What changed in this filing

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Item 9A. Controls and Procedures

2023-05-25 compared with 2022-05-24 · 367 added, 330 removed, 879 unchanged (44% of the section changed)

11 unchanged sentences

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 Chairman & CEO (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, 2022.

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.

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 Chairman & CEO (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.

evaluation, management has concluded that our internal control over financial reporting was effective as of and for the year ended February

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

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each annual meeting of the Company.

The terms of Dr.

Haskell and Ms.

O’Donnell run until the annual meeting to be held

The terms of Drs.

Coccio and Riemer and Messrs.

Strasburg and Harshbarger run until the annual meeting to be held in 2023, and

Strasburg and Harshbarger run until the annual meeting

to be held in 2023.

The terms of Dr.

Haskell and Ms.

O’Donnell run until the annual meeting to be held in 2024, and

in each case until their respective successors are duly elected and qualified.

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of the Audit Committee), Carol O’Donnell and Eric Haskell, CPA.

The Board of Directors has determined that each member if the Audit

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

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The Company’s executive compensation is administered by the

Compensation Committee of the Board of Directors, which was established in 2020.

Compensation Committee of the Board of Directors.

The members of the Compensation Committee are Drs.

and Riemer and Mr.

Strasburg, all of whom have been determined by the Board to be independent in accordance with NASDAQ’s requirement

for independent director oversight of executive officer compensation.

Mowbray and Riemer and Mr.

all of 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

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Chief Financial Officer

Vice President – Sales & Marketing

Christopher C.

Vice President – Application Engineering

Vice President – Sales and Application Engineering

Christopher L.

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President and Director

Vice President – Manufacturing Operations

The foregoing officers are appointed for terms of one year or until

their successors are duly elected and qualified or until terminated by the action of the Board of Directors.

There are no arrangements

or understandings between any executive officer and any other persons(s) pursuant to which he was or is to be selected as an officer.

their successors are duly elected 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

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Bagley earned

a Bachelor of Science degree from The State University of NY – College at Oneonta and an MBA from Marist College.

He was licensed

as a CPA in 1990.

a Bachelor of Science degree from The State University of NY at Oneonta and an MBA from Marist College.

He was licensed as a CPA in 1990.

Bagley served on the OTCQX US Advisory Council from 2019 to 2020.

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.

BRUNTIL was appointed Vice President – Sales &

Marketing in March 2018.

Bruntil joined Sono-Tek in 2007 as a Regional Sales Manager and has served as Marketing Brand Manager and

Director of the Electronics and Advanced Energy Division.

Bruntil has experience in branding and product development and has successfully

implemented sales strategies, launched new products and management of a diverse product line.

Prior to joining Sono-Tek, Mr.

a branch manager in the retail banking industry.

He is a graduate of Central Connecticut State University with a major in psychology and

a concentration in sociology.

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 Vice President – Application

Engineering in June 2019.

Cichetti joined Sono-Tek in 2005 as an Electrical Engineer and has served as Application Engineer, Senior

Application Engineer, and Manager of the Application Engineering Department.

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.

CICHETTI was appointed Vice President – Sales

and Application Engineering in August 2022.

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.

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.

CHRISTOPHER L.

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Coccio received a B.S.M.E.

from Stevens Institute of Technology, an

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.

from Rensselaer Polytechnic Institute in

Chemical Engineering.

Key attributes, Experience and Skills:

8 unchanged sentences

our engineering resources.

As Vice President of Engineering, he directs the engineering department, service department, IT and Sono-Tek

laboratory services.

As Vice President of Engineering, he directs the engineering department, service department, IT and coordinates

the Company’s intellectual property.

Engle was formally trained and certified by the U.S.

Navy as a Nuclear Operator where he was recognized with

an induction into the Navy League Memorial for meritorious service and the advancement of training techniques.

He also served with honors

on board a submarine and earned the prestigious Sub-Surface Warfare (E) Insignia.

