SONO TEK CORP 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: May 31, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 001-40763 SONO TEK CORP (Exact name of registrant as specified in its charter) New York 14-1568099 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2012 Rt. 9W , Milton , NY 12547 (Address of Principal Executive Offices) (Zip Code) Issuer's telephone no., including area code: ( 845 ) 795-2020 Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value per share SOTK NASDAQ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☑ Smaller reporting company ☑ Emerging Growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Outstanding as of July 6, 2026 Class Common Stock, par value $.01 per share 15,716,723 SONO-TEK CORPORATION INDEX Part I – Financial Information Page Item 1 – Condensed Consolidated Financial Statements: 1 – 4 Condensed Consolidated Balance Sheets – May 31, 2026 (Unaudited) and February 28, 2026 1 Condensed Consolidated Statements of Income – Three Months Ended May 31, 2026 and 2025 (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity – Three Months Ended May 31, 2026 and 2025 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows – Three Months Ended May 31, 2026 and 2025 (Unaudited) 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 – 12 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 13 –20 Item 3 – Quantitative and Qualitative Disclosures about Market Risk 20 Item 4 – Controls and Procedures 20 Part II – Other Information 21 Item 1 – Legal Proceedings 21 Item 1A – Risk Factors 21 Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 21 Item 3 – Defaults Upon Senior Securities 21 Item 4 – Mine Safety Disclosures 21 Item 5 – Other Information 21 Item 6 – Exhibits and Reports 21 Signatures and Certifications 22 Item 1 – Condensed Consolidated Financial Statements: SONO-TEK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS May 31, 2026 February 28, (Unaudited) 2026 ASSETS Current Assets: Cash and cash equivalents $ 8,982,075 $ 7,339,403 Marketable securities 7,669,872 7,469,649 Accounts receivable (less allowance of $ 12,225 , respectively) 1,264,932 3,350,953 Inventories 4,063,132 3,923,350 Prepaid expenses and other current assets 659,518 743,295 Total current assets 22,639,529 22,826,650 Land 250,000 250,000 Buildings, equipment, furnishings and leasehold improvements, net 2,138,226 2,173,443 Intangible assets, net 27,892 29,791 Deferred tax asset 809,182 1,141,611 TOTAL ASSETS $ 25,864,829 $ 26,421,495 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 935,442 $ 1,038,885 Accrued expenses 2,088,229 2,227,401 Customer deposits 2,006,896 3,069,743 Income taxes payable 147,984 255,398 Total current liabilities 5,178,551 6,591,427 Deferred tax liability 75,238 55,909 Total liabilities 5,253,789 6,647,336 Commitments and Contingencies (Note 10) — — Stockholders’ Equity Common stock, $ .01 par value; 25,000,000 shares authorized, 15,716,723 and 15,710,389 issued and outstanding as of May 31, 2026 and February 28, 2026 157,167 157,104 Additional paid-in capital 10,282,508 10,186,858 Accumulated earnings 10,171,365 9,430,197 Total stockholders’ equity 20,611,040 19,774,159 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 25,864,829 $ 26,421,495 See notes to unaudited condensed consolidated financial statements. 1 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended May 31, 2026 2025 Net Sales $ 5,661,159 $ 5,132,773 Cost of Goods Sold 2,447,241 2,468,259 Gross Profit 3,213,918 2,664,514 Operating Expenses Research and product development costs 616,982 668,470 Marketing and selling expenses 1,024,984 858,151 General and administrative costs 674,792 654,525 Total Operating Expenses 2,316,758 2,181,146 Operating Income 897,160 483,368 Interest and Dividend Income 114,624 142,098 Net unrealized (loss) on marketable securities ( 26,271 ) ( 21,923 ) Income Before Income Taxes 985,513 603,543 Income Tax Expense 244,345 118,558 Net Income $ 741,168 $ 484,985 Basic Earnings Per Share $ 0.05 $ 0.03 Diluted Earnings Per Share $ 0.05 $ 0.03 Weighted Average Shares - Basic 15,713,185 15,733,955 Weighted Average Shares - Diluted 15,737,276 15,748,556 See notes to unaudited condensed consolidated financial statements. 2 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY THREE MONTHS ENDED MAY 31, 2026 AND 2025 Common Stock Par Value $.01 Shares Amount Additional Paid – In Capital Accumulated Earnings Treasury Stock Total Stockholders’ Equity Balance - February 28, 2026 15,710,389 $ 157,104 $ 10,186,858 $ 9,430,197 — $ 19,774,159 Stock-based compensation expense 85,825 85,825 Cashless exercise of stock options 3,934 39 ( 39 ) — Proceeds from exercise of stock options 2,400 24 9,864 9,888 Net Income - - 741,168 — 741,168 Balance – May 31, 2026 (unaudited) 15,716,723 $ 157,167 $ 10,282,508 $ 10,171,365 — $ 20,611,040 Balance - February 28, 2025 15,751,153 $ 157,512 $ 10,018,034 $ 7,624,516 ( 7,867 ) $ 17,792,195 Stock-based compensation expense 75,163 75,163 Treasury Stock ( 79,479 ) ( 79,479 ) Net Income - - 484,985 484,985 Balance – May 31, 2025 (unaudited) 15,751,153 $ 157,512 $ 10,093,197 $ 8,109,501 ( 87,346 ) $ 18,272,864 See notes to unaudited condensed consolidated financial statements. 