##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB (Mark One) þ Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended
    
    May 31, 2005
 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
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)
 5845 West 82nd Street, Suite 102, Indianapolis, Indiana
    
    46278(Address of principal executive offices)
    
    (Zip Code)
 Issuers
telephone number, including area code
    
    317-871-7611
  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. YESþ NOo As of June 24, 2005, the
Company has 2,695,665 shares of Common Stock, $.001 par value,
outstanding. Transitional Small Business Disclosure Format (check one) YESo NOþ




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COHESANT TECHNOLOGIES INC. INDEX TABLE OF CONTENTS
    
    
    PAGEPART IItem 1.
    
    Financial InformationCohesant
Technologies Inc. Condensed Consolidated
Balance Sheets as of May 31, 2005 and November 30, 2004
    
    
    3Cohesant
Technologies Inc. Condensed ConsolidatedStatements of Operations
for the Three Months Ended
May 31, 2005 and May 31, 2004
    
    
    4Cohesant
Technologies Inc. Condensed ConsolidatedStatements of Operations
for the Six Months Ended
May 31, 2005 and May 31, 2004
    
    
    5Cohesant
Technologies Inc. Condensed ConsolidatedStatements of Cash Flows
for the Six Months Ended
May 31, 2005 and May 31, 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    12Item 3.
    
    Controls and Procedures
    
    
    16PART IIItem 2.
    
    Unregistered Sales of Securities and Use of Proceeds
    
    
    17Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    17SignaturesEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATIONS
  2




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PART I 
 ITEM 1. FINANCIAL INFORMATION COHESANT TECHNOLOGIES INC. 
 CONDENSED CONSOLIDATED BALANCE SHEET May 31, 2005
    
    
    November 30, 2004(Unaudited)ASSETS:Cash and cash equivalents
    
    $
    5,455,177
    
    
    $
    5,036,582Accounts receivable, net of allowance for doubtful
accounts of $315,470 and $302,000, respectively
    
    
    3,564,941
    
    
    
    3,297,305Inventory, net of allowance for obsolete and slow-moving
inventory of $203,250 and $187,000, respectively
    
    
    3,362,649
    
    
    
    3,367,947Prepaid expenses and other
    
    
    217,651
    
    
    
    272,032Deferred tax assets, net
    
    
    210,000
    
    
    
    210,000Total Current Assets
    
    
    12,810,418
    
    
    
    12,183,866Property, plant and equipment, net
    
    
    530,580
    
    
    
    520,866Patents and other intangibles, net
    
    
    120,042
    
    
    
    125,296Goodwill
    
    
    840,254
    
    
    
    840,254Other noncurrent assets
    
    
    1,815
    
    
    
    1,815Total Assets
    
    $
    14,303,109
    
    
    $
    13,672,097LIABILITIES AND SHAREHOLDERS EQUITY:Accounts payable
    
    $
    1,584,333
    
    
    $
    983,798Accrued salaries, benefits and commissions
    
    
    465,081
    
    
    
    786,713Accrued taxes
    
    
    447,151
    
    
    
    240,860Dividends payable
    
    
    
    
    
    
    347,005Other current liabilities
    
    
    183,136
    
    
    
    197,119Total Current Liabilities
    
    
    2,679,701
    
    
    
    2,555,495Deferred tax liability
    
    
    228,200
    
    
    
    228,200Total Liabilities
    
    
    2,907,901
    
    
    
    2,783,695Commitments and ContingenciesShareholders Equity:Common stock ($.001 par value, 10,000,000 shares authorized
and 2,644,752 and 2,613,965 shares issued, respectively)
    
    
    2,645
    
    
    
    2,614Additional paid-in capital
    
    
    6,539,704
    
    
    
    6,313,774Retained earnings
    
    
    4,852,859
    
    
    
    4,572,014Total Shareholders Equity
    
    
    11,395,208
    
    
    
    10,888,402Total Liabilities and Shareholders Equity
    
    $
    14,303,109
    
    
    $
    13,672,097
 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3




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COHESANT TECHNOLOGIES INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) For the Three Months EndedMay 31, 2005
    
