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

                        Commission file number:  1-16525

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

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

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

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

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

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

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

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

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

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

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

           DOCUMENTS INCORPORATED BY REFERENCE   None.

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

<PAGE> 1
                             PART I

Item 1.		Description of Business.

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

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

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

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

CVD Division

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

<PAGE> 2
SDC Division

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

Conceptronic Division

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

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

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

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

Principal Products

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

Our Chemical Vapor Deposition systems are available in a variety
of models that can be used in production and laboratory
research.  All models can be offered with total system
automation, a microprocessor control system by which the user
can measure, predict and regulate gas flow, temperature,
pressure and chemical reaction rates, thus controlling the
process in order to enhance the quality of the materials
produced.  Our standard microprocessor control system is
extremely versatile and capable of supporting the complete
product line and most custom system requirements.  These
Chemical Vapor Deposition systems range in price from $100,000
to $2,500,000.
<PAGE> 3
Rapid Thermal Processing ("RTP") -  Used to heat semiconductor
materials to elevated temperatures of 1,000 degrees Celsius at
rapid rates of up to 200 degrees Celsius per second.  Our RTP
systems are offered for implant activation, oxidation, silicide
formation and many other processes.  We offer systems that can
operate both at atmospheric or reduced pressures.  Our RTP
systems generally range in price from $75,000 to $350,000.

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

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

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

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

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

Markets and Marketing

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

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

<PAGE> 4
We are continuing to work on expanding our product offerings.
Many of these products are used in research and production
applications.  We sell our products primarily to semiconductor
manufacturers, institutions involved in electronic research such
as universities, government and industrial laboratories and to
electronic assembly manufacturers.  We have both an
international and domestic customer base in excess of 350
customers.  For the twelve months ended December 31, 2006
approximately 31% of our revenues were generated from foreign
exports compared to 29% for the twelve months ended December 31,
2005.  Sales to a single customer in any one year can exceed
10.0% of our total sales; however, we are not dependent on any
single customer.  In fiscal year 2006, one customer represented
9.0% of our total sales.  In 2005, another customer, a
distributor, represented 11.5% of our total sales.  No other
customer represented more than 6.5% or 6.8% of our total sales
in fiscal years 2006 or 2005, respectively.

Warranties

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

Competition

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

Sources of Supply

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

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

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

<PAGE> 5
Backlog

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

Intellectual Property

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

Research and Development

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

Government Regulation

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

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

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

<PAGE> 6
Insurance

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

Employees

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

Item 2.		Description of Property.

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

Item 3.		Legal Proceedings.

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

In May 2002, the Company instituted a new action against
Precisionflow Technologies, Inc., in the United States District
for the Northern District of New York seeking injunctive relief and
<PAGE> 7
monetary damages based upon copyright violations.  A motion
by Precisionflow Technologies, Inc. to dismiss this action has
been pending since June 2002.

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

	Not applicable.

<PAGE> 8

PART II

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

The principal market for our common stock which is traded under the symbol
"CVV" is the American Stock Exchange.  The following table sets forth, for
the periods indicated, the high and low closing prices of our common stock
on the American Stock Exchange.
<TABLE>
<CAPTION>
							High		    Low
                                ----------   ----------
<S>                             <C>          <C>
Year Ended December 31, 2006:
1st Quarter............		  $ 4.21		$ 2.80
2nd Quarter............		    4.22		  2.80
3rd Quarter............		    3.69		  2.25
4th Quarter............		    7.13		  3.09
</TABLE>
<TABLE>
<CAPTION>
							High		    Low
                                ----------   ----------
<S>                             <C>          <C>
Year Ended December 31, 2005:
1st Quarter............		  $ 5.25		$ 0.91
2nd Quarter............		    6.51		  2.04
3rd Quarter............		    4.30		  1.90
4th Quarter............		    4.60		  2.72
</TABLE>

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

Dividend Policy

We have never paid dividends on our common stock and we do not
anticipate paying dividends on common stock at the present time.
We currently intend to retain earnings, if any, for use in our
business.  There can be no assurance that we will ever pay
dividends on our common stock.  Our dividend policy with respect
to our common stock is within the discretion of the Board of
Directors and its policy with respect to dividends in the future
will depend on numerous factors, including earnings, financial
requirements and general business conditions.

