<PAGE>  1
                    SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C.
                   _____________________________________

                               FORM 10-KSB

                              ANNUAL REPORT
                   _____________________________________

                    PURSUANT TO SECTION 13 OR 15 (d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934
                   _____________________________________

                    Fiscal year ended December 31, 1997
                      Commission File No. 2-97210-NY

                         CVD EQUIPMENT CORPORATION
                         -------------------------
            (Exact name of registrant as specified in charter)

                   New York                   11-2621692
                   --------                   ----------
       (State of incorporation)   (IRS Employer Identification No.)



             1881 Lakeland Avenue, Ronkonkoma, New York 11779
             ------------------------------------------------
                 (Address of principal executive offices)

                               516-981-7081
                               ------------
                      (Registrant's telephone number)

     Securities Registered Pursuant to Section 12 (b) of the Act: NONE

     Securities Registered Pursuant to Section 12 (g) of the Act: NONE

          Indicate by check mark whether the Registrant (1) has filed all
          reports required to be filed by Section 13 or 15 (d) of the
          Securities Exchange Act of 1934 during the preceding 12 months,
          and (2) has been subject to such filing requirements for the
          past 90 days.

                   YES    |X|                  NO    |_|

          The aggregate market value of Common Stock, Par Value $.01 Per
          Share, held by non-affiliates of February 28, 1998 was
          approximately $2,165,850.

          As of February 28, 1998 there were 2,918,750 shares of Common
          Stock, Par Value $.01 Per Share, Outstanding.



  <PAGE>  2
                    DOCUMENTS INCORPORATED BY REFERENCE
                                   NONE
                                  PART I

  ITEM 1.  BUSINESS

     (a) GENERAL DEVELOPMENT OF BUSINESS

     CVD Equipment Corporation (the "Company") was incorporated under the
     laws of New York State in 1982.  On September 11, 1985 the Company
     made an initial public offering of 700,000 units underwritten by D.
     H. Blair & Co., 44 Wall Street, New York, New York 10005, pursuant
     to which it received net proceeds of $2,683,640.

     On August 14, 1986, CVD Equipment Corporation received a $2,542,500
     Industrial Development (IDA) Bond Issue through the Town of
     Brookhaven, New York in anticipation of the construction of a 42,000
     square foot facility on approximately 10 acres of land.  On March
     29, 1988, plans for construction were abandoned due to declining
     real estate conditions, and CVD Equipment Corporation negotiated a
     settlement on the Industrial Development Bond Issue that resulted in
     the termination of the remaining unexpended funds for financing
     construction of the facility and acquisition of machinery and
     equipment and has listed the real property for sale.

     On March 21, 1997, CVD Equipment Corporation entered into a contract
     for sale of approximately 10 acres of land.  The sale is expected to
     close within 12 months of the contract date.

     Subsequent to the close of the year, on March 13, 1998, the Company
     closed on the sale of the vacant land it owned in Selden, New York.

     (b) INFORMATION ABOUT INDUSTRY SEGMENTS

     The Company designs, manufactures and markets chemical vapor
     deposition equipment, etching systems and quartzware used in the
     semiconductor, aerospace and other industries.



  <PAGE>  3

     (c) GENERAL NARRATIVE DESCRIPTION OF BUSINESS

     The Company designs, develops, manufactures and markets (1) chemical
     vapor deposition equipment, annealing furnaces and etching systems;
     (2) gas flow control systems; and (3) fabricates standard and custom
     quartzware.  The Company's products are generally sold to the
     semiconductor and aerospace industries and are manufactured to the
     particular specifications of each of its customers.

     The Company commenced operations in October, 1982.  Equipment sales
     currently range in price from $50,000 to over $1,000,000 per unit.
     Approximately 90% of the Company's sales during 1997 were for
     equipment used to produce semiconductor materials.  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.  The Company's products are
     used in the manufacture of these integrated circuits.

     PRODUCTS

     Chemical Vapor Deposition Equipment - The Company offers advanced
     Metalorganic Chemical Vapor Deposition Systems for sale to the
     electronics industry.  Chemical vapor deposition is 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 1000
     degrees C).  The Company's Chemical Vapor Deposition Systems are
     complete and include all necessary instrumentation, subsystems and
     components.  The systems include mass flow controllers, bellows
     valves, stainless steel lines and fittings.  The Company provides
     such standard systems and also specifically engineered products for
     particular customer applications.

     The Company's CVD systems are available in a variety of models which
     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.  The Company's standard microprocessor control
     system is extremely versatile and capable of supporting the
     Company's complete product line and most custom system requirements.



  <PAGE>  4

     The Company also offers Annealing Furnaces which are used to heat
     materials to temperatures ranging from 300 degrees to 1500 degrees C
     in a gaseous environment.  The Annealing Furnace is equipped with an
     automatic process controller, permitting automatic process
     sequencing and monitoring with safety alarm provisions.

     Gas Flow Control Systems  - The Company offers standard and
     custom-designed gas cylinder storage cabinets and gas control
     systems to provide safe storage and handling of pressurized gases.
     System design allows for automatic or manual control from both a
     local and remote location where the handling of explosive,
     flammable, corrosive and toxic gases used in the manufacture of
     semiconductor wafers can be hazardous.

     Quartzware - The Company offers standard and custom fabricated
     quartzware.  The quartzware is used by CVD Equipment Corporation and
     is also sold as a separate item to the semiconductor industry.

     MARKETING

     The Company's products are used in research and production
     applications by the semiconductor industry.  The Company sells its
     products primarily to semiconductor manufacturers and to
     institutions involved in electronic research such as universities
     and industrial laboratories.  The Company generates sales from its
     sales office located in Ronkonkoma, New York.  Sales of the
     Company's products are made by a staff of two employees whose
     activities are supported by a staff of nine application engineers.
     In 1997 the Company has engaged three new outside commissioned sales
     representatives and have laid the foundation for additional
     representatives during 1998.

     In  September, 1997, CVD Equipment opened a Web Site,
     www.cvdequipment.com, to support CVD's expanded marketing program.

     On December 31, 1997, the Company had a backlog of orders of
     approximately $1.7 million as compared to $2.5 million on December
     31, 1996.  The backlog at December 31, 1997 is all current and is
     expected to ship in 1998.

     The Company warrants its equipment for a period of six months after
     shipment and passes along any warranties from original manufacturers
     of components used in its products.  The Company provides for its



  <PAGE>  5
     Engineering and New Product Development

     The processes utilizing chemical vapor deposition systems are
     subject to technological change, and the Company's ability to
     compete successfully depends upon, among other things, its ability
     to anticipate and react to such change.  Accordingly, the Company is
     committed to the research and development of new products as well as
     the improvement of existing products.  Although the Company does not
     specifically segregate in its financial statement amounts expended
     for product development, the Company estimates that during 1997 it
     spent approximately $153,000 for engineering and new product
     development.  This compares with approximately $150,000 spent for
     these purposes during 1996.  As of December 31, 1997, 9 employees
     were engaged on a full-time basis in engineering, improvement of
     existing products and development of new products.

     Patents and License Agreements

     The Company has developed technology related to the automatic valve
     shut-off system manufactured by the Company, which has been granted
     Patent No. 4,527,715.  Although the Company believes that the patent
     with respect to the automatic valve shut-off system provides it with
     some competitive advantage, the Company does not believe the patent
     protection is significant to any of its current business operations.
     The Company believes that its business depends primarily upon the
     technical know-how and experience of its employees.