Navy as a Nuclear Operator where he

was recognized with an induction into the Navy League Memorial for meritorious service and the advancement of training techniques.

also served with honors on board a submarine and earned the prestigious Sub-Surface Warfare (E) Insignia.

STEPHEN HARSHBARGER joined

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experience and are valuable resources to the Board as it exercises its oversight duties and support of the Company’s growth strategies.

KUHA joined Sono-Tek in 2007.

Kuha was appointed VP, Manufacturing Operations, Procurement & Logistics in September 2022.

Prior to assuming her present position,

Kuha served as Operations Director, Purchasing Manager, and several other positions within the procurement aspects of Sono-Tek;

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.

MOWBRAY has been a Director since August 2003.

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CAROL O’DONNELL has been a Director since November 2018.

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.

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.

admitted to practice law in the States of New York and Connecticut.

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.

Prior to joining Protégé Partners, Ms.

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.

O’Donnell is admitted to practice law in the States

of New York and Connecticut.

Key attributes, Experience and Skills:

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the

Company's Directors, executive officers and persons who own more than ten percent of the Company's 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 the Company with copies of all such reports.

Based solely on a review of such filings, during the year ended February 28, 2022, all of the Company's Directors and executive officers

and holders of more than ten percent of the Company’s stock have made timely filings of such reports,

Section 16(a) of the Securities Exchange Act of 1934 requires

the Company's Directors, executive officers and persons who own more than ten percent of the Company's common stock to file with the

Securities and Exchange Commission initial reports of beneficial ownership and reports of changes of beneficial ownership of common

Such persons are also required by Securities and Exchange Commission regulations to furnish the Company with copies of

all such reports.

Based solely on a review of such filings, during the year ended February 28, 2023, all of the Company's Directors

and executive officers and holders of more than ten percent of the Company’s stock have made timely filings of such reports,

with the exception of four late filings by Philip Strasburg.

Code of Ethics

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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 financial statements.

options pricing model which is further discussed in Note 4 – Stock Based Compensation, in the Company’s consolidated financial

Officer Compensation Arrangements

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Coccio was compensated at the rate of $150,000

per annum, until May 2022, at which time his annual base compensation increased to $200,000.

During fiscal 2023, Mr.

Harshbarger was compensated at the rate of

$220,000 per annum, until August 2021, at which time his annual compensation increased to $235,000.

$235,000 per annum, until November 2022, at which time his annual base compensation increased to $250,000.

During fiscal 2023, Mr.

Bagley was compensated at the rate of $165,000

per annum, until November 2022, at which time his annual base compensation increased to $175,000.

In addition, each named officer earned bonus compensation based on

69 unchanged sentences

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 financial statements.

options pricing model which is further discussed in Note 4 – Stock Based Compensation, in the Company’s consolidated financial

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

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Adah Nicklin 13

Judith Schwartz 12

The above ownership percentages are based on 15,742,073 shares outstanding as of May 23,

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options currently exercisable issued under the Company’s Stock Incentive Plans.

3 Represents 14,500 options currently exercisable issued under the Company’s

3 Includes 9,970 options currently exercisable issued under the Company’s

Stock Incentive Plans.

1 unchanged sentence

Stock Incentive Plans.

5 Includes 10,723 options currently exercisable issued under the Company’s

Stock Incentive Plans.

6 Includes 2,723 options currently exercisable issued under the Company’s

Stock Incentive Plans.

7 Includes 4,723 options currently exercisable issued under the Company’s

Stock Incentive Plans.

8 Includes 10,000 shares in the name of Mr.

3 unchanged sentences

The group total does not include 88,612 options that are currently unexercisable.

total includes 81,167 shares held by Robb Engle, Executive Vice President, 8,631 shares held by Bennett Bruntil, a Vice President and

1,138 shares held by Christopher Cichetti, a Vice President.

total includes 81,167 shares and 6,162 currently exercisable options held by Robb Engle, Executive Vice President, 600 shares and 1,050

currently exercisable options held by Maria Kuha, a Vice President and 6,162 currently exercisable options held by Christopher Cichetti,

a Vice President.

