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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 September 30, 1999
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, 1999, there were 3,520,100 shares of the Registrant's
Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes |_| No |X|
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<PAGE>
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements *
Consolidated Condensed Balance Sheets -
September 30, 1999 and June 30, 1999.........3
Consolidated Condensed Statements of Income -
For the Three Months Ended
September 30, 1999 and 1998..................4
Consolidated Condensed Statements of Cash Flows -
For the Three Months Ended
September 30, 1999 and 1998..................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, 1999 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,
1999 1999
---- ----
(unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 508,252 $ 354,564
Accounts receivable, net of allowance for doubtful accounts
of $95,000 at June 30, 1999 and September 30, 1999 2,533,848 2,057,809
Inventories 4,835,414 4,922,532
Restricted cash from industrial revenue bonds 86,577 136,000
Other current assets 199,586 167,054
----------- -----------
Total current assets 8,163,677 7,637,959
PROPERTY PLANT & EQUIPMENT - NET 4,062,892 4,139,372
GOODWILL - NET 985,169 999,045
MARKETABLE DEBT SECURITY - pledged 400,000 400,000
OTHER ASSETS 743,207 783,822
----------- -----------
$14,354,945 $13,960,198
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,465,101 $ 1,465,101
Current maturities of long-term debt 444,906 444,907
Accounts payable 1,017,158 579,766
Customer Advances 263,002 204,780
Commissions payable 149,191 141,446
Other accrued expenses and sundry liabilities 374,077 464,812
----------- -----------
Total current liabilities 3,713,435 3,300,812
LONG-TERM DEBT, net of current portion 3,774,806 3,886,487
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, 1999
and June 30, 1999 105,603 105,603
Additional paid in capital 6,575,010 6,575,010
Retained earnings 197,904 92,286
----------- -----------
Total stockholders' equity 6,866,704 6,772,889
----------- -----------
$14,354,945 $13,960,198
=========== ===========
</TABLE>
* Taken from the audited financial statements at June 30, 1999.
The accompanying notes are an integral part of these statements.
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
For the Three Months Ended
September 30,
-------------
1999 1998
---- ----
Net sales $ 3,507,110 $ 3,458,181
Cost of sales 2,317,873 2,107,943
----------- -----------
Gross profit 1,189,237 1,350,238
Operating expenses
Selling 645,704 826,944
General and administrative 242,074 243,070
Research and development 93,004 112,141
----------- -----------
Total operating expenses 980,783 1,182,156
Other income (expense)
Interest expense (96,247) (111,860)
Interest income 15,306 25,578
Other (3,708) (6,279)
----------- -----------
(84,650) (92,561)
Income before provision for income taxes 123,804 75,522
Provision for income taxes 30,000
----------- -----------
Net Income $ 93,804 $ 75,522
=========== ===========
BASIC INCOME PER SHARE
Net income per share $ .03 $ .02
=========== ===========
Weighted average number of common
and common equivalent shares
outstanding 3,520,100 3,520,100
=========== ===========
DILUTED INCOME PER SHARE
Net income per share $ .03 $ .02
=========== ===========
Weighted average number of common
and common equivalent shares
outstanding 3,526,898 3,532,916
=========== ===========
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended September 30,
1999 1998
--------- ---------
Net cash provided by (used) in operations $ 272,478 $(358,066)
Net cash provided by (used in) investing
activities (7,109) 215,005
Net cash provided by (used in) financing
activities (111,681) (84,003)
--------- ---------
Net increase (decrease) in cash for the period 153,688 (227,067)
Cash and cash equivalents - at beginning of
period 354,564 503,305
--------- ---------
Cash and cash equivalents - at end of period $ 508,252 $ 276,238
========= =========
Cash paid during the period for:
Interest $ 96,247 $ 111,860
========= =========
Income taxes $ -- $ --
========= =========
<PAGE>
Sonics & Materials, Inc.
Notes to Consolidated Financial Statements
September 30, 1999
(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, 1999. The results of
operations for the three months ended September 30, 1999 are not necessarily
indicative of the results for the entire fiscal year ending June 30, 2000.
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:
Basic and Diluted
Weighted Shares Outstanding
For the Three Months ended September 30,
----------------------------------------
1999 1998
---- ----
Basic shares 3,520,100 3,520,100
Dilution (warrants and options) 6,798 12,816
--------- ---------
Weighted average number of common
and common equivalent shares 3,526,898 3,532,916
========= =========
<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 any related patent litigation may hinder the Company's ability
to market its ultrasonic surgical 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.