     In August, 1997, CVD signed a license agreement with IBM to sell
     equipment using IBM's patented method for low temperature, low
     pressure chemical vapor deposition of epitaxial layers (UHV/CVD).

     Competition

     The Company's business is subject to intense competition.  The
     Company is aware of five businesses which market a substantial
     number of products comparable to the Company's.  Many of the
     Company's competitors (including customers who may elect to
     manufacture systems for internal use) have financial, marketing and
     other resources greater than the Company.  The most significant
     competitive factors with respect to the Company's products are
     technical performance, quality control and price.

     Manufacturing, Materials and Supplies

     Most of the components used in the production of the Company's
     products are not manufactured by the Company but are purchased from
     unrelated third-party manufacturers of such equipment.  The Company
     has no supply contracts covering the components which it uses to
     manufacture its products.



  <PAGE>  6

     Employees

     As of December 31, 1997, the Company employed 34 full time
     personnel, including 16 in manufacturing, 9 in engineering, research
     and development (including efforts relating to the improvement of
     existing products), 2 in marketing, and 7 in general management and
     administration.  One part-time worker was also on staff bringing
     total employed to 35.  The Company is not party to any collective
     bargaining agreement and has no work stoppages.  The Company
     believes that its employee relations are good.

     Insurance

     Because the Company's 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.

     The Company endeavors to minimize its product liability exposure by
     engineering safety devices for its products, carefully monitoring
     incidents involving its products to determine areas where safety
     improvements may be made, and training programs in connection with
     its products.  As of May, 1997, the Company maintains product
     liability coverage.


     (d)  FOREIGN OPERATIONS

     The Company's revenues derived from foreign exports was 2% of total
     revenues in 1997.


  ITEM 2.  DESCRIPTION OF PROPERTIES

     On June 1, 1991, CVD Equipment relocated its operations to its
     present location in Ronkonkoma, New York.  The 20,000 square foot
     facility offers significant financial and operational benefits over
     the Company's previous location.  The Company signed a new 5-year
     lease in 1996 which is scheduled to expire on July 31, 2001.
     Management feels that the property is adequately covered by
     insurance.

     On March 21, 1997, CVD Equipment Corporation entered into a contract
     for sale of approximately 10 acres of land.  The Company expects to
     realize a profit of approximately $165,000 when the sale is
     completed within the next twelve months of the contract date.



  <PAGE>  7

     Subsequent to the close of the year, on March 13, 1998 the Company
     closed on the sale of the vacant land it owned in Selden, New York.

  ITEM 3.  LEGAL PROCEEDINGS

     There are no legal issues open.

  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     A shareholder's meeting was held in the third quarter of 1997 for
     the primary purpose of re-electing directors.

                                  PART II

  ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
               HOLDER MATTERS


     (a) PRINCIPAL MARKET

     The stock continues to be traded on the OTC Bulletin Board and
     reported in the OTC "Pink Sheets".

     (b) STOCK PRICE AND DIVIDEND INFORMATION

     The Company's common stock first began to be publicly traded on
     September 11, 1985 and prior to that date the Company was privately
     held.  The following chart sets forth the high and low closing bid
     price of the Common Stock for the indicated periods.

        Period                                  High            Low

     January 1, 1996 through March 31, 1996     0.560           0.156
     April 1, 1996 through June 30, 1996        1.060           0.625
     July 1, 1996 through September 30, 1996    2.250           0.660
     October 1, 1996 through December 31, 1996  1.625           1.187
     January 1, 1997 through March 31, 1997     1.750           1.438
     April 1, 1997 through June 30, 1997        1.938           1.750
     July 1, 1997 through September 30, 1997    1.875           1.250
     October 1, 1997 through December 31, 1997  1.875           1.625

     The chart reflects inter-dealer prices, without retail mark-up,
     markdown, or commission and does not represent actual transactions.
     The Company paid no cash dividends during the period.



  <PAGE>  8

     (c) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

     The number of holders of record of the Company's Common Stock as of
     February 28, 1998 was approximately 400.

  ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS

        1997 Compared to 1996

     New orders in 1997 totaled $3.1 million which was 46% lower than
     1996's level of $5.7 million.  The revenues produced a net profit of
     $.6 million which was the second most profitable year ever reported
     by the Company. Net earnings per share were $.22 in 1997 compared to
     $.39 in 1996.  In the past CVD Equipment Corporation has generally
     manufactured customized equipment.  In 1998 the Company intends to
     start introducing a line of standard products as a supplement to our
     custom systems.  In September, 1997, CVD Equipment opened a Web
     site, www.cvdeqipment.com to support the company's expanded
     marketing program.

     Revenue

     Revenue for the year was $3.8 million which was a 24% decrease from
     1996 of $5.0 million.

     The type of sales in 1997 was similar to those of 1996.  CVD shipped
     approximately 7% to government associated entities, 15% to major
     colleges and universities, 10% to research laboratories and another
     45% was shipped to two significant Fortune 500 companies which
     continue to rely on CVD for more of their equipment needs.

     Costs and Expenses

     In 1997 cost of sales increased to 64% from 60% in 1996.  The main
     reason for the increase in cost of sales was an increase in payroll
     expenses (CVD averaged 34 employees in 1997 compared to 30 employees
     in 1996)  which was offset by a decrease in depreciation expenses.
     An increasingly conservative approach to capitalizing labor will
     continue to reduce depreciation expense in subsequent years.
     Capitalized labor depreciation expense was $75,000 less in 1997
     compared to 1996.

     Selling and G & A expense were slightly higher by $15,812 in 1997
     compared to 1996.  Despite increases in payroll expenses,
     stockholders expense, and advertising, CVD reduced expenditures in



  <PAGE>  9

     Interest expense dropped 82% as CVD paid all of its debt in 1997,
     which had a principal balance of $135,000 ending in 1996.

     Liquidity and Capital Resources

     By year end 1997, CVD's cash position improved to $239,476 from
     $67,212 at the beginning of the year.  This was still accomplished
     even though 1997 sales were lower than in 1996. This was mainly due
     to less cash allocated toward CVD's debt.  In 1997, $135,000 was
     paid for principal, which brought debt down to a $0 balance,
     compared to $569,000 being paid in 1996.

     CVD entered into a contract in March, 1997, to sell its land in
     Selden, NY.  The contingencies in that contract have been satisfied.
     With the proceeds from the sale of a property and being free of all
     debts, CVD anticipates a very strong cash position in 1998.

     Subsequent to the close of the year, on March 13, 1998, the Company
     closed on the sale of the vacant land it owned in Selden, New York.

          1996 Compared to 1995

     The year 1996 was an exceptional one for CVD Equipment with records
     set in many areas.  New orders in 1996 were $5.7 million which were
     more than 67% higher than 1995's level of $3.4 million.  The heavy
     influx of new orders pushed revenue past the $5.0 million mark for
     the year and was nearly double the 1995 level of $2.6 million.  The
     higher revenues produced a net profit of more than $1.1 million
     which is the best result ever reported by the Company.  Net earnings
     per share were $.39 in 1996 compared to $.08 in 1995.

     In 1996, CVD delivered its first systems to Taiwan and Australia and
     continued its expansion into developing niches of the semiconductor
     equipment market.  New system designs are on the floor for further
     expansion of our product line.

     Revenue

     Revenues for the year were $5.0 million which was 91% more than the
     1995 level of $2.6 million.  The make-up of sales shifted heavily
     toward the commercial side at the expense of government related jobs
     and non-semiconductor related business.  While government related
     agencies have averaged about 25% of CVD sales, in 1996 that number
     was only 10%.  Non-semiconductor business was less than 10% after
     providing a much larger percentage in prior years.

