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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 DECEMBER 31, 1997
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.)
4 WEST KENOSIA AVENUE
DANBURY, CT 06810
(Address of principal executive offices)
TELEPHONE NUMBER (203) 744-4400
(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 February 13, 1997, there were 3,590,100 shares of the Registrant's
Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
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PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements *
Consolidated Condensed Balance Sheets -
December 31, 1997 and June 30, 1997 ........................3
Consolidated Condensed Statements of Operations -
For the Three and Six Months Ended
December 31, 1997 and 1996 .................................4
Consolidated Condensed Statements of Cash Flows -
For the Six Months Ended
December 31, 1997 and 1996 .................................5
Notes to Consolidated Condensed Financial Statements ..........6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .................8
PART II - OTHER INFORMATION
Item 2 (d) Changes in Securities and Use of Proceeds ....................11
Item 4. Submission of Matters to a Vote of Security Holders ..........11
Item 6. Exhibits and Reports on Form 8-K .............................11
SIGNATURES ................................................................13
INDEX TO EXHIBITS .........................................................14
EXHIBIT 27 - FINANCIAL DATA SCHEDULE ......................................15
* The Balance Sheet at June 30, 1997 has been taken from the audited financial
statements at that date. All other financial statements are unaudited.
<PAGE>
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Sonics & Materials, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
As of
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
---- ---
(unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 12,909 $ 271,593
Short-term investments 4,191,470 1,665,470
Accounts receivable, net of allowance
for doubtful accounts of $45,000
at June 30, 1997 and $97,000
at December 31, 1997 2,306,461 1,854,118
Inventories 4,030,396 3,718,250
Prepaid income taxes 145,141 150,061
Deferred taxes 80,000 80,000
Other current assets 10,606 137,562
---------- -----------
Total current assets 10,776,983 7,877,054
PROPERTY PLANT & EQUIPMENT - NET 1,843,377 364,354
GOODWILL - NET 1,037,399 --
OTHER ASSETS 694,408 917,709
----------- -----------
$14,352,167 $ 9,159,117
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,155,101 $ 500,000
Current maturities of long-term debt 248,550 116,600
Accounts payable 822,836 804,653
Commissions payable 167,208 235,203
Other accrued expenses and sundry liabilities 421,797 278,310
Total current liabilities 2,815,492 1,934,766
----------- -----------
LONG TERM DEBT, NET OF CURRENT PORTION 4,446,303 406,911
COMMITMENTS -- --
STOCKHOLDERS' EQUITY
Common stock - par value $.03 per share; authorized
10,000,000 shares; issued and outstanding,
3,590,100 shares at December 31, 1997, and
3,520,100 shares at June 30, 1997 107,703 105,603
Additional paid in capital 6,766,897 6,539,597
Retained earnings 215,772 172,240
----------- -----------
Total stockholders' equity 7,090,372 6,817,440
----------- -----------
$14,352,167 $ 9,159,117
=========== ===========
</TABLE>
* Taken from the audited financial statements at June 30, 1997.
The accompanying notes are an integral part of these statements.
