Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 31, 2020 | Jul. 13, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | SONO TEK CORP | |
Entity Central Index Key | 0000806172 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Common Stock, Shares Outstanding | 15,422,985 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Emerging Growth Company | false | |
Entity Small Business | true | |
Shell Company | false | |
Interactive Data Current | Yes | |
Entity Incorporation State or Country | NY | |
Entity File Number | 000-16035 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 4,381,947 | $ 3,659,551 |
Marketable Securities | 3,908,454 | 4,219,240 |
Accounts receivable | 1,341,617 | 929,701 |
Inventories, net | 2,512,222 | 2,381,891 |
Prepaid expenses and other current assets | 146,588 | 153,698 |
Total current assets | 12,290,828 | 11,344,081 |
Land | 250,000 | 250,000 |
Buildings, net | 1,634,226 | 1,654,061 |
Equipment, furnishings and building improvements, net | 1,279,083 | 1,212,578 |
Intangible assets, net | 102,145 | 106,291 |
Deferred tax asset | 176,314 | 176,314 |
TOTAL ASSETS | 15,732,596 | 14,743,325 |
Current Liabilities: | ||
Accounts payable | 1,007,517 | 668,721 |
Accrued expenses | 1,409,167 | 1,613,409 |
Customer deposits | 1,325,694 | 1,648,690 |
Current maturities of long term debt | 556,212 | 169,716 |
Income taxes payable | 112,548 | 70,621 |
Total current liabilities | 4,411,138 | 4,171,157 |
Deferred tax liability | 251,761 | 251,761 |
Long term debt, less current maturities | 1,111,265 | 538,000 |
Total liabilities | 5,774,164 | 4,960,918 |
Stockholders' Equity | ||
Common stock | 154,230 | 153,482 |
Additional paid-in capital | 9,025,755 | 9,018,406 |
Accumulated earnings | 778,447 | 610,519 |
Total stockholders' equity | 9,958,432 | 9,782,407 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 15,732,596 | $ 14,743,325 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 71,000 | $ 71,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 25,000,000 | 25,000,000 |
Common stock, issued shares | 15,422,985 | 15,348,180 |
Common stock, outstanding shares | 15,422,985 | 15,348,180 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Statement [Abstract] | ||
Net Sales | $ 3,428,544 | $ 2,822,428 |
Cost of Goods Sold | 1,867,811 | 1,517,493 |
Gross Profit | 1,560,733 | 1,304,935 |
Operating Expenses | ||
Research and product development costs | 411,424 | 354,173 |
Marketing and selling expenses | 706,717 | 677,412 |
General and administrative costs | 258,402 | 268,813 |
Total Operating Expenses | 1,376,543 | 1,300,398 |
Operating Income | 184,190 | 4,537 |
Interest Expense | (8,417) | (8,947) |
Interest and Dividend Income | 22,646 | 31,171 |
Other income | 11,435 | 4,755 |
Income Before Income Taxes | 209,854 | 31,516 |
Income Tax Expense | 41,926 | 6,303 |
Net Income | $ 167,928 | $ 25,213 |
Basic Earnings Per Share | $ 0.01 | $ 0 |
Diluted Earnings Per Share | $ 0.01 | $ 0 |
Weighted Average Shares - Basic | 15,397,779 | 15,268,071 |
Weighted Average Shares - Diluted | 15,436,758 | 15,357,295 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance (shares) at Feb. 28, 2019 | 15,197,563 | |||
Beginning balance at Feb. 28, 2019 | $ 151,976 | $ 8,929,607 | $ (496,923) | $ 8,584,660 |
Stock based compensation expense | 11,310 | 11,310 | ||
Exercise of stock options (shares) | 104,050 | |||
Exercise of stock options | $ 1,040 | (1,040) | ||
Net Income | 25,213 | 25,213 | ||
Ending balance (shares) at May. 31, 2019 | 15,301,613 | |||
Ending balance at May. 31, 2019 | $ 153,016 | 8,939,877 | (471,710) | 8,621,183 |
Beginning balance (shares) at Feb. 29, 2020 | 15,348,180 | |||
Beginning balance at Feb. 29, 2020 | $ 153,482 | 9,018,406 | 610,519 | 9,782,407 |
Stock based compensation expense | 8,097 | $ 8,097 | ||
Exercise of stock options (shares) | 74,805 | 117,333 | ||
Exercise of stock options | $ 748 | (748) | ||
Net Income | 167,928 | $ 167,928 | ||
Ending balance (shares) at May. 31, 2020 | 15,422,985 | |||
Ending balance at May. 31, 2020 | $ 154,230 | $ 9,025,755 | $ 778,447 | $ 9,958,432 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $ 167,928 | $ 25,213 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 109,878 | 89,207 |
Stock based compensation expense | 8,097 | 11,310 |
Inventory reserve | 18,000 | 14,000 |
Decrease (Increase) in: | ||
Accounts receivable | (411,916) | 65,538 |
Inventories | (148,331) | (734,704) |
Prepaid expenses and other current assets | 7,110 | 289,992 |
(Decrease) Increase in: | ||
Accounts payable and accrued expenses | 134,554 | 410,079 |
Customer deposits | (322,996) | 184,748 |
Income taxes payable | 41,927 | 6,303 |
