SONO TEK CORP 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: May 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-16035 (Exact name of registrant as specified in its charter) New York 14-1568099 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2012 Rt. 9W , Milton , NY 12547 (Address of Principal Executive Offices) (Zip Code) Issuer's telephone no., 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 per share SOTK NASDAQ 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 checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Outstanding as of July 14, 2022 Class Common Stock, par value $.01 per share 15,734,728 SONO-TEK CORPORATION INDEX Part I – Financial Information Page Item 1 – Condensed Consolidated Financial Statements: 1 – 4 Condensed Consolidated Balance Sheets – May 31, 2022 (Unaudited) and February 28, 2022 1 Condensed Consolidated Statements of Income – Three Months Ended May 31, 2022 and 2021 (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity – Three Months Ended May 31, 2022 and 2021 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows – Three Months Ended May 31, 2022 and 2021 (Unaudited) 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 – 11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 12 –18 Item 3 – Quantitative and Qualitative Disclosures about Market Risk 19 Item 4 – Controls and Procedures 19 Part II – Other Information 20 Signatures and Certifications 21 SONO-TEK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS May 31, 2022 February 28, (Unaudited) 2022 ASSETS Current Assets: Cash and cash equivalents $ 7,675,112 $ 4,840,558 Marketable securities 3,398,931 5,867,990 Accounts receivable (less allowance of $ 56,123 ) 1,486,371 1,092,505 Inventories, net 2,893,196 2,373,242 Prepaid expenses and other current assets 206,885 323,304 Total current assets 15,660,495 14,497,599 Land 250,000 250,000 Buildings, net 1,607,814 1,621,878 Equipment, furnishings and building improvements, net 904,827 939,306 Intangible assets, net 71,249 76,015 Deferred tax asset 255,412 240,736 TOTAL ASSETS $ 18,749,797 $ 17,625,534 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 983,130 $ 684,511 Accrued expenses 1,688,372 1,804,028 Customer deposits 1,665,136 1,167,968 Income taxes payable 129,626 58,874 Total current liabilities 4,466,264 3,715,381 Deferred tax liability 167,215 168,840 Total liabilities 4,633,479 3,884,221 Stockholders’ Equity Common stock, $ .01 par value; 25,000,000 shares authorized, 15,729,175 and 15,729,175 shares issued and outstanding, respectively 157,292 157,292 Additional paid-in capital 9,379,656 9,310,287 Accumulated earnings 4,579,370 4,273,734 Total stockholders’ equity 14,116,318 13,741,313 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,749,797 $ 17,625,534 See notes to unaudited condensed consolidated financial statements. 1 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended May 31, 2022 2021 Net Sales $ 4,051,535 $ 3,644,468 Cost of Goods Sold 1,944,522 1,820,303 Gross Profit 2,107,013 1,824,165 Operating Expenses Research and product development costs 516,633 413,816 Marketing and selling expenses 789,862 764,642 General and administrative costs 419,993 302,799 Total Operating Expenses 1,726,488 1,481,257 Operating Income 380,525 342,908 Interest and Dividend Income 7,415 3,360 Net unrealized loss on marketable securities ( 11,853 ) — Paycheck Protection Program Loan Forgiveness — 1,005,372 Income Before Income Taxes 376,087 1,351,640 Income Tax Expense 70,451 84,888 Net Income $ 305,636 $ 1,266,752 Basic Earnings Per Share $ 0.02 $ 0.08 Diluted Earnings Per Share $ 0.02 $ 0.08 Weighted Average Shares - Basic 15,729,175 15,494,421 Weighted Average Shares - Diluted 15,752,424 15,663,772 See notes to unaudited condensed consolidated financial statements. 2 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY THREE MONTHS ENDED MAY 31, 2022 AND 2021 Common Stock Par Value $.01 Additional Paid – In Accumulated Total Stockholders’ Shares Amount Capital Earnings Equity Balance, February 28, 2022 15,729,175 $ 157,292 $ 9,310,287 $ 4,273,734 $ 13,741,313 Stock based compensation expense 69,369 69,369 Net Income — 305,636 305,636 Balance, May 31, 2022 (unaudited) 15,729,175 $ 157,292 $ 9,379,656 $ 4,579,370 $ 14,116,318 Balance, February 28, 2021 15,452,656 $ 154,527 $ 9,064,994 $ 1,731,161 $ 10,950,682 Stock based compensation expense 21,637 21,637 Cashless exercise of stock options 49,901 499 ( 499 ) — Net Income 1,266,752 1,266,752 Balance, May 31, 2021 (unaudited) 15,502,557 $ 155,026 $ 9,086,132 $ 2,997,913 $ 12,239,071 Accumulated Earnings See notes to unaudited condensed consolidated financial statements. 3 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended May 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 305,636 $ 1,266,752 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 107,640 107,553 Stock based compensation expense 69,369 21,637 Inventory reserve — 31,000 Paycheck Protection Program Loan Forgiveness — ( 1,005,372 ) Unrealized loss on marketable securities 11,853 — Deferred tax expense ( 14,676 ) 1,167 Decrease (Increase) in: Accounts receivable ( 393,866 ) 589,231 Inventories ( 519,955 ) ( 32,114 ) Prepaid expenses and other current assets 116,419 42,860 (Decrease) Increase in: Accounts payable and accrued expenses 182,963 ( 464,960 ) Customer deposits 497,168 80,530 Income taxes payable 69,127 83,721 Net Cash Provided by Operating Activities 431,678 722,005 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment, furnishings and leasehold improvements ( 54,331 ) ( 85,548 ) Sale of marketable securities 2,457,207 1,073,112 Net Cash Provided by Investing Activities 2,402,876 987,564 NET INCREASE IN CASH AND CASH EQUIVALENTS 2,834,554 1,709,569 CASH AND CASH EQUIVALENTS Beginning of period 4,840,558 4,084,078 End of period $ 7,675,112 $ 5,793,647 SUPPLEMENTAL CASH FLOW DISCLOSURE: Interest paid $ — $ — Taxes Paid $ 16,000 $ — See notes to unaudited condensed consolidated financial statements. 