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<SEC-DOCUMENT>0001171520-08-000396.txt : 20080711
<SEC-HEADER>0001171520-08-000396.hdr.sgml : 20080711
<ACCEPTANCE-DATETIME>20080711124510
ACCESSION NUMBER:		0001171520-08-000396
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20080531
FILED AS OF DATE:		20080711
DATE AS OF CHANGE:		20080711

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SONO TEK CORP
		CENTRAL INDEX KEY:			0000806172
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				141568099
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			0228

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16035
		FILM NUMBER:		08948570

	BUSINESS ADDRESS:	
		STREET 1:		2012 RT 9W BLDG 3
		CITY:			MILTON
		STATE:			NY
		ZIP:			12547
		BUSINESS PHONE:		8457952020

	MAIL ADDRESS:	
		STREET 1:		2012 RT. 9W, BLDG. 3,
		CITY:			MILTON
		STATE:			NY
		ZIP:			12547
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>eps3036.txt
<DESCRIPTION>SONO-TEK CORPORATION
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  For the quarterly period ended: May 31, 2008

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                          Commission File No.: 0-16035


                              SONO-TEK CORPORATION
             (Exact name of registrant as specified in its charter)

            New York                                    14-1568099
 -------------------------------             ---------------------------------
 (State or other jurisdiction of             (IRS Employer Identification No.)
  incorporation or organization)


                          2012 Rt. 9W, Milton, NY 12547
               (Address of Principal Executive Offices) (Zip Code)

         Registrant's telephone no., including area code: (845) 795-2020

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES |X| NO |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer |_| Accelerated Filer |_| Smaller reporting company |X|
Non Accelerated Filer |_| (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
                                                                  Yes |_| No |X|

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

        Class                                Outstanding as of June 25, 2008
        -----                                -------------------------------
Common Stock, par value $.01 per share                  14,361,091
<PAGE>

                              SONO-TEK CORPORATION

                                      INDEX

Part I - Financial Information                                             Page

Item 1 - Consolidated Financial Statements:                               1 - 3

Consolidated Balance Sheets - May 31, 2008 (Unaudited) and
        February 29, 2008                                                     1

Consolidated Statements of Income - Three Months Ended
        May 31, 2008 and 2007 (Unaudited)                                     2

Consolidated Statements of Cash Flows - Three Months Ended
        May 31, 2008 and 2007 (Unaudited)                                     3

Notes to Consolidated Financial Statements                                4 - 7

Item 2 - Management's Discussion and Analysis or Plan of Operations      8 - 11

Item 4 - Controls and Procedures                                             12

Part II - Other Information                                                  13

Signatures and Certifications                                           14 - 20
<PAGE>

                              SONO-TEK CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                      May 31,      February 29,
                                                       2008            2008
Current Assets                                       Unaudited
                                                    -----------
  Cash and cash equivalents                         $ 1,553,573    $ 2,339,550
  Accounts receivable (less allowance of $18,500
  at May 31 and February 29)                            821,601        614,378
  Inventories                                         1,822,360      1,602,511
  Prepaid expenses and other current assets             111,692         69,032
  Deferred tax asset                                     70,000         70,000
                                                    -----------    -----------
      Total current assets                            4,379,226      4,695,471
                                                    -----------    -----------

Equipment, furnishings and leasehold improvements
  (less accumulated depreciation of $1,074,750
  and $1,046,195 at May 31 and February 29,
  respectively)                                         520,197        536,892
Intangible assets, net                                   46,220         34,011
Other assets                                              7,171          7,171
Deferred tax asset                                      615,803        615,803
                                                    -----------    -----------

TOTAL ASSETS                                        $ 5,568,617    $ 5,889,348
                                                    ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                                  $   287,761    $   412,692
  Accrued expenses                                      342,879        452,911
  Current maturities of long term debt                   21,137         23,909
  Deferred tax liability                                 16,239         16,239
                                                    -----------    -----------
  Total current liabilities                             668,016        905,751

Long term debt, less current maturities                  23,283         27,628
Deferred tax liability                                   57,978         57,978
                                                    -----------    -----------
      Total liabilities                                 749,277        991,357
                                                    -----------    -----------

Commitments and Contingencies                                --             --

Stockholders' Equity
  Common stock, $.01 par value; 25,000,000 shares
    authorized, 14,361,091 shares issued and
    outstanding at May 31 and February 29               143,612        143,612
  Additional paid-in capital                          8,395,687      8,343,880
  Accumulated deficit                                (3,719,959)    (3,589,501)
                                                    -----------    -----------
      Total stockholders' equity                      4,819,340      4,897,991
                                                    -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 5,568,617    $ 5,889,348
                                                    ===========    ===========

                 See notes to consolidated financial statements.


