CVD(CVV) - 2020 Q4 - Annual Report

Revenue Performance - Revenue for the year ended December 31, 2020, was $16.9 million, a decrease of 13.9% from $19.6 million in 2019, primarily due to a $3.7 million decline in CVD Equipment sales [207]. - CVD Equipment segment revenue was $10.4 million, representing 61.4% of total revenue, down 26.2% from $14.1 million in the previous year [208]. - The Materials Business generated revenues of $2.3 million in 2020, up 42.0% from $1.6 million in 2019, but overall growth has not met expectations [198]. - Annual revenue for the SDC segment increased to $4.2 million in 2020, a 6.7% increase from $3.9 million in 2019, representing 24.9% of total revenue [209]. - Revenues for the CVD Materials segment rose to $2.3 million in 2020, up from $1.6 million in 2019, a 43.8% increase, driven by Tantaline products and coatings [210]. Operating Losses and Financial Health - Cumulative operating losses from 2018 to 2020 totaled $14.5 million, with significant losses attributed to the Tantaline operations [199]. - Operating loss for 2020 was $7.8 million, compared to a loss of $5.0 million in 2019 [206]. - The company recorded an impairment charge of $3.6 million during the fourth quarter of 2020 [201]. - Net loss for 2020 was $6.1 million or $0.91 per diluted share, compared to a net loss of $6.3 million or $0.96 per diluted share in 2019 [220]. - Cash balances declined from $21.7 million at December 31, 2016, to $7.7 million as of December 31, 2020, due to ongoing losses and investments in the Materials Business [199]. - As of December 31, 2020, cash and cash equivalents were $7.7 million, down from $8.7 million in 2019, with aggregate working capital decreasing to $8.1 million [223]. - Net cash used in operating activities was ($1.1 million), influenced by a net loss adjusted for non-cash items and changes in contract liabilities and accrued expenses [224]. Strategic Decisions and Future Outlook - The company plans to eliminate further investment in the Tantaline product line, potentially avoiding $1.5-$2.0 million in additional costs [201]. - The company forecasts continued losses and negative cash flow for the Tantaline product line, implementing plans to avoid approximately $1.5-$2.0 million in additional costs [238]. - The company appointed Emmanuel Lakios as President and CEO to evaluate business strategy and operations, aiming to reverse declines from previous years [238]. - The company believes its cash and cash equivalents will be sufficient to meet working capital and capital expenditure requirements for the next twelve months [242]. - The company plans to consolidate remaining elements of the Materials Business into the 355 Building, which is expected to accommodate growth needs [239]. Impact of COVID-19 - Aerospace sales, which have historically represented up to 60% of total revenue, were negatively impacted by the COVID-19 crisis [207]. - The ongoing impact of COVID-19 has led to substantial reductions in revenues, resulting in operating losses since Q2 2020, particularly affecting the aerospace sector [242]. - Employee headcount was reduced by 24% to approximately 130 as of December 31, 2020, compared to 172 in 2019, due to COVID-19 mandates [233]. - The company received a Paycheck Protection Program loan of $2.4 million, which may be forgiven based on qualifying expenses [236]. Asset Management - The 555 Building was sold for $24.36 million to increase liquidity and support ongoing operations [204]. - The company decided to sell the 555 Building for $24,360,000 to increase liquidity and support ongoing operations, with a portion of proceeds used to satisfy existing mortgage debt of approximately $9.3 million [240]. Tax and Financial Benefits - The company recorded an income tax benefit of $1.5 million in 2020 due to the CARES Act, compared to an income tax expense of $1.4 million in 2019 [219]. - The company secured a $2.4 million loan under the PPP and recognized a $1.5 million tax receivable from a five-year NOL carryback [242]. Impairment and Risk Management - An impairment charge of $3.6 million was recorded in Q4 2020 due to negative future cash flow projections for the Tantaline product line [249]. - The company has recorded no off-balance sheet arrangements [250]. - The company has historically demonstrated an ability to accurately estimate total revenues and expenses related to long-term contracts, but inherent risks remain [247].