Net Cash (Used In) Provided By Operating Activities | (395,749) | 361,686 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment, furnishings and leasehold improvements | (152,402) | (129,159) |
Sale of marketable securities | 310,786 | |
(Purchase) of marketable securities | (1,413,481) | |
Net Cash Provided By (Used In) Investing Activities | 158,384 | (1,542,640) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from note payable - bank | 1,001,640 | |
Repayment of long-term debt | (41,879) | (40,283) |
Net Cash Used In Financing Activities | 959,761 | (40,283) |
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | 722,396 | (1,221,237) |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 3,659,551 | 3,144,123 |
End of period | 4,381,947 | 1,922,886 |
SUPPLEMENTAL DISCLOSURE: | ||
Interest paid | $ 7,210 | $ 8,947 |
Business Description
Business Description | 3 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Business Description | NOTE 1: BUSINESS DESCRIPTION Sono-Tek Corporation (the “Company”, “Sono-Tek”, “We” or “Our”) was incorporated in New York on March 21, 1975. We are the world leader in the design and manufacture of ultrasonic coating systems for applying precise, thin film coatings to protect, strengthen or smooth surfaces on parts and components for the microelectronics/electronics, alternative energy, medical, industrial and emerging research & development/other markets. We design and manufacture custom-engineered ultrasonic coating systems and also provide patented nozzles and generators for manufacturers’ equipment. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, the Condensed Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. The results for the interim periods are not necessarily indicative of what the results will be for the fiscal year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended February 29, 2020 (“fiscal year 2020”) contained in the Company’s 2020 Annual Report on Form 10-K filed with the SEC. The Company’s current fiscal year ends on February 28, 2021 (“fiscal 2021”). |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Significant Accounting Policies | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents - Concentration of Credit Risk – Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At May 31, 2020, deposits in excess of the FDIC limits were $7,096,000. Consolidation Earnings Per Share - Equipment, Furnishings and Leasehold Improvements Fair Value of Financial Instruments - Level 1: Quoted prices in active markets. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The fair values of financial assets of the Company were determined using the following categories at May 31, 2020 and February 29, 2020, respectively: Level 1 Level 2 Level 3 Total Marketable Securities – May 31, 2020 $ 3,154,680 $ 753,774 $ — $ 3,908,454 Marketable Securities – February 29, 2020 $ 3,565,629 653,611 $ — $ 4,219,240 Marketable Securities include mutual funds, certificates of deposit and US Treasury securities, totaling $3,908,454 and $4,219,240 that are considered to be highly liquid and easily tradeable as of May 31, 2020 and February 29, 2020, respectively. Mutual funds & US Treasury securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 and certificates of deposit are classified as Level 2 within the Company’s fair value hierarchy. The Company’s marketable securities are considered to be available-for-sale investments as defined under ASC 320 “Investments – Debt and Equity Securities.” Income Taxes Intangible Assets - Interim Reporting The financial information reflects all adjustments, normal and recurring, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results for such interim periods are not necessarily indicative of the results to be expected for the year. Inventories - Land and Buildings – Long-Lived Assets - Management Estimates - Marketable Securities - New Accounting Pronouncements - In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes Other than ASU 2019-12 discussed above, all new accounting pronouncements issued but not yet effective have been deemed to be not applicable to the Company. Hence, the adoption of these new accounting pronouncements, once effective, is not expected to have an impact on the Company. Reclassifications – Research and Product Development Expenses - Shipping and Handling Costs – |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Revenue Recognition | NOTE 3: REVENUE RECOGNITION A majority of the Company’s sales revenue is derived primarily from short term contracts with customers, which, on average, are in effect for less than twelve months. Sales revenue from manufactured equipment transferred at a single point in time accounts for a majority of the Company’s revenue. Sales revenue is recognized when control of the Company’s