UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

☒ ☐

For the Fiscal Year ended: February 28, 2025

Commission File Number: 001-40763

SONO TEK CORP(Name of registrant as specified in its charter)

new york	14-1568099
(State or other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

2012 Route 9W, Milton, New York	12547
(Address of Principal Executive Offices)	(Zip Code)

Registrant's Telephone Number, Including Area Code: (845) 795-2020

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 par value	SOTK	The Nasdaq Stock Market LLC (Capital Market)

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-accelerated Filer ☑	Smaller reporting company ☑	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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 31, 2024 the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant was approximately $61,552,400 computed by reference to the average of the bid and asked prices of the Common Stock on said date, which average was $4.10.

The Registrant had 15,727,702 shares of Common Stock outstanding as of May 23, 2025.

DOCUMENTS INCORPORATED BY REFERENCE: None.

TABLE OF CONTENTS

PART I
	Item 1.	Business.	1
	Item 1A.	Risk Factors.	5
	Item 1B.	Unresolved Staff Comments.	21
	Item 1C.	Cybersecurity	21
	Item 2.	Properties.	22
	Item 3.	Legal Proceedings.	22
	Item 4.	Mine Safety Disclosures.	22

PART II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	23
	Item 6.	[Reserved].	23
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	29
	Item 8.	Financial Statements and Supplementary Data	31
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
	Item 9A.	Controls and Procedures.	31
	Item 9B.	Other Information.	31
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	31

PART III
	Item 10.	Directors, Executive Officers and Corporate Governance.	32
	Item 11.	Executive Compensation.	37
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	40
	Item 13.	Certain Relationships and Related Transactions.	42
	Item 14.	Principal Accountant Fees and Services.	42
	Item 15.	Exhibits, Financial Statement Schedules	43
	Item 16.	Form 10-K Summary.	44

PART I

ITEM 1

BUSINESS

Sono-Tek Corporation (the “Company”, “Sono-Tek”, “We” or “Our”) is the world leader in the design and manufacture of ultrasonic coating systems for applying precise, thin film coatings to add functional properties, protect or strengthen surfaces on parts and components for the microelectronics/electronics, alternative energy, medical, industrial and emerging research & development/other markets. We design and manufacture custom-engineered ultrasonic coating systems incorporating our patented technology, in combination with strong applications engineering knowledge, to assist our customers in achieving their desired coating solutions.

Our ultrasonic nozzle systems use high frequency ultrasonic vibrations that atomize liquids into minute drops that can be applied to surfaces at low velocity providing microscopic layers of protective and other useful materials over a wide variety of surfaces, including glass and metals. Our equipment solutions are environmentally-friendly, efficient and highly reliable. They enable dramatic reductions in overspray, savings in raw materials, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions. We serve a variety of industries and applications and have a broad base of customers.

The applications that are employing our unique coating technology and expertise have been expanding as the advantages of ultrasonic coatings are more broadly recognized. The original application of our technology was to coat the inner surface of blood collection tubes used for medical diagnostic testing. Our products enable the application of a thin and uniform coating of material that prevents coagulation of blood. Following that initial breakthrough, our technology was then used for applying uniform flux coatings to printed circuit boards, a critical part of the fabrication process for all electronic devices. A later application for much larger surfaces was to address the many challenges that glass manufacturers faced. They needed a solution for specialized glass applications in the construction and automotive industries. Among other things, our ultrasonic nozzles are used to provide coatings that improve durability, create filters, increase clarity, reduce reflection, enable conductivity, and enhance safety. We have invested significant resources to enhance our market diversity by leveraging our core ultrasonic coating technology. As a result, we have increased our portfolio of products, the industries we serve, and the countries in which we sell our products.

We were founded by the inventor of the ultrasonic nozzle, Dr. Harvey Berger, and incorporated in New York on March 21, 1975. We became a public company in 1987 and our stock is traded on the Nasdaq Capital Market. Our corporate offices are located in Milton, New York where our production facilities are co-located. We also have a sales and service office in Singapore and an application process development laboratory in Guangzhou, China. We are ISO 9001 qualified since registering in September 1998 and have been recertified annually since then.

Our fiscal year ends on February 28, except in leap years when it ends on February 29. We refer to the fiscal year ended February 28, 2025 as “fiscal 2025” and use similar protocol for previous fiscal years.

Our Products, Markets and Customers

Our products are used in a wide range of applications. We provide our customers a broad offering of ultrasonic spray coating equipment solutions custom suited for their requirements and we continually expand our offerings to address new applications. Our products include fully integrated Multi-Axis Coating Systems, Integrated Coating Systems, Fluxing Systems, OEM Systems and other related systems. We invest heavily in research and development to continually bring to market new solutions for our customers, to increase our market share and to solve high value problems in manufacturing.

Our Multi-Axis Coating Systems, Integrated Coating Systems and Fluxing Systems provide complete fully integrated solutions for our customers, while we created the Universal Align to offer our customers subsystems that integrate our nozzles and generators for incorporation into their original equipment.

We have built our brand and reputation on providing high quality, highly reliable products that provide consistent performance for critical applications in demanding operating environments. Our surface coating solutions are used in 24/7 work schedules, under harsh and challenging manufacturing environments, where they provide value in a continuous and dependable fashion.

We target the following markets where our product quality and consistency and application knowledge are valued by our customers:

•

Micro-Electronics/Electronics:

Printed circuit boards: Ultrasonic flux application that removes oxidation and is more efficient than standard, historic processes

Semiconductors: Applications of micron-thin photo-resist layers onto complex wafers

Sensors: Application of chemical, biological or other detection coatings as well as physical photoelectric elements for conversion of input and output signals

Display/panel glass on personal electronic devices: for sensitivity to temperature, imprint, pressure and for physical protection

•

Medical: Our systems are used in this industry to apply micron layers of polymers and drugs, biomedical materials and anti-coagulants.

Implanted medical devices such as:

▪

Stents and balloons

▪

Artificial joints

Blood collection tubes

Diagnostic devices

Bandages/protective wraps

Lenses

•

Industrial

Flat (“float”) glass used for windows in buildings and vehicles

Textiles: high performance value adding coatings such as anti-microbial, anti-stain, flame retardant and moisture barriers

Food packaging and food safety: anti-microbial coatings

Food: coatings of flavors, ingredients and other additives

•

Alternative Energy: Our systems provide coatings of chemicals and other materials that act as catalysts, barriers, facilitators of symbiosis or other interactions between surfaces.

Fuel cells

Solar cells

Carbon Capture

Green Hydrogen

•

Emerging Research and Development / Other Markets

Research and development efforts at universities, research institutions and government agencies that are not part of our already established markets

A variety of other small industries using our coating technology, that have not yet matured into a developed marketplace for our ultrasonic coating machines

Our principal customers include original equipment manufacturers, distributors and end users of our products in the industries that we serve.

Our products are sold primarily through our direct sales personnel, select independent distributors and through sales representatives around the world that are trained on our technologies and products. Our distributors are typically experts in their industries and recognize the significant value that our technology provides their customers. We provide extensive training and on-site support with our direct sales force and application engineers, who also respond to leads generated by our web site and the trade shows in which we participate. To grow sales, we continue to strengthen our laboratory and applications engineering personnel and support our worldwide process development labs with additional ultrasonic coating equipment, in conjunction with sponsoring various technical training seminars for our distribution network.

We also provide application consulting services enabling our customers to rely on our surface coating expertise and specific customer process optimization. We offer these services both in our application process development laboratory and at our customers’ sites where we can assist in the design and development of customized coating systems.

We are a global business and our geographical sales mix can vary from year to year depending on the timing of orders from customers. In fiscal 2025, 39% of our sales were from outside the U.S. and Canada.

Our Strengths

From our core strengths and capabilities, we:

•

Have built a strong reputation in the industry based on our ability to solve our customers’ complex problems and provide custom engineered, value-added solutions.

•

Are renowned for our product quality, customer service and responsiveness and critical thinking that enables a strong problem-solving culture throughout our organization.

•

Have expanded our ability to provide coating services for low to mid-volume demand to support our customers’ product development and testing.

•

Are continually developing new technologies and solutions to address an ever-changing marketplace.

•

Have built a strong balance sheet with no debt, which we believe provides us with the financial flexibility to pursue our strategic plans for growth, including aggressive pursuit of organic and other development opportunities.

Our Strategy

Our strategy is to further advance the use of ultrasonic coating technologies for the microscopic coating of surfaces in a broader array of applications which enable better outcomes for our customers’ products and processes. We believe product superiority is imperative and that it is attained through the extensive experience that we have in the coatings industry, our proprietary manufacturing know-how and skills, and our unique work force that we have built over the years.

We intend to leverage our innovative technologies, proprietary know-how, unique talent and experience, and global reach to:

•

Grow the business globally by reaching new markets and further penetrating the markets and customers we currently serve;

•

Increase our earnings power through lean manufacturing processes, automation and continuous improvement;

•

Develop new and unique technologies that solve our customers’ most challenging problems;

•

Meet or exceed our customers’ expectations; and

•

Provide an acceptable return to our shareholders.

To accomplish these objectives, we believe that we must judiciously deploy our monetary and human capital in order to expand our presence in our targeted markets and create broader offerings for our customers.

Availability of Raw Materials

Historically, we have not been adversely impacted by the availability of raw materials or components used in the manufacture of our products.

Generally, except in instances of pandemic related supply chain issues, all raw materials used in our products are available from many different domestic suppliers, who may themselves be subject to international raw material availability. We purchase circuit board assemblies and sheet metal components from a wide range of suppliers throughout the world.

We carefully manage our inventory using lean manufacturing processes.

Research and Development

We believe that our long-term growth is dependent upon the development and commercialization of ultrasonic coating technologies to solve customers’ high value problems across a wide spectrum of applications in various industries, while also advancing the utility of our core technology. During fiscal 2025 and fiscal 2024, we spent $2,724,000 and $2,886,000, respectively, on research and development activities related to new products and services and the ongoing improvement of existing products and services. As a percentage of sales, research and development expenses were 13.3% and 14.6% in fiscal 2025 and 2024, respectively.

Intellectual Property

Our business is based in part on the technology covered by our U.S. patents. We also rely on unpatented know-how in the design and production of our nozzle systems, subsystems and complete solutions. We have executed non-disclosure and non-compete agreements with all of our employees to safeguard our intellectual property. We execute reciprocal non-disclosure agreements with our key customers to safeguard any jointly developed intellectual property.

Competition

We operate in competitive markets in many of our industry segments. We compete against alternative coating technologies, as well as global and regional manufacturers of nozzles and other products based on price, quality, product features, application engineering and follow-up service. We maintain our competitive position by providing highly effective solutions that meet our customers’ requirements and needs. In several emerging markets, we encounter less competition compared to more established markets based on the uniqueness of our ultrasonic technology in these applications.

Information Regarding Sales Outside the United States and Canada and Significant Customers

During fiscal 2025 and fiscal 2024, net sales to customers outside the U.S. and Canada accounted for approximately $7,998,000, or 39% of total net sales, and $8,822,000, or 45% of total net sales, respectively. Our international sales could be impacted by changes in trade policies, including the imposition of new tariffs or other trade restrictions.

Employees

As of February 28, 2025, we employed 79 full-time and 10 part-time employees. We believe that relations with our employees are generally good.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. Therefore, we file “reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains a website at www.sec.gov that contains the reports, proxy statements and other information for registrants that file electronically, as we do. Additionally, these reports may be read and copied at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, DC 20549. Information regarding the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.

