What changed in this filing

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Item 9A. Controls and Procedures

2026-05-28 compared with 2025-05-28 · 260 added, 327 removed, 1040 unchanged (36% of the section changed)

40 unchanged sentences

Joseph Riemer, Ph.D.

Strasburg, CPA

Kirk Warshaw, CPA

7 unchanged sentences

Lawal and Ms.

O’Donnell run until the annual

meeting to be held in 2026, and in each case until their respective successors are duly elected and qualified.

O’Donnell run until the annual meeting

to be held in 2026, and in each case until their respective successors are duly elected and qualified.

The terms of Drs.

Coccio and Riemer and Messrs.

Harshbarger and Warshaw run until the annual meeting to be held in 2025, however, Mr.

Strasburg has notified us that he will not

stand for reelection and will resign effective upon the completion of our next annual meeting of shareholders in August 2025.

Coccio and Riemer

Harshbarger and Warshaw run until the annual meeting to be held in 2027.

Audit Committee

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The three members of the Audit Committee are Eric Haskell, CPA (who serves as Chairman

of the Audit Committee), Carol O’Donnell and Philip A.

Strasburg, CPA.

The Board of Directors has determined that each member of

the Audit Committee meets the independence criteria prescribed by NASDAQ governing the qualifications for audit committee members and

each Audit Committee member meets NASDAQ’s financial knowledge requirements.

of the Audit Committee), Carol O’Donnell and Kirk Warshaw, CPA.

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

Committee meets the independence criteria prescribed by NASDAQ governing the qualifications for audit committee members and each Audit

Committee member meets NASDAQ’s financial knowledge requirements.

The Board of Directors has determined that Mr.

qualifies as an “audit committee financial expert,” as defined in the rules and regulations of the SEC.

Haskell qualifies

as an “audit committee financial expert,” as defined in the rules and regulations of the SEC.

The Audit Committee is responsible for (i) selecting an independent

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of the Compensation Committee), Dr.

Riemer and Mr.

Strasburg, whom have been determined by the Board to be independent in accordance with

Lawal and Mr.

Haskell, whom have been determined by the Board to be independent in accordance with

NASDAQ’s requirement for independent director oversight of executive officer compensation.

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Netherlands, and International Flavors & Fragrances have also funded his research.

He has published

extensively in highly esteemed, archival journals and is the recipient of five U.S.

He has published extensively in highly esteemed,

archival journals and is the recipient of five U.S.

and international patents.

Lawal has also

been active in scientific societies, organized and chaired national and international conferences.

He received a B.Sc (Honors) Degree

in Engineering from the University of Ibadan, Nigeria, an S.M.

Lawal has also been active in scientific societies,

organized and chaired national and international conferences.

He received a B.Sc (Honors) Degree in Engineering from the University of

Ibadan, Nigeria, an S.M.

Degree from the Massachusetts Institute of Technology and a Ph.D.

McGill University, Canada, both in Chemical Engineering.

from McGill University, Canada, both in Chemical

Key Attributes, Experience, and Skills:

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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.

She also provides consulting services to OpenDeal, Inc., a

financial services company.

O’Donnell joined Protégé Partners, an industry leading firm investing in and seeding smaller and

emerging hedge fund managers in 2016 and has served as Chief Executive Officer since 2018.

She also provides consulting services to

OpenDeal, Inc., a financial services company.

Prior to joining Protégé Partners, Ms.

O’Donnell was the Director of Legal and Compliance

with DARA Capital US, Inc., a Swiss-owned boutique registered investment advisory and wealth management firm from 2013 to 2016.

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 a director of Apimeds Pharmaceuticals, Inc., a New York Stock Exchange listed

company (NYSE:

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.

O’Donnell is a director of Apimeds

Pharmaceuticals US, Inc., a New York Stock Exchange listed company (NYSE:

APUS), and a trustee of various family trusts.

O’Donnell is admitted to practice law in the States of New York

and Connecticut.

O’Donnell is admitted to practice law in the State of Connecticut.

Key attributes, Experience and Skills:

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and oversight experience to the Board.

