What changed in this filing

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Item 1. Business

2025-05-28 compared with 2024-05-23 · 106 added, 73 removed, 812 unchanged (18% of the section changed)

128 unchanged sentences

Generally, except in instances of pandemic related supply chain issues,

all raw materials used in our products are available from many different domestic suppliers.

We purchase circuit board assemblies and

sheet metal components from a wide range of suppliers throughout the world.

When materials are plentiful, we carefully manage our inventory using

lean manufacturing processes.

We provide a limited warranty on all of our products that covers parts and labor for a period of one year

from the date of sale .

all raw materials used in our products are available from many different domestic suppliers, who may themselves be subject to international

raw material availability.

We purchase circuit board assemblies and sheet metal components from a wide range of suppliers throughout the

We carefully manage our inventory using lean manufacturing processes.

Research and Development

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and Canada accounted for approximately $7,998,000, or 39% of total net sales, and $8,822,000, or 45% of total net sales, respectively.

Our international sales could be impacted by changes in trade policies, including the imposition of new tariffs or other trade restrictions.

As of February 28, 2025, we employed 79 full-time and 10 part-time

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to meet their financial obligations to us.

For the year ended February 29, 2024, our two

largest customers accounted for approximately 12% of our net sales.

For the year ended February 28, 2023, our two largest customers accounted

for approximately 14% of our net sales.

If we are unable to diversify our customer base, our future results could be heavily dependent

on these customers and distributors.

Our dependence on a limited number of customers and distributors means that the loss of a major customer

or distributor or any reduction in orders by a major customer or distributor would materially reduce our net sales and adversely affect

our results of operations.

We expect that sales to relatively few customers will continue to account for a significant percentage of our

net sales for the foreseeable future;

however, these customers or our other customers, may not use our products at current levels in the

future, if at all.

Customer purchase orders may be delayed or cancelled, and order volume levels can be changed with loss of deposit as

the only penalty.

We may not be able to replace cancelled, delayed, or reduced purchase orders with new orders.

If any one of these customers

reduces its demand for our products, it will likely have a material adverse effect on our operations.

For the year ended February 28, 2025, one customer

accounted for approximately 11% of our net sales.

For the year ended February 29, 2024, our two largest customers accounted for approximately

12% of our net sales.

If we are unable to diversify our customer base, our future results could be heavily dependent on these customers

and distributors.

Our dependence on a limited number of customers and distributors means that the loss of a major customer or distributor

or any reduction in orders by a major customer or distributor would materially reduce our net sales and adversely affect our results of

As we continue our transition from primarily selling ultrasonic nozzles and components to a more complex business providing

complete equipment solutions and higher value subsystems, we expect that sales to relatively few customers will continue to account for

a significant percentage of our net sales for the foreseeable future;

however, these customers or our other customers, may not use our

products at current levels in the future, if at all.

Customer purchase orders may be delayed or cancelled, and order volume levels can

be changed with loss of deposit as the only penalty.

We may not be able to replace cancelled, delayed, or reduced purchase orders with

If any one of these customers reduces its demand for our products, it will likely have a material adverse effect on our operations.

Furthermore, a significant portion of our accounts

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which may adversely affect our future growth.

We may finance a portion of our anticipated

future growth and possibly future strategic acquisitions through public or private equity offerings or debt financings.

Additional funds

may not be available when we need them on terms that are acceptable to us, or at all.

We may finance a portion of our anticipated future

growth and possibly future strategic acquisitions through public or private equity offerings or debt financings.

Additional funds may

not be available when we need them on terms that are acceptable to us, or at all.

If adequate funds are not available, we may be required

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terms we receive in the financial markets could be adversely impacted by various factors, including changes in financial markets and interest

Changes in United States trade policy, including the imposition

of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations .

The US government has indicated its intent to

adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral

trade agreements.

It has also initiated or is considering the imposition of tariffs on certain foreign goods, including electronic components

and devices, metal alloys, and potentially other parts used in our systems and machinery.

