##### 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, 2006
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the transition period fromto
 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)
  
  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, 2006 and November 30, 2005
    
    
    3Cohesant Technologies Inc. Condensed Consolidated Statements of Operations for the Three Months Ended February 28, 2006 and February 28, 2005
    
    
    4Cohesant Technologies Inc. Condensed Consolidated Statements of Cash Flows for the Three Months Ended February 28, 2006 and February 28, 2005
    
    
    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
    
    
    20PART IIItem 2.
    
    Unregistered Sales of Securities and Use of Proceeds
    
    
    20Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    21SignaturesEX-2.2 AMENDMENT AND SETTLEMENT AGREEMENTEX-10.1EX-31.1 302 CERTIFICATION - PRINCIPAL EXECUTIVE OFFICEREX-31.2 302 CERTIFICATION - PRINCIPAL FINANCIAL OFFICEREX-32 906 CERTIFICATION - PRINCIPAL EXECUTIVE OFFICERS
  2




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PART I
 
 ITEM 1. FINANCIAL INFORMATION
 COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 February 28, 2006
    
    
    November 30, 2005(Unaudited)ASSETS:Cash and cash equivalents
    
    $
    1,219,790
    
    
    $
    2,238,281Accounts receivable, net of allowance for doubtful
accounts of $300,163 and $284,628, respectively
    
    
    4,526,207
    
    
    
    4,125,062Inventory, net of allowance for obsolete and
slow-moving inventory of $227,675 and $195,425,
respectively
    
    
    3,908,149
    
    
    
    3,490,087Prepaid expenses and other
    
    
    381,494
    
    
    
    333,751Deferred tax assets, net
    
    
    240,200
    
    
    
    240,200Total Current Assets
    
    
    10,275,840
    
    
    
    10,427,381Property, plant and equipment, net
    
    
    1,143,171
    
    
    
    991,730License agreements, patents and other intangibles, net
    
    
    1,347,948
    
    
    
    1,392,499Goodwill
    
    
    8,074,149
    
    
    
    8,223,913Other noncurrent assets
    
    
    9,518
    
    
    
    8,484Total Assets
    
    $
    20,850,626
    
    
    $
    21,044,007LIABILITIES AND SHAREHOLDERS EQUITY:Accounts payable
    
    $
    1,953,581
    
    
    $
    1,622,153Accrued salaries, benefits and commissions
    
    
    555,515
    
    
    
    1,047,938Accrued income taxes
    
    
    506,303
    
    
    
    387,242Billings in excess of costs and estimated earnings
    
    
    113,824
    
    
    
    133,844Due to former owners of acquired business
    
    
    
    
    
    
    473,707Other current liabilities
    
    
    436,282
    
    
    
    480,787Total Current Liabilities
    
    
    3,565,505
    
    
    
    4,145,671Deferred tax liability
    
    
    243,700
    
    
    
    243,700Total Liabilities
    
    
    3,809,205
    
    
    
    4,389,371Commitments and Contingencies (Note 9)Shareholders Equity:Common stock ($.001 par value, 10,000,000 shares
authorized and 3,119,112 and 3,123,089 shares
issued and outstanding, respectively)
    
    
    3,119
    
    
    
    3,123Additional paid-in capital
    
    
    11,228,360
    
    
    
    11,230,959Accumulated other comprehensive income
    
    
    21,100
    
    
    
    11,384Retained earnings
    
    
    5,788,842
    
    
    
    5,409,170Total Shareholders Equity
    
    
    17,041,421
    
    
    
    16,654,636Total Liabilities and Shareholders Equity
    
    $
    20,850,626
    
    
    $
    21,044,007
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COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Three Months EndedFebruary 28, 2006
    
    
    February 28, 2005NET SALES
    
    $
    6,465,597
    
    
    $
    4,260,799COST OF SALES
    
    
    3,551,882
    
    
    
    2,234,955Gross profit
    
    
    2,913,715
    
    
    
    2,025,844RESEARCH AND DEVELOPMENT EXPENSES
    
    
    272,621
    
    
    
    230,818SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    2,036,886
    
    
    