3
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Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
December 31, December 31,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 2,814,963 $ 2,745,517 $ 5,931,767 $ 5,281,755
Cost of sales 1,527,219 1,399,335 3,354,877 2,729,739
----------- ----------- ---------- ----------
Gross profit 1,287,744 1,346,182 2,576,890 2,552,016
Operating expenses
Selling expense 882,646 873,715 1,614,819 1,560,110
General and administrative 319,490 291,784 627,237 511,771
Research and deveopment 148,751 149,929 299,253 249,737
----------- ----------- ---------- ----------
Total operating expenses 1,350,887 1,315,428 2,541,309 2,321,618
Other income (expense)
Interest income 51,780 75,459 51,780 75,464
Interest expense (78,605) (18,762) (116,088) (51,311)
Other 65,991 (3,438) 76,178 (1,192)
----------- ----------- ---------- ----------
39,166 53,259 11,870 22,961
Income (loss) before
provision for income taxes (23,977) 84,013 47,451 253,359
Provision (benefit) for
income taxes (11,996) 33,605 (3,919) 101,343
----------- ----------- ---------- ----------
Net Income (loss) $ (11,981) $ 50,408 $ 43,532 $ 152,016
=========== =========== =========== ===========
INCOME PER SHARE - BASIC
Net income per share $ -- $ .01 $ .01 $ .04
=========== =========== =========== ===========
Weighted average number of
shares outstanding 3,590,100 3,500,100 3,580,589 3,500,100
=========== =========== =========== ===========
INCOME PER SHARE - DILUTED
Net income per share $ -- $ .01 $ .01 $ .03
=========== =========== =========== ===========
Weighted average number of
shares outstanding 3,590,100 4,392,314 3,760,964 4,591,505
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
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Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months Ended December 31,
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net cash used in operations $ (605,917) $ (333,857)
Net cash provided by (used in) investing activities (4,018,210) 1,113,553
Net cash provided by (used in) financing activities 4,365,443 (800,000)
----------- -----------
Net decrease in cash for the period (258,684) (20,304)
Cash and cash equivalents - at beginning of period 271,593 73,129
----------- -----------
Cash and cash equivalents - at end of period $ 12,909 $ 52,825
=========== ===========
Cash paid during period for:
Interest $ 32,000 $ 31,516
=========== ===========
Income taxes $ -- $ 20,500
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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Sonics & Materials, Inc.
Notes to Consolidated Condensed Financial Statements
December 31, 1997
(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 management's discussion and analysis, contained
on Form 10-KSB for the year ended June 30, 1997. The results of operations for
the three and six months ended December 31, 1997 are not necessarily indicative
of the results for the entire fiscal year ending June 30, 1998.
NOTE 2: Consolidation
The accompanying financial statements for the three and six months ended
December 31, 1997 reflect the consolidated operations of Sonics & Materials,
Inc., and its wholly-owned subsidiary, Tooltex. All significant intercompany
accounts and transactions have been eliminated in consolidation.
NOTE 3: Net Income Per Share
Basic income per share is based on the weighted average number of common shares
outstanding during the period. Diluted income per share is based on the
assumption that all diluted securities were converted at the beginning of the
period or at the issue date, if later.
The weighted average number of shares outstanding for the periods presented is
as follows:
<TABLE>
<CAPTION>
Three months ended December 31, Six months ended December 31,
------------------------------- ----------------------------
1997 1996 1997 1996
--------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C>
Basic shares 3,590,100 3,500,100 3,580,589 3,500,100
Dilution (warrants and
options) -- 892,214 180,375 1,091,505
--------- --------- --------- ---------
Diluted shares 3,950,100 4,392,314 3,760,964 4,591,505
========= ========= ========= =========
</TABLE>
NOTE 4: Acquisition of Tooltex, Inc.
On July 25, 1997, the Company acquired, through a newly formed wholly-owned
subsidiary, 100% of the stock of Tooltex, Inc. ("Tooltex"). Tooltex is a
manufacturer of automated systems used in the plastics industry. The
shareholders received, in exchange for 100% of the stock of Tooltex, (i) an
aggregate of 70,000 shares of the Company's common stock, par value $.03 per
share, (ii) $70,000 and (iii) options to purchase 10,000 shares of the Company's
common stock. The purchase price was allocated to the assets acquired based on
their estimated fair value. The excess total acquisition costs over the fair
value of the net assets acquired of approximately $1,057,000 is to be amortized
on a straight line basis over 20 years. The Company had sales to Tooltex of
approximately $1,000 and $29,000 for the three and six months ended December 31,
1996, respectively. At the time of the acquisition, the Company had a receivable
of approximately $254,000 from Tooltex. The sales and results of operations of
Tooltex for the period from July 1, 1997, to July 25, 1997 were not material.
The following unaudited pro forma consolidation for the three and six months
ended December 31, 1996, shows the results of operations, assuming that the
purchase had occurred on July 1, 1996. The unaudited pro forma results are not
necessarily indicative of what actually would have occurred if the acquisition
had been in effect for the entire period. In addition, they are not intended to
be a projection of future results.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, 1996 December 31, 1996
------------------ -----------------
<S> <C> <C>
Revenues $3,175,342 $6,407,203
Net loss 7,738 64,103
Net loss per share $ - $.02
</TABLE>
6
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Sonics & Materials, Inc.
