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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 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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PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements *
Consolidated Condensed Balance Sheets -
September 30, 2000 and June 30, 2000.........................3
Consolidated Condensed Statements of Income -
For the Three Months Ended
September 30, 2000 and 1999..................................4
Consolidated Condensed Statements of Cash Flows -
For the Three Months Ended
September 30, 2000 and 1999..................................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, 2000 has been taken from the audited financial
statements at that date. All other financial statements are unaudited.
2
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
As of
September 30, June 30,
2000 2000
------------- -----------
(unaudited) *
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 493,112 $ 719,183
Accounts receivable, net of allowance for doubtful accounts
of $88,470 at June 30, 2000 and September 30, 2000 2,119,751 2,692,786
Inventories 5,020,077 4,489,967
Other current assets 113,672 150,913
----------- -----------
Total current assets 7,746,612 8,052,849
PROPERTY PLANT & EQUIPMENT - NET 4,029,625 4,050,052
GOODWILL - NET 915,215 929,091
OTHER ASSETS 626,091 672,215
----------- -----------
$13,317,543 $13,704,207
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,290,000 $ 1,290,000
Current maturities of long-term debt 331,097 331,097
Accounts payable 807,663 701,929
Customer Advances 183,676 133,816
Commissions payable 122,432 193,356
Other accrued expenses and sundry liabilities 324,559 599,436
----------- -----------
Total current liabilities 3,059,427 3,249,634
LONG-TERM DEBT, net of current portion 3,497,089 3,584,390
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, 2000
and June 30, 2000 105,603 105,603
Additional paid in capital 6,575,010 6,575,010
Retained earnings 80,414 189,570
----------- -----------
Total stockholders' equity 6,761,027 6,870,183
----------- -----------
$13,317,543 $13,704,207
=========== ===========
* Taken from the audited financial statements at June 30, 2000.
The accompanying notes are an integral part of these statements.
3
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended
--------------------------
September 30,
-------------
2000 1999
---- ----
Net sales $ 2,803,316 $ 3,507,110
Cost of sales 1,724,145 2,317,873
--------------------------
Gross profit 1,079,171 1,189,237
--------------------------
Operating expenses
Selling 684,740 645,705
General and administrative 282,272 242,032
Research and development 101,655 91,164
--------------------------
Total operating expenses 1,068,667 978,901
--------------------------
Other income (expense)
Interest expense (114,046) (96,247)
Other 11,831 11,597
--------------------------
(102,215) (84,650)
--------------------------
Income (loss) before provision for income taxes (91,711) 125,686
Provision for income taxes -- 30,000
--------------------------
Income (loss) from continuing operations (91,711) 95,686
Loss from discontinued operations -- (1,882)
--------------------------
Net income (loss) $ (91,711) $ 93,804
==========================
BASIC INCOME PER SHARE
Income(loss) from continued operations (.03) .03
Loss from discontinued operations -- --
--------------------------
Net income (loss) $ (.03) $ .03
--------------------------
Diluted
Income (loss) from continuing operations -- .03
Income (loss) from discontinued operations -- --
--------------------------
Diluted net income (loss) per share -- $ .03
--------------------------
Shares used in basic per share computation 3,520,100 3,520,100
Incremental shares from issuance of common stock
options and warrants -- 6,798
--------------------------
Weighted average number of common and common
equivalent shares outstanding 3,520,100 3,526,898
==========================
4
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended September 30,
2000 1999
--------- ---------
Net cash provided by (used in) operations $ (98,245) $ 274,360
Net cash by used in discontinued operations (1,882)
Net cash by used in investing activities (40,525) (7,109)
Net cash by used in financing activities (87,301) (111,681)
--------- ---------
Net increase (decrease) in cash for the period (226,071) 153,688
Cash and cash equivalents - at beginning of period 719,183 354,564
--------- ---------
Cash and cash equivalents - at end of period $ 493,112 $ 508,252
========= =========
Cash paid during the period for:
Interest $ 114,046 $ 96,247
========= =========
Income taxes $ -- $ --
========= =========
5
Sonics & Materials, Inc.
Notes to Consolidated Financial Statements
September 30, 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, 2000. The results of
operations for the three months ended September 30, 2000 are not necessarily
indicative of the results for the entire fiscal year ending June 30, 2001.