10 Emancipation Management LLC, Charles Frumberg and Circle N Advisors share

6 unchanged sentences

14 The address of this person is 3697 Se Doubleton Drive, Stuart, FL 34997.

12 The address of this person is 877 Route 9W, Upper Grandview, NY 10960.

Securities Authorized for Issuance Under Equity Compensation Plans:

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2013 Stock Incentive Plan

2003 Stock Incentive Plan

Description of Equity Compensation Plans:

2013 Stock Incentive Plan

Under the 2013 Stock Incentive Plan, as amended (the "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 Stock Incentive Plan (the "2013 Plan"),

up to 2,500,000 options and shares can be granted to officers, directors, consultants and employees of the Company and its subsidiaries

Under the 2013 Plan options expire ten years after the date of grant.

As of February

28, 2022, there were 243,710 options outstanding under the 2013 plan.

Under the 2013 Stock Incentive Plan, option prices must

be at least 100% of the fair market value of the common stock at time of grant.

For qualified employees, except under certain circumstances

specified in the plan or unless otherwise specified at the discretion of the Board of Directors, no option may be exercised prior to one

year after date of grant, with the balance becoming exercisable in cumulative installments over a three-year period during the term of

the option and terminating at a stipulated period of time after an employee's termination of employment.

2003 Stock Incentive Plan

Under the 2003 Stock Incentive Plan, as amended (the "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 of the Company's common shares.

As of February 28, 2023, there were 250,759 options outstanding

and vested under the 2003 Plan, under which no additional options may be granted.

under the 2013 plan.

2023 Stock Incentive Plan

May 2023, the Company’s Board of Directors authorized the creation of the 2023 Stock Incentive Plan (the “2023 Plan”)

pursuant to which the Company may grant up to 2,500,000 options or shares to officers, directors, employees and consultants of

the Company and its subsidiaries.

The 2023 Plan is intended to supplement and

replace the 2013 Plan under which no additional options or shares may be granted after June 2023.

Under the 2023 Plan, options expire

ten years after the date of grant.

Adoption of the 2023 Plan remains subject to shareholder approval which shall be sought at the Company’s

annual meeting in August 2023.

No options or shares have been granted under the 2023 Plan.

Under the 2013 Plan and the 2023 Plan, option prices

must be at least 100% of the fair market value of the common stock at time of grant.

For qualified employees, except under certain

circumstances specified in the plan or unless otherwise specified at the discretion of the Board of Directors, no option may be

exercised prior to one year after date of grant, with the balance becoming exercisable in cumulative installments over a three-year

period during the term of the option and terminating at a stipulated period of time after an employee's termination of

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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PRINCIPAL ACCOUNTING FEES AND SERVICES

For fiscal 2023 the Company paid or accrued fees of approximately

$100,000 for services rendered by Marcum LLP, its independent auditors.

These fees included audit and review services.

For fiscal 2023 and 2022, the Company paid or accrued fees of approximately

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By-laws of the Company as amended.

Sono-Tek Corporation 2003 Stock Incentive Plan.

Equipment Line Credit Agreement between Sono-Tek Corporation and M&T Bank, dated March 24, 2005.

General Security Agreement between Sono-Tek Corporation and M&T Bank, dated December 21, 2004.

Executive Agreement between Sono-Tek Corporation and Stephen J.

2 unchanged sentences

Coccio dated September 1, 2007.

Executive Agreement between Sono-Tek Corporation and Joseph Riemer dated September 1, 2007.

Executive Agreement between Sono-Tek Corporation and R.

2 unchanged sentences

Stephen Harshbarger dated March 8, 2012.

Equipment Term Note between Sono-Tek Corporation and M&T Bank dated June 17, 2011.

Sono-Tek Corporation 2013 Stock Incentive Plan.

Form of Amended and Restated Mortgage dated December 16, 2013, between Sono-Tek Industrial Park LLC and M&T Bank.