4 SONO-TEK CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MAY 31, 2022 and 2021 (Unaudited) NOTE 1: BUSINESS DESCRIPTION Sono-Tek Corporation (the “Company”, “Sono-Tek”, “We” or “Our”) was incorporated in New York on March 21, 1975. We are 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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. The results for the interim periods are not necessarily indicative of what the results will be for the fiscal year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended February 28, 2022 (“fiscal year 2022”) contained in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on May 24, 2022 . The Company’s current fiscal year ends on February 28, 2023 (“fiscal 2023”). NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable, net - In the normal course of business, the Company extends credit to customers. Accounts receivable, less the allowance for doubtful accounts, reflect the net realizable value of receivables and approximate fair value. The Company records a bad debt expense/allowance based on management’s estimate of uncollectible accounts. All outstanding accounts receivable accounts are reviewed for collectability on an individual basis. Cash and Cash Equivalents - Cash and cash equivalents consist of money market mutual funds, short term commercial paper and short-term certificates of deposit with original maturities of 90 days or less. Consolidation - The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Sono-Tek Industrial Park, LLC (“SIP”) in conformity with generally accepted accounting principles in the United States (“GAAP”). SIP operates as a real estate holding company for the Company’s real estate operations. All intercompany accounts and transactions have been eliminated in consolidation. Earnings Per Share - Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Equipment, Furnishings and Leasehold Improvements - Equipment, furnishings and leasehold improvements are stated at cost. Depreciation of equipment and furnishings is computed by use of the straight-line method based on the estimated useful lives of the assets, which range from three to five years . 5 Fair Value of Financial Instruments - The Company applies Accounting Standards Codification (“ASC”) 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts of financial instruments reported in the accompanying unaudited condensed consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short-term maturities of the financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The fair values of financial assets of the Company were determined using the following categories at May 31, 2022 and February 28, 2022, respectively: Significant Accounting Policies - Fair values of financial assets of the Company Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Marketable Securities – May 31, 2022 $ 3,398,931 $ — $ — $ 3,398,931 Marketable Securities – February 28, 2022 $ 5,716,338 $ 151,652 $ — $ 5,867,990 Marketable Securities include certificates of deposit and US Treasury securities that are considered to be highly liquid and easily tradeable totaling $ 3,398,931 and $ 5,867,990 as of May 31, 2022 and February 28, 2022, respectively. US Treasury securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 and certificates of deposit are classified as Level 2 within the Company’s fair value hierarchy. The Company’s marketable securities are considered to be trading securities as defined under ASC 320 “Investments – Debt and Equity Securities.” 6 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. 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. The Company uses a recognition threshold and a measurement attribute for financial statement recognition and measurement of 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 May 31, 2022 and February 28, 2022, there were no accruals for uncertain tax positions. Intangible Assets - Include costs of patent applications which are deferred and charged to operations over seventeen years for domestic patents and twelve years for foreign patents. The accumulated amortization of patents is $ 195,038 and $ 192,490 at May 31, 2022 and February 28, 2022, respectively. Annual amortization expense of such intangible assets is expected to be approximately $ 11,000 per year for the next five years. Inventories - Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method for raw materials, subassemblies and work-in-progress and the specific identification method for finished goods. Management compares the cost of inventory with the net realizable value and, if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost. On an ongoing basis, inventory is reviewed for potential write-down for estimated obsolescence or unmarketable inventory based upon forecasts for future demand and market conditions. Land and Buildings - Land and buildings are stated at cost. Buildings are being depreciated by use of the straight-line method based on an estimated useful