##### 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 endedFebruary 29, 2008
 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: 000-53007
 COHESANT INC.
  Delaware
    
    20-3580013(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)
 23400 Commerce Park Road, Beachwood, Ohio
    
    
    44122(Address of principal executive offices)
    
    (Zip Code)
 216 416-7000
 
  þ o
  Large
accelerated
filer oAccelerated
filer oNon-accelerated
filer o(Do not check if a
smaller reporting company)Smaller reporting
company þ o þ




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COHESANT INC.
INDEXTABLE OF CONTENTS
  
 PAGEPART IItem 1.
    
    Financial InformationCohesant Inc. Condensed Consolidated Balance Sheets as ofFebruary 29, 2008 and November 30, 2007
    
    
    3Cohesant Inc. Condensed Consolidated Statements ofOperations for the Three Months Ended February 29, 2008and February 28, 2007
    
    
    4Cohesant Inc. Condensed Consolidated Statements of CashFlows for the Three Months Ended February 29, 2008 andFebruary 28, 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Conditionand Results of Operations
    
    
    14Item 3.
    
    Controls and Procedures
    
    
    18PART IIItem 6.
    
    Exhibits
    
    
    18SignaturesEX-31.1EX-31.2EX-32
  2




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PART I
 
 ITEM 1. FINANCIAL INFORMATION
 COHESANT INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 February 29, 2008
    
    
    November 30, 2007(Unaudited)Assets:Cash and cash equivalents
    
    $
    543,959
    
    
    $
    191,486Accounts receivable, net of allowance for doubtful
accounts of $90,259 and $130,797, respectively
    
    
    1,724,515
    
    
    
    2,029,601Income tax receivable
    
    
    6,496
    
    
    
    19,148Current portion of long-term note receivable
    
    
    22,600
    
    
    
    21,935Inventories, net of allowance for obsolete and slow-moving
inventory of $11,000
    
    
    1,202,923
    
    
    
    1,270,573Costs in excess of billings and estimated earnings
    
    
    578
    
    
    
    6,005Prepaid expenses and other
    
    
    278,340
    
    
    
    190,908Deferred tax assets
    
    
    102,459
    
    
    
    159,298Total Current Assets
    
    
    3,881,870
    
    
    
    3,888,954Property and equipment, net
    
    
    2,048,076
    
    
    
    1,078,172License agreements, patents and other intangibles, net of accumulated
amortization of $377,067 and $349,035, respectively
    
    
    847,088
    
    
    
    875,120Goodwill
    
    
    8,767,563
    
    
    
    8,767,563Long-term note receivable, net current portion
    
    
    98,164
    
    
    
    104,070Other noncurrent assets
    
    
    7,394
    
    
    
    7,394Total Assets
    
    $
    15,650,155
    
    
    $
    14,721,273Liabilities and Shareholders Equity/Parent Company Equity:Accounts payable
    
    $
    436,747
    
    
    $
    758,108Current portion of long-term note payable
    
    
    130,718
    
    
    
    129,054Accrued salaries, benefits and commissions
    
    
    189,828
    
    
    
    322,733Accrued income taxes
    
    
    15,461
    
    
    
    26,207Billings in excess of costs and estimated earnings
    
    
    32,562
    
    
    
    86,328Other current liabilities
    
    
    311,204
    
    
    
    138,965Total Current Liabilities
    
    
    1,116,520
    
    
    
    1,461,395Long-term note payable, net of current portion
    
    
    102,533
    
    
    
    135,843Deferred tax liabilities
    
    
    698,257
    
    
    
    650,207Total Liabilities
    
    
    1,917,310
    
    
    
    2,247,445Commitments and Contingencies (Note 10)Shareholders
Equity/Parent Company EquityCommon stock ($.01 par value, 7,000,000 shares authorized and 
3,460,357 shares issued and outstanding at February 29, 2008, no

shares issued and outstanding at November 30, 2007)
    
    
    3,460
    
    
    
    Additional paid-in capital
    
    
    13,598,259
    
    
    
    Accumulated other comprehensive income
    
    
    131,126
    
    
    
    123,710Parent company investment
    
    
    
    
    
    
    12,350,118Total Shareholders Equity/Parent Company Equity
    
    
    13,732,845
    
    
    
    12,473,828Total Liabilities and Shareholders Equity/Parent Company Equity
    
    $
    15,650,155
    
    
    $
    14,721,273
  3




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COHESANT INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Three Months EndedFebruary 29, 2008
    
    
    February 28, 2007NET SALES
    
    $
    2,673,852
    
    
    $
    2,394,691COST OF SALES
    
    
    1,415,832
    
    
    
    1,320,777Gross profit
    
    
    1,258,020
    
    
    
    1,073,914RESEARCH AND DEVELOPMENT EXPENSES
    
    
    61,154
    
    
    
    64,411SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    1,763,867
    
    
    
    1,361,619TOTAL OPERATING EXPENSES
    
    
    1,825,021
    
    
    
    1,426,030Loss from operations
    
    
    (567,001
    )
    