Notes to Consolidated Condensed Financial Statements (Continued)
December 31, 1997
(Unaudited)
NOTE 5: Financing
On September 19, 1997, the Company entered into three facilities with a bank
(the "Bank"), each of which is secured by a first mortgage lien on property the
Company acquired in Newtown, CT: (i) a Bridge Loan in the original principal
amount of $1,600,000; (ii) a Line of Credit of up to $1,500,000; and (iii) a
Term Loan in the original principal amount of $427,000.
The Bridge Loan which bore interest at the Bank's base lending rate plus
one-half percent (9.0% at December 31, 1997), was repaid in full in December
1997.
The Line of Credit is used by the Company for working capital. The Line of
Credit bears interest, at Sonics' option, at either the Bank's base lending rate
(8.5% at December 31, 1997) or LIBOR plus 2.5% (8.25% at December 31, 1997).
Advances under the Line of Credit are at the Bank's sole discretion. The entire
principal balance of the Line of Credit, which at December 31, 1997 was
$1,155,000, 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. In the event of the prepayment of any portion
of the Line of Credit during any period in which the Line of Credit bears
interest at a LIBOR rate, Sonics will be obligated to pay the Bank a breakage
fee relating to the LIBOR interest component. The Line of Credit is also secured
by all of the Company's assets.
The proceeds of the Term Loan were used to pay in full a term loan with another
bank with interest and principal totaling $427,000. The term loan with the other
bank bore interest at such bank's loan pricing rate of interest plus one-half
percent. The current outstanding principal amount of the Term Loan is $403,278,
which bears interest, at Sonics' option, at either the Bank's base lending rate
(8.5% at December 31, 1997) or LIBOR plus 2.5% (8.25% at December 31, 1997). The
principal of the Term Loan must be paid in 36 equal monthly installments of
$11,861.11, commencing on November 1, 1997 and the entire remaining principal
balance will mature and be due and payable on October 1, 2000. 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. The Term Loan is also
secured by all of the Company's assets.
In December 1997, the Company issued Industrial Revenue Bonds through the
Connecticut Development Authority in the amount of $3,810,000. The proceeds were
used in part to pay in full the outstanding interest and principal due on the
Bridge loan discussed above. The remaining proceeds are invested in short term
securities and are to be used exclusively for the purchase and preparation of
the Company's new facilities, and to purchase new machinery and equipment. The
bonds, held by the Bank, mature in November 2017, and bear interest at 75% of
the Bank's base lending rate (6.4 % at December 31, 1997). The Company is to
begin to redeem the principal in 228 equal monthly installments of $16,700
beginning December 1998.
7
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<PAGE>
Any statements in this filing that are not statements of historical fact are
forward-looking statements that are subject to a number of uncertainties that
could cause actual results to differ materially. Specifically, any forward
looking statements in this filing related to the Company's objectives of 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 Ultra Sonic Seal division products, pricing,
market acceptance of existing and new products, a fluctuation in the sales
product mix, general economic conditions, competitive products, and product and
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 ultrasonic 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. The Company
undertakes no obligation to release data hereof or for this statement to reflect
the occurrence of unanticipated events.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 annual report on Form 10-KSB for the year ended June
30, 1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1996.
Net sales. Net sales for the quarter ended December 31, 1997 remained
relatively constant compared with the same period in fiscal 1997, increasing
$69,000 or 2.5%. This slight increase is primarily the result of the acquisition
and consolidation of Tooltex offset by decreased sales volume generated by the
Company's Aston, PA division.
Cost of Sales. Cost of sales increased from 51.0% of sales for the three
months ended December 31, 1996 to 54.3% of sales for the three months ended
December 31, 1997. A portion of this increase is attributable to the acquisition
and consolidation of Tooltex. In addition, the Company has experienced increased
costs associated with the manufacture of the vibration welder in connection with
the continuing redesign of the product for better cost effectiveness. These
factors, combined with the product mix, account for this increase in cost of
sales as a percent of sales.
Selling Expenses. Selling expenses for the second quarter of fiscal 1998
increased $9,000 or 1.0% over the same period in fiscal 1997. As a percentage of
net sales these expenses remained relatively constant, decreasing to 31.4% for
the three months ended December 31, 1997 from 31.9% for the three months ended
December 31, 1996.
