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: August 31, 2006
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT 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 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
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 October 6, 2006
----- ---------------
Common Stock, par value $.01 per share 14,360,541
SONO-TEK CORPORATION
INDEX
Part I - Financial Information Page
Item 1 - Consolidated Financial Statements: 1-3
Consolidated Balance Sheets - August 31, 2006 (Unaudited) and
February 28, 2006 1
Consolidated Statements of Income - Six Months and Three Months Ended
August 31, 2006 and 2005 (Unaudited) 2
Consolidated Statements of Cash Flows - Six Months Ended August 31, 2006
and 2005 (Unaudited) 3
Notes to Consolidated Financial Statements 4-7
Item 2 - Management's Discussion and Analysis or Plan of Operations 8-11
Item 3 - Controls and Procedures 12
Part II - Other Information 13
Signatures and Certifications 14-20
SONO-TEK CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
August 31, February 28,
2006 2006
Unaudited
----------- -----------
Current Assets:
Cash and cash equivalents $ 1,917,226 $ 1,740,804
Accounts receivable (less allowance of $26,200 and
$18,500 at August 31 and February 28, respectively) 1,002,635 955,094
Inventories 1,647,926 1,520,397
Prepaid expenses and other current assets 45,075 68,024
Deferred tax asset 270,000 270,000
----------- -----------
Total current assets 4,882,862 4,554,319
----------- -----------
Equipment, furnishings and leasehold improvements
(less accumulated depreciation of $818,403 and
$788,245 at August 31 and February 28, respectively) 300,185 257,299
Intangible assets, net 32,342 29,922
Other assets 7,171 7,171
Deferred tax asset 315,000 315,000
----------- -----------
TOTAL ASSETS $ 5,537,560 $ 5,163,711
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 172,657 $ 330,701
Accrued expenses 645,386 498,504
Current maturities of long term debt 26,511 25,415
----------- -----------
Total current liabilities 844,554 854,620
Long term debt, less current maturities 65,363 79,114
----------- -----------
Total liabilities 909,917 933,734
----------- -----------
Commitments and Contingencies -- --
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized,
14,360,541 and 14,354,416 shares issued and outstanding
at August 30 and February 28, respectively 143,606 143,545
Additional paid-in capital 8,286,029 8,247,091
Stock Subscription Receivable (15,750) (15,750)
Accumulated deficit (3,786,242) (4,144,909)
----------- -----------
Total stockholders' equity 4,627,643 4,229,977
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,537,560 $ 5,163,711
=========== ===========
See notes to consolidated financial statements.
1
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended August 31, Three Months Ended August 31,
Unaudited Unaudited
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net Sales $ 3,615,682 $ 3,412,144 $ 1,833,938 $ 1,579,779
Cost of Goods Sold 1,811,978 1,743,107 858,854 798,829
------------ ------------ ------------ ------------
Gross Profit 1,803,704 1,669,037 975,084 780,950
------------ ------------ ------------ ------------
Operating Expenses
Research and product development costs 377,333 294,894 197,823 149,121
Marketing and selling expenses 660,336 578,795 339,848 267,237
General and administrative costs 438,795 412,373 219,610 213,080
------------ ------------ ------------ ------------
Total Operating Expenses 1,476,464 1,286,062 757,281 629,438
------------ ------------ ------------ ------------
Operating Income 327,240 382,975 217,803 151,512
Interest Expense (3,308) (3,430) (2,014) (668)
Interest Income 28,874 3,880 15,017 2,933
Other Income 5,861 3,000 3,030 3,000
------------ ------------ ------------ ------------
Income from Operations Before Income Taxes 358,667 386,425 233,836 156,777
Income Tax Expense 0 250 0 0
------------ ------------ ------------ ------------
Net Income $ 358,667 $ 386,175 $ 233,836 $ 156,777
============ ============ ============ ============
Basic Earnings Per Share $ 0.02 $ 0.03 $ 0.02 $ 0.01
============ ============ ============ ============
Diluted Earnings Per Share $ 0.02 $ 0.03 $ 0.02 $ 0.01
============ ============ ============ ============
Weighted Average Shares - Basic 14,359,341 14,066,199 14,360,541 14,179,910
============ ============ ============ ============
Weighted Average Shares - Diluted 14,461,122 14,397,528 14,460,211 14,449,440
============ ============ ============ ============
See notes to consolidated financial statements.
