UNITED STATES
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 ACT OF 1934
For the quarterly period ended: November 30, 2005
OR
|X| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 0-16035
SONO-TEK CORPORATION
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(Exact name of small business issuer 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
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(Address of Principal Executive Offices) (Zip Code)
Issuer'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 |_|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
YES |_| NO |X|
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 January 3, 2006
----- ---------------
Common Stock, par value $.01 per share 14,295,846
SONO-TEK CORPORATION
INDEX
Part I - Financial Information Page
Item 1 - Consolidated Financial Statements: 1 - 3
Consolidated Balance Sheets - November 30, 2005 (Unaudited) and
February 28, 2005 1
Consolidated Statements of Income - Nine Months and Three Months Ended
November 30, 2005 and 2004 (Unaudited) 2
Consolidated Statements of Cash Flows - Nine Months Ended
November 30, 2005 nd 2004 (Unaudited) 3
Notes to Consolidated Financial Statements 4 - 7
Item 2 - Management's Discussion and Analysis or Plan of Operations 8 - 12
Item 3 - Controls and Procedures 13
Part II - Other Information 14
Signatures and Certifications 15 - 21
SONO-TEK CORPORATION
CONSOLIDATED BALANCE SHEETS
November 30, February 28,
2005 2005
Unaudited Audited
--------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 933,312 $ 421,043
Accounts receivable (less allowance of $29,922 and $18,123
At November 30 and February 28, respectively) 1,051,663 813,703
Inventories 1,424,122 1,338,410
Prepaid expenses and other current assets 37,462 111,714
Deferred tax asset 270,000 117,000
----------- -----------
Total current assets 3,716,559 2,801,870
----------- -----------
Equipment, furnishings and leasehold improvements (less accumulated
depreciation of $770,368 and $720,384 at November 30 and
February 28, respectively) 217,095 140,133
Intangible assets, net 28,513 22,894
Other assets 7,171 7,171
Deferred tax asset 315,000 468,000
----------- -----------
TOTAL ASSETS $ 4,284,338 $ 3,440,068
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 171,941 $ 292,729
Accrued expenses 447,844 491,828
Line of Credit 0 350,000
Current maturities of long term debt 18,537 0
----------- -----------
Total current liabilities 638,322 1,134,557
Long term debt, less current maturities 51,232 0
----------- -----------
Total liabilities 689,554 1,134,557
----------- -----------
Commitments and Contingencies -- --
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized,
14,203,997 and 13,825,640 shares issued and outstanding
at November 30 and February 28, respectively 142,041 138,257
Additional paid-in capital 7,990,344 7,371,233
Stock Subscription Receivable (15,750) (15,750)
Accumulated deficit (4,521,851) (5,188,229)
----------- -----------
Total stockholders' equity 3,594,784 2,305,511
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,284,338 $ 3,440,068
=========== ===========
See notes to consolidated financial statements.
1
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended November 30, Three Months Ended November 30,
------------------------------ -------------------------------
Unaudited Unaudited
2005 2004 2005 2004
------------------------------ -------------------------------
Net Sales $ 5,082,730 $ 4,391,653 $ 1,670,586 $ 1,670,284
Cost of Goods Sold 2,596,543 1,963,183 853,436 757,756
------------ ------------ ------------ ------------
Gross Profit 2,486,187 2,428,470 817,150 912,528
------------ ------------ ------------ ------------
Operating Expenses
Research and product development costs 446,512 361,781 151,618 133,933
Marketing and selling expenses 831,605 755,078 252,810 249,270
General and administrative costs 600,711 639,567 188,338 253,532
------------ ------------ ------------ ------------
Total Operating Expenses 1,878,828 1,756,426 592,766 636,735
------------ ------------ ------------ ------------
Operating Income 607,359 672,044 224,384 275,793
Interest Expense (4,642) (82,171) (1,212) (23,839)
Interest Income 7,811 6,793 3,931 2,988
Other Income 56,100 0 53,100 0
------------ ------------ ------------ ------------
Income from Operations Before Income Taxes 666,628 596,666 280,203 254,942
Income Tax Expense 250 6,000 0 6,000
------------ ------------ ------------ ------------
Net Income $ 666,378 $ 590,666 $ 280,203 $ 248,942
============ ============ ============ ============
Basic Earnings Per Share $ 0.05 $ 0.05 $ 0.02 $ 0.02
============ ============ ============ ============
Diluted Earnings Per Share $ 0.05 $ 0.05 $ 0.02 $ 0.02
============ ============ ============ ============
Weighted Average Shares - Basic 14,111,339 11,134,960 14,048,236 11,378,017
============ ============ ============ ============
Weighted Average Shares - Diluted 14,417,106 13,014,931 14,163,279 13,297,293
============ ============ ============ ============
See notes to consolidated financial statements.
