##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended February 28, 2007
 or
 o
    
    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: 1-13484
 COHESANT TECHNOLOGIES INC.
  Delaware
    
    34-1775913(State or other jurisdiction of 
Incorporation or organization)
    
    (I.R.S. Employer
Identification No.)5845 West 82nd Street, Suite 102, Indianapolis, Indiana
    
    46278(Address of principal executive offices)
    
    (Zip Code)
 317-871-7611
 
  þ o
 o þ
  o þ




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##### 



COHESANT TECHNOLOGIES INC.
 INDEX
 TABLE OF CONTENTS
 PAGEPART IItem 1.
    
    Financial InformationCohesant Technologies Inc. Condensed Consolidated
Balance Sheets as of February 28, 2007 and November 30, 2006
    
    
    3Cohesant Technologies Inc. Condensed Consolidated
Statements of Operations for the Three Months Ended
February 28, 2007 and February 28, 2006
    
    
    4Cohesant Technologies Inc. Condensed Consolidated
Statements of Cash Flows for the Three Months Ended
February 28, 2007 and February 28, 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14Item 3.
    
    Controls and Procedures
    
    
    18PART IIItem 6.
    
    Exhibits and Reports on Form 8-K
    
    
    18SignaturesEX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I
 
 ITEM 1. FINANCIAL INFORMATION
 COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 February 28, 2007
    
    
    November 30, 2006(Unaudited)ASSETS:Cash and cash equivalents
    
    $
    264,859
    
    
    $
    1,318,607Accounts receivable, net of allowance for doubtful
accounts of $286,423 and $282,415, respectively
    
    
    4,675,006
    
    
    
    4,517,316Note receivable
    
    
    151,710
    
    
    
    Inventories, net of allowance for obsolete and
slow-moving inventory of $288,750 and $285,000,
respectively
    
    
    4,396,485
    
    
    
    3,944,818Costs in excess of billings and estimated earnings
    
    
    
    
    
    
    52,805Prepaid expenses and other
    
    
    439,894
    
    
    
    490,408Deferred tax assets
    
    
    349,417
    
    
    
    318,766Total Current Assets
    
    
    10,277,371
    
    
    
    10,642,720Property and equipment, net
    
    
    2,738,628
    
    
    
    2,424,983License agreements, patents and other intangibles, net
    
    
    1,098,148
    
    
    
    1,125,419Goodwill
    
    
    8,767,563
    
    
    
    8,767,563Other noncurrent assets
    
    
    8,051
    
    
    
    7,965Total Assets
    
    $
    22,889,761
    
    
    $
    22,968,650LIABILITIES AND SHAREHOLDERS EQUITY:Accounts payable
    
    $
    2,760,857
    
    
    $
    2,073,649Current portion of long-term note payable
    
    
    124,185
    
    
    
    122,604Accrued salaries, benefits and commissions
    
    
    342,072
    
    
    
    877,224Accrued income taxes
    
    
    238,453
    
    
    
    402,165Billings in excess of costs and estimated earnings
    
    
    74,539
    
    
    
    49,224Customer deposits
    
    
    57,532
    
    
    
    204,128Other current liabilities
    
    
    360,803
    
    
    
    331,627Total Current Liabilities
    
    
    3,958,441
    
    
    
    4,060,621Long-term note payable, net of current portion
    
    
    233,251
    
    
    
    264,896Deferred tax liabilities
    
    
    527,156
    
    
    
    527,156Total Liabilities
    
    
    4,718,848
    
    
    
    4,852,673Commitments and Contingencies (Note 8)Shareholders Equity:Common stock ($.001 par value, 10,000,000 shares
authorized and 3,280,312 and 3,274,905 shares
issued and outstanding, respectively)
    
    
    3,280
    
    
    
    3,275Additional paid-in capital
    
    
    12,129,378
    
    
    
    12,008,087Accumulated other comprehensive income
    
    
    11,083
    
    
    
    24,302Retained earnings
    
    
    6,027,172
    
    
    
    6,080,313Total Shareholders Equity
    
    
    18,170,913
    
    
    
    18,115,977Total Liabilities and Shareholders Equity
    
    $
    22,889,761
    
    
    $
    22,968,650
  3




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##### Table of Contents



COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Three Months EndedFebruary 28, 2007
    
    
    February 28, 2006NET SALES
    
    $
    6,182,329
    
    
    $
    6,465,597COST OF SALES
    
    
    3,599,866
    
    
    
    3,551,882Gross profit
    
    
    2,582,463
    
    
    