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,
----------------------------------------
2000 1999
---- ----
Basic shares 3,520,100 3,520,100
Dilution (warrants and options) -- 6,798
----------------------------------------
Weighted average number of common
and common equivalent shares 3,520,100 3,526,898
========================================
NOTE 4: Loan covenant
The Company's credit facility contains a loan covenant that requires it to
maintain a fixed charge coverage ratio of at least 1.10 on a quarterly basis and
1.40 on a trailing six -month basis. At September 30,2000, the Company was in
violation of the six-month ratio. The bank has provided a waiver of the
violation as of September 30, 2000 and has also waived compliance with the
six-month ratio for the quarter ended December 31, 2000.
The Company has recently scaled down its Pennsylvania operation and has
implemented other cost reduction measures. Based on projected cost savings and
an improved revenue outlook, management believes it is probable that the Company
will be in compliance during the December 2000 quarter.
6
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. 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, 2000.
RESULTS OF OPERATIONS
Three months ended September 30, 2000 compared to the three months ended
September 30, 1999.
Net sales. Net sales for the quarter ended September 30, 2000 decreased
$704,000 or 20.1% over the same period in fiscal 2000. This decrease is
primarily the result of decreased sales at the Tooltex facilities.
Cost of Sales. Cost of sales decreased from 66.1.0% of net sales for the
three months ended September 30, 1999 to 61.5% of sales for the three months
ended September 30, 2000. This decrease is due to decreased sales in the quarter
of specialized equipment manufactured by Sonics and Tooltex Specialized
equipment typically has lower profit margins than the Company's standard
equipment.
Selling Expenses. Selling expenses for the first quarter of fiscal 2001
increased $39,000 or 6.0% over the same period in fiscal 2000. As a percentage
of net sales, selling expense increased from 18.4% to 24.4% over the same
period. This increase is the result of additional sales staff covering both the
Midwest and West Coast markets.
General and Administrative Expenses. General and administrative expenses
for the first quarter of fiscal 2001 increased $40,000. As a percentage of net
sales, General and administration expenses increased from 6.9% to 10.0%. This
increase is due to greater legal and professional fees in the first three months
of fiscal 2001 as compared to the first three months of fiscal 2000. In
addition, rising health insurance costs resulted in higher expenses.
Research and Development Expenses. Research and development expenses
increased $10,000 or 11.5% over the same period in fiscal 2000. This is due to
an increase in the fringe benefits allocation to the research and development
department.
Interest Expense. Total interest expense increased by $18,000 or 18.4%
over the same period in fiscal 2000. Interest rates on the Company's line of
credit increased from 7.75% to 9.5%. In addition, the interest rate on the
Company's Industrial Revenue Bond increased from 5.81% to 7.125%. Additional
capital leases acquired in the first quarter of fiscal 2001also increased the
Company's interest expense. (See Liquidity and Capital Resources.).
Income Taxes. No tax accrual for fiscal 2001 was booked due to the loss
for the quarter ended September 30, 2000. Income taxes for the fiscal 2000
period were based on an effective federal and state rate of 23.8%.
LIQUIDITY AND CAPITAL RESOURCES
7
Operating of the Company cash flow decreased approximately $226,000 during
the first three months ended September 30, 2000 as a result of increasing
inventory, and higher accounts payable. During the first quarter of fiscal 2001,
the Company invested $38,000 in property and equipment. The funds for these
expenditures were internally generated.
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 (9.50% at June 30, 2000). 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, 2000 was $1,290,000, is 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, 2000 is
$156,985, which bears interest at the Bank's base lending rate (9.50% at
September 30, 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 and payable on
October 1, 2000. In July 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 the Company 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, 2000 was
$3,459,079, which bears interest at a rate of 7.5% of the Bank's base lending
rate (7.125% at September 30, 2000). The Company's current lender purchased the
bonds 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
were payable in 228 monthly payments of $16,700 plus interest through November
2017. The bondholder, however, may make written demand for redemption of all or
a part of outstanding principal and accrued interest commencing in December
2000.
On January 3, 2000 the Company's lender approved the application of
approximately $187,000 of the $400,000 in restricted cash toward 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 at
$1,500,000.
The Company's credit facility contains a loan covenant that requires it to
maintain a fixed charge coverage ration of at least 1.10 on a quarterly basis
and 1.40 on a trailing six -month basis. At September 30,2000, the Company was
in violation of the six-month ratio. The bank has provided a waiver of the
violation as of September 30, 2000 and has also waived compliance with the
six-month ratio for the quarter ended December 31, 2000.