General and Administrative Expenses. General and administrative expenses
for the second quarter of fiscal 1998 increased $27,000 or 9.5% over the second
quarter of fiscal 1997. As a percentage of net sales, these expenses increased
to 11.4% from 10.6% over the same period in fiscal 1997. This increase is a
result of the acquisition and consolidation of Tooltex. The Company began
consolidating the financial results of Tooltex as of July 1, 1997. As such, the
current quarter reflects consolidated results, whereas the first quarter of
fiscal 1997 did not.
Research and Development Expenses. Research and development expenses
remained relatively constant over the two periods, decreasing $1,000 or 1.0%.
8
<PAGE>
<PAGE>
Interest Expense. Total interest expense increased by $60,000 or 319.0%.
This is due to increased debt carried by the Company in connection with the
purchase of real property in Newtown, Connecticut. A more detailed explanation
of the new credit facilities can be found in the liquidity and capital resources
section of the MD&A. The Company also had higher average borrowings on it's line
of credit than in the second quarter of fiscal 1997.
Other Income. Other income for the second quarter of fiscal 1998 increased
by $69,000 over the same period in fiscal 1997. This is the result of the
acquisition and consolidation of Tooltex. Tooltex earned approximately $62,000
resulting from the forgiveness by its vendors of debts owed.
SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER
31, 1996.
Net sales. Net sales for the six months ended December 31, 1997 increased
$650,000 or 12.3% over the same period in fiscal 1997. This increase is
primarily the result of the acquisition and consolidation of Tooltex, combined
with slightly increased volume in domestic markets for the Company's ultrasonic
welding equipment, offset by decreased sales volume generated by the Company's
Aston, PA division.
Cost of Sales. Cost of sales increased from 51.7% of sales for the six
months ended December 31, 1996 to 56.6% of sales for the six months ended
December 31, 1997. This increase is partially attributable to the acquisition
and consolidation of Tooltex. In addition, Cost of Sales for the six months
ended December 31, 1997 was 55.1% of sales, excluding the effect of the
consolidation of Tooltex, compared to 51.7% for the same period last year. The
Company has experienced increased costs associated with the manufacture of the
vibration welder in an effort to redesign the product for better cost
effectiveness. These factors, combined with the product mix, account for this
increase in cost of sales as a percent of sales.
Selling Expenses. Selling expenses for the first six months of fiscal 1998
increased $54,000 or 3.5% over the same period in fiscal 1997. As a percentage
of net sales these expenses decreased to 27.2% from 29.4% over the same period
in fiscal 1997. This decrease in selling expenses as a percentage of net sales
is a result of the Company maintaining fixed costs while increasing sales.
General and Administrative Expenses. General and administrative expenses
for the first six months of fiscal 1998 increased $115,000 or 22.6% over the
same period in fiscal 1997. As a percentage of net sales, these expenses
increased to 10.6% from 9.7% over the same period in fiscal 1997. This increase
is a result of the acquisition and consolidation of Tooltex. The Company began
consolidating the financial results of Tooltex as of July 1, 1997. As such, the
current quarter reflects consolidated results, whereas the first quarter of
fiscal 1997 did not.
Research and Development Expenses. Research and development expenses
increased $50,000 or 19.8% over the same period in fiscal 1997. The increase was
primarily due to increased use of outside consulting services for several
development projects in the first quarter.
Interest Income. Interest income decreased by approximately $24,000 or
31.4% over the same period in fiscal 1997. In the second half of fiscal 1996,
the Company reduced its invested balance by approximately $1,345,000. These
funds were used to reduce debt and for working capital. The use of these funds
resulted in a reduction of the average daily invested balance by about 30%.
Interest Expense. Total interest expense increased by $65,000 or 126.20%.
This is due to increased debt carried by the Company in connection with the
purchase of real property in Newtown, Connecticut. A more detailed explanation
of the new credit facilities can be found under Liquidity and Capital Resources.
The Company also had higher average borrowings on its line of credit than in the
second quarter of fiscal 1997.
