Cover
Cover - shares | 3 Months Ended | |
May 31, 2021 | Jul. 09, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | May 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --02-28 | |
Entity File Number | 000-16035 | |
Entity Registrant Name | Sono Tek Corp | |
Entity Central Index Key | 0000806172 | |
Entity Tax Identification Number | 14-1568099 | |
Entity Incorporation, State or Country Code | NY | |
Entity Address, Address Line One | 2012 Rt. 9W | |
Entity Address, City or Town | Milton | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 12547 | |
City Area Code | (845) | |
Local Phone Number | 795-2020 | |
Title of 12(b) Security | None | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,506,699 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | May 31, 2021 | Feb. 28, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 5,793,647 | $ 4,084,078 |
Marketable securities | 3,490,358 | 4,563,470 |
Accounts receivable (less allowance of $56,123) | 1,168,571 | 1,757,802 |
Inventories, net | 2,612,220 | 2,611,106 |
Prepaid expenses and other current assets | 108,456 | 151,316 |
Total current assets | 13,173,252 | 13,167,772 |
Land | 250,000 | 250,000 |
Buildings, net | 1,550,547 | 1,575,135 |
Equipment, furnishings and building improvements, net | 1,082,634 | 1,075,190 |
Intangible assets, net | 90,596 | 95,456 |
Deferred tax asset | 236,120 | 259,838 |
TOTAL ASSETS | 16,383,149 | 16,423,391 |
Current Liabilities: | ||
Accounts payable | 1,188,103 | 1,294,483 |
Accrued expenses | 1,388,606 | 1,750,916 |
Customer deposits | 1,247,071 | 1,166,541 |
Income taxes payable | 137,287 | 53,567 |
Total current liabilities | 3,961,067 | 4,265,507 |
Deferred tax liability | 183,011 | 205,562 |
Long term debt, less current maturities | 1,001,640 | |
Total liabilities | 4,144,078 | 5,472,709 |
Stockholders’ Equity | ||
Common stock, $.01 par value; 25,000,000 shares authorized, 15,502,557 and 15,452,656 shares issued and outstanding, respectively | 155,026 | 154,527 |
Additional paid-in capital | 9,086,132 | 9,064,994 |
Accumulated earnings | 2,997,913 | 1,731,161 |
Total stockholders’ equity | 12,239,071 | 10,950,682 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 16,383,149 | $ 16,423,391 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | May 31, 2021 | Feb. 28, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 56,123 | $ 56,123 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 15,502,557 | 15,452,656 |
Common stock, shares outstanding | 15,502,557 | 15,452,656 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Income Statement [Abstract] | ||
Net Sales | $ 3,644,468 | $ 3,428,544 |
Cost of Goods Sold | 1,820,303 | 1,867,811 |
Gross Profit | 1,824,165 | 1,560,733 |
Operating Expenses | ||
Research and product development costs | 413,816 | 411,424 |
Marketing and selling expenses | 764,642 | 706,717 |
General and administrative costs | 302,799 | 258,402 |
Total Operating Expenses | 1,481,257 | 1,376,543 |
Operating Income | 342,908 | 184,190 |
Interest Expense | (8,417) | |
Interest and Dividend Income | 3,360 | 22,646 |
Other Income | 11,435 | |
Paycheck Protection Program Loan Forgiveness | 1,005,372 | |
Income Before Income Taxes | 1,351,640 | 209,854 |
Income Tax Expense | 84,888 | 41,926 |
Net Income | $ 1,266,752 | $ 167,928 |
Basic Earnings Per Share | $ 0.08 | $ 0.01 |
Diluted Earnings Per Share | $ 0.08 | $ 0.01 |
Weighted Average Shares - Basic | 15,494,421 | 15,397,779 |
Weighted Average Shares - Diluted | 15,663,772 | 15,436,758 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Earnings | Total |
Balance – February 29, 2020 at Feb. 29, 2020 | $ 153,482 | $ 9,018,406 | $ 610,519 | $ 9,782,407 |
Shares, Outstanding, Beginning Balance at Feb. 29, 2020 | 15,348,180 | |||
Stock based compensation expense | 8,097 | 8,097 | ||
Cashless exercise of stock options | $ 748 | (748) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 74,805 | |||
Net Income | 167,928 | 167,928 | ||
Balance – May 31, 2020 (unaudited) at May. 31, 2020 | $ 154,230 | 9,025,755 | 778,447 | 9,958,432 |
Shares, Outstanding, Ending Balance at May. 31, 2020 | 15,422,985 | |||
Balance – February 29, 2020 at Feb. 28, 2021 | $ 154,527 | 9,064,994 | 1,731,161 | 10,950,682 |
Shares, Outstanding, Beginning Balance at Feb. 28, 2021 | 15,452,656 | |||
Stock based compensation expense | 21,637 | 21,637 | ||
Cashless exercise of stock options | $ 499 | (499) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 49,901 | |||
Net Income | 1,266,752 | 1,266,752 | ||
Balance – May 31, 2020 (unaudited) at May. 31, 2021 | $ 155,026 | $ 9,086,132 | $ 2,997,913 | $ 12,239,071 |
