CVF Technologies 10QSB Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

CVF TECHNOLOGIES CORPORATION

(Exact name of small business issuer as specified in its charter)

NEVADA	0-29266	87-0429335
(State or other jurisdiction	(Commission File	(I.R.S. Employer
of incorporation or organization)	Number)	Identification No.)

8604 Main Street, Suite 1
WILLIAMSVILLE, NEW YORK 14221
(716) 565-4711
(Address, including zip code, and telephone number,
including area code, of issuer’s principal executive offices)

     Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

     As of October 31, 2007, there were 12,637,735 shares of common stock, $0.001 par value per share, of the issuer outstanding.

     Transitional Small Business Disclosure Format (check one): Yeso Noþ

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
	Item 3. Controls and Procedures
PART II — OTHER INFORMATION
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 5. Other Information
	Item 6. Exhibits
SIGNATURES
EXHIBIT INDEX
EX-11
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CVF TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	(Expressed in U.S. Currency)
	September 30,				December 31,
	2007				2006
	(unaudited)				(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	548,213			$	1,164,736
Restricted cash		633,664				1,167,954
Trade receivables		97,757				401,714
Inventory		79,879				62,126
Prepaid expenses and other		18,947				37,148
TOTAL CURRENT ASSETS		1,378,460				2,833,678
Property and equipment, net of accumulated depreciation		14,576				12,167
Loans receivable		142,251				142,251
Equity investment & notes receivable in Biorem (see Note 4)		—				487,546
Holdings available for sale, at market		1,796				18,628
Security Deposit, long-term		1,671				1,426
Note receivable		476,138				406,461
TOTAL ASSETS	$	2,014,892			$	3,902,157
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payables and accrued liabilities	$	1,062,693			$	2,322,857
IRS Audit Settlement—Tax		515,030				—
IRS Audit Settlement-Interest		331,273				—
TOTAL CURRENT LIABILITIES		1,908,996				2,322,857
LONG-TERM LIABILITIES:
Deferred income taxes		102,466				87,195
Minority interest		902,115				832,111
Pension obligation		664,725				588,540
TOTAL LONG-TERM LIABILITIES		1,669,306				1,507,846
Redeemable Series A preferred stock, $0.001 par value, redeemable at $18.25 per share, authorized 500,000 shares, issued and outstanding 1,592 shares		29,054				29,054
		3,607,356				3,859,757
STOCKHOLDERS’ (DEFICIT) EQUITY:				��
Common stock, $0.001 par value, authorized 50,000,000 shares, 14,302,096 issued and in treasury 1,664,361		15,962				15,962
Warrants		111,094				111,094
Additional paid in capital		29,806,212				29,643,702
Treasury stock		(3,208,392	)			(3,208,392	)
Accumulated other comprehensive loss		(342,762	)			(271,606	)
Accumulated deficit		(27,974,578	)			(26,248,360	)
TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY		(1,592,464	)			42,400
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	$	2,014,892			$	3,902,157

See notes to consolidated financial statements

CVF TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	(Expressed in U.S. Currency)
	Three months ended September 30,						Nine months ended September 30,
	2007			2006			2007			2006
SALES	$	222,331		$	802,975		$	1,539,913		$	1,003,295
Royalty Income		15,485			—			21,393			8,100
Cost of sales		177,463			636,142			1,190,983			764,349
GROSS MARGIN		60,353			166,833			370,323			247,046
EXPENSES:
Selling, general and administrative		527,701			537,742			1,625,012			1,649,001
TOTAL EXPENSES		527,701			537,742			1,625,012			1,649,001
(Loss) from continuing operations before under noted items		(467,348	)		(370,909	)		(1,254,689	)		(1,401,955	)
OTHER (EXPENSES) INCOME
Interest income, net		13,876			26,743			31,523			106,924
(Loss) from equity investees		(314,438	)		(76,054	)		(555,657	)		(266,661	)
Other (expense), net		(50,208	)		(216	)		(61,004	)		(145,133	)
TOTAL OTHER (EXPENSE)		(350,770	)		(49,527	)		(585,138	)		(304,870	)
(Loss) before income taxes and minority interest		(818,118	)		(420,436	)		(1,839,827	)		(1,706,825	)
(Recovery of) Income taxes		11,654			10,951			(120,402	)		13,283
(Loss) before minority interest		(829,772	)		(431,387	)		(1,719,425	)		(1,720,108	)
Minority interest in loss		19,731			11,271			65,407			71,604
NET (LOSS)	$	(810,041	)	$	(420,116	)	$	(1,654,018	)	$	(1,648,504	)
BASIC (LOSS) PER SHARE	$	(0.06	)	$	(0.03	)	$	(0.13	)	$	(0.13	)
DILUTED (LOSS) PER SHARE	$	(0.06	)	$	(0.03	)	$	(0.13	)	$	(0.13	)
WEIGHTED SHARES USED IN COMPUTATION — BASIC		12,637,735			12,671,613			12,637,735			13,007,012
WEIGHTED SHARES USED IN COMPUTATION — DILUTED		12,637,735			12,671,613			12,637,735			13,007,012