3 SONO-TEK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended May 31, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 741,168 $ 484,985 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 118,637 153,723 Stock-based compensation expense 85,825 75,163 Inventory write-off 56,671 98,585 Unrealized loss on marketable securities 26,271 21,923 Deferred income tax benefit, net 351,758 ( 143,356 ) (Increase) Decrease in: Accounts receivable 2,086,021 ( 748,916 ) Inventories ( 196,453 ) ( 373,515 ) Prepaid expenses and other assets 83,777 ( 30,562 ) (Decrease) Increase in: Accounts payable ( 103,443 ) ( 159,011 ) Accrued expenses ( 139,172 ) 129,444 Customer deposits ( 1,062,847 ) ( 123,351 ) Income taxes payable ( 107,414 ) ( 307,405 ) Net Cash Provided by (Used in) Operating Activities 1,940,799 ( 922,293 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment, furnishings and leasehold improvements ( 81,521 ) ( 52,249 ) Sale of marketable securities 299,774 1,364,134 Purchase of marketable securities ( 526,268 ) ( 649,435 ) Net Cash (Used in) Provided by Investing Activities ( 308,015 ) 662,450 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 9,888 — Purchase of treasury stock — ( 79,479 ) Net Cash Provided by (Used in) Financing Activities 9,888 ( 79,479 ) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,642,672 ( 339,322 ) CASH AND CASH EQUIVALENTS: Beginning of period 7,339,403 5,202,361 End of period $ 8,982,075 $ 4,863,039 Supplemental Cash Flow Disclosure: Interest Paid $ — $ — Income Taxes Paid $ — $ 569,319 See notes to unaudited condensed consolidated financial statements. 4 SONO-TEK CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MAY 31, 2026 and 2025 (Unaudited) NOTE 1: BUSINESS DESCRIPTION Sono-Tek Corporation (the “Company”, “Sono-Tek”, “We” or “Our”) was incorporated in New York on March 21, 1975. We are the world leader in the design and manufacture of ultrasonic coating systems for applying precise, thin film coatings to add functional properties, protect or strengthen surfaces on parts and components for the microelectronics/electronics, alternative energy, medical, industrial and emerging research & development/other markets. We design and manufacture custom-engineered ultrasonic coating systems incorporating our patented technology, in combination with strong applications engineering knowledge, to assist our customers in achieving their desired coating solutions. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. The results for the interim periods are not necessarily indicative of what the results will be for the fiscal year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended February 28, 2026 (“fiscal year 2026”) contained in the Company’s 2026 Annual Report on Form 10-K filed with the SEC on May 28, 2026. The Company’s current fiscal year ends on February 28, 2027 (“fiscal year 2027”). NOTE 2: SIGNIFICANT ACCOUNTING POLICIES 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 May 31, 2026, $ 6,626,383 of the Company's bank deposits exceeded the insured limit provided by the Federal Deposit Insurance Corporation. Consolidation - The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Sono-Tek Industrial Park, LLC (“SIP”) in conformity with generally accepted accounting principles in the United States (“GAAP”). SIP operates as a real estate holding company for the Company’s real estate operations. All intercompany accounts and transactions have been eliminated in consolidation. Fair Value of Financial Instruments - The Company applies Accounting Standards Codification (“ASC”) 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. 5 The carrying amounts of financial instruments reported in the accompanying unaudited condensed consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short-term maturities of the financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The fair values of financial assets of the Company were determined using the following categories at May 31, 2026 and February 28, 2026, respectively: Schedule of significant accounting policies - fair values of financial assets of the company Level 1 Level 2 Level 3 Total Marketable Securities – May 31, 2026 $ 7,639,860 $ 30,012 $ — $ 7,669,872 Marketable Securities – February 28, 2026 $ 7,359,354 $ 110,295 $ — $ 7,469,649 Marketable Securities include certificates of deposit and US Treasury securities that are considered to be highly liquid and easily tradeable totaling $ 7,669,872 and $ 7,469,649 as of May 31, 2026 and February 28, 2026, 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.” Income Taxes - The Company accounts for income taxes under the asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company uses a recognition threshold and a measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in a return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. As of May 31, 2026 and February 28, 2026, there were no uncertain tax positions. Inventories - Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method for raw materials, subassemblies and work-in-progress and the specific identification method for finished goods. Management compares the cost of inventory with the net realizable value and, if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost. On an ongoing basis, inventory is reviewed for potential write-down for estimated obsolescence or unmarketable inventory based upon forecasts for future demand and market conditions. Land and Buildings - Land and buildings are stated at cost. Buildings are being depreciated by use of the straight-line method based on an estimated useful life of forty years. 6 At May 31, 2026 and February 28, 2026, the Company had land, stated at cost of $ 250,000 . At May 31, 2026 and February 28, 2026, the Company had buildings, equipment, furnishings and leasehold improvements totaling, $ 2,138,226 and $ 2,173,443 respectively, net of accumulated depreciation. Management Estimates - The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 income. 