                                        1
<PAGE>

                              SONO-TEK CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                    Unaudited

                                                 Three Months Ended May 31,
                                                2008                   2007
                                            -----------------------------------

Net Sales                                   $  1,620,521           $  1,232,643
Cost of Goods Sold                               831,657                629,133
                                            ------------           ------------
         Gross Profit                            788,864                603,510
                                            ------------           ------------

Operating Expenses
   Research and product development costs        205,570                194,740
   Marketing and selling expenses                413,910                234,044
   General and administrative costs              308,655                214,988
                                            ------------           ------------
         Total Operating Expenses                928,135                643,772
                                            ------------           ------------

Operating (Loss)                                (139,271)               (40,262)
                                            ------------           ------------

Interest Expense                                    (803)                (1,235)
Interest Income                                    6,785                 24,767
Other Income                                       2,831                  2,831
                                            ------------           ------------
                                                   8,813                 26,363
                                            ------------           ------------

(Loss) Before Income Taxes                      (130,458)               (13,899)

Income Tax (Benefit)                                  --                (33,813)
                                            ------------           ------------

Net (Loss) Income                           $   (130,458)          $     19,914
                                            ============           ============

Basic Earnings Per Share                    $      (0.01)          $       0.00
                                            ============           ============

Diluted Earnings Per Share                  $      (0.01)          $       0.00
                                            ============           ============

Weighted Average Shares - Basic               14,361,091             14,360,541
                                            ============           ============

Weighted Average Shares - Diluted             14,361,091             14,436,298
                                            ============           ============

                 See notes to consolidated financial statements.


                                        2
<PAGE>

                              SONO-TEK CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    Unaudited

<TABLE>
<CAPTION>
                                                            Three Months Ended May 31,
                                                                2008           2007
                                                            --------------------------

<S>                                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (Loss) Income                                        $  (130,458)   $    19,914

   Adjustments to reconcile net (loss) income to net cash
      (used in) provided by operating activities:
         Depreciation and amortization                           50,413         32,459
         Stock based compensation expense                        51,807         10,538
         Gain on sale of equipment                               23,384             --
         Decrease (Increase) in:
           Accounts receivable                                 (207,223)       259,639
           Inventories                                         (219,849)      (146,790)
           Prepaid expenses and other current assets            (42,660)       (33,552)
           Deferred tax asset                                        --        (35,000)
         Increase (Decrease) in:
           Accounts payable and accrued expenses               (234,963)       (39,187)
                                                            -----------    -----------
      Net Cash (Used In) Provided By Operating Activities      (709,549)        68,021
                                                            -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Patent application costs                                      (13,142)            --
  Purchase of equipment and furnishings                         (56,169)       (28,788)
                                                            -----------    -----------
         Net Cash Used In Investing Activities                  (69,311)       (28,788)
                                                            -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of notes payable                                    (7,117)        (6,701)
                                                            -----------    -----------
         Net Cash Used In Financing Activities                   (7,117)        (6,701)
                                                            -----------    -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS           (785,977)        32,532

CASH AND CASH EQUIVALENTS
  Beginning of year                                           2,339,550      2,268,976
                                                            -----------    -----------
  End of period                                             $ 1,553,573    $ 2,301,508
                                                            ===========    ===========

SUPPLEMENTAL DISCLOSURE:
  Interest paid                                             $       801    $     1,294
                                                            ===========    ===========

  Income taxes paid                                         $     6,250    $     1,187
                                                            ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.


                                        3
<PAGE>

                              SONO-TEK CORPORATION
                   Notes to Consolidated Financial Statements
                    Three Months Ended May 31, 2008 and 2007


NOTE 1:  SIGNIFICANT ACCOUNTING POLICIES

Consolidation - The accompanying consolidated financial statements of Sono-Tek
Corporation, a New York Corporation (the "Company"), include the accounts of the
Company and its wholly owned subsidiary, Sono-Tek Cleaning Systems, Inc., a New
Jersey Corporation ("SCS") which the Company acquired on August 3, 1999, whose
operations have been discontinued. There have been no operations of this
subsidiary since Fiscal Year Ended February 28, 2002. All significant
intercompany accounts and transactions are eliminated in consolidation.

Cash and Cash Equivalents - Cash and cash equivalents consist of money market
mutual funds, short term commercial paper and short term certificates of deposit
with original maturities of 90 days or less. The Company occasionally has cash
or cash equivalents on hand in excess of the $100,000 insurable limits at a
given bank.

