================================================================================
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 March 31, 2000
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 May 11, 2000, there were 3,520,100 shares of the Registrant's common
stock outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes |_| No |X|
================================================================================
<PAGE>
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements *
Consolidated Condensed Balance Sheets -
March 31, 2000 and June 30, 1999.............................3
Consolidated Condensed Statements of Operations -
For the Three and Nine Months Ended
March 31, 2000 and 1999......................................4
Consolidated Condensed Statements of Cash Flows -
For the Nine Months Ended
March 31, 2000 and 1999......................................5
Notes to Consolidated Condensed Financial Statements............6
Item 2. Management's Discussion and Analysis or Plan of Operations.....7
PART II - OTHER INFORMATION
Item 2. Change in Securities ..........................................10
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>
March 31, June 30,
2000 1999
---- ----
(unaudited) *
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 578,199 $ 354,564
Accounts receivable, net of allowance for doubtful accounts
of $95,000 at June 30, 1999 and $125,000 at March 31, 2000 2,809,133 2,057,809
Inventories 4,815,616 4,922,532
Restricted Cash from industrial revenue bonds 136,000
Other current assets 242,962 167,054
----------- -----------
Total current assets 8,445,910 7,637,959
PROPERTY PLANT & EQUIPMENT - NET 3,946,778 4,139,372
GOODWILL - NET 957,418 999,045
MARKETABLE DEBT SECURITY - pledged 400,000
OTHER ASSETS 684,300 783,822
----------- -----------
$14,034,406 $13,960,198
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,465,101 $ 1,465,101
Current maturities of long-term debt 326,854 444,907
Accounts payable 942,238 579,766
Customer Advances 178,282 204,780
Commissions payable 133,915 141,446
Other accrued expenses and sundry liabilities 485,361 464,812
----------- -----------
Total current liabilities 3,531,751 3,300,812
LONG-TERM DEBT, net of current portion 3,526,650 3,886,487
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock - par value $.07 per share; authorized, 10,000,000 shares;
issued and outstanding, 3,520,100 shares at March 31, 2000
and June 30, 1999 105,603 105,603
Additional paid in capital 6,575,010 6,575,010
Accumulated deficit 295,392 92,286
----------- -----------
Total stockholders' equity 6,976,005 6,772,899
----------- -----------
$14,034,406 $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 Nine Months Ended
March 31, March 31,
-------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 3,665,932 $ 3,323,453 $ 10,397,631 $ 9,684,831
Cost of sales 2,295,551 2,020,665 6,590,551 5,767,851
----------- ----------- ------------ -----------
Gross profit 1,370,381 1,302,788 3,807,080 3,916,980
Operating expenses
Selling expense 809,669 686,812 2,135,990 2,202,724
General and administrative 284,802 337,547 841,568 930,191
Research and development 104,648 87,005 295,242 276,677
----------- ----------- ------------ -----------
Total operating expenses 1,199,119 1,111,364 3,272,800 3,409,592
Other income (expense)
Interest expense (98,827) (95,448) (292,829) (315,078)
Other (1,184) 13,597 28,227 38,147
----------- ----------- ------------ -----------
(100,011) (81,851) (264,602) (276,931)
Income before provision for income taxes 71,251 109,573 269,678 230,457
Provision for income taxes 7,572 66,572
----------- ----------- ------------ -----------
Net income $ 63,679 $ 109,573 $ 203,106 $ 230,457
=========== =========== ============ ===========
INCOME PER SHARE-BASIC
Net income per share $ .02 $ .03 $ .06 $ .07
=========== =========== ============ ===========
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 $ .02 $ .03 $ .06 $ .07
=========== =========== ============ ===========
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 Nine Months Ended March 31,
2000 1999
--------- ---------
Net cash provided by (used in) operations $ 241,644 $(279,780)
Net cash provided by investing activities 341,828 186,325
Net cash used in financing activities (359,837) (255,554)
--------- ---------
Net increase (decrease) in cash for the period 223,635 (349,009)
Cash and cash equivalents - at beginning of period 354,564 503,305
--------- ---------
Cash and cash equivalents - at end of period $ 578,199 $ 154,296
========= =========
Cash paid during period for:
Interest $ 292,829 $ 340,428
========= =========
Income taxes $ 48,306 $ --
========= =========
<PAGE>
Sonics & Materials, Inc.