manufactured equipment is transferred to its customers, in an amount that reflects the consideration the Company expects to receive based upon the agreed transaction price. The Company’s performance obligations are satisfied when its customers take control of the purchased equipment, which is based on the contract terms. Based on prior experience, the Company reasonably estimates its sales returns and warranty reserves. Sales are presented net of discounts and allowances. Discounts and allowances are determined when a sale is negotiated. The Company does not grant its customers or independent representatives, the ability to return equipment nor does it grant price adjustments after a sale is complete. The Company does not capitalize any sales commission costs related to the acquisition of a contract. All commissions related to a performance obligation that are satisfied at a point in time are expensed when the customer takes control of the purchased equipment. The Company receives cash deposits for customer orders based upon contract terms. Customer deposits are recognized as revenue when the Company’s performance obligations have been met. At February 29, 2020, the Company had received $1,649,000 in cash deposits from customers. For the three months ended May 31, 2020, the Company recognized $1,154,000 in revenue from the cash deposits received at February 29, 2020. At May 31, 2020, the Company had received $1,326,000 in cash deposits for customer orders and had issued Letters of Credit in the amount of $372,000 to secure some of these cash deposits. |
Inventories
Inventories | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Inventories | NOTE 4: INVENTORIES Inventories consist of the following: May 31, February 29, 2020 2020 Raw materials and subassemblies $ 994,096 $ 967,089 Finished goods 929,111 752,999 Work in process 800,295 855,083 Total 2,723,502 2,575,171 Less: Allowance (211,280 ) (193,280 ) Net inventories $ 2,512,222 $ 2,381,891 |
Stock Options and Warrants
Stock Options and Warrants | 3 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
Stock Options and Warrants | NOTE 5: STOCK OPTIONS AND WARRANTS Stock Options Under the 2003 Stock Incentive Plan, as amended ("2003 Plan"), until May 2013, options were available to be granted to officers, directors, consultants and employees of the Company and its subsidiaries to purchase up to 1,500,000 shares of the Company's common stock. As of May 31, 2020, there were 50,000 options outstanding and vested under the 2003 Plan, under which no additional options may be granted. During the three months ended May 31, 2020, 117,333 options were exercised on a cashless basis into 74,805 shares of common stock. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Stock Based Compensation | NOTE 6: STOCK BASED COMPENSATION The Company adopted ASC 718, “Share Based Payments.” which requires companies to expense the value of employee stock options and similar awards. The weighted-average fair value of options are estimated on the date of grant using the Black-Scholes options-pricing model. For the three months ended May 31, 2020 no options were issued. In computing the impact, the fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company’s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. For the three months ended May 31, 2020 and 2019, net income and earnings per share reflect the actual deduction for stock-based compensation expense. The impact of applying ASC 718 approximated $8,000 and $11,000 in additional compensation expense during the three months ended May 31, 2020 and 2019, respectively. Such amounts are included in general and administrative expenses on the statement of operations. The expense for stock-based compensation is a non-cash expense item. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Earnings Per Share | NOTE 7: EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended May 31, 2020 2019 Numerator for basic and diluted earnings per share $ 167,928 $ 25,213 Denominator for basic earnings per share - weighted average 15,397,779 15,268,071 Effects of dilutive securities: Stock options for employees, directors and outside consultants 38,979 89,224 Denominator for diluted earnings per share 15,436,758 15,357,295 Basic Earnings Per Share $ 0.01 $ 0.00 Diluted Earnings Per Share $ 0.01 $ 0.00 |
Long Term Debt