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. In March 2025, the FASB issued ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which clarifies the measurement of expected credit losses for accounts receivable and contract assets arising from revenue transactions within the scope of Topic 606. The amendments require entities to measure expected credit losses for these financial assets using a methodology consistent with the current expected credit loss model while clarifying the interaction between the guidance in Topic 326 and Topic 606. The guidance in this ASU is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal years of adoption. The Company is currently evaluating the impact that the adoption of ASU 2025-05 will have on its consolidated financial statements and disclosures. In December 2025, the FASB issued ASU 2025-11 - Interim Reporting (Topic 270): Improvements to Interim Reporting Guidance, which is intended to improve the clarity and organization of the interim reporting guidance in Topic 270. The amendments clarify the scope and presentation requirements for interim financial statements and introduce a general disclosure principle requiring entities to disclose events or transactions occurring since the end of the last annual reporting period that have a material impact on the entity. The guidance also incorporates certain interim disclosure requirements from other Topics into Topic 270 to improve accessibility of the interim reporting guidance. The amendments in this ASU are effective for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2025-11 will have on its consolidated financial statements and disclosures. Product Warranty - Expected future product warranty expense is recorded when revenue is recognized for product sales. 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: 7 • 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 a Black-Scholes option pricing model to calculate the fair value of its stock options. The fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk-free interest rate; volatility; and expected lives of the awards. The Company primarily uses historical data to determine the assumptions to be used in the Black-Scholes model. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. ASC 718 requires the recognition of the fair value of stock compensation expense to be recognized over the vesting term of such award. The Company accounts for forfeitures as they occur. NOTE 3: REVENUE RECOGNITION The Company’s sales revenue is derived primarily from short term contracts with customers, which are generally in effect for less than twelve months. Sales revenue from manufactured equipment transferred at a single point in time accounts for a majority of the Company’s revenue. Sales revenue is recognized when control of the Company’s manufactured equipment is transferred to its customers, in an amount that reflects the consideration the Company expects to receive based upon the agreed transaction price. The Company’s performance obligations are satisfied when its customers take control of the purchased equipment, which is based on the contract terms. Based on prior experience, the Company reasonably estimates its sales returns and warranty reserves. Sales are presented net of discounts and allowances. Discounts and allowances are determined when a sale is negotiated. The Company does not grant its customers or independent representatives, the ability to return equipment nor does it grant price adjustments after a sale is complete. The Company does not capitalize any sales commission costs related to the acquisition of a contract. All commissions related to a performance obligation that are satisfied at a point in time are expensed when the customer takes control of the purchased equipment. The Company applies the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one-year or less. The Company requires cash deposits when an order is placed and subsequent cash deposits before a customer’s equipment is shipped. At 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 May 31, 2026, the Company had received approximately $ 2,007,000 in customer deposits, representing contract liabilities. At February 28, 2026, the Company had received approximately $ 3,070,000 in customer deposits, representing contract liabilities. During the three months ended May 31, 2026, the Company recognized $ 2,379,000 of these deposits as revenue. 8 The Company’s sales revenue, by product line is as follows: Schedule of revenue recognition - sales revenue by product line Three Months Ended May 31, 2026 % of total 2025 % of total Fluxing Systems $ 92,000 2 % $ 152,000 3 % In-Line Coating Systems 2,159,000 38 % 3,054,000 59 % Multi-Axis Coating Systems 2,075,000 37 % 677,000 13 % OEM Systems 231,000 4 % 130,000 3 % Spare Parts, Services and Other 1,104,000 20 % 1,120,000 22 % TOTAL $ 5,661,000 $ 5,133,000 NOTE 4: INVENTORIES Inventories consist of the following: Schedule of inventory, current May 31, February 28, 2026 2026 Raw materials and subassemblies $ 1,698,898 $ 1,931,294 Finished goods 1,191,500 932,866 Work in process 1,172,734 1,059,190 Total $ 4,063,132 $ 3,923,350 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 inventory, and it 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 inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis. During the three months ended May 31, 2026 and May 31, 2025, the Company recorded approximately $ 57,000 and $ 99,000 , respectively in additional allowances for slow moving inventory. NOTE 5: STOCK BASED COMPENSATION Stock Options – 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. The 2023 Plan replaced the 2013 Stock Incentive Plan (the “2013 Plan”) under which no additional options or shares could be granted after June 2023. At May 31, 2026, 393,183 and 186,660 options were outstanding, respectively, under the 2023 Plan and the 2013 Plan. The Company accounts for stock based compensation under ASC 718, “Share Based Payments”, which requires companies to expense the value of employee stock options and similar awards. The Company accounts for forfeitures as they occur. During the three months ended May 31, 2026, the Company granted options to acquire 2,988 shares to an employee at an exercise price of $ 3.99 . Options granted to employees vest over three years and expire ten years from the date of issuance. The options granted during the three months ended May 31, 2026 had a grant date fair value of $ 2.51 per share. 