We maintain a website at http://www.sono-tek.com. On our site, we provide copies of our Forms 8-K, 10-K, 10-Q, Proxy and Annual Report as soon as reasonably practicable after filing electronically such material with the SEC. Copies are also available, without charge, from Sono-Tek Corporation, 2012 Route 9W, Milton, NY 12547.

ITEM 1A

RISKS RELATED TO OUR BUSINESS AND OPERATIONS

We do not have long-term commitments for significant revenues with most of our customers and may be unable to retain existing customers, attract new customers or replace departing customers with new customers that can provide comparable revenues and profit margins.

Because we generally do not obtain firm, long-term volume purchase commitments from our customers, most of our sales are derived from individual purchase orders. We remain dependent upon securing new purchase orders in the future in order to sustain and grow our revenues. Accordingly, there is no assurance that our revenues and business will grow in the future. Our failure to maintain and expand our customer relationships could materially and adversely affect our business and results of operations.

In recent years, a few major customers and distributors have accounted for a significant portion of our revenue. Our revenue could decline if we are unable to maintain or develop relationships with additional customers or distributors and our results of operations could be adversely affected if any one of these customers is unable to meet their financial obligations to us.

For the year ended February 28, 2025, one customer accounted for approximately 11% of our net sales. For the year ended February 29, 2024, our two largest customers accounted for approximately 12% of our net sales. If we are unable to diversify our customer base, our future results could be heavily dependent on these customers and distributors. Our dependence on a limited number of customers and distributors means that the loss of a major customer or distributor or any reduction in orders by a major customer or distributor would materially reduce our net sales and adversely affect our results of operations. As we continue our transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete equipment solutions and higher value subsystems, we expect that sales to relatively few customers will continue to account for a significant percentage of our net sales for the foreseeable future; however, these customers or our other customers, may not use our products at current levels in the future, if at all. Customer purchase orders may be delayed or cancelled, and order volume levels can be changed with loss of deposit as the only penalty. We may not be able to replace cancelled, delayed, or reduced purchase orders with new orders. If any one of these customers reduces its demand for our products, it will likely have a material adverse effect on our operations.

Furthermore, a significant portion of our accounts receivables is concentrated with a few major customers, who may not be able to meet their financial obligations to us. The failure of any such customers to pay amounts owed to us in a timely fashion or at all could have an adverse effect on our results of operations. The Company is also exposed to credit risk on its accounts receivable, and this risk is heightened during periods when economic conditions worsen. The Company's outstanding receivables are not covered by collateral or credit insurance. The Company's exposure to credit and collectability risk on its receivables may also be higher in certain international markets, and its ability to mitigate such risks may be limited. While the Company has procedures to monitor and limit exposure to credit risk on its receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses.

We may need to raise additional funds to develop our business, which may adversely affect our future growth.

We may finance a portion of our anticipated future growth and possibly future strategic acquisitions through public or private equity offerings or debt financings. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay or reduce the scope of, our plans to grow our revenues or to consummate one or more strategic acquisitions or otherwise to scale back our business plans. In addition, we could be forced to reduce or forego attractive business opportunities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. In addition, debt financing, if available, may involve restrictive covenants. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. Our access to the financial markets and the pricing and terms we receive in the financial markets could be adversely impacted by various factors, including changes in financial markets and interest rates.

Changes in United States trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.

The US government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has also initiated or is considering the imposition of tariffs on certain foreign goods, including electronic components and devices, metal alloys, and potentially other parts used in our systems and machinery. Changes in United States trade policy could result in one or more of US trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries. These measures could also result in increased costs for goods imported into the United States. This in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the US economy, which in turn could adversely impact our business, financial condition and results of operations.

We may be adversely affected by global and regional economic conditions and military, legislative, regulatory and political developments.

We sell our products around the world, and we expect to continue to derive a substantial portion of sales from outside the U.S. In addition, we are currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by geopolitical instability due to ongoing military conflicts in various regions. Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from such conflicts or broader geopolitical tensions.

Customers or suppliers may experience cash flow problems and as a result, may modify, delay or cancel plans to purchase our products, and suppliers may significantly and quickly increase their prices or reduce their output. Additionally, if customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, amounts owed to us. Any inability of current and/or potential customers to purchase our products and/or to pay us for our products may adversely affect our sales, earnings and cash flow. Sales and earnings could also be affected by our ability to manage the risks and uncertainties associated with the application of local legal requirements or the enforceability of laws and contractual obligations, trade protection measures, changes in tax laws, regional political instability, war, terrorist activities, severe or prolonged adverse weather conditions and natural disasters as well as health epidemics or pandemics.

Our success will depend, to a large degree, on the expertise and experience of the members of our management team, the loss of whom could have a material adverse effect on our business.

Our success is, to a large degree, dependent upon the expertise and experience of the management team and its ability to attract and retain qualified personnel who are technically proficient. The loss of the services of one or more of such personnel could have a material adverse effect on our business. Our business may be adversely affected if we are unable to continue to attract and retain such personnel.

We will need to add qualified additional personnel as we expand our business, and we may not be able to employ such persons, which could affect our ability to expand and have a material adverse effect on our business.

In order to expand our product offerings and customer base, we will need to hire additional qualified personnel. We may not be able to identify such persons, and even if we identify them, we may not have the funds or ability to employ them, which could have a material adverse effect on our business.

Although we have not experienced any material disruptions due to labor shortages to date, we have observed an overall tightening and increasingly competitive labor market. A sustained labor shortage or increased turnover rates within our employee base as a result of general macroeconomic factors, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to complete our projects according to the required schedule or otherwise efficiently operate our business. If we are unable to hire and retain employees capable of performing at a high level, or if mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be adversely affected. An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

If we are unable to manage our expected growth, our business may be materially and adversely affected.

We expect to expand our operations, including by expanding our internal resources, making possible acquisitions and entering into new markets, and we intend to continue to focus on rapid growth, including organic growth and possibly acquisitions. The growth of our business could place significant strain on our management, operational and financial resources. To manage our future growth, we could be required to improve existing or implement new operational or financial systems, procedures and controls or expand, train and manage a growing employee base. Our failure to accomplish any of these tasks could materially and adversely affect our business. Even if we are successful in integrating future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies, that we expected from such acquisitions, which may result in the investment of our capital resources without realizing the expected returns on such investment.

Our inability to protect our intellectual property rights could negatively affect our business and results of operations.

Our ability to compete effectively depends in part upon developing, maintaining and/or protecting intellectual property rights relevant to our ultrasonic nozzles and coating processes. We rely principally on a combination of patent protection, trade secret laws, confidentiality and non-disclosure agreements, and trusted business relationships to establish, maintain and protect the intellectual property rights relevant to our business. These measures, however, may not be adequate in every given case to permit us to gain or retain any competitive advantage, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States.

Where we consider it appropriate, we may seek patent protection in the United States on technologies used in, or relating to, our ultrasonic nozzles, applications and manufacturing processes. The issuance of a patent is not conclusive as to its scope, validity and enforceability. Thus, any patent or patent application which may issue into a patent held by us could be challenged, invalidated or held unenforceable in litigation or proceedings before the U.S. Patent and Trademark Office and/or other patent tribunals or circumvented by others. No consistent policy regarding the breadth of patent claims has emerged to date in the United States, and the landscape could become more uncertain in view of future rule changes by the United States Patent and Trademark Office, the introduction of patent reform legislation and decisions in patent law cases by United States federal courts. The patent landscape outside the United States is even less predictable. As a result, the validity and enforceability of patents cannot be predicted with certainty. In addition, we may fail to apply for patents on important technologies or product candidates in a timely fashion, if at all, and our existing and future patents may not be sufficiently broad to prevent others from utilizing our technologies or from developing competing products or technologies.

Our patent strategy involves complex legal and factual questions. Our ability to maintain and solidify our proprietary technology may depend in part upon our success in obtaining patent rights and enforcing those rights once granted or licensed. Our issued patents and those that may be issued in the future may be challenged, invalidated, rendered unenforceable or circumvented, which could limit our ability to prevent competitors from marketing similar or related products, or shorten the term of patent protection that we may have for our products, processes and enabling technologies. In addition, the rights granted under any issued patents may not provide us with competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies, duplicate technology developed by us or otherwise possess intellectual property rights that could limit our ability to manufacture our products and operate our business.

We also rely on trade secret protection for our confidential and proprietary information. Trade secrets, however, can be difficult to protect. We may not be able to maintain our technology or know-how as trade secrets, and competitors may develop or acquire equally valuable or more valuable technology or know-how related to the manufacture of comparable ultrasonic nozzles. We also seek to protect our confidential and proprietary information, in part, by requiring all employees, consultants and business partners to execute confidentiality and/or nondisclosure agreements upon the commencement of any employment, consulting arrangement or engagement with us. These agreements generally require that all confidential and proprietary information developed by the employee, consultant, or business partner, or made known to the employee, consultant or business partner by us, during the course of the relationship with us, be kept confidential and not disclosed to third parties. These agreements may be breached and may not provide adequate remedies in the event of breach. To the extent that our employees, consultants, or business partners use intellectual property owned by others in their work for and/or with us, disputes could arise as to the rights in related or resulting technologies, know-how or inventions. Moreover, while we also require customers and vendors to execute agreements containing confidentiality and/or nondisclosure provisions, we may not have obtained such agreements from all of our customers and vendors. In addition, our trade secrets may otherwise become known or be independently discovered by competitors, customers, or vendors. Such customers or vendors may also be subject to laws and regulations that require them to disclose information that we would otherwise seek to keep confidential.

Moreover, others may independently develop and obtain patents covering technologies that are similar or superior to the product forms, applications, or manufacturing processes that we employ. If that happens, we may need to obtain licenses for these technologies and may not be able to obtain licenses on reasonable terms, if at all, which could limit our ability to manufacture our future products and operate our business. In addition, third parties could utilize our intellectual property rights in territories where we do not have intellectual property protection. Such third parties may then try to import products made using our intellectual property rights into the United States or other countries, which could have a material adverse effect on our business.

We could become subject to intellectual property litigation that could be costly, limit or cancel our intellectual property rights, divert time and efforts away from business operations, require us to pay damages and/or otherwise have an adverse material impact on our business.

The success of our business is highly dependent on protecting our intellectual property rights. Unauthorized parties may attempt to copy or otherwise obtain and use our products and/or enabling technologies. Policing the unauthorized use of our intellectual property rights is difficult and expensive, as is enforcing these rights against unauthorized use by others. Identifying unauthorized use of our intellectual property rights is difficult because we may be unable to monitor the processes and/or materials being employed by other parties. The steps we have taken may not prevent unauthorized use of our intellectual property rights, particularly in foreign countries where enforcement of intellectual property rights may be more difficult than in the United States.

Our continued commercial success will also depend in part upon not infringing the patents or violating the intellectual property rights of third parties. We are aware of patents and patent applications generally relating to aspects of our technologies filed by, and issued to, third parties. Nevertheless, we cannot determine with certainty whether such patents or patent applications of other parties may materially affect our ability to conduct our business. There may be existing patents of which we are unaware that we may inadvertently infringe, resulting in claims against us or our customers. If the manufacture, use and/or sale of our products or processes is challenged, or if our product forms or processes conflict with the patent rights of others, third parties could bring legal actions against us or our customers in the United States, Asia, Europe or other countries, claiming damages and seeking to enjoin the manufacturing and/or marketing of our products. Additionally, it is not possible to predict with certainty what patent claims may issue from any relevant third-party pending patent applications. Third parties may be able to obtain patents with claims relating to our product forms, applications and/or manufacturing processes which they could attempt to assert against us or our customers.