2
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended August 31,
Unaudited
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 358,667 $ 386,175
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 40,175 33,988
Provision for doubtful accounts 7,700 7,319
Stock based compensation expense 36,451 --
Gain on sale of equipment 17,723 --
Decrease (Increase) in:
Accounts receivable (55,241) (61,540)
Inventories (127,529) (70,376)
Prepaid expenses and other current assets 22,949 82,567
(Decrease) Increase in:
Accounts payable and accrued expenses (11,162) (220,597)
---------- ----------
Net Cash Provided By Operating Activities 289,733 157,536
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Patent Application Costs (4,701) --
Purchase of equipment and furnishings (98,503) (104,642)
---------- ----------
Net Cash (Used In) Investing Activities (103,204) (104,642)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Line of Credit Repayment -- (350,000)
Proceeds from exercise of stock options and warrants 2,548 300,598
Proceeds from issuance of stock -- 321,727
Repayments of notes payable and loans (12,655) (3,027)
Proceeds from Notes Payable -- 42,406
---------- ----------
Net Cash Provided by (Used In) Financing Activities (10,107) 311,704
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 176,422 364,598
CASH AND CASH EQUIVALENTS
Beginning of period 1,740,804 421,043
End of period $1,917,226 $ 785,641
========== ==========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 1,712 $ 3,430
========== ==========
See notes to consolidated financial statements.
3
SONO-TEK CORPORATION
Notes to Consolidated Financial Statements
Six Months Ended August 31, 2006 and 2005
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") which the Company acquired on August 3, 1999, whose
operations have been discontinued. There have been no operations of this
subsidiary since Fiscal Year Ended February 28, 2002. All significant
intercompany accounts and transactions are eliminated in consolidation.
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.
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, 2006, 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 preparation of financial statements in conformity with
generally accepted accounting principles 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 financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The results
for such interim periods are not necessarily indicative of the results to be
expected for the year.
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 $52,060 and $49,780 at
August 31, 2006 and February 28, 2006, respectively.
Reclassifications - Certain reclassifications have been made to the prior period
to conform to the presentations of the current period.
4
NOTE 2: INVENTORIES
Inventories at August 31, 2006 are comprised of:
Finished goods $ 537,829
Work in process 536,492
Consignment 9,605
Raw materials and subassemblies 816,981
-----------
Total 1,900,907
Less: Allowance (252,981)
-----------
Net inventories $ 1,647,926
===========
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 six
months ended August 31, 2006, the Board of Directors approved the issuance of
17,500 options. As of August 31, 2006, there were 121,500 options outstanding
under the 1993 Plan and 825,375 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.
NOTE 4: STOCK-BASED COMPENSATION
On March 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) 123R, Share-Based Payment, under the modified prospective
method. The Company had previously accounted for stock-based compensation plans
under the fair value provisions of SFAS 123, the adoption of SFAS 123 did not
significantly impact the Company's financial position or results of operations.
Under SFAS 123R, actual tax benefits recognized in excess of tax benefits
previously established upon grant are reported as a financing cash inflow. Prior
to adoption, such excess tax benefits were reported as an increase to operating
cash flows.
5
During the transition period of the Company's adoption of SFAS 123R, the
weighted-average fair value of options has been estimated on the date of grant
using the Black-Scholes options-pricing model with the following
weighted-average assumptions used: expected volatility ranging from 40% to 109%;
risk-free interest rate ranging from 3.25% to 4%; and an expected four-year term
for options granted.
For the six months ended August 31, 2006, net income and earnings per share
reflect the actual deduction for stock-based compensation expense. The total
stock-based compensation expense for the six months ended August 31, 2006 was
$36,451. The expense for stock-based compensation is a non-cash expense item.
Under the requirements of FAS 123R, the Company is not required to restate prior
period earnings, however, the Company is required to supplement its financial
statements with additional pro forma disclosures. Had compensation cost for the
Company's stock option plan been determined based on the fair value at the date
of grant, the Company's net income and basic and diluted earnings per share
would have been reduced to the pro forma amounts for the periods indicated
below.