    
    May 31, 2004NET SALES
    
    $
    5,702,957
    
    
    $
    5,290,141COST OF SALES
    
    
    3,101,005
    
    
    
    2,586,538Gross profit
    
    
    2,601,952
    
    
    
    2,703,603RESEARCH, DEVELOPMENT AND
ENGINEERING EXPENSES
    
    
    212,431
    
    
    
    275,628SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    1,767,037
    
    
    
    1,597,382TOTAL OPERATING EXPENSES
    
    
    1,979,468
    
    
    
    1,873,010Income from operations
    
    
    622,484
    
    
    
    830,593OTHER INCOME:Interest income
    
    
    28,210
    
    
    
    5,446Other income, net
    
    
    5,734
    
    
    
    5,632INCOME BEFORE TAXES
    
    
    656,428
    
    
    
    841,671INCOME TAX PROVISION
    
    
    (249,442
    )
    
    
    (312,518
    )NET INCOME
    
    $
    406,986
    
    
    $
    529,153BASIC AND DILUTED EARNINGS PER
COMMON SHARE (Note 3)
    
    $
    0.15
    
    
    $
    0.20AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:BASIC
    
    
    2,642,835
    
    
    
    2,587,632DILUTED
    
    
    2,730,462
    
    
    
    2,674,499CASH DIVIDENDS PER SHARE
    
    $
    0.135
    
    
    $
    
 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4




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COHESANT TECHNOLOGIES INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 For the Six Months EndedMay 31, 2005
    
    
    May 31, 2004NET SALES
    
    $
    9,963,756
    
    
    $
    9,525,591COST OF SALES
    
    
    5,335,960
    
    
    
    4,740,162Gross profit
    
    
    4,627,796
    
    
    
    4,785,429RESEARCH, DEVELOPMENT AND
ENGINEERING EXPENSES
    
    
    443,249
    
    
    
    523,903SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    3,205,680
    
    
    
    2,985,012TOTAL OPERATING EXPENSES
    
    
    3,648,929
    
    
    
    3,508,915Income from operations
    
    
    978,867
    
    
    
    1,276,514OTHER INCOME:Interest income
    
    
    50,158
    
    
    
    10,338Other income, net
    
    
    10,687
    
    
    
    14,574INCOME BEFORE TAXES
    
    
    1,039,712
    
    
    
    1,301,426INCOME TAX PROVISION
    
    
    (395,091
    )
    
    
    (483,773
    )NET INCOME
    
    $
    644,621
    
    
    $
    817,653EARNINGS PER COMMON SHARE (Note 3)BASIC
    
    $
    0.24
    
    
    $
    0.32DILUTED
    
    $
    0.24
    
    
    $
    0.31AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:BASIC
    
    
    2,633,916
    
    
    
    2,584,779DILUTED
    
    
    2,733,706
    
    
    
    2,671,495CASH DIVIDENDS PER SHARE
    
    $
    0.135
    
    
    $
    
 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5




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COHESANT TECHNOLOGIES INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) For the Six Months EndedMay 31, 2005
    
    
    May 31, 2004CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES:Net income
    
    $
    644,621
    
    
    $
    817,653Adjustments to reconcile net income to net cash
provided by operating activities -Depreciation and amortization
    
    
    107,132
    
    
    
    118,803Non-cash compensation
    
    
    80,916
    
    
    
    31,155Loss on asset disposal
    
    
    
    
    
    
    275Provision for doubtful accounts
    
    
    13,470
    
    
    
    13,470Net change in assets and liabilities-Accounts and notes receivable
    
    
    (281,106
    )
    
    
    (451,016
    )Inventories
    
    
    (3,253
    )
    
    
    (213,310
    )Prepaid expenses and other
    
    
    54,381
    
    
    
    57,656Accounts payable
    
    
    600,535
    
    
    
    361,908Other current liabilities
    
    
    (35,125
    )
    
    
    55,468Other noncurrent assets
    
    
    (8,078
    )
    
    
    (9,905
    )Net cash provided by operating activities
    
    
    1,173,493
    
    
    
