================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------
FORM 10-QSB
---------------------
(Mark One)
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
OR
|_| Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-20753
SONICS & MATERIALS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 06-0854713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
53 Church Hill Road
Newtown, Connecticut 06470
(Address of principal executive offices)
Telephone Number (203) 270-4600
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 |_|
As of November 10, 1998, there were 3,520,100 shares of the Registrant's
Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes |_| No |X|
================================================================================
<PAGE>
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements *
Consolidated Condensed Balance Sheets -
September 30, 1998 and June 30, 1998..................3
Consolidated Condensed Statements of Income -
For the Three Months Ended
September 30, 1998 and 1997...........................4
Consolidated Condensed Statements of Cash Flows -
For the Three Months Ended
September 30, 1998 and 1997...........................5
Notes to Consolidated Financial Statements................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..........................8
Signatures..................................................................9
Index to Exhibits..........................................................10
Exhibit 27 - Financial Data Schedule.......................................11
* The Balance Sheet at June 30, 1998 has been taken from the audited financial
statements at that date. All other financial statements are unaudited.
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
As of
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
---- ----
(unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 276,238 $ 503,305
Short-term investments, including restricted funds
of $400,000 at June 30, 1998 and September 30, 1998 500,000 750,000
Accounts receivable, net of allowance for doubtful accounts
of $112,000 at June 30, 1998 and September 30, 1998 2,415,599 2,370,960
Inventories 4,565,200 4,457,841
Other current assets 120,366 129,287
------------ ------------
Total current assets 7,877,403 8,211,393
PROPERTY PLANT & EQUIPMENT - NET 4,358,082 4,409,920
GOODWILL - NET 1,040,672 1,054,547
RESTRICTED CASH FROM INDUSTRIAL REVENUE BOND 309,371 309,371
OTHER ASSETS 713,769 692,584
------------ ------------
$ 14,299,297 $ 14,677,815
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,465,101 $ 1,465,101
Current maturities of long-term debt 394,812 354,978
Accounts payable 813,063 1,004,351
Customer Advances 192,627 327,355
Commissions payable 167,735 123,676
Other accrued expenses and sundry liabilities 512,191 600,270
------------ ------------
Total current liabilities 3,545,529 3,875,731
LONG-TERM DEBT, net of current portion 4,221,863 4,345,700
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock - par value $.03 per share; authorized,
10,000,000 shares; issued and outstanding,
3,520,100 shares at September 30, 1998 and
June 30, 1998 105,603 105,603
Additional paid in capital 6,575,010 6,575,010
Accumulated deficit (148,708) (224,229)
------------ ------------
Total stockholders' equity 6,531,905 6,456,384
------------ ------------
$ 14,299,297 $ 14,677,815
============ ============
</TABLE>
* Taken from the audited financial statements at June 30, 1998.
The accompanying notes are an integral part of these statements.
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
September 30,
-------------
1998 1997
---- ----
<S> <C> <C>
Net sales $ 3,458,181 $ 3,116,804
Cost of sales 2,107,943 1,827,659
----------- -----------
Gross profit 1,350,238 1,289,145
Operating expenses
Selling expense 826,944 732,173
General and administrative 243,070 307,746
Research and development 112,141 150,502
----------- -----------
Total operating expenses 1,182,155 1,190,421
Other income (expense)
Interest expense (111,860) (34,578)
Interest income 25,578 --
Other (6,279) 7,282
----------- -----------
(92,561) (27,296)
Income before provision for income taxes 75,522 71,428
Provision for income taxes -- 15,915
----------- -----------
Net Income $ 75,522 $ 55,513
=========== ===========
BASIC INCOME PER SHARE
Net income per share $.02 $.02
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 3,520,100 3,571,078
=========== ===========
DILUTED INCOME PER SHARE
Net income per share $.02 $.01
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 3,532,916 3,770,147
=========== ===========
</TABLE>
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended September 30,
1998 1997
----------- -----------
Net cash used in operations $ (358,066) $ (276,845)
Net cash provided by (used in) investing activities 215,002 (1,382,249)
Net cash provided by (used in) financing activities (84,003) 1,630,847
----------- -----------
Net decrease in cash for the period (227,067) (28,246)
Cash and cash equivalents - at beginning of period 503,305 271,593
----------- -----------
Cash and cash equivalents - at end of period $ 276,238 $ 243,347
=========== ===========
Cash paid during the period for:
Interest $ 111,860 $ 32,000
=========== ===========
Income taxes $ -- $ --
=========== ===========
<PAGE>
Sonics & Materials, Inc.