     A majority of the sales for 1996 were concentrated with two
     customers who were the source of 70% of revenue.  This reflects the
     confidence CVD has been developing with major customers as we now
     are supplying more production line equipment.



  <PAGE>  10

     Costs and Expenses

     Operating margins continued to be favorably impacted by a drop in
     Cost of Sales to 60%.  This is the third consecutive year of
     significant decreases.  Payroll expense was up substantially as CVD
     grew from 23 people at the end of 1995 to 32 people at the end of
     1996.  The Company has been careful in adding personnel so that
     sought after efficiency is not lost with the addition of new people.
     It is encouraging that despite the significant personnel increase,
     payroll expense as a percentage of sales was down to 26.8% from
     36.5% one year earlier.

     Selling expenses were increased in 1996 as CVD added a salesman and
     incurred commission expense that it did not have in 1995.  G & A
     also increased as many payroll-related overheads increased due to
     the change in headcount.  However, taken together, Selling and G & A
     expenses dropped as a percentage of sales from 22.8% to 16% in 1996.

     Interest expense dropped nearly 60% as CVD continued to aggressively
     pay off debt in 1996.  By year-end, debt was down to approximately
     $130,000 from $693,000 at the end of 1995.  Subsequent to year end,
     another $35,000 has been paid bringing the balance to under
     $100,000.

     Liquidity and Capital Resources

     Despite the record earnings for 1996, cash at the end of the year
     was $67,212 compared to $240,842 at the end of 1995.  The cash
     reduction reflects the aggresive debt repayment program followed in
     1996 as more than $564,000 was paid back to BNL.  Accounts
     Receivable, however, were significantly higher at year-end by
     $290,163 versus year-end 1995.  A majority of the receivables will
     be collected in the first quarter of 1997.

     The Company continued to reduce inventory in 1996 as more than
     $120,000 was used in production.




  ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information called for by ITEM 7 is incorporated by reference in
     ITEM 13.



  <PAGE>  11

                         CVD EQUIPMENT CORPORATION
                              AND SUBSIDIARY

                     CONSOLIDATED FINANCIAL STATEMENTS

                            FORM 10-KSB ITEM 7

                  Years ended December 31, 1997 and 1996



  <PAGE>  12

  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                              Page No.


  INDEPENDENT AUDITORS' REPORT                                     F-3


  FINANCIAL STATEMENTS:

  Consolidated balance sheets as of December 31, 1997 and 1996     F-4

  Consolidated statements of income and retained earnings
  (accumulated deficit) for the years ended
    December 31, 1997 and 1996                                     F-5

  Consolidated statements of cash flows for the years ended
    December 31, 1997 and 1996                                     F-6




  <PAGE>  13

                                                                   F-3
        [Letterhead of Albrecht, Viggiano, Zureck, & Company, P.C.]

                                          CERTIFIED PUBLIC ACCOUNTANTS
                                                      25 SUFFOLK COURT
                                                  HAUPPAUGE, NY  11788
                                                        (516) 434-9500



                       INDEPENDENT AUDITORS' REPORT


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


  We have audited the accompanying consolidated balance sheets of CVD
  Equipment Corporation and Subsidiary (the Company) as of December 31,
  1997 and 1996, and the related consolidated statements of income and
  retained earnings (accumulated deficit), and cash flows for the years
  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 audits.

  We conducted our audits in accordance with generally accepted auditing
  standards.  Those standards require that we plan and perform the audit
  to obtain reasonable assurance about whether the financial statements
  are free of material misstatement.  An audit includes examining, on a
  test basis, evidence supporting the amounts and disclosures in the
  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 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 financial position of CVD
  Equipment Corporation and Subsidiary as of December 31, 1997 and 1996
  and the results of its operations and its cash flows for the years then
  ended, in conformity with generally accepted accounting principles.




  Hauppauge, New York
  February 27, 1998, except as
  to Note 12, which is as of



  <PAGE>  14
                                                                   F-4
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS
                        December 31, 1997 and 1996
  <TABLE>
  <CAPTION>
                                                     1997        1996
                                                -----------  ------------
  <S>                                           <C>          <C>
  ASSETS
  Current Assets
     Cash and cash equivalents                  $   239,476  $    67,212
     Accounts receivable                            394,065      616,018
     Officer loan receivable                        499,154       -0-
     Costs and estimated earnings in excess of
       billings on uncompleted contracts          1,391,021    1,264,820
     Inventory                                      135,807       39,759
     Deferred tax asset                             197,334       67,736
     Prepaid income taxes                            66,729        -0-
     Other current assets                            44,362       18,559
                                                -----------  ------------
                     Total Current Assets         2,967,948    2,074,104

  Property, Plant and Equipment                     820,916      827,203
                                                -----------  ------------
  Other Assets
     Officer loan receivable                          -0-        500,000
     Other assets                                    97,065       65,720
                                                -----------  ------------
                                                     97,065      565,720
                                                -----------  ------------
                     Total Assets               $ 3,885,929  $ 3,467,027
                                                ===========  ============
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
     Accounts payable                           $    96,312  $   120,162
     Accrued expenses                               117,005      120,290
     Deposit on a contract for the sale of
       real estate                                   40,000        -0-
     Income and other taxes payable                   2,213       53,297
     Billings in excess of costs on uncompleted
       contracts                                      -0-         41,090
     Current maturities of long-term debt             -0-        135,695
                                                -----------  ------------
             Total Current Liabilities              255,530      470,534
                                                -----------  ------------
  Commitments and Contingencies
  Stockholders' Equity
     Common stock - $0.01 par-shares authorized 10,000,000;
       issued and outstanding 2,918,750              29,188       29,188
     Additional paid-in capital                   2,784,060    2,784,060
     Retained earnings                              817,151      183,245
                                                -----------  ------------
  Total Stockholders' Equity                      3,630,399    2,996,493

  Total Liabilities and Stockholders' Equity    $ 3,885,929    3,467,027
                                                ===========  ============
  </TABLE>



  <PAGE>  15
                                                                   F-5
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
                      EARNINGS (ACCUMULATED DEFICIT)
                  Years ended December 31, 1997 and 1996
  <TABLE>
  <CAPTION>
                                                     1997        1996
                                                -----------  ------------
  <S>                                           <C>          <C>
  Revenues
     Revenue on completed contracts             $ 2,664,574  $ 1,480,451
     Revenue on uncompleted contracts             1,128,630    3,537,071
                                                -----------  ------------
                                 Total Revenues   3,793,204    5,017,522
                                                -----------  ------------

  Costs and Revenues
     Cost on completed contracts                  1,763,005    1,139,504
     Costs on uncompleted contracts                 677,455    1,872,613
                                                -----------  ------------
                         Total Cost of Revenues   2,440,460    3,012,117
                                                -----------  ------------
                                   Gross Profit   1,352,744    2,005,405
                                                -----------  ------------
  Operating Expenses
     Selling and shipping                           114,061      130,674
     General and administrative                     709,214      676,789
                                                -----------  ------------
                       Total Operating Expenses     823,275      807,463
                                                -----------  ------------
      Income Before Interest and Other Expenses     529,469    1,197,942
                                                -----------  ------------
  Other Income (Expense)
     Interest income                                 50,707       37,105
     Interest expense                                (4,866)     (26,924)
     Other income                                     1,709        1,278
                                                -----------  ------------
                             Total Other Income      47,550       11,459
                                                -----------  ------------
                            Income Before Taxes     577,019    1,209,401

  Income Tax Benefit (Provision)                     56,887      (74,264)
                                                -----------  ------------
                                     Net Income     633,906    1,135,137

  Retained Earnings (Accumulated Deficit)
        at Beginning of Year                        183,245     (951,892)
                                                -----------  ------------
               Retained Earnings at End of Year $   817,151  $   183,245
                                                ===========  ============
  Net Income Per Share                          $      0.22  $      0.39
                                                ===========  ============
  Weighted Average Number of Shares of
    Common Stock Outstanding                      2,918,750    2,918,750
                                                ===========  ============
  </TABLE>
  See notes to consolidated financial statements.



