SONO TEK CORP
For the period ended Feb 28, 2026. Filed May 28, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed May 28, 2026
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-K
Period ended 2025-02-28; filed 2025-05-28.
0001171520-25-000195
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-02-28; filed 2026-05-28.
0001171520-26-000113
Item 7. 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 73 previous paragraphs and 94 current paragraphs.
39 unchanged; 22 reworded; 33 added; 12 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 18 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 (33)
Current report
Results of Operations
Current report
Gross profit increased $821,000, or 8% to $10,560,000 for fiscal 2026 compared with $9,739,000 in fiscal 2025. The gross profit percentage increased to 51% for fiscal 2026, compared to 48% for fiscal 2025.
Current report
In fiscal 2026 the increase in the gross profit percentage was influenced by product mix, including a favorable mix of mature high ASP systems with reduced manufacturing costs. In addition, sales to the United States were strong, which carry fewer distributor related expenses.
Current report
Total sales for fiscal year 2026 increased by 2%, driven primarily by significant growth in Integrated Coating Systems and Fluxing Systems, partially offset by declines in Multi-Axis Coating Systems and other product categories.
Current report
In-Line Coating System sales increased by 91%, or $3,367,000, to $7,070,000 due to shipments of multiple high ASP production systems, including several systems delivered to a key customer in the solar energy market. This increase reflects continued success in transitioning customers from research and development systems to production-scale platforms.
Current report
Fluxing System sales increased 53%, or $246,000, to $713,000, primarily driven by increased demand in Asia.
Current report
Multi-Axis Coating System sales decreased by $2,623,000, or 25%, to $8,055,000, primarily due to reduced demand in electrolysis-related applications within the Alternative/Clean Energy market.
Current report
OEM System sales decreased 18%, or $274,000, to $1,210,000, and Other product sales declined 7%, or $311,000, to $3,861,000, reflecting normal variability in customer demand and order timing.
Current report
Overall, product mix in fiscal 2026 continued to shift toward higher-value, production-scale systems, consistent with the Company’s strategic focus on expanding its portfolio of complex, high-ASP coating solutions.
Current report
Sales to the Medical market increased $1,754,000, or 54%, to $5,004,000 in fiscal 2026 compared to $3,250,000 in fiscal 2025. The increase was driven by strong demand for coating systems used in applications such as balloon catheter manufacturing, specialty stent coating needs, and custom medical device applications.
Current report
Electronics/Microelectronics sales increased $864,000, or 16%, to $6,290,000 in fiscal 2026 compared to $5,426,000 in fiscal 2025, reflecting continued demand for electrically active coatings for diagnostic-related applications.
Current report
Sales to the Alternative/Clean Energy market decreased $1,864,000, or 19%, to $7,974,000 in fiscal 2026 compared to $9,838,000 in fiscal 2025. The decrease was primarily attributable to reduced demand for electrolysis-related systems, influenced by reductions and eliminations of government incentives, partially offset by solar-related system shipments earlier in the fiscal year.
Current report
Industrial sales decreased $348,000, or 18%, to $1,575,000 in fiscal 2026 compared to $1,923,000 in fiscal 2025, reflecting continued variability in demand for industrial coating applications.
Current report
Emerging R&D and Other sales remained relatively unchanged and continue to represent an increasingly smaller portion of total revenue. As customer applications progress from development-stage activity to commercial adoption, the related revenue opportunity typically transitions into our larger addressable end markets, including Medical, Electronics/Microelectronics, Alternative/Clean Energy and Industrial.
Current report
Sales in the United States and Canada increased $1,440,000, or 12%, to $13,946,000 in fiscal 2026 compared to $12,506,000 in fiscal 2025. This increase was driven by increased shipments of production systems with high ASPs, including significant system deliveries to a major solar customer, as well as a greater concentration of revenue from domestic customers where we benefit from lower distribution and logistical costs.