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
NOTE 1: Basis of Presentation
The accompanying financial statements for the interim periods are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. These
financial statements should be read in conjunction with the financial statements
and notes thereto, together with the management's discussion and analysis,
contained on Form 10-KSB for the year ended June 30, 1998. The results of
operations for the three months ended September 30, 1998 are not necessarily
indicative of the results for the entire fiscal year ending June 30, 1999.
NOTE 2: Consolidation
The accompanying financial statements reflect the consolidated operations of
Sonics & Materials, Inc., and its wholly-owned subsidiary, Tooltex, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
NOTE 3: Net Income Per Share
Net income per share is based on the weighted average number of common and
common equivalent shares (warrants and options) outstanding during the period,
calculated using the treasury stock method.
The weighted average number of shares outstanding for the periods presented is
as follows:
<TABLE>
<CAPTION>
Basic and Diluted
Weighted Shares Outstanding
For the Three Months ended September 30,
----------------------------------------
1998 1997
---- ----
<S> <C> <C>
Basic shares 3,520,100 3,571,078
Dilution (warrants and options) 12,816 199,069
--------- ---------
Weighted average number of common and common
equivalent shares 3,532.916 3,770,147
========= =========
</TABLE>
<PAGE>
Any statements in this filing that are not statements of historical fact are
forward-looking statements that are subject to a number of important risks and
uncertainties that could cause actual results to differ materially.
Specifically, any forward looking statements in this filing related to the
Company's objective for future growth, profitability and financial returns are
subject to a number of risks and uncertainties, including, but not limited to,
risks related to a growing market demand for Sonics' existing and new products,
continued growth in sales and market share of Sonics and its USS products,
pricing, market acceptance of existing and new products, a fluctuation in the
sales product mix, general economic conditions, competitive products, and
product technology development. There can be no assurance that such objectives
will be achieved. The Company's objectives of future growth, profitability and
financial returns are also subject to the uncertainty of Vibra~Surge Corporation
being able to successfully market its ultrasonics surgical device. It is also
uncertain whether a patent will be granted for the Company's ultrasonic surgical
device, or whether any related patent litigation may hinder the Company's
ability to market the device. In addition, the Company's objectives of future
growth, profitability and financial returns are also subject to the uncertainty
of the growth and profitability of its wholly owned subsidiary, Tooltex. It is
also uncertain whether the Company's recent cost cutting measures will result in
increased profitability.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
The following information should be read in conjunction with the unaudited
financial statements included herein, see Item 1, and the financial information
contained in the Company's latest annual report on Form 10-KSB for the year
ended June 30, 1998.
RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared to the three months ended
September 30, 1997.
Net sales. Net sales for the quarter ended September 30, 1998 increased
$341,000 or 11.0% over the same period in fiscal 1998. This increase is
primarily the result of increased sales generated by the Company's Tooltex
subsidiary("Tooltex").
Cost of Sales. Cost of sales increased from 58.6% of net sales for the
three months ended September 30, 1997 to 61.0% of sales for the three months
ended September 30, 1998. This increase is primarily the result of increased
sales generated by Tooltex. Tooltex primarily manufactures custom machinery with
a lower profit margin than the machinery manufactured by Sonics.
Selling Expenses. Selling expenses for the first quarter of fiscal 1999
increased $95,000 or 12.9% over the same period in fiscal 1998. As a percentage
of net sales, selling expenses remained relatively constant, increasing from
23.5% to 23.9% over the same periods.
General and Administrative Expenses. General and administrative expenses
for the first quarter of fiscal 1999 decreased $65,000 or 21.0% over the first
quarter of fiscal 1998. As a percentage of net sales, these expenses decreased
to 7.0% from 9.9% over the same period in fiscal 1998. This decrease is
partially the result of an annual salary reduction of approximately $84,000
taken by the President in fiscal 1999.
Research and Development Expenses. Research and development expenses
decreased $38,000 or 25.5% over the same period in fiscal 1998. The increase was
primarily due to a reduction in labor costs and consulting expenses resulting
from the completion of the design of the Company's ultrasonic surgical device.
