-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lij1w1ODsuF7cQkQcNzyudY7h2blHIpUFP5ySuXuBN6qnibSOJPfEHi4njCSalEs BP3xxK5MEpZXxoJpmG8Feg== 0000806172-97-000006.txt : 19970715 0000806172-97-000006.hdr.sgml : 19970715 ACCESSION NUMBER: 0000806172-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970714 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONO TEK CORP CENTRAL INDEX KEY: 0000806172 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 141568099 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16035 FILM NUMBER: 97640159 BUSINESS ADDRESS: STREET 1: 2012 RT 9W BLDG 3 CITY: MILTON STATE: NY ZIP: 12547 BUSINESS PHONE: 9147952020 MAIL ADDRESS: STREET 1: 2012 RT. AW, BLDG. 3, CITY: MILTON STATE: NY ZIP: 12547 10-Q 1 QUARTERLY REPORT FOR QUARTER ENDING 05/31/97 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: May 31, 1997 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 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, Bldg. 3, Milton, NY 12547 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone no., including area code: (914) 795-2020 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 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 11, 1997 - --------------------- ----------------- Common Stock, par 4,374,387 value $.01 per share SONO-TEK CORPORATION INDEX Part I - Financial Information Page Item 1 - Financial Statements: 1 - 3 Balance Sheets - May 31, 1997 (Unaudited) and February 28, 1997 1 Statements of Operations - Three Months Ended May 31, 1997 and 1996 (Unaudited) 2 Statements of Cash Flows - Three Months Ended May 31, 1997 and 1996 (Unaudited) 3 Notes to Financial Statements 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 5 - 6 Item 3 - Quantative and Qualitative Disclosures about Market Risk - Not Applicable Part II - Other Information 7 Signatures 8 SONO-TEK CORPORATION BALANCE SHEETS
May 31 February 28 1997 1997 ASSETS Unaudited --------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 15,054 $ 107,746 Accounts receivable (net of allowance for doubtful accounts of $38,814 at May 31 and $35,814 at February 28) 615,887 525,750 Inventories (Note C) 447,230 469,241 Prepaid expenses and other current assets 18,607 33,441 --------------- --------------- Total Current Assets 1,096,778 1,136,178 Equipment, furnishings and leasehold improvements (less accumulated depreciation of $346,612 at May 31 and $339,829 at February 28) 49,791 56,574 Patents, patents pending and copyrights (less amortization of $117,875 at May 31 and $116,318 at February 28) 51,242 52,799 Other assets 6,317 6,317 --------------- --------------- T O T A L $ 1,204,128 $ 1,251,868 =============== =============== LIABILITIES Current maturities of long term debt $ 96,430 $ 94,370 Accounts payable 234,091 267,673 Accrued expenses (Note E) 283,815 354,381 --------------- --------------- Total Current Liabilities 614,336 716,424 --------------- --------------- Long term debt, less current maturities 550,567 576,056 Non-current rent payable 1,998 666 --------------- --------------- Total Liabilities 1,166,901 1,293,146 --------------- --------------- STOCKHOLDERS' EQUITY (DEFICIENCY) Common stock - $.01 par value: (Note E) Authorized - 12,000,000 shares Issued - 4,374,387 at May 31 and 4,204,913 at February 28 43,744 42,049 Additional paid-in capital 3,824,220 3,758,128 Deficit (3,830,737) (3,841,455) --------------- --------------- Total Stockholders' Equity (Deficiency) 37,227 (41,278) --------------- --------------- T O T A L $ 1,204,128 $ 1,251,868 =============== ===============
1 SONO-TEK CORPORATION STATEMENTS OF OPERATIONS Three Months Ended -------------------------- May 31 Unaudited 1997 1996 ---- ---- NET SALES $ 761,743 $ 751,637 COST OF GOODS SOLD 383,657 379,613 ---------- ---------- Gross Profit 378,086 372,024 ---------- ---------- OPERATING EXPENSES Research and product development costs 87,268 87,593 Marketing and selling expenses 172,851 159,174 General and administrative costs 94,169 87,795 ---------- ---------- Total Operating Expenses 354,288 334,563 ---------- ---------- OPERATING INCOME 23,798 37,461 INTEREST EXPENSE 13,080 16,319 INTEREST AND OTHER INCOME 0 15 ---------- ---------- NET INCOME $ 10,718 $ 21,157 ========== ========== INCOME PER COMMON SHARE (NOTE D) $ 0.00 $ 0.01 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED TO COMPUTE EARNINGS PER SHARE 4,261,404 4,204,913 2 SONO-TEK CORPORATION Statements of Cash Flows For Three Months Ended May 31