The Company has recently scaled down its Pennsylvania operation and has
implemented other cost reduction measures. Based on projected cost savings and
an improved revenue outlook, management believes it is probable that the Company
will be in compliance during the December 2000 quarter.
In June 2000, the Company settled a customer lawsuit for $80,000, payable
by the Company in four installments of $20,000 plus interest through September
2000. The Company accrued for the settlement in fiscal 1998 as an adjustment to
the Tooltex acquisition price.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 "Revenue Recognition" ("SAB 101"), which
provides guidance on the recognition presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Management believes that the Company's
revenue recognition policy
8
complies with the provision of SAB 101 and that the adoption of SAB 101 will
have no material effect on the financial position or results of operations of
the Company.
9
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).
10
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 20, 2000 By /s/ ROBERT S. SOLOFF
--------------------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
11
EXHIBIT INDEX
Exhibit Location of Exhibit in
No. Description Sequential Numbering System
3(i) Certificate of Incorporation of the Incorporated by reference from Exhibit 3.1 of
Registrant, as amended. 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 Incorporated by reference from Exhibit 10.1 of
Registrant and Robert S. Soloff. Registration Statement No. 33-96414
10(ii) 1995 Incentive Stock Option Plan and form of Incorporated by reference from Exhibit 10.3 of
Stock Option Agreement. Registration Statement No. 33-96414
10(iii) Lease between Registrant and Aston Investment Incorporated by reference from Exhibit 10.5 of
Associates (Aston, PA). Registration Statement No. 33-96414
10(iv) Amended lease between Registrant and Robert Incorporated by reference from Exhibit 10.6 of
Lenert (Naperville, IL). Amendment No. 4 to Registration Statement No.
33-96414
10(v) Lease between Registrant and Janine Berger Incorporated by reference from 10.7 of
(Gland, Switzerland). 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 Incorporated by reference from Exhibit 2(a) of
July 25, 1997, among the Registrant, SM Sub, Registrant's Form 8-K dated July 25, 1997
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 July 25, Incorporated by reference from Exhibit 2(b) of
1997, among the Registrant, SM Sub, Inc. and the Registrant's Form 8-K dated July 25, 1997).
Tooltex, Inc.
10(x) Credit Agreement, dated September 19, 1997, Incorporated by reference from Exhibit 10(xii) of the
between Brown Brothers Harriman & Co. and Registrant's Form 10-KSB for the year ended June 30, 1997
Registrant
10(xi) Term Loan Note of Registrant, dated September Incorporated by reference from Exhibit 10(xiii) of the
19, 1997, payable to the order of Brown Registrant's Form 10-KSB for the year ended June 30, 1997
Brothers Harriman & Co. in the original
principal amount of $427,000.
10(xii) Line of Credit Note of Registrant, dated Incorporated by reference from Exhibit 10(xiii) of the
September 19, 1997, payable to the order of Registrant's Form 10-KSB for the year 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 Registrant to Incorporated by reference from Exhibit 10(xiv) of the
Brown Brothers Harriman & Co. dated September Registrant's Form 10-KSB for the year ended June 30, 1997
19, 1997.
10(xv) General Security Agreement from Registrant to Incorporated by reference from Exhibit 10(xvii) of the
Brown Brothers Harriman & Co. dated September Registrant's Form 10-KSB for the year ended June 30, 1997
19, 1997.
10(xvi) Loan Agreement between Connecticut Development Incorporated by reference from Exhibit 10(xvi) of the
Authority and Sonics & Materials dated Registrants Form 10-KSB for the year ended June 30, 1998
December 1, 1997
10(xvii) Indenture of Trust between Connecticut Incorporated by reference from Exhibit 10(xvii) of the
Development Authority and Sonics & Materials, Registrants Form 10-KSB for the year ended June 30, 1998
Inc. dated December 1, 1997
10(xviii) Tax Regulatory Agreement between Connecticut Incorporated by reference from Exhibit 10(xviii) of the
Development Authority and Sonics & Materials, Registrants Form 10-KSB for the year ended June 30, 1998
Inc., and Brown Brothers Harriman Trust
Company as Trustee dated December 12, 1997
21 Subsidiaries of the Registrant (filed herewith). 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
12