Interest Expense. Total interest expense increased by $77,000 or 223.5%.
This is due to increased debt carried by the Company in connection with the
purchase of real property in Newtown, Connecticut. The Company also had higher
average borrowings on its line of credit than in the first quarter of fiscal
1998.
Interest Income. Interest income for the first quarter of fiscal 1999
increased by $26,000 over the same period in fiscal 1998. This is the result of
the investment of the proceeds from the Industrial Revenue Bond issue. (See
Liquidity and Capital Resources.)
<PAGE>
Income Taxes Total income tax expense for the three months ended September
30, 1998 decreased $16,000 or 100.0% compared to the three months ended
September 30, 1997. The absence of a provision in the first quarter of fiscal
1999 is the result of a net operating loss carryforward from fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
Operations of the Company used approximately $358,000 during the three months
ended September 30, 1998 as a result of increased inventory and accounts
receivable accompanied by a reduction of accounts payable. During the first
quarter of fiscal 1999, the Company invested approximately $35,000 in new
capital equipment. The Company was able to raise the funds necessary for these
expenditures through the sale of certain short-term investments and the
financing activities described below.
On September 19, 1997, the Company entered into a new credit arrangement with a
bank and repaid loans outstanding with its previous lender. The agreement, as
amended on October 13, 1998, provides for four credit facilities, including (i)
a Bridge Loan in the original principal amount of $1,600,000, (ii) a Line of
Credit of up to $1,500,000, (iii) a term loan of $427,000, and (iv) a tax-exempt
industrial development loan in the aggregate amount of $3,810,000. The loans are
secured by substantially all of the assets of the Company, including a first
mortgage lien on the Company's manufacturing facility in Newtown, CT.
The Bridge Loan which carried interest at the Bank's base lending rate plus
one-half percent was repaid in full in December 1997.
The Company's principal outside source of working capital is a $1,500,000 bank
credit facility. The Line of Credit bears interest, as amended, at the Bank's
base lending rate (8.25% at September 30, 1998). Advances under the Line of
Credit are at the Bank's sole discretion. The entire principal balance of the
Line of Credit, which at September 30, 1998 was $1,465,101, will mature and be
due and payable upon the demand of the Bank. The borrowings under the Line of
Credit may be prepaid in whole or in part, without premium or penalty, at any
time.
The proceeds of the Term Loan refinanced a term loan with another bank with
interest and principal totaling $427,000. The outstanding principal amount of
the Term Loan at September 30, 1998 is $307,691, which bears interest, as
amended, at the Bank's base lending rate (8.25% at September 30, 1998). The
remaining balance is to be paid in monthly installments of $6,279, and the
entire remaining principal balance will mature and be due and payable on October
1, 2002. The terms and conditions under which Sonics may prepay all or any
portion of the Term Loan are the same as for the Line of Credit discussed above.
In December 1997, the Company issued Industrial Revenue Bonds through the
Connecticut Development Authority in the amount of $3,810,000. The bonds were
purchased by the Company's current lender pursuant to the credit agreement. The
proceeds were used in part to (i) pay in full the outstanding interest and
principal due on the Bridge Loan discussed above (ii) purchase and preparation
of the Company's new facilities, and (iii) to purchase new machinery and
equipment. The Company has used a total of $2,157,000 of the proceeds for these
purposes through September 30, 1998. Unapplied funds have been invested in
short-term securities and are to be used to repay interest and principal due
under the Industrial Revenue Bond. The Bonds, held by the Bank, mature in
November 2017, and bear interest at 75% of the Bank's base lending rate (6 3/16%
at September 30, 1998). The Company is to begin to redeem the principal in 228
equal monthly installments of $16,700 beginning January 1999. The bondholder,
however, may make written demand for redemption of all or a part of outstanding
principal and accrued interest commencing in December 2000. In connection with
the IRB loan, the Company maintains a compensating balance of $400,000 with the
Bank. These funds are invested in U. S. Treasury Bonds.
Tooltex's principal credit facility is a term note in the original principal
amount of $461,000, and is guaranteed by the Company. The loan is payable in
forty-eight monthly installments of $9,604 plus interest at the prime rate plus
1 1/2%. The loan is secured by a first lien on the assets of Tooltex and is
subject to various covenants.
