8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 15,2020

Sono-Tek Corporation

(Exact name of registrant as specified in its charter)

Commission File Number: 0-16035

New York	14-1568099
(State of Incorporation)	(I.R.S. Employer ID No.)
2012 Route 9W, Milton, New York	12547
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (845)795-2020

Check appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br><br>Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02: Results of Operations and Financial Condition.

Item 7.01: Regulation FD Disclosure

On July 15, 2020, Sono-Tek Corporation issued a press release regarding its financial results for the quarter ended May 31, 2020 in the form attached as exhibit 99.1.

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01: Financial Statements and Exhibits.

(d) Exhibits

99.1       Press Release dated July 15, 2020.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SONO-TEK CORPORATION

By: /s/ Stephen J. Bagley

Stephen J. Bagley

Chief Financial Officer

July 15, 2020

Exhibit 99.1

FOR IMMEDIATE RELEASE

Sono-Tek Sales Grew 22% to $3.43 millionin First Quarter Fiscal 2021

·	Strong backlog of $3,202,000
·	Achieved net income of $168,000, up 572%
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·	Company expects second quarter revenues to increase over last year
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MILTON, N.Y., July 15, 2020 – Sono-Tek Corporation (OTCQX: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its first quarter of fiscal year 2021, ended May 31, 2020.

“In the first quarter of FY2021, we achieved our forecasted 20% plus revenue growth, along with a significant improvement in the bottom line. More importantly, we continued to invest in upfront resources in Engineering and Application Engineering. Application Engineering especially has become an essential element in our growth strategy of pursuing larger, more complex ultrasonic coating systems. These orders increase our average revenue per order and provide for longer delivery times compared to our more typical orders. We were pleased to be able to quickly shift our customers’ work with our Application Engineers and development labs to a virtual experience.

We experienced a significant sales increase in our Integrated Coating Systems this quarter, and these were shipped to the Electronics/Microelectronics and the Medical segments of our business. Globally, our sales to the Asia Pacific (APAC) region were strong, resulting in 78% of our sales originating from outside the United States and Canada compared to 56% in last year’s first quarter.

Due to both new orders and existing long delivery pre-Covid backlog this quarter, we are expecting second quarter revenues to increase over last year. Looking ahead, we believe that the ongoing strength of our business, combined with continued expense control and our strong balance sheet, position Sono-Tek well for the future”, commented Dr. Christopher L. Coccio, Chairman and CEO.

First Quarter Fiscal 2021 Review

	Three Months Ended May 31,				Change
	2020		2019		$	%
Net Sales	$	3,429,000	$	2,822,000	607,000	22%
Gross Profit		1,561,000		1,305,000	256,000	20%
Gross<br> Margin		45.5%		46.2%
Operating Income	$	184,000	$	5,000	179,000	3580%
Operating<br> Margin		5.4%		0.2%
Net Income	$	168,000	$	25,000	143,000	572%
Net<br> Margin		4.9%		0.9%
Basic Earnings Per Share	$	0.01	$	0.00
Diluted Earnings Per Share	$	0.01	$	0.00
Weighted Average Shares -Basic		15,398,000		15,268,000
Weighted Average Shares - Diluted		15,437,000		15,357,000

Sales growth was driven by demand for Sono-Tek’s customized, highly engineered and high value integrated coating systems primarily for the Electronics / Microelectronics market in the first quarter of fiscal 2021. A significant customer took delivery of a system valued at over $700,000 in this market, and further orders from this customer are expected in the future.

From a product sales perspective, Integrated Coating Systems revenues increased 197%. However, quarterly demand and revenue in any of the Market or Product baskets typically varies due to the size and timing of orders, so the multi-quarter totals at year-end are often more significant in reflecting overall Market and Product trends.

See the accompanying tables at the end of this release for a breakout ofsales by Market and Product.

