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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-QSB
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(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, 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 February 7, 2000, 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 -
December 31, 1999 and June 30, 1999............................3
Consolidated Condensed Statements of Operations -
For the Three and Six Months Ended
December 31, 1999 and 1998.....................................4
Consolidated Condensed Statements of Cash Flows -
For the Six Months Ended
December 31, 1999 and 1998.....................................5
Notes to Consolidated Condensed 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..................................10
Signatures.................................................................11
Index to Exhibits..........................................................12
Exhibit 27 - Financial Data Schedule.......................................13
* 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>
December 31, June 30,
1999 1999
----------- -----------
(unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 810,504 $ 354,564
Accounts receivable, net of allowance for doubtful accounts -- --
of $95,000 at June 30, 1999 and December 31, 1999 2,725,522 2,057,809
Inventories 4,817,522 4,922,532
Restricted Cash from industrial revenue bonds 38,579 136,000
Other current assets 218,463 167,054
----------- -----------
Total current assets 8,610,590 7,637,959
PROPERTY PLANT & EQUIPMENT - NET 4,005,374 4,139,372
GOODWILL - NET 971,294 999,045
MARKETABLE DEBT SECURITY - pledged 400,000
OTHER ASSETS 710,412 783,822
----------- -----------
$14,297,670 $13,960,198
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,465,101 $ 1,465,101
Current maturities of long-term debt 444,907 444,907
Accounts payable 821,416 579,766
Customer Advances 225,559 204,780
Commissions payable 160,983 141,446
Other accrued expenses and sundry liabilities 594,622 464,812
----------- -----------
Total current liabilities 3,712,588 3,300,812
LONG-TERM DEBT, net of current portion 3,672,756 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 December 31, 1999 and June 30, 1998 105,603 105,603
Additional paid in capital 6,575,010 6,575,010
Retained Earnings 231,713 92,286
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Total stockholders' equity 6,912,326 6,772,899
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$14,297,670 $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 OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
December 31, December 31,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 3,224,589 $ 2,903,197 $ 6,731,699 $ 6,361,378
Cost of sales 1,977,127 1,639,243 4,295,000 3,747,186
----------- ----------- ----------- -----------
Gross profit 1,247,462 1,263,954 2,436,699 2,614,192
Operating expenses
Selling expense 680,618 688,967 1,326,321 1,515,911
General and administrative 314,692 349,574 556,767 592,644
Research and development 97,590 77,531 190,594 189,672
----------- ----------- ----------- -----------
Total operating expenses 1,092,900 1,116,072 2,073,682 2,298,227
Other income (expense)
Interest expense (97,755) (107,770) (194,002) (219,630)
Interest and Other Income 17,815 5,251 29,412 24,550
----------- ----------- ----------- -----------
(79,940) (102,519) (164,590) (195,080)
Income before provision for income taxes 74,622 45,363 198,427 120,885
Provision for income taxes 29,000 59,000
----------- ----------- ----------- -----------
Net Income $ 45,622 $ 45,363 $ 139,427 $ 120,885
=========== =========== =========== ===========
INCOME PER SHARE BASIC
Net income per share $ .01 $ .01 $ .04 $ .03
=========== =========== =========== ===========
Weighted average number of shares
outstanding 3,520,100 3,520,100 3,520,100 3,520,100
=========== =========== =========== ===========
INCOME PER SHARE DILUTED
Net income per share $ .01 $ .01 $ .04 $ .03
=========== =========== =========== ===========
Weighted average number of shares
outstanding 3,526,898 3,532,916 3,526,898 3,532,916
=========== =========== =========== ===========
</TABLE>
<PAGE>
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months Ended December 31,
1999 1998
--------- ---------
Net cash provided by operations $ 360,845 $ 272,478
Net cash provided by (used in) investing activities 314,873 (7,109)
Net cash used in financing activities (219,778) (111,681)
--------- ---------
Net increase in cash for the period 455,940 153,688
Cash and cash equivalents - at beginning of period 354,564 354,564
--------- ---------
Cash and cash equivalents - at end of period $ 810,504 $ 508,252
========= =========
Cash paid during period for:
Interest $ 194,002 $ 96,247
========= =========
Income taxes $ -- $ --
========= =========
<PAGE>
Sonics & Materials, Inc.