Current report
Sales in international markets declined, with Asia Pacific decreasing $128,000, or 5%, to $2,630,000, Europe, Middle East and Africa decreasing $689,000, or 16%, to $3,742,000, and Latin America decreasing $218,000, or 27%, to $591,000. These decreases reflect variability in regional demand and the timing of system shipments.
Current report
In fiscal 2026, we expended approximately $635,000 for commissions as compared with $767,000 for the prior fiscal year, a decrease of $132,000. The decline was driven by a higher mix of sales closed directly by our in-house team. Our in-house team earns a consistent commission percentage on all sales. When sales are made through distributors or manufacturer representatives, we also incur their additional commissions (and related channel costs), which increase total selling costs. The shift toward direct sales reduced those third-party costs in the current period.
Current report
We expect our marketing and sales expenses to increase in fiscal 2027 as we invest in additional sales personnel, forward deployed engineering personnel, and programming talent to support new business opportunities, particularly those associated with production systems that have high ASPs to drive future growth.
Current report
In fiscal 2026 stock-based compensation expense increased $69,000 to $317,000, compared with $248,000 in fiscal 2025. The increase in stock-based compensation expense in fiscal 2026 is due to option awards that were issued in the prior fiscal year. Option awards are expensed over three years based on vesting terms.
Current report
Our operating income increased $815,000 or 81%, to $1,825,000 in fiscal 2026 compared with $1,010,000 for the prior fiscal year. Operating margin for fiscal 2026 increased to 9% compared with 5% in fiscal 2025. In fiscal 2026, the increase in gross profit was the key factor in the increase in operating income.
Current report
The deferred tax asset decreased approximately $384,000, to $1,142,000 at February 28, 2026 from $1,525,000 at February 28, 2025. Additionally, the deferred tax liability decreased approximately $76,000, to $56,000 at February 28, 2026 from $132,000 at February 28, 2025. The net decrease in the deferred tax asset and liability was approximately $307,000 for fiscal 2026. This decrease is primarily due to the retroactive expensing of research and development expenses that were capitalized for tax purposes, prior to the enactment of the One Big Beautiful Bill Act (the “Act” or “OBBBA”) on July 4, 2025.
Current report
The Act introduced significant changes to the Internal Revenue Code, including the permanent extension of many provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”) and various new tax incentives and adjustments. The financial reporting implications of the Act were recorded in the income tax provision for fiscal 2026, in accordance with ASC 740, Income Taxes.
Current report
The OBBBA did not change the statutory U.S. federal tax rate. Accordingly, the OBBBA did not compel us to remeasure our deferred tax assets and liabilities solely because of a rate change. However, the various changes in tax law did impact our current and deferred tax calculations.
Current report
The most significant tax provisions impacting us include:
Current report
Research and Development (“R&D”) Costs – The Act reinstates the ability for entities to immediately expense domestic R&D costs for tax years beginning after December 31, 2024. Certain small businesses may also retroactively expense R&D costs, which were capitalized under the TCJA during the calendar years 2022 – 2024.
Current report
In accordance with the Act, for the fiscal year ended February 28, 2026, the Company has expensed the R&D costs incurred for the current calendar year end. Pursuant to the Act, R&D costs amounts previously capitalized and recorded as a deferred tax asset now are eligible to be expensed in full verses being amortized periodically over a five year term. Any prior year R&D amounts capitalized and not utilized in the current year will be carried over as a deferred tax asset. Some states have decoupled from the federal tax provisions of the Act and continue to follow the prior tax laws per the 2017 Tax Cuts and Jobs Act for capitalizing and amortizing R&D costs. The expensing of these costs is subject to taxable income limitations.
Current report
During fiscal 2026 the net increase in our marketable securities was $742,000. This increase is included in the net increase in cash in the table above.