    1,438,643TOTAL OPERATING EXPENSES
    
    
    2,309,507
    
    
    
    1,669,461Income from operations
    
    
    604,208
    
    
    
    356,383OTHER INCOME:Interest income
    
    
    6,413
    
    
    
    21,948Other income, net
    
    
    1,755
    
    
    
    4,953INCOME BEFORE TAXES
    
    
    612,376
    
    
    
    383,284INCOME TAX PROVISION
    
    
    (232,704
    )
    
    
    (145,649
    )NET INCOME
    
    $
    379,672
    
    
    $
    237,635EARNINGS PER COMMON SHARE
BASIC & DILUTED (Note 4)
    
    $
    0.12
    
    
    $
    0.09WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:BASIC
    
    
    3,123,263
    
    
    
    2,624,798DILUTED
    
    
    3,235,496
    
    
    
    2,735,263COMPREHENSIVE INCOMENet Income
    
    $
    379,672
    
    
    $
    237,635Foreign currency translation adjustment
    
    
    9,716
    
    
    
    NET COMPREHENSIVE INCOME
    
    $
    389,388
    
    
    $
    237,635
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COHESANT TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Three Months EndedFebruary 28, 2006
    
    
    February 28, 2005CASH FLOWS USED IN OPERATING ACTIVITIES:Net income
    
    $
    379,672
    
    
    $
    237,635Adjustments to reconcile net income to net cash used in
operating activitiesDepreciation and amortization
    
    
    115,958
    
    
    
    54,233Non-cash compensation
    
    
    33,612
    
    
    
    46,187Provision for doubtful accounts
    
    
    15,535
    
    
    
    6,735Net change in assets and liabilities-Accounts receivable
    
    
    (416,680
    )
    
    
    (138,590
    )Inventories
    
    
    (431,147
    )
    
    
    (121,171
    )Prepaid expenses and other
    
    
    (47,743
    )
    
    
    (44,337
    )Accounts payable
    
    
    331,428
    
    
    
    263,007Billings in excess of costs and estimated earnings
    
    
    (20,020
    )
    
    
    Other current liabilities
    
    
    (551,549
    )
    
    
    (429,976
    )Other noncurrent assets
    
    
    5,041
    
    
    
    (4,832
    )Net cash used in operating activities
    
    
    (585,893
    )
    
    
    (131,109
    )CASH FLOWS USED IN INVESTING ACTIVITIES:Property and equipment additions
    
    
    (206,122
    )
    
    
    (74,753
    )Payment to former owners of acquired business
    
    
    (342,136
    )
    
    
    Return of cash paid for acquisition of CuraFlo
    
    
    77,250
    
    
    
    Proceeds from sale of property & equipment
    
    
    
    
    
    
    9,580Net cash used in investing activities
    
    
    (471,008
    )
    
    
    (65,173
    )CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:Proceeds from note receivable restricted stock
    
    
    32,833
    
    
    
    Proceeds from exercise of stock options
    
    
    5,577
    
    
    
    47,545Cash dividends paid to stockholders
    
    
    
    
    
    
    (347,004
    )Net cash provided by (used in) financing activities
    
    
    38,410
    
    
    
    (299,459
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,018,491
    )
    
    
    (495,741
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    2,238,281
    
    
    
    5,036,582CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    1,219,790
    
    
    $
    4,540,841
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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
 Acquisition of CuraFlo
  7




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    Current assets
    
    $
    864,667Property & equipment
    
    
    227,483Intangible assets
    
    
    1,343,000Goodwill
    
    
    7,233,895Total assets acquired
    
    
    9,669,045Liabilities assumed
    
    
    (783,599
    )Net assets acquired
    
    $
    8,885,446
 Unaudited pro forma results
  8




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Three Months Ended February 28,2006
    
    2005Revenue
    
    $
    6,465,597
    
    
    $
    5,349,698Net Income
    
    
    379,672
    
    
    
    319,265Basic earnings per share
    
    
    0.12
    
    
    
    0.10Diluted earnings per share:
    
    
    0.12
    
    
    