Fair Value of Financial Instruments - The carrying amounts reported in the
balance sheet for cash, receivables, accounts payable and accrued expenses
approximate fair value based on the short-term maturity of these instruments.

Interim Reporting - The attached summary consolidated financial information does
not include all disclosures required to be included in a complete set of
financial statements prepared in conformity with accounting principles generally
accepted in the United States of America. Such disclosures were included with
the financial statements of the Company at February 29, 2008, and included in
its report on Form 10-KSB. Such statements should be read in conjunction with
the data herein.

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.

Intangible Assets - Include cost of patent applications that are deferred and
charged to operations over seventeen years for domestic patents and twelve years
for foreign patents. The accumulated amortization is $59,883 and $58,949 at May
31, 2008 and February 29, 2008, respectively. Annual amortization expense of
such intangible assets is expected to be $4,600 per year for the next five
years.


                                        4
<PAGE>

Reclassifications - Certain reclassifications have been made to the prior period
to conform to the presentations of the current period.

NOTE 2: INVENTORIES

Inventories at May 31, 2008 are comprised of:

                Finished goods                         $   886,446
                Work in process                            558,938
                Consignment                                  9,770
                Raw materials and sub-assemblies           580,403
                                                       -----------
                              Total                      2,035,557
                Less: Allowance                           (213,197)
                                                       -----------
                Net inventories                        $ 1,822,360
                                                       ===========

NOTE 3: STOCK OPTIONS AND WARRANTS

Stock Options - Under the 2003 Stock Incentive Plan, as amended ("2003 Plan"),
options can be granted to officers, directors, consultants and employees of the
Company and its subsidiaries to purchase up to 1,500,000 of the Company's common
shares. The 2003 Plan supplemented and replaced the 1993 Stock Incentive Plan
(the "1993 Plan"), under which no further options may be granted. Options
granted under the 1993 Plan expire on various dates through 2013. As of May 31,
2008 there were 80,000 options outstanding under the 1993 Plan and 1,157,375
options outstanding under the 2003 plan.

Under both the 1993 and 2003 Stock Incentive Plans, option prices must be at
least 100% of the fair market value of the common stock at time of grant. For
qualified employees, except under certain circumstances specified in the plans
or unless otherwise specified at the discretion of the Board of Directors, no
option may be exercised prior to one year after date of grant, with the balance
becoming exercisable in cumulative installments over a three year period during
the term of the option, and terminating at a stipulated period of time after an
employee's termination of employment.

NOTE 4: STOCK BASED COMPENSATION

On March 1, 2006, the Company adopted SFAS No. 123R, "Share Based Payments."
SFAS No. 123R requires companies to expense the value of employee stock options
and similar awards for periods beginning after December 15, 2005, and applies to
all outstanding and vested stock-based awards at a company's adoption date.

During the transition period of the Company's adoption of SFAS 123R, the
weighted-average fair value of options has been estimated on the date of grant
using the Black-Scholes options-pricing model. The weighted-average
Black-Scholes assumptions are as follows:


                                       5
<PAGE>

                                                      2008              2007
                                                 -------------------------------
Expected life                                        4 years          4 years
Risk free interest rate                           1.8% - 3.13%     4.35% - 5.07%
Expected volatility                                 55% - 70%        39% - 78%
Expected dividend yield                                0%                0%

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
amount 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 quarters ended May 31, 2008 and 2007, net income and earnings per share
reflect the actual deduction for stock-based compensation expense. The impact of
applying SFAS 123R approximated $51,807 and $10,538 in additional compensation
expense during the quarters ended May 31, 2008 and 2007, respectively. Such
amount is included in general and administrative expenses on the statement of
operations. The expense for stock-based compensation is a non-cash expense item.

NOTE 5: EARNINGS PER SHARE

The denominator for the calculation of diluted earnings per share at May 31,
2008 and 2007 are calculated as follows:

                                                  May 31, 2008   May 31, 2007
                                                  ------------   ------------

Denominator for basic earnings per share           14,361,091     14,360,541

   Dilutive effect of stock options                        --         75,757
                                                   ----------     ----------

Denominator for diluted earnings per share         14,361,091     14,436,298
                                                   ==========     ==========

The effect of stock options for the three months ended May 31, 2008 is not used
in the calculation of diluted earnings per share. Due to the net loss for the
three months ended May 31, 2008, the inclusion of stock options in the
calculation would have an anti-dilutive effect.