Changes in United States trade policy could

result in one or more of US trading partners adopting responsive trade policies making it more difficult or costly for us to export our

products to those countries.

These measures could also result in increased costs for goods imported into the United States.

could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering

our margin on products sold.

We cannot predict future trade policy or the terms

of any renegotiated trade agreements and their impact on our business.

The adoption and expansion of trade restrictions, the occurrence

of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact

demand for our products, our costs, our customers, our suppliers, and the US economy, which in turn could adversely impact our business,

financial condition and results of operations.

We may be adversely affected by global and regional economic

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In addition, we are currently operating in a period

of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing

military conflict between Russia and Ukraine.

Our business, financial condition and results of operations could be materially adversely

affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical

tensions such as regional instability from the conflict between Israel and Hamas.

of economic uncertainty and capital markets disruption, which has been impacted by geopolitical instability due to ongoing military conflicts

in various regions.

Our business, financial condition and results of operations could be materially adversely affected by any negative

impact on the global economy and capital markets resulting from such conflicts or broader geopolitical tensions.

Customers or suppliers may experience cash flow

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labor availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be adversely affected.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by COVID-19 or as a result of general

macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by general macroeconomic factors, could

have a material adverse impact on our operations, results of operations, liquidity or cash flows.

If we are unable to manage our expected growth, our business

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There may be existing patents of which we are unaware that we may inadvertently infringe, resulting in claims against us or our customers.

In the event that the manufacture, use and/or sale of our products or processes is challenged, or if our product forms or processes conflict

with the patent rights of others, third parties could bring legal actions against us or our customers in the United States, Asia, Europe

or other countries, claiming damages and seeking to enjoin the manufacturing and/or marketing of our products.

Additionally, it is not

possible to predict with certainty what patent claims may issue from any relevant third-party pending patent applications.

Third parties

may be able to obtain patents with claims relating to our product forms, applications and/or manufacturing processes which they could

attempt to assert against us or our customers.

If the manufacture, use and/or sale of our products or processes is challenged, or if our product forms or processes conflict with the

patent rights of others, third parties could bring legal actions against us or our customers in the United States, Asia, Europe or other

countries, claiming damages and seeking to enjoin the manufacturing and/or marketing of our products.

Additionally, it is not possible

to predict with certainty what patent claims may issue from any relevant third-party pending patent applications.

Third parties may be

able to obtain patents with claims relating to our product forms, applications and/or manufacturing processes which they could attempt

to assert against us or our customers.

In either case, litigation may be necessary to

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and enhanced products and services, evolving industry standards and regulatory requirements, government incentives and changes in customer

The successful development and market acceptance of our products and systems, depends on a number of factors, including:

The successful development and market acceptance of our products and systems, depends on several factors, including:

the changing requirements and preferences of the potential customers in our markets;

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Any prolonged disruption in the operations of our manufacturing and assembly facility,

whether equipment or information technology infrastructure failure, labor difficulties, prolonged health emergencies, destruction of or

damage to this facility as a result of a hurricane, earthquake, fire, flood, other catastrophes, and other operational problems would

whether equipment or information technology infrastructure failure, cyber-attacks, labor difficulties, prolonged health emergencies, destruction

of or damage to this facility because of a hurricane, earthquake, fire, flood, other catastrophes, and other operational problems would

result in a decline in our sales and profitability.

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We may rely on sub-contractors to meet current demand for our

products, and we may need to obtain additional manufacturing capacity in order to increase production of our existing products or to produce

our proposed new products, the failure of which could have a material adverse effect on our operations.

products, and we may need to obtain additional manufacturing capacity to increase production of our existing products or to produce our

proposed new products, the failure of which could have a material adverse effect on our operations.

We may not have sufficient internal manufacturing

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As a result, the occurrence of any international, political, economic,

or geographic event could result in a significant decline in revenue.

There are significant risks associated with conducting operations

internationally, requiring significant financial commitments to support such operations.