life of forty years. Long-Lived Assets - The Company periodically evaluates the carrying value of long-lived assets, including intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. No impairment losses were identified or recorded in the three months ended May 31, 2022 and May 31, 2021 on the Company’s long-lived assets. Management Estimates - The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Pronouncements - In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses, have been released in November 2018 (2018-19), November 2019 (2019-10 and 2019-11) and a January 2020 Update (2020-02) that provided additional guidance on this Topic. This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For SEC filers meeting certain criteria, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For SEC filers that meet the criteria of a smaller reporting company (including this Company) and for non-SEC registrant public companies and other organizations, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently in the process of its analysis of the impact of this guidance on its consolidated financial statements and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. 7 Other than Accounting Standards Update (“ASU”) 2019-12 and ASU 2016-13 discussed above, all new accounting pronouncements issued but not yet effective have been deemed to be not applicable to the Company. Hence, the adoption of these new accounting pronouncements, once effective, is not expected to have an impact on the Company. Product Warranty - Expected future product warranty expense is recorded when the product is sold. Research and Product Development Expenses - Research and product development expenses represent engineering and other expenditures incurred for developing new products, for refining the Company's existing products and for developing systems to meet unique customer specifications for potential orders or for new industry applications and are expensed as incurred. 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. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: · Identification of the contract, or contracts, with a customer · Identification of the performance obligations in the contract · Determination of the transaction price · Allocation of the transaction price to the performance obligations in the contract · Recognition of revenue when, or as, performance obligations are satisfied Shipping and Handling Costs - Shipping and handling costs are included in cost of sales in the accompanying consolidated statements of operations. Stock-Based Compensation - The Company currently uses a Black-Scholes option pricing model to calculate the fair value of its stock options. The fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected lives of the awards. The Company primarily uses historical data to determine the assumptions to be used in the Black-Scholes model. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. ASC 718 requires the recognition of the fair value of stock compensation expense to be recognized over the vesting term of such award. The Company accounts for forfeitures as they occur. Uncertainties - Since early 2020, when the World Health Organization established the transmissible and pathogenic coronavirus a global pandemic, there have been business slowdowns. The outbreak of such a communicable disease has resulted in a widespread health crisis which has adversely affected general commercial activity and the economies and financial markets of many countries, including the United States. As the outbreak of the disease has continued through fiscal 2022 and into fiscal 2023, the measures taken by the governments of impacted countries have, at times, adversely affected the Company’s business, financial condition, and results of operations. Pandemic related supply shortages and increased energy expenses resulting from the war in Ukraine have recently created worldwide inflationary pressures which may have a material adverse effect on the Company's business, financial condition, and results of operations if such factors continue unabated. 8 NOTE 3: REVENUE RECOGNITION A majority of the Company’s sales revenue is derived primarily from short term contracts with customers, which, on average, are in effect for less than twelve months. Sales revenue from manufactured equipment transferred at a single point in time accounts for a majority of the Company’s revenue. Sales revenue is recognized when control of the Company’s manufactured equipment is transferred to its customers, in an amount that reflects the consideration the Company expects to receive based upon the agreed transaction price. The Company’s performance obligations are satisfied when its customers take control of the purchased equipment, which is based on the contract terms. Based on prior experience, the Company reasonably estimates its sales returns and warranty reserves. Sales are presented net of discounts and allowances. Discounts and allowances are determined when a sale is negotiated. The Company does not grant its customers or independent representatives, the ability to return equipment nor does it grant price adjustments after a sale is complete. The Company does not capitalize any sales commission costs related to the acquisition of a contract. All commissions related to a performance obligation that are satisfied at a point in time are expensed when the customer takes control of the purchased equipment. The Company applies