2
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended November 30,
------------------------------
Unaudited
2005 2004
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 666,378 $ 590,666
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 52,890 31,853
Provision for doubtful accounts 11,798 9,000
Decrease (Increase) in:
Accounts receivable (249,758) (47,119)
Inventories (85,712) (449,162)
Prepaid expenses and other current assets 74,252 17,846
(Decrease) Increase in:
Accounts payable and accrued expenses (164,772) 202,690
--------- ---------
Net Cash Provided By Operating Activities 305,076 355,774
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Patent Application Costs (8,525) (346)
Purchase of equipment and furnishings (126,946) (31,840)
Other 0 (633)
--------- ---------
Net Cash (Used In) Investing Activities (135,471) (32,819)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Line of Credit Repayment (350,000) 0
Proceeds from exercise of stock options and warrants 335,395 117,684
Proceeds from issuance of stock 287,500 46,700
Conversion of debt to equity 0 20,636
Loan payments/exchanges 0 (20,636)
Repayments of notes payable and loans (6,637) (260,650)
Proceeds from Notes Payable 76,406 0
--------- ---------
Net Cash Provided by (Used In) Financing Activities 342,664 (96,266)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 512,269 226,689
CASH AND CASH EQUIVALENTS
Beginning of period 421,043 189,987
--------- ---------
End of period $ 933,312 $ 416,676
========= =========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 4,642 $ 90,416
========= =========
See notes to consolidated financial statements.
3
SONO-TEK CORPORATION
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2005 and 2004
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 28, 2005, 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 2005 was $1.64
per share and the estimated fair value of options granted during the nine months
ended November 30, 2005 was $2.34 per share. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
the 2003 and 1993 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 and nine month
periods ended November 30, 2005 and 2004 would have been changed to the pro
forma amounts indicated below:
4
Nine Months Ended Three Months Ended
November 30, November 30,
2005 2004 2005 2004
-------- -------- -------- --------
Net Income:
As reported $666,378 $590,666 $280,203 $248,942
Deduct: Total stock based
employee compensation
under intrinsic value based
method for all
awards, net of tax effects 27,029 547,560 7,816 182,520
-------- -------- -------- --------
Pro forma $639,349 $ 43,106 $272,387 $ 66,422
======== ======== ======== ========
Basic and diluted earnings per share:
As reported $ 0.05 $ 0.05 $ 0.02 $ 0.02
Pro forma $ 0.04 $ 0.00 $ 0.02 $ 0.01
Intangible Assets - Include cost of patent applications that are deferred and
charged to operations over seventeen years for domestic patents and twelve years
for foreign patents. The accumulated amortization is $48,393 and $45,487 at
November 30, 2005 and February 28, 2005, respectively.
Reclassifications - Certain reclassifications have been made to the prior period
to conform to the presentations of the current period.
New Accounting Pronouncements - In May 2005, the FASB issued FASB Statement No.
154, which replaces APB Opinion No.20 and FASB No. 3. This Statement provides
guidance on the reporting of accounting changes and error corrections. It
established, unless impracticable, retrospective application as the required
method for reporting a change in accounting principle in the absence of explicit
transition requirements to a newly adopted accounting principle. The Statement
also provides guidance when the retrospective application for reporting of a
change in accounting principle is impracticable. The reporting of a correction
of an error by restating previously issued financial statements is also
addressed by this Statement. This Statement is effective for financial
statements for fiscal years beginning after December 15, 2005. Earlier
application is permitted for accounting changes and corrections of errors made
in fiscal years beginning after the date of this Statement is issued. Management
believes this Statement will have no impact on the financial statements of the
Company once adopted.
5
NOTE 2: INVENTORIES
Inventories at November 30, 2005 are comprised of:
Finished goods $ 419,165
Work in process 613,252
Consignment 9,305
Raw materials and subassemblies 656,692
-----------
Total 1,698,414
Less: Allowance (274,292)
-----------
Net inventories $ 1,424,122
===========
NOTE 3: STOCK OPTIONS AND WARRANTS
Stock Options - Under the 2003 Stock Incentive Plan, as amended ("2003 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. The 2003 Plan supplemented and replaced the 1993 Stock Incentive Plan
(the "1993 Plan"), under which no further options may be granted. Options
granted under the 1993 Plan expire on various dates through 2013. During the
nine months ended November 30, 2005, the Board of Directors approved the
issuance of 50,000 options. The 50,000 options were issued at the then
exercisable market price, hence, no compensation expense has been recorded. As
of November 30, 2005, there were 129,062 options outstanding under the 1993 Plan
and 761,500 options outstanding under the 2003 plan.