In the first quarter of fiscal 2021, approximately 78% of sales originated outside of the United States and Canada compared with 56% in the prior year period. Significantly, sales in the APAC region increased 297%, primarily led by several shipments to China, as manufacturing operations came back online following temporary COVID-19 shutdowns.

The change in product mix resulted in a slightly lower gross margin of 45.5%, and combined with tight expense control, resulted in a 572% increase in net income to $168,000 this quarter.

Balance Sheet and Cash Flow Overview

Sono-Tek has built a strong balance sheet with solid levels of cash and cash equivalents compared to a minimal level of debt. Cash and cash equivalents and short-term investments at quarter-end were $8.3 million, up from $7.9 million at the end of fiscal 2020. The increase was the result of the current period's net income and noncash charges and the proceeds of long term note payable partially offset by purchases of equipment and the repayment of long-term debt.

Cash used in operating activities was $396,000 in the first quarter of fiscal 2021 compared with generating $362,000 in the prior fiscal year period. Capital expenditures in the first quarter of fiscal 2021 were $152,000 compared with $129,000 in the prior fiscal year period.

About Sono-Tek

Sono-Tek Corporation is the leading developer and manufacturer of ultrasonic coating systems for applying precise, thin film coatings to protect, strengthen or smooth surfaces on parts and components for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive.

The Company’s solutions are environmentally-friendly, efficient and highly reliable, and enable dramatic reductions in overspray, savings in raw material, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions.

Sono-Tek’s growth strategy is focused on leveraging its innovative technologies, proprietary know-how, unique talent and experience, and global reach to further develop microscopic coating technologies that enable better outcomes for its customers’ products and processes.

For further information, visit www.sono-tek.com.

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Safe Harbor Statement

We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, press releases, and other written and oral statements. These “forward-looking statements” are based on currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events could turn out to be significantly different from our expectations. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; the duration and scope of the COVID-19 pandemic; the extent and duration of the pandemic’s adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; our ability to sell and provide our services and products, including as a result of continued pandemic related travel restrictions, mandatory business closures, and stay-at home or similar orders; any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations resulting from the pandemic; the ability of our customers and suppliers to continue their operations as result of the pandemic, which could result in terminations of contracts, losses of revenue, and further adverse effects to our supply chain; maintenance of increased order backlog, including effects of any COVID-19 related cancellations; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; consummation of order proposals; completion of large orders on schedule and on budget; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems; and realization of quarterly and annual revenues within the forecasted.

We undertake no obligation to update any forward-looking statement.

For more information, contact:

Stephen J. Bagley
Chief Financial Officer
Sono-Tek Corporation
info@sono-tek.com

FINANCIAL TABLES FOLLOW

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SONO-TEK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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		February 29,
		2020
ASSETS
Current Assets:
Cash and cash equivalents	4,381,947	$	3,659,551
Marketable securities	3,908,454		4,219,240
Accounts receivable (less allowance of<br> 71,000)	1,341,617		929,701
Inventories, net	2,512,222		2,381,891
Prepaid expenses<br> and other current assets	146,588		153,698
Total current assets	12,290,828		11,344,081
Land	250,000		250,000
Buildings, net	1,634,226		1,654,061
Equipment, furnishings and building improvements,<br> net	1,279,083		1,212,578
Intangible assets, net	102,145		106,291
Deferred tax asset	176,314		176,314
TOTAL ASSETS	15,732,596	$	14,743,325
LIABILITIES AND STOCKHOLDERS’<br> EQUITY
Current Liabilities:
Accounts payable	1,007,517	$	668,721
Accrued expenses	1,409,167		1,613,409
Customer deposits	1,325,694		1,648,690
Current portion of long-term debt	556,212		169,716
Income taxes payable	112,548		70,621
Total current liabilities	4,411,138		4,171,157
Deferred tax liability	251,761		251,761
Long term debt,<br> less current maturities	1,111,265		538,000
Total liabilities	5,774,164		4,960,918
Stockholders’ Equity
Common stock, .01 par value; 25,000,000<br> shares authorized, 15,422,985 and 15,348,180 shares issued and outstanding, respectively	154,230		153,482
Additional paid-in capital	9,025,755		9,018,406
Accumulated earnings	778,447		610,519
Total stockholders’<br> equity	9,958,432		9,782,407
TOTAL LIABILITIES<br> AND STOCKHOLDERS’ EQUITY	15,732,596	$	14,743,325

All values are in US Dollars.

