SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACTS OF 1934
For the quarterly period ended: May 31, 2004
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACTS OF 1934
Commission File No.: 0-16035
SONO-TEK CORPORATION
(Exact name of small business issuer as specified in its charter)
New York 14-1568099
---------------------------- -------------
(State or other jurisdiction (IRS Employer
incorporation or organization) Identification No.)
2012 Rt. 9W, Milton, NY 12547
(Address of Principal Executive Offices)
Registrant's telephone no., including area code: (845) 795-2020
Indicate by check mark whether the small business issuer (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
small business issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES |X| 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
Class July 2, 2004
----- ------------
Common Stock, par value $.01 per share 11,039,069
SONO-TEK CORPORATION
INDEX
Part I - Financial Information Page
Item 1 - Consolidated Financial Statements: 1 - 3
Consolidated Balance Sheets - May 31, 2004 (Unaudited) and
February 29, 2004 1
Consolidated Statements of Operations - Three Months Ended
May 31, 2004 and 2003 (Unaudited) 2
Consolidated Statements of Cash Flows - Three Months Ended
May 31, 2004 and 2003 (Unaudited) 3
Notes to Consolidated Financial Statements 4 - 8
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 9 - 12
Item 3 - Controls and Procedures 12
Part II - Other Information 13
Signatures and Certifications 14 - 18
SONO-TEK CORPORATION
CONSOLIDATED BALANCE SHEETS
May 31, February 29,
2004 2004
Unaudited Audited
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 319,346 $ 189,987
Accounts receivable (less allowance of $14,812 and $13,675
at May 31 and February 29, respectively) 675,317 813,835
Inventories 1,108,300 905,469
Prepaid expenses and other current assets 49,759 83,599
Deferred tax asset 117,000 117,000
----------- -----------
Total current assets 2,269,723 2,109,890
----------- -----------
Equipment, furnishings and leasehold improvements
(less accumulated depreciation of $683,925
and $675,795 at May 31 and February 29, respectively) 55,482 57,835
Intangible assets, net 28,532 31,050
Other assets 7,171 6,542
Deferred tax asset 468,000 468,000
----------- -----------
TOTAL ASSETS $ 2,828,908 $ 2,673,317
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 281,424 $ 245,981
Accrued expenses 405,080 441,117
Line of Credit 312,000 312,000
Subordinated mezzanine debt 170,000 282,144
Current maturities of long term debt 43,198 42,189
----------- -----------
Total current liabilities 1,211,702 1,323,431
Subordinated mezzanine debt 649,364 557,856
Long term debt, less current maturities 8,769 16,960
----------- -----------
Total liabilities 1,869,835 1,898,247
----------- -----------
Commitments and Contingencies -- --
Put Warrants 188,223 188,223
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized,
11,039,069 and 10,494,156 shares issued and outstanding
at May 31 and February 29, respectively 110,391 92,002
Additional paid-in capital 6,509,380 6,465,436
Accumulated deficit (5,848,921) (5,983,531)
----------- -----------
Total stockholders' equity 770,850 586,847
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,828,908 $ 2,673,317
=========== ===========
See notes to consolidated financial statements.
1
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended May 31,
--------------------------
Unaudited
2004 2003
---------------------------
Net Sales $ 1,206,432 $ 758,523
Cost of Goods Sold 538,091 319,518
----------- -----------
Gross Profit 668,341 439,005
----------- -----------
Operating Expenses
Research and product development costs 96,136 93,257
Marketing and selling expenses 234,353 149,258
General and administrative costs 175,281 135,707
----------- -----------
Total Operating Expenses 505,770 378,222
----------- -----------
Operating Income 162,572 60,783
Interest Expense (31,360) (50,710)
Interest and Other Income 3,399 974
----------- -----------
Income Before Income Taxes 134,610 11,047
Income Tax Expense 0 0
----------- -----------
Net Income $ 134,610 $ 11,047
=========== ===========
Basic Earnings Per Share
Net Earnings per share $ 0.01 $ 0.00
=========== ===========
Diluted Earnings Per Share
Net Earnings per share $ 0.01 $ 0.00
=========== ===========
Weighted Average Shares - Basic 10,853,471 9,200,161
=========== ===========
Weighted Average Shares - Diluted 12,973,240 10,137,302
=========== ===========
See notes to consolidated financial statements.