Long Term Debt | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Long Term Debt | NOTE 8: LONG TERM DEBT Long-term debt consists of the following: May 31, February 29, 2020 2020 Note payable, bank, collateralized by land and buildings, payable in monthly installments of principal and interest of $16,358 through January 2024. Interest rate 4.15%. 10-year term. $ 665,837 $ 707,716 Note Payable, bank, unsecured, Paycheck Protection Program funding, payable in monthly installments of principal and interest of $56,370 through April 2022. Interest rate 1%. 2-year term, no repayments required for the first six months. Under the terms of the CARE Act, forgiveness for all or a portion of the loan may be granted based upon use of the loan proceeds for eligible payroll and related payroll costs and other qualified expenses. 1,001,640 — Total long-term debt 1,667,477 707,716 Due within one year 556,212 169,716 Due after one year $ 1,111,265 $ 538,000 |
Revolving Line of Credit
Revolving Line of Credit | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Revolving Line of Credit | NOTE 9: REVOLVING LINE OF CREDIT The Company has a $1,500,000 revolving line of credit at prime which was 3.25% at May 31, 2020. The revolving credit line is collateralized by the Company’s accounts receivable and inventory. The revolving credit line is payable on demand and must be retired for a 30-day period, once annually. If the Company fails to perform the 30-day annual pay down or if the bank elects to terminate the credit line, the bank may, at its option, convert the outstanding balance to a 36-month term note with payments including interest in 36 equal installments. As of May 31, 2020, $372,000 of the Company’s credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to the Company on existing orders. The letters of credit expire in 2020. As of May 31, 2020, there were no outstanding borrowings under the line of credit and the unused portion of the credit line was $1,128,000 as of May 31, 2020. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10: COMMITMENTS AND CONTINGENCIES Other than the letters of credit disclosed in Note 8, the Company did not have any material commitments or contingencies as of May 31, 2020. |
Subsequent Events
Subsequent Events | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Subsequent Events | NOTE 11: SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to its disclosures in the condensed consolidated financial statements except for the following items: Issuance of Standby letters of Credit On June 4, 2020, the Company issued additional letters of credit in the amount of $323,000 to customers that remitted cash deposits to the Company on existing orders. Impact of Covid 19 In December 2019, the novel coronavirus (“COVID-19”) outbreak occurred in China and has since spread to other parts of the world. On March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic and recommended containment and mitigation measures. On March 13, 2020, the United States declared a national emergency concerning the outbreak. Along with these declarations, extraordinary and wide-ranging actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world. These actions include quarantines, social distancing and “stay-at-home” orders, travel restrictions, mandatory business closures and other mandates that have substantially restricted individuals’ daily activities and curtailed or ceased many businesses’ normal operations. The impact of COVID-19 on the Company’s results and operations is further discussed in the accompanying Management’s Discussion and Analysis section in this Report. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Cash and Cash Equivalents | Cash and Cash Equivalents - |
Concentration of Credit Risk | Concentration of Credit Risk – Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit. At May 31, 2020, deposits in excess of the FDIC limits were $7,096,000. |
Consolidation | Consolidation |
Earnings Per Share | Earnings Per Share - |
Equipment, Furnishings and Leasehold Improvements | Equipment, Furnishings and Leasehold Improvements |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Level 1: Quoted prices in active markets. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The fair values of financial assets of the Company were determined using the following categories at May 31, 2020 and February 29, 2020, respectively: Level 1 Level 2 Level 3 Total Marketable Securities – May 31, 2020 $ 3,154,680 $ 753,774 $ — $ 3,908,454 Marketable Securities – February 29, 2020 $ 3,565,629 653,611 $ — $ 4,219,240 Marketable Securities include mutual funds, certificates of deposit and US Treasury securities, totaling $3,908,454 and $4,219,240 that are considered to be highly liquid and easily tradeable as of May 31, 2020 and February 29, 2020, respectively. Mutual funds & US Treasury securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 and certificates of deposit are classified as Level 2 within the Company’s fair value hierarchy. The Company’s marketable securities are considered to be available-for-sale investments as defined under ASC 320 “Investments – Debt and Equity Securities.” |