the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one-year or less. At May 31, 2022, the Company had received $ 1,665,000 in cash deposits, and had issued Letters of Credit in the amount of $ 21,000 to secure these cash deposits. At May 31, 2022, the Company was utilizing $21,000 of its available credit line to collateralize these letters of credit . At February 28, 2022, the Company had received $ 1,168,000 in cash deposits for customer orders. During the three months ended May 31, 2022 the Company recognized $ 959,000 of these deposits as revenue. The Company’s sales revenue, by product line is as follows: Revenue Recognition - Sales Revenue by Product Line Three Months Ended May 31, 2022 % of total 2021 % of total Fluxing Systems $ 309,000 8 % $ 358,000 10 % Integrated Coating Systems 168,000 4 % 155,000 4 % Multi-Axis Coating Systems 1,979,000 49 % 2,079,000 57 % OEM Systems 554,000 14 % 326,000 9 % Spare Parts, Services and Other 1,042,000 25 % 726,000 20 % TOTAL $ 4,052,000 $ 3,644,000 NOTE 4: INVENTORIES Inventories consist of the following: Inventories - Schedule of Inventory, Current May 31, February 28, 2022 2022 Raw materials and subassemblies $ 1,676,995 $ 1,439,465 Finished goods 858,885 918,318 Work in process 684,977 343,120 Total 3,220,857 2,700,903 Less: Allowance ( 327,661 ) ( 327,661 ) Net inventories $ 2,893,196 $ 2,373,242 9 NOTE 5: STOCK OPTIONS Stock Options – Under the 2013 Stock Incentive Plan ("2013 Plan"), options can be granted to officers, directors, consultants and employees of the Company and its subsidiaries to purchase up to 2,500,000 shares of the Company's common stock. Under the 2013 Plan options expire ten years after the date of grant. As of May 31, 2022, there were 242,659 options outstanding under the 2013 Plan, of which 51,690 are vested. Under the 2003 Stock Incentive Plan, as amended ("2003 Plan"), until May 2013, options were available to be granted to officers, directors, consultants and employees of the Company and its subsidiaries to purchase up to 1,500,000 shares of the Company's common stock. As of May 31, 2022, there were 10,000 options outstanding and vested under the 2003 Plan, under which no additional options may be granted. NOTE 6: STOCK BASED COMPENSATION During the three months ended May 31, 2022, the Company granted options to acquire 1,408 shares to employees at an exercise price of $ 5.80 . The options granted to employees vest over three years and expire ten years from the date of issuance. The options granted during the three months ended May 31, 2022 had a grant date fair value of $ 3.55 per share. The weighted-average fair value of options are estimated on the date of grant using the Black-Scholes options-pricing model. The weighted-average Black-Scholes assumptions are as follows: Weighted-average Black-Scholes assumptions Three Months Ended May 31, 2022 Expected Life 8 years Risk free interest rate 2.82 % Expected volatility 55.02 % Expected dividend yield 0 % For the three months ended May 31, 2022 and 2021, net income and earnings per share reflect the actual expense for stock-based compensation. The impact of applying ASC 718 approximated $ 69,000 and $ 22,000 in compensation expense during the three months ended May 31, 2022 and 2021, respectively. NOTE 7: EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Earnings Per Share - Computation of basic and diluted earnings per share Three Months Ended May 31, 2022 2021 Numerator for basic and diluted earnings per share $ 305,636 $ 1,266,752 Denominator for basic earnings per share - weighted average 15,729,175 15,494,421 Effects of dilutive securities: Stock options for employees, directors and outside consultants 23,249 169,351 Denominator for diluted earnings per share 15,752,424 15,663,772 Basic Earnings Per Share $ 0.02 $ 0.08 Diluted Earnings Per Share $ 0.02 $ 0.08 10 NOTE 8: REVOLVING LINE OF CREDIT The Company has a $ 1,500,000 revolving line of credit at prime which was 4.00 % at May 31, 2022 and 3.25 % at February 28, 2022. The revolving credit line is collateralized by the Company’s accounts receivable and inventory. The revolving credit line is payable on demand and must be retired for a 30-day period, once annually. If the Company fails to perform the 30-day annual pay down or if the bank elects to terminate the credit line, the bank may, at its option, convert the outstanding balance to a 36-month term note with payments including interest in 36 equal installments. As of May 31, 2022, $ 21,000 of the Company’s credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to the Company on existing orders. The letters of credit expire in 2023. As of May 31, 2022, there were no outstanding borrowings under the line of credit and the unused portion of the credit line was $ 1,479,000 . NOTE 9: CUSTOMER CONCENTRATIONS AND FOREIGN SALES Export sales to customers located outside the United States and Canada were approximately as follows: Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales May 31, 2022 May 31, 2021 Asia Pacific (APAC) Asia Pacific (APAC) 706,000 1,222,000 Europe, Middle East, Asia (EMEA) Europe, Middle East, Asia (EMEA) 990,000 842,000 Latin America Latin America 418,000 352,000 $ 2,114,000 $ 2,416,000 During the three months ended May 31, 2022 and 2021, sales to foreign customers accounted for approximately $ 2,114,000 and $ 2,416,000 , or 52 % and 66 % respectively, of total revenues. The Company had seven customers which accounted for 40 % of sales during the first quarter of fiscal 2023. Four customers accounted for 46 % of the outstanding accounts receivables at May 31, 2022. The Company had three customers which accounted for 33 % of sales during the first quarter of fiscal 2022. Four customers accounted for 54 % of the outstanding accounts receivables at May 31, 2021. 