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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 March 31, 2001
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 15, 2001, 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 -
March 31, 2001 and June 30, 2000.........................3
Consolidated Condensed Statements of Operations -
For the Three and Nine Months Ended
March 31, 2001 and 2000..................................4
Consolidated Condensed Statements of Cash Flows -
For the Nine Months Ended
March 31, 2001 and 2000..................................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 6. Exhibits and Reports on Form 8-K............................10
Signatures....................................................................11
Index to Exhibits.............................................................12
* The Balance Sheet at June 30, 2000 has been taken from the audited financial
statements at that date. All other financial statements are unaudited.
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
As of
March 31, June 30,
2001 2000
------------ ------------
(Unaudited) *
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 696,482 $ 728,993
Accounts receivable, net of allowance
for doubtful accounts of $88,470 at
March 31, 2001 and June 30, 2000 1,870,547 2,692,786
Inventories 5,125,807 4,489,967
Other current assets 155,075 150,913
------------ ------------
Total current assets 7,847,911 8,062,659
PROPERTY PLANT & EQUIPMENT - NET 3,915,535 4,050,052
GOODWILL - NET 887,464 929,091
OTHER ASSETS 577,169 672,215
------------ ------------
$ 13,228,079 $ 13,714,017
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,390,000 $ 1,290,000
Current maturities of long-term debt 331,097 331,097
Accounts payable 1,108,847 701,929
Customer advances 121,315 133,816
Commissions payable 123,544 193,356
Other accrued expenses and sundry liabilities 289,445 626,691
------------ ------------
Total current liabilities 3,364,248 3,276,889
LONG-TERM DEBT, net of current portion 3,324,466 3,584,390
STOCKHOLDERS' EQUITY
Common stock - par value $.03 per share; authorized,
10,000,000 shares; issued and outstanding,
3,520,100 shares at March 31, 2001
and June 30, 2000 105,603 105,603
Additional paid in capital 6,571,378 6,575,010
Retained earnings (accumulated deficit) (137,616) 172,125
------------ ------------
Total stockholders' equity 6,539,365 6,852,738
------------ ------------
$ 13,228,079 $ 13,714,017
============ ============
* Taken from the audited financial statements at June 30, 2000.
The accompanying notes are an integral part of these statements.
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
---------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $ 2,791,109 $ 3,665,932 $ 8,521,052 $ 10,397,631
Cost of sales 1,689,529 2,295,551 5,295,735 6,590,551
------------ ------------ ------------ ------------
Gross profit 1,101,580 1,370,381 3,225,317 3,807,080
Operating expenses
Selling expense 534,784 809,669 1,977,973 2,135,990
General and administrative 335,281 275,872 949,931 830,381
Research and development 98,168 104,648 289,253 295,242
------------ ------------ ------------ ------------
Total operating expenses 968,233 1,190,189 3,217,157 3,261,613
Other income (expense)
Interest expense (87,936) (98,827) (285,225) (292,829)
Interest and Other Income 5,711 (1,184) 2,988 28,227
------------ ------------ ------------ ------------
(82,225) (100,011) (282,237) (264,602)
Income before provision for income taxes 51,122 80,181 (274,077) 280,865
Provision for income taxes 35,777 7,572 35,664 66,572
------------ ------------ ------------ ------------
Income (loss) from continuing operations 15,345 72,609 (309,741) 214,293
Loss from discontinued operations 8,930 11,187
------------ ------------ ------------ ------------
Net income (loss) $ 15,345 $ 63,679 $ (309,741) $ 203,106
============ ============ ============ ============
BASIC INCOME (LOSS) PER SHARE
Net income (loss) per share $ .004 $ .02 $ (.09) $ .06
------------ ------------ ------------ ------------
Weighted average number of shares
outstanding 3,520,100 3,520,100 3,520,100 3,520,100
------------ ------------ ------------ ------------
INCOME (LOSS) PER SHARE - DILUTED
Diluted net income (loss) per share $ .004 $ .02 $ (.09) $ .06
------------ ------------ ------------ ------------
Weighted average number of shares
outstanding 3,520,100 3,526,898 3,520,100 3,526,898
------------ ------------ ------------ ------------
Sonics & Materials, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Months Ended March 31,
2001 2000
--------- ---------
Net cash provided by operations $ 186,172 $ 241,644
Net cash provided by (used in) investing activities (55,128) 341,828
Net cash used in financing activities (163,556) (359,837)
--------- ---------
Net increase (decrease) in cash for the period (32,512) 223,635
Cash and cash equivalents - at beginning of period 728,994 354,564
--------- ---------
Cash and cash equivalents - at end of period $ 696,482 $ 578,199
========= =========
Cash paid during period for:
Interest $ 312,481 $ 292,829
========= =========
Income taxes $ 0 $ 48,306
========= =========
Sonics & Materials, Inc.