  <PAGE>  16
                                                                   F-6
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Years ended December 31, 1997and 1996
  <TABLE>
  <CAPTION>
                                                     1997        1996
                                                -----------  ------------
  <S>                                           <C>          <C>
  Cash Flows from Operating Activities
    Net income                                  $   633,906  $ 1,135,137
    Adjustments to reconcile net income to net
      cash provided by operating activities:
    Deferred tax benefit                           (129,598)     (67,736)
    Depreciation and amortization                   165,418      313,492
    Loss on disposition of property                   -0-             50
    (Increase) decrease in:
      Accounts receivable                           221,953     (290,163)
      Costs and estimated earnings in excess
        of billings on uncompleted contracts       (126,201)    (439,204)
      Inventory                                     (96,048)     120,838
      Prepaid income taxes                          (66,729)       -0-
      Other current assets                          (25,803)         873
      Other assets                                  (60,041)      (6,534)
    Increase (decrease) in:
      Accounts payable                              (23,850)     (48,049)
      Accrued expenses                               (3,285)    (117,225)
      Deposit on a contract for the sale of
        real estate                                  40,000        -0-
      Income and other taxes payable                (51,084)      35,390
      Billings in excess of costs
        on uncompleted contracts                    (41,090)    (101,603)
                                                -----------  ------------
  Net Cash Provided By Operating Activities         437,548      535,266
                                                -----------  ------------
  Cash Flows from Investing Activities
    Officer loan receivable                          (7,888)      (5,066)
    Capital expenditures                           (121,701)    (134,362)
                                                -----------  ------------
          Net Cash Used In Investing Activities    (129,589)    (139,428)
                                                -----------  ------------
  Cash Flows from Financing Activities
    Payments on debt                               (135,695)    (569,468)
                                                -----------  ------------
          Net Cash Used in Financing Activities    (135,695)    (569,468)
                                                -----------  ------------
          Net Increase (Decrease) in Cash
                           and Cash Equivalents     172,264     (173,630)

  Cash and Cash Equivalents at Beginning of Year     67,212      240,842
                                                -----------  ------------
  Cash and Cash Equivalents at End of Year      $   239,476  $    67,212
                                                ===========  ============
  Supplemental Disclosures of Cash Flow Information
    Cash paid during the year for:
      Income taxes                              $   175,227  $   104,000
      Interest                                        6,007       26,488
  </TABLE>



  <PAGE>  17
                                                                   F-7
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 1 - Summary of Significant Accounting Policies

  Description of Business
  CVD Equipment Corporation and Subsidiary (the Company), a New York
  corporation, was organized and commenced operations in October 1982.
  Principal business activities include the manufacturing of chemical
  vapor deposition equipment, customized gas control systems, and
  hydrogen annealing and brazing furnaces, all of which are used
  primarily to produce semiconductors and other electronic components.
  The Company engages in business throughout the United States and Asia.

  Basis of Consolidation
  The consolidated financial statements include the accounts of CVD
  Equipment Corporation and its wholly-owned subsidiary, CVD Materials
  Corporation.  CVD Materials Corporation, a New York corporation, was
  inactive for the years ended December 31, 1997 and 1996.  All
  significant intercompany accounts and transactions have been eliminated
  in consolidation.

  Estimates
  The preparation of financial statements in conformity with generally
  accepted accounting principles 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.

  Inventories
  The Company's inventories balance represents raw materials.
  Inventories are valued at the lower of cost or market.  The Company
  uses a cost system which approximates the first-in, first-out method.
  Materials used in work-in-process are included in costs and estimated
  earnings in excess of billings on uncompleted contracts.  There were no
  finished goods in inventories.

  Income Taxes
  The Company uses the asset and liability method of accounting for
  income taxes.  Under the asset and liability method, deferred tax
  assets and liabilities are recognized for the future tax consequences
  attributable to differences between the financial statement carrying
  amounts and the tax basis of existing assets and liabilities.

  Property, Plant and Equipment and Intangible Other Assets
  Property, plant and equipment are stated at cost less accumulated
  depreciation and amortization.  The cost of certain labor and overhead,
  as well as software, which is expected to benefit future periods, has
  been capitalized and amortized.  Depreciation and amortization are
  computed by the straight-line method for financial purposes over the
  estimated useful lives of the assets.



  <PAGE>  18
                                                                   F-8
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 1 - Summary of Significant Accounting Policies (continued)

  Revenue and Income Recognition
  The Company recognizes revenues and income using the percentage-of-
  completion method for complex major products while revenues from other
  products are recorded when such products are shipped.  Profits on
  contracts for complex major products 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 labor costs incurred to
  date compared with total estimated labor 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 amounts billed in excess of revenues earned.

  Accounts Receivable
  Accounts receivable are considered fully collectible and are presented
  net of a zero allowance for doubtful accounts.

  Product Warranty
  The Company records warranty costs as incurred and does not provide for
  possible future costs.  Management estimates such costs to be
  insignificant.

  Advertising Costs
  The Company generally expenses advertising costs.  Advertising
  expenses included in selling and shipping expenses were $17,067 and
  $4,229 in 1997 and 1996, respectively.  As of December 31, 1997, the
  Company recorded costs of $12,923 in Other Assets to develop a web
  site.

  Net Income Per Share
  Net income per share is calculated based on the weighted average number
  of shares of common stock outstanding during the year.  Outstanding
  options were not included in the weighted average number of outstanding
  shares as their effect would be immaterial.  There is no difference
  between basic and diluted net income per share in accordance with the
  Financial Accounting Standards Board Statement No. 128, "Earnings per
  Share".

  Cash and Cash Equivalents
  The Company considers all highly liquid financial instruments purchased
  with a maturity of three months or less to be cash equivalents.



  <PAGE>  19
                                                                   F-9
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 1 - Summary of Significant Accounting Policies (continued)

  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 the officer loan
  receivable 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 awards to employees using the
  intrinsic value method in accordance with Accounting Principles Board
  Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25").