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, 1999.
RESULTS OF OPERATIONS
Three months ended September 30, 1999 compared to the three months ended
September 30, 1998.
Net sales. Net sales for the quarter ended September 30, 1999 increased
$49,000 or 1.4% over the same period in fiscal 1999. The increase in sales is
primarily the result of increased sales of specialized equipment in the quarter
ended September 30, 1999.
Cost of Sales. Cost of sales increased from 61.0% of net sales for the
three months ended September 30, 1998 to 66.1% of sales for the three months
ended September 30, 1999. This increase is due to increased sales in the quarter
of specialized equipment manufactured by Sonics and Tooltex which typically has
lower profit margins than the Company's standard equipment.
Selling Expenses. Selling expenses for the first quarter of fiscal 2000
decreased $181,000 or 21.9% over the same period in fiscal 1999. This reduction
is the result of the cost cutting measures implemented by the Company in the
first quarter of fiscal 1999.
General and Administrative Expenses. General and administrative expenses
for the first quarter of fiscal 1999 decreased $1,000. As a percentage of net
sales, General and administration expenses remained relatively constant .
Research and Development Expenses. Research and development expenses
decreased $19,000 or 17.1% over the same period in fiscal 1999. The reduction is
due to a continued decrease in the utilization of outside consulting services.
Interest Expense. Total interest expense decreased by $16,000 or 13.9%
over the same period in fiscal 1999. Principal monthly installments on the
industrial revenue bond of $16,700 began in January of 1999. The Company expects
interest expenses to increase in fiscal year 2000 as a result of changes in its
credit agreement with the bank. (See Liquidity and Capital Resources).
Interest Income. Interest income for the first quarter of fiscal 2000
decreased by $10,000 over the same period in fiscal 1999. The decrease is the
result of the utilization of most of the Company's industrial revenue bond
proceeds. (See Liquidity and Capital Resources).
Income Taxes. At the end of fiscal 1998, management reversed the balance
in the tax valuation allowance offsetting deferred tax assets because in its
view it became more likely than not that the benefits provided by those assets
would be realized. Income tax expense of $30,000 for the quarter ended
<PAGE>
September 30, 1999 is based on an estimated combined federal and state tax rate
of approximately 30%. The Company has sufficient net operating losses available
to offset taxable income for the current quarter. Income tax for the 1998 first
quarter was offset by tax benefits provided by deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
Operations of the Company's cash flow increased approximately $272,000 during
the three months ended September 30, 1999 as a result of increased accounts
payable and accounts receivable accompanied by a reduction of inventory. During
the first quarter of fiscal 2000, the Company invested approximately $7,000 in
new capital equipment. The Company was able to raise the funds necessary for
these expenditures through the normal course of business.
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, covers three outstanding credit facilities,
including (i) a Line of Credit of up to $1,500,000, (ii) a term loan of
$427,000, and (iii) 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 Company's principal outside source of working capital is a $1,500,000 bank
credit facility. The Line of Credit bears interest, at the Bank's base lending
rate (7.75% at September 30, 1999). 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, 1999 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 outstanding principal amount of the Term Loan at September 30, 1999 is
$238,619, which bears interest, at the Bank's base lending rate (7.75% at
September 30, 1999). The principal of the term loan was to be paid in 36 equal
monthly installments of $11,861, which commenced on November 1, 1997 and the
entire remaining principal balance was to mature and be due payable on October
1, 2000. In July of 1998, however, the Company renegotiated the terms of the
Term Loan. Beginning August 1, 1998 the remaining balance of $320,250 is to be
paid in 51 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 outstanding
principal amount of the Industrial Revenue Bond at September 30, 1999 was
$3,676,347, which bears interest at a rate of 75% of the Banks base lending rate
(5.81% at September 30,1999). The Company's current lender purchased the bonds
pursuant to the credit agreement. Bonds were purchased by the Company's current
lender pursuant to the credit agreement. The proceeds were used in part to pay
existing indebtedness of approximately $1,343,000. Most of the remaining
proceeds have been used exclusively for the purchase and preparation of the
Company's new facilities, and to purchase new machinery and equipment. Unapplied
funds of $87,000 at September 30, 1999 have been invested in short-term
securities and can be used to repay principal due under the Bonds. The Bonds are
payable in 228 monthly installments of $16,700 plus interest through November
2017. The bondholder, however, may make written demand for redemption of all or
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 a U.S. Treasury Bond.