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

<PAGE> 9
Equity Compensation Plan Information

The following table provides information about shares of our common stock
that may be issued upon the exercise of options under all of our existing
compensation plans as of December 31, 2006.
<TABLE>
<CAPTION>
   	   	            Number of securities
       	            to be issued upon     Weighted-average
           	        exercise of           exercise price of      Number of securities
               	    outstanding options,  outstanding options,   remaining available
                   	warrants and rights	  warrants and rights	 for future issuance
<S>                 <C>                   <C>                    <C>
Plan Category

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

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

Recent Sales Of Unregistered Securities

None.

Issuer Purchases Of Equity Securities

None.

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

Except for historical information contained herein, this
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward-looking statements
within the meaning of the U.S.  Private Securities Litigation
Reform Act of 1995, as amended.  These statements involve known
and unknown risks and uncertainties that may cause our actual
results or outcomes to be materially different from any future
results, performance or achievements expressed or implied by
such forward-looking statements.  These forward-looking
statements were based on various factors and were derived
utilizing numerous important assumptions and other important
factors that could cause actual results to differ materially
from those in the forward-looking statements.  Important
assumptions and other factors that could cause actual results to
differ materially from those in the forward-looking statements,
include, but are not limited to: competition in our existing and
potential future product lines of business; our ability to
obtain financing on acceptable terms if and when needed;
uncertainty as to our future profitability, uncertainty as to
the future profitability of acquired businesses or product
lines, uncertainty as to any future expansion of the Company.
Other factors and assumptions not
<PAGE> 10
identified above were also involved in the derivation of these
forward-looking statements and the failure of such assumptions to be
realized as well as other factors may also cause actual results to
differ materially from those projected.  We assume no obligation to
update these forward-looking statements to reflect actual results,
changes in assumptions, or changes in other factors affecting such
forward-looking statements.

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

Results of Operations

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

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

<PAGE> 11
year.  We continue to achieve greater gross profit margins year
after year as a result of our ability to absorb those fixed costs
through greater revenues and continuously monitoring costs.  The
gross profit margin of the CVD division increased to 42.9% for the
current fiscal year compared to 42.2% for the last fiscal year.
The SDC division's gross profit margin increased to 25.6% for the
year ended December 31, 2006 from 19.0% for the year ended
December 31, 2005.  The gross profit margin of the Conceptronic
division decreased during the current fiscal year to 23.3% compared
to 29.4% in fiscal 2005.  This primarily is a result of the
division's fixed costs having a greater impact on the reduced
revenues.

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

In  2006 our credit line with a bank which permits us to borrow
on a revolving basis was revised to reflect an increase in the
amount we are permitted to borrow from $1,000,000 to $1,250,000.
<PAGE> 13
All financial covenants previously limiting the amounts borrowed
were eliminated. The line of credit is subject to renewal on
June 1, 2007.  As of December 31, 2006, the outstanding balance
on this facility was $210,000 as compared to $100,000 at
December 31, 2005.

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

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

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

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

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

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

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

<PAGE> 14
for doing so, will depend on market conditions, order levels,
opportunities presented to us and other factors.

Significant Accounting Policies

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

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

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

Off-Balance Sheet Arrangements

None

Item 7.		Financial Statements.

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


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

None

Item 8A.	Controls and Procedures.

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

<PAGE> 15
evaluation, the Chief Executive Officer and Chief Financial Officer,
along with the management of the Company, have determined that as
of December 31, 2006, the disclosure controls and procedures were
and are effective as designed to ensure that information
relating to the Company and its consolidated subsidiary would be
accumulated and communicated to them, as appropriate, to allow
timely disclosures regarding required disclosures.

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

Item 8B. 	Other Information.