9
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<PAGE>
Other Income. Other income for the six months ended December 31, 1997
increased by $77,000 over the same period in fiscal 1997. This is the result of
the acquisition and consolidation of Tooltex. Tooltex recognized approximately
$62,000 resulting from the forgiveness of debts by its vendors.
LIQUIDITY AND CAPITAL RESOURCES
Operations of the Company used approximately $606,000 during the six months
ended December 31, 1997 as a result of increasing accounts receivable while
paying down accounts payable balances. During the first half of fiscal 1998, the
Company invested approximately $25,000 in new capital equipment and leasehold
improvements and $1,390,000 in land and a building that will be used to
consolidate the Company's manufacturing and office facilities. As of June 30,
1997, the Company's working capital was $5,942,000. As of December 31, 1997, the
Company's working capital had increased to 7,961,000 representing an increase of
approximately 34.0%. This increase is the result of conversion of short term
debt to long term debt as discussed below.
The Company's principal credit line is a $1,500,000 bank credit facility.
On September 19, 1997, the Company entered into three facilities with a bank
(the "Bank"), each of which is secured by a first mortgage lien on property the
Company acquired in Newtown, CT: (i) a Bridge Loan in the original principal
amount of $1,600,000; (ii) a Line of Credit of up to $1,500,000; and (iii) a
Term Loan in the original principal amount of $427,000.
The Bridge Loan which bore interest at the Bank's base lending rate plus
one-half percent (9.0% at December 31, 1997), was repaid in full in December
1997.
The Line of Credit is used by the Company for working capital. The Line of
Credit bears interest, at Sonics' option, at either the Bank's base lending rate
(8.5% at December 31, 1997) or LIBOR plus 2.5% (8.25% at December 31, 1997).
Advances under the Line of Credit are at the Bank's sole discretion. The entire
principal balance of the Line of Credit, which at December 31, 1997 was
$1,155,000, 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. In the event of the prepayment of any portion
of the Line of Credit during any period in which the Line of Credit bears
interest at a LIBOR rate, Sonics will be obligated to pay the Bank a breakage
fee relating to the LIBOR interest component. The Line of Credit is also secured
by all of the Company's assets.
The proceeds of the Term Loan were used to pay in full a term loan with another
bank with interest and principal totaling $427,000. The term loan with the other
bank bore interest at such bank's loan pricing rate of interest plus one-half
percent. The current outstanding principal amount of the Term Loan is $403,278,
which bears interest, at Sonics' option, at either the Bank's base lending rate
(8.5% at December 31, 1997) or LIBOR plus 2.5% (8.25% at December 31, 1997). The
principal of the Term Loan must be paid in 36 equal monthly installments of
$11,861.11, commencing on November 1, 1997 and the entire remaining principal
balance will mature and be due and payable on October 1, 2000. 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. The Term Loan is also
secured by all of the Company's assets.
In December 1997, the Company issued Industrial Revenue Bonds through the
Connecticut Development Authority in the amount of $3,810,000. The proceeds were
used in part to pay in full the outstanding interest and principal due on the
Bridge loan discussed above. The remaining proceeds are invested in short term
securities and are to be used exclusively for the purchase and preparation of
the Company's new facilities, and to purchase new machinery and equipment. The
bonds, held by the Bank, mature in November 2017, and bear interest at 6.4%. The
Company is to begin to redeem the principal in 228 equal monthly installments of
$16,700 beginning December 1998.
10
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PART II - OTHER INFORMATION
Item 2. Change in Securities.
(d) In connection with the Company's initial public offering, on June 20, 1996,
the Company filed with the Securities and Exchange Commission (the "SEC") a
Form SR reporting the use of proceeds from such offering. Additional Forms
SR were subsequently filed by the Company. There have been no changes to
the information filed in the most recent Form SR
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company's annual meeting of shareholders was held on November 13,
1997.