Shares, Outstanding, Ending Balance at May. 31, 2021 | 15,502,557 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $ 1,266,752 | $ 167,928 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 107,553 | 109,878 |
Stock based compensation expense | 21,637 | 8,097 |
Inventory reserve | 31,000 | 18,000 |
Paycheck Protection Program Loan Forgiveness | (1,005,372) | |
Deferred tax expense | 1,167 | |
(Decrease) Increase in: | ||
Accounts receivable | 589,231 | (411,916) |
Inventories | (32,114) | (148,331) |
Prepaid expenses and other current assets | 42,860 | 7,110 |
Accounts payable and accrued expenses | (464,960) | 134,554 |
Customer deposits | 80,530 | (322,996) |
Income taxes payable | 83,721 | 41,927 |
Net Cash Provided By (Used in) Operating Activities | 722,005 | (395,749) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment, furnishings and leasehold improvements | (85,548) | (152,402) |
Sale of marketable securities | 1,073,112 | 310,786 |
Net Cash Provided By Investing Activities | 987,564 | 158,384 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from note payable - bank | 1,001,640 | |
Repayment of long-term debt | (41,879) | |
Net Cash Provided By Financing Activities | 959,761 | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 1,709,569 | 722,396 |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 4,084,078 | 3,659,551 |
End of period | 5,793,647 | 4,381,947 |
SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||
Interest paid | 7,210 | |
Taxes Paid |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 3 Months Ended |
May 31, 2021 | |
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 with the instructions for Form 10-Q and Article 8 of Regulation S-X. 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 unaudited condensed consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended February 28, 2021 (“fiscal year 2021”) contained in the Company’s 2021 Annual Report on Form 10-K filed with the SEC on May 28, 2021. The Company’s current fiscal year ends on February 28, 2022 (“fiscal 2022”). |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable, net Cash and Cash Equivalents - Consolidation Earnings Per Share - Equipment, Furnishings and Leasehold Improvements straight-line method three to five years Fair Value of Financial Instruments Fair Value Measurement The carrying amounts of financial instruments reported in the accompanying unaudited condensed consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short-term maturities of the financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The fair values of financial assets of the Company were determined using the following categories at May 31, 2021 and February 28, 2021, respectively: Significant Accounting Policies - Fair values of financial assets of the Company Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Marketable Securities – May 31, 2021 $ 3,490,358 $ — $ — $ 3,490,358 Marketable Securities – February 28, 2021 $ 4,261,927 $ 301,543 $ — $ 4,563,470 Marketable Securities include certificates of deposit and US Treasury securities, totaling $ 3,490,358 4,563,470 Income Taxes Intangible Assets - seventeen twelve 184,564 181,922 11,000 Inventories - Land and Buildings straight-line method forty years Long-Lived Assets - Management Estimates - New Accounting Pronouncements Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses, have been released in November 2018 (2018-19), November 2019 (2019-10 and 2019-11) and a January 2020 Update (2020-02) that provided additional guidance on this Topic. This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For SEC filers meeting certain criteria, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For SEC filers that meet the criteria of a smaller reporting company (including this Company) and for non-SEC registrant public companies and other organizations, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently in the process of its analysis of the impact of this guidance on its consolidated financial statements and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. Other than Accounting Standards Update (“ASU”) 2019-12 and ASU 2016-13 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. Product Warranty Reclassifications - Research and Product Development Expenses - Revenue Recognition Shipping and Handling Costs Stock-Based Compensation Changes in the assumptions to reflect future stock price volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. ASC 718 requires the recognition of the fair value of stock compensation expense on a straight line basis over the requite service period, based on the terms of the award in net income. The Company accounts for forfeitures as they occur. Although every effort is made to ensure the accuracy of the Company’s estimates and assumptions, significant unanticipated changes in those estimates, interpretations and assumptions may result in recording stock option expense that may materially impact the Company’s financial statements for each respective reporting period. Uncertainties |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