Notes to Consolidated Condensed Financial Statements
March 31, 2000
(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 nine months ended March 31, 2000 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., its wholly owned subsidiaries Tooltex Inc., and Vibra
Surge 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 are
as follows:
Basic and Diluted
Weighted Shares Outstanding
For the Nine Months ended March 31,
-----------------------------------
2000 1999
--------- ---------
Basic shares 3,520,100 3,520,100
Dilution (stock 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 have negotiated an amendment to the credit agreement
that includes eligible Tooltex accounts receivable and inventory in the
determination of loan availability under the working capital line. The line of
credit has remained 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 ultrasonic 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 March 31, 2000 compared to the three months ended March 31,
1999.
Net sales. Net sales for the quarter ended March 31, 2000 increased
$342,000 or 10.3% over the quarter ended March 31, 1999. This increase is
primarily the result of increased sales generated by the sale of specialized
equipment by Sonics and its wholly owned subsidiary, Tooltex.
Cost of Sales. Cost of sales increased from 60.8% of net sales for the
three months ended March 31, 1999 to 62.6% of sales for the three months ended
March 31, 2000. This increase is primarily the result of increased sales in the
quarter of specialized equipment manufactured by Sonics and Tooltex which
typically have a lower profit margin than the standard machinery manufactured by
Sonics.
Selling Expenses. Selling expenses for the third quarter of fiscal 2000
increased $123,000 or 17.9% over the same period in fiscal 1999. As a percentage
of net sales, selling expenses increased from 20.7% to 22.1% over the same
periods. This increase is in large part the result of the increase in sales
staff to provide more coverage in the West Coast market. Additional expenses
were incurred due to participation in trade shows to improve visibility in
various markets.
General and Administrative Expenses. General and administrative expenses
for the third quarter of fiscal 2000 decreased $53,000 or 15.6% over the third
quarter of fiscal 1999. As a percentage of net sales, these expenses decreased,
from 10.2% to 7.8% over the same periods. This decrease is primarily the result
of lower professional fees and legal costs.
Research and Development Expenses. Research and development expenses
increased $18,000 or 20.3% over the same period in fiscal 1999. 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 third quarter of fiscal 2000
increased by $3,000 over the same period in fiscal 1999 due primarily to higher
interest rates. The impact of the rate increase in 2000 was offset in part by
overall debt reduction. In December of 1999, the Company's lender approved the
application of approximately $187,000 restricted cash toward the repayment of
the Tooltex bank debt. The lender also lifted restrictions on the balance of the
funds, $213,000 of which are now available for working capital purpose. (See
Liquidity and Capital Resources.)
<PAGE>
Interest and Other Income. Other income for the three months ended March
31, 2000 decreased $15,000 or 108.7% over the same period in fiscal 1999.
Interest income declined due to the use of invested funds for the repayment of
the Tooltex bank debt of $187,000.
Nine months ended March 31, 2000 compared to the nine months ended March 31,
1999.
Net sales. Net sales for the nine months ended March 31, 2000 increased
$713,000 or 7.3% over the same period in fiscal 1999. International sales
increased by 12.9% over the same nine months in fiscal 1999. This increase is
primarily the result of increased sales of specialized equipment by Sonics and
its wholly owned subsidiary, Tooltex.
Cost of Sales. Cost of sales increased from 59.6% of net sales for the
nine months ended March 31, 1999 to 63.4% of sales for the nine months ended
March 31, 2000. This increase is primarily the result of specialized equipment
generated by Sonics and its wholly owned subsidiary, Tooltex. Specialized
equipment typically has lower profit margins than the Company's standard
equipment.