In either case, litigation may be necessary to enforce, protect or defend our intellectual property rights or to determine the validity and scope of the intellectual property rights of others. Any litigation could be unsuccessful, cause us to incur substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation and/or result in the impairment of our intellectual property rights. In some cases, litigation may be threatened or brought by a patent holding company or other adverse patent owner who has no relevant product revenues and against which our patents may provide little or no deterrence. If we are found to infringe any patents, we could be required to (1) pay substantial monetary damages, including lost profits, reasonable royalties and/or treble damages if an infringement is found to be willful and/or (2) totally discontinue or substantially modify any products or processes that are found to be in violation of another party’s intellectual property rights. If our competitors are able to use our technology without payment to us, our ability to compete effectively could be harmed.

The markets within which we compete are highly competitive. Many of our competitors have greater financial and other resources than we do and one or more of these competitors could use their greater financial and other resources to gain market share at our expense.

If our business continues to develop as expected, we anticipate that our revenues will continue to grow. If, due to capital constraints or otherwise, we are unable to fulfill our existing backlog in a timely manner and/or procure and timely fulfill our anticipated future backlog, our customers and potential customers may decide to use competing systems or products. If we are unable to fulfill the demand for products and systems in a timely manner, our customers and potential customers may choose to purchase products from our competitors. In addition, we could face new competition from large international or domestic companies with established industrial brands and distribution networks that enter our end markets. Demand for our products may also be affected by our ability to respond to changes in design and functionality, to respond to downward pricing pressure, and to provide shorter lead times for our products than our competitors. If we are unable to respond successfully to these competitive pressures, we could lose market share, which could have an adverse impact on our results. We cannot assure that we will be able to compete successfully in our markets or compete effectively against current and new competitors as our industry continues to evolve.

Rapid technological changes may prevent us from remaining current with our technological resources and maintaining competitive product and service offerings.

The markets in which we and our customers operate are characterized by rapid technological change. Significant technological changes could render our existing and potential new products, systems, and technology obsolete. Our future success will depend, in large part, upon our ability to:

	•	effectively identify and develop leading technologies;
	•	continue to develop our technical expertise;
	•	enhance our current products and systems with new, improved and competitive technology; and
	•	respond to technological changes in a cost-effective and timely manner.

If we are unable to successfully respond to technological change or if we do not respond to it in a cost-effective and timely manner, then our business will be materially and adversely affected. We cannot assure you that we will be successful in responding to changing technology. In addition, technologies developed by others may render our products, systems, and technology uncompetitive or obsolete. Even if we do successfully respond to technological advances, the integration of new technology may require substantial time and expense, and we cannot assure you that we will succeed in adapting our products, systems and technology in a timely and cost-effective manner.

If we are unable to continue to develop new and enhanced products and systems that achieve market acceptance in a timely manner, our competitive position and operating results could be harmed.

Our future success will depend on our ability to continue to develop new and enhanced ultrasonic nozzles and coating systems and related products that achieve market acceptance in a timely and cost-effective manner. The markets in which we and our customers operate are characterized by frequent introductions of new and enhanced products and services, evolving industry standards and regulatory requirements, government incentives and changes in customer needs. The successful development and market acceptance of our products and systems, depends on several factors, including:

	•	the changing requirements and preferences of the potential customers in our markets;
	•	the accurate prediction of market requirements, including any regulatory issues;
	•	the timely completion and introduction of new products and systems to avoid obsolescence;
	•	the quality, price and performance of new products and systems;
	•	the availability, quality, price and performance of competing products and systems;
	•	our customer service and support capabilities and responsiveness;
	•	the successful development of our relationships with existing and potential customers; and
	•	changes in industry standards.

We may experience financial or technical difficulties or limitations that could prevent us from introducing new or enhanced products or systems. Furthermore, any of these new or enhanced products and systems could contain problems that are discovered after they are introduced. We may need to significantly modify the design of these products and systems to correct problems. Rapidly changing industry standards and customer preferences and requirements may impede market acceptance of our products and systems.

Development and enhancement of our products and systems will require significant additional investment and could strain our management, financial and operational resources. The lack of market acceptance of our products or systems or our inability to generate sufficient revenues from this development or enhancement to offset their development costs could have a material adverse effect on our business. In addition, we may experience delays or other problems in releasing new products and systems and enhancements, and any such delays or problems may cause customers to forego purchases of our products and systems and to purchase those of our competitors.

We cannot provide assurance that products and systems that we have recently developed or that we develop in the future will achieve market acceptance. If our new products and systems fail to achieve market acceptance, or if we fail to develop new or enhanced products and systems that achieve market acceptance, our growth prospects, operating results and competitive position could be adversely affected.

We manufacture and assemble all our products at one facility. Any prolonged disruption in the operations of this facility would result in a decline in our sales and profitability.

We manufacture and assemble our products and systems at our production facility located in Milton, New York. Any prolonged disruption in the operations of our manufacturing and assembly facility, whether equipment or information technology infrastructure failure, cyber-attacks, labor difficulties, prolonged health emergencies, destruction of or damage to this facility because of a hurricane, earthquake, fire, flood, other catastrophes, and other operational problems would result in a decline in our sales and profitability. In the event of a business interruption at our facility, we may be unable to shift manufacturing and assembly capabilities to alternate locations, accept materials from suppliers or meet customer shipment needs, among other severe consequences. Such an event could have a material and adverse impact on our financial condition and results of our operations.

Failure to obtain adequate supplies of components and raw materials or failure to obtain components or raw materials at affordable prices could negatively affect our ability to supply products to our customers and negatively affect our profit margins.

We use a variety of components and raw materials in the manufacture of our products. As other industries develop products utilizing similar components and raw materials that we use, we may not be able to obtain adequate supplies of components and raw materials required for the manufacture of our existing and future products that would prevent us from supplying products to our customers and materially affect our business. Furthermore, any increased demand for, the raising of tariff rates on, or an increase of non-tariff trade barriers that apply to the components and raw materials that we use could increase the price we must pay to obtain them and could adversely affect our profitability, which would have an adverse effect on our financial results.

Recently, we have encountered challenges in our supply of various materials and components, and electronic components in particular, due to well-documented shortages and constraints in the global supply chain. Lead times for ordered components may vary significantly, and some components used to manufacture our products are provided by a limited number of sources.

We may rely on sub-contractors to meet current demand for our products, and we may need to obtain additional manufacturing capacity to increase production of our existing products or to produce our proposed new products, the failure of which could have a material adverse effect on our operations.

We may not have sufficient internal manufacturing capacity to meet the current demand for our products, and we may need to rely on subcontractors to enable us to meet this demand. Since we may rely on our subcontractors for a significant amount of our production capacity, the loss of the services of our subcontractors would have a material adverse effect on our business. Our plans for the growth of our business rely upon increasing sales of our existing products and systems and developing and marketing new products. We may not have adequate internal manufacturing facilities to substantially increase production of our products and obtaining additional manufacturing capacity in-house could require substantial capital expenditures. We may not have the capital resources to obtain or construct new facilities to expand manufacturing capacity and meet increasing demand for our products, which could have a material adverse effect on our operations. Conversely, any significant decrease in demand for our products could create idle plant capacity and an inability to cover fixed costs, which could adversely impact our results of operations and financial condition.

We are exposed to risks related to our international sales, and the failure to manage these risks could harm our business.

In addition to our net sales to customers within the U.S. and Canada, we may become increasingly dependent on net sales to customers outside the U.S. and Canada as we pursue expanding our business with customers worldwide. In the fiscal years ended February 28, 2025 and February 29, 2024, our net sales outside of the U.S. and Canada accounted for approximately 39% and 45%, respectively, of our total net sales. We continue to expect that a significant portion of our future revenues will be from international sales. As a result, the occurrence of any international, political, economic, or geographic event, including the imposition of tariffs and the onset of trade wars, could result in a significant decline in revenue. There are significant risks associated with conducting operations internationally, requiring significant financial commitments to support such operations. These numerous and sometimes conflicting laws and regulations include internal control and disclosure rules, data privacy and filtering requirements, anti-corruption laws, such as the Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental officials, and anti-competition regulations, among others.

Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries, and could also materially affect our brand, our international expansion efforts, our ability to attract and retain employees, our business, and our operating results. Although we have implemented policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate our policies.

Some of the risks and challenges of conducting business internationally include:


	•	requirements or preferences for domestic products or solutions, which could reduce demand for our products;
	•	unexpected changes in regulatory requirements;
	•	restrictions on the import or export of critical technology;
	•	management communication and integration problems resulting from cultural and geographic dispersion;
	•	the burden of complying with a variety of laws and regulations in various countries;
	•	difficulties in enforcing contracts;
	•	the uncertainty of protection for intellectual property rights in some countries;
	•	application of the income tax laws and regulations of multiple jurisdictions, including relatively low-rate and relatively high-rate jurisdictions, to our sales and other transactions, which results in additional complexity and uncertainty;
	•	tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell products;
	•	failure to comply with both U.S. and foreign laws, including export and antitrust regulations, the Foreign Corrupt Practices Act and any trade regulations ensuring fair trade practices;
	•	heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
	•	potentially adverse tax consequences, including multiple and possibly overlapping tax structures;
	•	general economic and geopolitical conditions, including war and acts of terrorism;
	•	lack of the availability of qualified third-party financing; and
	•	currency exchange controls.

While these factors and the impacts of these factors are difficult to predict, any one or more of them could adversely affect our business, financial condition and results of operations in the future.

Any liability damages resulting from technical faults or failures of our products could be substantial and could materially adversely affect our business and results of operations.

Our products are used by customers and integrated into customers’ machines and systems, and therefore a malfunction or the inadequate design of our products could result in product liability claims. Any liability for damages resulting from technical faults or failures could be substantial and could materially adversely affect our business and results of operations. In addition, a well-publicized actual or perceived problem could adversely affect the market’s perception of our products, which would materially impact our financial condition and operating results.

Inflationary Pressures and Rising Prices for Goods and Services.

Inflation rose sharply beginning in late 2021 and continued rising through 2022, leveling off in 2023 at rates not seen for over 40 years. Although the Federal Reserve has significantly increased interest rates in response to rising inflation, inflationary pressures, driven in part by evolving and uncertain US tariff policies, are currently expected to remain elevated throughout 2025. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not as able to leverage economics of scale to mitigate cost pressures compared to larger businesses. Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.

Reduction or elimination of United States government clean energy initiatives could materially adversely affect our business and results of operations

Since 2022, legislation such as the CLEAN Energy Act, Inflation Reduction Act and the American Renewable Energy Act intended to stimulate growth of the clean energy sector and have contributed to an increase in sales of our systems and products to the clean energy and solar markets. Any reduction or elimination of these government initiatives could have a material adverse effect on sales to these markets and on our total revenues and results of operations.

We could become liable for damages resulting from our manufacturing activities, which could have a material adverse effect on our business or cause us to cease operations.