None

<PAGE> 16
PART III

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

Board of Directors and Executive Officers

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

The following table sets for the names, ages and positions with
the Company of each of our directors and executive officers.
<TABLE>
<CAPTION>
Name	             Age	Position(s) with the Company
-------------------- --- -------------------------------------------------
<S>                  <C> <C>
Leonard A. Rosenbaum 61	 Director, Chief Executive Officer, President
Alan H. Temple Jr.	 73	 Director, Chairman-Compensation Committee
Martin J. Teitelbaum 57	 Director, Assistant Secretary
Conrad Gunther	     60	 Director, Chairman-Audit Committee
Bruce T. Swan	     74	 Director, Chairman-Nominating, Governance and
                             Compliance Committee
Glen R. Charles	     53	 Chief Financial Officer, Secretary
</TABLE>

Leonard A. Rosenbaum

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

Alan H. Temple Jr.

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

Martin J. Teitelbaum

Martin J. Teitelbaum has served as a member of the Board of
Directors since 1985.  Mr. Teitelbaum is an attorney, who since
1988, has conducted his own private practice, the Law
<PAGE> 17
Offices of Martin J. Teitelbaum.  Prior to establishing his own
firm, from 1977 to 1987, Mr. Teitelbaum was a partner in the law
firm of Guberman and Teitelbaum.  Mr. Teitelbaum became a member
of the Board of Directors for the Company in 1985.  He is presently
the Assistant Secretary of the Company, a position Mr. Teitelbaum
also held from 1986 to 1998.

Conrad Gunther

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

Bruce T. Swan

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

Glen R. Charles

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

Code Of Ethics

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

<PAGE> 18
Audit Committee

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

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

Section 16(a) Beneficial Ownership Reporting Compliance

The rules of the Securities and Exchange Commission require us
to disclose late filings of reports of stock ownership and
changes in stock ownership by our directors, officers and ten
percent stockholders.  To our knowledge, based solely on our
review of (a) the copies of such reports and amendments thereto
furnished to us and (b) written representations that no other
reports were required, during our fiscal year ended December 31,
2006, all of the filings for our officers, directors and ten
percent stockholders were made on a timely basis, except for the
following: two reports filed by Mr. Bruce T. Swan on Form 4, one
filed on March 16, to report an exercise of common stock options
and a second on December 13, 2006 to report a donation of 1,000
shares of common stock; and one report filed by Mr. Alan H.
Temple Jr. on Form 4 on September 27, 2006 to report an exercise
of common stock options.
<PAGE> 19
Item 10.	Executive Compensation.

Summary Compensation Table

The following table sets forth the compensation of our chief
executive officer and chief financial officer, our "named
executive officers," for the year ended December 31, 2006.  The
Company has no executive officers other than the named executive
officers.
<TABLE>
<CAPTION>
                                          Option
Name and                         Salary   Awards
principal position	       Year	   ($)	  ($)(1)	Total($)
-------------------------  ----  -------  -------   --------
<S>                        <C>   <C>      <C>       <C>
Leonard A. Rosenbaum       2006	 162,742   28,138	190,880
President and
Chief Executive Officer

Glen R. Charles            2006	 115,337	5,063	120,400
Secretary and
Chief Financial Officer
<FN>
For the year ended December 31, 2006 Mr. Rosenbaum and Mr.
Charles were paid base salaries of $162,742 and $115,337
respectively.
(1)     Amounts shown do not reflect compensation actually
received by the named executive officer. Instead, the amounts
shown are the compensation costs recognized by CVD in fiscal
2006 for option awards as determined pursuant to FAS 123R. These
compensation costs reflect option awards granted prior to fiscal
2006. The assumptions used to calculate the value of option
awards are set forth under Note 13 of the Notes to Consolidated
Financial Statements.
</TABLE>
Outstanding Equity Awards at December 31, 2006
<TABLE>
<CAPTION>
	                                           OPTION AWARDS
            ----------------------------------------------------------------
            Number of     Number of
            Securities    Securities
            Underlying    Underlying
            Unexercised   Unexercised
            Options       Options            Option            Option
            Exercisable   Unexercisable   Exercise Price     Expiration
Name            (#)	           (#)	           ($)	            Date
----------  ------------  -------------   --------------    ------------
<S>         <C>           <C>             <C>               <C>
Leonard A.	   10,000	        -	           2.00	          8/1/2007
Rosenbaum	   15,000	        -	           1.40	          9/23/2010
	            7,000	     14,000	           4.10	          9/13/2012