See notes to consolidated financial statements

CVF TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	(Expressed in U.S. Currency)
	Nine Months Ended September 30,
	2007			2006
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) from continuing operations	$	(1,654,018	)	$	(1,648,504	)
Adjustments to reconcile net loss from operating activities:
Depreciation and amortization		3,269			2,077
Equity based compensation		19,800			—
Minority interest in losses of subsidiaries		(65,407	)		(71,604	)
Pension expense		76,185			4,151
Deferred income tax		15,271			2,628
Stock option compensation		393			(7,000	)
Loss from equity investees		555,657			266,661
Issuance of restricted stock		—			107,900
Changes in non-cash working capital items
Decrease (Increase) in trade receivables		303,957			(579,634	)
(Increase) in loans receivable		—			(16,105	)
(Increase) in inventory		(17,753	)		(40,130	)
Decrease (Increase) in prepaid expenses and other		18,201			(58,149	)
Increase (Decrease) in trade payables and accrued liabilities		(398,590	)		178,684
		510,983			(210,521	)
CASH (USED IN) OPERATING ACTIVITIES		(1,143,035	)		(1,859,025	)
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Proceeds from sale of holdings		19,877			—
CASH PROVIDED BY INVESTING ACTIVITIES		19,877			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Series A preferred shares		—			(34,401	)
Redemption of Series C preferred shares		—			(1,121,667	)
Purchase of treasury shares		—			(457,418	)
Repayment of debt		—			(25,000	)
Purchase of public company shares		—			(60,369	)
CASH (USED) IN FINANCING ACTIVITIES		—			(1,698,855	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(27,655	)		74,132
NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,150,813	)		(3,483,748	)
CASH AND CASH EQUIVALENTS — beginning of period		2,332,690			6,517,893
CASH AND CASH EQUIVALENTS — end of period	$	1,181,877		$	3,034,145

See notes to consolidated financial statements

CVF TECHNOLOGIES CORPORATION AND SUBSIDIARIES

STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	(Expressed in U.S. Currency)
	Three months ended September 30,						Nine months ended September 30,
	2007			2006			2007			2006
Net (loss)	$	(810,041	)	$	(420,116	)	$	(1,654,018	)	$	(1,648,504	)
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(125,362	)		6			(69,259	)		76,238
Unrealized holding gains:
Unrealized holding (losses) gain arising during period (see note below)		2,864			(3,023	)		(1,897	)		(1,944	)
Total other comprehensive income		(122,498	)		(3,017	)		(71,156	)		74,294
Comprehensive (loss) during period	$	(932,539	)	$	(423,133	)	$	(1,725,174	)	$	(1,574,210	)

Note: Unrealized holding (losses) gain are net of tax of $1,909 and ($2,015) for the three months ended September 30, 2007 and 2006, respectively, and ($1,265) and ($1,296) for the nine months ended September 30, 2007 and 2006, respectively.

See notes to consolidated financial statements

CVF TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)

(Dollars Expressed in U.S. Currency)

1.BASIS OF PRESENTATION

     The accompanying financial statements are unaudited, but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position and the results of operations for the interim periods presented. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not necessarily indicative of the results attainable for a full fiscal year.

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

     Certain of the comparative figures have been reclassified to conform with the presentation adopted in the current period. The Canadian dollar is the functional currency used by the Company, whereas the reporting currency is the U.S. dollar.

2.ACCOUNTING POLICIES

Stock Based Compensation Plans

     The Company previously accounted for stock-based compensation issued to its employees under Accounting Principles Board Opinion 25, (APB 25). Accordingly, no compensation costs were recorded for stock options issued to employees, which was measured as the excess, if any, of the fair value of its common stock at the date of grant over the exercise price of the options.

     For purposes of the following disclosures during the transition period of the adoption of SFAS 123(R), the weighted average fair value of options has been estimated on the date of grant using the Black-Scholes options pricing model. The Company issued warrants to an officer of one of its subsidiaries in April 2007. Compensation costs of $19,800 were recorded for these warrants for the nine months ended September 30, 2007. There were no options or warrants issued during the nine month period ended September 30, 2006.

     On April 6, 2006 the Board of Directors of the Company approved the Corporation’s Management Incentive Program. In connection with the program, CVF restricted common stock was granted to officers and employees of the Company totaling 1,660,000 restricted common shares. These shares will vest at the end of each year over a three year period beginning April 2007 with vesting accelerated on a change of control. The value of these shares was recorded at $0.39 per share which was the closing market price on that date. The expense is being recorded over the period that the shares vest (36 months). During the first nine months of 2007 and 2006 an expense of $157,000 and $107,900 was recorded, respectively.