Under both 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 terminating at a stipulated period of time after an
employee's termination of employment.
Warrants - On May 11, 2005, a warrant for 142,857 shares of the Company's common
stock was exercised at $1.75 per share by Empire State Development Corporation,
Small Business Technology Investment Fund.
On October 20, 2005, the Company's Board of Directors extended the expiration
date for a warrant issued to the Empire State Development Corporation for ninety
days until January 26, 2006. The warrant entitled the Empire State Development
Corporation to purchase 142,857 shares of stock at $1.75 per share and was
exercised in full on January 4, 2006.
6
NOTE 4: EARNINGS PER SHARE
The denominator for the calculation of diluted earnings per share at November
30, 2005 and 2004 are calculated as follows:
November 30, 200 November 30, 2004
---------------- -----------------
Denominator for basic earnings per share 14,111,339 11,134,960
Dilutive effect of warrants 41,010 1,878,293
Dilutive effect of stock options 264,757 1,679
---------- ----------
Denominator for diluted earnings per share 14,417,106 13,014,932
========== ==========
NOTE 5: As previously disclosed on Form 8-K, filed on July 5, 2005, the Company
determined that a former employee had misappropriated approximately $250,000 of
the Company's monies, primarily through unauthorized check writing from the
Company's accounts over a period of three calendar years. The Company has
previously expensed substantially all of the misappropriated funds over the
years.
The Company is pursuing appropriate remedies to recover the majority of the
misappropriated funds and is continuing to do so. The Company recovered $56,000
during the nine month period ended November 30, 2005; this amount is recorded as
Other Income. As previously discussed, the Company can offer no assurances that
it will be successful in its attempt to collect the balance of the remaining
restitution.
NOTE 6: Subsequent Event
Additional Equity Investment - On January 4, 2006, a warrant for 142,857 shares
of the Company's common stock was exercised at $1.75 per share by Empire State
Development Corporation.
7
SONO-TEK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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 lower 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
electronics industry market appears to be in a stable to moderate growth period.
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 many specialized
ultrasonic nozzles and AccuMist(TM) and Micromist stent coating systems to large
pharmaceutical and medical device customers. Sono-Tek's stent coating systems
are superior compared to pressure nozzles in their ability to uniformly coat the
very small arterial stents without creating webs or gaps in the coatings. The
Company sells a bench-top, fully outfitted stent coating system to a wide range
of customers that are manufacturing stents and/or applying coatings to be used
in developmental trials. The Company is licensed to use a unique patented
vacuum-based ultrasonic system capable of uniformly coating batches of stents
with anti-restenosis coatings, and has offered this technology to selected
manufacturers. The Company recently sold a MediSonic system for use in the
diabetes management field.
8
The Company also committed engineering resources to develop a general industrial
coating product, the WideTrack coating system, which is finding increasing
applications in the glass, food and textile manufacturing industries. The
WideTrack is saving customers money by reducing the use of materials and
lessening the environmental impact by significantly reducing overspray, which is
common with other types of coating systems.
In addition to the engineering initiatives discussed above, the Company has been
focusing on expanding its geographic markets. The Company began to place
emphasis on developing new markets overseas in places such as China, India,
Southeast Asia, Europe, and Eastern Europe. Over the last twelve months, the
Company has more than doubled the number of countries where it has an
established sales distribution channel.
In conclusion, 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
Working Capital - The Company's working capital increased $1,410,924 from a
working capital of $1,667,313 at February 28, 2005 to $3,078,237 at November 30,
2005. The Company's current ratio is 5.82 to 1 at November 30, 2005, as compared
to 2.47 to 1 at February 28, 2005. The increase in working capital was the
result of the Company's net income, cash proceeds from the issuance of stock and
the exercise of stock options and warrants, the repayment of the outstanding
line of credit, an increase in the current deferred tax asset and a decrease in
accounts payable.
Accounts Receivable increased $237,960 or 29% from $813,703 at February 28, 2005
to $1,051,663 at November 30, 2005, resulting primarily from an increase of
orders received during the month ended November 30, 2005.
Stockholders' Equity - Stockholders' equity increased $1,289,273 from $2,305,511
at February 28, 2005 to $3,594,784 at November 30, 2005. The increase in
stockholders' equity was the result of net income of $666,378 for the nine
months ended November 30, 2005, stock option and warrant exercises of $335,395,
and stock issuance of $287,500.
Operating Activities - During the nine months ended November 30, 2005, the net
cash provided by operating activities was $305,000, resulting from the Company's
net income, increases in accounts receivable and inventories and a decrease in
accounts payable and accrued expenses.