    0.10
  Note 4  Earnings per Share
   Three Months Ended February 28,2006
    
    2005Income available to common
stockholders
    
    $
    379,672
    
    
    $
    237,635Basic earnings per share:Weighted-average number of
common shares outstanding
    
    
    3,123,263
    
    
    
    2,624,798Basic earnings per share
    
    $
    0.12
    
    
    $
    0.09Diluted earnings per share:Weighted-average number of
common shares outstanding
    
    
    3,123,263
    
    
    
    2,624,798Stock Options
    
    
    89,283
    
    
    
    98,456Restricted Stock
    
    
    22,950
    
    
    
    12,009Diluted weighted-average number of
common shares outstanding
    
    
    3,235,496
    
    
    
    2,735,263Diluted earnings per share
    
    $
    0.12
    
    
    $
    0.09
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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 5  Accounting for Stock-Based Compensation
  Three Months EndedFebruary 28,2006
    
    
    2005Net income, as reported
    
    $
    379,672
    
    
    $
    237,635Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects
    
    
    20,839
    
    
    
    28,636Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (93,919
    )
    
    
    (41,167
    )Pro forma net income
    
    $
    306,592
    
    
    $
    225,104Earnings per share:Basicas reported
    
    $
    0.12
    
    
    $
    0.09Basicpro forma
    
    $
    0.10
    
    
    $
    0.09Dilutedas reported
    
    $
    0.12
    
    
    $
    0.09Dilutedpro forma
    
    $
    0.09
    
    
    $
    0.08
   Note 6
 Costs and Estimated Earnings on Uncompleted Contracts
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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Costs incurred on uncompleted contracts
    
    $
    861,062Estimated earnings to date
    
    
    385,998Subtotal
    
    
    1,247,060Less  Billings to date
    
    
    (1,360,884
    )Total
    
    $
    (113,824
    )Included in the accompanying balance sheet under the following
caption:Costs and estimated earnings in excess of billings
    
    $
    Billings in excess of costs and estimated earnings
    
    
    (113,824
    )Total
    
    $
    (113,824
    )
  Note 7  Revolving Line of Credit
  Note 8  Segment Information
  11




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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Three Months EndedFebruary 28, 2006
    
    CIPAR
    
    CMI
    
    GCI
    
    Corporate
    
    Eliminations
    
    ConsolidatedNet Sales:External customers
    
    $
    3,243,776
    
    
    $
    62,598
    
    
    $
    3,159,223
    
    
    $
    
    
    
    $
    
    
    
    $
    6,465,597Intersegment sales
    
    
    
    
    
    
    853,333
    
    
    
    
    
    
    
    
    
    
    
    (853,333
    )
    
    
    Total net sales
    
    
    3,243,776
    
    
    
    915,931
    
    
    
    3,159,223
    
    
    
    
    
    
    
    (853,333
    )
    
    
    6,465,597Depreciation and
amortization:
    
    
    58,659
    
    
    
    6,753
    
    
    
    49,744
    
    
    
    802
    
    
    
    
    
    
    
    115,958Net income (loss):
    
    
    231,072
    
    
    
    110,032
    
    
    
    307,782
    
    
    
    (269,214
    )
    
    
    
    
    
    
    379,672Identifiable assets:
    
    
    11,552,389
    
    
    
    1,123,455
    
    
    
    6,772,628
    
    
    
    1,402,154
    
    
    
    
    
    
    
    20,850,626Capital expenditures:
    
    
    7,281
    
    
    
    21,391
    
    
    
    177,450
    
    
    
    
    
    
    
    
    
    
    
    206,122
 Three Months EndedFebruary 28, 2005
    
    CIPAR
    
    CMI
    
    GCI
    
    Corporate
    
    Eliminations
    
    ConsolidatedNet Sales:External customers
    
    $
    1,205,039
    
    
    $
    111,540
    
    
    $
    2,944,220
    
    
    $
    
    
    
    $
    
    
    
    $
    4,260,799Intersegment sales
    
    
    
    
    
    
    687,570
    
    
    
    
    
    
    
    
    
    
    
    (687,570
    )
    
    
    Total net sales
    
    
    1,205,039
    
    
    
