SONO TEK CORP
For the period ended May 31, 2025. Filed Jul 10, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 31, 2025 · Filed Jul 10, 2025
SOTK$4.30-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-11-30; filed 2025-01-13.
0001171520-25-000009
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-05-31; filed 2025-07-10.
0001171520-25-000225
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 65 current paragraphs.
31 unchanged; 16 reworded; 18 added; 31 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
For the first quarter of fiscal year 2026, Integrated Coating Systems sales increased $2.31 million, or 309%, to $3.05 million, primarily driven by a repeat order totaling $2.95 million for four high ASP systems shipped to the clean energy sector for an advanced solar application. Multi-Axis Coating Systems declined $1.99 million, or 75%, to $677,000 due to decreased North American sales tied to reduced R&D funding in the clean energy sector following shifts in government policy. OEM Systems were down $202,000, or 61%, to $130,000, as several OEM partners targeting the China market experienced lower product demand. Fluxing Systems rose 13%, or $18,000, to $152,000. Spare Parts, Services, and Other remained relatively stable at $1.12 million, down slightly by $34,000, or 3%.
Current report
Sales to the Alternative Energy/Clean market grew $966,000, or 42%, to $3.25 million, influenced by a $2.95 million repeat order for advanced solar cell applications. Medical market sales were $809,000, down slightly by $48,000 or 6%. Sales to the Electronics/Microelectronics market declined $625,000, or 40%, to $943,000, influenced by a non-recurring $370,000 order in the prior-year quarter for a semiconductor wafer handler system. Industrial sales decreased $194,000, or 62%, to $119,000 which was not especially impactful due to the small dollar amount involved. Emerging R&D and Other remains a negligible portion of sales and is not materially impactful for this period.
Current report
In the first quarter of fiscal year 2026, approximately 69% of sales were to customers in the U.S. and Canada, up from 61% in the prior-year period. This increase was influenced by a $2.95 million repeat order of high ASP systems shipped to a U.S.-based customer in the clean energy sector. Asia Pacific (APAC) sales grew 16%, or $84,000, to $597,000, driven in part by a $78,000 low-volume stent coating system sold to a customer in China, with a higher-volume follow-on system currently in backlog. EMEA sales declined $348,000, or 28%, to $897,000, reflecting a slowdown in orders from that region during the quarter. Latin America sales decreased $86,000, or 47%, to $96,000 which was not especially impactful due to the small dollar amount involved.
Current report
Gross profit increased $211,000, or 9%, to $2.67 million for the first quarter of fiscal 2026, compared with $2.45 million in the prior-year period. Gross profit percentage improved by 310 basis points, rising to 51.9% from 48.8%. The improvement was influenced by a favorable product mix, including a significant increase in Integrated Coating System sales tied to a repeat high ASP order. Additionally, the system shipped to a U.S.-based customer, where sales typically involve minimal distributor discounts or external commissions, supporting stronger margins.
Current report
Research and product development costs decreased in the first quarter of fiscal year 2026 due to a decrease in salary expense associated with the departure of a senior engineer, a decrease in insurance expense and a decrease in other miscellaneous expenses. These decreases were partially offset by additional lab salaries.
Current report
Commission expense decreased in the first quarter of fiscal year 2026 due to a majority of the quarter’s sales being generated by our in-house sales team. Our in-house sales team is compensated at a lower commission rate when compared to our external distributors.
Current report
In the first quarter of fiscal year 2026, our operating income increased $245,000 to $483,000 compared to $238,000 in the first quarter of fiscal year 2025. The increase is due to the current period’s increase in gross profit combined with a decrease in operating expenses.
Current report
Net unrealized loss increased $32,000 to $22,000 in the first quarter of fiscal year 2026 as compared to an unrealized gain of $10,000 in the first quarter of fiscal year 2025.
Current report
We recorded an income tax expense of $119,000 for the first quarter of fiscal year 2026 compared with $60,000 for the first quarter of fiscal year 2025. The increase in income tax expense in fiscal 2026 is due to the increase in income before income taxes offset by the application of available research and development tax credits.
Current report
Due to recently enacted budget legislation, we anticipate that the realization of certain of our deferred tax assets may be accelerated.
Current report
Net income increased by $154,000 to $485,000 in the first quarter of fiscal year 2026 compared with $331,000 in the prior year period. The increase in net income is primarily a result of an increase in operating income partially offset by an increase in income tax expense.