Notes to Consolidated Condensed Financial Statements
December 31, 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 and six months ended December 31, 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 Six Months ended December 31,
-------------------------------------
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
========= =========
NOTE 4: Other Transactions.
In December 1999, the Company's lender approved the application of approximately
$187,000 of $400,000 in restricted cash towards the repayment of Tooltex bank
debt. The lender also lifted restrictions on the balance of the funds, which are
now available for working capital purpose.
The Company and its lender are currently negotiating an amendment to the credit
agreement to include eligible Tooltex accounts receivable and inventory in the
determination of loan availability under the working capital line. The line of
credit is expected to remain at $1,500,000.
<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 December 31, 1999 compared to the three months ended December
31, 1998.
Net sales. Net sales for the quarter ended December 31, 1999 increased
$321,000 or 11.1% over the quarter ended December 31, 1998. This increase is
primarily the result of increased sales of specialized equipment in the quarter
ended December 31,1999.
Cost of Sales. Cost of sales increased from 56.4% of net sales for the
three months ended December 31, 1998 to 61.3% of sales for the three months
ended December 31, 1999. This increase is due to increased sales in the quarter
of specialized equipment manufactured by Sonics and Tooltex which typically have
lower profits margins than the Company's standard equipment.
Selling Expenses. Selling expenses for the second quarter of fiscal 2000
decreased $8,000 or 1.2% over the same period in fiscal 1999. As a percentage of
net sales, selling expenses decreased from 23.7% to 21.1% over the same periods.
This decrease was due to a reduction in sales staff.
General and Administrative Expenses. General and administrative expenses
for the second quarter of fiscal 2000 decreased $35,000 or 10.0% over the second
quarter of fiscal 1999. As a percentage of net sales, these expenses decreased
from 12.0% to 9.8% over the same periods. This decrease in primarily the result
of decreased professional fees and legal costs.
Research and Development Expenses. Research and development expenses
increased $20,000 or 25.9% over the same period in fiscal 1998. This is
primarily the result of a planned expansion of the Research and Development
department, which included the addition of one Research and Development
technician.
Interest Expense. Interest expense for the second quarter of fiscal 2000
decreased by $10,000 or 9.3% over the same period in fiscal 1999. Principal
monthly installments on the industrial revenue bond of $16,700 began in January
of 1999. (See Liquidity and Capital Resources).
Interest and Other Income. Interest income for the second quarter of
fiscal 2000 increased by $13,000 over the same period in fiscal 1999. This
increase in the result of higher interest rate on the short-term investments.
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 $29,000 for the quarter ended
<PAGE>
December 31, 1999 is based on an estimate 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 second
quarter was offset by tax benefits provided by deferred tax assets.
Six months ended December 31, 1999 compared to the six months ended December 31,
1998.
Net sales. Net sales for the six months ended December 31, 1999 increased
$370,000 or 5.8% over the same period in fiscal 1999. This increase is primarily
the result of increased sales of specialized equipment as well as increased
domestic sales volume.
Cost of Sales. Cost of sales increased from 58.9% of net sales for the six
months ended December 31, 1998 to 63.8% of sales for the six months ended
December 31, 1999. This increase is primarily the result of increased sales of
specialized equipment, which typically have lower profit margins than the
Company's standard equipment.
Selling Expenses. Selling expenses for the first half of fiscal 2000
decreased $190,000 or 12.5% over the same period in fiscal 1999. As a percentage
of net sales, selling expenses decreased from 23.8% to 19.7% over the same
periods. This is in large part the result of the cost cutting lay-offs
implemented by the Company in the first quarter of fiscal 1999.
General and Administrative Expenses. General and administrative expenses
for the first half of fiscal 2000 decreased $36,000 or 6.1% over the first half
of fiscal 1999. As a percentage of net sales, these expenses decreasing from
9.3% to 8.3% over the same periods. This decrease is partially the result of
salary reductions and decreased professional fees and legal costs.
Research and Development Expenses. Research and development expenses
increased $1,000 over the same period in fiscal 1999. This increase primarily
relates to the addition of one Research and Development Technician, offset by
the reduction in outside consulting.
Interest and Other Income. Interest and other income for the first half of
fiscal 2000 increased by $5,000 over the same period in fiscal 1999. This
increase is the result of higher interest rates on the short-term investments.