The nature of our manufacturing operations exposes us to potential claims and liability for environmental damage, personal injury, loss of life and damage to, or destruction of, property. Our manufacturing operations are subject to numerous laws and regulations that govern environmental protection and human health and safety. These laws and regulations have changed frequently in the past and it is reasonable to expect additional and more stringent changes in the future. Our manufacturing operations may not comply with future laws and regulations, and we may be required to make significant unanticipated capital and operating expenditures to bring our operations within compliance with such evolving regulations. If we fail to comply with applicable environmental laws and regulations, manufacturing guidelines, and workplace safety requirements, governmental authorities may seek to impose fines and penalties on us or to revoke or deny the issuance or renewal of operating permits, and private parties may seek damages from us. Under such circumstances, we could be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damage claims for which may not have sufficient or any insurance coverage for claims.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to assess the effectiveness of our internal control over financial reporting and to disclose in our filings if such controls were unable to provide assurance that a material error would be prevented or detected in a timely manner. We have an ongoing program to review the design of our internal controls framework in keeping with changes in business needs, implement necessary changes to our controls design and test the system and process controls necessary to comply with these requirements. If in the future, our internal controls over financial reporting are determined to be not effective resulting in a material weakness or significant deficiency, investor perceptions regarding the reliability of our financial statements may be adversely affected which could cause a decline in the market price of our stock and otherwise negatively affect our liquidity and financial condition.

We may have risks associated with security of our information technology systems.

We make significant efforts to maintain the security and integrity of our information technology systems and data. Despite significant efforts to create security barriers to such systems, it is virtually impossible for us to entirely mitigate this risk. There is a risk of industrial espionage, cyber-attacks, misuse or theft of information or assets, or damage to assets by people who may gain unauthorized access to our facilities, systems, or information. Such cybersecurity breaches, misuse, or other disruptions could lead to the disclosure of confidential information; improper usage and distribution of our intellectual property; theft, manipulation, and destruction of private and proprietary data; and production downtimes. Although we actively employ measures to prevent unauthorized access to our information systems, preventing unauthorized use or infringement of our rights is inherently difficult. These events could adversely affect our financial results and any legal action in connection with any such cybersecurity breach could be costly and time-consuming and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, we must frequently expand our internal information system to meet increasing demand in storage, computing and communication, which may result in increased costs. Our internal information system is expensive to expand and must be highly secure due to the sensitive nature of our customers’ information that we transmit. Building and managing the support necessary for our growth places significant demands on our management and resources. These demands may divert such resources from the continued growth of our business and implementation of our business strategy.

RISKS RELATED TO OUR COMMON STOCK

Future equity financings and issuances of shares under equity compensation plans would dilute your ownership and could adversely affect your common stock ownership rights in comparison with those of other security holders.

Our board of directors has the power to issue additional shares of common stock without stockholder approval. Additional shares are subject to issuance through various equity compensation plans or through the exercise of currently outstanding equity awards. Our stockholders do not have preemptive rights to any common stock issued by us in the future; therefore, stockholders may experience additional dilution of their equity investment if we issue additional shares of common stock in the future, including shares issuable under equity incentive plans, or if we issue securities that are convertible into shares of our common stock.

If additional funds are raised through the issuance of equity securities, the percentage of ownership of our existing stockholders will be reduced, and such newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we issue additional common stock or securities convertible into common stock, such issuance will reduce the proportionate ownership and voting power of each other stockholder. In addition, such stock issuances might result in a reduction of the market value of our common stock, which could make our stock unattractive to existing stockholders.

Provisions in our articles of incorporation and bylaws could discourage changes in the composition of our board of directors which could hinder an acquisition of us by a third party, even if the acquisition would be favorable to you, thereby adversely affecting existing stockholders.

Our articles of incorporation and bylaws contain provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of our board of directors and our Company, even when these attempts may be in the best interests of stockholders. For example, our articles of incorporation and bylaws provide for a classified board of directors which could delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.

There is limited trading volume of our common stock, which could make it difficult for you to liquidate an investment in our common stock in a timely manner.

Since August 27, 2021, our common stock has been traded on the Nasdaq Capital Market under the symbol SOTK. Because there is limited volume in our common stock, investors may not be able to liquidate their investments when they desire to do so.

In addition, if we fail to meet the criteria set forth in SEC and Nasdaq Capital Market rules and regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity.

If securities analysts do not publish research or reports about our business or if they downgrade us or our sector, the price of our common stock could decline.

The trading market for our common stock will depend in part on research and reports that industry or financial analysts publish about us or our business. Furthermore, if one or more of the analysts who cover us downgrades us, the industry in which we operate, or the stock of any of our competitors, the price of our common stock may decline. If one or more of these analysts ceases coverage altogether, we could lose visibility, which could also lead to a decline in the price of our common stock.

Our operating results can fluctuate significantly from period to period, which makes our operating results difficult to predict and can cause our operating results, in any particular period, to be less than comparable periods and expectations from time to time.

Our operating results have fluctuated significantly from quarter-to-quarter, period-to-period and year-to-year during our operating history and are likely to continue to fluctuate in the future due to a variety of factors, many of which are outside of our control. Certain factors that may affect our operating results include, without limitation, those set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in this Annual Report on Form 10-K.

Because we have little or no control over many of these factors, our operating results are difficult to predict. Any adverse change in any of these factors could negatively affect our business and results of operations.

Our revenues, net income and other operating results are heavily dependent upon the size and timing of customer orders and projects, and the timing of the completion of those projects. The timing of our receipt of large individual orders, and of project completion, is difficult for us to predict. Because our operating expenses are based on anticipated revenues over the mid and long-term and because a high percentage of our operating expenses are relatively fixed, a shortfall or delay in recognizing revenues can cause our operating results to vary significantly from quarter-to-quarter and can result in significant operating losses or declines in profit margins in any particular quarter. If our revenues fall below our expectations in any particular quarter, we may not be able, or it may not be prudent for us, to reduce our expenses rapidly in response to the revenue shortfall, which can result in us suffering significant operating losses or declines in profit margins in that quarter.

Due to these factors and the other risks discussed in this Annual Report on Form 10-K, you should not rely on quarter-to-quarter, period-to-period or year-to-year comparisons of our results of operations as an indication of our future performance. Quarterly, period and annual comparisons of our operating results are not necessarily meaningful or indicative of future performance. As a result, it is likely that, from time to time, our results of operations or our revenue backlog could fall below historical levels or the expectations of public market analysts and investors, which could cause the trading price of our common stock to decline significantly.

The market price of our common stock has been and may continue to be volatile.

The market price of our common stock has been volatile and fluctuates widely in response to various factors that are beyond our control. The price of our common stock is not necessarily indicative of our operating performance or long-term business prospects. In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Factors such as the following could cause the market price of our common stock to fluctuate substantially:

	•	the underlying price of the commodities, materials, equipment that affect our key markets;
	•	announcements of capital budget changes by major customers;
	•	the introduction of new products by our competitors;
	•	announcements of technology advances by us or our competitors;
	•	current events affecting the political and economic environment in the United States, Europe or Asia;
	•	conditions or industry trends, including demand for our products, services and technological advances;
	•	changes to financial estimates by us or by any securities analysts who might cover our stock;
	•	additions or departures of our key personnel;
	•	seasonal, economic, or financial conditions;
	•	our quarterly operating and financial results; or
	•	litigation or public concern about the safety of our systems or products;
	•	the impact of inflation; or
	•	global geopolitical tensions, armed conflicts, or other regional instabilities.

The realization of any of these risks and other factors beyond our control could cause the market price of our common stock to decline significantly. The stock market in general experiences, from time to time, extreme price and volume fluctuations. Periodic and/or continuous market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility may be worse if the trading volume of our common stock is low.

Future sales of our common stock, or the perception that future sales may occur, may cause the market price of our common stock to decline.

If any significant number of our outstanding shares are sold, such sales could have a depressive effect on the market price of our stock. We are unable to predict the effect, if any, that the sale of shares, or the availability of shares for future sale, will have on the market price of the shares prevailing from time to time. Sales of substantial numbers of shares in the public market, or the perception that such sales could occur, could depress prevailing market prices for the shares. Such sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that we deem appropriate.

Purchases under our Stock Repurchase Plan may cause the market price of our common stock to rise but may have an adverse effect on available cash.

In 2024, our Board approved the adoption of a Stock Repurchase Plan which permits us to make open market purchases of up to a total of $2,000,000 of our common stock from time-to-time at prices and in amounts we deem reasonable. Purchases under the Stock Repurchase Plan may cause the market price of our stock to rise, however, the amounts of such purchases are limited by federal securities regulations and by the parameters of the Stock Purchase Plan. To the extent that we use cash to make purchases under the Stock Repurchase Plan, such monies will not be available to fund our operations if ever needed. If adequate funds are not otherwise available, we may be required to delay or reduce the scope of our business plans.

The Company is considered a “smaller reporting company” and is exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.

Rule 12b-2 of the Securities Exchange Act of 1934 ("Exchange Act") defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent, that is not a smaller reporting company, and that had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity.

As a “smaller reporting company,” we are subject to reduced disclosure requirements that are less comprehensive than applicable to issuers that are not “smaller reporting companies,” which could make our stock less attractive to potential investors and could make it more difficult for shareholders to sell their shares.

We have no current plan to pay dividends on our common stock, and investors may lose the entire amount of their investment.

We have no current plans to pay dividends on our common stock; therefore, investors will not receive any funds absent a sale of their shares. We cannot assure investors of a positive return on their investment when they sell their shares, nor can we assure that investors will not lose the entire amount of their investment.

GENERAL RISK FACTORS

We will continue to incur significant costs as a result of operating as a public company, and our management may be required to devote substantial time to compliance initiatives that ultimately could have a material adverse effect on our financial condition and results of operations.

As a public company, we expect to continue to incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls as well as mandating certain corporate governance practices. Our management and other personnel will continue to devote a substantial amount of time and financial resources to these compliance initiatives.

As a “smaller reporting company” we are able to take advantage of certain exceptions to disclosure requirements, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemption from providing a “Compensation Discussion and Analysis” section in our proxy statements; providing only three years of business information; and other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies.

If we fail to staff our accounting and finance function adequately or maintain internal control systems adequate to meet the demands that are placed upon us as a public company, we may be unable to report our financial results accurately or in a timely manner and our business and stock price may suffer. The costs of being a public company, as well as diversion of management’s time and attention, may have a material adverse effect on our future business, financial condition and results of operations.

Changes in U.S. Generally Accepted Accounting Principles (“GAAP”) could adversely affect our financial results and may require significant changes to our internal accounting systems and processes.

We prepare our consolidated financial statements in conformity with GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. The FASB periodically issues new accounting standards on a variety of topics. For information regarding new accounting standards, please refer to Note 1 and 2, “Business Description and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. These and other such standards generally result in different accounting principles, which may significantly impact our reported results or could result in variability of our financial results.

In preparing our financial statements we make certain assumptions, judgments and estimates that affect amounts reported in our consolidated financial statements, which, if not accurate, may significantly impact our financial results.

We make assumptions, judgments and estimates for a number of items, including the fair value of financial instruments, long-lived assets and other intangible assets; the realizability of deferred tax assets; the recognition of revenue and the fair value of stock option awards; and others. We also make assumptions, judgments and estimates in determining the accruals for revenue recognition, product warranties, employee-related liabilities, including commissions and variable compensation, and in determining the allowance or provisions for uncertain tax positions, doubtful accounts, excess or obsolete inventory, and legal contingencies. These assumptions, judgments and estimates are drawn from historical experience and various other factors that we believe are reasonable under the circumstances as of the date of the consolidated financial statements. Actual results could differ materially from our estimates, and such differences could significantly impact our financial results.

Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our securities.

In recent years, shareholder activists have become involved in numerous public companies. Shareholder activists frequently propose to involve themselves in the governance, strategic direction and operations of the Company. Such proposals may disrupt our business and divert the attention of our Board of Directors, management and employees, and any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, interfere with our ability to execute our strategic plan, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business. A proxy contest for the election of directors at our annual meeting could also require us to incur significant legal fees and proxy solicitation expenses. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations.