Form of Amended and Restated Term Note dated December 16, 2013, between Sono-Tek Industrial Park LLC and M&T Bank.

Form of Assignment of Rents dated December 16, 2013, between Sono-Tek Industrial Park LLC and M&T Bank.

Form of Environmental Compliance and Indemnification Agreement dated December 16, 2013, between Sono-Tek Industrial Park LLC and M&T Bank.

Form of Modification and Extension Agreement dated December 16, 2013, between Sono-Tek Industrial Park LLC and M&T Bank.

Amended Executive Agreement between Sono-Tek Corporation and Christopher L.

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Security Agreement between Sono-Tek Corporation and M&T Bank dated January 17, 2019.

Term Note between Sono-Tek Corporation and M&T Bank dated April 16, 2020

Code of Ethics.

Subsidiaries of Issuer.

Consent of Marcum LLP

Consent of Friedman LLP

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document.

XBRL Instance Document — This instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

XBRL Taxonomy Extension Schema Document.

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XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Incorporated herein by reference to the Company’s Registration Statement No.

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Incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 7, 2019 and filed with the Securities and Exchange Commission on March 13, 2019.

Incorporated herein by reference to the Company’s Form 10-KSB for the year ended February 28, 2005.

Incorporated herein by reference to the Company’s Form 10-QSB for the quarter ended August 31, 2007

7 unchanged sentences

Incorporated herein by reference to the Company’s Form 10-K for the year ended February 28, 2019.

Incorporated herein by reference to the Company’s Current Report on Form 8-K dated April 17, 2020 and filed with the Securities and Exchange Commission on April 21, 2020.

Incorporated herein by reference to the Company’s Current Report on Form 8-K dated September 24, 2020 and filed with the Securities and Exchange Commission on September 17, 2020.

1 unchanged sentence

SONO-TEK CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

FOR THE YEARS ENDED FEBRUARY 28, 2023 and 2022

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS (PCAOB

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

Marcum LLP (PCAOB ID No:

Friedman LLP (PCAOB ID No:

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets at February 28, 2022 and 2021

Consolidated Balance Sheets as of February 28, 2023 and 2022

Consolidated Statements of Income

4 unchanged sentences

For the Years Ended February 28, 2023 and 2022

Notes to the Consolidated Financial Statements

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

To the Shareholders and Board of Directors of

Sono-Tek Corporation

Opinion on the Financial Statements update

We have audited the accompanying consolidated balance

sheets of Sono-Tek Corporation (the “Company”) as of February 28, 2022 and 2021, and the related consolidated statements

of income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as

the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of February 28, 2022 and 2021, and the results of its operations and its cash flows for each of

the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Sono-Tek

Corporation (the “Company”) as of February 28, 2023, the related consolidated statements of income, stockholders’ equity

and cash flows for the year ended February 28, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February

28, 2023, and the results of its operations and its cash flows for the year ended February 28, 2023, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting

firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit

of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over

financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period

audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to

accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

We determined that there are no critical audit matters.

/s/ Marcum llp

We have served as the Company’s auditor since 2020 (such date takes into account

the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022).

East Hanover, New Jersey

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Sono-Tek Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Sono-Tek

Corporation (the “Company”) as of February 28, 2022, and the related consolidated statements of income, stockholders’

equity, and cash flows for the year ended February 28, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February

28, 2022, and the results of its operations and its cash flows for the year ended February 28, 2022, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public

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and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of

We conducted our audit in accordance with the standards of the

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks

of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of

material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

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presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising

from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging,

subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matters or on the accounts or disclosures to which they relate.

Revenue Recognition

Critical Audit Matter Description

As discussed in Notes 2 and 3 to the financial statements, the Company recognizes revenue when the customer obtains control of promised goods or services in an amount that reflects the consideration they expect to receive in exchange for those goods or services.

The Company’s product and service offerings are customized to meet specific customer needs.