                                        6
<PAGE>

NOTE 6: OTHER INCOME

As previously reported on Form 8-K, filed on July 5, 2005, the Company
determined that a former employee had misappropriated approximately $250,000 of
the Company's monies, primarily through unauthorized check writing from the
Company's accounts over a period of three calendar years. The Company had
previously expensed substantially all of the misappropriated funds over the
years.

The Company has recovered approximately 73% of these funds to date. The Company
has a promissory note that is being repaid by the former employee. The note has
been fully reserved for as the collectibility is questionable. As previously
discussed, the Company can offer no assurances that it will be successful in its
attempts to collect the balance of the remaining restitution.


                                        7
<PAGE>

                              SONO-TEK CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Forward-Looking Statements

We discuss expectations regarding our future performance, such as our business
outlook, in our annual and quarterly reports, press 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. These factors include,
among other considerations, general economic and business conditions; political,
regulatory, competitive and technological developments affecting the Company's
operations or the demand for its products; timely development and market
acceptance of new products; adequacy of financing; capacity additions, the
ability to enforce patents and the successful implementation of the business
development program.

We undertake no obligation to update any forward-looking statement.

Overview

Sono-Tek has developed a unique and proprietary series of ultrasonic atomizing
nozzles, which are being used in an increasing variety of electronic, medical,
industrial, and nanotechnology applications. These nozzles are electrically
driven and create a fine, uniform, low velocity spray of atomized liquid
particles, in contrast to common pressure nozzles. These characteristics create
a series of commercial applications that benefit from the precise, uniform, thin
coatings that can be achieved. When combined with significant reductions in
liquid waste and less overspray than can be achieved with ordinary pressure
nozzle systems, there is lower environmental impact and lower energy use.

We have a well established position in the electronics industry with our
SonoFlux spray fluxing equipment. It saves customers from 40% to 80% of the
liquid flux required to solder printed circuit boards over other methods, such
as foam fluxing. Less flux equates to less material cost, fewer chemicals in the
workplace, and less clean-up. Also, the SonoFlux equipment reduces the number of
soldering defects, which reduces the amount of rework.

One change that has proven successful is our diversification into the medical
device market. In the past several years, we have focused engineering resources
on the medical device market, with emphasis on providing coating solutions for
the new generation of drug coated stents. We have sold a significant number of
specialized ultrasonic nozzles and MediCoat stent coating systems to large
medical device customers. Sono-Tek's stent coating systems are superior compared
to pressure nozzles in their ability to uniformly coat the very small arterial
stents without creating webs or gaps in the coatings. We sell a bench-top, fully
outfitted stent coating system to a wide range of customers that are
manufacturing stents and/or applying coatings to be used in developmental
trials. We have also introduced and sold several multiple stent coaters known as
Medicoat II, designed for production use.


                                        8
<PAGE>

Another change that has stimulated an increase in business has been the
development of the WideTrack coating system, a broad based platform for applying
a variety of coatings to moving webs of glass, textiles, plastic, metal, food
products and packaging materials. The WideTrack is a long-term product and
market development effort. Thus far, we have made successful inroads with
WideTrack systems into the glass, medical textile (bandages), textiles and solar
and fuel cell industries. We plan to increase our marketing efforts into the
broader textile and food industry markets. This will require a continuation of
market and technology development in these areas in the years ahead. Some of
these WideTrack applications involve nano-technology based liquids. We believe
there is an excellent fit between the thin, precise films required in
nano-technology coating applications and our ultrasonic nozzle systems.

The creation of technological innovations and the expansion into new
geographical markets requires the investment of both time and capital. Although
there is no guarantee of success, we expect that over time, these newer markets
will be the basis for Sono-Tek's continued growth and will contribute to future
profitability. It is management's opinion that this strategy will be a better
one than relying solely on our traditional domestics electronics business.

Liquidity and Capital Resources

Working Capital - Our working capital decreased $79,000 from a working capital
of $3,790,000 at February 29, 2008 to $3,711,000 at May 31, 2008. The Company's
current ratio is 6.6 to 1 at May 31, 2008 as compared to 5.2 to 1 at February
28, 2008.

Stockholders' Equity - Stockholder's Equity decreased $79,000 from $4,898,000 at
February 29, 2008 to $4,819,000 at May 31, 2008. The decrease is a result of the
net loss of $130,000 and an adjustment for stock based compensation expense of
$51,000.

Operating Activities - We used $710,000 of cash in our operating activities for
the three months ended May 31, 2008. The use of cash resulted from the current
period net loss of $130,000, an increase in accounts receivable of $207,000, an
increase in inventories of $220,000 and an increase of $43,000 in prepaid
assets. In addition to the above, our accounts payable and accrued expenses
decreased $235,000 during the current period.