We face certain risks in the event of a sustained deterioration of financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of our clearing, cash management and custodial financial institutions. In particular:

	•	We may be unable to access funds in our investment portfolio, deposit accounts and clearing accounts on a timely basis to settle our payments or to make money transfers. Any resulting need to access other sources of liquidity or short-term borrowing would increase our costs. Any delay or inability to settle our payments or to make money transfers could adversely impact our business, financial condition and results of operations.
	•	In the event of a major bank failure, we could face major risks to the recovery of our bank deposits used for the purpose of settling our payments and to the recovery of a significant portion of our investment portfolio. A substantial portion of our cash, cash equivalents and interest-bearing deposits are either held at financial institutions that are not subject to insurance protection against loss or exceed the deposit insurance limit.
	•	We may be unable to borrow from financial institutions or institutional investors on favorable terms, which could adversely impact our ability to pursue our growth strategy and fund key strategic initiatives.

If financial liquidity deteriorates, there can be no assurance we will not experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.

ITEM 1B	UNRESOLVED STAFF COMMENTS - None.

ITEM 1C	CYBERSECURITY

Risk Management and Strategy

Securing our business information, intellectual property, customer and employee data and technology systems is essential for the continuity of our business, meeting applicable regulatory requirements and maintaining the trust of our stockholders. Cybersecurity is an important and integrated part of our enterprise risk management function that identifies, monitors and mitigates business, operational and legal risks.

To help protect us from a major cybersecurity incident that could have a material impact on operations or our financial results, the Company is in the process of implementing policies, programs and controls, including technology investments that focus on cybersecurity incident prevention, identification and mitigation. The steps we expect to take to reduce our vulnerability to cyberattacks and to mitigate impacts from cybersecurity incidents include, but are not limited to: penetration testing by a third party vendor, agent based security scanning that runs continuously, establishing information security policies and standards, implementing information protection processes and technologies, monitoring our information technology systems for cybersecurity threats and implementing cybersecurity training. In addition, we annually purchase a cybersecurity risk insurance policy that would help defray the costs associated with a covered cybersecurity incident if it occurred.

Governance

Our Board of Directors is actively engaged in overseeing and reviewing our strategic direction and objectives, taking into account, among other considerations, our risk profile and related exposures, including oversight of risks from cybersecurity threats. As part of this oversight, the Company will update the Board periodically, and at least annually, on our cybersecurity program, including with respect to particular cybersecurity threats, cybersecurity incidents, new developments in our risk profile, the status of projects to strengthen our cybersecurity systems, assessments of our cybersecurity program, and the emerging threat landscape.

ITEM 2

DESCRIPTION OF PROPERTIES

We own an industrial park located in Milton, New York. The industrial park consists of approximately 50,000 square feet of office and warehouse space. Our offices, product development, manufacturing and assembly facilities are located in the industrial park. We presently utilize 41,000 square feet or 82% of the park for our operations. We believe our facilities will be adequate for the foreseeable future and the ownership of the industrial park provides us opportunity to expand as we grow.

Approximately 9,000 square feet of the park is leased or available for lease to unrelated third parties at any given time.

ITEM 3

LEGAL PROCEEDINGS – None

ITEM 4

MINE SAFETY DISCLOSURES – Not Applicable

PART II

ITEM 5

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock currently trades on the Nasdaq Capital Market.

As of May 12, 2025, there were 86 record holders of our common stock and approximately 1,560 beneficial shareholders of our Common Stock.

We have not paid any cash dividends on our Common Stock since inception. Except as set forth in the following table, we intend to retain earnings, if any, for use in our business and for other corporate purposes.

Issuer Purchases of Equity Securities Pursuant to Stock Repurchase Program ⁽¹⁾
Period	Total number of shares purchased ⁽²⁾	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs ⁽²⁾	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
Month #1 (December 1, 2024 through December 31, 2024).	—	—	—	—
Month #2 (January 1, 2025 through January 31, 2025).	—	—	—	—
Month #3 (February 1, 2025 through February 28, 2025).	2,116	$3.72	2,116	—
Total	2,116	$3.72	2,116	$1,992,133

(1)

On November 4, 2024, we announced that we had authorized a Stock Repurchase Program to acquire up to $2,000,000 of our outstanding common stock. We formally established the Stock Repurchase Program on January 21, 2025. The Stock Repurchase Program shall remain in place for a one-year period expiring on January 21, 2026, unless sooner terminated by its terms.

(2)

Represents shares repurchased through the Stock Repurchase Program. We did not acquire any shares outside of the Stock Repurchase Program.

ITEM 6

RESERVED

ITEM 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news 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 and could cause actual results to differ materially. 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; inflationary and supply chain pressures; the recovery of the Electronics/Microelectronics and Medical markets; maintenance of increased order backlog; 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 medical and alternative energy 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 quarterly and annual revenues within the forecasted range of sales guidance.

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

Sono-Tek Corporation Fiscal Year 2025 Highlights (compared with fiscal 2024 unless otherwise noted)
We refer to the twelve-month periods ended February 28, 2025 and February 29, 2024 as fiscal 2025 and fiscal 2024, respectively.

Net Sales: Record $20.5 million, up 4% from $19.7 million in fiscal 2024, driven by strong shipments to the Alternative/Clean Energy Market. This marks the highest annual revenue in company history.

Gross Profit: $9.74 million, down 1% or $106K from the prior year. Gross margin decreased to 47.5% from 50%, mainly due to product mix and the reclassification of labor costs from engineering to cost of goods sold.

Operating Income: Decreased $172,000 to $1.01 million compared to $1.20 million in fiscal 2024, due to the decrease in gross profit combined with higher operating expenses.

Net Income: Approximately $1.3 million, down from $1.4 million in fiscal 2024, reflecting a combination of lower gross profit and higher operating expenses.

Backlog: Equipment and service-related backlog of $8.67 million at fiscal year-end, down 6.6% from the prior year-end record high of $9.28 million.

Geography: US/Canada sales increased 15% (+$1.6 million), driven by a record shipment of five high Average Selling Price “ASP” systems totaling $3.85 million—the largest number of high ASP systems shipped in a year.

Product Categories: Integrated Coating Systems increased 28% (+$814K), and Multi-Axis Systems grew 6% (+$603K), both supported by significant orders from the solar and clean energy sectors.

End Markets: Alternative/Clean Energy rose 64% (+$3.84 million) driven by production-scale system shipments to the solar market and electrolysis markets, including four high ASP system deliveries totaling $3.38 million. The Industrial market declined 47% (-$1.68 million) as our customers saw reduced demand for float glass coating systems due to rising competition from China-based float glass producers.

Balance Sheet: No outstanding debt as of February 28, 2025, with cash, cash equivalents, and marketable securities totaling $11.9 million, compared to $11.8 million at the prior year-end.

Other Income: Interest income, dividend income, and unrealized gains on marketable securities totaled $524K, down $38K due to a slight reduction in interest rates.

Market and Geographic Diversity

We have invested significant resources to enhance our market diversity. By leveraging our core ultrasonic coating technology, we have expanded our portfolio of products, the industries we serve, and the countries in which we sell our products.

Today, we serve five industries: microelectronics/electronics, medical, alternative/clean energy, industrial markets, and emerging research and development and other.

We are a geographically diverse company with a presence either directly or through distributors and trade representatives in the United States and Canada, EMEA (Europe, Middle East and Africa), APAC (Asia Pacific) and Latin America (including Mexico). In fiscal 2025, approximately 39% of sales originated outside of the United States and Canada.

We have an established infrastructure of application process development laboratories located at our distributor sites in Japan, China, Germany, Taiwan, Korea and our home office in New York. These laboratories are equipped with Sono-Tek systems and technical personnel to conduct customer demonstrations and process development for new coating applications that our customers bring to us. Our engineering, service and sales teams all continue to grow as we expand our addressable markets and enhance our product line to include larger more sophisticated machinery and systems with increased capabilities.

We believe that the new products we have introduced, the new markets we have penetrated, and the expanded regions in which we now sell our products, are a strong foundation for our future sales growth and enhanced profitability.

Results of Operations

Sales and Gross Profit:

	Fiscal Year Ended
	February 28,		February 29		Change
	2025		2024		$			%
Net Sales	$	20,504,000	$	19,700,000	$	804,000		4%
Cost of Goods Sold		10,765,000		9,855,000		910,000		9%
Gross Profit	$	9,739,000	$	9,845,000	$	(106,000	)	(1%	)

Gross Profit %		47.5%		50.0%

Gross profit decreased $106,000, or 1% to $9,739,000 for fiscal 2025 compared with $9,845,000 in fiscal 2024. The gross profit percentage decreased to 47.5% for fiscal 2025, compared to 50.0% for fiscal 2024.

In fiscal 2025 the decrease in the gross profit percentage was a result of product mix and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024 as an outcome of the completion of several successful R&D endeavors.

Product Sales:

	Twelve Months Ended
	February 28,		*% of*	February 29,		*% of*	Change
	2025		*Total*	2024		*total*	$			%
Fluxing Systems	$	467,000	2%	$	724,000	4%	$	(257,000	)	(35%	)
Integrated Coating Systems		3,703,000	18%		2,889,000	14%		814,000		28%
Multi-Axis Coating Systems		10,678,000	52%		10,075,000	51%		603,000		6%
OEM Systems		1,484,000	7%		1,533,000	8%		(49,000	)	(3%	)
Other		4,172,000	21%		4,479,000	23%		(307,000	)	(7%	)
TOTAL	$	20,504,000		$	19,700,000		$	804,000		4%

Total sales for fiscal year 2025 grew by 4%, driven by increased demand for our Integrated Coating and Multi-Axis Coating systems which are commonly used in the clean energy sector. Integrated Coating System sales increased by 28%, or $814,000, to $3,703,000 due to continued success with a key strategic partner within the solar energy market.

Printed Circuit Board “PCB” Fluxing System sales declined 35%, or $257,000, largely due to weaker demand in Latin America. The decrease was driven by a general slowdown in PCB equipment sales in Mexico and the closure of one of our key distributors in the region. To address this, we onboarded and trained a New Mexico-based distribution partner, which we believe will contribute to improved spray fluxing sales in fiscal 2026.

Market Sales:

	Twelve Months Ended
	February 28,		% of	February 29,		% of	Change
	2025		Total	2024		Total	$			%
Electronics/Microelectronics	$	5,426,000	27%	$	5,602,000	29%	$	(176,000	)	(3%)
Medical		3,250,000	16%		4,180,000	21%		(930,000	)	(22%)
Alternative Energy		9,838,000	48%		5,997,000	30%		3,841,000		64%
Emerging R&D and Other		67,000	0%		315,000	2%		(248,000	)	(79%)
Industrial		1,923,000	9%		3,606,000	18%		(1,683,000	)	(47%)
TOTAL	$	20,504,000		$	19,700,000		$	804,000		4%

Sales to the Alternative/Clean Energy market increased 64% in fiscal 2025, driven by a growing number of customers transitioning from our R&D systems to production scale systems, which carry significantly higher ASPs. This growth was partially offset by declines in the Medical and Industrial markets. Medical sales decreased $930,000, or 22%, to $3.25 million compared to $4.18 million in the prior year, and Industrial sales declined $1.68 million, or 47%, to $1.92 million compared to $3.61 million in the prior year.

