Net income for the year was $11,000, compared to $544,000 for the previous fiscal year. The decrease in net income is mainly a result of a decision to continue efforts to diversify our business during the slowdown. According to Dr. Christopher L. Coccio, Sono-Tek's Chairman and CEO, "The reduction in current income is a direct result of investments in product and market development, and we expect to create future growth opportunities for the Company over the next year or two with these investments. We are focused on creating new business in the alternative energy market for fuel cell and solar cell coatings, medical device coatings, glass coatings, textile coatings, and food packaging coatings. We envision our future to be based on the ability of our ultrasonic spray systems to reduce the waste of energy, chemicals, water, and associated costs when compared to competitive nozzle systems. The fourth quarter did show a minor loss as we continue to invest in our business development efforts. We might see a similar loss in the first quarter of the current fiscal year, although we anticipate that our first quarter revenues will show an improvement when compared to the prior fiscal year."

Our working capital decreased $442,000 to $3,790,000 at February 29, 2008 versus $4,232,000 at the end of the previous fiscal year. The decrease in working capital is primarily due to the purchase of equipment and leasehold improvements and the reclassification of $200,000 of our current deferred tax asset to long term. Stockholders' equity increased from $4,851,000 to $4,898,000 at February 29, 2008. The Company has a total debt of $52,000, resulting in an excellent debt to equity ratio. Some of our cash balance was used in the fourth quarter for our development program, but this use was offset by customer deposits for equipment orders and other factors. We expect to use cash in the first quarter of the current year, although it is our goal to replenish our cash balance as our new business increases revenues