May 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
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 applies the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one-year or less. The Company applies the transition practical expedient in paragraph ASC 606-10-65-1(f)(3) and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue. At May 31, 2021, the Company had received $ 1,247,000 618,000 the Company was utilizing $618,000 of its available credit line to collateralize these letters of credit. At February 28, 2021, the Company had received $ 1,167,000 457,000 The Company’s sales revenue, by product line is as follows: Revenue Recognition - Sales Revenue by Product Line Three Months Ended May 31, 2021 % of total 2020 % of total Fluxing Systems $ 358,000 10 $ 344,000 10 Integrated Coating Systems 155,000 4 1,176,000 34 Multi-Axis Coating Systems 2,079,000 57 913,000 27 OEM Systems 326,000 9 422,000 12 Other 726,000 20 574,000 17 TOTAL $ 3,644,000 $ 3,429,000 |
INVENTORIES
INVENTORIES | 3 Months Ended |
May 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 4: INVENTORIES Inventories consist of the following: Inventories - Schedule of Inventory, Current May 31, February 28, 2021 2021 Raw materials and subassemblies $ 1,176,733 $ 1,081,591 Finished goods 613,653 786,785 Work in process 1,137,114 1,027,010 Total 2,927,500 2,895,386 Less: Allowance (315,280 ) (284,280 ) Net inventories $ 2,612,220 $ 2,611,106 |
STOCK OPTIONS
STOCK OPTIONS | 3 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
STOCK OPTIONS | NOTE 5: STOCK OPTIONS Stock Options 2,500,000 ten 396,250 285,125 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 47,500 During the three months ended May 31, 2021, 63,334 49,901 |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
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, 2021 no 22,000 8,000 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
May 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 7: EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Earnings Per Share - Computation of basic and diluted earnings per share Three Months Ended May 31, 2021 2020 Numerator for basic and diluted earnings per share $ 1,266,752 $ 167,928 Denominator for basic earnings per share - weighted average 15,494,421 15,397,779 Effects of dilutive securities: Stock options for employees, directors and outside consultants 169,351 38,979 Denominator for diluted earnings per share 15,663,772 15,436,758 Basic Earnings Per Share $ 0.08 $ 0.01 Diluted Earnings Per Share $ 0.08 $ 0.01 |
LONG TERM DEBT
LONG TERM DEBT | 3 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
LONG TERM DEBT | NOTE 8: LONG TERM DEBT Long-term debt consists of the following: Long Term Debt - Schedule of Long-Term Debt May 31, February 28, 2021 2021 Note Payable, bank, unsecured, Paycheck Protection Program funding, initially scheduled to be payable in monthly installments of principal and interest of $ 56,370 1 2 1,005,372 — 1,001,640 Total long-term debt $ — $ 1,001,640 |
REVOLVING LINE OF CREDIT
REVOLVING LINE OF CREDIT | 3 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
REVOLVING LINE OF CREDIT | NOTE 9: REVOLVING LINE OF CREDIT The Company has a $ 1,500,000 3.25 The revolving credit line is collateralized by the Company’s accounts receivable and inventory. As of May 31, 2021, $ 618,000 882,000 |
CUSTOMER CONCENTRATIONS AND FOR
CUSTOMER CONCENTRATIONS AND FOREIGN SALES | 3 Months Ended |
May 31, 2021 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER CONCENTRATIONS AND FOREIGN SALES | NOTE 10: CUSTOMER CONCENTRATIONS AND FOREIGN SALES Export sales to customers located outside the United States and Canada were approximately as follows: Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales May 31, May 31, Asia Pacific (APAC) 1,222,000 1,923,000 Europe, Middle East, Asia (EMEA) 842,000 430,000 Latin America Latin America 352,000 320,000 $ 2,416,000 $ 2,673,000 Asia Pacific (APAC) Europe, Middle East, Asia (EMEA) During first quarter of fiscal 2022 and fiscal 2021, sales to foreign customers accounted for approximately $ 2,416,000 2,673,000 66 78 The Company had three customers which accounted for 33 54 The Company had three customers which accounted for 46 45 Customers Sales Accounts Receivables |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11: COMMITMENTS AND CONTINGENCIES Other than the letters of credit disclosed in Note 9, the Company did not have any material commitments or contingencies as of May 31, 2021. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net |