    
    (352,116
    )OTHER INCOME (EXPENSE):Interest income
    
    
    294
    
    
    
    122Interest expense
    
    
    (3,734
    )
    
    
    (4,611
    )Foreign exchange loss, net
    
    
    (384
    )
    
    
    Other income, net
    
    
    8,764
    
    
    
    3,177LOSS BEFORE TAXES
    
    
    (562,061
    )
    
    
    (353,428
    )INCOME TAX BENEFIT
    
    
    174,826
    
    
    
    104,593NET LOSS
    
    $
    (387,235
    )
    
    $
    (248,835
    )LOSS PER COMMON SHARE (Basic and Diluted):
    
    $
    (0.11
    )
    
    $
    (0.07
    )AVERAGE SHARES OF COMMON STOCK
OUTSTANDING BASIC AND DILUTED
    
    
    3,460,357
    
    
    
    3,460,357COMPREHENSIVE LOSSNet loss
    
    $
    (387,235
    )
    
    $
    (248,835
    )Foreign currency translation adjustment
    
    
    7,416
    
    
    
    (13,219
    )NET COMPREHENSIVE LOSS
    
    $
    (379,819
    )
    
    $
    (262,054
    )
  4




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COHESANT INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Three Months EndedFebruary 29, 2008
    
    
    February 28, 2007CASH FLOWS USED IN OPERATING ACTIVITIES:Net loss
    
    $
    (387,235
    )
    
    $
    (248,835
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    100,323
    
    
    
    77,889Loss on asset disposal
    
    
    470
    
    
    
    Stock-based compensation
    
    
    266,033
    
    
    
    49,628Deferred tax provision
    
    
    (58,088
    )
    
    
    47,329Provision for doubtful accounts
    
    
    11,817
    
    
    
    1,008Net change in assets and liabilities-Accounts receivable
    
    
    306,966
    
    
    
    76,333Note receivable
    
    
    5,241
    
    
    
    (151,710
    )Inventories
    
    
    67,650
    
    
    
    (355,865
    )Costs in excess of billings and estimated earnings
    
    
    5,427
    
    
    
    52,805Prepaid expenses and other
    
    
    (51,173
    )
    
    
    83,626Accounts payable
    
    
    (321,361
    )
    
    
    249,639Billings in excess of costs and estimated earnings
    
    
    (53,766
    )
    
    
    25,315Other current liabilities
    
    
    (77,922
    )
    
    
    (270,505
    )Other noncurrent assets
    
    
    6,053
    
    
    
    (10,027
    )Net cash used in operating activities
    
    
    (179,565
    )
    
    
    (373,370
    )CASH FLOWS USED IN INVESTING ACTIVITIES:Property and equipment additions
    
    
    (72,046
    )
    
    
    (318,700
    )Net cash used in investing activities
    
    
    (72,046
    )
    
    
    (318,700
    )CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:Net contributions by Cohesant Technologies Inc.
    
    
    453,613
    
    
    
    6,523Funding of allocated charges by Cohesant Technologies Inc.
    
    
    182,117
    
    
    
    140,257Payments on Triton note payable
    
    
    (31,646
    )
    
    
    (30,064
    )Net cash provided by financing activities
    
    
    604,084
    
    
    
    116,716NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENT
    
    
    352,473
    
    
    
    (575,354
    )CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
    
    
    191,486
    
    
    
    608,682CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    543,959
    
    
    $
    33,328
  5




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




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    Note 2  Basis of Presentation
     7




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 3  Allocation Policies
  Specifically Identifiable Operating Expenses
  Shared Operating Expenses
  Allocated Expenses
  February 29, 2008
    
    
    February 28, 2007Corporate administrative expenses
    
    $
    181,686
    
    
    $
    140,379Investment income
    
    
    (294
    )
    
    
    (122
    )Interest expense
    
    
    725
    
    
    
    Allocated expenses from Cohesant Technologies Inc.
    
    $
    182,117
    
    
    $
    140,257
 8




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Taxes
  Note 4  Costs and Estimated Earnings on Uncompleted Contracts
  February 29,
    
    
    November 30,2008
    
    
    2007Costs incurred on uncompleted contracts
    
    $
    978,877
    
    
    $
    547,380Estimated earnings to date
    
    
    420,072
    
    
    
    250,751Subtotal
    
    
    1,398,949
    
    
    
    798,131Less  Billings to date
    
    
    (1,430,933
    )
    
    
    (878,454
    )Total
    
    $
    (31,984
    )
    
    $
    (80,323
    )Included in the accompanying balance sheets under the following caption:Costs and estimated earnings in excess of billings
    
    $
    578
    
    
    $
    6,005Billings in excess of costs and estimated earnings
    
    
    (32,562
    )
    
    
    (86,328
    )Total
    
    $
    (31,984
    )
    
    $
    (80,323
    )
  Note 5  Loss Per Share
  9




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 6  Related Party Transactions
  Note 7  Stock-Based Compensation
       Note 8  Revolving Line of Credit
  10