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 outstanding principal of the note at September 30, 1999 was
$201,688. The loan is secured by a first lien on the assets of Tooltex and is
subject to various covenants.
The Company instituted cost cutting measures in the form of lay-offs effective
September 25, 1998. In total, the Company reduced staffing by 11 people, or 9%,
through these lay-offs and attrition, primarily in the manufacturing and sales
departments.
<PAGE>
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, the year 2000 bug does not affect them. The Company has not
had the need to incur any material costs in preparation for the year 2000.
Management cannot presently estimate the costs of this program; however such
costs are not currently expected to be material to the Company's operations or
financial condition. There can be no assurance 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.
<PAGE>
PART II - OTHER INFORMATION
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 12, 1999 By /s/ ROBERT S. SOLOFF
----------------- -----------------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
<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 Incorporated by reference from Exhibit
Registrant, as amended. 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 Exhibit
the Registrant and Robert S. Soloff. 10.1 of Registration Statement No.
33-96414
10(ii) 1995 Incentive Stock Option Plan and Incorporated by reference from Exhibit
form of Stock Option Agreement. 10.3 of Registration Statement No.
33-96414
10(iii) Lease between Registrant and Aston Incorporated by reference from Exhibit
Investment Associates (Aston, PA). 10.5 of Registration Statement No.
33-96414
10(iv) Amended lease between Registrant and Incorporated by reference from Exhibit
Robert Lenert (Naperville, IL). 10.6 of Amendment No. 4 to Registration
Statement No. 33-96414
10(v) Lease between Registrant and Janine Incorporated by reference from 10.7 of
Berger (Gland, Switzerland). Registration Statement No. 33-96414
10(vi) Form of Sales Representation Incorporated by reference from Exhibit
Agreement. 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 Exhibit
as of July 25, 1997, among the 2(a) of Registrant's Form 8-K dated
Registrant, SM Sub, Inc., Tooltex, 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 Registrant's Form
Sub, Inc. and Tooltex, Inc. 8-K dated July 25, 1997).
10(x) Credit Agreement, dated September Incorporated by reference from
19, 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 of Registrant, dated Incorporated by reference from
September 19, 1997, payable to Exhibit 10 (xiii) of the Registrant's
the order of Brown Brothers Form10-KSB for the year ended June
Harriman & Co. in the original 30, 1997
principal amount of $427,000.
10(xii) Line of Credit Note of Registrant, Incorporated by reference from
dated September 19, 1997, payable Exhibit 10 (xiii) of the
to the order of Brown Brothers Registrant's Form 10-KSB for the
Harriman & Co. in the original year ended June 30, 1997
principal 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 Exhibit
Development Authority and Sonics & 10 (xvi) of the Registrants Form 10-KSB
dated December 1, 1997 for the year ended June 30, 1998
10(xvii) Indenture of Trust between Incorporated by reference from
Connecticut Development Authority Exhibit 10 (xvii) of the
and 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 Exhibit 10 (xviii) of the
and Sonics & Materials, Inc., and Registrants Form 10-KSB for the
Brown Brothers Harriman Trust year ended June 30, 1998
Company as Trustee dated December
12, 1997
21 Subsidiaries of the Registrant Incorporated by reference from Exhibit
(filed herewith). 21 of the Registrants Form 10-KSB for
the year ended June 30, 1998
27 Financial Data Schedule. Filed herewith
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AT SEPTEMBER 30, 1999 AND FROM THE INCOME STATEMENT FOR
THE 3 MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 508,252
<SECURITIES> 0
<RECEIVABLES> 2,533,848
<ALLOWANCES> 95,000
<INVENTORY> 4,835,414
<CURRENT-ASSETS> 8,163,677
<PP&E> 4,062,892
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,354,945
<CURRENT-LIABILITIES> 3,713,435
<BONDS> 0
0
0
<COMMON> 105,603
<OTHER-SE> 6,772,914
<TOTAL-LIABILITY-AND-EQUITY> 14,354,945
<SALES> 3,507,110
<TOTAL-REVENUES> 3,507,110
<CGS> 2,317,873
<TOTAL-COSTS> 980,783
<OTHER-EXPENSES> 3,708
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96,247
<INCOME-PRETAX> 123,804
<INCOME-TAX> 30,000
<INCOME-CONTINUING> 93,804
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,804
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