Investing Activities - We used $56,000 for the purchase of capital equipment and
$13,000 for patent application costs during the three months ended May 31, 2008.
For the three months ended May 31, 2007, we used $29,000 for the purchase of
capital equipment.

Financing Activities - For the three months ended May 31, 2008 and May 31, 2007,
we used $7,000 in financing activities resulting from the repayment of our notes
payable.


                                        9
<PAGE>

Results of Operations

For the three months ended May 31, 2008, our sales increased $388,000 or 31% to
$1,621,000 as compared to $1,233,000 for the three months ended May 31, 2007.
Our sales for the quarter ended May 31, 2008 were improved over the same period
last year due to additional sales of our WideTrack product. In addition, we also
saw an increase in sales of our programmable XYZ precision coating units and
Spray Dryer units. During the quarter ended May 31, 2008, sales of fluxer units,
EVS solder recovery units and stent coating systems decreased when compared to
the quarter ended May 31, 2007.

Our gross profit increased $185,000 to $789,000 for the three months ended May
31, 2008 from $604,000 for the three months ended May 31, 2007. The increase in
gross profit is due to the current period increase in sales. The gross profit
margin was 49% of sales for the three months ended May 31, 2008 and the three
months ended May 31, 2007.

Research and product development costs increased $11,000 to $206,000 for the
three months ended May 31, 2008 from $195,000 for the three months ended May 31,
2007. The increase was principally due to an increase in salary expense.

Marketing and selling costs increased $180,000 to $414,000 for the three months
ended May 31, 2008 from $234,000 for the three months ended May 31, 2007. The
increase in these expenditures is due to the reorganization of our sales force
into two separate Strategic Business Units. We have added additional sales
personnel, increased the number of trade shows we participate in and we have
engaged an outside marketing firm to help increase the awareness of our
products. These increases are part of the business development program which was
initiated last year.

General and administrative costs increased $94,000 to $309,000 for the three
months ended May 31, 2008 from $215,000 for the three months ended May 31, 2007.
The increase was principally due to an increase in salary expense and an
increase in stock based compensation expense.

Critical Accounting Policies

The discussion and analysis of the Company's financial condition and results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure on
contingent assets and liabilities at the date of the financial statements.
Actual results may differ from these estimates under different assumptions and
conditions.

Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and may potentially result in
materially different results under different assumptions and conditions. The
Company believes that critical accounting policies are limited to those
described below. For a detailed discussion on the application of this and other
accounting policies see Note 2 to the Company's consolidated financial
statements included in Form 10-KSB for the year ended February 29, 2008.


                                       10
<PAGE>

Accounting for Income Taxes

As part of the process of preparing the Company's consolidated financial
statements, the Company is required to estimate its income taxes. Management
judgment is required in determining the provision on its deferred tax asset. The
Company reduced the valuation reserve for the deferred tax asset resulting from
the net operating losses carried forward due to the Company having demonstrated
consistent profitable operations. In the event that actual results differ from
these estimates, the Company may need to again adjust such valuation reserve.

Stock-Based Compensation

Prior to fiscal year 2007, the Company accounted for employee stock options
under the fair value provisions of SFAS No. 123. On March 1, 2006, the Company
adopted SFAS No. 123R, "Share Based Payments." SFAS No. 123R requires companies
to expense the value of employee stock options and similar awards for periods
beginning after December 15, 2005, and applies to all outstanding and vested
stock-based awards at a company's adoption date. Results from prior periods have
not been restated in the Company's historical financial statements.

Impact of New Accounting Pronouncements

None.


                                       11
<PAGE>

                              SONO-TEK CORPORATION
                             CONTROLS AND PROCEDURES

The Company has established and maintains "disclosure controls and procedures"
(as those terms are defined in Rules 13a -15(e) and 15d-15(e) under the
Securities and Exchange Act of 1934 (the "Exchange Act'). Christopher L. Coccio,
Chief Executive Officer (principal executive) and Stephen J. Bagley, Chief
Financial Officer (principal accounting officer) of the Company, have evaluated
the Company's disclosure controls and procedures as of May 31, 2008. Based on
this evaluation, they have concluded that the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is (1)
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and (2) accumulated and
communicated to Management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding timely disclosure.

In addition, there were no changes in the Company's internal controls over
financial reporting during the first fiscal quarter of 2009 that have materially
affected, or are reasonably likely to materially affect, internal controls over
financial reporting.


