8-K
Sono Tek Corp (SOTK)
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): May 28**, 2021**
Sono-Tek Corporation
(Exact name of registrant as specified in its charter)
Commission File Number: 000-16035
| 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 May 28, 2021, Sono-Tek Corporation issued a press release regarding its financial results for the year ended February 28, 2021 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 May 28, 2021.
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
May 28, 2021
Exhibit 99.1
FOR IMMEDIATE RELEASE
Sono-Tek Announces Sales of $14.8M for Fiscal Year 2021,Strong Yearend Backlog and Sales Guidance for Fiscal Year 2022
Backlog Increased 9.5% Year-over-Year
MILTON, N.Y., May 28, 2021 – Sono-Tek Corporation (OTCQX: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its fourth quarter and fiscal year 2021, ended February 28, 2021 (“fiscal 2021”).
Fiscal 2021 Highlights
| · | Backlog on February 28, 2021 was up 9.5% compared to the backlog on February 29, 2020, a<br>result of our ongoing strategy for product line expansion with further customization and automation, which delivers increased value to<br>our customers, and a higher average selling price to Sono-Tek. |
|---|---|
| · | During the unprecedented year of the COVID-19 pandemic, net sales for fiscal 2021 dipped<br>only slightly to $14,833,000, down 3%, compared with $15,355,000 for fiscal 2020. This was achieved despite numerous COVID-related delays<br>and cancelations from customers, that are estimated at 20% or more of lost potential business. These strong results are due to the continuing<br>success of our ongoing growth initiatives. |
| --- | --- |
| · | Gross profit margin for fiscal 2021 remained strong at 47.2% compared to 47.6% in fiscal<br>2020. |
| --- | --- |
| · | Cash and equivalents increased to $8.6 million from $7.9 million last year, the highest level<br>ever. During the year we paid off the mortgage on our industrial park |
| --- | --- |
| · | FY2022 sales are projected to exceed the pre-COVID level of $15.5 million reported in FY<br>2020, which was the highest ever sales level in Company history. |
| --- | --- |
Dr. Christopher L. Coccio, Chairman and CEO of Sono-Tek, commented, “In March 2020, the beginning of fiscal 2021, we prepared for the impact of COVID-19 and for potential delays and cancelations of orders due to lock downs and pandemic safety concerns. However, looking back on the completed FY2021, we can now say that it was a year of unexpected success in many areas of our business. Sono-Tek not only weathered the COVID-19 storm, but its impact also uncovered opportunities for us to conduct our business with increased efficiency and effectiveness, while at the same time expanding our customer base.”
“Throughout the year, our flexibility to quickly change focus geographically and by market segment, allowed us to capture orders in places where COVID-19 conditions were stable, and shift away from areas that saw temporary declines due to the pandemic. And, as safety concerns shifted, the strong digital migration that we’ve made over the past several years allowed us to quickly transition significant amounts of work to employees from their homes. In many cases we found increased efficiencies were achieved with new digital connections being made in areas that had previously required in person interaction.”
“As the world recovers from the pandemic, all indications point to continued strong demand for our products and we project our highest sales year ever in fiscal year 2022,” concluded Dr. Coccio.
Fiscal 2021 Review (Results compared withfiscal 2020)
| ( in thousands) | Change | |||||||
|---|---|---|---|---|---|---|---|---|
| FY 2020 | % | |||||||
| Net Sales | 14,833 | $ | 15,355 | ) | (3% | ) | ||
| Gross Profit | 6,997 | $ | 7,313 | ) | (4% | ) | ||
| Gross Margin | 47.2% | 47.6% | ||||||
| Operating Income | 1,340 | $ | 1,115 | 20% | ||||
| Operating Margin | 9.0% | 7.3% | ||||||
| Net Income | 1,121 | $ | 1,107 | 1% | ||||
| Net Margin | 7.6% | 7.2% |
All values are in US Dollars.