9 The weighted-average fair value of options is estimated on the date of grant using the Black-Scholes options-pricing model. The weighted-average Black-Scholes assumptions are as follows: Schedule of weighted-average black-scholes assumptions Three Months Ended May 31, 2026 Expected Life 8 years Risk free interest rate 3.92 % Expected volatility 54.85 % Expected dividend yield 0 % For the three months ended May 31, 2026 and 2025 the Company recognized $ 85,825 and $ 75,163 in stock based compensation expense, respectively. Such amounts are included in general and administrative expenses on the unaudited condensed consolidated statements of income. Total compensation expense related to non-vested options not yet recognized as of May 31, 2026 was $ 370,000 and will be recognized over the next three years based on vesting date. The amount of future stock option compensation expense could be affected by any future option grants or by any forfeitures. The aggregate intrinsic value of the Company’s vested and exercisable options at May 31, 2026 was approximately $ 183,839 . NOTE 6: EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Schedule of computation of basic and diluted earnings per share Three Months Ended May 31, 2026 2025 Numerator for basic and diluted earnings per share $ 741,168 $ 484,985 Denominator for basic earnings per share - weighted average 15,713,185 15,733,955 Effects of dilutive securities: Stock options for employees and directors 24,091 14,601 Denominator for diluted earnings per share 15,737,276 15,748,556 Basic Earnings Per Share $ 0.05 $ 0.03 Diluted Earnings Per Share $ 0.05 $ 0.03 In the first quarter of fiscal year 2027, 149,425 stock options were excluded from the computation of diluted income per share because the effect of inclusion would have been anti-dilutive. NOTE 7: REVOLVING LINE OF CREDIT The Company has a $ 1,500,000 revolving line of credit at prime which was 6.75 % at May 31, 2026 and February 28, 2026. 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. At May 31, 2026, there were no outstanding borrowings under the revolving line of credit. The Company has a $ 750,000 equipment line of credit at prime plus 0.50 % , which was 7.25 % at May 31, 2026. At May 31, 2026, there were no outstanding borrowings under the equipment line of credit. 10 NOTE 8: CUSTOMER CONCENTRATIONS AND FOREIGN SALES Export sales to customers located outside the United States and Canada were approximately as follows: Schedule of customer concentrations and foreign sales May 31, 2026 May 31, 2025 Asia Pacific (APAC) 738,000 597,000 Europe, Middle East, Africa (EMEA) 930,000 897,000 Latin America 463,000 96,000 $ 2,131,000 $ 1,590,000 During the three months ended May 31, 2026 and 2025, sales to foreign customers accounted for approximately $ 2,131,000 and $ 1,590,000 , or 38 % and 31 % , respectively, of total revenues. The Company had two customers which accounted for 53 % of sales during the first quarter of fiscal 2027. Two customers accounted for 43 % of the outstanding accounts receivables at May 31, 2026. The Company had one customer which accounted for 57 % of sales during the first quarter of fiscal 2026. Three customers accounted for 61 % of the outstanding accounts receivables February 28, 2026. NOTE 9: SEGMENT DATA 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”). The CODM assesses the financial performance of the Company and decides how to allocate resources based on Operating income. The following table presents the Company’s segment data (rounded to the nearest thousand): Schedule of segment data Three Months Ended May 31, 2026 2025 Net Sales $ 5,661,000 $ 5,133,000 Direct Cost of Goods Sold Materials & Freight 1,887,000 1,872,000 Production Labor 111,000 76,000 Depreciation 34,000 50,000 Other 133,000 119,000 2,165,000 2,117,000 Service Department Salaries 146,000 138,000 Travel 51,000 37,000 Outside Installations - 11,000 Warranty Costs 35,000 98,000 Other 50,000 67,000 282,000 351,000 Total Cost of Goods & Service $ 2,447,000 $ 2,468,000 Gross Profit 3,214,000 2,665,000 Research & Product Development Salaries 458,000 474,000 Insurance 35,000 35,000 Depreciation 32,000 45,000 R & D Materials 39,000 66,000 Other 53,000 48,000 617,000 668,000 11 Marketing and Selling Salaries 500,000 437,000 Insurance 61,000 47,000 Commissions 227,000 152,000 Travel & Entertainment 29,000 29,000 Advertising / Trade Show 117,000 108,000 Depreciation 22,000 25,000 Other 69,000 60,000 1,025,000 858,000 General and Administrative Salaries 294,000 272,000 Insurance 56,000 45,000 Professional Fees 105,000 84,000 Corporate Expenses 90,000 132,000 Stock Based Compensation 86,000 75,000 Depreciation 15,000 17,000 Misc Other 29,000 30,000 675,000 655,000 Total Operating Expenses 2,317,000 2,181,000 Operating Income 897,000 484,000 Interest Income & Unrealized (Loss)/Gain 88,000 120,000 Income Before Taxes 985,000 604,000 Income Tax Expense 244,000 119,000 Net Income $ 741,000 $ 485,000 NOTE 10: COMMITMENTS AND CONTINGENCIES The Company did not have any material commitments or contingencies as of May 31, 2026. 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 May 31, 2026, the Company did not have any pending legal actions. 