  Note 2 - Uncompleted Contracts

  Costs, estimated earnings, and billings on uncompleted contracts are
  summarized as follows:                              1997        1996
                                                -----------  ------------
    Costs incurred on uncompleted contracts     $   896,859  $ 2,656,819
    Estimated earnings                              702,215    2,037,848
                                                -----------  ------------
                                                  1,599,074    4,694,667
    Billings to date                              (208,053)   (3,470,937)
                                                -----------  ------------
                                                $ 1,391,021  $ 1,223,730
  Included in accompanying balance sheets       ===========  ============
    under the following captions:
    Costs and estimated earnings in excess
      of billings on uncompleted contracts      $ 1,391,021  $ 1,264,820
    Billings in excess of costs and estimated
      earnings on uncompleted contracts               -0-        (41,090)
                                                -----------  ------------
                                                $ 1,391,021  $ 1,223,730
  Note 3 - Property, Plant and Equipment        ===========  ============

  Major classes of property, plant and equipment consist of the
    following:                                        1997        1996
                                                -----------  ------------
         Land                                   $   550,939  $   550,939
         Machinery and equipment                     87,712      211,111
         Capitalized labor and overhead           1,213,577    1,768,262
         Furniture and fixtures                     210,448      186,441
         Automobiles                                 24,557       24,557
         Leasehold improvements                      13,795       12,014
                                                -----------  ------------
                                                  2,101,028    2,753,324
      Accumulated depreciation and amortization  (1,280,112)  (1,926,121)
                                                -----------  ------------
                                                $   820,916  $   827,203
         Depreciation and amortization expense  ===========  ============
           relating to the above assets         $   127,988  $   267,605



  <PAGE>  20
                                                                  F-10
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 4 - Other Assets

  Other assets consist of the following:
                                                      1997        1996
                                                -----------  ------------
    Software                                    $   551,215  $   540,345
    Accumulated amortization                       (516,483)    (479,053)
                                                -----------  ------------
    Net software                                     34,732       61,292
    Advertising costs                                12,923        -0-
    Demonstration equipment                          36,640        -0-
    Licensing agreement                              10,000        -0-
    Security deposits                                 2,770        2,700
    Miscellaneous                                     -0-          1,728
                                                -----------  ------------
    Total other assets                          $    97,065  $    65,720
                                                ===========  ============
  Software additions for the years 1997 and 1996 totaled $10,870 and
  $5,068, respectively. The amortization of the software costs was
  $37,430 and $45,887 in 1997 and 1996, respectively. Software costs are
  amortized over three years.  Advertising costs will be amortized over
  five years beginning in 1998.

  Note 5 - Long-Term Debt
                                                      1997        1996
                                                -----------  ------------
  BANCA NAZIONALE DEL LAVORO
    Collateralized by a lien on the Company's
    assets; payable in monthly installments of
    $25,000 plus interest at the prime rate,
    paid in full June 30, 1997.                 $     -0-    $   130,863

  FORD MOTOR CREDIT CORP.
    Collateralized  by a lien on the Company's
    automobile; payable in 48 monthly installments
    of $622 including interest of 7.9% per annum;
    final payment made in August 1997.                -0-          4,832
                                                -----------  ------------
                                                      -0-        135,695
  Less:  Current maturities                           -0-        135,695
                                                -----------  ------------
  Long-term debt net of current maturities      $     -0-    $     -0-
                                                ===========  ============



  <PAGE>  21
                                                                  F-11
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 6 - Income Taxes

  The provision (benefit) for income taxes include the following:

                                                      1997        1996
                                                -----------  ------------
      Current:
        Federal                                 $    64,423  $   133,000
        State                                         8,288        9,000
                                                -----------  ------------
                        Total current provision      72,711      142,000
                                                -----------  ------------
      Deferred:
        Federal                                       4,593      (58,822)
        State                                      (134,191)      (8,914)
                                                -----------  ------------
                         Total deferred benefit    (129,598)     (67,736)
                                                -----------  ------------
                                                $   (56,887) $    74,264
                                                ===========  ============

  The Company has an investment tax credit carryforward for federal  tax
  purposes  of  $18,864 that may be offset against  future  federal  tax
  liabilities  through the year 2004, and a state investment tax  credit
  carryforward  of $135,949 that may be offset against future state  tax
  liabilities through the year 2012.

  Deferred income taxes are recognized for differences between the bases
  of  assets  and  liabilities for financial statement  and  income  tax
  purposes.  The  difference in income between financial  reporting  and
  income  tax purposes relates primarily to the use of different
  depreciation methods for book and tax purposes.  A valuation allowance
  equal to $-0- and $227,239 has been established against net deferred
  tax assets of $197,334 and $294,975 as of December 31, 1997 and 1996,
  respectively.



  <PAGE>  22
                                                                  F-12
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 6 - Income Taxes (continued)

  The effective tax rate on income taxes was less than the federal
  statutory rate.  The following summary reconciles taxes at the federal
  statutory rate with the actual taxes.

                                                      1997        1996
                                                -----------  ------------
    Earnings before income taxes                $   577,019  $ 1,209,401
    Add (deduct):
      State tax provision                            (8,288)      (9,000)
      Nondeductible expenses                         14,485       18,134
      Net operation loss carryforward                 -0-       (662,168)
      Timing differences due to:
        Use of accelerated depreciation methods
          for tax purposes                          (56,587)      50,619
        Bad debts                                   (25,000)      25,000
        Capitalization of additional costs to
          inventory for tax purposes                 (1,034)     (10,223)
        Tax basis loss on assets sold               (52,037)    (157,051)
        Use of accelerated amortization methods
          for tax purposes                          (10,925)      (3,423)
        Other                                         -0-         (4,928)
                                                -----------  ------------

                                Taxable Income  $   437,633  $   456,361
                                                ===========  ============

    Federal taxes at statutory rate             $   148,795  $   155,163
    Investment tax credit carryforward              (83,444)     (22,163)
    Other                                              (928)       -0-
                                                -----------  ------------
                          Federal Tax Provision $    64,423  $   133,000
                                                ===========  ============
  Note 7 - Commitments

  Leases

  On  August  1, 1996, the Company renewed its lease for a term  of  five
  years expiring on July 31, 2001 for its headquarters and operations  in
  Ronkonkoma, New York. Minimum future rental commitments are as follows:

             For the year ending December 31, 1998  $   123,245
                                              1999      126,942
                                              2000      130,751
                                              2001       77,589

  Rental expense for operating leases including the above lease  amounted



  <PAGE>  23
                                                                  F-13
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 8 - Non-Qualified Stock Option Plans

  The  Company instituted a non-qualified stock option plan  in  December
  1986 whereby options can be granted from time to time for up to 300,000
  shares  of the Company's $0.01 par value common stock.  All  full  time
  employees  except  Leonard  A. Rosenbaum, President,  are  eligible  to
  receive options, which are granted by the Stock Option Committee
  designated by the Company's Board of Directors.  The exercise price of
  options granted would have been the lowest trading price of the
  Company's common stock in the year of grant.  The plan terminated on
  December 31, 1996.

  In June 1989, the Company instituted a non-qualified stock option plan
  for key employees whereby options can be granted from time to time for
  up to 700,000 shares of the Company's $0.01 par value common stock.  In
  1996, 84,000 additional options were granted under this plan.  Options
  vest over a four-year period.  No options were exercised in 1997 or
  1996.  The plan shall terminate on June 15, 1999.

  In October 1995, the Financial Accounting Standards Board issued FASB
  123, Accounting for Stock-Based Compensation, which is effective for
  years beginning after December 15, 1995.  As permitted under FASB 123,
  the Company has elected not to adopt the fair value based method of
  accounting for its stock-based compensation plans, but will continue to
  account for such compensation under the provisions of APB 25.
  Accordingly, no compensation expense has been recognized for stock
  options awarded.  Had compensation cost for the Company's plan been
  determined consistent with the methodology prescribed under SFAS No.
  123, there would have been no significant impact on the Company's
  operations for the years ended December 31, 1997 or 1996.