There is significant judgment exercised by the Company in determining revenue recognition which includes (i) determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together (ii) the pattern of delivery (i.e.

timing of when revenue is recognized) for each distinct performance obligation (iii) identification and treatment of agreed upon customer terms that may impact the timing and amount of revenue recognized.

How We Addressed the Matter in Our Audit

To test the accounting we evaluated management's significant accounting policies related to these customer agreements for reasonableness included in Note 3.

We selected a sample of customer agreements and performed the following procedures (i) Obtained and read source documents for each selection (ii) tested management's identification and treatment of agreed upon terms (iii) assessed the terms in the customer agreement and evaluated the appropriateness of management's application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions (iv) we evaluated the reasonableness of management’s determination of the performance obligation (v) we tested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Friedman LLP

We have served as the Company’s auditor since 2020.

We served as the Company’s auditor from 2020 through 2022.

East Hanover, New Jersey

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Marketable securities

Accounts receivable (less allowance of $ 56,123 )

Inventories, net

Accounts receivable (less allowance of $ 12,225 and 56,123 , respectively)

Prepaid expenses and other current assets

Total current assets

Buildings, net

Equipment, furnishings and leasehold improvements, net

Buildings, equipment, furnishings and leasehold improvements, net

Intangible assets, net

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Deferred tax liability

Long term debt, less current maturities

Total Liabilities

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Other Income (Expense):

Interest Expense

Interest and Dividend Income

Net unrealized loss on marketable securities

Paycheck Protection Program Loan Forgiveness

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Cashless exercise of stock options

Proceeds from exercise of stock options

Balance - February 28, 2022

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Cashless exercise of stock options

Proceeds from exercise of stock options

Balance - February 28, 2023

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Stock based compensation expense

Accounts receivable reserve

Inventory reserve

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( 1,005,372 )

Deferred tax expense

Unrealized loss on marketable securities

Deferred tax asset, net

(Increase) Decrease in:

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(Decrease) Increase in:

Accounts payable and accrued expenses

Accounts payable

Accrued expenses

Customer deposits

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Purchase of equipment, furnishings and leasehold improvements

Patent costs paid

Capital expenditure grant proceeds

Purchase of marketable securities, net

( 2,255,129 )

Net Cash Used In Investing

( 1,304,520 )

Net Cash Used In Investing Activities

( 2,810,996 )

( 1,631,462 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

Proceeds from note payable - bank

Repayment of long-term debt

Net Cash Provided By Financing Activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 1,485,957 )

CASH AND CASH EQUIVALENTS:

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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.

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.

At February 28, 2023, the Company had 2,892,000 of

cash in excess of the FDIC insured limit.

Consolidation - The accompanying consolidated financial

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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.

Furnishings and Leasehold Improvements - Equipment, furnishings and leasehold improvements are stated at cost.

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 3

to five years 5 .

Fair Value of Financial Instruments - The Company applies

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2023 and February 28, 2022, there were no 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, which is considered the useful life.

The accumulated amortization of patents is $ 192,490 and $ 181,922 at February 28, 2022 and

February 28, 2021, respectively.

Annual amortization expense of such intangible assets is expected to be approximately $ 11,000 per

year for the next five years.

Assets - Include costs of patent applications which are deferred and charged to operations over seventeen 17

years for domestic patents and 12 twelve years for foreign patents, which is considered the useful life.

The accumulated

amortization of patents is $ 202,681

and $ 192,490

at February 28, 2023 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

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Buildings are being depreciated by use of the straight-line method based on an estimated useful life of 40 forty years.

Land and Buildings

At February 28, 2023 and 2022, the Company had Land, stated at cost of $ 250,000 .

Long-Lived Assets - The Company periodically

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Actual results could differ from those estimates.

New Accounting Pronouncements - In December 2019, the

FASB issued ASU 2019-12, “ Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes .” The guidance issued

in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the

approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred

tax liabilities for outside basis differences.

ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes

in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The ASU became

effective for the Company on March 1, 2021 and did not have a significant impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit

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.