<PAGE>
The Company has instituted cost cutting measures in the form of lay-offs
effective September 25, 1998. In total, the Company has reduced staffing by 11
people, or 9%, through these lay-offs and attrition, primarily in the
manufacturing and sales departments. Through these staffing cuts and other cost
saving measures to be put in place by Tooltex in the second quarter of fiscal
1999, the Company expects to save approximately $643,000 annually. In connection
with the cost cutting measures, the Company incurred a one-time charge of
approximately $48,000.
Management has initiated a company-wide program to prepare the Company's
computer systems and applications for the year 2000, as well as identify
critical third parties which the Company relies upon to operate its business to
assess their readiness for the year 2000. Management has determined that the
main computer systems that the Company relies upon to manage its operations are
year 2000 compliant. In addition, since the Company's products do not have an
internal date/clock, they are not affected by the year 2000 bug. The Company has
not had the need to incur any material costs in preparation for the year 2000.
Management cannot presently estimate any future costs of this program; however
such costs are not currently expected to be material to the Company's operations
or financial condition. The Company is currently contacting its major vendors to
assess their readiness for the year 2000. Presently, the Company is not aware of
any key vendors or customers, whose potential inability to achieve year 2000
compliance in time would have a material adverse effect to the operations of the
Company. There can be no assurance, however, that the systems of other companies
which the Company's systems rely upon will be timely converted, or that such
failure to convert by another company would not have a material adverse effect
on the Company's systems and results of operations.
In June 1997, SFAS 130, "Reporting Comprehensive Income," and SFAS 131,
"Disclosures About Segments of an Enterprise and Related Information," were
issued. SFAS 130 addresses standards for reporting and display of comprehensive
income and its components, and SFAS 131 requires disclosure of reportable
operating segments. In February 1998, SFAS 132, "Employers' Disclosures About
Pensions and Other Post-retirement Plans" was issued. SFAS 132 standardizes
pension disclosures. These statements are effective in fiscal 1999. The Company
will be reviewing these pronouncements to determine their applicability, if any.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Change in Securities.
(d) The Company completed its initial public offering of securities pursuant
to a registrations statement (No. 33 96414) that was declared effective on
February 26, 1996. As of November 1, 1998, the Company has applied
proceeds from the offering in the following approximate amounts to the
following categories.
Amount of Payments
------------------
Repayment of Indebtedness $1,670,000
Acquisition of other business 92,000
Working capital and corporate use 1,519,000
------------------
Total 3,281,000
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3(i) Certificate of Incorporation of the Registrant, as amended
(incorporated by reference from Exhibit 3.1 of Amendment No. 3 to
Registration Statement No. 33-96414).
3(ii) Amended By-laws of the Registrant (incorporated by reference from
Exhibit 3.2 of Registration Statement No. 33-96414).
10(i) Form of Employment Agreement between the Registrant and Robert S.
Soloff (incorporated by reference from Exhibit 10.1 of Registration
Statement No. 33-96414).
10(ii) 1995 Incentive Stock Option Plan and form of Stock Option Agreement
(incorporated by reference from Exhibit 10.3 of Registration
Statement No. 33-96414).
10(iii) Lease between Registrant and Aston Investment Associates (Aston, PA)
(incorporated by reference from Exhibit 10.5 of Registration
Statement No. 33-96414).
10(iv) Amended lease between Registrant and Robert Lenert (Naperville, IL)
(incorporated by reference from Exhibit 10.6 of Amendment No. 4 to
Registration Statement No. 33-96414).
10(v) Lease between Registrant and Janine Berger (Gland, Switzerland)
(incorporated by reference from Exhibit 10.7 of Registration
Statement No. 33-96414).
10(vi) Form of Sales Representation Agreement (incorporated by reference
from Exhibit 10.8 of Registration Statement No. 33-96414).
10(vii) Form of Sales Distribution Agreement (incorporated by reference from
Exhibit 10.9 of Registration Statement No. 33-96414).
10(viii) Agreement and Plan of Merger, dated as of July 25, 1997, among the
Registrant, SM Sub, Inc., Tooltex, Inc., and the persons designated
as the shareholders thereon (excluding schedules and annexes). A
list of omitted schedules and annexes appears on pages iv and v of
the Agreement and Plan of Merger. The Registrant hereby undertakes
to furnish supplementally a copy of any omitted schedule and annex
to the Commission upon request. (incorporated by reference from
Exhibit 2(a) of the Registrant's Form 8-K dated July 25, 1997).
