SONO TEK CORP Revenue Disclosure
NOTE 3: REVENUE RECOGNITION
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, in accordance with 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 transaction 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 and revenue is recognized.
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.
At February 28, 2025, the Company had received $2,413,000 in customer deposits, representing contract liabilities, and had issued Letters of Credit in the amount of $106,000 to secure these customer deposits. At February 28, 2025, the Company was utilizing $106,000 of its available credit line to collateralize these letters of credit.
At February 29, 2024, the Company had received $3,420,000 in customer deposits, representing contract liabilities, and had issued Letters of Credit in the amount of $72,000 to secure these customer deposits. At February 29, 2024, the Company was utilizing $72,000 of its available credit line to collateralize these letters of credit.
The Company’s sales revenue, by product line is as follows:
| Twelve Months Ended | ||||||||||||
| February 28, | February 29, | |||||||||||
| 2025 | % of total | 2024 | % of total | |||||||||
| Fluxing Systems | $ | 467,000 | 2% | $ | 724,000 | 4% | ||||||
| Integrated Coating Systems | 3,703,000 | 18% | 2,889,000 | 14% | ||||||||
| Multi-Axis Coating Systems | 10,678,000 | 52% | 10,075,000 | 51% | ||||||||
| OEM Systems | 1,484,000 | 7% | 1,533,000 | 8% | ||||||||
| Other | 4,172,000 | 21% | 4,479,000 | 23% | ||||||||
| TOTAL | $ | 20,504,000 | $ | 19,700,000 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | May 28, 2025 | Showing above |
| 2024 | May 23, 2024 | |
| 2023 | May 25, 2023 | |
| 2022 | May 24, 2022 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.