Current report
During fiscal 2025 and fiscal 2026, we acquired a total of 44,091 shares of our common stock pursuant to a Stock Repurchase Plan which terminated in January 2026. Such shares were held as treasury stock until February 2026 when they were canceled, becoming authorized but unissued.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (the “Act” or “OBBBA”) was signed into law. The Act introduces significant changes to the Internal Revenue Code, including the permanent extension of many provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”) and various new tax incentives and adjustments. The financial reporting implications of the Act were recorded in the income tax provision for the quarter and year to date periods ended November 30, 2025, in accordance with ASC 740, Income Taxes.
Current report
The OBBBA did not change the statutory U.S. federal tax rate. Accordingly, the OBBBA did not compel the Company to remeasure its deferred tax assets and liabilities solely because of a rate change. However, the various changes in tax law did impact the Company’s current and deferred tax calculations.
Current report
The most significant tax provisions impacting the Company include:
Current report
Research and Development Costs – The Act reinstates the ability for entities to immediately expense domestic research and development costs for tax years beginning after December 31, 2024. Certain small businesses may also retroactively expense research and development costs, which were capitalized under the TCJA during the calendar years 2022 – 2024.
Current report
In accordance with the Act, for the fiscal year ended February 28, 2026, the Company has expensed the R&D costs incurred for the current calendar year end. Pursuant to the Act, R&D costs amounts previously capitalized and recorded as a deferred tax asset now are eligible to be expensed in full verses being amortized periodically over a five year term. Any prior year R&D amounts capitalized and not utilized in the current year will be carried over as a deferred tax asset. Some states have decoupled from the federal tax provisions of the Act and continue to follow the prior tax laws per the 2017 Tax Cuts and Jobs Act for capitalizing and amortizing R&D costs. The expensing of these costs is subject to taxable income limitations.
Removed paragraphs (12)
Previous report
Gross profit decreased $106,000, or 1% to $9,739,000 for fiscal 2025 compared with $9,845,000 in fiscal 2024. The gross profit percentage decreased to 47.5% for fiscal 2025, compared to 50.0% for fiscal 2024.
Previous report
In fiscal 2025 the decrease in the gross profit percentage was a result of 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 the completion of several successful R&D endeavors.
Previous report
Total sales for fiscal year 2025 grew by 4%, driven by increased demand for our Integrated Coating and Multi-Axis Coating systems which are commonly used in the clean energy sector. Integrated Coating System sales increased by 28%, or $814,000, to $3,703,000 due to continued success with a key strategic partner within the solar energy market.
Previous report
Printed Circuit Board “PCB” Fluxing System sales declined 35%, or $257,000, largely due to weaker demand in Latin America. The decrease was driven by a general slowdown in PCB equipment sales in Mexico and the closure of one of our key distributors in the region. To address this, we onboarded and trained a New Mexico-based distribution partner, which we believe will contribute to improved spray fluxing sales in fiscal 2026.
Previous report
Sales to the Alternative/Clean Energy market increased 64% in fiscal 2025, driven by a growing number of customers transitioning from our R&D systems to production scale systems, which carry significantly higher ASPs. This growth was partially offset by declines in the Medical and Industrial markets. Medical sales decreased $930,000, or 22%, to $3.25 million compared to $4.18 million in the prior year, and Industrial sales declined $1.68 million, or 47%, to $1.92 million compared to $3.61 million in the prior year.
Previous report
Sales in the US & Canada increased 15% or $1.63 million, driven by the delivery of five high ASP systems totaling $3.85 million, reinforcing our strategy to provide highly complex, high-volume systems with premium pricing. This represents the largest number of high ASP systems sold in a single year. Growth in the US/Canada region was partially offset by declines in other regions. Latin America sales decreased 34% or $412,000, due to a $465,000 float glass coating system sale into Mexico that occurred in the prior year that did not repeat in fiscal 2025. Asia sales declined 16% or $510,000, influenced by continued weak demand from China, where sales fell to $522,000 in fiscal 2025 from $775,000 in fiscal 2024. China now represents approximately 2.5% of total sales, down significantly from its historical peak. EMEA sales increased 2% or $98,000, supported by multiple system shipments to customers in the green energy sector.