Income Taxes | Income Taxes |
Intangible Assets | Intangible Assets - |
Interim Reporting | Interim Reporting The financial information reflects all adjustments, normal and recurring, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results for such interim periods are not necessarily indicative of the results to be expected for the year. |
Inventories | Inventories - |
Land and Buildings | Land and Buildings – |
Long-Lived Assets | Long-Lived Assets - |
Management Estimates | Management Estimates - |
Marketable Securities | Marketable Securities - |
New Accounting Pronouncements | New Accounting Pronouncements - In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes Other than ASU 2019-12 discussed above, all new accounting pronouncements issued but not yet effective have been deemed to be not applicable to the Company. Hence, the adoption of these new accounting pronouncements, once effective, is not expected to have an impact on the Company. |
Reclassifications | Reclassifications – |
Research and Product Development Expenses | Research and Product Development Expenses - |
Shipping and Handling Costs | Shipping and Handling Costs – |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
May 31, 2020 | |
Notes to Financial Statements | |
Fair values of financial assets of the Company | Level 1 Level 2 Level 3 Total Marketable Securities – May 31, 2020 $ 3,154,680 $ 753,774 $ — $ 3,908,454 Marketable Securities – February 29, 2020 $ 3,565,629 653,611 $ — $ 4,219,240 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
May 31, 2020 | |
Inventories Tables Abstract | |
Inventories | May 31, February 29, 2020 2020 Raw materials and subassemblies $ 994,096 $ 967,089 Finished goods 929,111 752,999 Work in process 800,295 855,083 Total 2,723,502 2,575,171 Less: Allowance (211,280 ) (193,280 ) Net inventories $ 2,512,222 $ 2,381,891 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
May 31, 2020 | |
Earnings Per Share - Denominator For Calculation Of Diluted Earnings Per Share | |
Computation of basic and diluted earnings per share | Three Months Ended May 31, 2020 2019 Numerator for basic and diluted earnings per share $ 167,928 $ 25,213 Denominator for basic earnings per share - weighted average 15,397,779 15,268,071 Effects of dilutive securities: Stock options for employees, directors and outside consultants 38,979 89,224 Denominator for diluted earnings per share 15,436,758 15,357,295 Basic Earnings Per Share $ 0.01 $ 0.00 Diluted Earnings Per Share $ 0.01 $ 0.00 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 3 Months Ended |
May 31, 2020 | |
Long Term Debt Tables Abstract | |
Long-term debt | May 31, February 29, 2020 2020 Note payable, bank, collateralized by land and buildings, payable in monthly installments of principal and interest of $16,358 through January 2024. Interest rate 4.15%. 10-year term. $ 665,837 $ 707,716 Note Payable, bank, unsecured, Paycheck Protection Program funding, payable in monthly installments of principal and interest of $56,370 through April 2022. Interest rate 1%. 2-year term, no repayments required for the first six months. Under the terms of the CARE Act, forgiveness for all or a portion of the loan may be granted based upon use of the loan proceeds for eligible payroll and related payroll costs and other qualified expenses. 1,001,640 — Total long-term debt 1,667,477 707,716 Due within one year 556,212 169,716 Due after one year $ 1,111,265 $ 538,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Fair values of financial assets of the Company (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Marketable Securities | $ 3,908,454 | $ 4,219,240 |
Quoted Prices in Active Markets (Level 1) | ||
Marketable Securities | 3,154,680 | 3,565,629 |
Fair Value Inputs (Level 2) | ||
Marketable Securities | 753,774 | 653,611 |
Fair Value Inputs (Level 3) | ||
Marketable Securities |
Significant Accounting Polici_5
Significant Accounting Policies - Fair values of financial assets of the Company (Details Narrative) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Notes to Financial Statements | ||
Highly liquid and easily tradeable mutual funds, certificates of deposit and US Treasury securities | $ 3,908,454 | $ 4,219,240 |
Significant Accounting Polici_6
Significant Accounting Policies - Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | Feb. 29, 2020 | |
Accumulated amortization of intangible assets | $ 173,888 | $ 171,210 |
Annual Amortization Expense of Intangible Assets For the Next Five Years | ||
Annual amortization expense this year | 11,000 | |
Annual amortization expense year two | 11,000 | |
Annual amortization expense year three | 11,000 | |