    2,913,715RESEARCH AND DEVELOPMENT EXPENSES
    
    
    326,867
    
    
    
    272,621SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    2,340,196
    
    
    
    2,036,886TOTAL OPERATING EXPENSES
    
    
    2,667,063
    
    
    
    2,309,507Income (loss) from operations
    
    
    (84,600
    )
    
    
    604,208OTHER INCOME (EXPENSE):Interest income
    
    
    316
    
    
    
    6,413Interest expense
    
    
    (4,611
    )
    
    
    Other income, net
    
    
    3,177
    
    
    
    1,755INCOME (LOSS) BEFORE TAXES
    
    
    (85,718
    )
    
    
    612,376INCOME TAX (PROVISION) BENEFIT
    
    
    32,577
    
    
    
    (232,704
    )NET INCOME (LOSS)
    
    $
    (53,141
    )
    
    $
    379,672EARNINGS (LOSS) PER COMMON SHARE
BASIC & DILUTED (Note 3)
    
    $
    (0.02
    )
    
    $
    0.12WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:BASIC
    
    
    3,276,213
    
    
    
    3,123,263DILUTED
    
    
    3,276,213
    
    
    
    3,235,496COMPREHENSIVE INCOMENet Income (loss)
    
    $
    (53,141
    )
    
    $
    379,672Foreign currency translation adjustment
    
    
    (13,219
    )
    
    
    9,716NET COMPREHENSIVE INCOME (LOSS)
    
    $
    (66,360
    )
    
    $
    389,388
  4




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COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For the Three Months EndedFebruary 28, 2007
    
    
    February 28, 2006CASH FLOWS USED IN OPERATING ACTIVITIES:Net income (loss)
    
    $
    (53,141
    )
    
    $
    379,672Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization
    
    
    192,295
    
    
    
    115,958Stock-based compensation
    
    
    93,638
    
    
    
    33,612Deferred tax provision
    
    
    (30,651
    )
    
    
    Provision for doubtful accounts
    
    
    4,008
    
    
    
    15,535Net change in assets and liabilities-Accounts receivable
    
    
    (161,698
    )
    
    
    (416,680
    )Note receivable
    
    
    (151,710
    )
    
    
    Inventories
    
    
    (453,239
    )
    
    
    (431,147
    )Costs in excess of billings and estimated earnings
    
    
    52,805
    
    
    
    Prepaid expenses and other
    
    
    50,514
    
    
    
    (47,743
    )Accounts payable
    
    
    687,208
    
    
    
    331,428Billings in excess of costs and estimated earnings
    
    
    25,315
    
    
    
    (20,020
    )Other current liabilities
    
    
    (816,284
    )
    
    
    (551,549
    )Other noncurrent assets
    
    
    (9,905
    )
    
    
    5,770Net cash used in operating activities
    
    
    (570,845
    )
    
    
    (585,164
    )CASH FLOWS USED IN INVESTING ACTIVITIES:Patent and trademark additions
    
    
    (4,374
    )
    
    
    (729
    )Property and equipment additions
    
    
    (476,123
    )
    
    
    (206,122
    )Payment on Triton acquisition note payable
    
    
    (30,064
    )
    
    
    Payment to former owners of acquired CuraFlo business
    
    
    
    
    
    
    (342,136
    )Return of cash paid for acquisition of CuraFlo
    
    
    
    
    
    
    77,250Net cash used in investing activities
    
    
    (510,561
    )
    
    
    (471,737
    )CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:Proceeds from note receivable for restricted stock
    
    
    
    
    
    
    32,833Borrowings under revolving credit facility
    
    
    33,104
    
    
    
    Payments under revolving credit facility
    
    
    (33,104
    )
    
    
    Proceeds from exercise of stock options
    
    
    27,658
    
    
    
    5,577Net cash provided by financing activities
    
    
    27,658
    
    
    
    38,410NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,053,748
    )
    
    
    (1,018,491
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    1,318,607
    
    
    
    2,238,281CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    264,859
    
    
    $
    1,219,790
  5




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COHESANT TECHNOLOGIES INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1  Background
      6




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 2  Basis of Presentation
    Note 3  Earnings (Loss) per Share
   7




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Three Months Ended February 28,2007
    
    
    2006Income (loss) available to common stockholders
    
    $
    (53,141
    )
    
    $
    379,672Basic earnings (loss) per share:Weighted-average number of common shares outstanding
    
    
    3,276,213
    
    
    
    3,123,263Basic earnings (loss) per share
    
    $
    (0.02
    )
    
    $
    0.12Diluted earnings (loss) per share:Weighted-average number of common shares outstanding
    