Cash and Cash Equivalents | Cash and Cash Equivalents - |
Consolidation | Consolidation |
Earnings Per Share | Earnings Per Share - |
Equipment, Furnishings and Leasehold Improvements | Equipment, Furnishings and Leasehold Improvements straight-line method three to five years |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value Measurement The carrying amounts of financial instruments reported in the accompanying unaudited condensed consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short-term maturities of the financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. The fair values of financial assets of the Company were determined using the following categories at May 31, 2021 and February 28, 2021, respectively: Significant Accounting Policies - Fair values of financial assets of the Company Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Marketable Securities – May 31, 2021 $ 3,490,358 $ — $ — $ 3,490,358 Marketable Securities – February 28, 2021 $ 4,261,927 $ 301,543 $ — $ 4,563,470 Marketable Securities include certificates of deposit and US Treasury securities, totaling $ 3,490,358 4,563,470 |
Income Taxes | Income Taxes |
Intangible Assets | Intangible Assets - seventeen twelve 184,564 181,922 11,000 |
Inventories | Inventories - |
Land and Buildings | Land and Buildings straight-line method forty years |
Long-Lived Assets | Long-Lived Assets - |
Management Estimates | Management Estimates - |
New Accounting Pronouncements | New Accounting Pronouncements Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses, have been released in November 2018 (2018-19), November 2019 (2019-10 and 2019-11) and a January 2020 Update (2020-02) that provided additional guidance on this Topic. This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For SEC filers meeting certain criteria, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For SEC filers that meet the criteria of a smaller reporting company (including this Company) and for non-SEC registrant public companies and other organizations, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently in the process of its analysis of the impact of this guidance on its consolidated financial statements and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. Other than Accounting Standards Update (“ASU”) 2019-12 and ASU 2016-13 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. |
Product Warranty | Product Warranty |
Reclassifications | Reclassifications - |
Research and Product Development Expenses | Research and Product Development Expenses - |
Revenue Recognition | Revenue Recognition |
Shipping and Handling Costs | Shipping and Handling Costs |
Stock-Based Compensation | Stock-Based Compensation Changes in the assumptions to reflect future stock price volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. ASC 718 requires the recognition of the fair value of stock compensation expense on a straight line basis over the requite service period, based on the terms of the award in net income. The Company accounts for forfeitures as they occur. Although every effort is made to ensure the accuracy of the Company’s estimates and assumptions, significant unanticipated changes in those estimates, interpretations and assumptions may result in recording stock option expense that may materially impact the Company’s financial statements for each respective reporting period. |
Uncertainties | Uncertainties |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies - Fair values of financial assets of the Company | The fair values of financial assets of the Company were determined using the following categories at May 31, 2021 and February 28, 2021, respectively: Significant Accounting Policies - Fair values of financial assets of the Company Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Marketable Securities – May 31, 2021 $ 3,490,358 $ — $ — $ 3,490,358 Marketable Securities – February 28, 2021 $ 4,261,927 $ 301,543 $ — $ 4,563,470 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
May 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition - Sales Revenue by Product Line | The Company’s sales revenue, by product line is as follows: Revenue Recognition - Sales Revenue by Product Line Three Months Ended May 31, 2021 % of total 2020 % of total Fluxing Systems $ 358,000 10 $ 344,000 10 Integrated Coating Systems 155,000 4 1,176,000 34 Multi-Axis Coating Systems 2,079,000 57 913,000 27 OEM Systems 326,000 9 422,000 12 Other 726,000 20 574,000 17 TOTAL $ 3,644,000 $ 3,429,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