  Note 9 - Concentration of Credit Risk

  Significant Customers

  The Company's sales encompass markets wherein the demands of any one
  customer may vary greatly due to changes in technology.  In 1997, the
  Company had two significant customers which represented approximately
  27% and 18%, respectively, of sales and 72% and less than 1%,
  respectively, of the total accounts receivable and costs and estimated
  earnings in excess of billings on uncompleted contracts at December 31,
  1997.  One of these customers represented 61% of sales in 1996 and 57%
  of the total accounts receivable and costs and estimated earnings in
  excess of billings on uncompleted contracts at December 31, 1996.

  Export Sales

  Export sales to unaffiliated customers represented approximately 2% and
  8% of sales for the years ended December 31, 1997 and 1996,
  respectively.  Export sales in 1997 and 1996 were primarily to
  customers in Asia.  All contracts are denominated in U.S. dollars. The
  Company does not enter into any foreign exchange contracts.



  <PAGE>  24
                                                                  F-14
                 CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997 and 1996

  Note 9 - Concentration of Credit Risk (continued)

  Cash Equivalents
  The Company places its temporary cash investments with one financial
  institution and normally exceeds the SIPC limit.  The Company has not
  experienced any losses to date resulting from this policy.

  Note 10 - Related Party Transactions

  As of December 31, 1997 and 1996, the Company's president and major
  stockholder owed $499,154 and $500,000, respectively, to the Company.
  Original debt was payable on demand with interest at the prime rate
  plus one percent.  The debt was renegotiated on December 19, 1996, so
  that interest only was due on January 1, 1997, for the twelve days
  ended December 31, 1996.  Thereafter, the debt shall be payable in
  equal monthly installments of $3,008 consisting of principal and
  interest at the fixed rate of 7.0% on the first day of each month
  beginning February 1, 1997 with the remaining principal balance to be
  due and payable on January 1, 2007.  The interest accrued on the debt
  totaled $8,734 and $1,542 as of December 31, 1997 and 1996,
  respectively, and is included in Other Current Assets.

  The general counsel for the Company is also a director.  The Company
  incurred legal fees for his professional services of approximately
  $20,000 and $14,829 for the years ended December 31, 1997 and 1996,
  respectively.

  Note 11 - Commitments and Contingencies

  Line of Credit
  In May 1997, the Company entered into a revolving line of credit
  agreement with a bank which allows the Company to borrow up to $500,000
  at the bank's prime rate plus 0.75% until June 1, 1998.  No borrowings
  are outstanding as of December 31, 1997.  Any borrowings would be
  collateralized by the Company's assets, other than costs and estimated
  earnings in excess of billings on uncompleted contracts, and guaranteed
  by the Company's president and major stockholder as long as the officer
  loan receivable remains outstanding.

  Sale of Land
  On March 21, 1997, the Company entered into a contract for the sale of
  its vacant land owned in Selden, New York, for $720,000.  The Company
  recorded a liability of $40,000 representing a nonrefundable deposit
  from the purchaser.  The balance is due at closing which is expected to
  take place in March 1998.

  Note 12 - Subsequent Events

  On March 13, 1998, the Company closed on the sale of the vacant land it
  owned in Selden, New York for the contract price discussed in Note 11.

  On March 16, 1998, the officer loan receivable discussed in Note 10 and



  <PAGE>  25




  INDEX TO SUPPLEMENTARY FINANCIAL SCHEDULES



        Page No.


  Independent Auditors' Report on Supplementary Information          S-2


  Supplementary Financial Schedules:


    II.  Amounts receivable from related parties and
         underwriters, promoters, and employees other
         than related parties                                        S-3


     V.  Property, plant and equipment                               S-4


    VI.  Accumulated depreciation and amortization
         of property, plant and equipment                            S-5


    IX.  Supplementary income statement information                  S-6



  <PAGE>  26
                                                                     S-2
        [Letterhead of Albrecht, Viggiano, Zureck, & Company, P.C.]

                                            CERTIFIED PUBLIC ACCOUNTANTS
                                                        25 SUFFOLK COURT
                                                    HAUPPAUGE, NY  11788
                                                          (516) 434-9500

  INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION




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


  We have audited and reported separately herein on the consolidated
  financial statements of CVD Equipment Corporation and subsidiary (the
  Company) as of and for the years ended December 31, 1997 and 1996.

  Our audits were made for the purpose of forming an opinion on the basic
  consolidated financial statements of the Company taken as a whole.  The
  supplementary information included in Form 10-KSB, Schedules II, V, VI
  and IX is presented for purposes of additional analysis and is not a
  required part of the basic consolidated financial statements.  Such
  information has been subjected to the auditing procedures applied in
  the audits of the basic consolidated financial statements and, in our
  opinion, is fairly stated in all material respects in relation to the
  basic consolidated financial statements taken as a whole.






  Hauppauge, New York
  February 27, 1998



  <PAGE>  27
                                                                   S-3
                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                         FORM 10-KSB, SCHEDULE II
         AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
            PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
                  Years ended December 31, 1997 and 1996
  <TABLE>
  <CAPTION>

  Col. A                      Col. B    Col. C        Col. D          Col. E
  -------------------------- --------- --------- ------------------- ---------

                                                   Deductions
                             Balance at          (1)       (2)       Balance at
                             Beginning           Amounts   Amounts     End of
  Name of Debtor             of Period Additions Collected Written off Period
  -------------------------- --------- --------- --------- --------- ---------
  <S>                        <C>       <C>       <C>       <C>       <C>
  1997:
   Leonard A. Rosenbaum,
   President
   Maturity: January 1, 2007
   Interest: 7% per annum    $ 500,000 $  -0-    $     846 $    -0-  $ 499,154

  1996:
   Leonard A. Rosenbaum,
   President
   Maturity: January 1, 2007
   Interest: 7% per annum      494,934   30,388     25,322      -0-    500,000




  <PAGE>  28
                                                                   S-4

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                             FORM 10-KSB, SCHEDULE V
                          PROPERTY, PLANT AND EQUIPMENT
                     Years ended December 31, 1997 and 1996


</TABLE>
<TABLE>
  <CAPTION>
  Col. A                       Col. B       Col. C      Col. D        Col. E
  ------------------------- ------------ ----------- ------------- -----------
                            Balance at                Other         Balance at
                            Beginning     Additions   Changes -       End of
  Description               of Period     at Cost     Add (Deduct)    Period
  ------------------------- ------------ ----------- ------------- -----------
  <S>                        <C>          <C>         <C>          <C>
  1997:
    Land                     $   550,939                           $   550,939
    Machinery and equipment      211,111  $   10,541  $  (133,940)      87,712
    Capitalized labor and
      overhead                 1,768,262      85,372     (640,057)   1,213,577
    Furniture and fixtures       186,441      24,007                   210,448
    Automobiles                   24,557                                24,557
    Leasehold improvements        12,014       1,781                    13,795
                             -----------  ----------  ------------ -----------

                             $ 2,753,324  $  121,701  $  (773,997) $ 2,101,028
                             ===========  ==========  ============ ===========

  1996:
    Land                     $   550,939                           $   550,939
    Machinery and equipment      532,656 $    45,363  $ (366,908)      211,111
    Capitalized labor and
      overhead                 2,311,325      62,129    (605,192)    1,768,262
    Furniture and fixtures       159,571      26,870                   186,441
    Automobiles                   29,266                  (4,709)       24,557
    Leasehold improvements       218,574                (206,560)       12,014
                             -----------  ----------  ------------ -----------

                             $ 3,802,331 $   134,362 $(1,183,369)  $ 2,753,324
                             ===========  ==========  ============ ===========
  </TABLE>