    
    3,276,213
    
    
    
    3,123,263Stock Options
    
    
    
    
    
    
    89,283Restricted Stock
    
    
    
    
    
    
    22,950Diluted weighted-average number of common shares outstanding
    
    
    3,276,213
    
    
    
    3,235,496Diluted (loss) earnings per share
    
    $
    (0.02
    )
    
    $
    0.12
  Note 4  Accounting for Stock-Based Compensation
 Description of the Plan
  Adoption of FASB Statement No. 123(R), Share-Based Payment
 Share-Based Payment Accounting for Stock-Based Compensation, Accounting for Stock Issued to Employees, Statement of Cash Flows.
 8




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
     Three MonthsEndedFebruary 28, 2006Net income, as reported
    
    $
    379,672Add: Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    20,839Deduct: Total stock-based employee compensation expense
determined under the fair value based method for all
awards, net of related tax effects
    
    
    (93,919
    )Pro forma net income
    
    $
    306,592Earnings per share:Basicas reported
    
    $
    0.12Basicpro forma
    
    $
    0.10Dilutedas reported
    
    $
    0.12Dilutedpro forma
    
    $
    0.09
 9




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Stock Option Grants
   
 2007
    
    2006Risk-free interest rate
    
    
    4.6
    %
    
    
    4.4
    %Expected term  years
    
    
    6.5
    
    
    
    4.5Expected dividend yield
    
    
    3.2
    %
    
    
    3.6
    %Expected volatility
    
    
    45.8
    %
    
    
    49.5
    %
  Weighted-
    
    
    Weighted-Number
    
    
    Average
    
    
    Averageof
    
    
    Exercise
    
    
    Remaining
    
    
    AggregateOptions
    
    Options
    
    
    Price
    
    
    Contractual Life
    
    
    Intrinsic ValueOptions outstanding
at November 30,
2006
    
    
    306,384
    
    
    $
    7.39Granted
    
    
    115,000
    
    
    $
    8.78Exercised
    
    
    (4,251
    )
    
    $
    6.51Forfeited
    
    
    (1,208
    )
    
    $
    7.50Options outstanding
at February 28,
2007
    
    
    415,925
    
    
    $
    7.78
    
    
    
    4.2
    
    
    $
    577,171Options exercisable
at February 28,
2007
    
    
    140,456
    
    
    $
    5.76
    
    
    
    2.3
    
    
    $
    447,866
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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 5
 Costs and Estimated Earnings on Uncompleted Contracts
  February 28,
    
    
    November 30,2007
    
    
    2006Costs incurred on uncompleted contracts
    
    $
    693,920
    
    
    $
    743,480Estimated earnings to date
    
    
    284,527
    
    
    
    361,928Subtotal
    
    
    978,447
    
    
    
    1,105,408Less  Billings to date
    
    
    (1,052,986
    )
    
    
    (1,101,827
    )Total
    
    $
    (74,539
    )
    
    $
    3,581Included in the accompanying balance sheets under
the following caption:Costs and estimated earnings in excess of billings
    
    $
    
    
    
    $
    52,805Billings in excess of costs and estimated earnings
    
    
    (74,539
    )
    
    
    (49,224
    )Total
    
    $
    (74,539
    )
    
    $
    3,581
  Note 6  Revolving Line of Credit
  Note 7  Segment Information
  11




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   CIPARFranchisingThree Months Ended
    
    and
    
    CIPARFebruary 28, 2007
    
    Licensing
    
    Rehabilitation
    
    CMI
    
    GCI
    
    Corporate
    
    Eliminations
    
    ConsolidatedNet Sales:External customers
    
    $
    1,511,258
    
    
    $
    777,627
    
    
    $
    57,210
    
    
    $
    3,836,234
    
    
    $
    
    
    
    $
    
    
    
    $
    6,182,329Intersegment sales
    
    
    17,497
    
    
    
    
    
    
    
    648,639
    
    
    
    
    
    
    
    
    
    
    
    (666,136
    )
    
    
    Total net sales
    
    $
    1,528,755
    
    
    $
    777,627
    
    
    $
    705,849
    
    
    $
    3,836,234
    
    
    $
    
    
    
    $
    (666,136
    )
    
    $
    6,182,329Depreciation and
amortization:
    
    
    38,022
    
    
    
    28,989
    
    
    
    10,878
    
    
    
    59,947
    
    
    
    54,459
    
    
    
    
    
    
    
    192,295Net income (loss):
    
    
    (78,465
    )
    
    
    (103,687
    )
    
    
    80,757
    
    
    
    337,135
    
    
    