Six Months Ended Three Months Ended
August 31, 2005 August 31, 2005
--------------- ---------------
Net Income:
As reported $386,175 $156,777
Deduct: Stock based employee
compensation expense under
fair value based method for all
awards, net of tax effects 19,213 9,241
-------- --------
Pro forma net income $366,962 $147,536
======== ========
Basic and diluted earnings per share:
As reported $ 0.03 $ 0.01
Pro forma $ 0.03 $ 0.01
6
NOTE 5: EARNINGS PER SHARE
The denominator for the calculation of diluted earnings per share at August 31,
2006 and 2005 are calculated as follows:
August 31, 2006 August 31, 2005
--------------- ---------------
Denominator for basic earnings per share 14,359,341 14,066,199
Dilutive effect of warrants -- 51,518
Dilutive effect of stock options 101,782 279,812
---------- ----------
Denominator for diluted earnings per share 14,461,122 14,397,528
========== ==========
NOTE 6: OTHER INCOME
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 had
previously expensed substantially all of the misappropriated funds over the
years.
The Company recovered $5,661 during the six months ended August 31, 2006 and
$157,605 during the year ended February 28, 2006. The Company is pursuing
appropriate remedies to recover the balance of the funds. 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.
7
SONO-TEK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Forward-Looking Statements
We discuss expectations regarding our future performance, such as our business
outlook, in our annual and quarterly reports, press 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. The following risks are
by no means all inclusive but are designed to highlight what we believe are
important factors to consider when evaluating our trends and future results.
- Our ability to respond to competition in national and global markets.
- General economic conditions in our markets.
We undertake no obligation to update 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.
We have a well established position in the electronics industry with our
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.
In the past three years, we have focused engineering resources on the medical
device market, with emphasis on providing coating solutions for the new
generation of drug coated stents. We have sold a significant number of
specialized ultrasonic nozzles and MediCoat stent coating systems to large
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. We also sell 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.
8
We have 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.
One of the new markets we are participating in is nanotechnology. We have been
able to enter this market with our SonoDry nozzle spraying system and WideTrack
technology.
In conclusion, our sales levels have increased result of an improved economy,
product development efforts, and related marketing thrusts which have had the
effects of improving net income, reducing debt, and increasing stockholders'
equity.
Liquidity and Capital Resources
Working Capital - Our working capital increased $339,000 from a working capital
of $3,699,000 at February 28, 2006 to $4,038,000 at August 31, 2006. The
Company's current ratio is 5.78 to 1 at August 31, 2006 as compared to 5.33 to 1
at February 28, 2006.
Inventory increased $128,000 from $1,520,000 to $1,648,000 as the result of
diversification of the Company's product lines and an increase in finished goods
for anticipated future sales.
Stockholders' Equity - Stockholder's Equity increased $398,000 from $4,230,000
at February 28, 2006 to $4,628,000 at August 31, 2006. The increase is the
result of net income of $359,000, stock option exercises of $2,500 and an
adjustment for stock based compensation expense of $36,000.
Operating Activities - Our operations provided $290,000 of cash for the six
months ended August 31, 2006, an increase of $132,000 when compared to the six
months ended August 31, 2005.
Investing Activities - We used $103,000 for the purchase of capital equipment
and patent application costs during the six months ended August 31, 2006
compared to the use of $105,000 during the six months ended August 31, 2005.
Financing Activities - For the six months ended August 31, 2006, we used $10,000
in financing activities resulting from the repayment of our notes payable
$12,500 and the proceeds of stock option exercises of $2,500. For the six months
ended August 31, 2005, the net cash provided by financing activities was
$312,000 resulting from: the issuance of stock and stock option exercises of
$621,000, repayment of the outstanding line of credit of $350,000 and the
proceeds of notes payable of $41,000.
9
Results of Operations
During the six month period ended August 31, 2006, our sales increased $204,000
or 6% to $3,616,000 as compared to $3,412,000 for the six months ended August
31, 2005. For the three months ended August 31, 2006, our sales increased
$254,000 when compared to the three months ended August 31, 2005. During the six
month period ended August 31, 2006, sales of our Nozzles and Medi-Coat systems
increased. The increase in sales of these units was offset by a decrease in
sales of WideTrack units and EVS systems. Sales of our Fluxer units were flat
when compared to the six months ended August 31, 2005.
Our gross profit increased $135,000 to $1,804,000 for the six months ended
August 31, 2006 from $1,669,000 for the six months ended August 31, 2005. The
gross profit margin was 49.89% of sales for the six months ended August 31, 2006
as compared to 48.91% of sales for the six months ended August 31, 2005. Our
gross profit increased $194,000 to $975,000 for the three months ended August
31, 2006 from $781,000 for the three months ended August 31, 2005. The gross
profit margin was 53.17% of sales for the three months ended August 31, 2006 as
compared to 49.43% of sales for the three months ended August 31, 2005. The
improvement in gross margin for the current quarter is the result of a large
Medicoat sale that occurred during the quarter.