    782,157CASH FLOWS USED IN INVESTING ACTIVITIES:Property and equipment additions
    
    
    (114,423
    )
    
    
    (59,244
    )Proceeds from sale of property & equipment
    
    
    13,370
    
    
    
    Net cash used in investing activities
    
    
    (101,053
    )
    
    
    (59,244
    )CASH FLOWS USED IN FINANCING
ACTIVITIES:Proceeds from exercise of stock options
    
    
    56,935
    
    
    
    36,125Cash dividends paid to stockholders
    
    
    (710,780
    )
    
    
    (645,341
    )Net cash used in financing activities
    
    
    (653,845
    )
    
    
    (609,216
    )NET INCREASE IN CASH
AND CASH EQUIVALENTS
    
    
    418,595
    
    
    
    113,697CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
    
    
    5,036,582
    
    
    
    3,838,179CASH AND CASH EQUIVALENTS AT
END OF PERIOD
    
    $
    5,455,177
    
    
    $
    3,951,876
 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6




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COHESANT TECHNOLOGIES INC. 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Note 1  Background Cohesant Technologies Inc. and its subsidiaries (the Company or Cohesant) are engaged in the
design, development, manufacture and sale of specialized dispense equipment systems, replacement
parts and supplies used in the operation of the equipment and the design, development, manufacture
and sale of specialty coatings. The Companys direct, wholly owned subsidiaries, GlasCraft Inc. (GCI) and Raven Lining Systems
Inc. (Raven) sell their products through a network of independent distributors and Certified
Applicators in the United States and overseas. Industries served include construction,
transportation and marine. The Companys executive offices are located in Indianapolis, Indiana with its principal
manufacturing, warehouse and distribution facilities located in Indianapolis, Indiana and Tulsa,
Oklahoma. Note 2  Basis of Presentation The condensed consolidated interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities and Exchange
Commission for certain small business issuers. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted pursuant to such rules and
regulations. However, in the opinion of management of the Company, the condensed consolidated
interim financial statements include all adjustments necessary to present fairly the financial
information for such periods. These interim financial statements should be read in conjunction with the Companys financial
statements and the notes thereto included in the November 30, 2004 Annual Report to Shareholders on
Form 10-KSB. The consolidated financial statements include the accounts of the Company and its direct, wholly
owned subsidiaries, GCI and Raven. Intercompany accounts and transactions have been eliminated. Note 3  Earnings per Share Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share, requires dual
presentation of basic and diluted earnings per share on the face of the statement of operations.
Basic earnings per share is computed by dividing net income available to common 7




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COHESANT TECHNOLOGIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) shareholders by the weighted-average number of common shares outstanding for the period.
Restricted stock grants are not considered issued and outstanding until vested, but are included in
diluted earnings per share. Diluted earnings per share is computed based upon the weighted average
shares that would have been outstanding if all dilutive potential common shares would have been
converted into shares at the earliest date possible. In determining diluted earnings per share,
stock options were included in the calculation as their effect was dilutive. The following is a
reconciliation of the numerators and denominators used in computing earnings per share: Three Months Ended May 31,
    
    
    Six Months Ended May 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Income available to common
stockholders
    
    $
    406,986
    
    
    $
    529,153
    
    
    $
    644,621
    
    
    $
    817,653Basic earnings per share:Weighted-average number of
common shares outstanding
    
    
    2,642,835
    
    
    
    2,587,632
    
    
    
    2,633,916
    
    
    
    2,584,779Basic earnings per share
    
    $
    0.15
    
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.32Diluted earnings per share:Weighted-average number of
common shares outstanding
    
    
    2,642,835
    
    
    
    2,587,632
    
    
    
    2,633,916
    
    
    
    2,584,779Stock Options
    
    
    81,679
    
    
    
    84,559
    
    
    
    90,591
    
    
    
    84,632Restricted Stock
    
    
    5,948
    
    
    
    2,308
    
    
    
    9,199
    
    
    
    2,084Diluted weighted-average
number of
common shares outstanding
    
    
    2,730,462
    
    
    
    2,674,499
    
    
    
    2,733,706
    
    
    