3.SUBSIDIARY ANNUAL SHAREHOLDERS MEETING

     G.P. Royalty Distribution Corporation (formerly Gemprint Corporation) conducted its annual shareholders meeting on July 10, 2006 at which time the separate audited 2005 financial statements were approved. Since no additional liabilities were reported in the audited financial statements, excess restricted cash above the sale agreement restriction of a $1 million net worth provision was reclassified to be unrestricted. In November 2006 CVF received $860,306 from Gemprint as a shareholder distribution of capital. Future distribution of the unrestricted cash from the Gemprint asset sale will be decided upon by the board of directors at future meetings.

4.SUBSIDIARY BIOREM GOES PUBLIC

     In January 2005 Biorem completed its going public transactions and began trading on the Toronto Venture Exchange effective Friday, January 21, 2005 under the symbol BRM. CVF’s ownership position in Biorem as of September 30, 2007 is approximately 2.8 million             shares representing approximately 23.6% of the outstanding shares of Biorem and has a market value as of October 31, 2007 of US $4.5 million. Since CVF no longer owns more than 50% (effective November 24, 2004), CVF records the results of Biorem on the equity basis of accounting.

5.EQUITY AND DEBT INVESTMENT IN XYLODYNE CORPORATION

     In April 2006 the Company invested in a newly formed Ontario corporation, Xylodyne Corporation. The Company advanced a total of $15,000 cdn in March 2006 and the remaining $310,000 cdn in April 2006 of which $12,000 was invested in common stock and the remaining $313,000 cdn in an interest bearing debenture. CVF owns 40% of the common stock of Xylodyne Corporation. However since the Company is the only anticipated investor in Xylodyne Corporation, its results are consolidated into the results of the Company. In addition the Company has agreed to guarantee up to $120,000 of certain vendor payables. Xylodyne is in the business of distributing electrical vehicles, parts and developing

proprietary technology relating to electrical vehicles. The business commenced operations in April 2006.

6.INCOME (LOSS) PER SHARE

     Basic income per share amounts are computed by dividing net income (loss) from continuing operations available to common stockholders from continuing operation, and net income available to common stockholders by the weighted average number of common shares outstanding during the period. The net income from continuing operations and net income available to common stockholders consists of net income from continuing operations and net income amounts reduced by the dividends on the Company’s Series A preferred stock. Diluted income per share reflects the per share amount that would have resulted if diluted potential common stock had been converted to common stock, as prescribed by SFAS 128. The Company has presented dilutive income per share in those periods where there was net income and therefore reduced income per share and not presented dilutive loss per share information when the dilution would reduce the loss per share.

7.	INVENTORY
	Inventory consists of the following:

	September 30, 2007		December 31, 2006
Finished goods	$	79,879	$	62,126

8.INVESTMENTS

     The following table provides certain summarized unaudited financial information related to the Company’s equity basis holdings:

	Nine Months Ended September 30,
	2007			2006
Net Sales	$	5,982,455		$	7,885,807
Gross profit on sales		1,971,389			2,293,760
Net (loss)	$	(2,827,107	)	$	(1,157,225	)

9.CONCENTRATION OF CREDIT RISK

     For the nine months ended September 30, 2007, the Company’s subsidiary, Xylodyne Corporation, had a customer which accounted for $770,799 or 50.1% of consolidated sales as compared to $496,317 or 61.8% of the nine months ended September 30, 2006 consolidated sales. No other customer accounted for more than 10% of the Company’s sales in the first nine months of either 2007 or 2006. The Company’s accounts receivable from this customer at September 30, 2007 and September 30, 2006 amounted to $8,493 and $361,964, respectively.

10.DEPENDENCY ON SUPPLIER

     The Company’s subsidiary, Xylodyne Corporation, had one supplier that accounted for $657,952 or 55.2% of consolidated cost of sales as compared to $419,723 or 54.9% of the nine months ended September 30, 2007 and nine months ended September 30, 2006 respectively consolidated cost of sales. The Company’s accounts payable to this supplier at September 30, 2007 and September 30, 2006 amounted to $103,931 and $196,073, respectively.

11.SETTLEMENT WITH THE INTERNAL REVENUE SERVICE

     As the result of an audit, in 2003 the IRS proposed adjustments to the Company’s income tax returns for 1997, 2000, and 2001, and asserted a tax deficiency of $2,969,123, plus interest. More specifically, the IRS proposed disallowances of (1) bad debt deductions in 2000 and 2001 in the amounts of $1,221,494 and $1,232,257, respectively; (2) worthless stock loss in the amount of $5,806,496 in 2000; (3) worthless stock loss in the amount of $2,141,566 in 2000; and (4) capital loss carryback of $447,452 from the taxable year 2001 to 1997. The administrative appeals division of the IRS and the Company agreed to settle the dispute. Under the settlement, the IRS would concede (1) and (3) and the Company would concede (4). With respect to (2), the worthless stock loss in 2000, the IRS and the Company would agree the loss would be allowed, in part, in 2000 and, in part, in 2001 ($3,870,999 in 2000; $1,935,490 in 2001). Because that loss was carried back to 1997, the settlement would result in a total tax deficiency of $515,030, plus interest, for the tax year 1997 and no deficiencies for 2000 and 2001. The part of the loss disallowed for carryback from 2000 to 1997 would be available as a carryforward for years after 2001. On July 9, 2007 the Company received a letter from the IRS confirming final approval of the settlement. The Company is challenging the interest assessment from the IRS.