These numerous and sometimes conflicting laws

and regulations include internal control and disclosure rules, data privacy and filtering requirements, anti-corruption laws, such as

the Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental officials, and anti-competition regulations,

among others.

or geographic event, including the imposition of tariffs and the onset of trade wars, could result in a significant decline in revenue.

There are significant risks associated with conducting operations internationally, requiring significant financial commitments to support

such operations.

These numerous and sometimes conflicting laws and regulations include internal control and disclosure rules, data privacy

and filtering requirements, anti-corruption laws, such as the Foreign Corrupt Practices Act, and other local laws prohibiting corrupt

payments to governmental officials, and anti-competition regulations, among others.

Violations of these laws and regulations could

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Although the Federal Reserve has significantly

increased interest rates in response to rising inflation, inflationary pressures are currently expected to remain elevated throughout

Small to medium-sized businesses may be impacted more during periods of high inflation as they are not as able to leverage economics

of scale to mitigate cost pressures compared to larger businesses.

Inflation has the potential to adversely affect our liquidity, business,

financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate

increases in the prices we charge our customers.

The existence of inflation in the economy has resulted in, and may continue to result

in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates and

other similar effects.

As a result of inflation, we have experienced and may continue to experience, cost increases.

Although we may take

measures to mitigate the impact of this inflation, if these measures are not effective our business, financial condition, results of operations

and liquidity could be materially adversely affected.

Even if such measures are effective, there could be a difference between the timing

of when these beneficial actions impact our results of operations and when the cost inflation is incurred.

increased interest rates in response to rising inflation, inflationary pressures, driven in part by evolving and uncertain US tariff policies,

are currently expected to remain elevated throughout 2025.

Small to medium-sized businesses may be impacted more during periods of high

inflation as they are not as able to leverage economics of scale to mitigate cost pressures compared to larger businesses.

Inflation has

the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost

structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.

The existence of inflation

in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages,

increased costs of labor, weakening exchange rates and other similar effects.

As a result of inflation, we have experienced and may continue

to experience, cost increases.

Although we may take measures to mitigate the impact of this inflation, if these measures are not effective

our business, financial condition, results of operations and liquidity could be materially adversely affected.

Even if such measures are

effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the

cost of inflation is incurred.

Reduction or elimination of United States government clean energy

initiatives could materially adversely affect our business and results of operations

Since 2022, legislation such as the CLEAN Energy

Act, Inflation Reduction Act and the American Renewable Energy Act intended to stimulate growth of the clean energy sector and have contributed

to an increase in sales of our systems and products to the clean energy and solar markets.

Any reduction or elimination of these government

initiatives could have a material adverse effect on sales to these markets and on our total revenues and results of operations.

We could become liable for damages resulting from our manufacturing

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Section 404 of the Sarbanes-Oxley Act of 2002

requires our management to assess the effectiveness of our internal control over financial reporting and to disclose in our filing if

requires our management to assess the effectiveness of our internal control over financial reporting and to disclose in our filings if

such controls were unable to provide assurance that a material error would be prevented or detected in a timely manner.

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the impact of inflation;

wars in Ukraine or Gaza;

global geopolitical tensions, armed conflicts, or other regional instabilities.

The realization of any of these risks and other

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in the future at a time and price that we deem appropriate.

Purchases under our Stock Repurchase Plan may cause the market

price of our common stock to rise but may have an adverse effect on available cash.

In 2024, our Board approved the adoption of a

Stock Repurchase Plan which permits us to make open market purchases of up to a total of $2,000,000 of our common stock from time-to-time

at prices and in amounts we deem reasonable.

Purchases under the Stock Repurchase Plan may cause the market price of our stock to rise,

however, the amounts of such purchases are limited by federal securities regulations and by the parameters of the Stock Purchase Plan.

To the extent that we use cash to make purchases under the Stock Repurchase Plan, such monies will not be available to fund our operations

if ever needed.

If adequate funds are not otherwise available, we may be required to delay or reduce the scope of our business plans.

The Company is considered a “ smaller

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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 1. Business