12 ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news releases, and other written and oral statements. These “forward-looking statements” are based on currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events could turn out to be significantly different from our expectations and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; the recovery of the Electronics/Microelectronics and Medical markets; rebound of sales to the industrial market in the second quarter of fiscal year 2027; maintenance of increased order backlog; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems which are sold at higher average selling prices; and realization of quarterly and annual revenues within the forecasted range of sales guidance. We undertake no obligation to update any forward-looking statement. Overview Founded in 1975, Sono-Tek Corporation is a global leader in designing and manufacturing ultrasonic coating systems that are shaping industries and driving innovation worldwide. Our ultrasonic coating systems are used to apply thin films onto parts used in diverse industries, including microelectronics, alternative energy, medical devices, advanced industrial manufacturing, and research and development sectors worldwide. Sono-Tek’s move into the clean energy sector is showing transformative results in next-gen solar cells, fuel cells, green hydrogen generation, and carbon capture applications as we shape a sustainable future. Our product line is rapidly evolving, transitioning from R&D to high-volume production machines with significantly higher average selling prices, showcasing our market leadership and adaptability. Over the last decade, we have shifted our business from primarily selling ultrasonic nozzles and components to providing complete machine solutions and higher-value subsystems to original equipment manufacturers (OEMs). This strategy has resulted in significant growth of our average unit selling price, with our larger machines often selling for over $300,000 and system prices sometimes reaching over $1,000,000. Consequently, we have broadened our addressable market and believe we can grow sales on a larger scale. We expect that we will experience wide variations in both order flow and shipments from quarter to quarter. Our comprehensive suite of thin film coating solutions and application consulting services, provided by our expert applications engineers to guide our customers in developing the complete coating process, ensures unparalleled results for our clients. These solutions help some of the world’s most promising companies achieve technological breakthroughs and bring them to market. In anticipation of customer demands, our significant focus on R&D efforts allows us to keep pace with industry trends while continuously innovating. We strategically deliver our products through a network of direct sales personnel, carefully chosen independent distributors, and experienced sales representatives located in North America, Latin America, Europe, and Asia. This network ensures efficient market reach across diverse sectors around the globe. Approximately 38% of our sales were generated outside the United States and Canada in the first three months of fiscal year 2027. 13 We continue to expand our sales capabilities by increasing the size of our direct sales force and adding new distributors and sales representatives. In addition, we have established testing labs at our distribution partner sites in China, Taiwan, Germany, Turkey, Korea, and Japan, while also expanding our first testing lab co-located with our manufacturing facilities in New York. These labs provide significant value for demonstrating the capabilities of our equipment to prospective customers and enable us to develop custom solutions to meet their needs. Our growth strategy is focused on leveraging our innovative technologies, proprietary know-how, unique talent and experience, and global reach to develop thin-film coating technologies that enable better outcomes for our customers’ products and processes. First Quarter Fiscal Year 2027 Highlights (compared with the first quarter of fiscal year 2026 unless otherwise noted) We refer to the three-month periods ended May 31, 2026 and 2025 as the first quarter of fiscal year 2027 and fiscal year 2026, respectively. • Net Sales for the quarter increased 10% to $5,661,000 compared to $5,133,000 in the prior year period, driven by strong shipments to the Medical market, including specialty stent coating systems and Drug-Eluting Balloon coating platforms. • Combined equipment and service-related backlog at May 31, 2026 was $7.73 million, compared to backlog of $7.48 million at May 31, 2025, an increase of $250,000 or 3%. • Gross Profit increased 21% to $3.21 million, compared to $2.67 million in the prior-year period. Gross profit margin expanded 500 basis points to 57%, up from 52% in the first quarter of fiscal 2026. The improvement reflects an unusually favorable product mix, including increased shipments of high-value medical device coating systems, particularly stent coating and Drug-Eluting Balloon coating platforms. In addition, a concentration of shipments to U.S.-based customers resulted in lower distributor discounts and commission expenses, supporting stronger margin performance. • Operating income increased 86% or $414,000 to $897,000, compared to $483,000 in the prior year period. The increase is due to the current period’s increase in gross profit, partially offset by an increase in operating expenses. • Interest and dividend income decreased to $115,000 for the first quarter of fiscal 2027, compared to $142,000 in the prior year period, due to a slight reduction in interest rates. • As of May 31, 2026, we had $16.6 million in cash, cash equivalents and marketable securities and no outstanding debt. This compares to $14.8 million as of February 28, 2026. 