    799,110
    
    
    
    2,944,220
    
    
    
    
    
    
    
    (687,570
    )
    
    
    4,260,799Depreciation and
amortization:
    
    
    
    
    
    
    12,057
    
    
    
    39,865
    
    
    
    2,311
    
    
    
    
    
    
    
    54,233Net income (loss):
    
    
    55,386
    
    
    
    84,264
    
    
    
    297,951
    
    
    
    (199,966
    )
    
    
    
    
    
    
    237,635Identifiable assets:
    
    
    1,637,966
    
    
    
    994,189
    
    
    
    5,978,708
    
    
    
    4,875,599
    
    
    
    
    
    
    
    13,486,462Capital expenditures:
    
    
    
    
    
    
    1,075
    
    
    
    72,479
    
    
    
    1,199
    
    
    
    
    
    
    
    74,753
  Three Months Ended February 28,2006
    
    2005Equipment and Parts
    
    $
    3,540,153
    
    
    
    54.7
    %
    
    $
    3,005,048
    
    
    
    70.5
    %Coatings
    
    
    1,493,179
    
    
    
    23.1
    
    
    
    1,246,751
    
    
    
    29.3Licensee
    
    
    43,611
    
    
    
    0.7
    
    
    
    9,000
    
    
    
    0.2Rehabilitation
    
    
    1,388,654
    
    
    
    21.5
    
    
    
    
    
    
    
    Total
    
    $
    6,465,597
    
    
    
    100
    %
    
    $
    4,260,799
    
    
    
    100
    %
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COHESANT TECHNOLOGIES INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Three Months Ended February 28,Region
    
    2006
    
    2005United States
    
    
    57
    
    
    
    66Canada
    
    
    20
    
    
    
    9Asia/Pacific Rim
    
    
    9
    
    
    
    10Europe
    
    
    9
    
    
    
    10Other
    
    
    5
    
    
    
    5Total
    
    
    100
    %
    
    
    100
    %
 Note 9  Contingencies
  13




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS
 Acquisition of CuraFlo
   Reconfiguration of Business Units
  14




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




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Results of Operations
 Three months ended February 28, 2006 as compared to the same period in the prior year.
       16




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Liquidity and Capital Resources
      Critical Accounting Policies and Estimates
   17




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   Revenue Recognition.
    Accounts receivable.
 Inventory .
 18




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COHESANT TECHNOLOGIES INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Goodwill.
  Forward Looking Statements
  19




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COHESANT TECHNOLOGIES INC.
 
 ITEM 3. CONTROLS AND PROCEDURES
    
 PART II
 
 ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
 (a)
    
    On January 23, 2006, the Board of Directors approved the grant of 100 shares of Common
Stock, with an aggregate value of $955 to a Director of its Canadian Subsidiary for
services rendered and an additional 17 shares with an aggregate value of $162 to its
Licensed Dealers for promotional purposes. The issuances were exempt from registration
pursuant to section 4(2) of the Securities Act of 1933.(c)
    
    On February 24, 2006, 4279 Investments Ltd. returned 7,500 shares, which were retired,
to resolve outstanding issues among the parties from the CuraFlo acquisition in August
2005.
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COHESANT TECHNOLOGIES INC.
 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 (a)
    
    Exhibits
 2.1
    
    Asset Acquisition Agreement by and among 4279 Investments and
its subsidiaries and Cohesant and its subsidiaries, (Incorporated by reference to the exhibit in the
Companys 8-K dated August 12, 2005)2.2
    
    Amendment and Settlement Agreement by and among 4279 Investments and its
subsidiaries and Cohesant and its subsidiaries.10.1
    
    Form of Stock Option Grant.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, 2005 to report earnings for the quarter and twelve
months ended November 30, 2005 (Items 2.02 and 9.01).
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SIGNATURES
  Dated: March 30, 2006COHESANT TECHNOLOGIES INC.BY:
    
    /s/ Morris H. WheelerMorris H. WheelerPresident & Chief Executive OfficerBY:
    
    /s/ Robert W. PawlakRobert W. PawlakChief Financial Officer
 22