Current report
In the first quarter of fiscal year 2026, our accounts receivable increased $749,000 when compared to the prior year. The increase in accounts receivable is primarily due to revised payment terms provided to one customer that purchased four units during the first quarter of fiscal year 2026, with a total sales price of $2.9 million. After completion of the first quarter of fiscal year 2026, the customer requested a modification to the timing of one of their scheduled payments due to a shift in their production plans from overseas to the United States. Because we have already collected a significant cash down payment on the order and we anticipate only a modest delay of approximately two months on a portion of the next payment, we accommodated the customer’s request. The customer has indicated that they will return to the originally agreed payment schedule thereafter. Based on our long-standing relationship and ongoing communications we do not currently foresee any collection issues with this customer.
Current report
In the first quarter of fiscal year 2026, our accounts receivable increased $749,000 when compared to the prior year. The increase in accounts receivable is primarily due to extended payment terms being offered to one customer that purchased four units during the quarter with a total sales price of $2.9 million.
Current report
In the first quarter of fiscal year 2026, our inventories increased $374,000 when compared to the prior year. The increase in inventories is due to the number of customer orders in our backlog scheduled for shipment in the remaining part of the year.
Current report
In the first quarter of fiscal year 2026, our income taxes payable decreased $307,000 when compared to the prior year. The decrease in income taxes payable is due to payments on our current year tax returns and required estimated payments.
Current report
In the first quarter of fiscal year 2026, net sales of marketable securities generated $715,000 of cash compared with using $28,000 for the purchase of marketable securities in the prior year period.
Current report
***Financing Activities –***In the first quarter of fiscal year 2026, we used $79,000 of cash for the purchase of treasury stock.
Current report
In November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations. The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.
Removed paragraphs (31)
Previous report
Total sales for the first nine months of fiscal year 2025 grew by 3%, and total sales for the third quarter of fiscal 2025 decreased by 9%. The increase in revenue for the first nine months of fiscal 2025 is the result of an 11% increase in Integrated Coating Systems revenue and a 7% increase in Multi Axis Coating Systems revenue. For the third quarter of fiscal 2025, sales of our Integrated Coating Systems decreased by 94%, but this decrease was partially offset by a 20% increase in Multi Axis Coating Systems revenue.
Previous report
OEM Systems revenue for the third quarter and first nine months of fiscal year 2025 decreased by 3% and 26%, respectively. The decrease is primarily due to OEM partners previously building up excess inventory to combat supply chain concerns. There are indications that this excess inventory created by OEM Partners has been cleared during the third quarter of fiscal 2025.
Previous report
Fluxing Systems revenue for the third quarter of fiscal 2025 increased 15% and decreased 36% for the first nine months of fiscal 2025. The first nine-month dip was influenced by softening activity from the Printed Circuit Board Sector, however due to significant positive momentum resulting from recent distributor changes, we anticipate that this revenue stream will have continued growth for the remainder of the fiscal year.
Previous report
The Other revenue category increased by 24% in the third quarter of fiscal 2025 and 4% for the first nine months of fiscal 2025. This category comprises spare parts sales and service-related activities, with the latter experiencing particularly strong performance in the third quarter of fiscal 2025, highlighting service-related revenue as an important contributor to growth.
Previous report
Sales to the Alternative/Clean Energy market recorded growth of 42% in the third quarter of fiscal 2025, and 63% for the first nine months of fiscal 2025, which were positively impacted by a growing number of our customers transitioning from our R&D systems to production scale systems that carry much higher average selling prices.
Previous report
Electronics market revenue increased for the first nine months of fiscal 2025, influenced by the introduction of newly developed products in the semiconductor market.
Previous report
Medical sales revenue decreased in the third quarter of fiscal 2025 and the first nine months of fiscal 2025 due to decreased medical sales in China, resulting from a weak Chinese economy, increased competition in mainland China, and a strong push for China based companies to buy “Made in China” products. Sales to China have declined to a level where they no longer represent a significant portion of our overall revenue. As such, any further decreases in sales to this region are not expected to have a material impact on our financial performance.
Previous report
Industrial sales declined by 59% and 49%, respectively, for the third quarter of fiscal 2025 and the first nine months of fiscal 2025. The reduction in industrial sales was strongly impacted by approximately $930,000 of sales to the float glass industry in the first nine months of fiscal 2024 that did not repeat in fiscal 2025. The businesses of our primary American based customers in this market have contracted due to China-based competition entering the market with inexpensive glass.