PHILIP STRASBURG, CPA, has been a Director since August 2004.

a retired partner from the firm of Anchin Block and Anchin, LLP and has 40 years of experience in auditing.

He served as Audit Committee

Chairman from 2005 through 2023.

He was the lead partner on the Sono-Tek account from fiscal 1994 to fiscal 1996.

Strasburg is a certified

public accountant in New York State.

He has a Master of Science in economics from The London School of Economics and Political Science

and a Bachelor of Science degree from Lehigh University, where he majored in business administration.

Key attributes, Experience and Skills:

Strasburg's training and extensive experience in auditing provide the Board with valuable insights and skills.

Strasburg's strong operational and business background complement his accounting and finance experience, and are valuable resources to the Board as it exercises its oversight duties and support of the Company's growth strategies.

KIRK WARSHAW, CPA, has been a director since May 2025.

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designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us .

the policy is filed as Exhibit 19 to this Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

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All Other Compensation 2

Christopher L.

CEO, Executive Chairman and Director

Stephen Harshbarger

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Chief Operating Officer

1 Option awards in the above table are calculated using the Black-Scholes options pricing model which is

further discussed in Note 4 – Stock Based Compensation, in the Company’s consolidated financial statements.

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

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

Coccio stepped down as CEO (Principal Executive Officer) on January 1, 2024 and became Executive Chairman.

Coccio was not a “named executive officer” for purposes of this Table in fiscal 2025.

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

Officer Compensation Arrangements

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The Company has entered into Executive Agreements with Stephen J.

Bagley, the Company’s Chief Financial Officer and Christopher L.

Coccio, the Company’s Executive Chairman.

The Company also

entered into an Executive Agreement with R.

Stephen Harshbarger, the Company’s Chief Executive Officer and President.

Bagley, the Company’s Chief Financial Officer, Christopher Cichetti, the Company’s Chief Operating Officer, Christopher L.

Coccio, the Company’s Executive Chairman and R.

Stephen Harshbarger, the Company’s Chief Executive Officer.

The agreements

as amended, provide that in the event of a change of control of the Company followed by a termination of the executives’ employment

under certain circumstances, the officers shall receive severance payments equal to two years of the executive’s annual base, commissions

and bonus compensation paid by the Company for the previous calendar year.

provide that in the event of a change of control of the Company followed by a termination of the executives’ employment under certain

circumstances, the officers shall receive severance payments equal to two years of the executive’s annual base, commissions and

bonus compensation paid by the Company for the previous calendar year.

Based on last year’s salary arrangements, if the rights of the

foregoing officers were to be triggered following a change of control, they would be entitled to the following payments from the Company:

Bagley $471,000, Christopher L.

Bagley $455,000, Christopher Cichetti $475,000, Christopher L.

Coccio $406,000 and R.

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The agreements provide that in the event of termination of the executive’s employment,

other than for the cause, the officers shall receive severance payments equal to two weeks of compensation for each full year employed

by the Company.

other than for cause, the officers shall receive severance payments equal to two weeks of compensation for each full year employed by

Clawback Policy

Our Board has adopted an

executive compensation recoupment policy consistent with the requirements of the Exchange Act Rule 10D-1 and the Nasdaq listing standards

thereunder, to help ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation

of performance against incentive targets.

Our policy addresses recoupment of amounts from performance-based awards paid to all corporate

officers, including awards under our equity incentive plans, in the event of a financial restatement to the extent that the payout for

such awards would have been less, or in the event of fraud, or intentional, willful or gross misconduct that contributed to the need for

a financial restatement.

Our Board has adopted an executive compensation recoupment

policy consistent with the requirements of the Exchange Act Rule 10D-1 and the Nasdaq listing standards thereunder, to help ensure that

incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive

Our policy addresses recoupment of amounts from performance-based awards paid to all corporate officers, including awards under

our equity incentive plans, in the event of a financial restatement to the extent that the payout for such awards would have been less,

or in the event of fraud, or intentional, willful or gross misconduct that contributed to the need for a financial restatement.

Compensation of Directors

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O’Donnell held an aggregate of 25,377 stock options.

During fiscal 2025, Mr.

