SONO TEK CORP

Sono-Tek Corporation

Company overview

• Global designer and manufacturer of ultrasonic coating systems that apply precise, thin-film coatings to surfaces using high-frequency ultrasonic vibrations to atomize liquids into fine droplets.
• Equipment is designed to reduce overspray, conserve materials, water, and energy, and improve process repeatability and coating uniformity.
• Founded in 1975; public in 1987. Common stock trades on the Nasdaq Capital Market under the ticker SOTK since August 27, 2021.
• Corporate offices and production facilities in Milton, New York; sales and service office in Singapore; application process development laboratory in Guangzhou, China.
• ISO 9001 certified since September 1998 and recertified annually.
• Strong balance sheet with no debt.

Products and solutions

• Core product families:
  • Multi-Axis Coating Systems
  • Integrated Coating Systems
  • Fluxing Systems
  • OEM Systems
  • Universal Align subsystems (nozzles and generators for integration into customers’ equipment)
• Provides custom-engineered ultrasonic nozzle systems and full coating solutions to enable thin, uniform coatings across a range of applications and industries.
• Target outcomes include high coating quality, improved process efficiency, reduced emissions, and better transfer efficiency and uniformity.

Markets, applications and customers

• Key markets and applications:
  • Microelectronics/Electronics: printed circuit boards (ultrasonic flux application), semiconductor photoresist layers, sensors, display and panel glass coatings.
  • Medical: micron-scale coatings of polymers, drugs, biomedical materials, anti-coagulants; devices such as stents, balloons, artificial joints; blood collection tubes; diagnostic devices; bandages and lenses.
  • Industrial: flat (float) glass coatings; textiles (anti-microbial, anti-stain, flame retardant, moisture barriers); food packaging and safety coatings; food coatings for flavors and additives.
  • Alternative Energy: coatings used as catalysts, barriers, or facilitators for fuel cells, solar cells, carbon capture, and green hydrogen.
  • Emerging R&D/Other: university, research institution, government R&D and small industries.
• Customers include original equipment manufacturers (OEMs), distributors, and end users. Sales are conducted primarily through direct sales, select independent distributors, and trained sales representatives worldwide, with training and on-site support.
• Customer concentration: For the year ended February 28, 2026, one customer accounted for approximately 28% of net sales; for the year ended February 28, 2025, one customer accounted for approximately 11% of net sales. The company relies on a subset of large customers and distributors; reductions in orders or financial difficulties at those customers or distributors could materially affect revenues.
• International exposure: In fiscal 2026, 33% of net sales were outside the U.S. and Canada (compared with 39% in fiscal 2025).

Employees

• As of February 28, 2026: 79 full-time employees and 10 part-time employees (total 89).

Research and development

• Focused on development of ultrasonic coating technologies and ongoing improvement of products and services.
• R&D spending: $2,554,000 in fiscal 2026; $2,724,000 in fiscal 2025.
• R&D as a percentage of sales: 12% in fiscal 2026; 13% in fiscal 2025.

Operations, manufacturing and supply chain

• All products are manufactured and assembled at a single facility in Milton, New York.
• Growth may require additional manufacturing capacity and reliance on subcontractors.
• Supply chain exposure includes electronic components and related lead-time variability.
• Raw materials are generally available from multiple suppliers worldwide; the company is exposed to tariff changes and global supply disruptions.

International operations and compliance

• Sales and support operate worldwide through direct channels, distributors, and representatives.
• Regulatory and compliance exposure includes export controls, data privacy, anti-corruption laws (e.g., FCPA), tax laws in multiple jurisdictions, and currency risks. Enforcing contracts and protecting intellectual property can be more difficult internationally.

Intellectual property and competition

• IP strategy includes U.S. patents, trade secrets, and confidentiality/non-disclosure agreements, including reciprocal NDAs with key customers.
• Patents can be challenged, invalidated, or circumvented; markets outside the U.S. are less predictable and may require third-party licences.
• Competes with alternative coating technologies and global/regional nozzle manufacturers on price, quality, features, and service. New entrants and rapid technological change require ongoing development and market acceptance.
• Potential for IP-related litigation exists; adverse findings could require payment of damages or modification of products.

Financial position and capital structure

• No debt.
• Operating as a public company entails material costs for compliance with Sarbanes-Oxley and other governance requirements.
• No current plan to pay dividends on common stock.
• Nasdaq trading volume is limited, which presents potential liquidity risk for investors.
• The board has authority to issue additional shares, which could dilute existing holders; equity or debt financing may be used to support growth or acquisitions.
• In 2024, the board approved a stock repurchase plan authorizing up to $2,000,000 in common stock repurchases; actual purchases depend on market conditions and regulatory limits.
• Operating results have fluctuated and are influenced by order timing, project backlog, and external factors.
• Ongoing assessment of internal controls over financial reporting under Sarbanes-Oxley Section 404.

Key risks

• Customer concentration and reliance on a limited set of large customers and distributors.
• Need for additional funding to support growth or acquisitions; potential dilution if equity is issued.
• Global trade policy and tariff effects on costs and pricing.
• Geopolitical and macroeconomic events affecting supply chains, costs, and financing.
• Labor and talent acquisition challenges and potential capacity constraints with growth.
• Supply chain disruptions, component lead times, and reliance on a limited number of sources for critical components.
• Single-site manufacturing creates operational disruption risk.
• Intellectual property protection and litigation exposure.
• International regulatory, currency, and compliance risks.
• Cybersecurity, data protection, and IT system security risks.