                                       12
<PAGE>

                           PART II - OTHER INFORMATION

   Item 1.  Legal Proceedings
            None

   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
            None

   Item 3.  Defaults Upon Senior Securities
            None

   Item 4.  Submission of Matters to a Vote of Security Holders
            None

   Item 5.  Other Information
            None

   Item 6.  Exhibits and Reports
            (a)   Exhibits

            10.1 Executive Agreement between Sono-Tek Corporation and R. Stephen
            Harshbarger dated March 5, 2008.

            31.1 - 31.2 - Rule 13a - 14(a)/15d - 14(a) Certification

            32.1 - 32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as
            adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.


                                       13
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: July 11, 2008

                                                 SONO-TEK CORPORATION
                                                      (Registrant)



                                            By: /s/ Christopher L. Coccio
                                                -----------------------------
                                                Christopher L. Coccio
                                                Chief Executive Officer


                                            By: /s/ Stephen J. Bagley
                                                -----------------------------
                                                Stephen J. Bagley
                                                Chief Financial Officer


                                       14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex10-1.txt
<TEXT>

                                                                    Exhibit 10.1


            EXECUTIVE AGREEMENT between Sono-Tek Corporation, a New York
corporation (the "Company") and R. Stephen Harshbarger ("Executive"), dated as
of the Fifth day of March, 2008.

                              W I T N E S S E T H:
                               - - - - - - - - - -

            WHEREAS, Executive is an employee of the Company and is an integral
part of its management; and

            WHEREAS, it is in the best interest of the Company that Executive
continue in the service of the Company without the benefits which would accrue
to Executive pursuant to an employment agreement; and

            WHEREAS, the Company wishes to assure itself of continuity of
management during the critical period of any actual or threatened change in
control of the Company.

            NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:

      1.    Employment Status.

            In consideration of the benefits provided to Executive pursuant to
this Executive Agreement, Executive hereby agrees to continue to be employed by
the Company as an employee-at-will without the benefit of an employment
agreement. Nothing expressed or implied herein shall create any right or duty
(on the part of the Company or Executive) to have Executive remain in the
employment of the Company, each reserving all rights to terminate the employment
relationship at any time, with or without "Cause" (as hereinafter defined).

      2.    Term.

            The term of this Executive Agreement shall commence on the date
hereof and shall terminate on the earlier to occur of (i) termination of
Executive's employment for whatever reason, unless a Change of Control (as
hereinafter defined) shall have occurred prior to such termination or (ii)
twelve months following written notice of termination of this Executive
Agreement given by the Company or Executive.

      3.    Payment Subsequent to Change of Control.

            (a) Except as may otherwise be required in accordance with Section 8
hereof, in the event that a Change of Control of the Company shall occur during
the time Executive is employed by the Company, there shall be payable to
Executive upon the termination of Executive's employment without Cause or
Executive's Resignation for Good Reason (as hereinafter defined) within 18
months following such Change of Control a lump sum (net of any required tax or
other withholding) equal to one year of Executive's annual base and bonus
compensation paid by the Company for the previous calendar year (or such lesser
period as Executive shall have been employed by the Company) immediately
<PAGE>

preceding the Change of Control as reflected in Executive's Forms W-2 in respect
of such year. Payment made in accordance with this Section 3(a) shall represent
full satisfaction of all of the obligations of the Company under this Executive
Agreement and concurrent with receipt of such payment Executive shall execute a
document satisfactory to the Company to that effect.

            (b) For the purpose of this Executive Agreement, a "Change of
Control" of the Company shall mean any of the following:

            (i)   The sale to a "Non-Affiliate" (as defined below) of all or
                  substantially all of the assets of the Company;

            (ii)  The merger of the Company with or into a Non-Affiliate where
                  immediately following such transaction 50% or more of the
                  outstanding voting stock of the remaining entity is not owned
                  by persons who were shareholders of the Company immediately
                  prior to such transaction;

            (iii) The acquisition by any person who is not on the date hereof an
                  Affiliate or Major Shareholder (as such terms are defined
                  below) of 50% or more of the issued and outstanding stock of
                  the Company; or

            (iv)  The Board of Directors of the Company shall cease to be a
                  "Qualified Board" (as defined below).

            (c)   For purposes of this Executive Agreement:

            (i)   Persons or entities shall be "Affiliates" if one controls the
                  other or if they are under common control. "Control" shall
                  mean the ownership of 50% or more of the issued and
                  outstanding stock of any such entity.

            (ii)  "Major Shareholder" shall mean any person or entity who
                  directly or indirectly currently owns as of the date of this
                  Agreement 25% of the issued and outstanding stock of the
                  Company.