12.  SERIES C PREFERRED STOCK REDEMPTION

     On February 27, 2006 the Company redeemed in cash all of its outstanding Series C 6% Convertible Preferred Stock. The redemption price was $1.0 million (US), plus accrued and unpaid interest of $121,666 through the redemption date, February 27, 2006. The Company issued the Series C Preferred Stock together with common shares and warrants in February 2004 in exchange for its then outstanding Series B 6% convertible Preferred Stock.

     Also the former Series C holder received a three-year warrant to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.35 per share. This warrant expired unexercised on February 27, 2007.

13.  REDEEMABLE SERIES A PREFERRED STOCK REDEMPTION

     On July 14, 2006 the Company redeemed in cash 1,885 shares of Redeemable Series A Preferred Stock. The redemption price was $34,401 (US), plus accrued and unpaid interest of $15,136 through the redemption date, July 14, 2006.

14.  STOCK BUYBACK PLAN

     As announced on December 30, 2005 the Company’s Board of Directors approved up to a maximum $500,000 stock buyback program. The program allows the Company to make up to $500,000 of stock repurchases. As of October 31, 2007, the Company has purchased 1,182,661 shares under this repurchase program for a total of $461,218.

15.  ISSUANCE OF RESTRICTED CVF COMMON SHARES

     On April 6, 2006 the Board of Directors of the Company approved the Corporation’s Management Incentive Program. In connection with the program, restricted stock was granted to officers and employees of the Company totaling 1,660,000 restricted common shares. These shares will vest every 12 months over a three year period beginning April 2007 with vesting accelerated on a change of control. The value of these shares was recorded at $0.39 per share which was the closing market price on that date. The expense is being recorded over the period that the shares vest (36 months). During the first nine months of 2007 and 2006, an expense of $157,000 and $107,900 was recorded, respectively.

16.  INTERIM FINANCIAL STATEMENT DISCLOSURES

     Certain information and footnote disclosures normally included in annual financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying unaudited interim financial statements. Reference is made to the Company’s audited financial statements for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on April 13, 2007.

17.  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Company has implemented new accounting standards as follows:

FIN 48 – Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109, Accounting for Income Taxes. The Statement clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

FASB 157 – Fair Value Measures

In September 2006, the FASB issued FASB Statement No. 157. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is a relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practices. This Statement is effective for financial statements for fiscal years beginning after November 15, 2007. Earlier application is permitted provided that the reporting entity has not yet issued financial statements for that fiscal year. Management believes this

Statement will have significant positive impact on the financial statements of the Company once adopted.

FASB 159 — Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115” (SFAS 159). This Statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years beginning after November 15, 2007, which for us is the first quarter of fiscal 2008. We do not believe that the adoption of SFAS 159 will have a material impact on our results of operations or financial condition.

18.  SEGMENTED INFORMATION

     The Company currently has four reportable segments (three in 2006): identification systems, natural horticultural, electric vehicles & parts and general corporate. The identification systems segment consists of one company whose assets were sold in December 2005 for consideration which included a five year royalty stream. The natural horticultural segment consists of one company that develops, manufactures and markets natural fertilizers, insecticides and herbicides. In 2002, as a result of growth in the natural horticultural segment, as a percentage of consolidated sales, the Company reallocated business units to business segments to more appropriately group units for chief operating decision purposes and reporting in accordance with SFAS 131. This change was applied on a retroactive basis. The electric vehicles & parts segment (which commenced operations in April 2006) consists of one company that is in the business of developing and distributing electric vehicles. The Company’s general corporate segment includes one company which provides funding and management advisory services to the holdings. This segment’s profits include interest income and gains on sales of its various holdings.

     The Company evaluates performance and allocates resources based on continuing profit or loss from operations before income taxes, depreciation and research and development. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

     There are no intersegment sales, transfers, or profit or loss.

     Industry Segments for the Nine Months Ended September 30, 2007 and 2006

							Electric
	Identification			Natural			Vehicles			Corporate
	Systems			Horticultural			& Parts			Administration			Total
2007	$			$			$			$			$
Sales		—			169,547			1,391,759			—			1,561,306
Income (Loss) from continuing operations before other income		(49,759	)		(242,944	)		(34,006	)		(927,980	)		(1,254,689	)
Other income (expense)*		(137,118	)		241,286			29,100			(718,406	)		(585,138	)
Income (Loss) from continuing operations before income taxes and minority interest		(186,877	)		(1,658	)		(4,906	)		(1,646,386	)		(1,839,827	)
*Included in Other (expense) for Identification Systems is foreign exchange loss of $166,028
2006
Sales		—			156,195			855,200			—			1,011,395
(Loss) from continuing operations before other income (expense)		(119,213	)		(122,760	)		(44,926	)		(1,115,056	)		(1,401,955	)
Other income (expense)		(39,897	)		44,041			(4,180	)		(304,834	)		(304,870	)
(Loss) from continuing operations before income taxes		(159,110	)		(78,719	)		(49,106	)		(1,419,890	)		(1,706,825	)

19.  CONTINGENCIES

     A subsidiary of the Company, Xylodyne is in the process of obtaining product liability insurance to cover the products that it sells. In the interim it is uninsured for any potential lawsuits by individuals and/or entities that have purchased products from Xylodyne. The Company cannot make an estimate of the cost of this potential risk and therefore cannot account for any loss until an amount becomes determinable.