Geographic Sales:

	Twelve Months Ended
	February 28,		February 29,		Change
	2025		2024		$			%
U.S. & Canada	$	12,506,000	$	10,878,000	$	1,628,000		15%
Asia Pacific (APAC)		2,758,000		3,268,000		(510,000	)	(16%	)
Europe, Middle East, Asia (EMEA)		4,431,000		4,333,000		98,000		2%
Latin America		809,000		1,221,000		(412,000	)	(34%	)
TOTAL	$	20,504,000	$	19,700,000	$	804,000		4%

In fiscal 2025, approximately 61% of our sales were to US and Canadian customers. This is compared to 55% in fiscal 2024.

Sales in the US & Canada increased 15% or $1.63 million, driven by the delivery of five high ASP systems totaling $3.85 million, reinforcing our strategy to provide highly complex, high-volume systems with premium pricing. This represents the largest number of high ASP systems sold in a single year. Growth in the US/Canada region was partially offset by declines in other regions. Latin America sales decreased 34% or $412,000, due to a $465,000 float glass coating system sale into Mexico that occurred in the prior year that did not repeat in fiscal 2025. Asia sales declined 16% or $510,000, influenced by continued weak demand from China, where sales fell to $522,000 in fiscal 2025 from $775,000 in fiscal 2024. China now represents approximately 2.5% of total sales, down significantly from its historical peak. EMEA sales increased 2% or $98,000, supported by multiple system shipments to customers in the green energy sector.

Operating Expenses:

	Twelve Months Ended
	February 28,		February 29,		Change
	2025		2024		$			%
Research and product development	$	2,724,000	$	2,886,000	$	(162,000	)	(6%	)
Marketing and selling		3,678,000		3,696,000		(18,000	)	0%
General and administrative		2,327,000		2,080,000		247,000		12%
Total Operating Expenses	$	8,729,000	$	8,662,000	$	67,000		1%

Research and Product Development:

Research and product development costs decreased $162,000 to $2,724,000 for fiscal 2025 due to a decrease in salary associated with the departure of a senior engineer, a decrease in research and development materials and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024.

Marketing and Selling:

Marketing and selling expenses decreased slightly in fiscal 2025 to $3,678,000 due to a decrease in salary expense which was partially offset by an increase in commissions and travel and trade show expenses.

During fiscal 2025, we expended approximately $595,000 for travel and trade show expenses compared with $505,000 for the prior fiscal year, an increase of $90,000.

In fiscal 2025, we expended approximately $767,000 for commissions as compared with $674,000 for the prior fiscal year, an increase of $93,000. The increase in commission expense is primarily the result of an increase in sales being generated by our external distributors, which are commissioned at a higher rate than our in-house sales team.

The decrease in salary expense is primarily due to the reallocation of the salary of our Chief Executive Officer, Steve Harshbarger, to the General and Administrative category as described more fully below under the heading “General and Administrative”.

General and Administrative:

General and Administrative (G&A) costs increased $247,000 to $2,327,000 for fiscal 2025 due to an increase in salaries, professional fees, corporate expenses and stock-based compensation. These increases were partially offset by the reversal of the sales tax accrual described more fully below.

Effective January 1, 2024, Steve Harshbarger became our Chief Executive Officer, having previously served as President prior to such date. On becoming Chief Executive Officer, we reclassified the expenses related to Mr. Harshbarger's compensation in connection with this positional change. Prior to January 1, 2024, we classified Mr. Harshbarger’s salary under sales expenses because of Mr. Harshbarger’s instrumental role in that area. For fiscal year 2025, the total reallocated amount of Mr. Harshbarger’s salary was approximately $325,000.

In the fourth quarter of fiscal 2024, we were notified by the State of California that we were required to collect sales tax on our shipments to customers in California. For taxable sales, we collected approximately $86,000 of delinquent sales tax from our customers in fiscal 2025. As of February 29, 2024, on the basis of a preliminary analysis of our sales to our California customers since April 1, 2019, we recorded an accrual in the amount of $138,000 for the estimated sales tax, penalties and interest that we may have been required to remit to the State of California.

In the second quarter of fiscal 2025, we filed all necessary sales tax returns with the State of California. Our net expense for sales tax and interest amounted to $72,000. In the second quarter of fiscal 2025, we reversed the remaining accrual of $66,000. This reversal is recorded in general and administrative expenses.

Operating Income:

Our operating income decreased $172,000 or 15%, to $1,010,000 in fiscal 2025 compared with $1,182,000 for the prior fiscal year. In fiscal 2025, the decrease in operating income is a result of a decrease in gross profit combined with an increase in operating expenses. Operating margin for fiscal 2025 decreased to 5% compared with 6% in fiscal 2024. As a percentage of net sales, operating expenses decreased 100 basis points to 43% in fiscal 2025 compared with 44% in fiscal 2024.

Interest and Dividend Income:

Interest and dividend income decreased $41,000 to $489,000 for fiscal 2025 as compared with $530,000 for the prior fiscal year, reflecting a minor reduction in interest rates earned on our cash balances in fiscal 2025. Our present investment policy is to invest excess cash in highly liquid, low risk US Treasury securities and certificates of deposit. At February 28, 2025, the majority of our holdings are rated at or above investment grade.

Income Tax Expense:

We recorded income tax expense of $261,000 for fiscal 2025 compared with $303,000 for the prior fiscal year. The decrease in income tax expense in fiscal 2025 is due to the current period’s decrease in income before income taxes offset by the application of available research and development tax credits.

Net Income:

Net income decreased $168,000 or 12%, to $1,273,000 for fiscal 2025 compared with $1,441,000 for the prior fiscal year. The decrease in net income in fiscal 2025 is a result of a decrease in gross profit combined with an increase in operating expenses partially offset by a decrease in income tax expense.

Liquidity and Capital Resources

Working Capital – Our working capital increased $1,378,000 to $13,501,000 at February 28, 2025 from $12,123,000 at February 29, 2024. The increase in working capital was primarily the result of the current year’s net income and non-cash charges partially offset by purchases of equipment.

We aggregate cash and cash equivalents and marketable securities in managing our balance sheet and liquidity. For purposes of the following analysis, the total is referred to as “Cash.” At February 28, 2025 and February 29, 2024, our working capital included:

	February 28, 2025		February 29, 2024		Cash Increase
Cash and cash equivalents	$	5,202,000	$	2,135,000	$	3,067,000
Marketable securities		6,728,000		9,712,000		(2,984,000	)
Total	$	11,930,000	$	11,847,000	$	83,000

The following table summarizes the accounts and the major reasons for the $83,000 increase in “Cash”:

	Impact on Cash			Reason
Net income, adjusted for non-cash items	$	1,937,000		To reconcile increase in cash.
Accounts receivable increase		(877,000	)	Decrease due to timing of receipts.
Inventories decrease		666,000		Decrease in finished goods for customer orders.
Customer deposits decrease		(1,007,000	)	Received for new orders.
Accounts payable		(190,000	)	Timing of disbursements.
Accrued expenses		(21,000	)	Timing of disbursements.
Prepaid and Other Assets increase		(29,000	)	Decreased prepaid expenses.
Income taxes payable decrease		81,000		Timing of disbursements.
Equipment purchases		(469,000	)	Equipment and facilities upgrade.
Treasury stock purchase		(8,000	)	Purchase of treasury stock.
Net increase in cash	$	83,000

Stockholders’ Equity – Stockholders’ equity increased $1,513,000 from $16,279,000 at February 29, 2024 to $17,792,000 at February 28, 2025. The increase was a result of the current year’s net income of $1,273,000 and $248,000 in additional equity related to stock-based compensation awards. These increases were partially offset by treasury stock purchases of $8,000. The details of stock-based compensation are explained in Note 4 in our financial statements.

Operating Activities – We generated $525,000 of cash in our operating activities in fiscal 2025 compared with generating $1,164,000 in fiscal 2024, a decrease of $639,000. The decrease in cash generated by operating activities was the result of an increase in accounts receivable combined with a decrease in customer deposit balances. These uses of cash were partially offset by a decrease in inventories and an increase in income taxes payable.

In fiscal 2025, our accounts receivable increased $877,000 when compared to the prior year. The increase in accounts receivable is primarily due to a large number of sales occurring in the fourth quarter of fiscal 2025.

In fiscal 2025, customer deposit balances decreased $1,007,000 when compared to the prior year. The decrease in customer deposits is primarily due to a large number of shipments occurring in the fourth quarter of fiscal 2025.

Investing Activities – In fiscal 2025, our investing activities provided $2,550,000 of cash compared with using $2,384,000 of cash in fiscal 2024. Capital spending in fiscal 2025 was $469,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements. This compares with $795,000 for the prior year period.

In fiscal 2025, net sales of marketable securities generated $3,019,000 of cash compared with using $1,589,000 for the purchase of marketable securities in fiscal 2024.

Bank Credit Facilities:

We currently have a revolving credit line of $1,500,000 and a $750,000 equipment purchase facility, both of which are with a bank. The revolving credit line is collateralized by the Company’s accounts receivable and inventory. The revolving line of credit is payable on demand and must be retired for a 30-day period, once annually. As of February 28, 2025, there were no outstanding borrowings under the line of credit.

As of February 28, 2025, $106,000 of our credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to us on existing orders. The unused portion of the credit line was $1,394,000 as of February 28, 2025. The letters of credit expire in fiscal year 2025.

Backlog

At the end of fiscal year 2025, our total backlog amounted to $8,677,000, comprised of $8,618,000 in equipment backlog and $59,000 in services-related backlog.

Off - Balance Sheet Arrangements

We do not have any Off - Balance Sheet Arrangements as of February 28, 2025.

Critical Accounting Estimates

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure on contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Management’s estimates and judgements are continually evaluated and are based on historical experience and expectations regarding future events that are believed to be reasonable under the specific circumstances.

Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions.

Accounting for Income Taxes

The Company accounts for income taxes under the asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Based on management’s estimate, if it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. Management evaluates the valuation allowance based on current estimates and historical experience. We use a recognition threshold and a measurement attribute for financial statement recognition and measurement tax positions taken or expected to be taken in a return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. As of February 28, 2025 and February 29, 2024, there were no uncertain tax provisions.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services.

Judgement is required when determining at what point in time control of the Company’s manufactured equipment is transferred to its customers. Management’s judgement is based on each customer contract and the transfer of control of the equipment to the customer. The sales revenue to be recorded is based on each contract.

Impact of New Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

Other than ASU 2023-09 discussed above, accounting pronouncements issued but not yet effective have been deemed to be not applicable or the adoption of such accounting pronouncements is not expected to have a material impact on the financial statements of the Company.

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK – Not Required for Smaller Reporting Companies.

ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are presented on pages 43 to 60 of this Report.

ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE – None.

ITEM 9A

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Act”)) as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of such date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by us in the reports we file or submit under the Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal accounting officer), we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of and for the year ended February 28, 2025. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B	OTHER INFORMATION - None.

ITEM 9C	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. – Not Applicable.

PART III

ITEM 10

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Identification of Directors

Name	Age	Position with the Company

Christopher L. Coccio, Ph.D.	84	Executive Chairman and Director
R. Stephen Harshbarger	57	Chief Executive Officer, President and Director
Eric Haskell, CPA	78	Director*
Adeniyi Lawal, Ph.D.	68	Director
Carol O’Donnell	68	Director*
Joseph Riemer, Ph.D.	76	Director
Philip A. Strasburg, CPA	86	Director*
Kirk Warshaw, CPA	67	Director

*Member of the Audit Committee.

Our Board of Directors is divided into two classes. The directors in each class serve for a term of two years. The terms of the classes are staggered so that only one class of directors is elected at each annual meeting of our shareholders. The terms of Mr. Haskell, Dr. Lawal and Ms. O’Donnell run until the annual meeting to be held in 2026, and in each case until their respective successors are duly elected and qualified.