Fourth Quarter Fiscal 2021 Review (Results comparedwith the fourth quarter of fiscal 2020)
| ( in thousands) | Change | |||||||
|---|---|---|---|---|---|---|---|---|
| FY 2020 | % | |||||||
| Net Sales | 4,097 | $ | 5,514 | ) | (26% | ) | ||
| Gross Profit | 1,885 | $ | 2,665 | ) | (29% | ) | ||
| Gross Margin | 46.0% | 48.3% | ||||||
| Operating Income | 508 | $ | 749 | ) | (32% | ) | ||
| Operating Margin | 12% | 14% | ||||||
| Net Income | 455 | $ | 688 | ) | (34% | ) | ||
| Net Margin | 11.1% | 12.5% |
All values are in US Dollars.
Balance Sheet and Cash Flow Overview
Cash generated by operating activities was $725,000 in fiscal 2021, compared with generating $3,254,000 in fiscal 2020. Net capital expenditures in fiscal 2021 were $244,000 compared with $722,000 in fiscal 2020.
At February 28, 2021, the Company had total debt of $1,002,000, representing the proceeds from a Paycheck Protection Program Loan received in fiscal 2021. This loan was forgiven in its entirety in April 2021.
In fiscal 2021, the Company paid off the existing mortgage related to the industrial park where the Company’s operations are located. The total repayment was $722,000.
Sono-Tek has a revolving credit line of $1,500,000 and a $750,000 equipment purchase facility, both of which had no outstanding borrowings at year-end.
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.
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; continued sales growth in the specialty glass and portable electronics markets; 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 increased annual revenues as forecasted. We refer you to documents that the company files with the Securities and Exchange Commission, which includes Form 10-K and Form 10-Qs containing additional important information.
For more information, contact:
| Stephen Bagley |
|---|
| Chief Financial Officer |
| Sono-Tek Corporation |
| info@sono-tek.com |
SONO-TEK CORPORATION
CONSOLIDATED BALANCE SHEETS
| February 29,<br><br> 2020 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | 4,084,078 | $ | 3,659,551 |
| Marketable securities | 4,563,470 | 4,219,240 | |
| Accounts receivable (less allowance of 56,123 and 71,000, respectively) | 1,757,802 | 929,701 | |
| Inventories, net | 2,611,106 | 2,381,891 | |
| Prepaid expenses and other current assets | 151,316 | 153,698 | |
| Total current assets | 13,167,772 | 11,344,081 | |
| Land | 250,000 | 250,000 | |
| Buildings, net | 1,575,135 | 1,654,061 | |
| Equipment, furnishings and leasehold improvements, net | 1,075,190 | 1,212,578 | |
| Intangible assets, net | 95,456 | 106,291 | |
| Deferred tax asset | 259,838 | 176,314 | |
| TOTAL ASSETS | 16,423,391 | $ | 14,743,325 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
| Current Liabilities: | |||
| Accounts payable | 1,294,483 | $ | 668,721 |
| Accrued expenses | 1,750,916 | 1,613,409 | |
| Customer deposits | 1,166,541 | 1,648,690 | |
| Current maturities of long term debt | — | 169,716 | |
| Income taxes payable | 53,567 | 70,621 | |
| Total current liabilities | 4,265,507 | 4,171,157 | |
| Deferred tax liability | 205,562 | 251,761 | |
| Long term debt, less current maturities | 1,001,640 | 538,000 | |
| Total Liabilities | 5,472,709 | 4,960,918 | |
| Commitments and Contingencies (Note 10) | — | — | |
| Stockholders’ Equity | |||
| Common stock, .01 par value; 25,000,000 shares authorized, 15,452,656 and 15,348,180 issued and outstanding, respectively | 154,527 | 153,482 | |
| Additional paid-in capital | 9,064,994 | 9,018,406 | |
| Accumulated earnings | 1,731,161 | 610,519 | |
| Total stockholders’ equity | 10,950,682 | 9,782,407 | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 16,423,391 | $ | 14,743,325 |
All values are in US Dollars.