11 ITEM 2 – 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, including inflationary pressures; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; the duration and scope of the COVID-19 pandemic; the extent and duration of the pandemic’s adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; our ability to sell and provide our services and products, including as a result of continued pandemic related travel restrictions, mandatory business closures, and stay-at home or similar orders; any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations resulting from the pandemic; the ability of our customers and suppliers to continue their operations as result of the pandemic, which could result in terminations of contracts, losses of revenue; and further adverse effects to our supply chain; maintenance of increased order backlog, including effects of any COVID-19 related cancellations; the imposition of tariffs; the continued strong sales of the multi-axis coatings systems; 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; maintenance of increased order backlog; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the clean energy, diagnostic test and next generation semiconductor chip manufacturing markets; successful implementation of initiatives advanced energy, medical device applications and next generation high precision semiconductor coating applications; 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. Overview Founded in 1975, Sono-Tek Corporation designs and manufactures ultrasonic coating systems that apply precise, thin film coatings to a multitude of products for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive. We also sell our products to emerging research and development and other markets. 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. 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 thin layers of protective materials over a surface such as glass or metals. Our 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. 12 We believe product superiority is imperative and that it is attained through the extensive experience we have in the coatings industry, our proprietary manufacturing know-how and skills and the unique work force we have built over the years. Our growth strategy is to leverage our innovative technologies, proprietary know-how, unique talent and experience, and global reach to further advance the use of ultrasonic coating technologies for the microscopic coating of surfaces in a broader array of applications that enable better outcomes for our customers’ products and processes. We are a global business with approximately 52% of our sales generated from outside the United States and Canada in the first three months of fiscal 2023. Our direct sales team and our distributor and sales representative network are located in North America, Latin America, Europe and Asia. Over the last few years, we have expanded our sales capabilities by increasing the size of our direct sales force and adding new distributors and sales representatives. In addition, we have established testing labs at our distribution partner sites in China, Taiwan, Germany, Turkey, Korea and Japan, while also expanding our first testing lab that is co-located with our manufacturing facilities in New York. These labs provide significant value for demonstrating to prospective customers the capabilities of our equipment and enabling us to develop custom solutions to meet their needs. Over the last decade, we have shifted our business from primarily selling our ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems to original equipment manufacturers (“OEMs”). This strategy has resulted in significant growth of our average unit selling price; with our larger machines often selling for over $300,000 and system prices sometimes reaching over $1,000,000. As a result of this transition, we have broadened our addressable market and we believe that we can grow sales on a larger scale. We expect that we will experience wide variations in both order flow and shipments from quarter to quarter. First Quarter Fiscal 2023 Highlights (compared with the first quarter of fiscal 2022 unless otherwise noted) We refer to the three-month periods ended May 31, 2022 and 2021 as the first quarter of fiscal year 2023 and fiscal year 2022, respectively. • Net Sales were $4,052,000, an increase of 11%, primarily driven by strength in the medical, alternative energy and emerging R&D markets. • Gross Profit increased 16 % to $2,107,000 due to the increase in sales and a favorable product mix. • Gross Margin increased 200 basis points to 52.0% primarily due to a favorable product mix. • As of May 31, 2022, the Company had $11.1 million in cash, cash equivalents and marketable securities and no outstanding debt. Results of Operations Sales: Product Sales: Three Months Ended May 31, Change 2022 % of total 2021 % of total $ % Fluxing Systems $ 309,000 8% $ 358,000 10% (49,000 ) (14% ) Integrated Coating Systems 168,000 4% 155,000 4% 13,000 8% Multi-Axis Coating Systems 1,979,000 49% 2,079,000 57% (100,000 ) (5% ) OEM Systems 554,000 14% 326,000 9% 228,000 70% Spare Parts, Services and Other 1,042,000 25% 726,000 20% 316,000 44% TOTAL $ 4,052,000 $ 3,644,000 $ 408,000 11% Sales growth was driven by increased demand for our OEM systems used in the electronics, medical and alternative energy markets. In addition, a significant customer using Sono-Tek stent coating systems upgraded all of their machines to our latest atomization technology, classified as Other in the table above. 