10(ix) Agreement of Merger, dated as of July 25, 1997, among the
Registrant, SM Sub, Inc. and Tooltex, Inc. (incorporated by
reference from Exhibit 2(b) of the Registrant's Form 8-K dated July
25, 1997).
10(x) Credit Agreement, dated September 19, 1997, between Brown Brothers
Harriman & Co. and Registrant (incorporated by reference from
Exhibit 10 (xii) of the Registrant's Form 10KSB for the year ended
June 30, 1997).
10(xi) Term Loan Note of Registrant, dated September 19, 1997, payable to
the order of Brown Brothers Harriman & Co. in the original principal
amount of $427,000 (incorporated by reference from Exhibit 10 (xiii)
of the Registrants Form 10KSB for the year ended June 30, 1997).
10(xii) Line of Credit Note of Registrant, dated September 19, 1997, payable
to the order of Brown Brothers Harriman & Co. in the original
principal amount of $1,500,000 (incorporated by reference from
Exhibit 10 (xiv) of the Registrants Form 10KSB for the year ended
June 30, 1997).
10(xiii) Intentionally deleted
10(xiv) Open-End Mortgage Deed from Registrant to Brown Brothers Harriman &
Co. dated September 19, 1997 (incorporated by reference from Exhibit
10 (xvi) of the Registrants Form 10KSB for the year ended June 30,
1997).
10(xv) General Security Agreement from Registrant to Brown Brothers
Harriman & Co. dated September 19, 1997 (incorporated by reference
from Exhibit 10 (xvii) of the Registrants Form 10KSB for the year
ended June 30, 1997).
10(xvi) Loan Agreement between Connecticut Development Authority and Sonics
& Materials dated December 1, 1997 (incorporated by reference from
Exhibit 10 (xvi) of the Registrants Form 10KSB for the year ended
June 30, 1998).
10(xvii) Indenture of Trust between Connecticut Development Authority and
Sonics & Materials, Inc. dated December 1, 1997 (incorporated by
reference from Exhibit 10 (xvii) of the Registrants Form 10KSB for
the year ended June 30, 1998).
10(xviii) Tax Regulatory Agreement between Connecticut Development Authority
and Sonics & Materials, Inc., and Brown Brothers Harriman Trust
Company as Trustee dated December 12, 1997 (incorporated by
reference from Exhibit 10 (xvii) of the Registrants Form 10KSB for
the year ended June 30, 1998).
21 Subsidiaries of the Registrant (incorporated by reference from
Exhibit 21 of the Registrants Form 10KSB for the year ended June 30,
1998).
27 Financial Data Schedule (filed herewith).
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SONICS & MATERIALS, INC.
Date: November 10, 1998 By /s/ ROBERT S. SOLOFF
------------------- -----------------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Location of Exhibit in
No. Description Sequential Numbering System
3(i) Certificate of Incorporation of the Incorporated by reference from
Registrant, as amended. Exhibit 3.1 of Amendment No. 3
to Registration Statement No.
33-96414
3(ii) Amended By-laws of the Registrant. Incorporated by reference from
Exhibit 3.2 of Registration
Statement No. 33-96414
10(I) Form of Employment Agreement between Incorporated by reference from
the Registrant and Robert S. Soloff. Exhibit 10.1 of Registration
Statement No. 33-96414
10(ii) 1995 Incentive Stock Option Plan and Incorporated by reference from
form of Stock Option Agreement. Exhibit 10.3 of Registration
Statement No. 33-96414
10(iii) Lease between Registrant and Aston Incorporated by reference from
Investment Associates (Aston, PA). Exhibit 10.5 of Registration
Statement No. 33-96414
10(iv) Amended lease between Registrant and Incorporated by reference from
Robert Lenert (Naperville, IL). Exhibit 10.6 of Amendment No. 4
to Registration Statement No.