14 Results of Operations Sales: Product Sales: Three Months Ended May 31, Change 2026 % of total 2025 % of total $ % Fluxing Systems $ 92,000 2% $ 152,000 3% (60,000 ) (39%) In-Line Coating Systems 2,159,000 38% 3,054,000 59% (895,000 ) (29%) Multi-Axis Coating Systems 2,075,000 37% 677,000 13% 1,398,000 206% OEM Systems 231,000 4% 130,000 3% 101,000 78% Spare Parts, Services and Other 1,104,000 20% 1,120,000 22% (16,000 ) (1%) TOTAL $ 5,661,000 $ 5,133,000 $ 528,000 10% For the first quarter of fiscal year 2027, In-Line Coating Systems sales decreased $895,000, or 29%, to $2.16 million, impacted by a significant decrease in sales to the clean energy sector for a solar coating customer in the first quarter of fiscal year 2026 that did not repeat in the current quarter. Multi-Axis Coating Systems increased $1.39 million, or 206%, to $2.08 million. OEM Systems increased $101,000, or 78%, to $231,000, driven by strong sales to our fluxer OEM partners, and strong sales to a China-based OEM partners in the semiconductor market. Fluxing Systems decreased 39%, or $60,000, to $92,000. Spare Parts, Services, and Other remained relatively stable at $1.1 million . Market Sales: Three Months Ended May 31, Change 2026 % of total 2025 % of total $ % Electronics/Microelectronics $ 863,000 15% $ 943,000 19% (80,000 ) (8%) Medical 3,946,000 70% 809,000 16% 3,137,000 388% Alternative Energy/Clean 319,000 6% 3,248,000 63% (2,929,000 ) (90%) Emerging R&D and Other 3,000 0% 14,000 0% (11,000 ) (79%) Industrial 530,000 9% 119,000 2% 411,000 345% TOTAL $ 5,661,000 $ 5,133,000 $ 528,000 10% Sales to the Alternative Energy/Clean market decreased $2.93 million, or 90%, to $319,000, impacted by reduced electrolysis demand following government policy shifts, and no solar shipments. Medical market sales increased $3.14 million, or 388%, to $3.95 million led by strong specialty stent coating in the US, and DEB coating system sales in the US, China and Europe. Sales to the Electronics/Microelectronics market declined $80,000, or 8%, to $863,000. Industrial sales increased $411,000, or 345%, to $530,000 influenced by some significant rework orders on older machines that needed upgrades, and an R&D textile coating machine for nano-coatings. Geographic Sales: Three Months Ended May 31, Change 2026 2025 $ % U.S. & Canada $ 3,530,000 $ 3,543,000 $ (13,000 ) 0% Asia Pacific (APAC) 738,000 597,000 141,000 24% Europe, Middle East, Africa (EMEA) 930,000 897,000 33,000 4% Latin America 463,000 96,000 367,000 382% TOTAL $ 5,661,000 $ 5,133,000 $ 528,000 10% 15 In the first quarter of fiscal year 2027, sales to customers in the U.S. and Canada were $3,530,000, essentially flat compared to sales of $3,543,000 in the prior year period. Asia Pacific (APAC) sales grew 24%, or $141,000, to $738,000, influenced by increased sales to China in the medical sector for DEB coating. EMEA sales increased $34,000, or 4%, to $930,000, and Latin America sales increased $367,000, or 382%, to $463,000, influenced by a $242,000 shipment to Costa Rica for a specialty medical device coating application used in advanced cardiac procedures, requiring precise deposition of a functional coating onto complex device geometries. Gross Profit: Three Months Ended May 31, Change 2026 2025 $ % Net Sales $ 5,661,000 $ 5,133,000 $ 528,000 10% Cost of Goods Sold 2,447,000 2,468,000 (21,000 ) (1%) Gross Profit $ 3,214,000 $ 2,665,000 $ 549,000 21% Gross Profit % 57% 52% Gross profit increased $549,000, or 21%, to $3.21 million for the first quarter of fiscal 2027, compared with $2.67 million in the prior-year period. Gross profit percentage improved by 500 basis points, rising to 57% from 52%. The strong gross margin performance during the quarter benefited from an especially favorable product mix, including increased shipments of high-value medical device coating systems, particularly stent coating and Drug-Eluting Balloon coating platforms. Our improved gross margin achieved during the current quarter may vary going forward from quarter to quarter because of changing product mix, which may influence future gross margin performance. In addition, a concentration of shipments to U.S.-based customers resulted in lower distributor discounts and commission expenses, supporting stronger margin performance. Operating Expenses: Three Months Ended May 31, Change 2026 2025 $ % Research and product development $ 617,000 $ 668,000 $ (51,000 ) (8%) Marketing and selling $ 1,025,000 $ 858,000 $ 167,000 19% General and administrative $ 675,000 $ 655,000 $ 20,000 3% Total Operating Expenses $ 2,317,000 $ 2,181,000 $ 136,000 6% Research and Product Development: Research and product development costs decreased in the first quarter of fiscal year 2027 due to a decrease in salary expense, a decrease in research and development materials and a decrease in supplies. These decreases were partially offset by an increase in miscellaneous expenses. Marketing and Selling: Marketing and selling expenses increased in the first quarter of fiscal year 2027 due to an increase in salary expense related to our sales application lab, an increase in insurance expense, an increase in trade show expenses and an increase in other miscellaneous expenses. Our sales and marketing costs are variable, and a large portion of the costs are dependent upon trade shows and where geographically our sales are generated. We anticipate that our costs will increase in the future as we increase our trade show presence and the potential change in geographic origin of our sales from our in-house sales team to our external distributors. 