    2,671,495Diluted earnings per share
    
    $
    0.15
    
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.31
 Note 4  Accounting for Stock-Based Compensation The Company accounts for its stock-based employee compensation plan under the intrinsic value
method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees, (APB 25). The Company has adopted the disclosure-only provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation (FAS 123), as amended by FASB Statement No. 148,
Accounting for Stock-Based CompensationTransition and Disclosure. Had the company elected to adopt
the fair value recognition provisions of FAS 123, pro forma net income and earnings per share would
be as follows: 8




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COHESANT TECHNOLOGIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 3 Months Ended
    
    
    6 Months EndedMay 31
    
    
    May 312005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    406,986
    
    
    $
    529,153
    
    
    $
    644,621
    
    
    $
    817,653Add: Stock-based
employee compensation
expense included in
reported net income,
net of related tax
effects
    
    
    21,532
    
    
    
    18,067
    
    
    
    50,168
    
    
    
    24,068Deduct: Total
stock-based employee
compensation expense
determined under fair
value based method for
all awards, net of
related tax effects
    
    
    (34,063
    )
    
    
    (32,659
    )
    
    
    (75,230
    )
    
    
    (53,251
    )Pro forma net income
    
    $
    394,455
    
    
    $
    514,561
    
    
    $
    619,559
    
    
    $
    788,470Earnings per share:Basicas reported
    
    $
    0.15
    
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.32Basicpro forma
    
    $
    0.15
    
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.31Dilutedas reported
    
    $
    0.15
    
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.31Dilutedpro forma
    
    $
    0.14
    
    
    $
    0.19
    
    
    $
    0.23
    
    
    $
    0.30
 On December 16, 2004, the FASB finalized SFAS No. 123R Share-Based Payment, which will be
effective for small business issuers at the beginning of the first annual reporting period after
December 15, 2005. The new standard will require the Company to expense stock options and the FASB
believes the use of a binomial lattice model for option valuation is capable of more fully
reflecting certain characteristics of employee share options. The Company has begun a process to
analyze how the utilization of a binomial lattice model could impact the valuation of our options. Note 5  Revolving Line of Credit On April 29, 2005, the Company renewed, through May 1, 2006, its $3,500,000 unsecured revolving
line of credit facility. This facility accrues interest at the banks prime lending rate. Among
other restrictions, the credit facility requires that the Company meet certain covenants including
financial ratios. As of May 31, 2005, the Company was in compliance with all covenants and did not
have a balance outstanding under this facility. Note 6  Segment Information The Company monitors its operations in two business divisions: GCI and Raven. Certain corporate
costs are not allocated to the business segments. Financial information for the Companys business
segments as of and for the period ended May 31, 2005 and May 31, 2004 is as follows: 9




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COHESANT TECHNOLOGIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Three Months EndedMay 31, 2005
    
    GCI
    
    
    Raven
    
    
    Corporate
    
    
    ConsolidatedNet Sales
    
    $
    3,747,846
    
    
    $
    1,955,111
    
    
    $
    
    
    
    $
    5,702,957Depreciation and amortization:
    
    
    40,603
    
    
    
    10,487
    
    
    
    1,809
    
    
    
    52,899Net Income:
    
    
    423,183
    
    
    
    270,186
    
    
    
    (286,383
    )
    
    
    406,986Identifiable assets:
    
    
    5,968,797
    
    
    
    2,555,069
    
    
    
    5,779,243
    
    
    
    14,303,109Capital expenditures:
    
    
    37,834
    
    
    
    1,642
    
    
    
    194
    
    
    
    39,670
 Three Months EndedMay 31, 2004
    
    GCI
    
    
    Raven
    
    
    Corporate
    
    
    ConsolidatedNet Sales
    
    $
    3,445,320
    
    
    $
    1,844,821
    
    
    $
    
    
    
    $
    5,290,141Depreciation and amortization:
    
    
    44,761
    
    
    
    12,963
    
    
    
    1,933
    
    
    
    59,657Net Income:
    
    
    397,211
    
    
    
    331,704
    
    
    
    (199,762
    )
    