33-96414
10(v) Lease between Registrant and Janine Incorporated by reference from
Berger (Gland, Switzerland). 10.7 of Registration Statement
No. 33-96414
10(vi) Form of Sales Representation Incorporated by reference from
Agreement. Exhibit 10.8 of Registration
Statement No. 33-96414
10(vii) Form of Sales Distribution Agreement. Incorporated by reference from
Exhibit 10.9 of Registration
Statement No. 33-96414
10(viii) Agreement and Plan of Merger, dated Incorporated by reference from
as of July 25, 1997, among the Exhibit 2(a) of Registrant's
Registrant, SM Sub, Inc., Tooltex, Form 8-K dated July 25, 1997
Inc., and the persons designated as
the shareholders thereon (excluding
schedules and annexes). A list of
omitted schedules and annexes appears
on pages iv and v of the Agreement
and Plan of Merger. The Registrant
hereby undertakes to furnish
supplementally a copy of any omitted
schedule and annex to the Commission
upon request.
10(ix) Agreement of Merger, dated as of July Incorporated by reference from
25, 1997, among the Registrant, SM Exhibit 2(b) of the
Sub, Inc. and Tooltex, Inc. Registrant's Form 8-K dated
July 25, 1997).
10(x) Credit Agreement, dated September 19, Incorporated by reference from
1997, between Brown Brothers Harriman Exhibit 10 (xii) of the
& Co. and Registrant Registrant's Form 10-KSB for
the year ended June 30, 1997
10(xi) Term Loan Note of Registrant, dated Incorporated by reference from
September 19, 1997, payable to the Exhibit 10 (xiii) of the
order of Brown Brothers Harriman & Registrant's Form 10-KSB for
Co. in the original principal amount the year ended June 30, 1997
of $427,000.
10(xii) Line of Credit Note of Registrant, Incorporated by reference from
dated September 19, 1997, payable to Exhibit 10 (xiii) of the
the order of Brown Brothers Harriman Registrant's Form 10-KSB for
& Co. in the original principal the year ended June 30, 1997
amount of $1,500,000.
10(xiii) Intentionally deleted
10(xiv) Open-End Mortgage Deed from Incorporated by reference from
Registrant to Brown Brothers Harriman Exhibit 10 (xiv) of the
& Co. dated September 19, 1997. Registrant's Form 10-KSB for
the year ended June 30, 1997
10(xv) General Security Agreement from Incorporated by reference from
Registrant to Brown Brothers Harriman Exhibit 10 (xvii) of the
& Co. dated September 19, 1997. Registrant's Form 10-KSB for
the year ended June 30, 1997
10(xvi) Loan Agreement between Connecticut Incorporated by reference from
Development Authority and Sonics & Exhibit 10 (xvi) of the
Materials dated December 1, 1997 Registrants Form 10-KSB for the
year ended June 30, 1998
10(xvii) Indenture of Trust between Incorporated by reference from
Connecticut Development Authority and Exhibit 10 (xvii) of the
Sonics & Materials, Inc. dated Registrants Form 10-KSB for the
December 1, 1997 year ended June 30, 1998
10(xviii) Tax Regulatory Agreement between Incorporated by reference from
Connecticut Development Authority and Exhibit 10 (xviii) of the
Sonics & Materials, Inc., and Brown Registrants Form 10-KSB for the
Brothers Harriman Trust Company as year ended June 30, 1998
Trustee dated December 12, 1997
21 Subsidiaries of the Registrant (filed Incorporated by reference from
herewith). Exhibit 21 of the Registrants
Form 10-KSB for the year ended
June 30, 1998
27 Financial Data Schedule. Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AT SEPTEMBER 30, 1998 AND FROM THE INCOME STATEMENT FOR
THE 3 MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 276,238
<SECURITIES> 500,000
<RECEIVABLES> 2,415,599
<ALLOWANCES> 112,000
<INVENTORY> 4,565,200
<CURRENT-ASSETS> 7,877,403
<PP&E> 4,358,082
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,299,297
<CURRENT-LIABILITIES> 3,545,529
<BONDS> 0
0
0
<COMMON> 105,603
<OTHER-SE> 6,426,302
<TOTAL-LIABILITY-AND-EQUITY> 14,299,297
<SALES> 3,458,181
<TOTAL-REVENUES> 3,458,181
<CGS> 2,107,943
<TOTAL-COSTS> 1,182,155
<OTHER-EXPENSES> 6,279
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111,860
<INCOME-PRETAX> 75,522
<INCOME-TAX> 0
<INCOME-CONTINUING> 75,522
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,522
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