20.  SUBSEQUENT EVENTS

     On November 14, 2007, the board of directors of the Company approved the award of an aggregate of 652,131 shares of restricted stock to officers, employees and other service providers to the company. These restricted shares were awarded in exchange for the cancellation by the recipients of an aggregate of 652,131 outstanding CVF options and warrants. The restricted shares vest equally over a period of three years beginning one year from the award date and vesting accelerates upon a change of control of CVF.

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW:

CVF Technologies Corporation (www.cvfcorp.com) (“CVF” or the “Company”) was originally founded as a limited partnership in 1989 and was converted into a corporation in 1995. CVF is involved in the business of investing in and managing early stage companies primarily engaged in the environmental technology sector. CVF’s mandate is to acquire significant holdings in new and emerging technology companies and then to assist them in their management, and through them to engage in their respective businesses. CVF’s current holdings include investments made in its investee companies during the period from 1990 to the present.

CVF realizes revenues and profits through consolidation of the operating results of its investee companies. CVF also endeavors to generate gains through the eventual sale of all or a portion of its holdings in these companies at such time as management determines that CVF’s funds can be better deployed in other industries or companies. CVF’s goal is to maximize the value of its holdings in its investee companies for the Company’s shareholders. One important way that CVF accomplishes this is by taking the investee company public at the appropriate time or selling the investee company. This has been done with CVF’s former investee companies Certicom Corporation and TurboSonic Technologies, Inc. both of which went public. Also, in January 2005 Biorem Inc. (formerly Biorem Technologies Inc.) completed its going public transaction. Most recently G.P. Royalty Distribution Corporation (formerly Gemprint Corporation), sold substantially all its assets in December 2005 for $7.5 million, while retaining a 5 year royalty stream of $1 per Gemprint in excess of 100,000 Gemprints per year beginning December 22, 2005.

After CVF’s initial investment, an investee company often requires additional capital to meet its business plan. Consequently, the Company actively assists its investee companies in obtaining additional capital which is usually sourced through CVF’s own resources or via other participants. CVF’s ability to continue to provide additional investment to its investees is subject to the limitations of its own financial resources. CVF’s resources are currently more liquid as a result of the Gemprint sale and Biorem having become a public company. Therefore CVF expects to have more flexibility in assisting its investee companies.

On a stand-alone basis, CVF has no sales from operations. Sales and gross profit from sales reflect the operations of CVF’s consolidated subsidiaries only. The consolidated subsidiaries in the 2007 period are G.P. Royalty Distribution Corporation (“Gemprint”), Ecoval Corporation (“Ecoval”) and Xylodyne Corporation (“Xylodyne”). CVF records profit and loss using the equity method for companies in which CVF holds 20% to 50% ownership. These companies are Biorem and Petrozyme Technologies Inc. (“Petrozyme). The results of companies in which CVF has less than 20% ownership are not included in the Consolidated Statement of Operations.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2006:

Consolidated sales of CVF subsidiaries for the three months ended September 30, 2007 amounted to $222,331, representing a decrease of $580,644 compared to sales of $802,975 for the same period in 2006 due to Xylodyne sales decrease of $569,533 and Ecoval sales decrease of $11,111.

CVF’s gross margin of $60,353 for the third quarter of 2007 represents a decrease of $106,481 from the same period last year. This decrease is due to the sales decrease from Xylodyne. Overall gross margin of CVF as a percentage of sales increased to 27.1% for the third quarter of 2007 from 20.8% for the third quarter of 2006 due to an increase at Ecoval of $11,400 due to royalty income.

Selling, general and administrative expenses on a consolidated basis for the three months ended September 30, 2007 amounted to $527,701, representing a decrease of $10,041 (2%) compared to expenses of $537,742 for the same period in 2006. This decrease is due to lower expenses at the parent and Gemprint, offset by higher expenses at Xylodyne and Ecoval. The increase at Ecoval of $49,495 (67%) is due to

ramping up the sales and marketing activities. The decrease at the parent level of $49,208 (14%) is due to lower salary expense, travel expense, insurance expense and accounting expense. The decrease at Gemprint ($11,101 or 66% lower) is due to that company selling its assets in December 2005 and no longer operating a business.