  <PAGE>  29
                                                                   S-5
                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                            FORM 10-KSB, SCHEDULE VI
        ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
                                    EQUIPMENT
                     Years ended December 31, 1997 and 1996
  <TABLE>
  <CAPTION>
  Col. A                      Col. B       Col. C       Col. D       Col. E
  ------------------------- ------------ ------------ ------------ -----------
                                          Additions
                            Balance at    Charged to    Other       Balance at
                            Beginning     Costs and   Charges -       End of
  Description               of Period     Expenses    Add (Deduct)    Period
  ------------------------- ------------ ------------ ------------ -----------
  <S>                       <C>          <C>          <C>          <C>
  1997:
   Machinery, equipment and
      capitalized labor and
      overhead              $ 1,742,808  $   113,945  $  (773,997) $ 1,082,756
   Furniture and fixtures      146,742       13,829                   160,571
   Automobiles                  24,557                                 24,557
   Leasehold improvements       12,014          214                    12,228
                            ------------ ------------ ------------ -----------

                            $ 1,926,121  $   127,988  $  (773,997) $ 1,280,112
                            ============ ============ ============ ===========

  1996:
    Machinery, equipment and
      capitalized labor and
      overhead              $ 2,463,950  $   250,959  $  (972,101) $ 1,742,808
    Furniture and fixtures      134,755       11,987                   146,742
    Automobiles                  24,510        4,091       (4,044)      24,557
    Leasehold improvements      218,620          568     (207,174)      12,014
                            ------------ ------------ ------------ -----------

                            $ 2,841,835  $   267,605  $(1,183,319) $ 1,926,121
                            ============ ============ ============ ===========
  </TABLE>



  <PAGE>  30
                                                                   S-6
                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                            FORM 10-KSB, SCHEDULE IX
                   SUPPLEMENTARY INCOME STATEMENT INFORMATION
                     Years ended December 31, 1997 and 1996

         Col. A                                   Col. B

                                        Charges to Costs and Expenses

     Item                                        1997         1996




  <PAGE>  31
                                        PART III


  ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following sets forth, with respect to each officer and/or
     director, his/her age, present position with the Company, principal
     occupation during the past five years, other directorships, if any,
     and the year he/she  first became an officer and/or a director of
     the company.

                                                                Officer/
                                   Position with                Director
  Name of Officer/Director   Age   the Company                  Since

  Leonard A. Rosenbaum       52    President and                1982
                                   Chief Executive Officer

  Alan H. Temple, Jr.        64    None                         1986

  Sharon M. Canese           37    Chief Financial Officer/     1998
                                   Secretary

  Martin J. Teitelbaum       48    Assistant Secretary          1985

  Albert G. Metzler          50    None                         1993


     Leonard A. Rosenbaum founded the Company in October, 1982 and has
     been its President and Chief Executive Officer and a director since
     that date.  From 1971 until the time of his affiliation with the
     Company in 1982, Mr. Rosenbaum was President and a director and
     principal stockholder of Nav-Tec Industries, Inc., Hauppauge, New
     York, a manufacturer of semiconductor processing equipment similar
     to the type of equipment presently manufactured by the Company.
     Nav-Tec Industries, Inc. suspended operations, as related to the
     type of equipment presently manufactured by the Company, in 1984.
     From 1966 through 1971, Mr. Rosenbaum was employed by a division of
     General Instrument, Westbury, New York, a manufacturer of



  <PAGE>  32

     Alan H. Temple, Jr. has, since 1977, been President of Harrison
     Homes, Inc. Pittsford, New York, a building and consulting firm.

     Sharon M. Canese joined CVD Equipment Corporation on September 11,
     1991.  Prior to joining CVD, Mrs. Canese was Assistant Controller
     of Transcontrol Corporation for a period of four years.  Mrs.
     Canese has also held the position of Financial Analyst  of the
     Financial Planning Department at Eaton Corporation/AIL Division
     from 1983 to 1987.

     Martin J. Teitelbaum was a partner in the law firm of Guberman and
     Teitelbaum, Smithtown, New York from February 1977 through December
     1987.  From January 1988 to date, Mr. Teitelbaum has been principal
     attorney for the Law Offices of Martin J. Teitelbaum.  Mr. Teitel-
     baum became a director of the Company in 1985.  From September 23,
     1986 to December 31, 1986 he served as Corporate Secretary and
     served again as Corporate Secretary from August 1997 to February
     1998.  Since January 1, 1987 he has served as the Assistant Secre-
     tary.  Mr. Teitelbaum serves as General Counsel to CVD Equipment
     Corporation.

     Albert G. Metzler has, since 1972, been Sales Manager of R. S. Crum
     & Co., a distributor of valves and valve fittings.  Mr. Metzler was
     formerly a director from 9/28/83 to 5/29/86.  R. S. Crum is a
     supplier to CVD Equipment Corporation.

     All directors hold office until the next annual meeting of
     stockholders of the Company or until their successors are elected
     and qualify.

     The Board of Directors met three times during 1997.  Mr.Rosenbaum,
     Mr.Temple, Mrs. Canese, Mr. Teitelbaum and Mr. Metzler attended all
     meetings.


  ITEM 10.      EXECUTIVE COMPENSATION
                Remuneration

     The following table sets forth certain information as to each of
     the Company's most highly compensated executive officers whose cash
     compensation exceeded $100,000.

               SUMMARY COMPENSATION TABLE


  Name and Principal                                      Annual
  Position                      Year                      Compensation
  ---------------------         ----                      ------------

  Leonard A. Rosenbaum          1997                      $211,342
    President and Chief         1996                      $139,126
    Executive Officer           1995                      $132,571



  <PAGE>  33

     The Company owns life insurance on the life of Leonard A. Rosenbaum
     in the amount of $2,000,000.  The Company is the sole beneficiary
     of said policy.

     The Company adopted a non-qualified stock option plan in December
     1986 for eligible salaried employees.  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 Common Stock,
     $.01 par value, of the Company are reserved for issuance or
     transfer upon the exercise of options which are granted.  Unless
     otherwise provided in the Option Agreement, an option granted under
     the plan shall become exercisable in 25% installments commencing
     one year from the anniversary date of the grant.  The purchase
     price of an option shall be the lowest price per share that the
     common stock traded during the calendar year in which the option is
     granted.  The plan terminated on December 31, 1996.

     In June 1989, the shareholders approved a non-qualified stock
     option plan covering key employees, officers and directors.
     Options will be awarded by the Board of Directors or by a committee
     appointed by the board.

     Under the plan an aggregate of 700,000 shares of common stock, $.01
     par value of the Company are reserved for issuance or transfer upon
     the exercise of options which are granted.  Unless otherwise
     provided in the Option Agreement, an option 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 the average bid price per
     share, calculated on a monthly basis, that the Common Stock (as
     reported by NASDAQ) traded during the calendar year immediately
     preceding the year in which the option is granted.  The plan shall
     terminate on June 15, 1999.

     In 1996 84,000 options were granted, and no options were exercised
     from this plan in 1996 and 1997.

     Other than the one remaining non-qualified stock option plan, the
     Company has no pension or profit sharing plan or other contingent
     forms of remuneration.