Previous report
In the first nine months of fiscal 2025, approximately 39% of sales originated outside of the United States and Canada compared with 40% in the first nine months of fiscal 2024.
Previous report
In the third quarter of fiscal 2025, approximately 46% of sales originated outside of the United States and Canada compared with 40% in the third quarter of fiscal 2024.
Previous report
We continue to record strong sales from the U.S. and Canada compared to past years, with the first nine-month revenue up 5% or $421,000. U.S. government initiatives such as the CHIPS ACT and the Inflation Reduction Act have influenced these strong sales, as well as the continuing trend of onshoring for high technology products
Previous report
Asia sales increased 64% and 11% respectively, for the third quarter of fiscal 2025 and first nine months of fiscal 2025. While China sales continue to decline, growth for the first nine months of fiscal 2025 continues from South Korea, India, Taiwan and Japan.
Previous report
Latin America sales in the third quarter of fiscal 2025 increased by $185,000, or 165% primarily due to an orthopedic medical device coating system that shipped for $133,000. Sales for the first nine months of fiscal 2025 decreased by $455,000, or 41% due to a $465,000 float glass line that was shipped in fiscal 2024 that did not repeat in fiscal 2025.
Previous report
For the third quarter of fiscal 2025, gross profit decreased $583,000, or 20%, compared with the third quarter of fiscal 2024. For the third quarter of fiscal 2025, the gross profit margin was 45% compared with 51% for the prior year period. The decrease in the gross profit margin was influenced by product mix, increased International Sales that most commonly have distributor discounts, and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024 as an outcome of the completion of several successful R&D endeavors.
Previous report
Gross profit decreased $190,000, or 3%, to $7,314,000 for the first nine months of fiscal 2025 compared with $7,504,000 in the first nine months of fiscal 2024. The gross profit margin was 48% compared with 50% for the prior year period. The decrease in the gross profit margin was influenced by product mix and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024 as an outcome of completion of several successful R&D endeavors.
Previous report
Research and product development costs decreased in the third quarter and the first nine months of fiscal 2025 due to a decrease in salary associated with the departure of a senior engineer, a decrease in research and development materials and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024. The reallocation of the labor expenses is an outcome of the completion of several successful R&D endeavors.
Previous report
Marketing and selling expenses increased in the first nine months of fiscal 2025 due to increased commissions and increased travel and trade show expenses. In the third quarter of fiscal 2025, we expended approximately $222,000 for commissions as compared with $178,000 for the prior year period, an increase of $44,000. In the first nine months of fiscal 2025, we expended approximately $628,000 for commissions as compared with $464,000 for the prior year period, an increase of $164,000. The increase in commission expense is primarily the result of an increase in sales being generated by our external distributors, which are commissioned at a higher rate than our in-house sales team.
Previous report
The decrease in salary expense is due to the reallocation of our Chief Executive Officer, Steve Harshbarger’s salary to the General and Administrative category as described more fully below under the heading “General and Administrative”.
Previous report
The increase in stock based compensation expense in the third quarter of fiscal 2025 is due to option awards that were issued in the second quarter of fiscal 2025. Option awards are expensed over three years based on vesting.
Previous report
Effective January 1, 2024, Steve Harshbarger became our Chief Executive Officer, having previously served as President prior to such date. On becoming Chief Executive Officer, we reclassified the expenses related to Mr. Harshbarger's compensation in connection with this positional change. Prior to January 1, 2024, we classified Mr. Harshbarger’s salary under sales expenses because of Mr. Harshbarger’s instrumental role in that area. For the first nine months of fiscal year 2025, the total reallocated amount of Mr. Harshbarger’s salary was approximately $194,000.
Previous report
In the fourth quarter of fiscal 2024, we were notified by the State of California that we were required to collect sales tax on our shipments to customers in California. For taxable sales, we collected approximately $86,000 of delinquent sales tax from our customers in the first nine months of fiscal 2025. As of February 29, 2024, on the basis of a preliminary analysis of our sales to our California customers since April 1, 2019, we recorded an accrual in the amount of $138,000 for the estimated sales tax, penalties and interest that we may have been required to remit to the State of California.