May 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories - Schedule of Inventory, Current | Inventories consist of the following: Inventories - Schedule of Inventory, Current May 31, February 28, 2021 2021 Raw materials and subassemblies $ 1,176,733 $ 1,081,591 Finished goods 613,653 786,785 Work in process 1,137,114 1,027,010 Total 2,927,500 2,895,386 Less: Allowance (315,280 ) (284,280 ) Net inventories $ 2,612,220 $ 2,611,106 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
May 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share - Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share: Earnings Per Share - Computation of basic and diluted earnings per share Three Months Ended May 31, 2021 2020 Numerator for basic and diluted earnings per share $ 1,266,752 $ 167,928 Denominator for basic earnings per share - weighted average 15,494,421 15,397,779 Effects of dilutive securities: Stock options for employees, directors and outside consultants 169,351 38,979 Denominator for diluted earnings per share 15,663,772 15,436,758 Basic Earnings Per Share $ 0.08 $ 0.01 Diluted Earnings Per Share $ 0.08 $ 0.01 |
LONG TERM DEBT (Tables)
LONG TERM DEBT (Tables) | 3 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
Long Term Debt - Schedule of Long-Term Debt | Long-term debt consists of the following: Long Term Debt - Schedule of Long-Term Debt May 31, February 28, 2021 2021 Note Payable, bank, unsecured, Paycheck Protection Program funding, initially scheduled to be payable in monthly installments of principal and interest of $ 56,370 1 2 1,005,372 — 1,001,640 Total long-term debt $ — $ 1,001,640 |
CUSTOMER CONCENTRATIONS AND F_2
CUSTOMER CONCENTRATIONS AND FOREIGN SALES (Tables) | 3 Months Ended |
May 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales | Export sales to customers located outside the United States and Canada were approximately as follows: Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales May 31, May 31, Asia Pacific (APAC) 1,222,000 1,923,000 Europe, Middle East, Asia (EMEA) 842,000 430,000 Latin America Latin America 352,000 320,000 $ 2,416,000 $ 2,673,000 Asia Pacific (APAC) Europe, Middle East, Asia (EMEA) |
Significant Accounting Polici_4
Significant Accounting Policies - Fair values of financial assets of the Company (Details) - USD ($) | May 31, 2021 | Feb. 28, 2021 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Marketable Securities, Current | $ 3,490,358 | $ 4,563,470 |
Level 1 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Marketable Securities, Current | 3,490,358 | 4,261,927 |
Level 2 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Marketable Securities, Current | 301,543 | |
Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Marketable Securities, Current |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2021 | Feb. 28, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Marketable Securities | $ 3,490,358 | $ 4,563,470 |
Accumulated amortization of patents | 184,564 | $ 181,922 |
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 | ||
Property, Plant and Equipment [Line Items] | ||
Useful life of intangible assets | 17 years | |
Foreign Patents | ||
Property, Plant and Equipment [Line Items] | ||
Useful life of intangible assets | 12 years | |
Equipment and Furnishings | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation methods | straight-line method | |
Estimated useful lives | three to five years | |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation methods | straight-line method | |
Estimated useful lives | forty years |
Revenue Recognition - Sales Rev
Revenue Recognition - Sales Revenue by Product Line (Details) - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 3,644,468 | $ 3,428,544 |
Fluxing Systems | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 358,000 | $ 344,000 |
Sales revenue, percent | 10.00% | 10.00% |
Integrated Coating Systems | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 155,000 | $ 1,176,000 |
Sales revenue, percent | 4.00% | 34.00% |
Multi-Axis Coating Systems | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 2,079,000 | $ 913,000 |
Sales revenue, percent | 57.00% | 27.00% |
OEM Systems | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 326,000 | $ 422,000 |
Sales revenue, percent | 9.00% | 12.00% |
Other Product Line | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 726,000 | $ 574,000 |
Sales revenue, percent | 20.00% | 17.00% |
Total Product Line | ||
Disaggregation of Revenue [Line Items] | ||
Sales revenue | $ 3,644,000 | $ 3,429,000 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