2
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended May 31,
--------------------------
Unaudited
2004 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit $ 134,610 $ 11,047
Adjustments to reconcile net profit to net cash provided by (used in)
operating activities:
Imputed interest expense on subordinated mezzanine debt 0 13,968
Depreciation and amortization 10,995 12,764
Provision for doubtful accounts 3,000 1,137
(Increase) decrease in:
Account receivable 135,517 6,989
Inventories (202,831) (9,875)
Prepaid expenses and other current assets 33,841 21,907
Decrease in:
Accounts payable and accrued expenses (594) (28,613)
--------- ---------
Net Cash Provided By Operating Activities 114,593 29,234
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of equipment and furnishings (5,777) (2,309)
Patent costs (346) 0
Other (630) 0
--------- ---------
Net Cash (Used In) Investing Activities (6,753) (2,309)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 28,756 0
Conversion of debt to equity 20,636 0
Loan payments/ exchanges (20,636) 0
Renegotiation of debt repayments 0 18,748
Repayments of notes payable and equipment loans (7,182) (31,496)
--------- ---------
Net Cash Provided By (Used In) Financing Activities 21,574 (12,748)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 129,360 14,267
CASH AND CASH EQUIVALENTS
Beginning of period 189,987 265,658
--------- ---------
End of period $ 319,347 $ 279,925
========= =========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 23,120 $ 34,733
========= =========
See notes to consolidated financial statements.
3
SONO-TEK CORPORATION
Notes to Consolidated Financial Statements
Three Months Ended May 31, 2004 and 2003
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The accompanying consolidated financial statements of Sono-Tek
Corporation, a New York Corporation (the "Company"), include the accounts of the
Company and its wholly owned subsidiary, Sono-Tek Cleaning Systems, Inc., a New
Jersey Corporation ("SCS"), that the Company acquired on August 3, 1999. SCS is
a non-operating entity. All significant intercompany accounts and transactions
are eliminated in consolidation.
Interim Reporting - The attached summary consolidated financial information does
not include all disclosures required to be included in a complete set of
financial statements prepared in conformity with accounting principles generally
accepted in the United States of America. Such disclosures were included with
the financial statements of the Company at February 29, 2004, and included in
its report on Form 10-KSB. Such statements should be read in conjunction with
the data herein.
The financial information reflects all adjustments, which, in the opinion of
management, are necessary for a fair presentation of the results for the interim
periods presented. The results for such interim periods are not necessarily
indicative of the results to be expected for the year.
Stock-Based Employee Compensation - The Company accounts for stock-based
compensation plans utilizing the provisions of Accounting Principles Board
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees" and the
Financial Accounting Statement of Financial Accounting Standards No. 123 and No.
148 (SFAS 123 and SFAS 148), "Accounting for Stock-Based Compensation". Under
SFAS 123, the Company will continue to apply the provisions of APB 25 to its
stock-based employee compensation arrangements, and is only required to
supplement its financial statements with additional pro-forma disclosures. The
Company has elected to provide the related pro-forma disclosures utilizing an
intrinsic value method of accounting for such stock based compensation.