Previous report
In the second quarter of fiscal 2025, we filed all necessary sales tax returns with the State of California. Our net expense for sales tax and interest amounted to $72,000. In the second quarter of fiscal 2025, we reversed the remaining accrual of $66,000. This reversal is recorded in general and administrative expenses.
Previous report
In the third quarter of fiscal 2025, operating income decreased $523,000, or 73%, to $198,000 compared with $721,000 for the third quarter of fiscal 2024. Operating margin for the third quarter of fiscal 2025 was 4% compared with 13% in the prior year period. The current period’s decrease in operating income is a result of a decrease in revenue and gross profit partially offset by a decrease in operating expenses.
Previous report
In the first nine months of fiscal 2025, operating income decreased $473,000, or 40%, to $722,000 compared with $1,195,000 for the first nine months of fiscal 2024. Operating margin for the first nine months of fiscal 2025 was 5% compared with 8% in the prior year period. In the first nine months of fiscal 2025, the decrease in operating income is a result of a decrease in gross profit combined with an increase in operating expenses.
Previous report
Net unrealized gain decreased to a $15,000 net unrealized loss in the third quarter of fiscal 2025 compared to a gain of $20,000 in the prior year period. In the first nine months of fiscal 2025, net unrealized gain increased $8,000 to $39,000 compared with $31,000 in the prior year period.
Previous report
We recorded income tax expense of $40,000 for the third quarter of fiscal 2025 compared with $200,000 for the third quarter of fiscal 2024. For the first nine months of fiscal 2025 we recorded income tax expense of $174,000 compared with $321,000 for the first nine months of fiscal 2024.
Previous report
The decrease in income tax expense in the third quarter fiscal 2025 is due to the decrease in income before income taxes partially offset by an increase in permanent timing differences and then the further reduction of taxes due to the application of available research and development tax credits from the current quarter’s increase in research and development expenditures. The deferred tax asset increased approximately $255,000, to $1,511,000 at November 30, 2024 from $1,256,000 at February 29, 2024. Additionally, the deferred tax liability increased approximately $87,000, to $317,000 at November 30, 2024 from $230,000 at February 29, 2024. The net increase in the deferred tax asset and liability was approximately $168,000 for the first nine months of fiscal 2025. This increase is primarily due to an increase in capitalized research and development expenses for tax purposes, partially offset by a decrease in other deferred tax assets and an increase in deferred tax liabilities related to timing differences for depreciation.
Previous report
Net income decreased by $416,000 or 60% to $274,000 for the third quarter of fiscal 2025 compared with $690,000 for the third quarter of fiscal 2024. The decrease in net income during the third quarter is primarily the result of a decrease in revenue and gross profit combined with decreases in operating expenses and income tax expense.
Previous report
Net income decreased by $339,000 or 26% to $946,000 for the first nine months of fiscal 2025 compared with $1,285,000 for the first nine months of fiscal 2024. The decrease in net income in the first nine months of fiscal 2025 is primarily the result of a decrease in gross profit combined with decreases in operating expenses and income tax expense.
Previous report
In the first nine months of fiscal 2025, we liquidated approximately $5,318,000 of our treasury bill investments. At November 30, 2024, approximately $3,583,000 of the liquidated balance is recorded as cash on our balance sheet and is invested in cash equivalents.
Previous report
In November 2023, the FASB issued ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures, and does not expect the standard will have a material impact on the Company’s consolidated financial statements and related disclosures.
Reworded paragraphs (16)
Previous wording
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news 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 and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; the recovery of the Electronics/Microelectronics and Medical markets; rebound of sales to the industrial market in the fourth quarter of fiscal year 2025; continued depletion of excess inventory created by our OEM Partners; continued positive impact of recent distributor changes on the Printed Circuit Board revenues; maintenance of increased order backlog; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems which are sold at higher average selling prices; and realization of quarterly and annual revenues within the forecasted range of sales guidance.
Current wording
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news 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 and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; the recovery of the Electronics/Microelectronics and Medical markets; rebound of sales to the industrial market in the second quarter of fiscal year 2026; maintenance of increased order backlog; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems which are sold at higher average selling prices; and realization of quarterly and annual revenues within the forecasted range of sales guidance.