Net interest income was $13,876 for the third quarter of 2007 compared to income of $26,743 for the third quarter of 2006. This decrease in income is due to lower interest bearing cash balances in the third quarter 2007 compared to the same period in 2006.

Loss from equity holdings (entities in which CVF has a 50% or less ownership) was a loss of $314,438 in the 2007 third quarter compared to a loss of $76,054 in the 2006 period. This represents CVF’s share of Biorem’s loss in the 2007 period and $23,463 for investment into Petrozyme compared to CVF’s share of Biorem’s loss in the 2006 period.

Other expense was $50,208 in the third quarter 2007 compared to an expense of $216 in the 2006 period. This was due to foreign exchange as the US dollar weakened during the 2007 and 2006 periods.

Income tax expense amounted to $11,654 in the third quarter 2007 compared to expense of $10,951 in the third quarter 2006.

Minority interest – included in the 2007 third quarter is $19,731 of income relating to the minority shareholders of Gemprint’s share of the 2007 third quarter’s loss compared to $11,271 in the 2006 third quarter.

CVF, on a consolidated basis, recorded a net loss of $810,041 ($0.06 loss per share) for the three months ended September 30, 2007 compared to a net loss of $420,116 ($0.03 loss per share) in the 2006 period.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2006:

Consolidated sales of CVF subsidiaries for the nine months ended September 30, 2007 amounted to $1,539,913, representing an increase of $536,618 compared to sales of $1,003,295 for the same period in 2006 due primarily to the Xylodyne sales increase of $536,559.

CVF’s gross margin of $370,323 for the first nine months of 2007 represents an increase of $123,277 from the same period last year. This increase is due to the sales from Xylodyne and improved gross margin at Ecoval. Overall gross margin of CVF as a percentage of sales decreased slightly to 24.0% for the first nine months of 2007 from 24.6% for the first nine months of 2006.

Selling, general and administrative expenses on a consolidated basis for the nine months ended September 30, 2007 amounted to $1,625,012 representing a decrease of $23,989 (2%) compared to expenses of $1,649,001 for the same period in 2006. This decrease is due to the parent level decrease of $187,077 (17%) due to lower salary expense, travel expense, insurance expense and accounting expense offset by the recording of a vested portion of the restricted CVF stock issued totaling $157,000 in the 2007 period compared to $107,900 in the 2006 period. The decrease at Gemprint ($69,454 or 58% lower) is due to that company selling its assets in December 2005 and no longer operating a business. Expenses at Xylodyne and Ecoval were higher. The expenses at Xylodyne increased by $73,703 (33%) as that company only operated for six months during the 2006 period having started operations in April 2006. The increase at Ecoval of $158,838 (82%) is due to ramping up the sales and marketing activities.

Net interest income was $31,523 for the first nine months of 2007 compared to income of $106,924 for the first nine months of 2006. This decrease in income is due to lower interest bearing cash balances in the first nine months of 2007 compared to the same period in 2006.

Loss from equity holdings (entities in which CVF has a 50% or less ownership) was a loss of $555,657 in the first nine months of 2007 compared to loss of $266,661 in the 2006 period. This represents CVF’s share

of Biorem’s loss in the 2007 period and $30,704 invested into Petrozyme compared to CVF’s share of Biorem’s loss in the 2006 period.

Other expense was $61,004 in the first nine months of 2007 compared to an expense of $145,133 in the 2006 period. This was due to foreign exchange as the US dollar weakened during the 2007 and 2006 periods.

Recovery of income tax amounted to $120,402 in the first nine months of 2007 as the IRS settlement was accepted by the Joint Committee of Congress and therefore the accrual adjusted to the accepted balance resulting in recovery of income taxes. This compared to expense of $13,283 in the 2006 period.

Minority interest – included in the first nine months of 2007 is $65,407 of income relating to the minority shareholders of Gemprint’s share of the 2007 first nine months loss compared to $71,604 in the 2006 period.

CVF, on a consolidated basis, recorded a net loss of $1,654,018 ($0.13 loss per share) for the nine months ended September 30, 2007 compared to a net loss of $1,648,504 ($0.13 loss per share) in the 2006 period.

LIQUIDITY AND CAPITAL RESOURCES:

Stockholders’ (deficit) equity as of September 30, 2007 amounted to a deficit of $1,592,464 compared to equity of $42,400 at December 31, 2006. This net decrease in the equity of $1,634,864 is primarily attributable to the net loss of $1,654,018 which was recognized in the first nine months of 2007.

The current ratio of CVF at September 30, 2007 is .72 to 1, which has decreased from 1.22 to 1 at December 31, 2006 due mainly to the cash used to fund the parent loss of $927,980 in the first nine months of 2007 and advances of $248,000 to Ecoval.

CVF management anticipates that over the next twelve month period CVF should have sufficient cash from various sources to sustain itself. Between cash on hand, value of the Biorem stock that became listed on a public market in January 2005, and the sales of a portion of its holdings in certain investee companies such as the sale of Gemprint in 2005, the Company expects to have enough cash to fund itself and those of its investee companies that are currently not profitable. Additionally, CVF has limited outside debt and a line of credit could be sought.