13 Market Sales: Three Months Ended May 31, Change 2022 % of total 2021 % of total $ % Electronics/Microelectronics $ 1,287,000 32% $ 2,258,000 62% (971,000 ) (43% ) Medical 1,675,000 41% 717,000 20% 958,000 133% Alternative Energy 609,000 15% 432,000 12% 177,000 41% Emerging R&D and Other 203,000 5% 166,000 4% 37,000 22% Industrial 278,000 7% 71,000 2% 207,000 292% TOTAL $ 4,052,000 $ 3,644,000 $ 408,000 11% Four significant customers from the medical device market drove growth of this market by 133% year over year. These medical device coating machine applications ranged from implantable medical textiles, orthodontic devices, glucose monitoring implants, and implantable cardiac devices. The alternative energy market basket recorded 41% year over year growth with continued strong sales to the clean energy sector. The Industrial market basket grew by 292%, positively impacted by the first of seven machines shipped to a customer during the quarter; we plan to ship the remaining six machines in the second half of fiscal year 2023. Geographic Sales: Three Months Ended May 31, Change 2022 2021 $ % U.S. & Canada $ 1,938,000 $ 1,228,000 $ 710,000 58% Asia Pacific (APAC) 706,000 1,222,000 (516,000 ) (42% ) Europe, Middle East, Asia (EMEA) 990,000 842,000 148,000 18% Latin America 418,000 352,000 66,000 19% TOTAL $ 4,052,000 $ 3,644,000 $ 408,000 11% In the first quarter of fiscal 2023, approximately 52% of sales originated outside of the United States and Canada compared with 66% in the prior year period. The increase in the US and Canada sales was positively impacted by several large US based medical companies, incorporating Sono-Tek equipment in their operations. The future balance of sales by geography will depend upon economic conditions and recovery in each region. Gross Profit: Three Months Ended May 31, Change 2022 2021 $ % Net Sales $ 4,052,000 $ 3,644,000 $ 408,000 11% Cost of Goods Sold 1,945,000 1,820,000 125,000 7% Gross Profit $ 2,107,000 $ 1,824,000 $ 283,000 16% Gross Profit % 52.0% 50.0% Our gross profit increased $283,000, or 16%, to $2,107,000 for the first quarter of fiscal 2023 compared with $1,824,000 in the prior year period. Our gross profit margin increased 200 basis points to 52.0% in the first quarter of fiscal 2023 compared to 50.0% in the prior year period. The increase in gross profit margin during the quarter is primarily due to a favorable product mix including strong sales of our OEM products which typically generate relatively higher margins. This increase was partially offset by increased Service Department travel and installation costs. 14 Operating Expenses: Three Months Ended May 31, Change 2022 2021 $ % Research and product development $ 516,000 $ 414,000 $ 102,000 25% Marketing and selling $ 790,000 $ 764,000 $ 26,000 3% General and administrative $ 420,000 $ 303,000 $ 117,000 39% Total Operating Expenses $ 1,726,000 $ 1,481,000 $ 245,000 16% Research and Product Development: As anticipated, research and product development costs increased in the first quarter of fiscal 2023 due to increased salaries and research and development materials and supplies, which are directed at the focused growth initiatives we continue to implement. In the current quarter, some of the increase in research and development costs are a result of our Roll-to-Roll coating initiative. Marketing and Selling: Marketing and selling expenses increased in the first quarter of fiscal 2023 due to increased salary, travel and trade show expenses. These increases were partially offset by a decrease in international commission expense. General and Administrative: In the first quarter of fiscal 2023, we experienced increases in professional fees, stock-based compensation expense, and corporate expenses. The increase in stock-based compensation expense in the first quarter of fiscal 2023 is due to option awards that were issued in the prior fiscal year. Option awards are expensed over three years based on vesting. The increase in professional fees and corporate expenses are a result of our listing on the Nasdaq Capital Market in August 2021. Operating Income: Operating income increased to $381,000 in the first quarter of fiscal 2023 compared with $343,000 for the prior year period, an increase of $38,000 . The increase in operating income is a result of our gross profit increasing by $283,000, offset by an increase in our operating expenses of $245,000. Interest and Dividend Income: Interest and dividend income increased $4,000 to $7,000 in the first quarter of fiscal 2023 as compared with $3,000 for the first quarter of fiscal 2022. Our present investment policy is to invest excess cash in highly liquid, lower risk US Treasury securities. At May 31, 2022, the majority of our holdings are rated at or above investment grade. Income Tax Expense: We recorded income tax expense of $70,000 for the first quarter of fiscal 2023 compared with $85,000 for the first quarter of fiscal 2022. The decrease in income tax expense is due to the application of available research and development tax credits in the quarter partially offset by an increase in permanent timing differences. Paycheck Protection Program Loan Forgiveness: In fiscal year 2021, the Company obtained a loan under the Paycheck Protection Program (“PPP”) in the amount of $1,001,640. In the first quarter of fiscal 2022, the Company received notice from the SBA that the loan was forgiven in full and recorded a gain on forgiveness of $1,005,372, which is recorded on the condensed consolidated statements of income. The gain on the forgiveness of the PPP Loan is a non-taxable event. 