(c) (i) The following directors were elected:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares
For Against Withheld Non-Votes
------------ ------------- -------- ---------
<S> <C> <C> <C> <C>
Robert S. Soloff 3,498,495 39,450 0 0
Alan Broadwin 3,498,495 39,450 0 0
Jack Tyransky 3,498,495 39,450 0 0
Lauren H. Soloff 3,498,495 39,450 0 0
Stephen J. Drescher 3,498,195 0 39,750 0
</TABLE>
(ii) Grant Thornton LLP was approved as the Company's independent auditors
by the following vote:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstaining Non-Votes
------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
3,494,937 2,433 40,575 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3(i) Certificate of Incorporation of the Registrant, as
amended. (Previously filed as Exhibit 3.1 of Amendment
No. 3 to Registration Statement No. 33-96414)
3(ii) Amended By-laws of the Registrant . (Previously filed as
Exhibit 3.2 of Registration Statement No. 33-96414)
10(i) Form of Employment Agreement between the Registrant and
Robert S. Soloff. (Previously filed as Exhibit 10.1 of
Registration Statement No. 33-96414)
10(ii) 1995 Incentive Stock Option Plan and form of Stock Option
Agreement. (Previously filed as Exhibit 10.3 of
Registration Statement No. 33-96414)
10(iii) Original Office Lease and Amendments between the
Registrant and Nicholas R. DiNapoli, Jr. DBA DiNapoli
Holding Co. (Danbury, CT). (Previously filed as Exhibit
10.4 of Registration Statement No. 33-96414)
10(iv) Lease between Registrant and Aston Investment Associates
(Aston, PA). (Previously filed as Exhibit 10.5 of
Registration Statement No. 33-96414)
10(v) Amended lease between Registrant and Robert Lenert
(Naperville, IL). (Previously filed as Exhibit 10.6 of
Amendment No. 4 to Registration Statement No. 33-96414)
10(vi) Lease between Registrant and Janine Berger (Gland,
Switzerland). (Previously filed as Exhibit 10.7 of
Registration Statement No. 33-96414)
10(vii) Form of Sales Representation Agreement. (Previously filed
as Exhibit 10.8 of Registration Statement No. 33-96414)
10(viii) Form of Sales Distribution Agreement. (Previously filed as
Exhibit 10.9 of Registration Statement No. 33-96414)
10(ix) Consulting Agreement dated October 17, 1995 between
the Registrant and Alan Broadwin. (Previously filed as
Exhibit 10.10 of Amendment No. 3 of Registration Statement
No. 33-96414)
11
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10(x) 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(xi) Agreement of Merger dated July 25, 1997, among the
Registrant, SM Sub, Inc., and Tooltex, Inc. (incorporated
by reference from Exhibit 2(b) of the Registrant's 8K
dated July 25, 1997).
10(xii) Credit Agreement, dated September 19, 1997 between Brown
Brothers Harriman & Co. and Registrant (filed with
Registrant's 10KSB dated September 25, 1997).
10(xiii) 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 (filed with
Registrant's 10KSB dated September 25, 1997).
10(xiv) 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 (filed
with Registrant's 10KSB dated September 25, 1997).
10(xv) Bridge Loan Note of Registrant dated September 19, 1997,
payable to the order of Brown Brothers Harriman & Co. in
the original principal amount of $1,600,000 (filed with
Registrant's 10KSB dated September 25, 1997).
10(xvi) Open-End Mortgage Deed from Registrant to Brown Brothers
Harriman & Co. dated September 19, 1997 (filed with
Registrant's 10KSB dated September 25, 1997).
10(xvii) General Security Agreement from Registrant to Brown
Brothers Harriman & Co. dated September 19, 1997 (filed
with Registrant's 10KSB dated September 25, 1997).
27 Financial Data Schedule. (Filed Herewith)
(b) none
12
<PAGE>
<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: February 17, 1998 By /s/ ROBERT S. SOLOFF
---------------------- ------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
13
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT LOCATION OF EXHIBIT IN
NO. DESCRIPTION SEQUENTIAL NUMBERING SYSTEM
- ------- ----------- ----------------------------
<S> <C> <C>
3(i) Certificate of Incorporation of the Registrant, as Previously filed as Exhibit 3.1 of
amended . Amendment No. 3 to Registration
Statement No. 33-96414
3(ii) Amended By-laws of the Registrant . Previously filed as Exhibit 3.2 of
Registration Statement No. 33-96414
10(i) Form of Employment Agreement between the Previously filed as Exhibit 10.1 of
Registrant and Robert S. Soloff. Registration Statement No. 33-96414
10(ii) 1995 Incentive Stock Option Plan and form of Stock Previously filed as Exhibit 10.3 of
Option Agreement. Registration Statement No. 33-96414
10(iii) Original Office Lease and Amendments between the Previously filed as Exhibit 10.4 of
Registrant and Nicholas R. DiNapoli, Jr. DBA Registration Statement No. 33-96414
DiNapoli Holding Co. (Danbury, CT) .