Selling Expenses. Selling expenses for the first three quarters of fiscal
2000 decreased $67,000 or 3.0% over the same period in fiscal 1999. As a
percentage of net sales, selling expenses decreased from 22.7% to 20.6% over the
same periods. This is partially the result of salary reductions along with
additional cost savings implemented in fiscal 2000. The company has recently
increased its sales staff and promotional cost in an effort to develop certain
domestic markets.
General and Administrative Expenses. General and administrative expenses
for the first three quarters of fiscal 2000 decreased $89,000 or 9.5% over the
first three quarters of fiscal 1999. As a percentage of net sales, these
expenses decreased from 9.6% to 8.1% over the same periods. This decrease is
partially the result of salary reductions as well as decreased professional fees
and legal costs.
Research and Development Expenses. Research and development expenses
increased $19,000 or 6.7% over the same period in fiscal 1999. The increase
primarily relates to the addition of one Research and Development Technician,
offset by the reduction in outside consulting.
Interest and Other Income. Interest income for the first three quarters of
fiscal 2000 decreased by $10,000 over the same period in fiscal 1999. This is
due to the use of invested funds to repay the Tooltex bank debt of $187,000.
Interest Expense. Total interest expense decreased for the first three
quarters of fiscal year 2000 by $22,000 or 7.1%. This is due to decreased debt
carried by the Company in connection with the industrial revenue bond and payoff
of Tooltex bank debt. Interest charges are expected to increase for the balance
of the fiscal year in light of the rising cost interest rate environment on all
outstanding debt subject to interest rates.
Income Taxes. At the end of fiscal 1999, 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 $67,000 for the nine months ended March
31, 2000 is based on an estimate combined federal and state tax related to the
current nine months profits and deferred tax obligation.
LIQUIDITY AND CAPITAL RESOURCES
Operating cash flow increased approximately $242,000 during the nine months
ended March 31, 2000 as a result of increased accounts payable accompanied by a
reduction of inventory. During the nine months
<PAGE>
of fiscal 2000, the Company invested approximately $58,000 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 (9.0% at March 31, 200). Advances under the Line of Credit are at the
Bank's sole discretion. The entire principal balance of the Line of Credit,
which at March 31, 2000 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 Company's Term Loan at March 31, 2000 is
194,662, which bears interest, at the Bank's base lending rate (9.0% at March
31, 2000). 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 March 31, 2000 was $3,559,342
which bears interest at a rate of 75% of the Banks base lending rate (6.75% at
March 31,2000). 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. 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 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 purposes.
The Company and its lender have negotiated an amendment to the credit agreement
that includes eligible Tooltex accounts receivable and inventory in the
determination of loan availability under the working capital line. The line of
credit has remained att $1,500,000.
<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: May 15, 2000 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 Incorporated by reference from Exhibit 3.1 of
the Registrant, as amended. Amendment No. 3 to Registration Statement No.
33-96414
3(ii) Amended By-laws of the Incorporated by reference from Exhibit 3.2 of
Registrant. Registration Statement No. 33-96414
10(I) Form of Employment Agreement Incorporated by reference from Exhibit 10.1 of
between the Registrant and Robert Registration Statement No. 33-96414
S. Soloff.
10(ii) 1995 Incentive Stock Option Plan Incorporated by reference from Exhibit 10.3 of
and form of Stock Option Registration Statement No. 33-96414
Agreement.
10(iii) Lease between Registrant and Incorporated by reference from Exhibit 10.5 of
Aston Investment Associates Registration Statement No. 33-96414
(Aston, PA).
10(iv) Amended lease between Registrant Incorporated by reference from Exhibit 10.6 of
and Robert Lenert (Naperville, Amendment No. 4 to Registration Statement No.
IL). 33-96414
10(v) Lease between Registrant and Incorporated by reference from 10.7 of
Janine Berger (Gland, Registration Statement No. 33-96414
Switzerland).
