Forty-five minutes. At the five-minute mark, we'll have a card in the back that says five minutes.
Okay.
Okay? Make sure you speak into the microphone because they're webcasting this.
Okay. Gotcha. Dr. Coccio, you're gonna speak first, and I'll speak right after.
Introduce you, and then.
Yeah. He's gonna text me to Dr. Coccio. We'll speak first, first, and then I'll speak to you.
Dr. Coccio.
To a phone call.
Coccio?
This is the forward, backwards, I'm assuming, on the slide show?
Yes.
Perfect. I think these look there, and the words backwards are there, Chris.
Looks like we're ready.
Excuse me?
You can start.
Good afternoon. The next MicroCap presentation is Sono-Tek. We have Dr. Coccio and then Steve Harshbarger.
Thank you, and good morning. Everybody here okay? Yeah. I am Chris Coccio, and I am the Executive Chairman of Sono-Tek, and Steve Harshbarger here is our President and CEO, and we're very happy to be here today to tell you about our company. What you see on this cover slide is a semiconductor wafer and some of our equipment that we sell to semiconductor companies to put down very thin microscopic coating using ultrasonic atomization technology. We'll talk a little bit about that, but not too much, just enough so you understand what we're doing. The next slide is simply the safe harbor statement. I'm gonna skip over that and introduce you to our team. We are located in the Mid-Hudson Valley of New York. It's a very localized company in the sense that people are from our area. They work there.
These people have been together for 20 years plus. Steve and I have worked together for 24, 25 years. We have a large international footprint as well. 40% - 50% of our business is overseas, and it's been that way for years. We are one of those unusual exporters of technology. The company was actually founded in 1975 by the inventor of what we'll describe in a moment as ultrasonic coating technology. It took a while for it to find its footing. You know, when you're ahead of the curve, it takes a while. What's happened is the technology world has moved into our space. We now have four worldwide development labs. We've got 39 international distributors, and we have customers in over 50 countries. You can see we have a number of diverse markets.
I will talk a little bit about it, and Steve will talk further when he's here. One important note is that we have a lot of cash on hand and no debt. I've heard one or two companies this morning say the same thing, and it's unusual, really, in small- cap companies. The ultrasonic nozzle, which is the heart of our system, and which was invented in 1975, there were patents. There's intellectual property. It doesn't just operate by itself. It needs firmware, software, electronics, and it has intellectual property protection beyond patents. We have good protection. It puts down a very fine thin microscopic film, and we try to give a little example of what it looks like on the L of a coin. You can see what, you know, one little spot looks like.
We, of course, cover the entire surfaces of objects. That's some of our equipment down below that we sell. Thin films are in. This has happened in the past 20 years, 10, 20 years. It's only accelerating as technology becomes more precise. That slice is a side slice of a solar coating, of a solar, I'm sorry, a solar cell, a perovskite cell. You can see it's a half a micron thick, and it's very uniform, and that's critical. Now, most of us are not familiar with the metric system, but a human hair is about 100 microns. So it's a very thin, precise film. That's the main advantage of this application for things like solar cells, fuel cells, cardiac stents, semiconductor wafers.
In the field, we're going after a number of disruptive markets for the past three to five years. Microelectronics, handheld devices, for example, cell phones. We work with a variety of companies because they all need coatings either internally or maybe to prevent fingerprinting or, you know, a variety of things of that nature. As far as medical devices, implantables, I mean, people who have had either a heart attack or a suspected heart attack would have a cardiac stent placed in. Starting 15 years or 20 years ago, the medical industry moved towards coating them with an anti-restenosis coating to prevent clogging afterwards or scarring afterwards. Our company was at the forefront of that. We dominate that coating market for medical companies. It's gone beyond that now.
There are other, many other applications, both in the body and also for things like diagnostic testing. We did, we sold a fair amount of equipment for COVID testing back during that time. Alternative energy, it's become a significant part of our business. Around the world, there's still great interest in finding ways to reduce the, you know, the carbon footprint and other effects of climate. It isn't just about the past or the present. We're looking at a lot of different areas with our customers. They come into our laboratories, and then they work with us, and we try to help them find ways to succeed in the applications they're interested in. Micro-LEDs, if you have a new car, you've got one of those big screens that, that's been coated with some of our equipment.