16 In the first quarter of fiscal 2027, we expended approximately $227,000 for commissions as compared with $152,000 in the prior year period, an increase of $75,000. The increase in commission expense during the current period is due to the increase in sales during the period and to increased commission rates for salesmen who had temporarily agreed to lower rates in the prior year period because of higher sales volumes associated with one customer. We expect our marketing and sales expenses to increase in fiscal 2027 as we invest in additional sales personnel, forward deployed engineering personnel, and programming talent to support new business opportunities, particularly those associated with production systems that have high average sales prices to drive future growth. General and Administrative: General and administrative expenses increased in the first quarter of fiscal 2027 due to increases in salary expense, insurance, professional fees and stock-based compensation. These increases were partially offset by a decrease in other corporate expenses. Operating Income: In the first quarter of fiscal year 2027, our operating income increased $414,000 to $897,000 compared to $483,000 in the first quarter of fiscal year 2026. The increase is primarily due to the current period’s increase in gross profit. Interest and Dividend Income and Unrealized Loss: Interest and dividend income decreased $27,000 to $115,000 in the first quarter of fiscal year 2027 as compared with $142,000 in the prior year period, due to a slight reduction in interest rates. Our present investment policy is to invest excess cash in highly liquid, lower risk US Treasury securities. At May 31, 2026, the majority of our holdings are rated at or above investment grade. Income Tax Expense: We recorded an income tax expense of $244,000 for the first quarter of fiscal year 2027 compared with $119,000 for the first quarter of fiscal year 2026. The increase in income tax expense in the current period is due to the increase in income before income taxes offset by the application of available research and development tax credits. Net Income: Net income increased by $256,000 to $741,000 in the first quarter of fiscal year 2027 compared with $485,000 in the prior year period. The increase in net income is primarily a result of an increase in gross profit partially offset by an increase in operating expenses and income tax expense. Liquidity and Capital Resources Working Capital – Our working capital increased $1,226,000 to $17,461,000 at May 31, 2026 from $16,236,000 at February 28, 2026. The increase in working capital was primarily the result of the current period's net income and non-cash charges partially offset by purchases of equipment. We aggregate cash, cash equivalents and marketable securities in managing our balance sheet and liquidity. For purposes of the following analysis, the total is referred to as “Cash.” At May 31, 2026 and February 28, 2026, our working capital included: May 31, 2026 February 28, 2026 Cash Increase Cash and cash equivalents $ 8,982,000 $ 7,339,000 $ 1,643,000 Marketable securities 7,670,000 7,470,000 200,000 Total $ 16,652,000 $ 14,809,000 $ 1,843,000 17 The following table summarizes the accounts and the major reasons for the $1,843,000 increase in “Cash”: Impact on Cash Reason Net income, after adjustments to reconcile to net cash $ 1,139,000 To reconcile increase in cash. Accounts receivable decrease 2,086,000 Timing of cash receipts. Inventories increase (196,000) Additional inventory purchases and increase in work in process due to customer requirements. Customer deposits decrease (1,063,000) Decrease due to completed sales. Accounts payable decrease (103,000) Timing of disbursements. Accrued expenses decrease (139,000) Timing of disbursements. Prepaid and Other Assets increase 84,000 Decreased prepaid expenses. Income taxes payable decrease 107,000 Timing of disbursements. Equipment purchases (82,000) Equipment and facilities upgrade. Proceeds from exercise of stock options 10,000 Received from stock options. Net increase in Cash $ 1,843,000 Stockholders’ Equity – Stockholder’s Equity increased $837,000 from $19,774,000 at February 28, 2026 to $20,611,000 at May 31, 2026. The increase is a result of the current period’s net income of $741,000, proceeds from exercise of stock options of $10,000, and $86,000 in additional equity related to stock-based compensation awards . The details of stock-based compensation awards are explained in Note 5 in our financial statements. Operating Activities – We generated $1,941,000 of cash in our operating activities in the first quarter of fiscal year 2027 compared with using $922,000 in the prior year period, an increase of $2,863,000. The increase in cash generated by operating activities was the result of a decrease in accounts receivable in the current period, partially offset by a decrease in customer deposits. Investing Activities – For the first quarter of fiscal year 2027, our investing activities used $308,000 of cash compared with them providing $662,000 for the first quarter of fiscal 2026. For the first quarters of fiscal years 2027 and 2026, we used $82,000 and $52,000, respectively, for the purchase or manufacture of equipment, furnishings and leasehold improvements. In the first quarter of fiscal year 2027, net purchases of marketable securities used $226,000 of cash compared to net sales of marketable securities generating $715,000 of cash in the prior year period. Financing Activities – In the first quarter of fiscal year 2027, we received $10,000 for the exercise of stock options. In the first quarter of fiscal year 2026, we used $79,000 of cash for the purchase of treasury stock. Net Increase in Cash and Cash Equivalents – In the first quarter of fiscal 2027, our cash balance increased $1,643,000 as compared to a decrease of $339,000 in the first quarter of fiscal 2026. In the first quarter of fiscal 2027, our operating activities generated $1,941,000 of cash and our marketable securities used $226,000 of cash. In addition, we used $82,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements and we received $10,000 for the exercise of stock options. 