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended May<br> 31,
	2020			2019
Net Sales	$	3,428,544		$	2,822,428
Cost of Goods Sold		1,867,811			1,517,493
Gross<br> Profit		1,560,733			1,304,935
Operating Expenses
Research and<br> product development costs		411,424			354,173
Marketing and<br> selling expenses		706,717			677,412
General<br> and administrative costs		258,402			268,813
Total<br> Operating Expenses		1,376,543			1,300,398
Operating Income		184,190			4,537
Interest Expense		(8,417	)		(8,947	)
Interest and Dividend Income		22,646			31,171
Other income		11,435			4,755
Income Before Income Taxes		209,854			31,516
Income Tax Expense		41,926			6,303
Net Income	$	167,928		$	25,213
Basic Earnings Per Share	$	0.01		$	0.00
Diluted Earnings Per Share	$	0.01		$	0.00
Weighted Average Shares - Basic		15,397,779			15,268,071
Weighted Average Shares - Diluted		15,436,758			15,357,295

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended May 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	167,928		$	25,213
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		109,878			89,207
Stock based compensation expense		8,097			11,310
Inventory reserve		18,000			14,000
Decrease (Increase) in:
Accounts receivable		(411,916	)		65,538
Inventories		(148,331	)		(734,704	)
Prepaid expenses and other current assets		7,110			289,992
(Decrease) Increase in:
Accounts payable and accrued expenses		134,554			410,079
Customer Deposits		(322,996	)		184,748
Income taxes payable		41,927			6,303
Net Cash (Used In) Provided By Operating Activities		(395,749	)		361,686
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment, furnishings and leasehold improvements		(152,402	)		(129,159	)
Sale (Purchase) of marketable securities		310,786			(1,413,481	)
Net Cash Provided By (Used In) Investing Activities		158,384			(1,542,640	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable - bank		1,001,640			—
Repayment of long-term debt		(41,879	)		(40,283	)
Net Cash Provided By (Used In) Financing Activities		959,761			(40,283	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		722,396			(1,221,237	)
CASH AND CASH EQUIVALENTS
Beginning of period		3,659,551			3,144,123
End of period	$	4,381,947		$	1,922,886
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid	$	7,210		$	8,947
Taxes Paid	$	—		$	—

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATION

ADDITIONAL INFORMATION – MARKET AND PRODUCT SALES

(Unaudited)

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Product Sales:

	Three Months Ended May 31,								Change
	2020		% of total		2019		% of total				%
Fluxing Systems	$	344,000		10%	$	391,000		14%		)		(12%	)
Integrated Coating Systems		1,176,000		34%		396,000		14%				197%
Multi-Axis Coating Systems		913,000		27%		1,073,000		38%		)		(15%	)
OEM Systems		422,000		12%		319,000		11%				32%
Other		574,000		17%		643,000		23%		)		(11%	)
TOTAL	$	3,429,000			$	2,822,000						22%

All values are in US Dollars.

Market Sales:

	Three Months Ended May 31,								Change
	2020		% of total		2019		% of total				%
Electronics/Microelectronics	$	2,240,000		65%	$	1,538,000		55%				46%
Medical		692,000		20%		543,000		19%				27%
Alternative Energy		395,000		12%		386,000		14%				2%
Emerging R&D and Other		37,000		1%		285,000		10%		)		(87%	)
Industrial		65,000		2%		70,000		2%		)		(7%	)
TOTAL	$	3,429,000			$	2,822,000						22%

All values are in US Dollars.

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