1997 1996 Unaudited ------------------------- Cash flows from operating activities: Net income $ 10,718 $ 21,157 ----------- ----------- Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 8,340 15,504 Allowance for doubtful accounts 3,000 1,500 (Increase) decrease in: Accounts receivable (93,138) (631) Inventories 22,011 (64,347) Prepaid expenses and other current assets 14,834 9,672 Increase (decrease) in: Accounts payable & accrued expenses (Note E) (36,360) (2,441) Noncurrent rent payable 1,332 (2,788) Notes and obligations payable - professional fees (4,000) (500) Notes and obligations payable - lease termination 0 (5,208) ----------- ----------- Total adjustments (83,981) (49,239) ----------- ----------- Net cash used in operating activities (73,263) (28,082) ----------- ----------- Cash flows from investing activities: Fixed asset, patent and copyright acquisition costs 0 (5,616) Cash flows from financing activities: Payments of capitalized leases 0 (1,305) Repayments of note payable - bank (19,429) (17,544) ----------- ----------- Net cash used in financing activities (19,429) (18,849) ----------- ----------- Net decrease in cash and cash equivalents (92,692) (52,547) Cash and cash equivalents: Beginning of period 107,746 69,033 ----------- ----------- End of period $ 15,054 $ 16,486 =========== =========== Supplemental disclosure: Interest paid $ 3,071 $ 20,399 Income taxes paid $ 0 $ 0 Non-cash exchange of accrued interest for common stock (Note E) $ 67,787 $ 0
3 SONO-TEK CORPORATION Notes to Financial Statements May 31, 1997 NOTE A: The attached summarized financial information does not include all disclosures required to be included in a complete set of financial statements prepared in conformity with generally accepted accounting principles. Such disclosures were included with the financial statements of the Company at February 28, 1997, included in its report on Form 10-K. Such statements should be read in conjunction with the data herein. NOTE B: 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. The results for the interim periods are not necessarily indicative of the results to be expected for the year. NOTE C: Inventory at May 31, 1997 is comprised of: Finished goods $107,335 Work in process 102,862 Raw materials and subassemblies 237,033 -------- Total $447,230 ======== NOTE D: Income per share is based on the weighted average number of shares outstanding during each period. The computation does not include the effect of outstanding stock options or conversion of the subordinated promissory notes since their inclusion would not be material. NOTE E: In April 1997 the holders of $530,000 of Subordinated Convertible Notes entered into an agreement with the Company (the "Third Note Amendment Agreement") whereby the holders agreed to (1) accept 169,474 shares of the Company's Common Stock as payment for $67,787 of interest due as of February 15, 1997; (2) Waive the default as to nonpayment of interest until March 1, 1998; (3) extend the due date of the note from August 15, 1997 until August 15, 2000; (4) reduce the interest rate from 1/2% below prime to 1% below prime. 4 SONO-TEK CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- The Company's sales increased $10,106 to $761,743 for the three months ended May 31, 1997 as compared to $751,637 for the three months ended May 31, 1996. The increase was a result of increased sales of the SonoFlux product line. Sales of these products increased approximately $113,000 while sales of the Company's Nozzle Systems decreased approximately $103,000. The Company believes the increase in sales of the SonoFlux System is a result of its efforts to provide the circuit board assembly industry with equipment that has a reputation for reliable and cost-effective performance. Due to the nature of the market for Nozzle Systems, it is not uncommon for the Company to experience significant fluctuations in sales from quarter to quarter. The Company's gross profit increased $6,062 from $372,024 for the three months ended May 31, 1996 to $378,086 for the three months ended May 31, 1997. The increase was a result of a decrease in the raw materials portion of cost of goods sold. Raw materials consumed were higher during the three months ended May 31, 1996 as a result of the disposal of obsolete stock associated with earlier models of the SonoFlux System and higher materials cost associated with the sale of a custom Nozzle System that required several unique components. Marketing and selling costs increased $13,677 from $159,174 for the three months ended May 31, 1996 to $172,851 for the three months ended May 31, 1997. The increase was primarily a result of an increase in commissions paid to outside sales representatives. Such commissions are paid on sales of SonoFlux units and related equipment which, as noted above, increased significantly over the prior year. General and administrative costs increased $6,374 from $87,795 for the three months ended May 31, 1996 to $94,169 for the three months ended May 31, 1997. During the three months ended May 31, 1996 the Company realized an expense reduction of approximately $4,000 as a result of a customer order cancellation charge. In addition, compensation costs increased approximately $2,000 during the three months ended May 31, 1997. Interest expense decreased $3,239 from $16,319 for the three months ended May 31, 1996 to $13,080 for the three months ended May 31, 1997. The decrease in interest expense is primarily a result of the increasing maturity of the Company's loan with its bank. As such loan matures, the amount of each fixed monthly payment which pertains to interest declines as the amount applied to principal increases. 5 For the three months ended May 31, 1997, the Company earned $10,718 or $.00 per share as compared to earnings of $21,157 or $.01 per share for the three months ended May 31, 1996. The decrease in earnings was primarily a result of higher commissions and administrative costs. Liquidity and Capital Resources - ------------------------------- The Company's working capital increased $62,688 to $482,442 at May 31, 1997 as compared to working capital of $419,754 at February 28, 1997 and the stockholders' position improved $78,505 from a deficit of $41,278 on February 28, 1997 to an equity position of $37,227 on May 31, 1997. The increase in working capital and equity was a result of restructured debt and profitable operations. On April 30, 1997 the Company reached an agreement with the holders of $530,000 of Subordinated Convertible Notes whereby they agreed to, among other things, accept shares of the Company's Common Stock as payment for the total amount of interest due as of February 28, 1997 and extend the term of the Notes until August 2000. The improvement in working capital has allowed the Company to make steady progress in its efforts to reduce outstanding debt. The Company has improved its position with many of its trade vendors, however, payments remain in arrears with many others. Although there can be no assurances, management believes that working capital generated by continuing operations will be sufficient to support the Company's working capital needs for the next twelve months based on anticipated sales levels. 6 PART II - OTHER INFORMATION Item 2. Changes in Securities On April 30, 1997 the Company sold 169,474 shares of its Common Stock. The shares were issued in a private placement to holders of convertible subordinated notes in payment of interest on notes in the aggregate sum of $67,787 due as of February 15, 1997. No underwriter was involved in the transaction. Item 4. Submission of Matters to a Vote of Security Holders None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description 27. Financial Data Schedule - EDGAR filing only (b) Reports on Form 8-K None 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: July 11, 1997 SONO-TEK CORPORATION By: /s/ James L. Kehoe -------------------------- James L. Kehoe Chief Executive Officer By: /s/ J. Duncan Urquhart --------------------------- J. Duncan Urquhart Treasurer & Chief Financial Officer 8 EX-27 2 ART. 5 FDS FOR QUARTERLY REPORT ON 10Q
5 3-mos FEB-28-1998 MAY-31-1997 15,054 0 615,887 38,814 447,230 1,096,778 49,791 346,612 1,204,128 614,336 0 0 0 43,774 (6,517) 1,204,128 761,743 761,743 383,657 383,657 0 0 13,080 10,718 0 10,718 0 0 0 10,718 .00 .00
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