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

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 has adopted ASU 2016-13 as updated and does not expect the adoption of

this guidance to have a material impact on the Company’s consolidated financial statements.

Other than Accounting Standards Update (“ASU”) 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.

Product Warranty - Expected future product warranty expense is recorded when revenue is recognized for product

Reclassifications - Building,

equipment, leasehold improvements reclassifications have been made to the fiscal 2022 consolidated financial statements to conform to

the fiscal 2023 consolidated financial statement presentation.

These reclassifications had no effect on net loss or cash flows as previously

Research and Product Development Expenses - Research

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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.

During fiscal 2023 and fiscal 2022, the Company spent approximately

$ 2,149,000 and $ 1,730,000 , respectively, on research and development activities related to new products and services and the ongoing improvement

of existing products and services.

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

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.

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

Stock-Based Compensation - The Company currently uses

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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, the measures taken by the governments of impacted

countries have slightly impacted the Company’s business, financial condition, and results of operations.

The pandemic had a

slightly adverse impact on sales and the demand for products in fiscal 2021.

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.

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.

The Company has encountered challenges in procuring supplies 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.

Company experienced lengthened lead times throughout its supply chain as a result of supply chain constraints and material shortages that

have occurred through fiscal year 2023.

This has been exacerbated by the recent resurgence of the COVID-19 pandemic in certain parts of

China, which has resulted in the temporary closure of manufacturing facilities, including those that manufacture electronic parts that

the Company includes in its products.

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.

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

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The Company’s performance obligations are satisfied when its customers take control of the purchased equipment,

which is based on the contract terms.

in accordance with 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

Discounts and allowances are determined when a transaction is negotiated.

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

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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.

when the customer takes control of the purchased equipment and revenue is recognized.

The Company applies the practical expedient in paragraph ASC 606-10-50-14

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At February 28, 2023, the Company had received $ 2,838,000 in cash

deposits, and had issued a Letter of Credit in the amount of $ 5,000 to secure these cash deposits.

At February 28, 2022, the Company was

utilizing $5,000 of its available credit line to collateralize these letters of credit .

deposits, representing contract liabilities, and had issued Letters of Credit in the amount of $ 145,000 to secure these cash deposits.

At February 28, 2023, the Company was utilizing $ 145,000 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, and had issued Letters of Credit in the amount of $ 849,000 to secure these cash deposits.

At February 28, 2021, the Company

was utilizing $849,000 of its available credit line to collateralize these letters of credit .

deposits, representing contract liabilities, and had issued Letters of Credit in the amount of $ 5,000 to secure these cash deposits.

February 28, 2022, the Company was utilizing $ 5,000 of its available credit line to collateralize these letters of credit.

The Company’s sales revenue, by product line is as follows:

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As of February 28, 2023, there were 250,759 options outstanding under the 2013 plan.

Under the 2003 Stock Incentive Plan, as amended (the "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 of the Company's common shares.

As of February 28, 2022, there were 10,000 options outstanding

under the 2003 Plan, under which no additional options may be granted.

Under the 2013 Stock Incentive Plan, option prices must

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the option and terminating at a stipulated period of time after an employee's termination of employment.

During fiscal 2022, the Company granted options to acquire

138,085 shares to employees exercisable at prices ranging from $ 3.19 to $ 6.26 and options to acquire 30,250 shares to the non-employee

members of the board of directors with an exercise price of $ 3.19 .

The options granted to employees and directors vest over three years

and expire in ten years.

The options granted by the Company during fiscal 2022 had a combined weighted average grant date fair value of

$ 2.76 per share.

During fiscal 2021, the Company granted options to acquire

60,500 shares to employees exercisable at prices ranging from $ 3.70 to $ 4.45 and options to acquire 20,000 shares to the non-employee

members of the board of directors with an exercise price of $ 3.70 .

During fiscal 2023, the Company granted options to

acquire 28,239

shares to employees exercisable at prices ranging from $ 5.45

and options to acquire 16,500

shares to the non-employee members of the board of directors with an exercise price of $ 5.50 .