Previous report
In fiscal 2025, we expended approximately $767,000 for commissions as compared with $674,000 for the prior fiscal year, an increase of $93,000. 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 primarily due to the reallocation of the salary of our Chief Executive Officer, Steve Harshbarger, to the General and Administrative category as described more fully below under the heading “General and Administrative”.
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 fiscal year 2025, the total reallocated amount of Mr. Harshbarger’s salary was approximately $325,000.
Previous report
Our operating income decreased $172,000 or 15%, to $1,010,000 in fiscal 2025 compared with $1,182,000 for the prior fiscal year. In fiscal 2025, the decrease in operating income is a result of a decrease in gross profit combined with an increase in operating expenses. Operating margin for fiscal 2025 decreased to 5% compared with 6% in fiscal 2024. As a percentage of net sales, operating expenses decreased 100 basis points to 43% in fiscal 2025 compared with 44% in fiscal 2024.
Previous report
As of February 28, 2025, $106,000 of our credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to us on existing orders. The unused portion of the credit line was $1,394,000 as of February 28, 2025. The letters of credit expire in fiscal year 2025.
Previous report
In December 2023, the FASB issued ASU 2023-09,*Improvements to Income Tax Disclosures.*This ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.
Reworded paragraphs (22)
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; 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; 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; international hostilities, including war with Iran; the recovery of the Electronics/Microelectronics and Medical markets; 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; and realization of quarterly and annual revenues within the forecasted range of sales guidance.
Previous wording
We are a geographically diverse company with a presence either directly or through distributors and trade representatives in the United States and Canada, EMEA (Europe, Middle East and Africa), APAC (Asia Pacific) and Latin America (including Mexico). In fiscal 2025, approximately 39% of sales originated outside of the United States and Canada.
Current wording
We are a geographically diverse company with a presence either directly or through distributors and trade representatives in the United States and Canada, EMEA (Europe, Middle East and Africa), APAC (Asia Pacific) and Latin America (including Mexico). In fiscal 2026, approximately 33% of sales originated outside of the United States and Canada.
Previous wording
We have an established infrastructure of application process development laboratories located at our distributor sites in Japan, China, Germany, Taiwan, Korea and our home office in New York. These laboratories are equipped with Sono-Tek systems and technical personnel to conduct customer demonstrations and process development for new coating applications that our customers bring to us. Our engineering, service and sales teams all continue to grow as we expand our addressable markets and enhance our product line to include larger more sophisticated machinery and systems with increased capabilities.
Current wording
We have an established infrastructure of application process development laboratories located at our distributor sites in Japan, China, Germany, Singapore, South Korea and our home office in New York. These laboratories are equipped with Sono-Tek systems and technical personnel to conduct customer demonstrations and process development for new coating applications that our customers bring to us. Our engineering, service and sales teams all continue to grow as we expand our addressable markets and enhance our product line to include larger more sophisticated machinery and systems with increased capabilities.
Previous wording
In fiscal 2025, approximately 61% of our sales were to US and Canadian customers. This is compared to 55% in fiscal 2024.
Current wording
In fiscal 2026, approximately 67% of our sales were to US and Canadian customers. This is compared to 61% in fiscal 2025, reflecting a continued shift toward domestic, production-oriented customers and higher-value system shipments.
Previous wording
Research and product development costs decreased $162,000 to $2,724,000 for 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.
Current wording
Research and product development costs decreased $170,000 to $2,554,000 for fiscal 2026 due to a decrease in salary associated with the departure of a senior engineer, a decrease in research and development materials, supplies, insurance expense and travel expenses. These decreases were partially offset by additional lab salaries.
Previous wording
Marketing and selling expenses decreased slightly in fiscal 2025 to $3,678,000 due to a decrease in salary expense which was partially offset by an increase in commissions and travel and trade show expenses.