Strasburg received a grant of 5,333 options exercisable at $4.12 per share.

At the end of fiscal 2025, Mr.

Strasburg held an aggregate of 15,636 stock options.

Strasburg did not stand for reelection as a Director and his term concluded in August 2025 upon completion of the Company’s annual meeting of stockholders.

During fiscal 2026, Dr.

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Riemer held an aggregate of 27,377 stock options.

During fiscal 2026, Mr.

Warshaw received a grant of 7,018 options exercisable at $3.25 per share.

At the end of fiscal 2026, Mr.

Warshaw held an aggregate of 7,018 stock options.

Option awards in the above table are calculated using the Black-Scholes

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c/o Sono-Tek Corporation, 2012 Route 9W, Milton, NY 12547.

** Less than 1%

Includes 19,915 options currently exercisable issued under the Company’s Stock Incentive Plans.

1 unchanged sentence

Includes 4,000 shares held in the name of Dr.

Coccio’s wife and 44,476 options currently exercisable issued under the Company’s

Stock Incentive Plans.

Coccio’s wife and 57,226 options currently exercisable issued under the Company’s Stock Incentive Plans.

Includes 40,243 options currently exercisable issued under the Company’s Stock Incentive Plans.

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Includes 16,241 options currently exercisable issued under the Company’s Stock Incentive Plans.

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

Strasburg’s wife and 7,621 options currently exercisable issued under the Company’s

Stock Incentive Plans.

The group total includes 219,826 options currently exercisable issued under the Company’s Stock Incentive Plans.

total does not include 152,431 options that are currently unexercisable.

The group total includes 683 shares and 4,274 currently exercisable

options held by Maria Kuha, a Vice President.

10 Emancipation Management LLC, Charles Frumberg and Circle N Advisors share the power to dispose or to direct the disposition of

these shares.

The group total does not include 214,461 options that are currently unexercisable.

The group total includes 683 shares and 9,857 currently exercisable options held by Maria Kuha, a Vice President.

Emancipation Management LLC, Charles Frumberg and Circle N Advisors share the power to dispose or to direct the disposition of these shares.

The Company does not consider these holders to be “affiliates” of the Company.

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reflected in column (a))

Equity compensation plans

approved by security holders:

Equity compensation plans approved by security holders:

2013 Stock Incentive Plan

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2023 Stock Incentive Plan

In May 2023, to replace the expiring 2013 Plan, 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.

Company’s shareholders approved the adoption of the 2023 Plan in August 2023.

There are currently 217,229 options outstanding under

the 2023 Plan.

In 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 Company’s shareholders approved

the adoption of the 2023 Plan in August 2023.

There are currently 395,201 options outstanding under the 2023 Plan.

Under the 2023 Plan, option prices must be at least 100% of the fair

11 unchanged sentences

Independence of Directors

The Company’s Board of Directors is comprised of six “independent

The Company’s Board of Directors is comprised of five “independent

directors”, as that term is defined under NASDAQ rules, and two directors who are not “independent directors”.

The Company’s

“independent directors” are Eric Haskell, Carol O’Donnell, Philip Strasburg, Joseph Riemer, Adeniyi Lawal and Kirk Warshaw.

Christopher L.

“independent directors” are Eric Haskell, Carol O’Donnell, Joseph Riemer, Adeniyi Lawal and Kirk Warshaw.

Coccio and R.

2 unchanged sentences

For fiscal 2026 and 2025 the Company paid or accrued fees of approximately

$185,000 and $171,000, respectively, for services rendered by CBIZ CPAs and Marcum LLP, its independent auditors.

These fees included

audit and review services.

$242,000 and $185,000, respectively, for services rendered by CBIZ CPAs, its independent auditors.

These fees included audit and review

Audit Related Fees - None

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Description of Securities

Executive Agreement between Sono-Tek Corporation and Stephen J.

Bagley dated September 1, 2007.

Executive Agreement between Sono-Tek Corporation and Christopher L.

Coccio dated September 1, 2007.

Executive Agreement between Sono-Tek Corporation and R.

Stephen Harshbarger dated March 5, 2008.