            (iii) "Qualified Board" shall mean the Board of Directors of the
                  Company which is comprised of no fewer than five persons at
                  least a majority of whose members are currently directors of
                  the Company or shall have been elected or nominated to the
                  Board by a "Qualified Board".

            (iv)  "Cause" shall mean: (1) proven or admitted (A) embezzlement,
                  or (B) material dishonest misuse of the Company funds or
                  assets; (2) an admitted or proven act constituting a felony or
                  misdemeanor (other than minor offenses such as traffic
                  violations) or conviction for such act; (3) continued conduct


                                       -2-
<PAGE>

                  materially adverse to the interests of the Company which does
                  not cease within thirty (30) days of written notice from the
                  Board of Directors of the Company; (4) repeated material
                  failure by Executive, after written warning by the Board of
                  Directors of the Company, to perform the duties of his or her
                  employment (including without limitation material failure to
                  follow or comply with the reasonable and lawful written
                  directives of the Board of Directors of the Company); or (5)
                  breach of any statutory or common law fiduciary duty of
                  loyalty to the Company which is not cured within thirty (30)
                  days of written notice from the Board of Directors of the
                  Company.

            (d) For purposes of this Executive Agreement "Resignation for Good
Reason" shall be deemed to have occurred if the Executive shall resign from all
of his or her positions as employee, officer, director of the Company, and its
Affiliates within 60 days after the occurrence of any of the following events:

            (i)   If the Executive is an officer of the Company, the Executive
                  is removed from that post except for the purposes of assuming
                  another post in the Company which other post the Executive
                  accepts.

            (ii)  The imposition on the Executive of a requirement to relocate
                  the site of his or her employment by the Company to a place
                  more than 50 miles from the site of his or her present
                  employment.

            (iii) A reduction in the Executive's rate of compensation from the
                  Company, which reduction continues after the Executive has
                  protested in writing to the Chief Executive Officer of the
                  Company referring to this Executive Agreement.

            (iv)  A substantial negative change in the duties, responsibilities
                  or supervisory authority of the Executive which change
                  persists for a period of at least 60 days after written
                  protest by the Executive to the Chief Executive Officer of the
                  Company referring to this Executive Agreement.

      4.    Notices.

            All notices, requests, demands and other communications provided for
by this Executive Agreement shall be in writing and shall be sufficiently given
if and when mailed in the continental United States by registered or certified
mail or personally delivered to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:

To the Company:                           Sono-Tek Corporation
                                          2012 Route 9W
                                          Milton, NY 12547


                                       -3-
<PAGE>

To the Executive:                         R. Stephen Harshbarger
                                          13 Banks Hill
                                          Pawling, NY 12564

      5.    Agreement for Benefit of Executive.

            This Executive Agreement shall be binding upon and shall inure to
the benefit of the Executive, the Executive's heirs and legal representative,
and the Company and its successors.

      6.    Amendment or Modification; Waiver.

            No provision of this Executive Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Boards of Director of the Company or any authorized committees of the Boards of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized. Except as otherwise
specifically provided in this Executive Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Executive Agreement to be performed by such other party shall be deemed a
waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.

      7.    Governing Law.

            This Agreement shall be governed by and interpreted and construed in
accordance with the internal laws of the State of New York (without reference to
principles of conflicts or choice of law).

      8.    Section 409A.

            Notwithstanding anything to the contrary in this Agreement, if the
Company determines (a) that on the date the Executive's employment with the
Company terminates or at such other time that the Company determines to be
relevant, the Executive is a "specified employee" (as such term is defined under
Section 409A of the Internal Revenue Code) of the Company and (b) that any
payments to be provided to the Executive pursuant to this Agreement are or may
become subject to the additional tax under Section 409A(a)(1)(B) of the Code or
any other taxes or penalties imposed under Section 409A of the Code ("Section
409A Taxes") if provided at the time otherwise required under this Agreement,
then such payments shall be delayed until the date (the " Deferred Payment
Date") that is six months after the date of the Executive's "separation from
service" (as such term is defined under Section 409A of the Code) with the
Company, or such shorter period that, as determined by the Company, is
sufficient to avoid the imposition of Section 409A Taxes; it being understood
that any payments so delayed shall become payable in the aggregate on the
Deferred Payment Date. It is the intent of the parties that the provisions of
this Agreement comply with Section 409A of the Code and related regulations and
Department of the Treasury pronouncements. Accordingly, notwithstanding any
provision in this Agreement to the contrary, this Agreement will be interpreted,
applied and to the minimum extent necessary, unilaterally amended by the Company
in its sole discretion, without the consent of Executive, as the Company deems


                                       -4-
<PAGE>

appropriate for the Agreement to satisfy the requirements of Section 409A and to
avoid the imposition of Section 409A Taxes. Notwithstanding the foregoing, the
Company shall not be liable for any taxes, penalties, interest or other costs
that may arise under Section 409A or otherwise.

            IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement as of the day and year first above written.


                                            By /s/ Christopher L. Coccio
                                               --------------------------
                                               Christopher L. Coccio
                                               Chief Executive Officer


                                            /s/ R. Stephen Harshbarger
                                            -----------------------------
                                            R. Stephen Harshbarger


                                       -5-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>ex31-1.txt
<TEXT>
                                                                    Exhibit 31.1

                      RULE 13a-14/15d - 14(a) CERTIFICATION

I, Christopher L. Coccio, Chief Executive Officer, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Sono-Tek
            Corporation;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the issuer as of, and for the periods presented in
            this quarterly report;

      4.    Sono-Tek Corporation's other certifying officer and I are
            responsible for establishing and maintaining disclosure controls and
            procedures (as defined in Exchange Act Rules 13a-15(e) and 15d -
            15(e) and internal control over financial reporting (as defined in
            Exchange Act Rules 13a-15(f) and 15d-15(f) for the issuer and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the issuer, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

            c)    Evaluated the effectiveness of the issuer's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of disclosure controls and
                  procedures, as of the end of the period covered by this report
                  based on such evaluation; and

            d)    Disclosed in this report any change in the issuer's internal
                  control over financial reporting that occurred during the
                  issuer's most recent fiscal quarter that has materially
                  affected, or is reasonably likely to materially affect, the
                  issuer's internal control over financial reporting; and

      5.    Sono-Tek Corporation's other certifying officer and I have
            disclosed, based on our most recent evaluation of internal control
            over financial reporting, to the issuer's auditors and the audit
            committee of the issuer's board of directors:

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  issuer's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the issuer's
                  internal controls over financial reporting.

Date: July 11, 2008

/s/ Christopher L. Coccio
- -------------------------
Christopher L. Coccio
Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>ex31-2.txt
<TEXT>
                                                                    Exhibit 31.2

                      RULE 13a-14/15d - 14(a) CERTIFICATION

I, Stephen J. Bagley, Chief Financial Officer, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Sono-Tek
            Corporation;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the issuer as of, and for the periods presented in
            this quarterly report;

      4.    Sono-Tek Corporation's other certifying officer and I are
            responsible for establishing and maintaining disclosure controls and
            procedures (as defined in Exchange Act Rules 13a-15(e) and 15d -
            15(e) and internal control over financial reporting (as defined in
            Exchange Act Rules 13a-15(f) and 15d-15(f) for the issuer and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the issuer, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

            c)    Evaluated the effectiveness of the issuer's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of disclosure controls and
                  procedures, as of the end of the period covered by this report
                  based on such evaluation; and

            d)    Disclosed in this report any change in the issuer's internal
                  control over financial reporting that occurred during the
                  issuer's most recent fiscal quarter that has materially
                  affected, or is reasonably likely to materially affect, the
                  issuer's internal control over financial reporting; and

      5.    Sono-Tek Corporation's other certifying officer and I have
            disclosed, based on our most recent evaluation of internal control
            over financial reporting, to the issuer's auditors and the audit
            committee of the issuer's board of directors:

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  issuer's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the issuer's
                  internal controls over financial reporting.

Date: July 11, 2008

/s/ Stephen J. Bagley
- ---------------------
Stephen J. Bagley
Chief Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>ex32-1.txt
<TEXT>

                                                                    Exhibit 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sono-Tek Corporation (the "Company")
on Form 10Q for the period ended May 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"). I, Christopher L. Coccio,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section
1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
that:

      (1)   The Report fully complies with the requirements of section 13(a) and
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
            material respects, the financial condition and result of operations
            of the Company.

Date: July 11, 2008

/s/ Christopher L. Coccio
- -------------------------
Christopher L. Coccio
Chief Executive Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>ex32-2.txt
<TEXT>

                                                                    Exhibit 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sono-Tek Corporation (the "Company")
on Form 10Q for the period ended May 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"). I, Stephen J. Bagley,
Chief Financial Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

      (1)   The Report fully complies with the requirements of section 13(a) and
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
            material respects, the financial condition and result of operations
            of the Company.

Date: July 11, 2008

/s/ Stephen J. Bagley
- ---------------------
Stephen J. Bagley
Chief Financial Officer

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