10(iv) Lease between Registrant and Aston Investment Previously filed as Exhibit 10.5 of
Associates (Aston, PA). Registration Statement No. 33-96414
10(v) Amended lease between Registrant and Robert Lenert Previously filed as Exhibit 10.6 of
(Naperville, IL). Amendment No. 4 to Registration
Statement No. 33-96414
10(vi) Lease between Registrant and Janine Berger (Gland, Previously filed as Exhibit 10.7 of
Switzerland). Registration Statement No. 33-96414
10(vii) Form of Sales Representation Agreement. Previously filed as Exhibit 10.8 of
Registration Statement No. 33-96414
10(viii) Form of Sales Distribution Agreement. Previously filed as Exhibit 10.9 of
Registration Statement No. 33-96414
10(ix) Consulting Agreement dated October 17, 1995 Previously filed as Exhibit 10.10 of
between the Registrant and Alan Broadwin. Amendment No. 3 of Registration
Statement No. 33-96414
10(x) Agreement and Plan of Merger, dated as of July 25, Incorporated by reference from Exhibit
1997, among the Registrant, SM Sub, Inc., Tooltex, 2(a) of the Registrant's Form 8-K
Inc. and the persons designated as the dated July 25, 1997.
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(xi) Agreement of Merger dated July 25, 1997, among the Incorporated by reference from Exhibit
Registrant, SM Sub, Inc., and Tooltex, Inc. 2(b) of the Registrant's 8K dated July
25, 1997.
10(xii) Credit Agreement, dated September 19, 1997 between Previously filed with Registrant's
Brown Brothers Harriman & Co. and Registrant 10KSB dated September 25, 1997.
10(xiii) Term Loan Note of Registrant dated September 19, Previously filed with Registrant's
1997, payable to the order of Brown Brothers 10KSB dated September 25, 1997.
Harriman & Co. in the original principal amount of
$427,000
10(xiv) Line of Credit Note of Registrant dated September Previously filed with Registrant's
19, 1997, payable to the order of Brown Brothers 10KSB dated September 25, 1997.
Harriman & Co. in the original principal amount of
$1,500,000
10(xv) Bridge Loan Note of Registrant dated September 19, Previously filed with Registrant's
1997, payable to the order of Brown Brothers 10KSB dated September 25, 1997.
Harriman & Co. in the original principal amount of
$1,600,000
10(xvi) Open-End Mortgage Deed from Registrant to Brown Previously filed with Registrant's
Brothers Harriman & Co. dated September 19, 1997 10KSB dated September 25, 1997.
10(xvii) General Security Agreement from Registrant to Previously filed with Registrant's
Brown Brothers Harriman & Co. dated September 19, 10KSB dated September 25, 1997.
1997
27 Financial Data Schedule. Filed Herewith
</TABLE>
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AT DECEMBER 31, 1997 AND FROM THE INCOME STATEMENT FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 12,909
<SECURITIES> 4,191,470
<RECEIVABLES> 2,306,461
<ALLOWANCES> 97,000
<INVENTORY> 4,030,396
<CURRENT-ASSETS> 10,776,983
<PP&E> 1,843,377
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,352,167
<CURRENT-LIABILITIES> 2,815,492
<BONDS> 0
0
0
<COMMON> 107,703
<OTHER-SE> 6,982,669
<TOTAL-LIABILITY-AND-EQUITY> 14,352,167
<SALES> 5,931,767
<TOTAL-REVENUES> 5,931,767
<CGS> 3,354,877
<TOTAL-COSTS> 3,354,877
<OTHER-EXPENSES> (76,178)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,088
<INCOME-PRETAX> 47,451
<INCOME-TAX> (3,919)
<INCOME-CONTINUING> 43,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,532
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