Annual amortization expense year four | 11,000 | |
Annual amortization expense year five | $ 11,000 | |
Domestic Patents | ||
Useful life of intangible assets | 17 years | |
Foreign Patents | ||
Useful life of intangible assets | 12 years |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | Feb. 29, 2020 | |
Letters of Credit | ||
Letters of credit issued | $ 372,000 | |
Letters of credit, collateral description | $372,000 of the Company’s credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to the Company on existing orders. | |
Revenue Recognition | ||
Cash deposits received | $ 1,326,000 | $ 1,649,000 |
Revenue recognized from previous cash deposits | $ 1,154,000 |
Inventories (Details)
Inventories (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Inventories Tables Abstract | ||
Raw materials and subassemblies | $ 994,096 | $ 873,483 |
Finished goods | 929,111 | 571,640 |
Work in process | 800,295 | 483,271 |
Total | 2,723,502 | 1,928,394 |
Less: Allowance | 211,280 | 270,378 |
Net inventories | $ 2,512,222 | $ 2,381,891 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) | 3 Months Ended |
May 31, 2020shares | |
Options exercised on a cashless basis | 117,333 |
Shares issued as a result of options exercised | 74,805 |
2013 Stock Incentive Plan | |
Stock options shares available for purchase | 2,500,000 |
Stock options outstanding | 421,834 |
Years until options expire | 10 years |
Options vested | 288,125 |
2003 Stock Incentive Plan | |
Stock options shares available for purchase | 1,500,000 |
Stock options outstanding | 50,000 |
Options vested | 50,000 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | ||
May 31, 2020 | May 31, 2019 | ||
Options granted | 38,979 | 89,224 | |
Employee Stock Option | |||
Options granted | 0 | ||
Additional stock-based compensation expense as a result of applying ASC 718 | [1] | $ 8,000 | $ 11,000 |
[1] | Included in general and administrative expenses on the statement of operations. |
Earnings Per Share - The denomi
Earnings Per Share - The denominator for the calculation of diluted earnings per share (Details) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Earnings Per Share - Denominator For Calculation Of Diluted Earnings Per Share | ||
Numerator for basic and diluted earnings per share | $ 167,928 | $ 25,213 |
Denominator for basic earnings per share - weighted average | 15,397,779 | 15,268,071 |
Effects of dilutive securities: | ||
Stock options for employees, directors and outside consultants | 38,979 | 89,224 |
Denominator for diluted earnings per share | 15,436,758 | 15,357,295 |
Basic Earnings Per Share | $ 0.01 | $ 0 |
Diluted Earnings Per Share | $ 0.01 | $ 0 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Total long-term debt | $ 1,667,477 | $ 707,716 |
Due within one year | 556,212 | 169,716 |
Due after one year | 1,111,265 | 538,000 |
Note payable, bank, collateralized by land and buildings, payable in monthly installments of principal and interest of $16,358 through January 2024. Interest rate of 4.15%. 10 year term | ||
Total long-term debt | 665,837 | 707,716 |
Note Payable, bank, unsecured, Paycheck Protection Program funding, payable in monthly installments of principal and interest of $56,370 through April 2022. Interest rate 1%. 2-year term, no repayments required for the first six months. | ||
Total long-term debt | $ 1,001,640 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details Narrative) | 3 Months Ended |
May 31, 2020USD ($) | |
Letters of Credit | |
Letters of credit, collateral description | $372,000 of the Company’s credit line was being utilized to collateralize letters of credit issued to customers that have remitted cash deposits to the Company on existing orders. |
Letters of credit, maturity date | Feb. 29, 2020 |
Revolving Line of Credit | |
Revolving line of credit amount | $ 1,500,000 |
Revolving line of credit interest rate | 3.25% |
Revolving line of credit description | The revolving credit line is collateralized by the Company's accounts receivable and inventory. The revolving credit line is payable on demand and must be retired for a 30-day period, once annually. If the Company fails to perform the 30-day annual pay down or if the bank elects to terminate the credit line, the bank may, at its option, convert the outstanding balance to a 36-month term note with payments including interest in 36 equal installments. |
Revolving line of credit unused credit line | $ 1,128,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Jun. 04, 2020 |
Issuance of Standby Letters of Credit | |
Subsequent event description | On June 4, 2020, the Company issued additional letters of credit in the amount of $323,000 to customers that remitted cash deposits to the Company on existing orders. |