039,100
                                                                     =============   =============
  </TABLE>
  <PAGE>
                                      F-18

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Outstanding options to purchase 305,900 shares were not included
  in the earnings per share calculation at December 31, 2004,
  because the exercise price was higher than the market price.
  Potentially dilutive shares related to the exercise of stock
  options to purchase 365,400 shares were excluded from the
  diluted loss per share calculation at December 31, 2003, because
  their effects would have been antidilutive. These options could
  potentially dilute earnings in the future.

  Note 11 - Income Taxes

  The provision (benefit) for income taxes includes the following:
  <TABLE>
  <CAPTION>
                                                                          2004            2003
                                                                     -------------   -------------
  <S>                                                                <C>             <C>
          Current:
              Federal                                                $      ---      $    (65,761)
              State                                                       (14,486)            835
                                                                     -------------   -------------
                  Total Current Provision (Benefit)                       (14,486)        (64,926)
          Deferred:
              Federal                                                      85,638         (77,849)
              State                                                        53,981         (18,439)
                                                                     -------------   -------------
                 Total Deferred Provision (Benefit)                       139,619         (96,288)
                                                                     -------------   -------------
                                                                     $    125,133    $   (161,214)
                                                                     =============   =============
  </TABLE>

  The Company has New York State investment tax credit
  carryforwards of $263,160 that may be offset against future
  state tax liabilities through the year 2019 and other state tax
  credits totaling $316,053 which may be carried forward
  indefinitely. The Company accounts for investment tax credits
  primarily by the flow-through method.

  As of December 31, 2004, the Company had federal and state net
  operating loss (NOL's) carryforwards totaling approximately
  $625,000 and $342,000, respectively. These NOL's were incurred
  in the 2003 tax year and may be used to offset taxable income in
  future periods through 2023.

  The Company also has capital loss carryforwards incurred in
  prior periods totaling approximately $24,000 set to expire 2005.

  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:




  <PAGE>
                                      F-19

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  <TABLE>
  <CAPTION>
                                                             2004            2003
                                                         -------------   -------------
  <S>                                                    <C>             <C>

          Statutory rate                                      34%             34%
          State taxes, net of federal benefits                 7%              7%
          Investment and other tax credits                    24%            (73%)
                                                         -------------   -------------
                                          Totals              65%            (32%)
                                                         =============   =============
  </TABLE>
  The tax effects of temporary differences giving rise to
  significant portions of deferred taxes are as follows:
  <TABLE>
  <CAPTION>
                                                             2004            2003
                                                         -------------   -------------
  <S>                                                    <C>             <C>

          Allowance for doubtful accounts                $      9,320    $      7,472
          Inventory capitalization                             67,353          39,618
          Deferred revenue                                   (425,860)       (368,573)
          Net operating loss                                  222,555         289,570
          Depreciation and amortization                      (190,376)       (157,462)
          Investment tax credit                               579,213         615,133
  Vacation Accrual                                             28,963          14,604
  Other                                                         9,575               0
                                                         -------------   -------------
                    Net deferred tax asset               $    300,743    $    440,362
                                                         -------------   -------------
  </TABLE>
  Management believes the net 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 the
  near term.

  Note 12 - 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 a four-year period 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.

  <PAGE>
                                      F-20

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  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 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.

  In July 2001, the shareholders approved a non-qualified stock
  option plan 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.

  <TABLE>
  <CAPTION>
  A summary of stock option activity related to the Company's Plan is as follows:

                                     Beginning      Granted   Exercised   Canceled   Ending
                                     Balance        During    During      During     Balance
                                     Outstanding    Period    Period      Period    Outstanding  Exercisable
                                     -----------   ---------  ---------  ---------  -----------  -----------
  <S>                                <C>           <C>        <C>        <C>        <C>          <C>
  Year ended December 31, 2003
  Number of shares                     396,650        87,500      -0-      118,750    365,400      196,290
  Weighted average exercise price
   per share                           $  1.65       $  1.75    $ -0-      $  1.59    $  1.69      $  1.66
  Year ended December 31, 2004
  Number of shares                     365,400         -0-        -0-       10,000    355,400      296,650
  Weighted average exercise price
  Per share                            $  1.69         -0-      $ -0-      $  1.75    $  1.69      $  1.68
  </TABLE>
  <PAGE>
                                      F-21

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
  <TABLE>
  <CAPTION>
  The following table summarizes information about the options at December 31, 2004.

                             Options Outstanding         Options Exercisable
                   -----------------------------------  ---------------------
                                  Weighted
                                  Average     Weighted               Weighted
                                  Remaining   Average                Average
      Exercise      Number       Contractual  Exercise     Number    Exercise
     Price Range   Outstanding      Life       Price    Exercisable  Price
    -------------  -----------  ------------  --------  -----------  --------
    <C>            <C>          <C>           <C>       <C>          <C>
    $0.13 - $1.00     49,500      1.55 years    $ 1.00      49,500     $ 1.00
    $1.25 - $1.50     75,000      5.74 years    $ 1.40      25,000     $ 1.40
    $1.51 - $1.75    169,900      2.09 years    $ 1.75     169,900     $ 1.75
    $2.00 - $2.75     45,000      2.56 years    $ 2.00      45,000     $ 2.00
    $3.00 - $3.25      3,500      2.50 years    $ 3.25       3,500     $ 3.25
    $3.75 - $4.00     12,500      4.25 years    $ 3.88       3,750     $ 3.88
  </TABLE>

  The Company accounts for the stock option plans under the
  recognition and measurement principles of APB Opinion No. 25,
  "Accounting for Stock Issued to Employees, and related
  interpretations.  The following table illustrates the effect on
  net income and earnings per share if the Company had applied the
  fair value recognition provisions of FASB Statement No. 123,
  "Accounting for Stock-Based Compensation", to its stock-based
  employee compensation: See Note 2.

