CVV

• Strategic Transformation and Divestiture: Completed the sale of the SDC business on April 1, 2026, which significantly strengthened the balance sheet, eliminated long-term debt, and allowed management to refocus the company on its core advanced material process equipment segment. As of quarter end, the company held $23.5 million in cash and cash equivalents with no outstanding long-term debt, creating a strong financial foundation to navigate current market challenges. • Restructuring Completion: Substantially completed the operational restructuring initiative launched in 2025, which was designed to align the company's cost structure with current business activity levels, improve operating efficiency, and increase agility to respond to improving market conditions. Management expects these actions will deliver material reductions to fixed operating costs moving forward. • Current Operating Performance: Customer order levels remain negatively impacted by broad macroeconomic and geopolitical uncertainty. Q2 2026 orders totaled $1.2 million, with ending backlog of $3.9 million as of June 30, 2026. • Capital Allocation Strategy: Management remains committed to a disciplined approach to capital allocation and expense control, with a core focus on generating long-term shareholder value.

CBD Equipment has not issued specific quantitative financial guidance for future periods, consistent with the company's historical practice of not providing forecasts given the small size and project-based nature of its business. No upward, downward, or maintained quantitative guidance was provided during this call.

Following the completed divestiture of the SDC business on April 1, 2026, SDC results are classified as discontinued operations, and CBD Equipment now operates as a single reportable segment focused on advanced material processing equipment and related technologies. For continuing operations in Q2 2026: total revenue was $2 million, a 41% decrease from $3.4 million in Q2 2025. Gross profit was $329,000 with a gross margin of 16.8%, compared to $481,000 gross profit and 14.1% gross margin in the prior year quarter. Operating loss from continuing operations was $1.6 million, and net loss from continuing operations was $1.4 million ($0.20 per basic/diluted share), compared to a $1.3 million net loss ($0.19 per basic/diluted share) in Q2 2025. Discontinued operations generated net income of $13.9 million from the SDC divestiture (net of transaction and tax expenses), bringing total Q2 2026 net income to $12.6 million ($1.81 per basic/diluted share), versus a $1.1 million net loss in Q2 2025.

• Broader macroeconomic and geopolitical uncertainty continues to suppress customer order activity across the company's target markets. • Following quarter end, the customer associated with a $0.8 million Q2 2026 system order filed for prepackaged Chapter 11 bankruptcy. While proposed plans indicate unsecured trade creditors are expected to be unimpaired, the company is still evaluating the potential negative impact to this order, its backlog, financial results, financial position, and cash flows. • Delays in customer funding caused by prior U.S. government inefficiencies and shutdowns have pushed back multiple prospective opportunities, requiring re-quoting and resubmission of funding requests that extend the sales cycle. • The market for silicon carbide wafers served by the company's PVT technology is currently saturated by incumbent Chinese suppliers, limiting near-term commercial opportunities for this product line.

Q: With major aerospace engine OEMs investing heavily in CMC component capacity, what is your outlook for the timing and size of potential follow-on aerospace orders as production ramps up? / A: Aerospace production of gas turbine engines using CMC materials has increased, and CBD Equipment currently has previously ordered equipment in the installation and commissioning phase for its aerospace customers. The company has already seen growth in high-margin consumables and spare parts revenue from the aerospace segment, and expects this trend to continue as customers increase utilization of installed CBD equipment. (208 characters)

Q: Has the published research from the Stony Brook University PVT collaboration translated to broader commercial engagement or new pipeline opportunities? / A: The PVT technology produces silicon carbide wafers for a market that is currently saturated by existing suppliers. The company continues to characterize its PVT equipment and acknowledges long-term potential, but has no new commercial updates to report at this time. (176 characters)

Q: What macroeconomic conditions need to shift for order flow to pick up at CBD Equipment? / A: First, increased federal funding for university research is needed, as university projects have historically seeded future production system opportunities. Second, lingering delays from prior government shutdowns have pushed back customer funding, requiring opportunity rework that extends the sales cycle. Early, unquantifiable demand is emerging in the defense segment, while aerospace new products still require installation and customer adoption before future orders can be expected. The PVT silicon carbide market remains saturated, limiting near-term growth there. (362 characters)

Q: Are you working with an external investment bank to explore new strategic initiatives? / A: Management has no substantive strategic updates to disclose at this time. The company will inform all investors if and when new developments progress that require public disclosure. (106 characters)