The estimated fair value of options granted during Fiscal Year 2004 was $.20 per
share and the estimated fair value of options granted during the three months
ended May 31, 2004 was $.95 per share. The Company applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its stock
option plans. Had compensation cost for the Company's stock option plan been
determined based on the intrinsic value at the option grant dates for awards in
accordance with the accounting provisions of SFAS 123, the Company's net income
and basic and diluted earnings per share for the three month periods ended May
31, 2004 and 2003 would have been changed to the pro forma amounts indicated
below:
4
Three Months Ended
May 31,
2004 2003
---- ----
Net income:
As reported $134,610 $11,047
Deduct: Total stock based
employee compensation under
intrinsic value based method for
all awards, net of tax effects 8,999 6,363
-------- -------
Pro forma net income (loss) $125,611 $ 4,684
======== =======
Basic and diluted earnings per share:
As reported $ 0.01 $ 0.00
Pro-forma $ 0.01 $ 0.00
Intangible Assets - Include cost of patent applications which are deferred and
charged to operations over seventeen years for domestic patents and twelve years
for foreign patents. The accumulated amortization is $42,221 and $41,132 at May
31, 2004 and February 29, 2004, respectively. Deferred financing fees of $35,523
at May 31, 2004 are being amortized over the term of the related debt.
Accumulated amortization was $33,152 at May 31, 2004.
NOTE 2: INVENTORIES
Inventories at May 31, 2004 are comprised of:
Finished goods $ 558,608
Work in process 342,291
Consignment 5,379
Raw materials and subassemblies 400,398
----------
Total 1,306,676
Less: Allowance (198,376)
----------
Net inventories $1,108,300
==========
NOTE 3: RELATED PARTY TRANSACTIONS
Subordinated Mezzanine Debt
One of the Company's directors and a significant shareholder are participants
with Norwood Venture Corporation in its subordinated mezzanine financing.
NOTE 4: SUBORDINATED MEZZANINE DEBT
On April 30, 2001, the Company and Norwood Ventures Corporation amended the
Norwood Note and Warrant Purchase Agreement to increase the Note to $850,000 and
the Warrant shares to 2,077,777. The monthly principal payments were to commence
in October 2001 at $23,612 per month and were deferred on May 13, 2004 until
5
November 30, 2005 at which time the note would be repaid in 20 equal
installments of $42,000 per month. The Company, at its option can make
prepayments at anytime. During the fiscal year ended February 29, 2004, the
Company prepaid $10,000 of this indebtedness and 24,444 Warrant shares were
exercised.
In addition, the original Norwood Note was issued with a detachable stock
purchase warrant (the "Put Warrants") to purchase 1,100,000 shares of the
Company's common stock at an exercise price of $.30, the fair market value of
the Company's common stock on September 30, 1999. The fair market value, as
determined by an independent appraisal, of the Put Warrants was determined to be
$0.07 per share, and is accounted for as a discount to the Norwood Note and will
be amortized over the life of the principal repayment term of the Agreement. In
connection with the amendments, dated December 22, 2000 and April 30, 2001,an
additional 244,444 and 733,333 warrant shares were granted at an exercise price
of $0.30 and $.10 per share, respectively. In connection with an amendment to
the Agreement in October 2001, the exercise price of certain of the warrants was
reduced from $.30 to $.15 per share. This resulted in an increase in the value
of the warrants of $13,445, which is accounted as a discount to the loan and is
being imputed as additional interest over the term of the loan. The discount was
fully amortized at May 31, 2004. As noted above, 24,444 of the Put Warrants were
exercised during fiscal year ended February 29, 2004. The aggregate residual
exercise price of the Put Warrants is $272,556 for the purchase of 2,053,333
shares of common stock
The Put Warrant holders may, commencing after the delivery of the February 29,
2008 audited financial statements and terminating one year thereafter, require
the Company to purchase such warrants at a price equal to the result calculated
by subtracting the aggregate exercise of the warrants to the extent remaining
from the product of the greatest of;
a) the fair market value of the Company as determined by an independent
appraiser as at the end of the Company's fiscal year end February
29, 2008 (the "Company's 2008 Fiscal Year"),
b) five times EBITDA for the Company's 2008 Fiscal Year or, if higher,
average EBITDA for such year and the fiscal year of the Company
immediately prior to such year, or
c) the book value of the Company as at the end of the Company's 2008
Fiscal Year,
multiplied by the fraction of (the "Put Fraction") the numerator of which is the
total number of shares of common stock, the Put Warrant holders would own upon
such exercise of the warrants and the denominator would be the total number of
common shares outstanding upon the exercise of all equity rights to acquire
common stock.