Amended Executive Agreement between Sono-Tek Corporation and R.

Stephen Harshbarger dated March 8, 2012.

Sono-Tek Corporation 2013 Stock Incentive Plan.

Sono-Tek Corporation 2023 Stock Incentive Plan.

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

Coccio dated August 24, 2014.

Amended Executive Agreement between Sono-Tek Corporation and R.

Stephen Harshbarger dated August 24, 2014.

Amended Executive Agreement between Sono-Tek Corporation and Stephen J.

Bagley dated May 21, 2015.

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

Coccio dated November 17, 2016.

Amended Executive Agreement between Sono-Tek Corporation and R.

Stephen Harshbarger dated November 17, 2016.

Amended Executive Agreement between Sono-Tek Corporation and Stephen J.

Bagley dated November 17, 2016.

Letter Agreement between Sono-Tek Corporation and Christopher L.

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Letter Agreement between Sono-Tek Corporation and Christopher Cichetti dated October 20, 2017.

Executive Agreement by and between the Company and R.

Stephen Harshbarger dated as of November 5, 2025 .

Executive Agreement by and between the Company and Christopher L.

Coccio dated as of November 5, 2025.

Executive Agreement by and between the Company and Stephen J.

Bagley dated as of November 5, 2025.

Executive Agreement by and between the Company and Christopher Cichetti dated as of November 5, 2025.

Insider Trading Policies and Procedures

2 unchanged sentences

Consent of CBIZ CPAs P.C.

Consent Marcum LLP

Rule 13a-14/15d – 14(a) Certification.

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Incorporated herein by reference to the Company’s Registration Statement on Form 8-A12B filed with the Securities and Exchange Commission on August 26, 2021.

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

Incorporated herein by reference to the Company’s Form 10-Q for the quarter ended May 31, 2008.

Incorporated herein by reference to the Company’s Form 10-K for the year ended February 29, 2012.

Incorporated herein by reference to Exhibit A to the Company’s definitive proxy statement filed with the Securities and Exchange Commission on July 25, 2013.

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Incorporated herein by reference to the Company’s Form 10-K for the year ended February 29, 2024.

Incorporated herein by reference to the Company’s Form 10-K for the year ended February 28, 2018.

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

Filed herewith.

Incorporated herein by reference to the Company’s Current Report on Form 8-K dated November 5, 2025 and filed with the Securities and Exchange Commission on November 12, 2025.

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.

Filed herewith.

Incorporated herein by reference to the Company’s Current Report on Form 8-K dated November 16, 2023 and filed with the Securities and Exchange Commission on November 17, 2023.

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(PCAOB ID No:

MARCUM LLP (PCAOB ID No:

CONSOLIDATED FINANCIAL STATEMENTS:

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

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, 2025, the related consolidated statements of income,

stockholders’ equity and cash flows for the year ended February 28, 2025, and the related notes (collectively referred to as the

“financial statements”).

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

the financial position of the Company as of February 28, 2025 and the results of its operations and its cash flows for the year ended

February 28, 2025 in conformity with accounting principles generally accepted in the United States of America.

Retrospective Application of a Change in

Accounting Principle

We also have audited the adjustments to

the 2024 financial statements to retrospectively apply the change in accounting principle due to the adoption of Accounting

Standards Update 2023-07, Segment Reporting, as described in Note 2.

In our opinion, such adjustments are appropriate and have

been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company

other than with respect to the adjustments and, accordingly, we do not express an opinion or any form of assurance on the 2024

financial statements taken as a whole.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

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

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

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

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

subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor

since 2020 (such date takes into account the acquisition of certain assets of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024).

Morristown, New Jersey

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

1 unchanged sentence

Opinion on the Financial Statements

We have audited, before the effects of the adjustments to

retrospectively apply the change in accounting described in Note 2, the consolidated balance sheet of Sono-Tek Corporation (the

“Company”) as of February 29, 2024, the related consolidated statements of income, changes in stockholders’ equity

and cash flows for the year ended February 29, 2024, and the related notes (the 2024 financial statements before the effects of the

adjustments discussed in Note 2 are not presented herein).