Glen R. Charles	3,750	     11,250	           2.26	          6/16/2012
</TABLE>
<PAGE> 20
2006 Director Compensation
<TABLE>
<CAPTION>
                        Option Awards ($)
Name	                      (1)	           Total ($)
----------------------  ------------------   -------------
<S>                     <C>                  <C>
Alan H. Temple Jr.	         28,138	             28,138
Martin J. Teitelbaum	     28,138	             28,138
Conrad Gunther	             28,138	             28,138
Bruce T. Swan	             28,138	             28,138
<FN>
(1)     Amounts shown do not reflect compensation actually
received by the named director. Instead, the amounts shown are
the compensation costs recognized by CVD in fiscal 2006 for
option awards as determined pursuant to FAS 123R. These
compensation costs reflect option awards granted prior to fiscal
2006. The assumptions used to calculate the value of option
awards are set forth under Note 13 of the Notes to Consolidated
Financial Statements.
</TABLE>

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

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

The following table sets forth, as of March 10, 2007,
information regarding the beneficial ownership of our common
stock by (a) each person who is known to us to be the owner of
more than five percent of our common stock, (b) each of our
directors, (c) each of the named executive officers, and (d) all
directors and executive officers and executive employees as a
group.  For purposes of the table, a person or group of persons
is deemed to have beneficial ownership of any shares that such
person has the right to acquire within 60 days of March 10,
2007.
<TABLE>
<CAPTION>
                            Amounts and Nature of       Percent of Class
Name of Beneficial Owner	Beneficial Ownership (1)	       (%)
--------------------------  ------------------------   ------------------
<S>                         <C>                        <C>
Leonard A. Rosenbaum	         1,325,350 (2)	              40.2
Alan H. Temple Jr.	               170,500 (3)	               5.2
Martin J. Teitelbaum	            61,500 (4)	               1.9
Conrad Gunther	                    35,500 (2)	               1.1
<PAGE> 21
Bruce T. Swan	                    24,500 (3)	               0.7
Glen R. Charles	                     3,750 (5)	               0.1
All directors and executive
officers and executive
employees as a group
(five (5) persons)	             1,621,100	                  49.2
<FN>
______________________________
(1) All of such shares are owned directly with sole voting and investment
power, unless otherwise noted below.

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

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

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

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

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

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

Related Person Transactions

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

Director Independence

The members of our Board of Directors are Leonard A. Rosenbaum,
Alan H. Temple Jr., Martin J. Teitelbaum, Conrad Gunther and
Bruce T. Swan.  Messrs. Gunther, Temple, Swan and Teitelbaum are
"independent" under the requirements of the American Stock
Exchange.  Messr. Rosenbaum is not independent under such
requirements.
<PAGE> 22

PART IV

Item 13.	Exhibits.

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

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

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

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

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

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

10.3 CVD Equipment Corporation 2001 Stock Option Plan.*

10.4 Form of Non-Qualified Stock Option Agreement.*

21.1 Subsidiaries.

23.1 Consent of Moore Stephens, P.C.

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

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

32.1 Section 1350 Certification of Principal Executive Officer.

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

Item 14.	Principal Accountant Fees and Services.

The following presents fees for professional audit services
rendered by Moore Stephens, P.C. for the audit of our financial
statements for the years ended December 31, 2006 and December
31, 2005.
<PAGE> 23
Audit Fees

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

Audit- Related Fees

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

Tax Fees

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

All Other Fees

None

Audit Committee Approval

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

<PAGE> 24

SIGNATURES

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

                          CVD EQUIPMENT CORPORATION

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

In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
	NAME					POSITION				                  DATE
-----------------------  --------------------------------------  --------------
<S>                      <C>                                     <C>
/s/ Leonard A Rosenbaum  President, Chief Executive Officer and  March 26, 2007
Leonard A. Rosenbaum	 Director (Principal Executive Officer)

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

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

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

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

/s/ Glen R. Charles      Chief Financial Officer and Secretary   March 26, 2007
Glen R. Charles	         (Principal Financial and Accounting
                          Officer)
</TABLE>
<PAGE> 25

EXHIBIT INDEX


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

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

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

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

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

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

10.3 CVD Equipment Corporation 2001 Stock Option Plan.*

10.4 Form of Non-Qualified Stock Option Agreement .*

21.1 Subsidiaries.

23.1 Consent of Moore Stephens, P.C.

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

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

32.1 Section 1350 Certification of Principal Executive Officer.

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

<PAGE> 1/5                                                     Exhibit 10.3

                           CVD EQUIPMENT CORPORATION

                             2001 STOCK OPTION PLAN


  1.   Establishment and Purpose.

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

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


  2.   Administration.

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

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

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

<PAGE> 2/5                                                     Exhibit 10.3

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


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


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


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


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

  <PAGE> 3/5                                                     Exhibit 10.3

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

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

       (c)  Payment of Exercise Price.