Research and product development costs increased $82,000 to $377,000 for the six
months ended August 31, 2006 from $295,000 for the six months ended August 31,
2005 and $49,000 to $198,000 for the three months ended August 31, 2006 from
$149,000 for the three months ended August 31, 2005. The increases were
principally due to an increase in engineering personnel in the current periods.
Marketing and selling costs increased $82,000 to $660,000 for the six months
ended August 31, 2006 from $579,000 for the six months ended August 31, 2005 and
$73,000 to $340,000 for the three months ended August 31, 2006 from $267,000 for
the three months ended August 31, 2005. The increases were due principally to
increased travel expenses, outside commissions and trade show expenses.
General and administrative costs increased $26,000 to $439,000 for the six
months ended August 31, 2006 from $412,000 for the six months ended August 31,
2005 and $7,000 to $220,000 for the three months ended August 31, 2006 from
$213,000 for the three months ended August 31, 2005. The increase was
principally due to recording the current period stock based compensation expense
of $36,000. We are now required to directly expense the effects of stock based
compensation expense, a non-cash expense item.
Interest income increased $25,000 to $29,000 for the six months ended August 31,
2006 compared to the six months ended August 31, 2005. Our present investment
policy is to invest excess cash in short term commercial paper with an S & P
rating of at least A1+.
10
Our net income was $359,000 and $234,000 for the six and the three month periods
ended August 31, 2006 as compared to $386,000 and $157,000 for the six and three
month periods ended August 31, 2005.
The Company's backlog of firm orders was $300,000 at August 31, 2006. All of
these orders are deliverable before the end of the Company's current fiscal
year, which is February 28, 2007.
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, 2006.
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.
Stock-Based Compensation
The computation of the expense associated with stock-based compensation requires
the use of a valuation model. SFAS 123R is a new and very complex accounting
standard, the application of which requires significant judgment and the use of
estimates, particularly surrounding Black-Scholes assumptions such as stock
price volatility, expected option lives, and expected option forfeiture rates,
to value equity-based compensation. The Company currently uses a Black-Scholes
option pricing model to calculate the fair value of its stock options. The
Company primarily uses historical data to determine the assumptions to be used
in the Black-Scholes model and has no reason to believe that future data is
likely to differ materially from historical data. However, changes in the
assumptions to reflect future stock price volatility and future stock award
exercise experience could result in a change in the assumptions used to value
awards in the future and may result in a material change to the fair value
calculation of stock-based awards. SFAS 123R requires the recognition of the
fair value of stock compensation in net income. Although every effort is made to
ensure the accuracy of our estimates and assumptions, significant unanticipated
changes in those estimates, interpretations and assumptions may result in
recording stock option expense that may materially impact our financial
statements for each respective reporting period.
11
SONO-TEK CORPORATION
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'). Christopher L. Coccio,
Chief Executive Officer and President (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 August 31,
2006. 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 second fiscal quarter of 2007 that have
materially affected, or are reasonably likely to materially affect, internal
controls over financial reporting.
12
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
The following matters were voted upon at the Company's annual
meeting of shareholders held on August 17, 2006.
1. The election of three (3) directors of the Company to
serve until the Company's 2008 annual meeting of
shareholders.
For Against
--- -------
Donald F. Mowbray 11,477,490 94,500
Samuel Schwartz 11,440,890 131,100
Edward J. Handler 11,477,490 94,500
There were no broker non-votes.
Harvey L. Berger, Christopher L. Coccio and Philip A.
Strasburg, who were not standing for re-election, continued to
serve as Directors following the annual meeting.
2. The ratification of the appointment of Sherb & Co. as
the Company's independent auditors for the fiscal year
ending February 28, 2007.
For 11,331,463; Against 144,797; Abstained 95,730
There were no broker non-votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports
(a) Exhibits
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.
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: October 11, 2006
SONO-TEK CORPORATION
(Registrant)
/s/ Christopher L. Coccio
By: ____________________________________
Christopher L. Coccio
Chief Executive Officer and President
/s/ Stephen J. Bagley
By: ____________________________________
Stephen J. Bagley
Chief Financial Officer
14