    
    529,153Identifiable assets:
    
    
    5,925,074
    
    
    
    2,784,932
    
    
    
    4,223,105
    
    
    
    12,933,111Capital expenditures:
    
    
    30,432
    
    
    
    4,753
    
    
    
    7,936
    
    
    
    43,121
 Six Months EndedMay 31, 2005
    
    GCI
    
    
    Raven
    
    
    Corporate
    
    
    ConsolidatedNet Sales
    
    $
    6,692,066
    
    
    $
    3,271,690
    
    
    $
    
    
    
    $
    9,963,756Depreciation and amortization:
    
    
    80,468
    
    
    
    22,544
    
    
    
    4,120
    
    
    
    107,132Net Income:
    
    
    721,134
    
    
    
    409,836
    
    
    
    (486,349
    )
    
    
    644,621Identifiable assets:
    
    
    5,968,797
    
    
    
    2,555,069
    
    
    
    5,779,243
    
    
    
    14,303,109Capital expenditures:
    
    
    110,313
    
    
    
    2,717
    
    
    
    1,393
    
    
    
    114,423
 Six Months EndedMay 31, 2004
    
    GCI
    
    
    Raven
    
    
    Corporate
    
    
    ConsolidatedNet Sales
    
    $
    6,236,134
    
    
    $
    3,289,457
    
    
    $
    
    
    
    $
    9,525,591Depreciation and amortization:
    
    
    89,277
    
    
    
    26,032
    
    
    
    3,494
    
    
    
    118,803Net Income:
    
    
    611,515
    
    
    
    544,131
    
    
    
    (337,993
    )
    
    
    817,653Identifiable assets:
    
    
    5,925,074
    
    
    
    2,784,932
    
    
    
    4,223,105
    
    
    
    12,933,111Capital expenditures:
    
    
    39,123
    
    
    
    12,185
    
    
    
    7,936
    
    
    
    59,244
 The following table presents percentage of total revenues by region. Six Months
    

    Six MonthsThree Months Ended
    

    Three Months Ended
    

    Ended
    

    EndedRegion
    
    May 31, 2005
    

    May 31, 2004
    

    May 31, 2005
    

    May 31, 2004United States
    
    68
    

    69
    

    67
    

    66Europe
    
    12
    

    14
    

    11
    

    12Asia/Pacific Rim
    
    10
    

    9
    

    10
    

    12Canada
    
    5
    

    5
    

    7
    

    6Other
    
    5
    

    3
    

    5
    

    4Total
    

    100
    %

    100
    %

    100
    %

    100
    %
 10




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COHESANT TECHNOLOGIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Note 7  Contingencies In November 1999, following the sale of certain assets of the Companys American
Chemical Company (ACC) subsidiary, ACC contributed its land and building to Marine Learning
Institute (MLI), a not-for-profit environmental educational organization. MLI agreed to indemnify
the Company to assume any costs arising from or out of the past, present or future environmental
condition of the site. Subsequent to the donation of the St. Louis property, the Missouri Attorney
Generals office raised questions regarding the status of the contributed land and advised the
affected parties that additional clean-up efforts were necessary. MLI advised both the Company and
the Missouri Attorney General that, in its opinion, no further clean-up efforts were necessary.
Management intends to seek indemnification from MLI for any further clean-up and legal costs. No
activity with respect to this matter has occurred in either fiscal year 2004 or to date in fiscal
year 2005. The Company is a party to certain other legal matters arising in the ordinary course of
business. Management believes the ultimate disposition of these matters and the matter referred to
above will not have a material adverse effect on the Companys financial position or results of
operations. Note 8  Shareholders Equity On December 13, 2004, the Compensation Committee of the Board of Directors approved the grant of
7,850 shares of Common Stock, with an aggregate value of $94,200 to an aggregate of 12 key
employees, including three executive officers. The grants were based on fiscal 2004 performance.
The entire cost of these awards was expensed in the fiscal 2004 period. The issuance was exempt
from registration pursuant to section 4(2) of the Securities Act of 1933. Effective March 22, 2005, the Board of Directors approved the grant of 1,350 shares of Common
Stock, with an aggregate value of $9,936, to a new employee. The grant was a restricted award that
vests on a cliff basis on March 22, 2012 and may vest earlier according to meeting specific
performance measures through March 31, 2006. The value of the grant is being recognized as non
cash compensation expense over the vesting period. Note 9  Dividends On May 4, 2005, the Company announced that its Board of Directors approved a semi-annual dividend
payment of $0.135 per share. This dividend payment of $363,776 was paid on May 27, 2005 to
shareholders of record on May 18, 2005. 11