The terms of Drs. Coccio and Riemer and Messrs. Strasburg, Harshbarger and Warshaw run until the annual meeting to be held in 2025, however, Mr. Strasburg has notified us that he will not stand for reelection and will resign effective upon the completion of our next annual meeting of shareholders in August 2025.

Audit Committee

We have a separate designated standing Audit Committee established and administered in accordance with SEC rules. The three members of the Audit Committee are Eric Haskell, CPA (who serves as Chairman of the Audit Committee), Carol O’Donnell and Philip A. Strasburg, CPA. The Board of Directors has determined that each member of the Audit Committee meets the independence criteria prescribed by NASDAQ governing the qualifications for audit committee members and each Audit Committee member meets NASDAQ’s financial knowledge requirements. The Board of Directors has determined that Mr. Haskell qualifies as an “audit committee financial expert,” as defined in the rules and regulations of the SEC.

The Audit Committee is responsible for (i) selecting an independent public accountant for ratification by the stockholders, (ii) reviewing material accounting items affecting the consolidated financial statements of the Company, and (iii) reporting its findings to the Board of Directors.

Compensation Committee

The Company’s executive compensation is administered by the Compensation Committee of the Board of Directors. The members of the Compensation Committee are Carol O’Donnell (who serves as Chairperson of the Compensation Committee), Dr. Riemer and Mr. Strasburg, whom have been determined by the Board to be independent in accordance with NASDAQ’s requirement for independent director oversight of executive officer compensation.

Nominating Committee

There have been no changes to the procedures by which shareholders may recommend nominees to the Board of Directors.

Family Relationships

There are no family relationships between any of our directors and officers.

Identification of Executive Officers

Name	Age	Position with the Company

Stephen J. Bagley, CPA	62	Chief Financial Officer
Christopher C. Cichetti	43	Chief Operating Officer
Christopher L. Coccio, Ph.D.	84	Executive Chairman and Director
R. Stephen Harshbarger	57	Chief Executive Officer, President and Director
Maria T. Kuha	48	Vice President – Manufacturing Operations

The foregoing officers are appointed for terms of one year or until their successors are duly appointed and qualified or until terminated by action of the Board of Directors. There are no arrangements or understandings between any executive officer and any other persons pursuant to which he was or is to be selected as an officer.

Business Experience

STEPHEN J. BAGLEY, CPA was appointed Chief Financial Officer of the Company in June 2005. From 1987 to 1991 he worked in public accounting in various capacities. From 1992 to 2005, he held various leadership positions as Controller, Chief Financial Officer and Vice President of Finance for companies with up to $45,000,000 in revenues. Mr. Bagley earned a Bachelor of Science degree from The State University of NY at Oneonta and an MBA from Marist University. He was licensed as a CPA in 1990. Mr. Bagley served on the OTCQX US Advisory Council from 2019 to 2020. Mr. Bagley is a past President of the Board of Education for the New Paltz Central School District and a past Chairman of the Audit and Finance Committee for the District.

CHRISTOPHER C. CICHETTI was appointed Chief Operating Officer in March 2025. From August 2022 until March 2025, Mr. Cichetti served as Vice President – Sales and Application Engineering of the Company. Mr. Cichetti joined Sono-Tek in 2005 as an Electrical Engineer and has served as Application Engineer, Senior Application Engineer, Application Engineering Manager, and Vice President of Application Engineering. Mr. Cichetti has experience in lab testing, process development, project management, and has successfully implemented several successful OEM relationships with outside vendors. He is a graduate of Worcester Polytechnic Institute with a major in Computer and Electrical Engineering and a minor in International Studies.

DR. CHRISTOPHER L. COCCIO has served as Executive Chairman of the Company since January 2024. Prior thereto, Dr. Coccio served as Sono-Tek’s Chief Executive Officer from April 2001 until January 2024. Dr. Coccio has been a Director of the Company since June 1998 and became Chairman of the Board of Directors in August 2007. From 1964 to 1996, he held various engineering, sales, marketing and management positions at General Electric Company, with P&L responsibilities for up to $100 million in sales and 500 people throughout the United States. He also won an ASME Congressional Fellowship and served with the Senate Energy Committee in 1976. His business experience includes both domestic and international markets and customers. He founded a management consulting business in 1996 and was appointed a legislative Fellow on the New York State Assembly’s Legislative Commission on Science and Technology from 1996 to 1998. From 1998 to 2001, he worked with Accumetrics Associates, Inc., a manufacturer of digital wireless telemetry systems, as Vice President of Business Development and member of the Board of Advisors. Dr. Coccio received a B.S.M.E. from Stevens Institute of Technology, an M.S.M.E. from the University of Colorado, and a Ph.D. from Rensselaer Polytechnic Institute in Chemical Engineering.

Key attributes, Experience and Skills: Dr. Coccio brings his strategic vision for our Company to the Board together with his leadership, business experience and investor relations skills. Dr. Coccio has an immense knowledge of our Company and its related applications which is beneficial to the Board. Dr. Coccio’s service as Executive Chairman bridges a critical gap between the Company’s management and the Board, enabling the Board to benefit from management’s perspective on the Company’s business while the Board performs its oversight function.

R. STEPHEN HARSHBARGER has been Chief Executive Officer and President of the Company since January 2024 and a Director since 2013. Mr. Harshbarger originally joined Sono-Tek in 1993 and became President in 2012.

Before becoming Chief Executive Officer and President, Mr. Harshbarger honed his expertise through various pivotal roles within Sono-Tek, including Sales Engineer, Worldwide Sales and Marketing Manager, Vice President & Director of Electronics and Advanced Energy (E&AE), and Executive Vice President. Under his stewardship, the sales organization flourished, with a global distribution network spanning over 40 countries and boasting a revenue surge of over 300%.

Mr. Harshbarger is a recognized authority in ultrasonic coating equipment, particularly within the electronics, medical device, and advanced energy sectors. Prior to his tenure at Sono-Tek, he played a pivotal role as the Sales and Marketing Manager for Plasmaco Inc., a pioneer in the development of Flat Panel Displays, where he spearheaded the establishment of their distribution network, participated in venture capital funding, and introduced the first flat panels to the Wall Street trading floors. Mr. Harshbarger graduated from Bentley University, with a major in Finance and a minor in Marketing.

Key attributes Experience and Skills: Mr. Harshbarger is a pivotal asset to Sono-Tek and its Board. Renowned as one of the foremost ultrasonic coating experts globally, he has a proven successful track record of identifying, developing, and implementing innovative technologies for diverse markets and applications. His adeptness in cultivating robust distribution networks and his deep understanding of ultrasonic coating for new product developments are invaluable assets that drive the Company’s growth and innovation. Moreover, Mr. Harshbarger’s leadership and oversight prowess further enrich the strategic vision of the Board, ensuring that Sono-Tek remains at the forefront of technological advancement and market leadership.

ERIC HASKELL, CPA has been a Director since August 2009. He has over 40 years of experience in senior financial positions at several public and private companies. He has significant expertise in the areas of acquisitions and divestitures, strategic planning and investor relations. From December 2005 through March 2008, Mr. Haskell served as the Executive Vice President and Chief Financial Officer of SunCom Wireless Holdings, Inc., a company providing digital wireless communications services which was publicly traded until its merger with a wholly-owned subsidiary of T-Mobile USA, Inc. in February 2008. He also served as a member of SunCom’s Board of Directors from November 2003 through May 2007. From 1989 until April 2004, Mr. Haskell served as the Chief Financial Officer of Systems & Computer Technology Corp., a NASDAQ listed software and services corporation. He has served as Audit Committee Chairman since 2023. Mr. Haskell received a Bachelors Degree in Business Administration from Adelphi University in 1969.

Key attributes, Experience and Skills: Mr. Haskell’s training and extensive experience in financial management at both public and private companies provide the Board with valuable insights. Mr. Haskell’s significant experience in acquisitions and divestitures and investor relations bring strategic judgment and experience to the Board. Mr. Haskell’s strong operational and business background complement his accounting and finance experience and are valuable resources to the Board as it exercises its oversight duties and support of the Company’s growth strategies.

MARIA T. KUHA joined Sono-Tek in 2007. Mrs. Kuha was appointed VP, Manufacturing Operations, Procurement & Logistics in September 2022. Prior to assuming her present position, Mrs. Kuha served as Operations Director, Purchasing Manager, and several other positions within the procurement aspects of Sono-Tek; providing extensive expertise in several vital areas of Sono-Tek operations.

Prior to joining Sono-Tek, Mrs. Kuha held various positions in high tech manufacturing companies revolving around purchasing and operations. She holds an AAS in business from Dutchess County Community College.

DR. ADENIYI LAWAL became a Director in April 2024. He has considerable experience in both industries and academia, having worked with Shell Petroleum Development Company, Texaco Overseas Oil Company, and three different universities. Currently he’s a Professor of Chemical Engineering at the Department of Chemical Engineering & Materials Science, Stevens Institute of Technology where he has been a member of the faculty for over twenty-five years. At Stevens, he has held several administrative positions, including Program Director, Associate Department Chair, and now, Department Chair. Dr. Lawal has directed research groups in academia, and has been a highly successful researcher, having executed several multi-million dollar, and multi-year projects funded by the Department of Energy and the Department of Defense. ACS-Petroleum Research Fund, GAF Materials Corporation, Phillips Netherlands, and International Flavors & Fragrances have also funded his research. He has published extensively in highly esteemed, archival journals and is the recipient of five U.S. and international patents. Dr. Lawal has also been active in scientific societies, organized and chaired national and international conferences. He received a B.Sc (Honors) Degree in Engineering from the University of Ibadan, Nigeria, an S.M. Degree from the Massachusetts Institute of Technology and a Ph.D. from McGill University, Canada, both in Chemical Engineering.

Key Attributes, Experience, and Skills: Dr. Lawal’s core expertise is in catalysis, reaction engineering and process intensification with specific application to renewable energy. His extensive research experience and knowledge of the renewable energy landscape bring valuable insights to the Board on emerging local and global business opportunities in green energy. His administrative and leadership experience that has spanned decades is also of value to the Board.

CAROL O’DONNELL has been a Director since November 2018. Ms. O’Donnell joined Protégé Partners, an industry leading firm investing in and seeding smaller and emerging hedge fund managers in 2016 and has served as Chief Executive Officer since 2018. She also provides consulting services to OpenDeal, Inc., a financial services company. Prior to joining Protégé Partners, Ms. O’Donnell was the Director of Legal and Compliance with DARA Capital US, Inc., a Swiss-owned boutique registered investment advisory and wealth management firm from 2013 to 2016. She also served as General Counsel to Boothbay Fund Management LLC, a registered investment adviser, from December 2019 through May 2021, and was General Counsel and Chief Compliance Officer of each of the Permal Group and Framework Investment Group from 2004 through 2011 and from 2002 to 2004, respectively. Ms. O’Donnell is a director of Apimeds Pharmaceuticals, Inc., a New York Stock Exchange listed company (NYSE: APUS), and a trustee of various family trusts. Ms. O’Donnell is admitted to practice law in the States of New York and Connecticut.

Key attributes, Experience and Skills: Ms. O’Donnell’s extensive experience as an attorney enables her to bring valuable strategic insights to the Board in the areas of corporate governance, finance and securities law. Ms. O’Donnell also brings leadership and oversight experience to the Board.