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

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

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

  <PAGE> 4/5                                                     Exhibit 10.3

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


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


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


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


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

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

  <PAGE> 5/5                                                     Exhibit 10.3

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


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


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


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


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




  Name:  Sharon Canese

  <PAGE> 1/7                                             Exhibit 10.4

                      CVD EQUIPMENT CORPORATION
                         2001 "KEY EMPLOYEE"

                       STOCK OPTION AGREEMENT

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

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

  SECTION 1.  GRANT OF OPTION.

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

  SECTION 2.  EXERCISABILITY.

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


  SECTION 3.  METHOD OF EXERCISE.

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

  <PAGE> 2/7                                             Exhibit 10.4

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

  SECTION 4.  TERMINATION OF EMPLOYMENT OR SERVICE; DEATH.

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

  <PAGE> 3/7                                             Exhibit 10.4

  SECTION 5.  RESTRICTIONS

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

  SECTION 6.  NONTRANSFERABILITY AND NONASSIGNABILITY.

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

  <PAGE> 4/7                                             Exhibit 10.4

  SECTION 7.  WITHHOLDING TAXES.

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

  SECTION 8.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

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

  SECTION 9.  REORGANIZATION.

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

  <PAGE> 5/7                                             Exhibit 10.4

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

  SECTION 10.  (RESERVED).

  SECTION 11. RIGHT OF DISCHARGE RESERVED.

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

  SECTION 12.  NO RIGHTS AS A STOCKHOLDER.

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

  SECTION 13.  NATURE OF PAYMENTS.

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

  SECTION 14.  COMMITTEE DETERMINATIONS.

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

  <PAGE> 6/7                                             Exhibit 10.4

  SECTION 15.  DEFINITION OF SUBSIDIARY.

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

  SECTION 16.  DEFINITION OF COMMON STOCK.

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

  SECTION 17.  PLAN PROVISIONS TO PREVAIL.

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

  SECTION 18.  SECTION HEADINGS.

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

  SECTION 19.  NOTICES.

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


  SECTION 20.  SUCCESSORS AND ASSIGNS.

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

  <PAGE> 7/7                                             Exhibit 10.4

  SECTION 21.  OTHER PAYMENTS OR AWARDS.

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

  SECTION 22.  OPTION NONQUALIFIED.

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

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


  KEY EMPLOYEE:

  ADDRESS:

  KEY EMPLOYEE SIGNATURE:  __________________________

  BY ___________________________ Leonard A. Rosenbaum, President

<PAGE>                                                          Exhibit 21.1

                              SUBSIDIARIES

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

<PAGE>                                                          Exhibit 23.1


       CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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


                                       MOORE STEPHENS, P.C.
                                       Certified Public Accountants

Cranford, New Jersey
March 19, 2007




<PAGE>                                                          Exhibit 31.1

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

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


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

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

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

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

<PAGE>                                                          Exhibit 32.1

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



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


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

<PAGE>                                                          Exhibit 32.2

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



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


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

<PAGE>
              CVD EQUIPMENT CORPORATION AND SUBSIDIARY
             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			                    				                   Page No.

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

Financial Statements:

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

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

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

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

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


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

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

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



				            				MOORE STEPHENS, P.C.
							            	Certified Public Accountants.