9
Investing Activities - During the nine months ended November 30, 2005, the net
cash used in investing activities was $135,000, resulting from the purchase of
equipment.
Financing Activities - During the nine months ended November 30, 2005, the net
cash provided by financing activities was $343,000, resulting from the issuance
of stock, exercise of stock options and warrants; repayment of the outstanding
line of credit and the proceeds of notes payable to finance equipment purchases.
Results of Operations
For the nine months ended November 30, 2005, the Company's sales increased
$691,000 to $5,083,000 as compared to $4,392,000 for the nine months ended
November 30, 2004. For the three months ended November 30, 2005, the Company's
sales remained level at $1,670,000 when compared to the three months ended
November 30, 2004.
The Company's gross profits increased $58,000 to $2,486,000 for the nine months
ended November 30, 2005 from $2,428,000 for the nine months ended November 30,
2004. The gross profit margin was 48.91% of sales for the nine months ended
November 30, 2005 as compared to 55.3% of sales for the nine months ended
November 30, 2004. The Company's gross profit decreased $95,000 to $817,000 for
the three months ended November 30, 2005 from $912,000 for the three months
ended November 30, 2004. The gross profit margin was 48.9% of sales for the
three months ended November 30, 2005 as compared to 54.6% of sales for the three
months ended November 30, 2004. The changes in gross margin occurred as the
result of the changing mix of products in each period and increases in both
internal and external costs associated with business growth.
Research and product development costs increased $85,000 to $447,000 for the
nine months ended November 30, 2005 from $362,000 for the nine months ended
November 30, 2004 and $18,000 to $152,000 for the three months ended November
30, 2005 from $134,000 for the three months ended November 30, 2004. The
increases were principally due to an increase in engineering personnel in the
current periods.
Marketing and selling costs increased $77,000 and $3,000 for the respective nine
and three months ended November 30, 2005 as compared to the same periods ended
November 30, 2004. The increases were due principally to increased labor and
fringe benefit costs, travel expenses and increased commissions.
General and administrative costs decreased $39,000 and $65,000 for the
respective nine and three months ended November 30, 2005 as compared to the same
periods ended November 30, 2004. The decrease is a result of the reallocation of
payroll costs across departments and is offset by increased legal, consulting
and accounting costs.
Interest expense decreased $78,000 to $5,000 for the nine months ended November
30, 2005 compared to the period ended November 30, 2004. Interest expense
decreased $23,000 to $1,000 for the three months ended November 30, 2005 from
$24,000 for the three months ended November 30, 2004. The decrease is primarily
due to reduced interest and amortization on related party and bank loans.
10
The Company's net income was $666,000 and $280,000 for the nine and three months
ended November 30, 2005 as compared to $591,000 and $249,000 for the nine and
three month periods ended November 30, 2004.
The Company's backlog of firm orders was $354,000 at November 30, 2005. All of
these orders are deliverable before the end of the Company's current fiscal
year, which is February 28, 2006.
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.
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 28, 2005.
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.
11
Impact of New Accounting Pronouncements
FASB 154 - Accounting Changes and Error Corrections
In May 2005, the FASB issued FASB Statement No. 154, which replaces APB Opinion
No.20 and FASB No. 3. This Statement provides guidance on the reporting of
accounting changes and error corrections. It established, unless impracticable,
retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements to a
newly adopted accounting principle. The Statement also provides guidance when
the retrospective application for reporting of a change in accounting principle
is impracticable. The reporting of a correction of an error by restating
previously issued financial statements is also addressed by this Statement. This
Statement is effective for financial statements for fiscal years beginning after
December 15, 2005. Earlier application is permitted for accounting changes and
corrections of errors made in fiscal years beginning after the date of this
Statement is issued. Management believes this Statement will have no impact on
the financial statements of the Company once adopted.
12
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 officer) and Stephen
J. Bagley, Chief Financial Officer (principal accounting officer) of the
Company, have evaluated the Company's disclosure controls and procedures as of
November 30, 2005. Based on this evaluation, they have 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 November 30, 2005.
There were no significant deficiencies or material weaknesses, and therefore
there were no corrective actions taken.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - None
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
(a) Exhibits
31.1 - Rule 13a - 14(a)/15d - 14(a) Certification
31.2 - Rule 13a - 14(a)/15d - 14(a) Certification
32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
14
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: January 6, 2006
SONO-TEK CORPORATION
(Registrant)
By: /s/ Christopher L. Coccio
------------------------------
Christopher L. Coccio
Chief Executive Officer and President
By: /s/ Stephen J. Bagley
------------------------------
Stephen J. Bagley
Chief Financial Officer
15