The options granted to employees and directors vest over three years 3 and expire in ten years 10 .

The options granted by the Company during fiscal 2023 had a combined weighted average grant date fair value of $ 3.44 per share.

During fiscal 2022, the Company granted options to

acquire 138,085

shares to employees exercisable at prices ranging from $ 3.19

and options to acquire 30,250

shares to the non-employee members of the board of directors with an exercise price of $ 3.19 .

The options granted to employees and directors vest over three years 3

and expire in ten years 10 .

The options granted by the Company during fiscal 2021 had a combined weighted average grant date fair value of

$ 2.20 per share.

A summary of the activity of both plans for fiscal 2022 and fiscal

2021 is as follows:

The options granted by the Company during fiscal 2022 had a combined weighted average grant date fair

value of $ 2.76 per share.

A summary of the activity for fiscal 2023 and fiscal 2022 is as follows:

Stock-based compensation - summary of stock options

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For the years ended February 28, 2023 and 2022 the Company

recognized $ 179,283 and $ 47,633 in stock based compensation expense, respectively.

Such amounts are included in general and

administrative expenses on the consolidated statements of income.

Total compensation expense related to non-vested options not yet

recognized as of February 28, 2022 was $ 456,000 and will be recognized over the next three years based on vesting date.

of future stock option compensation expense could be affected by any future option grants or by any forfeitures.

During the year

ended February 28, 2022, the Company had net settlement exercises of stock options, whereby, the optionee did not pay cash for the

options but instead received the number of shares equal to the difference between the exercise price and the market price on the

date of exercise.

Net settlement exercises during the year ended February 28, 2022 resulted in 249,019 shares of common stock issued.

recognized $ 256,740

and $ 179,283

in stock based compensation expense, respectively.

Such amounts are included in general and administrative expenses on the

consolidated statements of income.

Total compensation expense related to non-vested options not yet recognized as of February 28,

2023 was $ 288,000 and

will be recognized over the next three years 3 based on vesting date.

The amount of future stock option compensation expense could

be affected by any future option grants or by any forfeitures.

During the year ended February 28, 2023, the Company had net

settlement exercises of stock options, whereby, the optionee did not pay cash for the options but instead received the number of

shares equal to the difference between the exercise price and the market price on the date of exercise.

Net settlement exercises

during the year ended February 28, 2023 resulted in 12,898 shares of common stock issued.

Determining the appropriate fair value of the stock-based awards requires

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The weighted-average Black-Scholes assumptions are as follows:

Stock-Based Compensation

- Weighted-average Black-Scholes assumptions

Stock-based compensation - weighted-average black-scholes assumptions

Fiscal Year Ended

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Work in process

Net inventories

The Company maintains an allowance for slow moving inventory for raw materials and finished

The recorded allowances at February 28, 2023 and 2022, totaled $332,525 and $327,661, respectively.

BUILDINGS, EQUIPMENT, FURNISHINGS AND LEASEHOLD IMPROVEMENTS

Equipment, furnishings and leasehold improvements consist of the following:

Building, Equipment, Furnishings and Leasehold Improvements

Buildings, equipment, furnishings and leasehold improvements

consist of the following:

Buildings, equipment, furnishings and leasehold improvements

Laboratory equipment

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Accrued expenses consist of the following:

Accrued expenses

Accrued compensation

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The Company has a $ 1,500,000 revolving line of credit at prime which

was 3.25 % at February 28, 2022 and February 28, 2021.

The revolving credit line is collateralized by the Company’s accounts receivable

and inventory.

was 7.75 % at February 28, 2023 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 February 28, 2022, $ 5,000 of the Company’s credit line was being utilized to

collateralize a Letter of Credit issued to a customer that has remitted cash deposits to the Company on existing orders.

The Letter of

Credit expires in 2023.

As of February 28, 2022, there were no outstanding borrowings under the line of credit and the unused portion

of the credit line was $ 1,495,000 .

As of February 28, 2021, $ 849,000 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

The letters of credit expire at various times in the fiscal year ending February 28, 2022.