In our opinion, the February 29, 2024 financial statements, before the

effects of the adjustments to respectively apply the change in accounting described in Note 2, present fairly, in all material

respects, the financial position of the Company as of February 29, 2024, and the results of its operations and its cash flows for

year ended February 29, 2024, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to

the adjustments to retrospectively apply the change in accounting principle described in Note 2 and accordingly, we do not express

an opinion or any form of assurance about whether such adjustments are appropriate and have been properly applied.

The adjustments

were audited by CBIZ CPAs P.C.

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

Corporation (the “Company”) as of February 28, 2026 and 2025, the related consolidated statements of income, stockholders’

equity and cash flows for the years ended February 28, 2026 and 2025, and the related notes (collectively referred to as the “financial

statements”).

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

position of the Company as of February 28, 2026 and 2025, and the results of its operations and its cash flows for the years ended February

28, 2026 and 2025, 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.

Our responsibility is to express an opinion on these financial statements based on our audits.

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.

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 audits 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

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of its internal control over financial reporting.

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

As part of our audits, 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

1 unchanged sentence

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

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.

1 unchanged sentence

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

Our audit also included

Our audits 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.

/s/ Marcum llp

We have served as the Company’s auditor from 2020 to 2025.

Morristown, New Jersey

We believe that our audits provide 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/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

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

the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024).

Morristown, NJ

SONO-TEK CORPORATION

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Accumulated earnings

Treasury stock, at cost, 2,116 shares

Treasury stock, at cost, 2,116 shares as of February 28, 2025

Total stockholders’ equity

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Interest and dividend income

Net unrealized gain on marketable securities

Net unrealized (loss) gain on marketable securities

Income before Income Taxes

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Cashless exercise of stock options

Treasury stock purchased

Balance - February 28, 2025

Stock-based compensation expense

Cashless exercise of stock options

Proceeds from exercise of stock options

Treasury stock purchased

Treasury stock retired

Balance - February 28, 2026

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Stock-based compensation expense

Inventory reserve

Unrealized gain on marketable securities

Inventory write-off

Unrealized loss/(gain) on marketable securities

Deferred income tax benefit, net

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( 14,648,839 )

Net Cash Provided by (Used in) Investing Activities

( 2,383,681 )

Net Cash (Used in)/Provided by Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from exercise of stock options

Purchase of treasury stock

1 unchanged sentence

NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS

( 1,219,815 )

CASH AND CASH EQUIVALENTS:

24 unchanged sentences

receivables and approximate fair value.

The Company records a bad debt expense/allowance based on management’s estimate of uncollectible

All outstanding accounts receivable accounts are reviewed for collectability on an individual basis.

The Company maintains an allowance for credit losses at an amount estimated to be sufficient

to cover the risk of collecting less than full payment of financial assets measured at amortized cost, including receivables.

estimates expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts.

considers factors such as customer-specific risk characteristics, aging, historical write-off trends, and other relevant economic and

environmental conditions in developing the estimate.

The Company estimates losses on receivables based on expected losses, including its

historical experience of actual losses.

Receivables are written off when it is probable that all contractual payments due will not be

collected in accordance with the terms of the agreement.

At each balance sheet date, the Company evaluates its receivables and will assess

the allowance for credit losses based on historical write-off trends.

After all reasonable attempts to collect an account receivable have

failed, the amount of the receivable is written off against the allowance.

As of February 28, 2026 and 2025, the Company's allowance for

credit losses was $ 12,225 .

Cash and Cash Equivalents - Cash and cash equivalents

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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 February 28, 2025 and February 29, 2024, respectively:

The fair values of financial assets of the Company were determined

using the following categories at February 28, 2026 and February 28, 2025, respectively:

Schedule of significant accounting policies - fair values of financial assets of the company

1 unchanged sentence

Marketable Securities – February 28, 2025

Marketable Securities include certificates

of deposit and US Treasury securities, totaling $ 6,727,678 and $ 9,711,351 that are considered to be highly liquid and easily tradeable

as of February 28, 2025 and February 29, 2024, 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.”