15 Net Income: Net income decreased by $961,000 to $306,000 in the first quarter of fiscal 2023 compared to $1,267,000 in the prior year period. The decrease in net income is a result of an increase in operating income offset by the PPP Loan forgiveness recorded in the prior year. Impact of Covid 19 In December 2019, the COVID-19 outbreak occurred in China and has since spread to other parts of the world. On March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic and recommended containment and mitigation measures. On March 13, 2020, the United States declared a national emergency concerning the outbreak. Along with these declarations, extraordinary and wide-ranging actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world. These actions include quarantines, social distancing and “stay-at-home” orders, travel restrictions, mandatory business closures and other mandates that have substantially restricted individuals’ daily activities and curtailed or ceased many businesses’ normal operations. COVID-19 has also impacted various aspects of the supply chain as our suppliers experience similar business disruptions due to operating restrictions from government mandates. We continue to monitor procurement of raw materials and components used in the manufacturing, distribution and sale of our products, but continued disruptions in the supply chain due to COVID-19 may cause difficulty in sourcing materials or unexpected shortages or delays in delivery of raw materials and components, and may result in increased costs in our supply chain. We are closely monitoring and assessing the impact of the pandemic on our business. The extent of the impact on our results of operations, cash flow, liquidity, and financial performance, as well as our ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be reasonably predicted. Given the inherent uncertainty surrounding COVID-19, the pandemic may continue to have an adverse impact on our business in the near term. Should these conditions persist for a prolonged period, the COVID-19 pandemic, including any of the above factors and others that are currently unknown, may have a material adverse effect on our business, results of operations, cash flow, liquidity, and financial condition. Liquidity and Capital Resources Working Capital – Our working capital increased $412,000 to $11,194,000 at May 31, 2022 from $10,782,000 at February 28, 2022. The increase in working capital was primarily the result of the current period's net income and noncash charges partially offset by purchases of equipment. Our inventories increased $520,000 to $2,893,000 at May 31, 2022 from $2,373,000 at February 28, 2022. The increase in our inventories is due to increased raw material inventory and work in process inventory. Historically, our purchasing was on an as needed basis. Due to remaining effects of the COVID-19 outbreak, we have increased our raw material inventories for items that may have a longer than usual delivery time to protect ourselves against supply chain issues. Our increased work in process inventory is due to customer orders that are being completed. Our accounts receivable increased $394,000 to $1,486,000 at May 31, 2022 from $1,092,000 at February 28, 2022. The increase in our accounts receivable is due to a large number of sales occurring in the last month of the quarter. Customers are generally within our receivable benchmarks. Our customer deposits increased $497,000 to $1,665,000 at May 31, 2022 from $1,168,000 at February 28, 2022. The increase in customer deposits is the result of the receipt of new orders. Customer deposits are primarily used to fund the acquisition of materials for a customer’s order. 16 We aggregate cash, 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 May 31, 2022 and February 28, 2022, our working capital included: May 31, 2022 February 28, 2022 Cash Increase Cash and cash equivalents $ 7,675,000 $ 4,841,000 $ 2,834,000 Marketable securities 3,399,000 5,868,000 (2,469,000 ) Total $ 11,074,000 $ 10,709,000 $ 365,000 The following table summarizes the accounts and the major reasons for the $365,000 increase in “Cash”: Impact on Cash Reason Net income, adjusted for non-cash items $ 483,000 To reconcile increase in cash. Accounts receivable increase (394,000) Timing of cash receipts. Inventories increase (520,000) Required to support backlog and supply chain. Customer deposits increase 497,000 Received for new orders. Accounts payable and accrued expenses increase 183,000 Timing of disbursements. Prepaid and Other Assets decrease 116,000 Decreased prepaid expenses. Net increase in Cash $ 365,000 Stockholders’ Equity – Stockholder’s Equity increased $375,000 from $13,741,000 at February 28, 2022 to $14,116,000 at May 31, 2022. The increase is a result of the current period’s net income of $306,000 and $69,000 in additional equity related to stock-based compensation awards. Operating Activities – We generated $432,000 of cash in our operating activities in the first quarter of fiscal 2023 