As of February 28, 2021, there were

no outstanding borrowings under the line of credit and the unused portion of the credit line was $ 651,000 as of February 28, 2021.

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 February 28, 2023, $ 145,000 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 May and July 2023.

As of February 28, 2023, there were no outstanding borrowings

under the line of credit and the unused portion of the credit line was $ 1,355,000 .

As of February 28, 2022, $ 5,000 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 May 2023.

As of February 28, 2022, there were no outstanding borrowings under the

line of credit and the unused portion of the credit line was $ 1,495,000 .

LONG-TERM DEBT

In fiscal year 2021, the Company

obtained a loan under the Paycheck Protection Program (“PPP”) for $ 1,001,640 .

In April 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 consolidated

statements of income.

Unsecured Debt

Subsequent Event

In fiscal year 2021, the Company obtained a loan under the Paycheck

Protection Program for $ 1,001,640 .

In April 2021, 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 consolidated statements of income in fiscal 2022.

The annual provision (benefit) for income taxes differs from amounts

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Income tax expense

Components of the current and deferred tax expense are as follows:

Income taxes - current and deferred tax expense

Total current income tax

Total deferred income tax

Income tax expense

In assessing the realizability of deferred tax assets, management

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that the Company will realize the benefits of these deductible differences.

Management does not believe that there are significant uncertain

tax positions in 2022.

The incorporation of the new tax laws for 2023, requires the Company

to capitalize for income tax purposes research and development expenses incurred during the year and for such expenses to be amortized

over a five year period.

As a result, a deferred tax asset “Capitalized R&D expenses – IRC Section 174” has been

The Company does not have any uncertain tax

positions in 2023.

There are no interest and penalties related to uncertain tax positions in 2023.

As of February 28, 2022, open

years related to the federal and state jurisdictions are 2020, 2019 and 2018.

As of February 28, 2023, open years

related to the federal and state jurisdictions are 2022, 2021 and 2020.

The deferred tax asset and liability are comprised of the following:

Income Taxes - Deferred tax asset and liability

Income taxes - deferred tax asset and liability components

Deferred tax asset

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Allowance for accounts receivable

Capitalized R&D expenses – IRC Section 174

Accrued expenses and other

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$ ( 169,000 )

$ ( 206,000 )

EARNINGS PER SHARE

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earnings per share:

Earnings Per Share - The computation of basic and diluted

earnings per share

Earnings per share - the computation of basic and diluted earnings per share

Numerator for basic and diluted earnings per share

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were approximately as follows:

Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales

Asia Pacific (APAC) Asia Pacific (APAC)

Europe, Middle East, Asia (EMEA) Europe, Middle East, Asia (EMEA)

Latin America Latin America

Schedule of customer concentrations and foreign sales

Asia Pacific (APAC)

Europe, Middle East, Asia (EMEA)

Latin America

During fiscal 2023 and fiscal 2022, sales to foreign customers accounted

for approximately $ 8,254,000 and $ 11,653,000 , or 55 % and 68 % respectively, of total revenues.

Accounts Receivable

Sales Revenue

The Company had two customers which accounted for 14 % of sales during

Four customers accounted for 44 % of the outstanding accounts receivables at February 28, 2023.

The Company had two customers which accounted for 24 % of sales during

Three customers accounted for 41 % of the outstanding accounts receivables at February 28, 2022.

The Company had three customers which accounted for 28 % of sales during

Two customers accounted for 64 % of the outstanding accounts receivables at February 28, 2021.

COMMITMENTS AND CONTINGENCIES

Other than the letter of credit discussed in Notes 3 and 8, the Company did not have any

Other than the letters of credit discussed in Notes 3 and 8, the Company did not have any

material commitments or contingencies as of February 28, 2023.

The Company is subject, from time to time, to claims by third parties under various

legal disputes.

The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on

the Company’s liquidity, financial condition, and cash flows.

As of February 28, 2023, the Company did not have any pending legal

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures