10-Q 1 0001.txt QUARTERLY REPORT FOR QUARTER ENDING 5/31/00 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, 2000 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, Milton, NY 12547 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone no., including area code: (845) 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 12, 2000 Common Stock, par value $.01 per share 8,954,855 SONO-TEK CORPORATION INDEX Part I - Financial Information Page Item 1 - Consolidated Financial Statements: 1 - 3 Consolidated Balance Sheets - May 31, 2000 (Unaudited) and February 29, 2000 1 Consolidated Statements of Operations - Three Months Ended May 31, 2000 and 1999 (Unaudited) 2 Consolidated Statements of Cash Flows - Three Months Ended May 31, 2000 and 1999 (Unaudited) 3 Notes to Consolidated Financial Statements 4 - 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 12 Item 3 - Quantitative and Qualitative Disclosure About Market Risk 12 - 13 Part II - Other Information 13 Signatures 14 SONO-TEK CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS
May 31, February 29, 2000 2000 Current Assets Unaudited Cash and cash equivalents $ 92,097 $ 8,176 Accounts receivable (less allowance of $45,997 and $39,997 at May 31 and February 29, respectively) 820,752 1,619,639 Inventories (Note 4) 957,488 1,224,380 Prepaid expenses and other current assets 94,440 74,308 ------ ------ Total current assets 1,964,777 2,926,503 Equipment, furnishings and leasehold improvements (less accumulated depreciation of $485,236 and $469,011 at May 31 and February 29, respectively) 314,566 256,994 Intangible assets, net: Goodwill (Note 1) 1,211,197 1,232,571 Patents and patents pending (Note 1) 30,142 31,642 Deferred financing fees 30,787 32,563 ------ ------ Total intangible assets 1,272,126 1,296,776 Long-term equity investment, net (Note 5) 17,916 19,310 Other assets 14,442 14,542 ------ ------ TOTAL ASSETS $3,583,827 $4,514,125 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $698,701 $847,135 Deferred revenue 0 725,491 Accrued expenses 749,646 437,342 Revolving Line of Credit 350,000 334,307 Short term loans-related parties (Notes 6 and 10) 113,084 239,084 Current maturities of long term debt (Note 7) 236,925 220,532 Short term convertible loan (Note 8) 0 100,000 - -------- ------- Total current liabilities 2,148,356 2,903,891 Subordinated mezzanine debt 387,496 382,060 Long term debt, less current maturities (Note 7) 223,950 273,544 Subordinated convertible loans-related parties 150,000 150,000 ------- ------- Total liabilities 2,909,802 3,709,495 --------- --------- Commitments and Contingencies - - Put Warrants 77,000 77,000 Stockholders' Equity Common stock, $.01 par value; 25,000,000 shares authorized, 8,954,855 and 8,886,613 shares issued and outstanding at May 31 and February 29, respectively 89,549 88,666 Additional paid-in capital 5,844,042 5,711,800 Accumulated deficit (5,336,566) (5,072,836) ---------- ---------- Total stockholders' equity 597,025 727,630 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,583,827 $4,514,125 ========== ==========
See notes to consolidated financial statements. SONO-TEK CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended May 31, Unaudited 2000 1999 Net Sales $1,973,033 $805,329 Cost of Goods Sold 1,227,078 345,571 --------- ------- Gross Profit 745,955 459,758 ------- ------- Operating Expenses Research and product development costs 237,131 111,249 Marketing and selling expenses 403,698 217,105 General and administrative costs 210,543 116,199 ------- ------- Total Operating Expenses 851,372 444,553 ------- ------- Operating (Loss) Income (105,417) 15,205 Interest Expense (125,245) (112,768) Interest and Other (Loss) Income (33,066) 6,469 ------- ----- Loss Before Income Taxes (263,728) (91,094) Income Tax Expense 0 0 ------- ------- Net Loss ($263,728) ($91,094) ========= ======== Basic Loss Per Share $(0.03) $(0.01) ====== ====== Diluted Loss Per Share $(0.03) $(0.01) ====== ====== Weighted Average Shares - Basic 8,953,156 6,281,667 ========= ========= Weighted Average Shares - Diluted 8,953,156 6,281,667 ========= =========
See notes to consolidated financial statements. SONO-TEK CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended May 31, Unaudited 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(263,728) $(91,094) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Non-cash charge for issuance of warrants 75,831 102,626 Imputed interest expense on subordinated mezzanine debt 5,436 0 Loss on equity investment 1,394 0 Depreciation and amortization 40,874 10,536 Provision for doubtful accounts 6,000 0 (Increase) decrease in: Accounts receivable 792,887 (179,280) Inventories 266,892 (65,051) Prepaid expenses and other current assets (20,033) (70,596) Increase (decrease) in: Accounts payable and accrued expenses 163,870 129,450 Deferred revenue (725,491) 0 Non-current rent payable 0 249 ------- ------- Net Cash Provided By (Used In) Operating Activities 343,932 (163,160) ------- -------- CASH FLOW FROM INVESTING ACTIVITIES: Purchase of equipment and furnishings (73,797) (638) Loan receivable 0 (25,000) ------- -------- Net Cash Used In Investing Activities (73,797) (25,638) ------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from revolving line of credit 15,693 51,000 Proceeds from bank loan for production equipment 45,359 0 Proceeds from short term loans-related parties 0 77,000 Proceeds from exercise of warrants 55,692 0 Proceeds from stock options 1,602 0 Repayments of short term loans-related parties (126,000) 0 Repayments of short term borrowings (100,000) 0 Repayments of note payable and equipment loans (78,560) (2,546) ------- ------ Net Cash (Used In) Provided By Financing Activities (186,214) 125,454 -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 83,921 (63,344) CASH AND CASH EQUIVALENTS Beginning of period 8,176 70,051 ----- ------ End of period $ 92,097 $ 6,707 ========= ======== SUPPLEMENTAL DISCLOSURE: Interest paid $ 40,554 $ 6,392 ========= ========
See notes to consolidated financial statements. SONO-TEK CORPORATION Notes to Consolidated Financial Statements May 31, 2000 and 1999 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. (formerly known as S&K Products International, Inc.), a New Jersey Corporation ("SCS"), which the Company acquired on August 3, 1999 (the "Acquisition"). All significant intercompany accounts and transactions are eliminated in consolidation. The inclusion of SCS's results since August 3, 1999 has an effect on the comparison of the Company's Fiscal Year 2001 results to prior periods. 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, 2000, and included in its report on Form 10-K. 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. Goodwill - Goodwill is being amortized on a straight-line basis over 15 years. Patent and Patent Pending Costs - Cost of patent applications are deferred and charged to operations over seventeen years for domestic patents and twelve years for foreign patents. However, if it appears that such costs are related to products which are not expected to be developed for commercial application within the reasonably foreseeable future, or are applicable to geographic areas where the Company no longer requires patent protection, they are written off to operations. The accumulated amortization is $81,553 and $80,053 at May 31, 2000 and February 29, 2000, respectively. Reclassifications - Certain February 29, 2000 balances have been reclassified to conform with the current period presentation. NOTE 2: SEGMENT INFORMATION The Company has two reportable segments: spraying systems and cleaning and drying systems. The spraying systems segment is primarily engaged in the business of developing, manufacturing, selling, installing and servicing ultrasonic spray equipment. The cleaning and drying systems segment is engaged in the business of developing, manufacturing, selling, installing and servicing cleaning systems for the semiconductor, disk drive and precision cleaning industries. Summary financial information concerning the Company's reportable segments is shown in the following table:
Three Months Ended May 31, 2000 Spraying Cleaning/Drying Systems Systems Total Net Sales $967,005 $1,006,028 $1,973,033 Net Loss (36,508) (227,220) (263,728) Identifiable Assets 204,243 110,323 314,566 Capital Expenditures 73,797 0 73,797 Depreciation and Amortization Expense 16,656 24,219 40,874
The Company operated in a single reportable segment for the three months ended May 31, 1999. NOTE 3: ACQUISITION On August 3, 1999 the Company purchased all the outstanding stock of S&K Products International, Inc. ("S&K"), a supplier of cleaning and drying systems for the semiconductor, disk drive, and precision cleaning industries. In June 2000, the Company renamed S&K to Sono-Tek Cleaning Systems, Inc. ("SCS"). SCS is a wholly owned subsidiary of the Company. The following unaudited proforma information presents a summary of the consolidated results of operations of Sono-Tek and SCS as if the acquisition had occurred on March 1, 1999. Proforma Consolidated Statement of Operations Three month period ended May 31, 1999 Net Sales $966,834 Cost of Goods Sold 698,635 ------- Gross Profit 268,199 Operating Expenses 837,691 ------- Operating Loss (569,492) Interest Expense (128,800) Interest & Misc. Income 88,134 ------ Net Loss $(610,158) ========= These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as additional amortization expense as a result of goodwill and the elimination of extraordinary items associated with the SCS reorganization. They do not purport to be indicative of the results of operations that actually would have resulted had the combination occurred on March 1, 1999, or of future results of operations of the consolidated entities. NOTE 4: INVENTORIES Inventories at May 31, 2000 are comprised of: Finished goods $199,723 Work in process 232,453 Consignment 12,610 Raw materials and subassemblies 696,302 ------- Total 1,141,088 Less: Allowance (183,600) -------- Net inventories $957,488 ======== NOTE 5: LONG-TERM EQUITY INVESTMENT - NET In January 2000, in connection with the formation of PNR America, LLC, a Delaware limited liability company ("PNR America"), the Company invested $19,600 in PNR America for a 49% ownership interest. Flowtech Srl, an Italian company ("Flowtech"), a pressure nozzle manufacturer, owns the remaining 51%. PNR America was formed to market and sell nozzles imported from Flowtech in the U.S. The PNR America product line compliments the Company's existing business as there are certain basic nozzle properties common to both product lines and capitalizes on the Company's existing relationships with its customers. Prior to the formation of PNR America, the Company had conducted business with Flowtech as a U.S. distributor. Certain of the Company's officers and directors are also officers and directors of PNR America, however, PNR America's board of directors are controlled by Flowtech. The Company does not control PNR America and it is therefore not consolidated for reporting purposes. The Company shares its facilities and personnel with PNR America. The Company allocated costs of $32,610 to PNR America for the three month period ended May 31, 2000 and $13,967 for the period of inception through February 29, 2000. Balances due from PNR America of $46,577 and $13,967 at May 31, 2000 and February 29, 2000, respectively, are expected to be repaid out of PNR America's fiscal year 2000 operating cash flows. The Company's cumulative equity loss in PNR America at May 31, 2000 was $28,661. The Company recognized, during the three month period ended May 31, 2000 and the period from inception to February 29, 2000, $34,004 and $14,257, respectively as its estimate of the proportionate share of the net loss of PNR America. PNR America's year end is December 31, however, for financial reporting purposes the Company will reflect its proportionate share of the operating results of PNR America on a monthly basis, as the records are compiled by the Company. The condensed financial information of PNR America as of May 31, 2000 and for the three month period ended May 31, 2000 is as follows: Net loss $(69,396) ======== Total assets - current $50,163 ======= Due to Sono-Tek $46,577 Due to Flowtech 43,739 Accrued Expenses 18,338 ------ Liabilities 108,654 Stockholders' deficiency (58,491) ------- Total liabilities and stockholders' deficiency $50,163 ======= The Company, for financial reporting purposes has netted the cumulative equity loss in PNR America with the intercompany balances due from PNR America. NOTE 6: RELATED PARTY TRANSACTIONS Short term loans - related parties - From time to time the Company has required short term loans to meet its cash requirements. All of these loans have been provided by two officers and a director of the Company, at the fixed rate of prime plus 2% at the date of the loans (9.75% to 10.75% at May 31, 2000). During the three month period ended May 31, 2000, a total of $126,000 plus interest was repaid to these individuals. Accrued interest on these short term loans was $14,149 and $13,165 at May 31, 2000 and February 29, 2000, respectively. During the three month period ended May 31, 2000 and 1999, interest expense relating to these loans was $4,766 and $3,750, respectively. A non-cash charge of $11,799 was made to interest expense for the issuance of warrants in March 2000 to a lender. NOTE 7. LONG TERM DEBT On May 11, 2000, the Company entered into a collateralized loan agreement with a bank to purchase production equipment. The five year loan for $45,359 carries an interest rate of prime plus 2%, which was 10.75% at the date of inception. The loan will be repaid in equal monthly installments of $756 plus interest. NOTE 8: SHORT TERM CONVERTIBLE LOAN On February 15, 2000, the Company entered into a 90 day $100,000 short term convertible loan with a non-affiliated individual with an interest rate of 8%. At the option of the lender, the loan could be (i) converted into common stock at $1.00 per share or (ii) repaid by the Company, at which time the lender would be issued a warrant to purchase 50,000 shares of the Company's common stock at $1.00 per share. The lender elected for repayment and was issued a warrant that expires May 15, 2002 which resulted in a non-cash charge of $64,033 to interest expense warrants. NOTE 9: LOSS PER SHARE Basic earning per share ("EPS") and loss per share ("LPS") is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS would reflect, if applicable, the potential dilution that could occur if securities or other obligations to issue common stock were exercised or converted into common stock. Stock options granted but not yet exercised under the Company's stock option plans are included for Diluted EPS calculations under the treasury stock method. The computation of basic and diluted (loss) per share are set forth on the following table:
Three Months Ended May 31, 2000 1999 Numerator- Numerator for basic and diluted (loss) per share ($263,728) ($91,094) Denominator: Denominator for basic loss per share - weighted average shares 8,953,156 6,281,667 Effects of dilutive securities: Stock warrants for directors 0* 0* Stock options for employees and outside consultants 0* 0* Denominator for diluted loss per share 8,953,156** 6,281,667**
*Stock options and warrants for employees and outside consultants are antidilutive as a result of the net loss and therefore are not considered in the Diluted LPS calculation. **The effect of considering the detachable warrants related to the convertible secured subordinated promissory notes which were converted on February 26, 1999, are antidilutive and therefore not considered for the Diluted LPS calculations. Under the assumption that stock options and warrants were not antidilutive as described in * and **, the denominator for diluted loss per share would be 11,927,030 and 8,280,501 shares at May 31, 2000 and 1999, respectively. NOTE 10: SUBSEQUENT EVENTS Short term loans - related parties - During June 2000, an officer and a director of the Company loaned the Company a total of $110,000 at the fixed rate of prime plus 2% at the date of the loans. Letter of intent - On May 16, 2000, the Company signed a letter of intent to purchase all the outstanding stock of a corporation to further expand the Company's product base. Although the letter of intent contemplates negotiation and execution of a definitive stock purchase agreement, closing of the transaction is subject to numerous conditions, including, but not limited to (i) due diligence review by the Company with results reasonably satisfactory to the Company, (ii) receipt by the Company of financing necessary to consummate the transaction, and (iii) receipt of necessary consents including shareholder and third party consents. The letter of intent was to remain in effect for thirty (30) days and was extended for an additional thirty (30) day term. Should either party decide not to consummate the proposed transaction, in contravention of the terms and conditions of the letter of intent, a break-up fee of $100,000, plus out of pockets costs will be payable to the other party. 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: general economic and business conditions; political, regulatory, competitive and technological developments affecting the Company's operations or the demand for its products; timely development and market acceptance of new products; adequacy of financing; capacity additions; and ability to enforce patents. The Company undertakes no obligation to update publicly any forward-looking statement. Liquidity and Capital Resources The Company's working capital decreased $220,156 to a working capital deficiency of ($182,577) at May 31, 2000 from $36,579 at February 29, 2000. The decrease in working capital was a result of a decrease in accounts receivable and inventory that was offset by a decrease in deferred revenue. The stockholders' equity decreased $130,905 to $597,025 on May 31, 2000 from $727,930 on February 29, 2000. The decrease in stockholders' equity was the result of the loss of $263,729 for the three months ended May 31, 2000 that was offset by an increase in paid in capital of $132,242 from the exercise of warrants and options. During Fiscal Year 2000, the Company entered into an agreement with a Small Business Investment Corporation, Norwood Venture Corporation ("Norwood"), pursuant to which the Company obtained a five-year loan in the principal amount of $450,000. The terms of the loan require interest payments only for the first two years followed by monthly payments of $12,500 plus interest through September 30, 2004. The Company also granted Norwood a warrant to purchase 1,100,000 shares of the Company's common stock which can be put to the Company. Such warrants were valued at $77,000 which is accounted for as a discount and will be imputed as additional interest expense over the term of the loan. During Fiscal Year 2000, the Company entered into a short term loan of $100,000 with an outside non-affiliated individual. The loan and related interest was repaid in May 2000. As part of the loan agreement, when the loan was repaid, the lender received a warrant to purchase 50,000 shares of the Company's common stock at a price of $1.00 per share. The Company currently has a $350,000 line of credit with a bank. The loan is collateralized by accounts receivable, inventory and all other personal property of the Company and is guaranteed by the CEO of the Company. As of May 31, 2000 the outstanding balance was $350,000. The Company's Convertible Secured Subordinated Promissory Notes that were scheduled to mature on August 15, 2000 were converted to Common Stock under the Fourth Note Amendment Agreement dated February 26, 1999. At the same time, the exercise price of the warrants was reduced from $1.50 per share to $.65 per share, and the expiration date of the warrants was extended to February 28, 2002. During the three month period ended May 31, 2000, warrants to purchase 85,680 shares of stock were exercised, resulting in $55,692 of new capital. Due to the losses incurred during Fiscal Years 2000 and 1999, the Company was required to borrow on a short term basis from two officers and a director. During the three month period ended May 31, 2000 $126,000 plus interest was repaid. As of May 31, 2000, the balance owed the officers and director was $113,084. As an acknowledgement of the loans, 50,000 warrants were issued to an officer of the Company during the three month period ended May 31, 2000. One of the warrants for 25,000 shares of the Company's common stock expires August 16, 2004 and has an exercise price of $0.50 per share. The other warrant for 25,000 shares of the Company's common stock expires January 31, 2005 and has an exercise price of $1.00 per share. The Company recognized a non-cash interest charge of $11,799 based on the fair market value of the warrants granted. Subsequent to May 31, 2000, an officer and a director loaned the Company a total of $110,000 at the fixed rate of prime plus 2% at the date of the loans. As necessary, the Company plans on funding the operations by using the available borrowings under its current line of credit, and, if necessary, obtaining additional loans from officers and directors. Although there can be no assurances, management believes that the continued sales and expanding markets for its spray products, and the sales of cleaning and drying equipment will lead to broader markets and increases in sales and profits. These factors, and the anticipated success of PNR America, should allow the Company to meet its current obligations as they become due. The consolidated backlog at May 31, 2000 gives the Company a reason to anticipate increased sales in Fiscal Year 2001. On May 16, 2000, the Company signed a letter of intent to purchase all the outstanding stock of a corporation to further expand the Company's product base. Although the letter of intent contemplates negotiation and execution of a definitive stock purchase agreement, closing of the transaction is subject to numerous conditions, including, but not limited to (i) due diligence review by the Company with results reasonably satisfactory to the Company, (ii) receipt by the Company of financing necessary to consummate the transaction, and (iii) receipt of necessary consents including shareholder and third party consents. The letter of intent was to remain in effect for thirty (30) days and was extended for an additional thirty (30) day term. Should either party decide not to consummate the proposed transaction, in contravention of the terms and conditions of the letter of intent, a break-up fee of $100,000, plus out of pockets costs will be payable to the other party. Results of Operations For the three months ended May 31, 2000, the Company's sales increased $1,167,704 to $1,973,033 as compared to $805,329 for the three months ended May 31, 1999. The increase was a result of new sales of cleaning and drying systems of $1,006,028 and an increase in the sales of SonoFlux Systems of $154,987. The Company's gross profit increased $286,197 to $745,955 for the three months ended May 31, 2000 from $459,758 for the three months ended May 31, 1999. The increase was primarily a result of increased sales of the Company's products that were offset by the related material costs and labor. The gross profit margin was 37% and 57% of sales for the three months ended May 31, 2000 and 1999, respectively. The decrease in the gross profit margin was a result of lower margins on the sale of newly developed cleaning and drying systems due to expediting, redesign and additional labor charges associated with the new design which are not expected to recur for subsequent deliveries. Research and product development costs increased $125,882 to $237,131 for the three months ended May 31, 2000 from $111,249 for the three months ended May 31, 1999. The increase was a result of increased compensation resulting from a larger engineering staff and additional costs associated with SCS. Marketing and selling costs increased $186,593 to $403,698 for the three months ended May 31, 2000 from $217,105 for the three months ended May 31, 1999. The increases were primarily a result of costs for additional trade shows of $23,315, personnel costs of $84,476 related to SCS and additional commissions of $93,298 related to increased sales. General and administrative costs increased $94,344 to $210,543 for the three months ended May 31, 2000 from $116,199 for the three months ended May 31, 1999. The increases were primarily a result of increases in personnel costs of $31,449, professional and consulting fees of $32,083 and goodwill amortization of $21,374 related to SCS. Interest expense increased $12,477 to $125,245 for the three months ended May 31, 2000 from $112,768 for the three months ended May 31, 1999. The increase is primarily due to an increase in interest costs associated with the addition of the SCS and Norwood loan interest that was offset by a non-recurring, non-cash charge of $102,626 reflecting the value of warrants issued in the quarter ended May 31, 1999. For the three months ended May 31, 2000, the Company had a loss of $(263,729) or $(0.03) per share as compared to a loss of $(91,094) or $(0.01) per share for the three months ended May 31, 1999. SONO-TEK CORPORATION QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk related to changes in interest rates. The interest rate on the Company's debt is based on fluctuations in the prime rates. If the prime rate increased by 1 percentage point from the levels at February 29, 2000, the negative effect on the Company's results of operations would approximate $1,000 for the quarter ended May 31, 2000. PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in 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 on Form 8-K (a) Exhibits Exhibit No. Description 27. Financial Data Schedule - EDGAR filing only (b) Reports on Form 8-K None 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 14, 2000 SONO-TEK CORPORATION (Registrant) /s/ James L. Kehoe By: ____________________________________ James L. Kehoe Chief Executive Officer /s/ Kathleen N. Martin By: ____________________________________ Kathleen N. Martin Treasurer & Chief Financial Officer