Smartwatches, high-tech glasses, AI, or I'm sorry, augmented and virtual reality. Another area that's very important is lithium, lithium battery protection. In the manufacturing process, they're sort of wrapped with a material to prevent shorting. A very high percentage of those batteries fail in the manufacturing process. Thank goodness they fail there because if they get out and they fail, you know, it can be a major fire hazard, and they're very hard to put out. We're working with companies that are trying to put down a spray coating using our technology to avoid the problems that come with folding something around a cell. Another area that I think is very interesting is food containers. There's a movement to get away from plastics because of the microplastics in the food.
Companies are looking at, let's say, cardboard containers, but you can't just put liquids in a cardboard container long-term. You need some kind of a food safety coating inside. We're working with companies looking at putting down that type of a barrier coating. Financially, we've had a long-term growth track. There are a little—there are some dips. One, the first dip there was COVID. The second dip was basically the supply chain impact of COVID. Long-term, it's been a nice growth trend and consistent gross margins in the high 40s, ever, you know, for long-term. We're profitable. I don't remember a time in 20 years that we have not been profitable. Sometimes more, sometimes less. It just depends on the market circumstances and our internal decisions on how much money to put into R&D and marketing.
I'm gonna turn it over to Steve now. He'll give you more granular detail. Thank you.
Thank you, Dr. Coccio. Good morning, everybody. Again, my name is Steve Harshbarger, and I'm the President and CEO of Sono-Tek. Let me first start by saying, being here at 10:30 A.M., I know is not very early by normal standards, but when in Vegas after a late night, I do recognize it's an ambitious commitment. I appreciate you all joining us here in person. Let's dive right into why I think Sono-Tek's worth a spot on your radar. Now, all the little circles you see on this slide are showing you pictures of just a sampling of the variety of disruptive high-tech coating applications that Sono-Tek participates in. Our investors commonly want to understand specifically what changed over the past decade to accelerate us into so many new growth and disruptive applications.
It was about a decade ago we started to see a significant shift in the rate of which manufacturers were applying functional and/or protective thin film nano coatings onto products that historically never had coating on them. You know, protective and functional thin films, you know, they're now on so many products in our daily lives. You know, they're on our food products, they're on our textiles, they're on the glasses you might be wearing, they're on your phone, they're on your medical devices. You know, inclusive of thousands of different functional nano- thin films that are on our electronic devices and sensors. An item like a car, for example, might have hundreds of thin- film coating processes that go into the manufacturing of the car, to make up the parts for that car.
With all of these opportunities, it's been a very important part of Sono-Tek's strategy to focus on growth-oriented sectors. They're often developing disruptive technology products where we try to get in early on the ground floor in the development stages. Recognizing the significant number of opportunities in this rapidly expanding addressable market, Sono-Tek implemented three very important strategic initiatives leading us down clear pathways for growth. The first of these was to provide full system solutions. Now, historically, Sono-Tek primarily catered to the R&D sector with very basic ultrasonic nozzle setups. And then about a decade ago, we began a very important strategic shift to provide our customers with much more than these basic ultrasonic nozzle setups.
We became focused to provide our customers with all the know-how, and that included all the hardware, all the software, and very importantly, all the process expertise for their specific applications within their specific marketplaces. This shift then propelled Sono-Tek efforts to develop fully integrated large production lines, which then increased the value to our customer and enabled us then to justify higher ASPs or higher, higher average selling prices across our product offering. The second significant pathway we established to accelerate our growth was the rapid expansion of our application engineering capabilities and our laboratory facilities, both in our New York-based lab as well as our overseas labs, which are located at our international distributor sites. Our application engineering team, they really guide our customers in several ways. They'll help to define the proper liquid chemistries that the customer may be using.
They'll help to define the proper product handling needs. They'll help to define and integrate the machine that may sit before and after the ultrasonic coating process. They'll even often go out to the end customer manufacturing site to work with that customer to develop their full coating processes. This full system solutions approach really differentiates Sono-Tek from our competitors, and it builds a very strong relationship with the customer. We're much more than a vendor. We're really like a partner that's attached at the hip with the customer. Now, the third, and perhaps the most significant pathway we established to accelerate our growth was the enhancement of our internal capabilities to develop and manufacture systems that were scalable all the way from R&D to very high volume production.
Now, the pictures on the right-hand side of this slide show you the transformative journey we've gone through over recent years. The top image here shows you one of our R&D systems. The middle image shows you one of our pilot line systems. The bottom picture here shows you one of our high-volume production systems. Interestingly, it's not uncommon for a single customer to buy all three of these machines. They may start out in phase one by buying one of our R&D machines to prove coating feasibility on a machine that might range in price from $50,000 to, say, $100,000. Upon successfully proving coating feasibility, they move on to phase two and buy a pilot line machine. These machines are for low volume production. It may.