Depending on the fair value of the Company based on the above computations from
the Company's 2008 Fiscal Year results will determine if the Company will be
required, assuming such Put Warrant holders exercise their put warrants, to pay
up to $272,556 for the warrants. These warrants are exercisable for the purchase
of up to 2,053,333 shares of common stock.
6
The put provision above may be terminated if the Company's stock trades at an
average daily volume of 50,000 shares at an average price above $1.50 per share
for a period of 180 consecutive days.
NOTE 5: STOCK OPTIONS AND WARRANTS
Stock Options - Under the 1993 Stock Incentive Plan, as amended ("1993 Plan"),
options can be granted to officers, directors, consultants and employees of the
Company and its subsidiaries to purchase up to 1,500,000 of the Company's common
shares. Options granted under the 1993 Plan expire on various dates through
2012. As of May 31, 2004, there were 386,437 options outstanding under the 1993
Plan. No further options can be granted under the 1993 Plan.
During Fiscal Year 2004, the Company granted options for 20,000 shares
exercisable at $.19 per share to a director of the Company and options for
10,000 shares at $.25 to a consultant to the Company. There were no options
granted to employees of the Company. During Fiscal Year 2004, compensation
expense of $1,564 was recognized based on the fair value of the options granted
to a consultant.
At the August 21, 2003 Annual Meeting of Shareholders, the Company adopted a new
Stock Incentive Plan (the"2003 Plan"). Under this plan, up to 1,500,000 stock
options can be granted until 2013. During the three month period ended May 31,
2004, 55,000 stock options at $.95 per share were granted to officers of the
Company and 39,000 options at prices from $.95 to $.98 per share were granted to
qualified employees of the Company.
Under the 1993 and 2003 Stock Incentive Plans, option prices must be at least
100% of the fair market value of the common stock at time of grant. For
qualified employees, except under certain circumstances specified in the plans
or unless otherwise specified at the discretion of the Board of Directors, no
option may be exercised prior to one year after date of grant, with the balance
becoming exercisable in cumulative installments over a three year period during
the term of the option, and terminate at a stipulated period of time after an
employee's termination of employment.
Warrants - There were no warrants issued during Fiscal 2004 and 2005.
7
NOTE 6: EARNINGS PER SHARE
The denominator for the calculation of diluted earnings per share at May 31,
2004 and 2003 are calculated as follows:
May 31, 2004 May 31, 2003
------------ ------------
Denominator for basic earnings per share 10,853,471 9,200,161
Dilutive effect of warrants 1,940,209 882,125
Dilutive effect of stock options 179,560 55,016
---------- ----------
Denominator for dilutive earnings per share 12,973,240 10,137,302
========== ==========
NOTE 7: SUBSEQUENT EVENT
During the period from June 1, 2004 to July 1, 2004, the Company prepaid
$170,000 of the indebtedness to Norwood Venture Corporation.
8
SONO-TEK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Federal Securities Laws. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following:
- The Company's ability to respond to competition in its markets;
- General economic conditions in the Company's markets.
The Company undertakes no obligation to update publicly any forward-looking
statement.
Overview
Sono-Tek has developed a unique and proprietary series of ultrasonic atomization
nozzles, which are being used in an increasing variety of electronic, medical,
industrial, and nanotechnology applications. These nozzles are electrically
driven and create a fine, uniform, low velocity spray of atomized liquid
particles, in contrast to common pressure nozzles. These characteristics create
a series of commercial applications that benefit from the precise, uniform, thin
coatings that can be achieved. When combined with significant reductions in
liquid waste and less overspray than can be achieved with ordinary pressure
nozzle systems, there is lower environmental impact.
The Company has a well established position in the electronics industry with its
SonoFlux spray fluxing equipment. It saves customers from 40% to 80% of the
liquid flux required to solder printed circuit boards over more labor intensive
methods, such as foam fluxing. Less flux equates to less material cost, fewer
chemicals in the workplace, and less clean-up. Also, the SonoFlux equipment
reduces the number of soldering defects, which reduces the level of rework. The
Company experienced a dramatic recovery of this market towards the latter part
of Fiscal Year 2004 and to date into Fiscal Year 2005, resulting in increased
orders for the Company's equipment.