Cranford, New Jersey
March 9, 2007

  <PAGE>                                            F-2

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


  <TABLE>
  <CAPTION>

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

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

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

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

  Other assets                                                            708,114              610,304

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


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

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

  Commitments and Contingencies                                                -                    -

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

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



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

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


  <TABLE>
  <CAPTION>

                                                                          2006                 2005
                                                                     -------------        -------------
  <S>                                                                <C>                  <C>
  Revenue                                                            $ 13,355,778         $ 11,225,316

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

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

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

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

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

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

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

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



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

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

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


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

                                  CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                              Consolidated Statements of Stockholders' Equity
                                   Years ended December 31, 2006 and 2005
  <TABLE>
  <CAPTION>
                                                                     Additional                             Total
                                            Common Stock               Paid -In        Retained      Stockholders'
                                         Shares         Amount          Capital        Earnings            Equity
                                    --------------  --------------  --------------  --------------  --------------
  <S>                               <C>             <C>             <C>             <C>             <C>
  Balance - December 31, 2004          3,039,100     $    30,391     $ 2,902,149     $ 2,766,694     $ 5,699,234

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

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

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

  Stock based compensation expense                                       169,264                         169,264

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


  <FN>
  The accompanying notes are an integral part of the consolidated financial statements
  </TABLE>

  <PAGE>                                            F-5

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

  <TABLE>
  <CAPTION>

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

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

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

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

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

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



  <FN>
    See Notes to Consolidated Financial Statements
  </TABLE>

                                      F-6

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

  Note 1 - Business Description

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

  Note 2 - Summary of Significant Accounting Policies

  Principles of Consolidation

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

  Use of Estimates

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

  Revenue and Income Recognition

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

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

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

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

  Investments

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

  Inventories

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

  Reclassifications

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

  Income Taxes

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

  Property, Plant and Equipment

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


                                      F-8

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

                                                  Estimated
                                                  Useful Life
                                                ---------------
          <S>                                   <C>
          Buildings                                  39 years
          Building improvements                    5-39 years
          Machinery and equipment                     8 years
          Capitalized labor and overhead              3 years
  </TABLE>
  <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 $123,115 and $252,483 for the years ended
  December 31, 2006 and 2005 respectively and are included in Other Assets.
  All software is amortized straight-line over its useful life of three years.
  Amortization expense related to software totaled $37,194 and $47,446 for the
  years ended December 31, 2006 and 2005, respectively.

  Intangible Assets

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

  Bad Debts

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

                                      F-9

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

  Product Warranty

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

  Advertising Costs

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

  Earnings Per Share

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

  Cash and Cash Equivalents

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

  Concentration of Credit Risk

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


                                      F-10

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



  Fair value of Financial Instruments

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

  Stock-Based Compensation

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

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

  Shipping and Handling

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


                                      F-11

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

  Recently Issued Accounting Standards

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

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

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


                                      F-12

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

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

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

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

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


                                      F-13

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

  1. Recognized financial assets and financial liabilities except for:

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

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

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

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

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

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

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

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

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

  The fair value option:

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

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

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

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

                                      F-14

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

  Note 3 - Supplemental Cash Flow Information

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

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

  Note 4 - Investments

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

                                      F-15

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

  Note 5 - Uncompleted Contracts

  <TABLE>
  <CAPTION>
  Costs, estimated earnings, and billings on uncompleted contracts are summarized
  as follows:
                                                    2006           2005
                                                ------------   ------------
  <S>                                           <C>            <C>
  Costs incurred on uncompleted contracts       $ 1,509,672    $   961,735
          Estimated earnings                      2,015,836        901,390
                                                ------------   ------------
                                                  3,525,508      1,863,125

          Billings to date                       (2,808,845)    (1,268,058)
                                                ------------   ------------
                                                $   716,663    $   595,067
                                                ============   ============
  </TABLE>
  <TABLE>
  <CAPTION>
                                                    2006           2005
                                                ------------   ------------
  <S>                                           <C>            <C>
  Included in accompanying balance sheets
     Under the following captions:

     Costs and estimated earnings in excess
         of billings on uncompleted contracts   $   716,663    $   595,067
     Billings in excess of costs and estimated
         earnings on uncompleted contracts            ---            ---
                                                ------------   ------------
                                                $   716,663    $   595,067
                                                ============   ============
  </TABLE>
  Note 6 - Inventory
  <TABLE>
  <CAPTION>
                                                       December 31,
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>
  Raw materials                                 $   860,085    $   849,355
  Work-in-process                                 1,515,460        854,115
  Finished goods                                    328,961        363,785
                                                ------------   ------------
                                                $ 2,704,506    $ 2,067,255
                                                ============   ============
  </TABLE>