Marketable Securities include certificates of deposit and US Treasury

securities, totaling $ 7,469,649 and $ 6,727,678 that are considered to be highly liquid and easily tradeable as of February 28, 2026 and

February 28, 2025, 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

The Company’s marketable securities are considered to be trading securities as defined under ASC 320 “Investments

– Debt and Equity Securities.”

Income Taxes - The Company accounts for income taxes

11 unchanged sentences

2026 and February 28, 2025, there were no uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”

or “OBBBA”) was signed into law.

The Act introduces significant changes to the Internal Revenue Code, including the permanent

extension of many provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”) and various new tax incentives and adjustments.

financial reporting implications of the Act were recorded in the income tax provision for the year ended February 28, 2026, in accordance

with ASC 740, Income Taxes.

The OBBBA did not change the statutory U.S.

federal tax rate.

the OBBBA did not compel the Company to remeasure its deferred tax assets and liabilities solely because of a rate change.

various changes in tax law did impact the Company’s current and deferred tax calculations.

The most significant tax provisions impacting the Company include:

Bonus Depreciation – The Act permanently restores 100% bonus

depreciation for qualified property acquired and placed into service after January 19, 2025.

Research and Development (“R&D”) Costs – The Act

reinstates the ability for entities to immediately expense domestic R&D costs for tax years beginning after December 31, 2024.

Certain small businesses may also retroactively expense R&D costs, which were capitalized under the TCJA during the calendar

years 2022 – 2024.

In accordance with the Act, for the fiscal year ended February 28, 2026, the Company has

expensed the R&D costs incurred for the current calendar year end.

Pursuant to the Act, R&D costs amounts previously capitalized

and recorded as a deferred tax asset now are eligible to be expensed in full verses being amortized periodically over a five year term.

Any prior year R&D amounts capitalized and not utilized in the current year will be carried over as a deferred tax asset.

have decoupled from the federal tax provisions of the Act and continue to follow the prior tax laws per the 2017 Tax Cuts and Jobs Act

for capitalizing and amortizing R&D costs.

The expensing of these costs is subject to taxable income limitations.

Intangible Assets - Include costs of patent applications

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Actual results could differ from those estimates.

New Accounting Pronouncements – In November 2023,

the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in this

ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating

officer decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of

segment profit or loss.

The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the

CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

entities are required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single

reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures

in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024, with early adoption permitted.

The amendments in this ASU should be applied retrospectively to all prior periods

presented in the financial statements.

The Company has adopted this ASU, and the standard did not have a material impact on the Company’s

consolidated financial statements and related disclosures.

Segment Data, for the Company’s segment disclosure.

Recent Accounting Pronouncements Not Yet Adopted - In

Recently Adopted Accounting Pronouncements – In

December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

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on a prospective basis although retrospective application is permitted.

The Company is currently evaluating the impact the adoption of

this ASU will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued issued ASU 2024-03 – Income

Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income

Statement Expenses, which is intended to provide more detailed information about specified about specified categories of expenses (purchases

of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated

statement of operations.

The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods

within fiscal years beginning after December 15, 2027.

The Company has adopted this ASU on a retrospective basis, and

the standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Income Taxes, for the Company’s income tax disclosures.

Recent Accounting Pronouncements Not Yet Adopted - In

November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about

specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense

captions presented on the consolidated statement of operations.

The guidance in this ASU is effective for fiscal years beginning after

December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact the

adoption of this ASU will have on its consolidated financial statements and related disclosures.

is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

Product Warranty - Expected future product warranty

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and does not disclose information about remaining performance obligations that have original expected durations of one-year or less.

Company requires cash deposits when an order is placed and subsequent cash deposits before a customer’s equipment is shipped.

the time of shipment, the Company will extend credit terms to its customers.

The credit terms do not contain a significant financing component

(credit terms over more than one year).

At February 28, 2026, the Company had received $ 3,070,000 in customer

deposits, representing contract liabilities, and had issued Letters of Credit in the amount of $ 106,000 to secure these customer deposits.

At February 28, 2025, the Company was utilizing $ 106,000 of its available credit line to collateralize these letters of credit.

deposits, representing contract liabilities.