  <PAGE>  34

  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                     OWNERS AND MANAGEMENT

     (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     Set forth below is certain information concerning persons who are
     known by the Company to own beneficially more than 5% of any class
     of the Company's voting shares on March 1, 1998:

                                       Amount and
  Title                                Nature of
   Of         Name and Address of      Beneficial          Percentage
  Class       Beneficial Owner         Ownership (1)       of Class
  ------      --------------------     -------------       ----------

  Common      Leonard A. Rosenbaum     1,270,450           43.5%
  Stock       1881 Lakeland Avenue
              Ronkonkoma, NY 11779

  Common      Alan H. Temple Jr.         145,000            5.0%
  Stock       10 Harrison Circle
              Pittsford, NY 14534

  (1)  Except as noted, all shares are beneficially owned, and the  sole
  voting and investment power is held, by the persons named.

     (b) SECURITY OWNERSHIP OF MANAGEMENT

     The following table sets forth as of March 1, 1998, information
     concerning the beneficial ownership of each class of equity securi-
     ty by each director and all directors and officers of the company
     as a group:

                                       Amount and
  Title                                Nature of
   Of         Name and Address of      Beneficial          Percentage
  Class       Beneficial Owner         Ownership (1)       of Class
  ------      --------------------     -------------       ----------

  Common      Leonard A. Rosenbaum     1,270,450           43.5%
  Stock       1881 Lakeland Avenue
              Ronkonkoma, NY 11779

  Common      Martin J. Teitelbaum         2,000 (2)         *
  Stock       329 Middle Country Road



  <PAGE>  35

  Common      Alan H. Temple, Jr.        145,000 (3)        5.0%
  Stock         10 Harrison Circle
                Pittsford, NY 14534

  Common      Albert Metzler              57,400 (4)        2.0%
  Stock       85 Shellbank Place
              Rockville Centre, NY 11570



  Common      All Directors and        1,474,850           50.5%
  Stock       Officers as a group
              (four persons)

  * Less than 1%

  (1) Except  as noted, all shares are beneficially owned, and the  sole
     voting and investment power is held by the persons named.
  (2) Shares are held by Mr. Teitelbaum's wife and beneficial  ownership
     thereof is disclaimed by Mr. Teitelbaum.
  (3) Includes and aggregate of 13,000 shares held by Mr. Temple's wife,
     as to which he disclaims beneficial interest.
  (4) Includes  an  aggregate  of 9,900 shares held by  Mr.  Metzler  in
     custody for his minor children as to which he disclaims  beneficial
     interest.


     (c) CHANGES IN CONTROL

     The Company knows of no contractual arrangements which may at a
     subsequent date result in a change of Company control.


  ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In February, 1986 the Company lent $980,000 to an unaffiliated real
     estate partnership collateralized by a mortgage on 72 acres of
     vacant land in Suffolk County, New York which included
     approximately 25 acres Leonard A. Rosenbaum, the Company's
     president, agreed to purchase as a site for a new plant.  In August
     1986, $965,000 was exchanged for approximately 25 acres of land,
     approximately 10 acres which was purchased by the Company for its
     new plant and approximately 15 acres of which were purchased by
     Leonard A. Rosenbaum in exchange for a promissory note of $548,207.
     The promissory note, which was payable on demand was collateralized



  <PAGE>  36

     In November 1987, Leonard Rosenbaum personally borrowed $650,000
     from the Bank of New York and used the proceeds to pay off the
     remaining debt he had with the Company.  In order for Mr. Rosenbaum
     to secure this note, CVD Equipment Corporation had to provide the
     bank with a corporate guaranty.  In the course of a paydown and
     refinancing of this obligation during the first quarter of 1995,
     CVD Equipment Corporation has been released from this guaranty.

     As of December 31, 1995, as a result of payments by CVD based upon
     the guaranty, Leonard A. Rosenbaum was indebted to CVD Equipment
     Corporation for $494,934 which included interest at prime plus 1%,
     all of which was due and payable upon demand.

     On December 19, 1996, Leonard Rosenbaum entered into a
     Modification/Extension agreement with CVD Equipment Corporation.
     The agreement calls for Leonard Rosenbaum to make monthly payments
     starting February 1, 1997 in the amount of $3,008.44 consisting of
     reduction of principal and 7% per annum interest. Other terms of
     the agreement call for any outstanding principal balance due to be
     paid either at time of sale of the property or no later than
     January 1, 2007.

     On March 21, 1997, Leonard Rosenbaum entered into a contract for
     sale of the land.  Upon completion of the land sale within the next
     year, it is expected that the remaining balance of the loan will be
     repaid in full.

     Subsequent to the close of the year, on March 16, 1998 Leonard
     Rosenbaum paid in full the remaining balance of his loan.

     During 1997, the Company incurred approximately $20,000  in legal
     fees to Martin J. Teitelbaum.  Mr. Teitelbaum, a director of the
     Company, is the principal attorney for the law offices of Martin J.



  <PAGE> 37



  PART IV

  ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
           REPORT ON FORM 10-KSB

        (a)     1.      Exhibits

   (3)  Articles of incorporation and by-laws
   (4)  Instruments defining the rights of holders, including indentures
   (9)  Voting trust agreement
  (10)  Material Contracts
  (11)  Statement re: Computation of per share earnings
  (13)  Annual or quarterly reports, Form 10QSB
  (18)  Letter on change in accounting principles
  (19)  Previously unfiled documents
  (21)  Subsidiaries of registrant
  (22)  Published report regarding matters submitted to vote
  (23)  Consent of experts and counsel
  (24)  Power of Attorney
  (28)  Information from reports furnished to state insurance authorities
  (99) Additional exhibits


  All items included by reference.

        (a)     2.      Financial Statements

  The  following financial statements of CVD Equipment  Corporation  are
  included in Part II, Item 7:


  Report of Independent Certified Public Accountants................ F-3
  Balance Sheets - December 31, 1997 and 1996....................... F-4
  Statements of Operations & Retained Earnings
        (Accumulated Deficit) Years Ended
        December 31, 1997 and 1996.................................. F-5
  Statements of Cash Flows
        Years Ended December 31, 1997 and 1996...................... F-6
  Summary of Accounting Policies.............................. F-7 - F-8



  <PAGE>  38



  (a)   3.      Financial Statement Schedules

  Report of Independent Certified Public Accountants................ S-2


        Schedules:

  II. Amounts receivable from Related Parties and Underwriters,
             Promoters, and Employees other than Related Parties.... S-3
  V. Property, Plant and Equipment.................................. S-4
  VI. Accumulated depreciation and amortization of Property,
  Plant and Equipment............................................... S-5
  IX    Supplementary Income Statement Information.................. S-6


  All other schedules are omitted because they are not applicable, or
  not required, or because information is included in the consolidated
  financial statements or notes thereto.



  <PAGE>  39

  SIGNATURES


  Pursuant to the requirements of 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,
  this

  ____30th day of March 1998_______.


                                        CVD EQUIPMENT CORPORATION

                                        By__/S/_Leonard_A._Rosenbaum___
                                                Leonard A. Rosenbaum
                                                President
                                                Chief Executive Officer


  Pursuant  to  the requirements of the Securities and Exchange  Act  of
  1934,  this report signed below by the following persons on behalf  of
  the Registrant and in the capacities and on the dates indicated.


  __/S/_Leonard_A._Rosenbaum_____________President, Chief Executive
  Leonard A. Rosenbaum                            Officer and Director


  __/S/_Alan_H._Temple,_Jr.______________Director
  Alan H. Temple, Jr.


  __/S/_Martin_J._Teitelbaum_____________Director
  Martin J. Teitelbaum


  __/S/_Sharon_M._Canese_________________Chief Financial Officer
  Sharon M. Canese


  __/S/_Albert_G._Metzler________________Director
  Albert G. Metzler