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COHESANT TECHNOLOGIES INC. 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS Results of Operations Second quarter ended May 31, 2005 as compared to the same period in the prior year. Net sales for the three months ended May 31, 2005 were $5,702,957 compared to $5,290,141 for the
same period of the prior year, an increase of $412,816 or 7.8%. Equipment sales increased
$351,048, or 9.4% and Coatings sales increased $61,768, or 4.0%. Net income was $406,986, a
$122,167 or 23.1% decrease compared to last year. Net sales of dispense equipment and spare parts at GCI increased $302,526 or 8.8%. This increase
was primarily attributable to 1) strong initial demand for the new Probler P2 dispense gun which
spurred sharply increased sales of dispense guns to the foam and coatings market and 2) an increase
in sales of dispense systems for the fiberglass reinforced plastics market. GCI also experienced
an increase in sales of spare parts and accessories. These sales gains were partially offset by a
decrease in sales of polyurethane and coatings dispense systems. Net sales of dispense equipment
and parts in the United States increased 9.0% and international dispense equipment and parts net
sales increased 8.5%. The increase in international sales was primarily a result of increased
sales to the Asia/Pacific Rim, which was partially offset by decreased sales to Europe and Canada. Specialty coatings net sales at Raven were $1,623,749 compared to $1,561,981 for the comparable
period in the prior year, an increase of $61,768 or 3.9%. In addition, Raven had ancillary
equipment and parts sales of $331,362 compared to $282,840 for the comparable period last year.
Typically, Raven does not sell equipment unless new Certified Applicators needing equipment are
added or existing applicators decide to increase capacity by buying additional equipment. Raven
added three Certified Applicators during the quarter. The Companys gross margin decreased to $2,601,952, or 45.6% of net sales, in the 2005 period from
$2,703,603, or 51.1% of net sales, in the 2004 period. The largest portion of this decrease was
attributable to special introductory pricing on the new Probler P2 gun and greater than expected
manufacturing and component costs for initial runs of this new product. To a lesser extent, the
decrease in gross margin dollars and percentage decrease was due to increased raw material costs on
the Companys specialty coatings. Management expects margins to improve on its equipment as
introductory pricing expires and as manufacturing and component costs decline on future production
runs of the Probler P2. Operating expenses for the three months ended May 31, 2005 were $1,979,468 compared to $1,873,010
for the same period of the prior year, an increase of $106,458, or 5.7%. This increase
was primarily due to increased corporate administrative costs (higher personnel costs), which was
partially offset by decreased sales and marketing expenses at both GCI and Raven and decreased
research, development and engineering costs at GCI. The decrease in research, development and
engineering costs at GCI reflects primarily timing differences and the Company expects its
research, development and engineering costs will approximate those of the prior year. 12