At February 28, 2025, the Company had received $ 2,413,000 in customer

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At February 28, 2025, the Company was utilizing $ 106,000 of its available credit line to collateralize these letters of credit.

At February 29, 2024, the Company had received $ 3,420,000 in cash

deposits, representing contract liabilities.

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

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Fluxing Systems

Integrated Coating Systems

In-Line Coating Systems

Multi-Axis Coating Systems

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and 195,810 options outstanding, respectively, under the 2023 Plan and the 2013 Plan.

During fiscal 2025, the Company granted options to

acquire 134,656

During fiscal 2026, the Company granted options to acquire 154,328

shares to employees exercisable at prices ranging from $ 3.25

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shares to the non-employee members of the board of directors with an exercise price of $ 3.25 .

The options granted to employees and directors vest over three 3

years and expire in ten 10 years.

The options granted by the Company during fiscal 2026 had a combined weighted average grant date

fair value of $ 3.26 per share.

During fiscal 2025, the Company granted options to acquire 134,656

shares to employees exercisable at prices ranging from $ 4.12

and options to acquire 26,667

shares to the non-employee members of the board of directors with an exercise price of $ 4.12 .

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

The options granted by the

Company during fiscal 2025 had a combined weighted average grant date fair value of $ 4.13

During fiscal 2024, the Company granted options to

acquire 54,813 shares to employees exercisable at prices ranging from $ 4.79 to $ 5.60 and options to acquire 18,380 shares to the

non-employee members of the board of directors with an exercise price of $ 4.79 .

The options granted to employees and directors vest

over 3 three years and expire in 10

The options granted by the Company during fiscal 2024 had a combined weighted average grant date fair value of $ 3.11 per

Company during fiscal 2025 had a combined weighted average grant date fair value of $ 4.13 per share.

A summary of the activity for both plans, for fiscal 2026 and fiscal

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Cashless exercises during

the year ended February 28, 2025 resulted in 273

shares of common stock issued.

the years ended February 28, 2026 and 2025 resulted in 0 and 273 shares of common stock issued, respectively.

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

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Treasury notes with a term approximating the expected life of the option at the

The weighted-average fair value of options has been estimated

on the date of grant using the Black-Scholes options-pricing model.

The weighted-average fair value of options has been estimated on the

date of grant using the Black-Scholes options-pricing model.

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

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Work in process

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

The recorded allowances at February 28, 2025 and February 29, 2024, totaled $ 398,165 and $ 380,400 , respectively.

The Company maintains an allowance for slow-moving inventory for raw

materials and finished goods.

The recorded allowances at February 28, 2026 and February 28, 2025, were $ 445,294 and $ 398,165 , respectively.

The Company maintains a valuation allowance for slow moving inventory

for raw materials and finished goods.

The valuation allowance creates a new cost basis for the slow-moving inventory, and the new cost

basis is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts

and circumstances.

When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase

in cost of sales.

The valuation allowance is only reduced if or when the underlying reserved inventory is sold or destroyed, at which

time the recognized cost of sales would include the adjusted cost basis of the reserved inventory.

During the years ended February 28,

2026 and 2025, the Company recorded approximately $ 97,000 and $ 81,000 , respectively, in additional allowances for slow moving inventory.

BUILDINGS, EQUIPMENT, FURNISHINGS AND LEASEHOLD IMPROVEMENTS

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Estimated warranty costs

Estimated installation costs

Accrued sales tax

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the outstanding balance to a 36-month term note with payments including interest in 36 equal installments.

As of February 28, 2025, $ 106,000 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 in June 2025.

As of February 28, 2025, there were no outstanding borrowings under the line of credit

and the unused portion of the credit line was $ 1,394,000 .

As of February 28, 2026, $ 0 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.

As of February 28, 2026, there were no outstanding borrowings under the line of credit, and the unused portion of the credit line was

$ 1,500,000 .

As of February 28, 2025, $ 106,000 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 expired in April 2024.

The Letters of Credit expired in June 2025.