Interest Expense. Total interest expense decreased by $26,000 or 11.7%.
Principal monthly installments on the industrial revenue bond of $16,700 began
in January of 1999. Interest rates will increase as a result of changes in its
credit agreement with the bank. (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 $59,000 for the six month period ended
December 31, 1999 is based on an estimated combined federal and state tax rate
of approximately 30%.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from the Company's operations increased approximately $361,000 during
the three months ended December 31, 1999 as a result of increased accounts
receivable accompanied by a reduction of Accounts Payable, and inventory. During
the first half of fiscal 2000, the Company invested approximately $33,000 in new
capital equipment. The Company was able to raise the funds necessary for these
expenditures through the normal course of business.
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 (8.5% at December 31, 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 December 31, 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.
<PAGE>
The outstanding principal amount of the Company's Term Loan at December 31, 1999
is $219,782, which bears interest, at the Bank's base lending rate (8.5% at
December 31, 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 December 31, 1999 was
$3,626,247, which bears interest at a rate of 75% of the Banks base lending rate
(6.375% at December 31,1999). 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 $38,000 at December 31, 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.
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 December 31, 1999 was $172,876.
In December 1999, the Company's lender approved the application of approximately
$187,000 of the $400,000 in restricted cash towards the repayment of the Tooltex
bank debt. The lender also lifted restrictions on the balance of the funds,
which are now available for working capital purpose.
The Company and its lender are currently negotiating an amendment to the credit
agreement to include eligible Tooltex accounts receivable and inventory in the
determination of loan availability under the working capital line. The line of
credit is expected to remain at $1,500,000.
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, the year 2000 bug does not affect them. The Company did not
have the need to incur any material costs in preparation for the year 2000.
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. However, to date, no other
companies which the Company's systems rely upon have demonstrated any failure to
be timely converted.
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).
<PAGE>
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: February 7, 2000 By /s/ ROBERT S. SOLOFF
---------------- -----------------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location of Exhibit in
Sequential Numbering System
<S> <C> <C>
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 10.7
Berger (Gland, Switzerland). 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 Form 8-K
Registrant, SM Sub, Inc., Tooltex, 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 Registrant's Form
Sub, Inc. and Tooltex, Inc. 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 Registrant's
& Co. and Registrant 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 Registrant's
order of Brown Brothers Harriman & Form 10-KSB for the year ended June
Co. in the original principal amount 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 Registrant's
the order of Brown Brothers Harriman Form 10-KSB for the year ended June
& Co. in the original principal 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 Registrant's
& Co. dated September 19, 1997. 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 Registrant's
& Co. dated September 19, 1997. 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 Registrants
Materials dated December 1, 1997 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 Registrants
Sonics & Materials, Inc. dated Form 10-KSB for the year ended June
December 1, 1997 30, 1998
10(xviii) Tax Regulatory Agreement between Incorporated by reference from
Connecticut Development Authority and Exhibit 10 (xviii) of the Registrants
Sonics & Materials, Inc., and Brown Form 10-KSB for the year ended June
Brothers Harriman Trust Company as 30, 1998
Trustee dated December 12, 1997
21 Subsidiaries of the Registrant Incorporated by reference from
Exhibit 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 DECEMBER 31, 1999 AND FROM THE INCOME STATEMENT FOR
THE 3 MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 179,504
<SECURITIES> 631,000
<RECEIVABLES> 2,725,522
<ALLOWANCES> 95,000
<INVENTORY> 4,817,522
<CURRENT-ASSETS> 8,610,590
<PP&E> 4,005,374
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,297,670
<CURRENT-LIABILITIES> 3,712,588
<BONDS> 0
0
0
<COMMON> 105,603
<OTHER-SE> 6,806,723
<TOTAL-LIABILITY-AND-EQUITY> 14,297,670
<SALES> 6,731,699
<TOTAL-REVENUES> 6,731,699
<CGS> 4,295,000
<TOTAL-COSTS> 4,295,000
<OTHER-EXPENSES> 4,066
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194,002
<INCOME-PRETAX> 198,427
<INCOME-TAX> 59,000
<INCOME-CONTINUING> 139,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,427
<EPS-BASIC> .04
<EPS-DILUTED> .04
</TABLE>