CVF, on February 27, 2006, redeemed its Series C Preferred Stock as well as paid accrued dividends for total cash payment of $1,121,667. The Series C holder had received a three-year warrant to purchase 100,000 shares of CVF’s common stock at an exercise price of $0.35 per share which expired in February 2007.

As at September 30, 2007, CVF’s cash balance was $1,181,877 (including restricted cash of $633,664) which is a decrease of $1,150,813 compared to December 31, 2006. The primary source of cash for the Company is expected to be from the proceeds of the sale of Gemprint and if necessary some of its holdings in its investee companies, or from CVF issuing additional securities.  In November 2006 CVF received $860,306 from Gemprint as a shareholder distribution of capital. The Company will also continue to assist its investee companies in their efforts to obtain outside financing in order to fund their growth and development of their business plans. Certain of the Company’s financial obligations included in current liabilities related to items that will not be paid in the near term.  The Company will carefully manage its cash payments on such obligations.

As the result of an audit, in 2003 the IRS proposed adjustments to the Company’s income tax returns for 1997, 2000, and 2001, and asserted a tax deficiency of $2,969,123, plus interest. More specifically, the IRS proposed disallowances of (1) bad debt deductions in 2000 and 2001 in the amounts of $1,221,494 and $1,232,257, respectively; (2) worthless stock loss in the amount of $5,806,496 in 2000; (3) worthless stock loss in the amount of $2,141,566 in 2000; and (4) capital loss carryback of $447,452 from the taxable year 2001 to 1997. The administrative appeals division of the IRS and the Company agreed to settle the dispute. Under such settlement, the IRS would concede (1) and (3) and the Company would concede (4). With

respect to (2), the worthless stock loss in 2000, the IRS and the Company would agree the loss would be allowed, in part, in 2000 and, in part, in 2001 ($3,870,999 in 2000; $1,935,490 in 2001). Because that loss was carried back to 1997, the settlement would result in a total tax deficiency of $515,030, plus interest, for the tax year 1997 and no deficiencies for 2000 and 2001. The part of the loss disallowed for carryback from 2000 to 1997 would be available as a carryforward for years after 2001. On July 9, 2007 the Company received a letter from the IRS confirming final approval of the settlement. The Company is challenging the interest assessment from the IRS.

As announced on December 30, 2005, CVF’s Board of Directors approved a $500,000 stock buyback program. The program allows the Company to make up to $500,000 of stock repurchases. As of October 31, 2007, the Company has purchased 1,182,661 shares for $461,218 under this repurchase program.

CRITICAL ACCOUNTING POLICIES:

An understanding of CVF’s accounting policies is necessary for a complete analysis of our results, financial position, liquidity and trends. We focus your attention on the following accounting policies of the Company:

Revenue recognition — Revenue from the sale of manufactured products is recognized when the goods are shipped and accepted by the customer. The Company recognizes revenue on long-term contracts on the percentage of completion basis, based on costs incurred relative to the estimated total contract costs. Losses on such contracts are accrued when the estimate of total costs indicates that a loss will be realized. Contract billings in excess of costs and accrued profit margins are included as deferred revenue, which is part of current liabilities. Service revenue is recognized when the services are performed.

Inventory — Finished goods are stated at the lower of cost or market using the first-in, first-out method of costing. Raw materials are stated at the lower of cost or replacement value, using the first-in, first-out method.

Contingencies -

A subsidiary of the Company, Xylodyne, is in the process of obtaining product liability insurance to cover the products that it sells. In the interim it is uninsured for any potential lawsuits by individuals and/or entities that have purchased products from Xylodyne. The Company cannot make an estimate of the cost of this potential risk and therefore cannot account for any loss until an amount becomes determinable.

Stock Options/Warrants/Restricted Stock Grants –

During the first nine months of 2007, the Company granted nil [nil in 2006] stock options to officers, employees and directors.

The Company issued warrants to an officer of one of its subsidiaries in April 2007. Compensation costs of $19,800 was recorded for these warrants for the nine months ended September 30, 2007.

On April 6, 2006 the Board of Directors of the Company approved the Corporation’s Management Incentive Program. In connection with the program, CVF restricted common stock was granted to officers and employees of the Company totaling 1,660,000 restricted common shares. These shares will vest at the end of each year over a three year period beginning April 2007 with vesting accelerated on a change of control. The value of these shares was recorded at $0.39 per share which was the closing market price on that date. The expense is being recorded over the period that the shares vest (36 months). During the first nine months of 2007 and 2006 an expense of $157,000 and $107,900 was recorded respectively.

FINANCIAL CONSIDERATIONS:

The business of CVF is subject to risks described elsewhere in this report, and an investor should consider the following:

Early Stage Development Companies: Each of the investees is an early stage development company with a limited relevant operating history upon which an evaluation of its prospects can be made and prone to the risks of all early stage development companies, including those described under “Forward Looking Statements”. As such, there can be no assurance of the future success of any of the investees.