May 31, 2021 | Feb. 28, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Proceeds in cash deposits | $ 1,247,000 | $ 1,167,000 |
Letter of credit | $ 618,000 | |
Letter of credit, collateral description | the Company was utilizing $618,000 of its available credit line to collateralize these letters of credit. | |
Revenue recognized | $ 457,000 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory, Current (Details) - USD ($) | May 31, 2021 | Feb. 28, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and subassemblies | $ 1,176,733 | $ 1,081,591 |
Finished goods | 613,653 | 786,785 |
Work in process | 1,137,114 | 1,027,010 |
Total | 2,927,500 | 2,895,386 |
Less: Allowance | (315,280) | (284,280) |
Net inventories | $ 2,612,220 | $ 2,611,106 |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - shares | 3 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2013 | |
Common Stock [Member] | |||
Options exercised, net cashless basis | 63,334 | ||
Exercise of stock options | 49,901 | 74,805 | |
2013 Stock Incentive Plan ("2013 Plan") | |||
Stock options shares available for grants | 2,500,000 | ||
Options, expiration period | 10 years | ||
Stock options, outstanding | 396,250 | ||
Stock options, vested | 285,125 | ||
2003 Stock Incentive Plan ("2003 Plan") | |||
Stock options shares available for grants | 1,500,000 | ||
Stock options, outstanding | 47,500 |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details Narrative) - Share-based Payment Arrangement, Option [Member] - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options issued | 0 | |
Additional stock-based compensation expense as a result of applying ASC 718 | $ 22,000 | $ 8,000 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of basic and diluted earnings per share (Details) - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Earnings Per Share [Abstract] | ||
Numerator for basic and diluted earnings per share | $ 1,266,752 | $ 167,928 |
Denominator for basic earnings per share - weighted average | 15,494,421 | 15,397,779 |
Effects of dilutive securities: | ||
Stock options for employees, directors and outside consultants | 169,351 | 38,979 |
Denominator for diluted earnings per share | 15,663,772 | 15,436,758 |
Basic Earnings Per Share | $ 0.08 | $ 0.01 |
Diluted Earnings Per Share | $ 0.08 | $ 0.01 |
Long Term Debt - Schedule of Lo
Long Term Debt - Schedule of Long-Term Debt (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2021 | May 31, 2021 | |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 1,001,640 | |
Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Monthly installments of principal and interest | $ 56,370 | |
Interest rate | 1.00% | |
Maturity | 2 years | |
Gain on forgiveness of debt | $ 1,005,372 | |
Total long-term debt | $ 1,001,640 |
REVOLVING LINE OF CREDIT (Detai
REVOLVING LINE OF CREDIT (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
May 31, 2021 | Feb. 28, 2021 | |
Line of Credit Facility [Line Items] | ||
Revolving credit line collateral | the Company was utilizing $618,000 of its available credit line to collateralize these letters of credit. | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving line of credit | $ 1,500,000 | $ 1,500,000 |
Interest rate | 3.25% | 3.25% |
Revolving credit line collateral | The revolving credit line is collateralized by the Company’s accounts receivable and inventory. | The revolving credit line is collateralized by the Company’s accounts receivable and inventory. |
Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit line utilized to collateralize letter of credit issued to customers | $ 618,000 | |
Unused portion of credit line | $ 882,000 |
Customer Concentrations and F_3
Customer Concentrations and Foreign Sales - Schedule of Customer Concentrations and Foreign Sales (Details) - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Total sales | $ 2,416,000 | $ 2,673,000 |
Asia Pacific (APAC) | ||
Total sales | 1,222,000 | 1,923,000 |
Europe, Middle East, Asia (EMEA) | ||
Total sales | 842,000 | 430,000 |
Latin America | ||
Total sales | $ 352,000 | $ 320,000 |
CUSTOMER CONCENTRATIONS AND F_4
CUSTOMER CONCENTRATIONS AND FOREIGN SALES (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Concentration Risk [Line Items] | ||
Sales revenue | $ 3,644,468 | $ 3,428,544 |
Sales | Foreign Customers | ||
Concentration Risk [Line Items] | ||
Sales revenue | $ 2,416,000 | $ 2,673,000 |
Sales revenue, percent | 66.00% | 78.00% |
Sales | Customers | ||
Concentration Risk [Line Items] | ||
Concentration of Credit Risk | 33.00% | 46.00% |
Accounts Receivables | Customers | ||
Concentration Risk [Line Items] | ||
Concentration of Credit Risk | 54.00% | 45.00% |