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COHESANT TECHNOLOGIES INC. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Other income, net of other expenses increased $22,866. This increase was primarily attributable to
increased interest earned on cash balances. Six months ended May 31, 2005 as compared to the same period in the prior year. Net sales for the six months ended May 31, 2005 were $9,963,756 compared to $9,525,591 for the same
period of the prior year, an increase of $438,165 or 4.6%. Equipment sales increased $404,725, or
6.1% and Coatings sales increased $33,440, or 1.2%. Net income was $644,621, a $173,032 or 21.2%
decrease compared to last year. Net sales of dispense equipment and spare parts at GCI increased $455,932 or 7.3%. This increase
was primarily attributable to 1) strong initial demand for the new Probler P2 dispense gun
introduced in the first quarter which spurred sharply increased sales of dispense guns to the foam
and coatings market and 2) an increase in sales of dispense systems for the fiberglass reinforced
plastics market. GCI also experienced an increase in sales of spare parts and accessories. These
sales gains were partially offset by a decrease in sales of polyurethane dispense systems. Net
sales of dispense equipment and parts in the United States increased 13.8% and international
dispense equipment and parts net sales increased less than 1%. Decreased sales to the Asia/Pacific
Rim and Europe were offset by increased sales to Canada and other areas. Specialty coatings net sales at Raven were $2,879,500 compared to $2,846,060 for the comparable
period in the prior year, an increase of $33,440 or 1.2%. In addition, Raven had ancillary
equipment and parts sales of $392,190 compared to $443,397 for the comparable period last year.
Typically, Raven does not sell equipment unless new Certified Applicators needing equipment are
added or existing applicators decide to increase capacity by buying additional equipment. Raven
added five Certified Applicators during the period. The Companys gross margin decreased to $4,627,796, or 46.5% of net sales, in the 2005 period from
$4,785,429, or 50.2% of net sales, in the 2004 period. The largest portion of this decrease was
attributable to special introductory pricing on the new Probler P2 gun and greater than expected
manufacturing and component costs for initial runs of this new product. To a lesser extent, the
decrease in gross margin dollars and percentage decrease was due to increased raw material costs on
the Companys specialty coatings. Management expects margins to improve on its equipment as
introductory pricing expires and as manufacturing and component costs decline on future production
runs of the Probler P2. Operating expenses for the six months ended May 31, 2005 were $3,648,929 compared to $3,508,915 for
the same period of the prior year, an increase of $140,014, or 4.0%. This increase was primarily
due to increased corporate administrative costs (higher personnel costs), which was partially
offset by decreased research, development and engineering costs and decreased sales and marketing
expenses at GCI. The decrease in research, development and engineering 13




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COHESANT TECHNOLOGIES INC. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS costs at GCI reflects primarily timing differences and the Company expects its research,
development and engineering costs will approximate those of the prior year. Other income, net of other expenses increased $35,933. This increase was primarily attributable to
increased interest earned on cash balances. Liquidity and Capital Resources The Companys primary sources of liquidity are its cash reserves and availability under the
revolving line of credit. At May 31, 2005 the Company has cash and cash equivalents of $5,455,177,
net working capital of $10,130,717 and $3,500,000 available under the revolving line of credit. In the first half of fiscal 2005 cash provided by operations was $1,173,493 compared to $782,157 in
the comparable period last year. This increase was due to improved inventory management and a
decrease in accounts receivable days sales outstanding as well as increased accounts payable
balances. Cash used in investing activities increased to $101,053 in the current period from
$59,244 in the period ended May 31, 2004. This increase was due to increased spending on capital
equipment. Cash used in financing activities was $653,845 in the current period compared to
$609,216 in the prior year period. This increase was primarily due to increased dividends paid to
shareholders. On April 29, 2005, the Company renewed, through May 1, 2006, its $3,500,000 unsecured revolving
line of credit facility. This facility accrues interest at the banks prime lending rate. Among
other restrictions, the credit facility requires that the Company meet certain covenants including
financial ratios. As of May 31, 2005, the Company was in compliance with all covenants and did not
have a balance outstanding under this facility. The Company does not have any other significant commitments or guarantees, except for rental
commitments. The Company believes that its cash flow from operating activities, existing cash resources and
working capital coupled with its bank line will be adequate to meet its capital needs and dividend
provisions for the foreseeable future. Critical Accounting Policies and Estimates The Company has disclosed those accounting policies and estimates that it considers to be
significant in determining the amounts to be utilized for communicating its consolidated financial
position, results of operations and cash flows in the notes to its consolidated financial
statements. The preparation of financial statements in conformity with these principles requires management to
make estimates and assumptions that affect amounts reported in the financial statements and 14