Current wording
Marketing and selling expenses decreased $153,000 to $3,525,000 for fiscal 2026 due to a decrease in salary expense, a decrease in travel and trade show expenses and a decrease in commission expense.
Previous wording
During fiscal 2025, we expended approximately $595,000 for travel and trade show expenses compared with $505,000 for the prior fiscal year, an increase of $90,000.
Current wording
During fiscal 2026, we expended approximately $568,000 for travel and trade show expenses compared with $595,000 for the prior fiscal year, a decrease of $27,000. Our sales and marketing costs are variable, and a large portion of the costs are dependent upon trade shows and where geographically our sales are generated. We anticipate that our costs will increase in the future as we increase our trade show presence and the potential change in geographic origin of our sales from our in-house sales team to our external distributors.
Previous wording
General and Administrative (G&A) costs increased $247,000 to $2,327,000 for fiscal 2025 due to an increase in salaries, professional 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 (G&A) costs increased $329,000 to $2,656,000 for fiscal 2026 due to an increase in salaries, insurance expense, corporate expenses, stock-based compensation and other expenses. These increases were partially offset by a decrease in professional fees.
Previous wording
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 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.
Current wording
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. In connection with previous taxable sales, we collected approximately $86,000 of delinquent sales tax from our customers in fiscal 2025. As of February 29, 2024, on the basis of a preliminary analysis of our sales to our California customers commencing on 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 wording
Interest and dividend income decreased $41,000 to $489,000 for fiscal 2025 as compared with $530,000 for the prior fiscal year, reflecting a minor reduction in interest rates earned on our cash balances in fiscal 2025. Our present investment policy is to invest excess cash in highly liquid, low risk US Treasury securities and certificates of deposit. At February 28, 2025, the majority of our holdings are rated at or above investment grade.
Current wording
Interest and dividend income decreased $45,000 to $444,000 for fiscal 2026 as compared with $489,000 for the prior fiscal year, reflecting a minor reduction in interest rates earned on our cash balances in fiscal 2026. Our present investment policy is to invest excess cash in highly liquid, low risk US Treasury securities and certificates of deposit. At February 28, 2026, the majority of our holdings are rated at or above investment grade.
Previous wording
We recorded income tax expense of $261,000 for fiscal 2025 compared with $303,000 for the prior fiscal year. The decrease in income tax expense in fiscal 2025 is due to the current period’s decrease in income before income taxes offset by the application of available research and development tax credits.
Current wording
We recorded an income tax expense of $461,000 for fiscal 2026 compared with $261,000 for the prior fiscal year. The increase in income tax expense in fiscal 2026 is due to the current year’s increase in income before income taxes offset by the application of available research and development tax credits.
Previous wording
Net income decreased $168,000 or 12%, to $1,273,000 for fiscal 2025 compared with $1,441,000 for the prior fiscal year. The decrease in net income in fiscal 2025 is a result of a decrease in gross profit combined with an increase in operating expenses partially offset by a decrease in income tax expense.
Current wording
Net income increased $533,000 or 42%, to $1,806,000 for fiscal 2026 compared with $1,273,000 for the prior fiscal year. The increase in net income in fiscal 2026 is a result of an increase in gross profit offset by a slight increase in operating expenses and partially offset by an increase in income tax expense.
Previous wording
Working Capital – Our working capital increased $1,378,000 to $13,501,000 at February 28, 2025 from $12,123,000 at February 29, 2024. The increase in working capital was primarily the result of the current year’s net income and non-cash charges partially offset by purchases of equipment.
Current wording
Working Capital – Our working capital increased $2,735,000 to $16,236,000 at February 28, 2026 from $13,501,000 at February 28, 2025. The increase in working capital was primarily the result of the current year’s net income and non-cash charges partially offset by purchases of equipment and redemptions of the Company’s stock.