Slideshow, I think it. There you go from beginning. Are you right there? Perfect. All right.
You want a bigger or?
Yeah, please just look at that.
How's that? Let me just push that one.
Yeah, I'll grab it and scrub that up a little bit.
Perfect. All right.
You're gonna have 25 minutes. That's a five-minute mark. We'll have a card in the back that says five minutes.
Okay.
Okay. Make sure to speak into the microphone because they're webcasting this.
Okay. Gotcha. Dr. Coccio, you're gonna speak first, and I'll speak right after.
I'll introduce you, and then.
Yeah. Just gotta text me to Dr. Coccio. We'll speak first, first, and then I'll speak to you about.
Coccio.
This is the forward backwards, I'm assuming, on the slideshow?
Yes.
Perfect. I think these with there and forwards backwards is there, Chris.
Looks like we're ready.
Excuse me?
You gonna start.
Good afternoon. The next micro-cap presentation is Sono-Tek. We have Dr. Coccio and then Steve Harshbarger.
Thank you and good morning. Everybody here okay? Yeah. I am Chris Coccio, and I am the Executive Chairman of Sono-Tek, and Steve Harshbarger here is our President and CEO. We are very happy to be here today to tell you about our company. What you see on this cover slide is a semiconductor wafer and some of our equipment that we sell to semiconductor companies to put down very thin microscopic coating using ultrasonic atomization technology. We'll talk a little bit about that, but not too much, just enough so you understand what we're doing. The next slide is simply the safe harbor statement. I'm gonna skip over that and introduce you to our team. We are located in the Mid-Hudson Valley of New York. It's a very localized company in the sense that people are from our area. They work there.
These people have been together for 20 years plus. Steve and I have worked together for 24, 25 years. We have a large international footprint as well. 40% - 50% of our business is overseas, and it's been that way for years. We are one of those unusual exporters of technology. The company was actually founded in 1975 by the inventor of what we'll describe in a moment as ultrasonic coating technology. It took a while for it to find its footing. You know, when you're ahead of the curve, it takes a while. What's happened is the technology world has moved into our space. We now have four worldwide development labs. We've got 39 international distributors, and we have customers in over 50 countries. You can see we have a number of diverse markets.
I will talk a little bit about it, and Steve will talk further when he's here. One important note is that we have a lot of cash on hand and no debt. I've heard one or two companies this morning say the same thing. It's unusual, really, in small cap companies. The ultrasonic nozzle, which is the heart of our system, which was invented in 1975, there were patents. There's intellectual property, but it doesn't just operate by itself. It needs firmware, software, electronics, and it has intellectual property protection beyond patents. We have good protection. It puts down a very fine thin microscopic film. We try to give a little example of what it looks like on the L of a coin. You can see what, you know, one little spot looks like.
We, of course, cover the entire surfaces of objects. That's some of our equipment down below that we sell. Thin films are in. This has happened in the past 20 years, 10, 20 years. It's only accelerating as technology becomes more precise. That slice is a side slice of a solar coating, of a solar, I'm sorry, a solar cell, a perovskite cell. You can see it's a half a micron thick, and it's very uniform. That's critical. Now, most of us are not familiar with the metric system, but a human hair is about 100 microns. So it's a very thin, precise film. That's the main advantage of this application for things like solar cells, fuel cells, cardiac stents, semiconductor wafers.
In the field, we're going after a number of disruptive markets for the past three to five years. Microelectronics, handheld devices, for example, cell phones. We work with a variety of companies because they all need coatings either internally or maybe to prevent fingerprinting or, you know, a variety of things of that nature. As far as medical devices, implantables, I mean, people who have had either a heart attack or a suspected heart attack would have a cardiac stent placed in. Starting 15 or 20 years ago, the medical industry moved towards coating them with an anti-restenosis coating to prevent clogging afterwards or scarring afterwards. Our company was at the forefront of that. We dominate that coating market for medical companies, but it's gone beyond that now.
There are many other applications, both in the body and also for things like diagnostic testing. We did, we sold a fair amount of equipment for COVID testing back during that time. Alternative energy, it's become a significant part of our business. Around the world, there's still great interest in finding ways to reduce the, you know, the carbon footprint and other effects of climate. It isn't just about the past or the present. We're looking at a lot of different areas with our customers. They come into our laboratories, and then they work with us, and we try to help them find ways to succeed in the applications they're interested in. Micro-LEDs, if you have a new car, you've got one of those big screens that, and that's been coated with some of our equipment.