Previous wording
Our comprehensive suite of thin film coating solutions and application consulting services, provided by our expert applications engineers to guide our customers in developing the complete coating process, ensures unparalleled results for our clients and helps some of the world’s most promising companies achieve technological breakthroughs and bring them to market. In anticipation of customer demands, our significant focus on R&D efforts allows us to keep pace with industry trends while continuously innovating. The company strategically delivers its products through a network of direct sales personnel, carefully chosen independent distributors, and experienced sales representatives located in North America, Latin America, Europe, and Asia, ensuring efficient market reach across diverse sectors around the globe. Approximately 39% of our sales were generated outside the United States and Canada in the first nine months of fiscal year 2025.
Current wording
Our comprehensive suite of thin film coating solutions and application consulting services, provided by our expert applications engineers to guide our customers in developing the complete coating process, ensures unparalleled results for our clients. These solutions help some of the world’s most promising companies achieve technological breakthroughs and bring them to market. In anticipation of customer demands, our significant focus on R&D efforts allows us to keep pace with industry trends while continuously innovating. We strategically deliver our products through a network of direct sales personnel, carefully chosen independent distributors, and experienced sales representatives located in North America, Latin America, Europe, and Asia. This network ensures efficient market reach across diverse sectors around the globe. Approximately 31% of our sales were generated outside the United States and Canada in the first three months of fiscal year 2026.
Previous wording
Third Quarter Fiscal 2025 Highlights (compared with the third quarter of fiscal 2024 unless otherwise noted) We refer to the three-month periods ended November 30, 2024 and 2023 as the third quarter of fiscal 2025 and fiscal 2024, respectively.
Current wording
First Quarter Fiscal 2026 Highlights (compared with the first quarter of fiscal year 2025 unless otherwise noted) We refer to the three-month periods ended May 31, 2025 and 2024 as the first quarter of fiscal year 2026 and fiscal year 2025, respectively.
Previous wording
Marketing and selling expenses decreased slightly in the third quarter of fiscal 2025 due to a decrease in salary expense which was partially offset by an increase in commissions.
Current wording
Marketing and selling expenses decreased in the first quarter of fiscal year 2026 due to a decrease in salary expense related to the departure of a salesperson and a decrease in travel and entertainment. These decreases were partially offset by an increase in salaries related to our sales application lab.
Previous wording
General and administrative expenses increased in both the third quarter and first nine months of fiscal 2025 due to increased salaries, legal and audit fees, corporate expenses and stock based compensation. These increases were partially offset by the reversal of the sales tax accrual described more fully below.
Current wording
General and administrative expenses increased in the first quarter of fiscal year 2026 due to increases in corporate investor coverage and other corporate expenses and stock based compensation. These increases were partially offset by decreases in salary expense and legal and accounting fees.
Previous wording
Interest, Dividend Income and Unrealized Gain/(Loss):
Current wording
Interest and Dividend Income and Unrealized Loss:
Previous wording
Interest and dividend income decreased by $18,000 to $132,000 in the third quarter of fiscal 2025 as compared with $150,000 for the third quarter of fiscal 2024, reflecting a minor reduction in interest rates earned on our cash balances in the third quarter of fiscal 2025. In the first nine months of fiscal 2025, interest and dividend income decreased by $21,000 to $359,000 as compared with $380,000 for the first nine months of fiscal 2024. Our present investment policy is to invest excess cash in highly liquid, low risk US Treasury securities. At November 30, 2024, the majority of our holdings are rated at or above investment grade.
Current wording
Interest and dividend income remained steady at $142,000 in the first quarter of fiscal year 2026 and 2025. Our present investment policy is to invest excess cash in highly liquid, lower risk US Treasury securities. At May 31, 2025, the majority of our holdings are rated at or above investment grade.
Previous wording
Working Capital – Our working capital increased $1,079,000 to $13,202,000 at November 30, 2024 from $12,123,000 at February 29, 2024. The increase in working capital was mostly the result of the current period’s net income and noncash charges partially offset by purchases of equipment.
Current wording
Working Capital – Our working capital increased $439,000 to $13,940,000 at May 31, 2025 from $13,501,000 at February 28, 2025. The increase in working capital was primarily the result of the current period's net income and noncash charges partially offset by purchases of equipment.