DR. JOSEPH RIEMER joined the Company in January 2007 as Vice President of Engineering and has been a Director since August 2007. Dr. Riemer served as President from September 2007 until August 2012 when he became Vice President of Food Business Development, which position he held until June 2016. Dr. Riemer holds a Ph.D. in Food Science and Technology from the Massachusetts Institute of Technology (MIT), focusing on food technology, food chemistry, biochemical analysis, and food microbiology. His experience includes seven years with Pfizer in its Adams Confectionary Division, where he was Director, Global Operations Development. Dr. Riemer has also held leading positions with several food, food ingredients, and personal care products companies. He has served in the capacities of research and development, operations, and general management. Prior to joining the Company, he was a management consultant serving clients in the food, biotech and pharmaceutical industries.

Key attributes, Experience and Skills: Dr. Riemer’s extensive research and management experience enables him to bring valuable insights to the Board. His considerable experience in the biotech, food and pharmaceutical industries bring specific product application insights to the Board. Dr. Riemer’s previous service as Vice President of Food Business Development helps to provide focus to the Board on this important marketing area. Dr. Riemer also brings leadership and oversight experience to the Board.

PHILIP STRASBURG, CPA, has been a Director since August 2004. He is a retired partner from the firm of Anchin Block and Anchin, LLP and has 40 years of experience in auditing. He served as Audit Committee Chairman from 2005 through 2023. He was the lead partner on the Sono-Tek account from fiscal 1994 to fiscal 1996. Mr. Strasburg is a certified public accountant in New York State. He has a Master of Science in economics from The London School of Economics and Political Science and a Bachelor of Science degree from Lehigh University, where he majored in business administration.

Key attributes, Experience and Skills: Mr. Strasburg's training and extensive experience in auditing provide the Board with valuable insights and skills. Mr. Strasburg's strong operational and business background complement his accounting and finance experience, and are valuable resources to the Board as it exercises its oversight duties and support of the Company's growth strategies.

KIRK WARSHAW, CPA, has been a director since May 2025. He has over 40 years of experience in financial and general management across a diverse range of industries. Since 2015, he has served as the Executive Chairman of Bogue Machine Company, a state-of-the-art machining operation that produces complex components for both commercial and defense contractors, and as Chief Executive Officer and Chief Financial Officer of UAV Turbines, a company focused on developing small turbine engine systems for aerospace and military applications. Mr. Warshaw has also provided advisory services and held interim executive leadership roles at numerous companies, specializing in financial oversight, corporate restructuring, and strategic growth. Earlier in his career, Mr. Warshaw worked in public accounting and financial institutions, earning his CPA in 1982.

Key attributes, Experience and Skills: Mr. Warshaw’s extensive experience in financial and operational management at both public and private companies provides the Board with valuable insights. Mr. Warshaw’s significant experience in acquisitions and divestitures and strong operational, accounting, and finance background are valuable resources to the Board as it exercises its oversight duties and support of the Company’s growth strategies.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our Directors, executive officers and persons who own more than ten percent of our common stock to file with the Securities and Exchange Commission initial reports of beneficial ownership and reports of changes of beneficial ownership of common stock. Such persons are also required by Securities and Exchange Commission regulations to furnish us with copies of all such reports. Based solely on a review of such filings, during the year ended February 28, 2025, all of our Directors and executive officers and holders of more than ten percent of our stock have made timely filings of such reports.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers, and employees. This code of ethics is designed to comply with the NASDAQ marketplace rules related to codes of conduct. A copy of the Company's Code of Ethics is posted on the "information for investors" web page located at http://www.sono-tek.com/code-of-ethics/ and is available in print to any shareholder who requests a copy. The Company intends to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our code of ethics by posting such information on the Company’s website.

Insider Trading Policy

We have adopted an Insider Trading Policy governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees, and by the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of the policy is filed as Exhibit 19 to this Annual Report on Form 10-K.

ITEM 11

EXECUTIVE COMPENSATION

The following table sets forth the aggregate remuneration paid or accrued by the Company for fiscal 2025 and fiscal 2024 for each named officer of the Company.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards	Option Awards¹ ($)	All Other Compensation²	Total ($)

Christopher L. Coccio³ CEO, Executive Chairman and Director	2025 2024	— 193,800	— 48,000	— 0	— 15,000	— 7,300	— 264,100
R. Stephen Harshbarger⁴ CEO, President and Director	2025 2024	265,000 252,300	50,500 55,000	0 0	60,000 15,000	10,000 9,200	385,500 331,500
Stephen J. Bagley Chief Financial Officer	2025 2024	185,000 176,500	37,400 44,000	0 0	25,000 7,500	7,200 6,600	254,600 234,600
Christopher C. Cichetti Chief Operating Officer	2025 2024	200,000 179,800	37,400 37,000	0 0	90,000 27,500	7,400 6,500	334,800 250,800

Option awards in the above table are calculated using the Black-Scholes options pricing model which is further discussed in Note 4 – Stock Based Compensation, in the Company’s consolidated financial statements.

All Other Compensation represents Company contributions to the Company’s 401K plan.

Dr. Coccio stepped down as CEO (Principal Executive Officer) on January 1, 2024 and became Executive Chairman. Dr. Coccio was not a “named executive officer” for purposes of this Table in fiscal 2025.

⁴

Mr. Harshbarger became CEO (Principal Executive Officer) on January 1, 2024.

Officer Compensation Arrangements

During fiscal 2025, Mr. Harshbarger was compensated at the rate of $265,000 per annum.

During fiscal 2025, Mr. Bagley was compensated at the rate of $185,000 per annum.

During fiscal 2025, Mr. Cichetti was compensated at the rate of $200,000 per annum.

In addition, each named officer earned bonus compensation based on the achievement of certain operating objectives.

Outstanding Equity Awards at Fiscal Year End

Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expiration Date

R. Stephen Harshbarger	5,815	—	6.05	11/18/2031
CEO, President and Director	16,340	—	6.26	02/17/2032
	3,150	787	5.96	11/17/2032
	2,096	2,562	5.00	11/16/2033
	—	23,166	4.12	08/22/2034

Stephen J. Bagley	2,750	—	4.45	01/15/2031
Chief Financial Officer	9,804	—	6.26	02/17/2032
	1,575	394	5.96	11/17/2032
	1,048	1,281	5.00	11/16/2033
	—	9,653	4.12	08/22/2034

Christopher C. Cichetti	2,750	—	4.45	01/15/2031
Chief Operating Officer	9,804	—	6.26	02/17/2032
	1,575	394	5.96	11/17/2032
	1,048	1,281	5.00	11/16/2033
	2,795	3,416	5.00	11/16/2033
	—	34,749	4.12	08/22/2034

Estimated Payments and Benefits Upon Termination or Change in Control

The Company has entered into Executive Agreements with Stephen J. Bagley, the Company’s Chief Financial Officer and Christopher L. Coccio, the Company’s Executive Chairman. The Company also entered into an Executive Agreement with R. Stephen Harshbarger, the Company’s Chief Executive Officer and President. The agreements, as amended, provide that in the event of a change of control of the Company followed by a termination of the executives’ employment under certain circumstances, the officers shall receive severance payments equal to two years of the executive’s annual base, commissions and bonus compensation paid by the Company for the previous calendar year.

Based on last year’s salary arrangements, if the rights of the foregoing officers were to be triggered following a change of control, they would be entitled to the following payments from the Company: Stephen J. Bagley $471,000, Christopher L. Coccio $431,000 and R. Stephen Harshbarger $659,000.

Severance Agreements

The Company has entered into severance agreements with Stephen J. Bagley, Chief Financial Officer, Christopher Cichetti, Chief Operating Officer, Christopher L. Coccio, Executive Chairman and R. Stephen Harshbarger Chief Executive Officer and President. The agreements provide that in the event of termination of the executive’s employment, other than for the cause, the officers shall receive severance payments equal to two weeks of compensation for each full year employed by the Company.

Clawback Policy

Our Board has adopted an executive compensation recoupment policy consistent with the requirements of the Exchange Act Rule 10D-1 and the Nasdaq listing standards thereunder, to help ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive targets. Our policy addresses recoupment of amounts from performance-based awards paid to all corporate officers, including awards under our equity incentive plans, in the event of a financial restatement to the extent that the payout for such awards would have been less, or in the event of fraud, or intentional, willful or gross misconduct that contributed to the need for a financial restatement.

Compensation of Directors

Each non-employee director receives $2,500 for each meeting attended. Directors who are employees of the Company receive no additional compensation for serving as directors. For the year ended February 28, 2025, director compensation was as follows:

2025 Director Compensation

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Christopher Coccio	—	—	50,000¹	—	—	210,400²	260,400
Eric Haskell	10,000	—	10,000³	—	—	—	20,000
Adeniyi Lawal	10,000	—	10,000⁴	—	—	—	20,000
Carol O’Donnell	10,000	—	10,000⁵	—	—	—	20,000
Philip Strasburg	10,000	—	10,000⁶	—	—	—	20,000
Joseph Riemer	10,000	—	10,000⁷	—	—	—	20,000

¹	During fiscal 2025, Dr. Coccio received a grant of 22,222 options exercisable at $4.12 per share. At the end of fiscal 2025, Dr. Coccio held an aggregate of 70,504 stock options.
²	Represents salary of $160,000 and bonus of $43,000 paid to Dr. Coccio during fiscal 2025 in connection with his service as Executive Chairman and a Company contribution of $7,400 to the Company’s 401k plan.
³	During fiscal 2025, Mr. Haskell received a grant of 5,333 options exercisable at $4.12 per share. At the end of fiscal 2025, Mr. Haskell held an aggregate of 28,359 stock options.
⁴	During fiscal 2025, Dr. Lawal received a grant of 5,333 options exercisable at $4.12 per share. At the end of fiscal 2025, Dr. Lawal held an aggregate of 5,333 stock options.
⁵	During fiscal 2025, Ms. O’Donnell received a grant of 5,333 options exercisable at $4.12 per share. At the end of fiscal 2025, Ms. O’Donnell held an aggregate of 18,359 stock options.
⁶	During fiscal 2025, Mr. Strasburg received a grant of 5,333 options exercisable at $4.12 per share. At the end of fiscal 2025, Mr. Strasburg held an aggregate of 15,636 stock options.
⁷	During fiscal 2025, Dr. Riemer received a grant of 5,333 options exercisable at $4.12 per share. At the end of fiscal 2025, Dr. Riemer held an aggregate of 20,359 stock options.

ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following information is furnished as of May 23, 2025 to indicate beneficial ownership of the Company's Common Stock by each Director, by each named executive officer, by all Directors and executive officers as a group, and by each person known to the Company to be the beneficial owner of more than 5% of the Company's outstanding Common Stock. Such information has been furnished to the Company by the indicated owners. Unless otherwise indicated, the named person has sole voting and investment power.

Name (and address if more than 5%) of Beneficial owner	Amount Beneficially Owned		Percent
Directors and Officers
*Stephen J. Bagley	55,323	¹	**
*Christopher Cichetti	17,972	²	**
*Christopher L. Coccio	370,555	³	2.35%
*R. Stephen Harshbarger	292,679	⁴	1.86%
*Eric Haskell	29,503	⁵	**
*Adeniyi Lawal	—		**
*Carol O’Donnell	32,344	⁶	**
*Joseph Riemer	31,006	⁷	**
*Philip A. Strasburg	37,739	⁸	**
*Kirk Warshaw	1,000		**

All Executive Officers and Directors as a Group	872,995	⁹	5.50%

Additional 5% owners

SEC Form 10-K filed by Sono-Tek Corporation