  The weighted average grant date fair value of options granted
  during 2003 was $1.75. There were no options granted in 2004.
  <TABLE>
  <CAPTION>
                                                             2004            2003
                                                         -------------   -------------
          <S>                                            <C>             <C>

          Net income (loss), as reported                 $     70,724    $   (336,950)

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

          Deduct: Total stock-based employee
          compensation expense determined under
          fair value based method for all awards, net
          of related tax effects                         $    (71,978)   $    (57,985)
                                                         -------------   -------------

          Pro-forma net (loss)                           $     (1,254)   $   (394,935)
                                                         =============   =============
  </TABLE>
  <PAGE>
                                      F-22

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
  <TABLE>
  <CAPTION>
  Income (loss) per share:                                    2004            2003
                                                         -------------   -------------
                    <S>                                  <C>             <C>
                    Basic-as reported                      $   .02         $  (.11)
                    Basic-pro forma                        $   .00         $  (.13)

                    Diluted -as reported                   $   .02         $  (.11)
                    Diluted -pro forma                     $   .00         $  (.13)
  </TABLE>

  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.
  <TABLE>
  <CAPTION>
                         Risk-Free                   Expected    Expected
  Year Ended           Interest Rate  Expected Life  Volatility  Dividends
  -------------------  -------------  -------------  ----------  ---------
  <S>                  <C>            <C>            <C>         <C>
  December 31, 2003        2.5%         5.7 Years     47.725%       None
  <FN>
  There were no options granted in 2004.
  </TABLE>

  Note 13 - 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, 2004 and 2003 the Company incurred
  administrative costs totaling $2,530 and $2,869 respectively. No
  employer contribution has been made for 2004 and 2003.

  <PAGE>
                                      F-23

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 14 - Concentration of Credit Risk

  Cash

  The Company places most of its temporary cash investments with
  one financial institution. Balances normally exceed the federal
  Deposit Insurance Corporation limit. The amount at risk at
  December 31, 2004 was approximately $76,000. 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
  2004, one customer from the Conceptronic division represented
  approximately 17% of the Company's total revenue for the year
  and 16% of the Company's total billed and unbilled receivables
  at December 31, 2004. Two other customers, one each from the CVD
  and SDC divisions, represented approximately 11% and 23% of
  total billed and unbilled receivables at December 31, 2004. In
  2003, one customer of Conceptronic represented approximately 12%
  and one customer of the CVD division represented 13% of the
  Company's annual revenue. These customers represented less than
  1% of total billed and unbilled receivables at December 31,
  2003.

  Export Sales

  Export sales to unaffiliated customers represented approximately
  32% and 26% of sales for the years ended December 31, 2004 and
  2003, respectively, Export sales in 2004 and 2003 were primarily
  to customers in Asia. All contracts are denominated in U.S.
  dollars. The Company does not enter into any foreign exchange
  contracts.

  Note 15 - Related Party Transactions

  The general counsel for the Company is also a director. The
  Company incurred legal fees for his professional services of
  approximately $26,000 and $41,000 for the years ended December
  31, 2004 and 2003, respectively. As of December 31, 2004 and
  2003, the Company owed the general counsel approximately
  $41,000.

  Note 16 - Other Income

  Other income for the year ended December 31, 2003 consists of
  approximately $140,000 in cash received on the collection of
  accounts receivable exceeding the amount booked as part of the
  purchase of assets on June 17, 2002.

  <PAGE>
                                      F-24

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  Note 17 - 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 at December 31, 2004 and for the year then ended:

  <TABLE>
  <CAPTION>
                               CVD             SDC        Conceptronic    Eliminations    Consolidated
                          -------------   -------------   -------------   -------------   -------------
  <S>                     <C>             <C>             <C>             <C>             <C>

  Assets                  $ 10,026,553    $  2,604,804    $  2,878,597    $ (3,956,771)   $ 11,553,183
                          =============   =============   =============   =============   =============
  Revenue                 $  2,885,410    $  2,843,293    $  4,948,170    $   (803,281)   $  9,873,592
  Interest Income                -0-               752           -0-                               752
  Interest Expense              76,678          59,190          76,679                         212,547
  Depreciation and
  amortization                 201,958         130,876          24,050                         356,884
  Capital
    expenditures                36,721           8,150           3,015                          47,886
  Pretax (loss) earnings      (38,052)         140,380          93,529                         195,857

  </TABLE>
  <PAGE>
                                      F-25

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003

  The following table presents certain information regarding the
  Company's segments at December 31, 2003 and for the year then
  ended:
  <TABLE>
  <CAPTION>
                               CVD             SDC        Conceptronic    Eliminations    Consolidated
                          -------------   -------------   -------------   -------------   -------------
  <S>                     <C>             <C>             <C>             <C>             <C>

  Assets                  $  9,227,302    $  2,245,712    $  2,361,457    $ (3,509,577)   $ 10,324,894
                          =============   =============   =============   =============   =============

  Revenue                 $  3,779,878    $  2,360,711    $  4,106,780    $   (459,430)   $  9,787,939
  Interest Income                  586             657           -0-                             1,243
  Interest Expense             170,735          60,044         (21,835)                        208,944
  Depreciation and
    amortization               188,789         140,229          22,562                         351,580
  Capital
    expenditures                47,168          17,413           2,822                          67,403
  Pretax earnings (loss)        87,950        (205,884)       (380,230)                       (498,164)
  </TABLE>

  Note 18- 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 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. Presently, cross-motions for summary judgment are
  pending before the court.

  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.