10(vi) Form of Sales Representation Incorporated by reference from Exhibit 10.8 of
Agreement. Registration Statement No. 33-96414
10(vii) Form of Sales Distribution Incorporated by reference from Exhibit 10.9 of
Agreement. Registration Statement No. 33-96414
10(viii) Agreement and Plan of Merger, Incorporated by reference from Exhibit 2(a) of
dated as of July 25, 1997, among Registrant's Form 8-K dated July 25, 1997
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. .
10(ix) Agreement of Merger, dated as of Incorporated by reference from Exhibit 2(b) of
July 25, 1997, among the the Registrant's Form 8-K dated July 25, 1997).
Registrant, SM Sub, Inc. and
Tooltex, Inc.
10(x) Credit Agreement, dated September Incorporated by reference from Exhibit 10 (xii)
19, 1997, between Brown Brothers of the Registrant's Form 10-KSB for the year
Harriman & Co. and Registrant ended June 30, 1997
10(xi) Term Loan Note of Registrant, Incorporated by reference from Exhibit 10 (xiii)
dated September 19, 1997, payable of the Registrant's Form 10-KSB for the year
to the order of Brown Brothers ended June 30, 1997
Harriman & Co. in the original
principal amount of $427,000.
10(xii) Line of Credit Note of Incorporated by reference from Exhibit 10 (xiii)
Registrant, dated September 19, of the Registrant's Form 10-KSB for the year
1997, payable to the order of ended June 30, 1997
Brown Brothers Harriman & Co. in
the original principal amount of
$1,500,000.
10(xiii) Intentionally deleted
10(xiv) Open-End Mortgage Deed from Incorporated by reference from Exhibit 10 (xiv)
Registrant to Brown Brothers of the Registrant's Form 10-KSB for the year
Harriman & Co. dated September ended June 30, 1997
19, 1997.
10(xv) General Security Agreement from Incorporated by reference from Exhibit 10 (xvii)
Registrant to Brown Brothers of the Registrant's Form 10-KSB for the year
Harriman & Co. dated September ended June 30, 1997
19, 1997.
10(xvi) Loan Agreement between Incorporated by reference from Exhibit 10 (xvi)
Connecticut Development Authority of the Registrants Form 10-KSB for the year
and Sonics & Materials dated ended June 30, 1998
December 1, 1997
10(xvii) Indenture of Trust between Incorporated by reference from Exhibit 10 (xvii)
Connecticut Development Authority of the Registrants Form 10-KSB for the year
and Sonics & Materials, Inc. ended June 30, 1998
dated December 1, 1997
10(xviii) Tax Regulatory Agreement between Incorporated by reference from Exhibit 10
Connecticut Development Authority (xviii) of the Registrants Form 10-KSB for the
and Sonics & Materials, Inc., and year ended June 30, 1998
Brown Brothers Harriman Trust
Company as 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 March 31, 2000 AND FROM THE INCOME STATEMENT FOR THE
NINE MONTH ENDED March 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 136,199
<SECURITIES> 442,000
<RECEIVABLES> 2,809,133
<ALLOWANCES> 125,000
<INVENTORY> 4,815,616
<CURRENT-ASSETS> 8,445,910
<PP&E> 3,946,778
<DEPRECIATION> 328,688
<TOTAL-ASSETS> 14,034,406
<CURRENT-LIABILITIES> 3,531,751
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0
0
<COMMON> 105,603
<OTHER-SE> 6,870,402
<TOTAL-LIABILITY-AND-EQUITY> 14,034,406
<SALES> 10,397,631
<TOTAL-REVENUES> 10,397,631
<CGS> 6,590,551
<TOTAL-COSTS> 3,272,800
<OTHER-EXPENSES> (28,228)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,829
<INCOME-PRETAX> 269,678
<INCOME-TAX> 66,572
<INCOME-CONTINUING> 203,106
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203,106
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