Previous wording
We aggregate cash and cash equivalents and marketable securities in managing our balance sheet and liquidity. For purposes of the following analysis, the total is referred to as “Cash.” At November 30, 2024 and February 29, 2024, our working capital included:
Current wording
We aggregate cash, cash equivalents and marketable securities in managing our balance sheet and liquidity. For purposes of the following analysis, the total is referred to as “Cash.” At May 31, 2025 and February 28, 2025, our working capital included:
Previous wording
The following table summarizes the accounts and the major reasons for the $834,000 increase in “Cash”:
Current wording
The following table summarizes the accounts and the major reasons for the $1,076,000 decrease in “Cash”:
Previous wording
Stockholders’ Equity – Stockholders’ Equity increased $1,122,000 from $16,279,000 at February 29, 2024 to $17,401,000 at November 30, 2024. The increase is a result of the current period’s net income of $946,000 and $176,000 in additional equity related to stock-based compensation awards.
Current wording
Stockholders’ Equity – Stockholder’s Equity increased $481,000 from $17,792,000 at February 28, 2025 to $18,273,000 at May 31, 2025. The increase is a result of the current period’s net income of $485,000 and $75,000 in additional equity related to stock-based compensation awards. These increases were partially offset by treasury stock purchases of $79,000. The details of stock-based compensation awards are explained in Note 5 in our financial statements.
Previous wording
Operating Activities – We generated $1,199,000 of cash in our operating activities in the first nine months of fiscal 2025 compared with $1,442,000 of cash in the first nine months of fiscal 2024, a decrease of $243,000. The decrease was mostly the result of increases in accounts receivable, a decrease in income taxes payable offset by decreases in inventories and customer deposits. The increase in accounts receivable is due to a number of large sales occurring in the last month of the quarter.
Current wording
Operating Activities – We used $922,000 of cash in our operating activities in the first quarter of fiscal year 2026 compared to them providing $328,000 of cash in the first quarter of fiscal year 2025, a decrease of $1,250,000. The decrease in cash generated by operating activities was the result of increases in accounts receivable and inventories combined with a decrease in income taxes payable and customer deposit balances.
Previous wording
Investing Activities– Our investing activities provided $4,765,000 of cash in the first nine months of fiscal 2025 compared with using $1,815,000 in the first nine months of 2024. For the first nine months of fiscal years 2025 and 2024, we used $403,000 and $327,000, respectively, for the purchase or manufacture of equipment, furnishings and leasehold improvements.
Current wording
Investing Activities – For the first quarter of fiscal year 2026, our investing activities provided $662,000 of cash compared with using $61,000 for the first quarter of fiscal 2025. For the first quarters of fiscal years 2026 and 2025, we used $52,000 and $33,000, respectively, for the purchase or manufacture of equipment, furnishings and leasehold improvements.
Previous wording
Net Changes in Cash and Cash Equivalents – In the first nine months of fiscal 2025, our cash balance increased by $5,964,000 as compared to a decrease of $373,000 in the first nine months of 2024. In the first nine months of fiscal 2025, our operating activities generated $1,199,000 of cash, our marketable securities provided $5,168,000 of cash and we used $403,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements.
Current wording
Net Decrease in Cash and Cash Equivalents – In the first quarter of fiscal 2026, our cash balance decreased by $339,000 as compared to an increase of $267,000 in the first quarter of fiscal 2025. In the first quarter of fiscal 2026, our operating activities used $922,000 of cash and our marketable securities generated $715,000 of cash. In addition, we used $52,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements and we used $79,000 for the purchase of treasury stock.
Previous wording
Management’s estimates and judgements are continually evaluated and are based on historical experience and expectations regarding future events that are believed to be reasonable under the specific circumstances.
Current wording
Management’s estimates and judgments are continually evaluated and are based on historical experience and expectations regarding future events that are believed to be reasonable under the specific circumstances.
Previous wording
Judgement is required when determining at what point in time control of the Company’s manufactured equipment is transferred to its customers. Management’s judgement is based on each customer contract and the transfer of control of the equipment to the customer. The sales revenue to be recorded is based on each contract.
Current wording
Judgment is required when determining at what point in time control of the Company’s manufactured equipment is transferred to its customers. Management’s judgment is based on each customer contract and the transfer of control of the equipment to the customer. The sales revenue to be recorded is based on each contract.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report — wording carried elsewhere
Nine Month Fiscal 2025 Highlights (compared with the first nine months of fiscal 2024 unless otherwise noted) We refer to the nine-month periods ended November 30, 2024 and 2023 as the first nine-months of fiscal 2025 and fiscal 2024, respectively.