compared to $722,000 of cash in the first quarter of fiscal 2022, a decrease of $290,000. The decrease was mostly the result of increases in accounts receivable and inventories partially offset by increases in accounts payable and accrued expenses and customer deposits. Investing Activities – For the first quarter of fiscal 2023, our investing activities generated $2,403,000 of cash compared with $988,000 for the first quarter of fiscal 2022. For the first quarters of fiscal 2023 and 2022, we used $54,000 and $86,000, respectively, for the purchase or manufacture of equipment, furnishings and leasehold improvements. For the first quarters of fiscal 2023 and 2022, our marketable securities provided $2,457,000 and $1,073,000, respectively, of cash. Net Increase in Cash and Cash Equivalents – In the first quarter of fiscal 2023, our cash balance increased by $2,834,000 as compared to an increase of $1,709,000 in the first quarter of 2022. In the first quarter of fiscal 2023, our operating activities generated $432,000 of cash and our marketable securities generated $2,457,000 of cash. In addition, we used $54,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements. Backlog – Our backlog decreased $1,100,000 to $4 ,230,000 at May 31, 2022 from $5 ,325,000 at February 28, 2022. In the current quarter, we shipped $2,226,000 of orders that were included in backlog at February 28, 2022. Orders can be highly variable from quarter to quarter resulting in large fluctuations in backlog, as product shipments are more systematically managed for both customer timing requirements and staffing management. 17 Critical Accounting Policies The discussion and analysis of the Company’s financial condition and results of operations are based upon the 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. Critical accounting policies 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. The Company believes that critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other accounting policies see Note 2 to the Company’s consolidated financial statements included in Form 10-K for the year ended February 28, 2022. 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. 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. 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 May 31, 2022 and May 31, 2021, there were no uncertain tax provisions. Stock-Based Compensation The computation of the expense associated with stock-based compensation requires the use of a valuation model. ASC 718 is a complex accounting standard, the application of which requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility, expected option lives, and expected option forfeiture rates, to value equity-based compensation. The Company currently uses a Black-Scholes option pricing model to calculate the fair value of its stock options. The Company primarily uses historical data to determine the assumptions to be used in the Black-Scholes model and has no reason to believe that future data is likely to differ materially from historical data. However, changes in the assumptions to reflect future stock price volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. ASC 718 requires the recognition of the fair value of stock compensation in net income. 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. Impact of New Accounting Pronouncements 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. 18 ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk The Company does not issue or invest in financial instruments or derivatives for trading or speculative purposes. Substantially all of the operations of the Company are conducted in the United States, and, as such, are not subject to material foreign currency exchange rate risk. All of our sales transactions are completed in US dollars. Although the Company's assets included $7,675,000 in cash and $3,399,000 in marketable securities, the market rate risk associated with changing interest rates in the United States is not material. ITEM 4 – Controls and Procedures The Company has established and maintains “disclosure controls and procedures” (as those terms are defined in Rules 13a –15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”). Christopher L. Coccio, Chief Executive Officer (principal executive) and Stephen J. Bagley, Chief Financial Officer (principal accounting officer) of the Company, have evaluated the Company’s disclosure controls and procedures as of May 31, 2022. Based on this evaluation, they have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to Management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding timely disclosure. In addition, there were no changes in the Company’s internal controls over financial reporting during the first fiscal quarter of 2023 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting. 19 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 1A. Risk Factors There are no material changes from risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures None Item 5. Other Information None Item 6. Exhibits and Reports 31.1 – 31.2 – Rule 13a - 14(a)/15d – 14(a) Certification 32.1 – 32.2 – Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover page formatted as Inline XBRL and contained in Exhibit 101 20 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: July 15, 2022 SONO-TEK CORPORATION (Registrant) By: /s/ Christopher L. Coccio Christopher L. Coccio Chief Executive Officer By: /s/ Stephen J. Bagley Stephen J. Bagley Chief Financial Officer 21