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COHESANT TECHNOLOGIES INC. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS accompanying notes. Management continually evaluates the information used to make such estimates
as its business and economic environment changes and has discussed these estimates with the Audit
Committee of the Board of Directors. Actual results are likely to differ from
these estimates, but management does not believe such differences will materially affect the
Companys financial position or results of operations. The following accounting policies represent the most critical based on managements analysis due
the impact on the Companys results of operations. Revenue Recognition.The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 104, Revenue Recognition (SAB 104). Under SAB 104 revenue is recognized when there
is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the
sales price is fixed or determinable, and collectibility is reasonably assured. For equipment, coatings, and replacement and spare part revenue, the criteria of SAB 104 are
generally met upon shipment to its independent distributors, certified applicators, large end users
and Original Equipment Manufacturer accounts, at which time title and risks ownership are
transferred to these customers. Therefore, revenue is recognized at the time of shipment. The
Company does not have any rights of return, customer acceptance, installation or other
post-shipment obligations with any of its products. The Companys pricing is fixed at the time of
shipment. Accounts receivable.The Company evaluates the allowance for doubtful accounts on a periodic basis
and reviews any significant customers with delinquent balances to determine future collectability.
The determination includes a review of legal issues (such as bankruptcy status), past payment
history, current financial and credit reports, and the experience of the credit representative.
Allowances are established in the period in which the account is deemed uncollectable or
questionable collectability. The Company believes, based on past history and credit policies, that
the net accounts receivable are of good quality. Inventory.The Companys inventories are valued at the lower of cost or market. Reserves for
obsolescence are estimated and based on projected sales volume. Though management considers these
balances adequate and proper, changes in sales volumes due to unexpected economic conditions could
result in materially different amounts for this item. Based on a critical assessment of its accounting policies and the underlying judgments and
uncertainties affecting the application of those policies, management believes that the Companys
consolidated financial statements provide a meaningful and fair perspective of the Company. This
is not to suggest that other risk factors such as changes in economic conditions, changes in
material costs, and others could not adversely impact the Companys consolidated financial
position, results of operations and cash flows in future periods. 15




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COHESANT TECHNOLOGIES INC. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Forward Looking Statements Certain statements contained in this report that are not historical facts are forward looking
statements that are subject to certain risks and uncertainties that could cause actual results to
differ materially from those set forth in the forward looking statement. These risks and
uncertainties include, but are not limited to, a slow-down in domestic and international markets
for plural component dispensing systems, a reduction in growth of markets for the Companys epoxy
coating systems and customer resistance to Company price increases. 
 ITEM 3. CONTROLS AND PROCEDURES Based on their evaluation as of a date within 90 days of the filing date of this Quarterly Report
on Form 10-QSB, the Companys principal executive officer and principal financial officer have
concluded that the Companys disclosure controls and procedures as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act) are effective to ensure that
information required to be disclosed by the Company in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. There were no significant changes in the Companys internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation and up to the filing
date of this Quarterly Report on Form 10-QSB. There were no significant deficiencies or material
weaknesses, and therefore there were no corrective actions taken. It should be noted that any system of controls, however well designed and operated, can provide
only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. 16




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COHESANT TECHNOLOGIES INC. 
 PART II 
 ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS Effective March 22, 2005, the Board of Directors approved the grant of 1,350 shares of Common
Stock, with an aggregate value of $9,936 to a new employee. The grant was a restricted award that
vests on a cliff basis on March 22, 2012 and may vest earlier according to meeting specific
performance measures through March 31, 2006. The value of the grant is being recognized as non
cash compensation expense over the vesting period. 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibit  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 March 17, 2005 to report earnings for the first quarter ended
February 28, 2005 (Items 2.02 and 9.01).An 8-K was filed on May 2, 2005 to report the renewal of its $3,500,000 credit facility
through May 1, 2006 (Items 2.03 and 9.01).An 8-K was filed on May 4, 2005 to report a semi-annual dividend payment of $0.135 per
share. (Items 8.01 and 9.01). 17




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned there unto duly authorized. Dated:      June 23, 2005 COHESANT TECHNOLOGIES INC.BY:
    
    /s/ Morris H. WheelerMorris H. WheelerPresident & Chief Executive OfficerBY:
    
    /s/ Robert W. PawlakRobert W. PawlakChief Financial Officer
 18