                                      F-16

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

  Note 7 - Property, Plant and Equipment
  <TABLE>
  <CAPTION>
  Major classes of property, plant and equipment consist of the following:
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>
  Land                                          $   760,000    $   760,000
  Buildings                                       2,815,839      2,815,839
  Building improvements                           1,398,054      1,394,976
  Machinery and equipment                         1,379,656      1,347,842
  Capitalized labor and overhead                    216,602        216,602
  Furniture and fixtures                            236,419        226,022
  Computer equipment                                250,419        221,635
  Transportation equipment                           74,709         74,709
  Demo equipment                                       -            42,776
  Lab equipment                                        -            42,121
                                                ------------   ------------
          Totals at Cost                          7,131,698      7,142,487
  Accumulated depreciation and amortization      (2,352,910)    (2,051,951)
                                                ------------   ------------
                                                $ 4,778,788    $ 5,090,536
                                                ------------   ------------
  Depreciation and amortization expense         $   300,924    $   287,404
                                                ============   ============
  <FN>
  During 2006, certain assets in property, plant and equipment, with a net book
  value of $84,897 were reclassified into inventory.
  </TABLE>

  Note 8 - Intangible Assets
  <TABLE>
  <CAPTION>
  Intangible assets are summarized as follows:
  December 31, 2006
  -----------------
                         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     16,924         15,095
  Intellectual Property          15           100,000     36,669         63,331
  Certifications                  3            27,661      4,610         23,051
  Other                           5            21,492     17,194          4,298
                                          ---------------------------------------------
            Totals               11           191,172     85,397        105,775
  </TABLE>


                                      F-17

                    CVD EQUIPMENT CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2006 and 2005
  <TABLE>
  <CAPTION>
  December 31, 2005
  -----------------
                         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     14,472         17,547
  Intellectual Property          15           100,000     30,002         69,998
  Other                           5            21,492     12,896          8,596
                                          ---------------------------------------------
            Totals               13           163,511     67,370         96,141
  </TABLE>

  The estimated amortization expense related to intangible assets for each
  of the five succeeding fiscal years and thereafter as of December 31, 2006
  is as follows:
  <TABLE>
  <CAPTION>
  Year Ended
  December 31,
  <S>                                             <C>
  2007                                            $   22,638
  2008                                                18,339
  2009                                                12,229
  2010                                                 7,619
  2011                                                 7,619
  Thereafter                                          37,331
                                                  -----------
     Total                                        $  105,775
                                                  ===========
  </TABLE>
  Note 9 - Financing Arrangements

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








                                      F-18

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

  Note 10 - Long-term Debt
  <TABLE>
  <CAPTION>
  Long-term debt consists of the following:
                                                                  2006             2005
                                                             --------------   --------------
  <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.                                             $    810,508     $    825,068

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

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

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


                                      F-19

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

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

  Note 11 - Earnings per Share

  The calculation of basic and diluted weighted average common shares
  outstanding is as follows:
  <TABLE>
  <CAPTION>
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>
  Weighted average common shares outstanding
  basic earnings per share                         3,169,177      3,097,698

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

  </TABLE>



                                      F-20

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

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

  Note 12 - Income Taxes

  The provision (benefit) for income taxes includes the following:
  <TABLE>
  <CAPTION>
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>
          Current:
              Federal                           $    18,437    $      ---
              State                                   1,722          5,815
                                                ------------   ------------
                  Total Current Provision            20,159          5,815
          Deferred:
              Federal                               223,888         81,305
              State                                  48,540        (22,550)
                                                ------------   ------------
                  Total Deferred Provision          272,428         58,755
                                                ------------   ------------
                                                $   292,587    $    64,570
                                                ============   ============
  </TABLE>

  The Company has New York State investment tax credit carryforwards of
  approximately $263,000 that may be offset against future state tax
  liabilities through the year 2019 and other state tax credits totaling
  approximately $327,000 which may be carried forward indefinitely. The
  Company accounts for investment tax credits primarily by the flow-through
  method.