Smartwatches, high-tech glasses, AI, or I'm sorry, augmented and virtual reality. Another area that's very important is lithium battery protection. In the manufacturing process, they're sort of wrapped with a material to prevent shorting. A very high percentage of those batteries fail in the manufacturing process. Thank goodness they fail there because if they get out and they fail, you know, it can be a major fire hazard, and they're very hard to put out. We're working with companies that are trying to put down a spray coating using our technology to avoid the problems that come with folding something around a cell. Another area that I think is very interesting is food containers. There's a motion, there's a movement to get away from plastics because of the microplastics in the food.
Companies are looking at, let's say, cardboard containers, but you can't just put liquids in a cardboard container long- term. You need some kind of a food safety coating inside. We're working with companies looking at putting down that type of a barrier coating. Financially, we've had a long-term growth track. There are a little, there are some dips. One, the first dip there was COVID. The second dip was basically the supply chain impact of COVID. Long-term, it's been a nice growth trend and a consistent gross margins in the high forties, ever, you know, for long-term. We're profitable. I don't remember a time in 20 years that we have not been profitable. Sometimes more, sometimes less. It just depends on the market circumstances and our internal decisions on how much money to put into R&D and marketing.
I'm gonna turn it over to Steve now. He'll give you more granular detail. Thank you.
Thank you, Dr. Coccio. Good morning, everybody. Again, my name is Steve Harshbarger, and I'm the President and CEO of Sono-Tek. Let me first start by saying, being here at 10:30 A.M., I know is not very early by normal standards, but when in Vegas after a late night, I do recognize it's an ambitious commitment. I appreciate you all joining us here in person. Let's dive right into why I think Sono-Tek's worth a spot on your radar. Now, all the little circles you see on this slide are showing you pictures of just a sampling of the variety of disruptive high-tech coating applications that Sono-Tek participates in. Our investors commonly want to understand specifically what changed over the past decade to accelerate us into so many new growth and disruptive applications.
It was about a decade ago we started to see a significant shift in the rate of which manufacturers were applying functional and/or protective thin film nano coatings onto products that historically never had coating on them. You know, protective and functional thin films, you know, they're now on so many products in our daily lives. You know, they're on our food products, they're on our textiles, they're on the glasses you might be wearing, they're on your phone, they're on your medical devices, you know, inclusive of thousands of different functional nano thin films that are on our electronic devices and sensors. An item like a car, for example, might have hundreds of thin film coating processes that go into the manufacturing of the car, to make up those parts for that car.
With all of these opportunities, it's been a very important part of Sono-Tek's strategy to focus on growth-oriented sectors. They're often developing disruptive technology products where we try to get in early on the ground floor in the development stages. Recognizing the significant number of opportunities in this rapidly expanding addressable market, Sono-Tek implemented three very important strategic initiatives leading us down clear pathways for growth. The first of these was to provide full system solutions. Now, historically, Sono-Tek primarily catered to the R&D sector with very basic ultrasonic nozzle setups. And then about a decade ago, we began a very important strategic shift to provide our customers with much more than these basic ultrasonic nozzle setups.
We became focused to provide our customers with all the know-how, and that included all the hardware, all the software, and very importantly, all the process expertise for their specific applications within their specific marketplaces. This shift then propelled Sono-Tek efforts to develop fully integrated large production lines, which then increased the value to our customer and enabled us then to justify higher ASPs or have higher average selling prices across our product offering. The second significant pathway we established to accelerate our growth was the rapid expansion of our application engineering capabilities and our laboratory facilities, both in our New York-based labs as well as our overseas labs, which are located at our international distributor sites. Our application engineering team, they really guide our customers in several ways. They'll help to define the proper liquid chemistries that the customer may be using.
They'll help to define the proper product handling needs. They'll help to define and integrate the machine that may sit before and after the ultrasonic coating process. They'll even often go out to the end customer manufacturing site to work with that customer to develop their full coating processes. This full system solutions approach really differentiates Sono-Tek from our competitors, and it builds a very strong relationship with the customer. We're much more than a vendor. We're really like a partner that's attached at the hip with the customer. Now, the third, and perhaps the most significant pathway we established to accelerate our growth was the enhancement of our internal capabilities to develop and manufacture systems that were scalable all the way from R&D.
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