Quarterly Fluctuations: CVF’s financial results have historically been, and will continue to be, subject to quarterly and annual fluctuations due to a variety of factors, primarily resulting from the nature of the technology companies in which it invests. Any shortfall in revenues in a given quarter may impact CVF’s results of operations due to an inability to adjust expenses during the quarter to match the level of revenues for the quarter. There can be no assurance that CVF will report net income in any period in the future, except when it realizes a gain from profitably selling off a portion of its assets, which is CVF’s core business model. While some of the investees have consistently reported losses, CVF has recorded income in certain fiscal periods as it did in 2005 and experienced fluctuations from period to period due to the sale of some of its holdings, other one-time transactions and similar events.

Rapid Technological Change: The markets for CVF’s investee’s products are generally characterized by rapidly changing technology, evolving industry standards, changes in customer needs and frequent new product introductions. The future success of the investees will depend on their ability to enhance current products, develop new products on a timely and cost-effective basis that meet changing customer needs and to respond to emerging industry standards and other technological changes. There can be no assurance that the investees will be successful in developing new products or enhancing their existing products on a timely basis, or that such new products or product enhancements will achieve market acceptance.

FORWARD LOOKING STATEMENTS:

CVF believes that certain statements contained in this Quarterly Report on Form 10-QSB constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to vary materially from the Company’s expected results, performance or achievements. Other factors that may affect CVF’s future
results include:

• general economic and business conditions;

• foreign currency fluctuations, particularly involving the Canadian dollar:

• the Company’s ability to find additional suitable investments and the ability of those investments to generate an acceptable return on invested capital; and

• the uncertainties and risks involved in investing in early-stage development companies which can arise because of the lack of a customer base, lack of name recognition and credibility, the need to locate and retain experienced management and the need to develop and refine the business and its operations, among other reasons.

• the Company’s ability to obtain capital to fund its operations and those of its investees.

The Company will not update any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements.

Item 3. Controls and Procedures

(a) The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief

Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

(b) There has been no significant change in the Company’s internal controls over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Small Business Issuer Purchases of Equity Securities

					Total No. of shares		Maximum Approximate Dollar
	Total Number		Average		purchased as part of		Value of shares that may yet
	of Shares		Price Paid		publicly announced plans		be purchased under publicly
PERIOD	Purchased		per Share		or programs		announced plans or programs
January 2006		84,100	$	0.33		84,100	$	470,543.00
February 2006		49,300	$	0.36		49,300	$	451,889.50
March 2006		38,100	$	0.38		38,100	$	436,875.60
April 2006		879,961	$	0.40		879,961	$	82,733.95
May 2006		89,800	$	0.37		89,800	$	47,940.14
June 2006		4,600	$	0.33		4,600	$	46,445.14
September 2006		16,800	$	0.23		16,800	$	42,581.14
October 2006		4,200	$	0.19		4,200	$	41,783.14
November 2006		15,800	$	0.19		15,800	$	38,781.14
December 2006		-0-		-0-		-0-	$	38,781.14
January 2007		-0-		-0-		-0-	$	38,781.14
February 2007		-0-		-0-		-0-	$	38,781.14
March 2007		-0-		-0-		-0-	$	38,781.14
April 2007		-0-		-0-		-0-	$	38,781.14
May 2007		-0-		-0-		-0-	$	38,781.14
June 2007		-0-		-0-		-0-	$	38,781.14
July 2007		-0-		-0-		-0-	$	38,781.14
August 2007		-0-		-0-		-0-	$	38,781.14
September 2007		-0-		-0-		-0-	$	38,781.14
TOTAL		1,182,661	$	0.38		1,182,661	$	38,781.14

Item 5. Other Information.

     On November 14, 2007, the board of directors of CVF approved the award of an aggregate of 652,131 shares of restricted stock to officers, employees and other service providers to the company. These restricted shares were awarded in exchange for the cancellation by the recipients of an aggregate of 652,131 outstanding CVF options and warrants. The restricted shares vest equally over a period of three years beginning one year from the award date and vesting accelerates upon a change of control of CVF. The executive officers and directors of CVF will receive awards in return for cancellation of options and/or warrants of CVF as follows:

Jeffrey I. Dreben	100,000 shares
Robert B. Nally	0 shares
Robert L. Miller	60,000 shares
Robert H. Glazier	100,000 shares

Item 6. Exhibits

(11)	Statement re computation of per share earnings
(31.1)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Certifications Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

                         In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DATED: November 14, 2007

CVF TECHNOLOGIES CORPORATION
By: Name:	/s/ Jeffrey I. DrebenJeffrey I. Dreben
Title:	Chairman of the Board, President and Chief Executive Officer
By: Name:	/s/ Robert L. MillerRobert L. Miller
Title:	Chief Financial Officer

EXHIBIT INDEX

No.	Description
(11)	Statement re computation of per share earnings.
(31.1)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Certifications Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.