CVD Equipment (CVV) risk factors, FY2024 10-K

Risks related to sales and product development

1. 01Historically, we have maintained a highly concentrated customer base so that changes in ordering patterns, delays or order cancellations could have a material adverse effect on our business and results of operations
2. 02Our lengthy and variable sales cycle makes it difficult to predict our financial results
3. 03If any of our customers cancel or fail to accept a large system order, our financial position and results of operations could be materially and adversely affected
4. 04If demand declines for chemical vapor deposition/infiltration, physical vapor transport, gas control and related equipment, or for carbon nanotube and nanowire deposition systems, our financial position and results of operations could be materially adversely affected
5. 05The demand for our products and the profitability of our products can change significantly from period to period because of numerous factors
6. 06Our business might be adversely affected by our dependence on foreign business
7. 07United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business
8. 08Our reputation and operating performance may be negatively affected if our products are not timely delivered
9. 09We may not be able to keep pace with the rapid change in the technology we use in our products
10. 10We face significant competition, and we are relatively small in size and have fewer resources in comparison with many of our competitors

Risks related to manufacturing and our supply chain

1. 11Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs, while the failure to estimate customer demand accurately could result in excess or obsolete inventory
2. 12Supply chain delays and cost increases that may adversely affect our business, including potential cost increases from the imposition of tariffs
3. 13Inflation has and may continue to adversely affect our business, financial condition, and results of operations
4. 14If our critical suppliers fail to deliver enough quality materials and components in a timely and cost-effective manner, it could negatively affect our business
5. 15Our manufacturing facilities in Central Islip, New York and Saugerties, New York could be affected due to multiple weather risks, including risks to our Central Islip facility from hurricanes and similar phenomena

Risks related to cybersecurity, intellectual property and regulatory compliance

1. 16If we are subject to cyberattacks, we could incur substantial costs and, if such attacks are successful, we could incur significant liabilities, reputational harm, and disruption to our operations
2. 17Our financial position and results of operations may be materially harmed if we are unable to recoup our investment in research and development
3. 18We have made investments in our proprietary technologies. If third parties violate our proprietary rights, or accuse us of infringing upon their proprietary rights, such events could result in a loss of value of some of our intellectual property or costly litigation
4. 19We may be unable to obtain required export licenses for the sale of our products
5. 20Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences
6. 21We are subject to environmental regulations, and our inability or failure to comply with these regulations could adversely affect our business
7. 22Regulations related to conflict minerals will force us to incur additional expenses, may make our supply chains more complex, and may result in damage to our relationships with customers

Risks related to financial and accounting matters

1. 23Cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues
2. 24We might require additional financing
3. 25We may, in the future, identify deficiencies in controls over financial reporting
4. 26We are required to assess our long-lived assets, consisting of our property, plant and equipment, for recoverability and impairment whenever there are indicators or impairment, such as an adverse change in business climate
5. 27Acquisitions can result in an increase in our operating costs, divert management’s attention away from other operational matters and expose us to other associated risks

Risks related to product liability

1. 28We face the risk of product liability claims
2. 29The health and environmental effects of nanotechnology are unknown. There is no scientific agreement on the health effects of nanomaterials in general and carbon nanotubes but some scientists believe that in some cases, nanomaterials may be hazardous to an individual’s health or to the environment

Risk related to our stock

1. 30The price of our common shares is volatile and could decline significantly

General risks

1. 31Our success is highly dependent on the technical, sales, marketing and managerial contributions of key individuals, including our Chief Executive Officer and President, and we may be unable to retain these individuals or recruit others
2. 32We may not be able to hire or retain the number of qualified personnel, particularly engineering personnel, required for our business, which would harm the development and sales of our products and limit our ability to grow