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Note 9  Segment Information
   Three Months Ended
    
    Franchising and
    
    
    CuraFloFebruary 29, 2008
    
    Licensing
    
    
    Services
    
    
    CMI
    
    
    Corporate
    
    
    Eliminations
    
    
    ConsolidatedNet Sales:External customers
    
    $
    1,367,208
    
    
    $
    1,168,187
    
    
    $
    138,457
    
    
    $
    
    
    
    $
    
    
    
    $
    2,673,852Intersegment sales
    
    
    44,594
    
    
    
    
    
    
    
    716,636
    
    
    
    
    
    
    
    (761,230
    )
    
    
    Total net sales
    
    $
    1,411,802
    
    
    $
    1,168,187
    
    
    $
    855,093
    
    
    $
    
    
    
    $
    (761,230
    )
    
    $
    2,673,852Depreciation
and amortization:
    
    
    48,875
    
    
    
    41,473
    
    
    
    9,975
    
    
    
    
    
    
    
    
    
    
    
    100,323Net income (loss):
    
    
    (359,983
    )
    
    
    18,888
    
    
    
    79,339
    
    
    
    (125,479
    )
    
    
    
    
    
    
    (387,235
    )Identifiable assets:
    
    
    9,020,585
    
    
    
    3,912,884
    
    
    
    939,364
    
    
    
    1,777,322
    
    
    
    
    
    
    
    15,650,155Capital expenditures:
    
    
    17,203
    
    
    
    51,524
    
    
    
    3,319
    
    
    
    
    
    
    
    
    
    
    
    72,046
 11




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Three Months Ended
    
    Franchising and
    
    
    CuraFloFebruary 29, 2008
    
    Licensing
    
    
    Services
    
    
    CMI
    
    
    Corporate
    
    
    Eliminations
    
    
    ConsolidatedNet Sales:External customers
    
    $
    1,511,258
    
    
    $
    777,627
    
    
    $
    105,806
    
    
    $
    
    
    
    $
    
    
    
    $
    2,394,691Intersegment sales
    
    
    17,497
    
    
    
    
    
    
    
    648,639
    
    
    
    
    
    
    
    (666,136
    )
    
    
    Total net sales
    
    $
    1,528,755
    
    
    $
    777,627
    
    
    $
    754,445
    
    
    $
    
    
    
    $
    (666,136
    )
    
    $
    2,394,691Depreciation
and amortization:
    
    
    38,022
    
    
    
    28,989
    
    
    
    10,878
    
    
    
    
    
    
    
    
    
    
    
    77,889Net income (loss):
    
    
    (128,093
    )
    
    
    (103,687
    )
    
    
    80,757
    
    
    
    (97,812
    )
    
    
    
    
    
    
    (248,835
    )Identifiable assets:
    
    
    9,396,307
    
    
    
    3,444,674
    
    
    
    1,052,637
    
    
    
    164,610
    
    
    
    
    
    
    
    14,058,228Capital expenditures:
    
    
    200,688
    
    
    
    114,274
    
    
    
    3,738
    
    
    
    
    
    
    
    
    
    
    
    318,700
   Three Months EndedFebruary 29, 2008
    
    
    February 28, 2007Coatings
    
    $
    1,375,115
    
    
    
    51.4
    %
    
    $
    1,256,242
    
    
    
    52.4
    %Equipment and Parts
    
    
    89,900
    
    
    
    3.4
    
    
    
    329,801
    
    
    
    13.8Franchisee and Licensee
    
    
    40,650
    
    
    
    1.5
    
    
    
    31,021
    
    
    
    1.3Rehabilitation
    
    
    1,168,187
    
    
    
    43.7
    
    
    
    777,627
    
    
    
    32.5Total
    
    $
    2,673,852
    
    
    
    100
    %
    
    $
    2,394,691
    
    
    
    100
    %
  Three Months EndedRegion
    
    February 29, 2008
    
    
    February 28, 2007United States
    
    
    64
    
    
    
    68Canada
    
    
    36
    
    
    
    32Total
    
    
    100
    %
    
    
    100
    %
 Note 10  Contingencies
  12




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COHESANT INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 11 New Accounting Standards
    13




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COHESANT INC.
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
    Results of Operations
 Three months ended February 29, 2008 as compared to the three months ended February 28, 2007.
   14




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COHESANT INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Three months ended
    
    
    Three months endedFebruary 29, 2008
    
    
    February 28, 2007Coatings
    
    $
    1,236,658
    
    
    $
    1,150,436Equipment and Parts
    
    
    89,900
    
    
    
    329,801Franchisee & Licensee
    
    
    40,650
    
    
    
    31,021Total
    
    $
    1,367,208
    
    
    $
    1,511,258
        15




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COHESANT INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    Liquidity and Capital Resources
   16




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COHESANT INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   New Accounting Standards
    Forward Looking Statements
  17




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COHESANT INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 3.
    
    CONTROLS AND PROCEDURES
    
 PART II
 
 ITEM 6.
    
    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
 18




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