In the past two years, the Company has focused engineering resources on the
medical device market, with emphasis on providing coating solutions for the new
generation of drug coated stents. The Company has sold a significant number of
specialized ultrasonic nozzles and AccuMist(TM) stent coating systems to large
pharmaceutical and medical device customers that are superior compared to
pressure nozzles in their ability to uniformly coat the very small arterial
9
stents without creating webs or gaps in the coatings. The Company has begun to
sell a bench-top, fully outfitted stent coating system to a wide range of
customers who are manufacturing stents or coatings to be used in developmental
trials. The Company has developed a unique patented vacuum-based ultrasonic
system capable of uniformly coating batches of stents with anti-restenosis
coatings, and is now offering this technology to selected manufacturers for
licensing. The Company's sales levels have increased as the result of an
improved economy, product development efforts, and related marketing thrusts
which have had the effects of improving net income, reducing debt, and bringing
shareholders' equity from a deficit position to a positive position.
Liquidity and Capital Resources
The Company's working capital increased $272,000 from a working capital of
$786,000 at February 29, 2004 to $1,058,000 at May 31, 2004. The Company's
current ratio is 1.87 to 1 at May 31, 2004, as compared to 1.59 to 1 at February
29, 2004. The Company's debt to equity ratio has improved from 3.23 to 1 at
February 29, 2004 to 2.43 to 1 at May 31, 2004. The increase in working capital
and improvement in the financial ratios was a result of a reduction in the
current maturity of subordinated mezzanine debt of $112,000, an increase in
inventories of $203,000, and an increase in cash of $129,000 partially offset by
decreases in accounts receivable of $139,000 and prepaid assets of $34,000.
Stockholders' equity increased $184,000 from $587,000 at February 29, 2004 to
$771,000 at May 31, 2004. The increase in stockholders' equity was the result of
the net profit of $135,000 for the three months ended May 31, 2004, stock option
exercises of $29,000 and conversion of debt to equity of $20,000.
Accounts receivable at May 31, 2004 decreased $139,000 or 17% from February 29,
2004 due to collections during the quarter.
Inventory increased $203,000 or 22% as the result of the large influx of orders
received during the three months ended May31, 2004.
The Company currently has a $350,000 line of credit with a bank, in the form of
a demand note. The loan is collateralized by accounts receivable, inventory and
all other personal property of the Company and is guaranteed by the former Chief
Executive Officer of the Company. As of May 31, 2004 and February 29, 2004, the
outstanding balance was $312,000. New borrowings are presently precluded under
this note.
The Company and its mezzanine lender, Norwood Venture Corporation ("Norwood"),
reached an agreement during May 2004 whereby principal payments under the
$840,000 loan would be deferred until November 2005. At that time, Norwood would
be repaid over 20 months at $42,000 per month. As a result of this agreement,
$282,000 of current debt was reclassified as long-term. During June and early
July 2004, the Company prepaid $170,000 of this loan, which has been classified
as current. Additionally, $20,000 of this loan was converted to 49,000 shares of
the Company's common stock by Norwood on May 28, 2004.
10
Results of Operations
For the three months ended May 31, 2004, the Company's sales increased $448,000
or 59% to $1,206,000 as compared to $758,000 for the three months ended May 31,
2003. The increase was principally the result of increased fluxer sales, the
sale of a large cleaning system, and sales of new products, such as Accumist
stent coaters, SonoDry spray dryers and WideTrack systems.
The Company's gross profit increased $229,000 to $668,000 for the three months
ended May 31, 2004 from $439,000 for the three months ended May 31, 2004 The
gross profit margin was 55.4% of sales for the three months ended May 31, 2004
as compared to 57.9% of sales for the three months ended May 31, 2003. The
change in margin occurred as the result of the changing mix of products in each
period.