Previous wording
The following table summarizes the accounts and the major reasons for the $83,000 increase in “Cash”:
Current wording
The following table summarizes the accounts and the major reasons for the $2,879,000 increase in “Cash”:
Previous wording
Stockholders’ Equity – Stockholders’ equity increased $1,513,000 from $16,279,000 at February 29, 2024 to $17,792,000 at February 28, 2025. The increase was a result of the current year’s net income of $1,273,000 and $248,000 in additional equity related to stock-based compensation awards. These increases were partially offset by treasury stock purchases of $8,000. The details of stock-based compensation are explained in Note 4 in our financial statements.
Current wording
Stockholders’ Equity – Stockholders’ Equity increased $1,982,000 from $17,792,000 at February 28, 2025 to $19,774,000 at February 28, 2026. The increase is a result of the current year’s net income of $1,806,000, proceeds from exercise of stock options of $11,000, and $317,000 in additional equity related to stock-based compensation awards. These increases were partially offset by treasury stock purchases of $151,000. The details of stock-based compensation awards are explained in Note 4 in our financial statements.
Previous wording
Operating Activities – We generated $525,000 of cash in our operating activities in fiscal 2025 compared with generating $1,164,000 in fiscal 2024, a decrease of $639,000. The decrease in cash generated by operating activities was the result of an increase in accounts receivable combined with a decrease in customer deposit balances. These uses of cash were partially offset by a decrease in inventories and an increase in income taxes payable.
Current wording
Operating Activities – We generated $3,246,000 of cash in our operating activities in fiscal 2026 compared with generating $525,000 in fiscal 2025, an increase of $2,721,000. The increase in cash generated by operating activities was the result of increases in accounts payable, accrued expenses, an increase in customer deposits and a decrease in inventories. These sources of cash were partially offset by an increase in accounts receivable, an increase in prepaid expenses and an increase in income taxes payable.
Previous wording
In fiscal 2025, our accounts receivable increased $877,000 when compared to the prior year. The increase in accounts receivable is primarily due to a large number of sales occurring in the fourth quarter of fiscal 2025.
Current wording
In fiscal 2026, our accounts receivable increased $1,003,000 when compared to the prior year. The increase in accounts receivable is primarily due to a large number of sales occurring in the fourth quarter of fiscal 2026.
Previous wording
In fiscal 2025, customer deposit balances decreased $1,007,000 when compared to the prior year. The decrease in customer deposits is primarily due to a large number of shipments occurring in the fourth quarter of fiscal 2025.
Current wording
In fiscal 2026, customer deposit balances increased $657,000 when compared to the prior year. The increase in customer deposits is primarily due to a large number of shipments occurring in the fourth quarter of fiscal 2026.
Previous wording
Investing Activities – In fiscal 2025, our investing activities provided $2,550,000 of cash compared with using $2,384,000 of cash in fiscal 2024. Capital spending in fiscal 2025 was $469,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements. This compares with $795,000 for the prior year period.
Current wording
Investing Activities – In fiscal 2026, our investing activities used $968,000 of cash compared with providing $2,550,000 in fiscal 2025. Capital spending in fiscal 2026 was $225,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements. This compares with $469,000 for the prior year period.
Previous wording
In fiscal 2025, net sales of marketable securities generated $3,019,000 of cash compared with using $1,589,000 for the purchase of marketable securities in fiscal 2024.
Current wording
In fiscal 2026, we used $743,000 of cash for the purchase of marketable securities compared with $3,019,000 being generated in fiscal 2025.
Previous wording
At the end of fiscal year 2025, our total backlog amounted to $8,677,000, comprised of $8,618,000 in equipment backlog and $59,000 in services-related backlog.
Current wording
At the end of fiscal year 2026, our total backlog amounted to $9,117,000, comprised of $8,968,000 in equipment backlog and $149,000 in services-related backlog.
Previous wording
In November 2024, the FASB issued 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.
Current wording
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.