    (288,881
    )
    
    
    
    
    
    
    (53,141
    )Identifiable assets:
    
    
    9,416,307
    
    
    
    3,432,903
    
    
    
    1,069,002
    
    
    
    7,143,576
    
    
    
    1,827,973
    
    
    
    
    
    
    
    22,889,761Capital expenditures:
    
    
    200,688
    
    
    
    114,274
    
    
    
    3,738
    
    
    
    51,414
    
    
    
    106,009
    
    
    
    
    
    
    
    476,123
 CIPARFranchisingThree Months Ended
    
    and
    
    CIPARFebruary 28, 2006
    
    Licensing
    
    Rehabilitation
    
    CMI
    
    GCI
    
    Corporate
    
    Eliminations
    
    ConsolidatedNet Sales:External customers
    
    $
    1,855,122
    
    
    $
    1,388,654
    
    
    $
    62,598
    
    
    $
    3,159,223
    
    
    $
    
    
    
    $
    
    
    
    $
    6,465,597Intersegment sales
    
    
    60,183
    
    
    
    
    
    
    
    853,333
    
    
    
    
    
    
    
    
    
    
    
    (913,516
    )
    
    
    Total net sales
    
    $
    1,915,305
    
    
    $
    1,388,654
    
    
    $
    915,931
    
    
    $
    3,159,223
    
    
    $
    
    
    
    $
    (913,516
    )
    
    $
    6,465,597Depreciation and
amortization:
    
    
    34,762
    
    
    
    23,897
    
    
    
    6,753
    
    
    
    49,744
    
    
    
    802
    
    
    
    
    
    
    
    115,958Net income (loss):
    
    
    123,492
    
    
    
    107,580
    
    
    
    110,032
    
    
    
    307,782
    
    
    
    (269,214
    )
    
    
    
    
    
    
    379,672Identifiable assets:
    
    
    8,760,788
    
    
    
    2,791,601
    
    
    
    1,123,455
    
    
    
    6,772,628
    
    
    
    1,402,154
    
    
    
    
    
    
    
    20,850,626Capital expenditures:
    
    
    
    
    
    
    7,281
    
    
    
    21,391
    
    
    
    177,450
    
    
    
    
    
    
    
    
    
    
    
    206,122
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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Three Months Ended February 28,2007
    
    2006Equipment and Parts
    
    $
    4,166,034
    
    
    
    67.4
    %
    
    $
    3,540,153
    
    
    
    54.7
    %Coatings
    
    
    1,207,646
    
    
    
    19.5
    
    
    
    1,493,179
    
    
    
    23.1Franchisee and Licensee
    
    
    31,021
    
    
    
    0.5
    
    
    
    43,611
    
    
    
    0.7Rehabilitation
    
    
    777,628
    
    
    
    12.6
    
    
    
    1,388,654
    
    
    
    21.5Total
    
    $
    6,182,329
    
    
    
    100
    %
    
    $
    6,465,597
    
    
    
    100
    %
  Three Months Ended February 28,Region
    
    2007
    
    2006United States
    
    
    53
    
    
    
    57Canada
    
    
    18
    
    
    
    20Asia/Pacific Rim
    
    
    13
    
    
    
    9Europe
    
    
    11
    
    
    
    9Other
    
    
    5
    
    
    
    5Total
    
    
    100
    %
    
    
    100
    %
 Note 8  Contingencies
  Note 9  New Accounting Standards
   13




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COHESANT TECHNOLOGIES INC.
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS
 Results of Operations
 Three months ended February 28, 2007 as compared to the same period in the prior year.
       14




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
     Liquidity and Capital Resources
    15




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    Critical Accounting Policies and Estimates
    Revenue Recognition.
  16




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   Accounts receivable.
 Inventories .
 Goodwill.
  Forward Looking Statements
  17




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  
 ITEM 3. CONTROLS AND PROCEDURES
    
 PART II
 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 (a)
    
    Exhibits
 31.1
    
    302 Certification of Chief Executive Officer31.2
    
    302 Certification of Chief Financial Officer32
    
    906 Certification of Chief Executive Officer and Chief Financial Officer
 (b)
    
    Reports on Form 8-KAn 8-K was filed on December 22, 2006 to report earnings for the quarter and twelve
months ended November 30, 2006 (Items 2.02 and 9.01).
 18




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SIGNATURES
   COHESANT TECHNOLOGIES INC.BY:
    /s/ Morris H. WheelerMorris H. WheelerPresident & Chief Executive Officer BY:
    /s/ Robert W. PawlakRobert W. PawlakChief Financial Officer 19