Research and product development costs increased $3,000 to $96,000 for the three
months ended May 31, 2004 from $93,000 for the three months ended May 31, 2003.
Marketing and selling costs and general and administrative costs increased
$85,000 or 57% to $234,000 for the three months ended May 31, 2004 as compared
to $149,000 for the three months ended May 31, 2003. The increase was
principally due to increased commissions related to the 59% increase in sales
for the three months ended May 31, 2004.
General and Administrative costs increased $40,000 or 29% to $175,000 for the
three months ended May 31, 2004 as compared to $135,000 for the three months
ended May 31, 2003. The increase was principally due to increased compensation,
legal expense and consulting costs.
Interest expense decreased $19,000 to $31,000 for the three months ended May 31,
2004 from $50,000 for the three months ended May 31, 2003. The decrease is
primarily due to reduced additional interest amortization on the Norwood loans
and reduced interest on related party and other loans due to conversions to
equity and repayments made in the quarter ended February 29, 2004.
The Company's net income was $135,000 for the three months ended May 31, 2004 as
compared to $11,000 for the three months ended May 31, 2003. Earnings per common
share were $.01 for the three months ended May 31, 2004 as compared to $.001 for
the three months ended May 31, 2003.
Critical Accounting Policies
The discussion and analysis of the Company's financial condition and results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure on
contingent assets and liabilities at the date of the financial statements.
Actual results may differ from these estimates under different assumptions and
conditions.
11
Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and may potentially result in
materially different results under different assumptions and conditions. The
Company believes that critical accounting policies are limited to the one
described below. For a detailed discussion on the application of this and other
accounting policies see note 2 to the Company's consolidated financial
statements included in Form 10-KSB for the year ended February 29, 2004.
Accounting for Income Taxes
As part of the process of preparing the Company's consolidated financial
statements the Company is required to estimate its income taxes. Management
judgment is required in determining the provision on its deferred tax asset.
During the fourth quarter of the year ended February 29, 2004, the Company
reduced the valuation reserve for the deferred tax asset resulting from the net
operating losses carried forward due to the Company having demonstrated
consistent profitable operations. In the event that actual results differ from
these estimates, the Company may need to again adjust such valuation reserve.
Impact of New Accounting Pronouncements
There were no new issuances which affected the Company during this fiscal
quarter.
SONO-TEK CORPORATION
CONTROLS AND PROCEDURES
The Company has established and maintains "disclosure controls and procedures"
(as those terms are defined in Rules 13a -14(c) and 15d- 14(c) under the
Securities and Exchange Act of 1934 (the "Exchange Act'). Christopher L. Coccio,
Chief Executive Officer and President (principal executive and accounting
officer) of the Company, has evaluated the Company's disclosure controls and
procedures within 90 days of filing this Form 10-QSB. Based on his evaluation,
Mr. Coccio has concluded that the Company's disclosure controls and procedures
are effective to ensure that the information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by SEC
rules and Forms.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls after May 31, 2004. There
were no significant deficiencies or material weaknesses, and therefore there
were no corrective actions taken.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds.
On May 28, 2004, the Company entered into an agreement to exchange
49,133 shares of common stock valued at $20,636 with Norwood
Venture Corporation. This exchange resulted in the reduction of
Norwood debt in the amount of $20,636. This issuance was deemed
exempt from registration under Securities Act of 1933 in reliance
upon Section 4(2) of the Securities Act and/or Rule 506 of
Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 Amendment dated May 13, 1004 to Note and Purchase
Agreement dated September 29, 1999, as amended and the
12% Note dated September 30, 1999, as amended between
the Company and Norwood Venture Corporation.
31 Rule 13a-14/15d - 14(a) Certification
32 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K filed on May 17,
2004 relating to a press release on the results of operations
for the quarter ended February 29, 2004.
13
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 7, 2004
SONO-TEK CORPORATION
(Registrant)
By: /s/ Christopher L. Coccio
--------------------------------------
Christopher L. Coccio
Chief Executive Officer and President
14