As of February 28, 2025, there were no outstanding borrowings under the line of credit,

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Income taxes - income tax reconciliation

Twelve Months Ended

Expected federal income tax

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Income tax expense

The Company files state and local income tax returns in more than twenty state and local

jurisdictions.

One state, California, makes up the majority of the state taxes due.

In fiscal 2026 and fiscal 2025, California state taxes

were approximately $ 28,000 and $ 17,000 , respectively.

All other state taxes are significantly less.

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

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Income tax expense

In assessing the realizability of deferred tax assets,

management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in

which those temporary differences become deductible.

Massachusetts research and development tax credits have been fully reserved as

management does not forsee utilizing such tax credits in the foreseeable future.

Management considers the scheduled reversal of

deferred tax liabilities, projected future taxable income, and projections for future taxable income over periods in which the

deferred tax assets are deductible.

Management believes it is more likely than not that the Company will realize the benefits of

these deductible differences.

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 2025.

are no interest and penalties related to uncertain tax positions in 2025.

As of February 28, 2025, open years related to the federal and

state jurisdictions are 2024, 2023 and 2022.

In assessing the realizability of deferred tax assets, management

considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization

of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences

become deductible.

The Company has Massachusetts research and development tax credits that have been fully reserved as management does

not foresee utilizing such tax credits in the foreseeable future.

Management considers the scheduled reversal of deferred tax liabilities,

projected future taxable income, and projections for future taxable income over periods in which the deferred tax assets are deductible.

Management believes it is more likely than not that the Company will realize the benefits of its other deferred tax assets.

The Company had no uncertain tax positions in 2026.

There are no interest

and penalties related to uncertain tax positions in 2026.

As of February 28, 2026, open years related to the federal and state jurisdictions

are 2025, 2024 and 2023.

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

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Accrued expenses and other

Research & Development tax credits

Research & Development tax credits – Massachusetts

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$ ( 132,000 )

$ ( 230,000 )

The following table presents income taxes paid (net of funds received), disaggregated by

jurisdiction:

Schedule of federal income tax

State – California

State – Others

Total Income Taxes Paid

EARNINGS PER SHARE

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Diluted Earnings Per Share – Weighted Average

At February 28, 2025, the total number of stock options excluded from the computation of diluted income per share because the effect of

inclusion would have been anti-dilutive is 192,275 .

At February 28, 2026, the total number of stock options excluded from

the computation of diluted income per share because the effect of inclusion would have been anti-dilutive is 342,074 .

CUSTOMER CONCENTRATIONS AND FOREIGN SALES

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Asia Pacific (APAC)

Europe, Middle East, Asia (EMEA)

Europe, Middle East, Africa (EMEA)

Latin America

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for 28 % of the Company’s revenues.

Three customers accounted for 61 % of the outstanding accounts receivables February 28, 2026.

For the fiscal year ended February 28, 2025, one customer accounted

for 11 % of the Company’s revenues.

Two customers accounted for 25 % of the outstanding accounts receivables February 28, 2025.

The Company had no single customer accounted for more than 10 % of

sales during fiscal 2024.

Two customers accounted for 26 % of the outstanding accounts receivables at February 29, 2024.

The Company operates in one segment.

The chief operating decision maker, who is responsible

for allocating resources and assessing performance, has been identified as the Chief Executive Officer (the “CODM”).

assesses the financial performance of the company and decides how to allocate resources based on Operating income.

The following table presents our segment data (rounded to the nearest thousand):

The chief operating decision

maker, who is responsible for allocating resources and assessing performance, has been identified as the Chief Executive Officer (the

The CODM assesses the financial performance of the Company and decides how to allocate resources based on operating

The following table presents our segment data (rounded to the nearest

Schedule of segment

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COMMITMENTS AND CONTINGENCIES

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, 2025.

The Company did not have any material commitments or contingencies

as of February 28, 2026.

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

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/s/ Carol O’Donnell

/s/ Philip A.

/s/ Adeniyi Lawal

Carol O’Donnell

Adeniyi Lawal

Stephen Harshbarger

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Chief Executive Officer and President

/s/ Adeniyi Lawal

Adeniyi Lawal

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