See accompanying notes to consolidated financial statements.
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
| Fiscal Year Ended | ||||||
|---|---|---|---|---|---|---|
| February 28,<br><br> 2021 | February 29,<br><br> 2020 | |||||
| Net Sales | $ | 14,832,877 | $ | 15,354,619 | ||
| Cost of Goods Sold | 7,835,837 | 8,041,378 | ||||
| Gross Profit | 6,997,040 | 7,313,241 | ||||
| Operating Expenses | ||||||
| Research and product development | 1,644,598 | 1,427,543 | ||||
| Marketing and selling | 2,789,880 | 3,403,133 | ||||
| General and administrative | 1,222,101 | 1,367,073 | ||||
| Total Operating Expenses | 5,656,579 | 6,197,749 | ||||
| Operating Income | 1,340,461 | 1,115,492 | ||||
| Other Income (Expense): | ||||||
| Interest Expense | (39,843 | ) | (33,038 | ) | ||
| Interest and Dividend Income | 22,558 | 101,592 | ||||
| Other Income | 24,691 | 29,401 | ||||
| Income before Income Taxes | 1,347,867 | 1,213,447 | ||||
| Income Tax Expense | 227,225 | 106,005 | ||||
| Net Income | $ | 1,120,642 | $ | 1,107,442 | ||
| Basic Earnings Per Share | $ | .07 | $ | .07 | ||
| Diluted Earnings Per Share | $ | .07 | $ | .07 | ||
| Weighted Average Shares – Basic | 15,428,411 | 15,302,367 | ||||
| Weighted Average Shares – Diluted | 15,672,253 | 15,359,088 |
See accompanying notes to consolidated financial statements.
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Fiscal Year Ended | ||||||
|---|---|---|---|---|---|---|
| February 28,<br><br> 2021 | February 29,<br><br> 2020 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net Income | $ | 1,120,642 | $ | 1,107,442 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 463,076 | 406,731 | ||||
| Stock based compensation expense | 47,633 | 90,305 | ||||
| Bad debt expense | — | 25,000 | ||||
| Inventory reserve | 91,000 | (77,098 | ) | |||
| Deferred tax expense | (129,723 | ) | 36,707 | |||
| (Increase) Decrease in: | ||||||
| Accounts receivable | (828,100 | ) | 443,190 | |||
| Inventories | (305,790 | ) | (646,777 | ) | ||
| Prepaid expenses and other assets | 2,382 | 241,307 | ||||
| (Decrease) Increase in: | ||||||
| Accounts payable and accrued expenses | 763,269 | 1,063,730 | ||||
| Customer deposits | (482,149 | ) | 499,132 | |||
| Income taxes payable | (17,054 | ) | 64,349 | |||
| Net Cash Provided by Operating Activities | 725,186 | 3,254,018 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchase of equipment, furnishings and leasehold improvements | (344,353 | ) | (722,241 | ) | ||
| Patent costs paid | (6,000 | ) | — | |||
| Capital expenditure grant proceeds | 100,000 | — | ||||
| Sale (purchase) of marketable securities, net | (344,230 | ) | (1,853,534 | ) | ||
| Net Cash Provided By (Used In) Investing Activities | (594,583 | ) | (2,575,775 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from note payable - bank | 1,001,640 | — | ||||
| Repayment of long-term debt | (707,716 | ) | (162,815 | ) | ||
| Net Cash Provided By (Used In) Financing Activities | 293,924 | (162,815 | ) | |||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 424,527 | 515,428 | ||||
| CASH AND CASH EQUIVALENTS: | ||||||
| Beginning of year | 3,659,551 | 3,144,123 | ||||
| End of year | $ | 4,084,078 | $ | 3,659,551 | ||
| Supplemental Cash Flow Disclosure: | ||||||
| Interest Paid | $ | 39,843 | $ | 33,038 | ||
| Income Taxes Paid | $ | 374,004 | $ | 4,948 |
See accompanying notes to consolidated financial statements.