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

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

  <TABLE>
  <CAPTION>
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>

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

                                                    F-21

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

  The tax effects of temporary differences giving rise to significant
  portions of deferred taxes are as follows:
  <TABLE>
  <CAPTION>
                                                     2006         2005
                                                ------------   ------------
  <S>                                           <C>            <C>

          Allowance for doubtful accounts       $     2,834    $     3,377
          Inventory capitalization                  103,435         76,330
          Deferred revenue                         (791,821)      (354,066)
          Net operating loss                         34,600         26,790
          Depreciation and amortization            (173,123)      (225,141)
          Investment and other tax credits          589,768        588,908
              Compensation costs                     66,487           --
              Vacation Accrual                      129,720        118,130
              Other                                   7,660          7,660
                                                ------------   ------------
           Net deferred tax (liability) asset   $   (30,440)   $   241,988
                                                ============   ============
  </TABLE>

  Management believes the deferred tax asset will more likely than not be
  realized. In assessing the likelihood of realization, management considers
  estimates of future taxable income. However, it is at least reasonably
  possible that management's estimate of future realization may change in
  future periods.

  Note 13 - Stock Option Plans

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


                                      F-22

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

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

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

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

  A summary of stock option activity related to the Company's Plan is as
  follows:
  <TABLE>
  <CAPTION>
                                   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, 2005
  Number of shares                   355,400       176,500        88,700           -0-       443,200       276,700
  Weighted average exercise price
  Per share                        $    1.69     $    3.42     $    1.67     $     -0-     $    2.39     $    2.03
  Year ended December 31, 2006
  Number of shares                   443,200        10,000       122,700         7,500       323,000       196,875
  Weighted average exercise price
   per share                       $    2.39     $    3.00     $    1.53     $    2.26     $    2.73     $    2.30
  </TABLE>

                                      F-23

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

  <TABLE>
  <CAPTION>
  The following table summarizes information about the options at December 31, 2006.

                                  Options Outstanding                Options Exercisable
                    ------------------------------------------   ---------------------------
                                     Weighted
                                     Average      Weighted                        Weighted
                                    Remaining     Average                         Average
       Exercise        Number      Contractual    Exercise        Number          Exercise
      Price Range    Outstanding      Life        Price           Exercisable     Price
    --------------  -------------  -------------  ------------   -------------  ------------
    <C>             <C>            <C>            <C>            <C>            <C>
     $1.25 - $1.50     55,000       3.74 years        $  1.40         55,000        $  1.40
     $1.51 - $1.75     48,000        .09 years        $  1.75         48,000        $  1.75
     $2.00 - $2.75     76,500       3.55 years        $  2.16         41,625        $  2.07
     $3.00 - $3.25     28,500       5.31 years        $  3.07          7,250        $  3.16
     $3.75 - $4.00     10,000       1.25 years        $  3.88         10,000        $  3.88
     $4.00 - $4.25    105,000       5.70 years        $  4.10         35,000        $  4.10
  </TABLE>

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

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

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

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

                                      F-24

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

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

  The weighted average grant date fair value of options granted during 2005
  was $3.42.
  <TABLE>
  <CAPTION>
                                                            2005
                                                       --------------
          <S>                                          <C>
          Net income as reported                       $    390,911

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


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

  </TABLE>
  <TABLE>
  <CAPTION>
  Earnings per share:                                       2005
                                                       --------------
               <S>                                     <C>

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

               Diluted -as reported                        $ .12
                                                           -----
               Diluted -pro forma                          $ .09
                                                           -----
  </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, 2006          2.5%       3.9 Years      126.54%      None
  December 31, 2005          2.5%       5.7  Years     126.54%      None
  </TABLE>
                                      F-25

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


  Note 14 - Defined Contribution Plan

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

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

  Note 15 - Concentration of Credit Risk

  Cash

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

  Significant Customers

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

  Export Sales

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

                                      F-26

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

  Note 16 - Related Party Transactions

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

  Note 17 - Other Income

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

  Note 18 - Segment Reporting

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

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

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

  Pretax (loss) earnings        1,233,982         148,627        (485,696)                        896,913
  </TABLE>

                                      F-27

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

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

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

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

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