18 Critical Accounting Estimates The discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure on contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions and conditions. Management’s estimates and judgments are continually evaluated and are based on historical experience and expectations regarding future events that are believed to be reasonable under the specific circumstances. Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions. The Company believes that critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other accounting policies see Note 2 to the Company’s consolidated financial statements included in Form 10-K for the year ended February 28, 2026. Accounting for Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. We use a recognition threshold and a measurement attribute for financial statement recognition and measurement tax positions taken or expected to be taken in a return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. As of May 31, 2026 and May 31, 2025, there were no uncertain tax provisions. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. Judgment is required when determining at what point in time control of the Company’s manufactured equipment is transferred to its customers. Management’s judgment is based on each customer contract and the transfer of control of the equipment to the customer. The sales revenue to be recorded is based on each contract. Impact of New Accounting Pronouncements In 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. 19 In March 2025, the FASB issued ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which clarifies the measurement of expected credit losses for accounts receivable and contract assets arising from revenue transactions within the scope of Topic 606. The amendments require entities to measure expected credit losses for these financial assets using a methodology consistent with the current expected credit loss model while clarifying the interaction between the guidance in Topic 326 and Topic 606. The guidance in this ASU is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal years of adoption. The Company is currently evaluating the impact that the adoption of ASU 2025-05 will have on its consolidated financial statements and disclosures. In December 2025, the FASB issued ASU 2025-11 - Interim Reporting (Topic 270): Improvements to Interim Reporting Guidance, which is intended to improve the clarity and organization of the interim reporting guidance in Topic 270. The amendments clarify the scope and presentation requirements for interim financial statements and introduce a general disclosure principle requiring entities to disclose events or transactions occurring since the end of the last annual reporting period that have a material impact on the entity. The guidance also incorporates certain interim disclosure requirements from other Topics into Topic 270 to improve accessibility of the interim reporting guidance. The amendments in this ASU are effective for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2025-11 will have on its consolidated financial statements and disclosures. Other than ASU 2024-03, ASU 2025-05 and ASU 2025-11 discussed above, accounting pronouncements issued but not yet effective have been deemed to be not applicable or the adoption of such accounting pronouncements is not expected to have a material impact on the financial statements of the Company. ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk The Company does not issue or invest in financial instruments or derivatives for trading or speculative purposes. Substantially all of the operations of the Company are conducted in the United States, and, as such, are not subject to material foreign currency exchange rate risk. All of our sales transactions are completed in US dollars. Although the Company's assets included $8,982,000 in cash and $7,670,000 in marketable securities, the market rate risk associated with changing interest rates in the United States is not material. ITEM 4 – Controls and Procedures The Company has established and maintains “disclosure controls and procedures” (as those terms are defined in Rules 13a –15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”). R. Stephen Harshbarger, Chief Executive Officer (principal executive) and Stephen J. Bagley, Chief Financial Officer (principal accounting officer) of the Company, have evaluated the Company’s disclosure controls and procedures as of May 31, 2026. Based on this evaluation, they have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to Management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding timely disclosure. In addition, there were no changes in the Company’s internal controls over financial reporting during the first fiscal quarter of fiscal year 2027 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting. 20 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 1A. Risk Factors There are no material changes from risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended February 28, 2026. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures None Item 5. Other Information None Item 6. Exhibits and Reports 31.1 – 31.2 – Rule 13a - 14(a)/15d – 14(a) Certification 32.1 – 32.2 – Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover page formatted as Inline XBRL and contained in Exhibit 101 21 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: July 8, 2026 SONO-TEK CORPORATION (Registrant) By: /s/ R. Stephen Harshbarger R. Stephen Harshbarger Chief Executive Officer By: /s/ Stephen J. Bagley Stephen J. Bagley Chief Financial Officer 22