Notes to Consolidated Condensed Financial Statements
March 31, 2001
(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 and nine months ended March 31, 2001 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 are
as follows:
Basic and Diluted
Weighted Shares Outstanding
For the Nine Months Ended March 31,
-----------------------------------
2001 2000
--------- ---------
Basic shares 3,520,100 3,520,100
Dilution (stock options) -- 6,798
--------- ---------
Weighted average number of common and common
equivalent shares 3,520,100 3,526,898
========= =========
NOTE 4: Loan Covenants
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 March 31, 2001, the Company met the
quarterly but was in violation of the trailing six-month test. The bank has
provided a waiver for this violation.
During the second and third quarter of Fiscal Year 2001, and continuing into the
fourth quarter of Fiscal Year 2001, the Company scaled back operations at both
its Newtown, Connecticut facility and at Tooltex, Inc., its wholly-owned
subsidiary. Based on projected cost savings, management believes it is probable
that the Company will be in compliance with the loan covenants for the fourth
quarter.
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 objectives 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 Ultra Sonic Seal
line of 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, Inc.
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
During the second and third quarters of Fiscal Year 2001, and continuing
into the fourth quarter of Fiscal Year 2001, the Company implemented an
extensive restructuring program. The result has been a significant reduction in
costs, primarily through layoffs and attrition. On an annualized basis, the
Company estimates that it has reduced its expenses by approximately $1,800,000.
During the second quarter, the Company incurred a one-time severance charge
associated with the layoffs of $42,000. The severance charge was paid in full
during the third quarter of this fiscal year.
In May 2000 Sonics' management and Board of Directors elected to
discontinue the Company's VibraSurge operation after reviewing the marketability
of its line of ultrasonic surgical products and its recurring operating losses.
As a result, for Fiscal Year 2000, the Company's balance sheet, statements of
income, and statements of cash flows have been reclassified to report the net
assets and operating results of the VibraSurge business as discontinued. As of
June 30, 2000, VibraSurge operations ceased and remaining net assets, consisting
principally of inventory and accounts receivable, have been written off.
Three months ended March 31, 2001 compared to the three months ended March 31,
2000.
Net sales. Net sales for the quarter ended March 31, 2001 decreased
$875,000 or 23.9% compared to the quarter ended March 31, 2000. This decrease is
primarily the result of a decline in sales of its plastic welding equipment and
specialized equipment sales by its wholly-owned subsidiary, Tooltex, Inc. Sales
at Tooltex were adversely affected when a customer delayed delivery on a major
order. Management believes this product will be delivered in the fourth quarter.
Cost of Sales. Cost of sales decreased from 62.6% of net sales for the
three months ended March 31, 2000 to 60.5% of sales for the three months ended
March 31, 2001. A shift to higher-margin standard products, as opposed to
specialty products, accounted for this improvement.
Selling Expenses. Selling expenses for the third quarter of Fiscal Year
2001 decreased $275,000 or 34.0% compared with the same period in Fiscal Year
2000. As a percentage of net sales, selling expenses decreased from 22.1% to
19.2% in these same periods. This decrease is due to the implementation of a
Company wide restructuring program that began in the second quarter of Fiscal
Year 2001. As part of the restructuring program, the Company reorganized its
sales department and reduced the number of employees through both attrition and
layoffs.
General and Administrative Expenses. General and administrative expenses
for the third quarter of Fiscal Year 2001 increased $59,000 or 21.5% over the
third quarter of fiscal 2000. As a percentage of net sales, these expenses
increased, from 7.5% to 12.0% over the same periods. This increase is primarily
the result of an increase in legal and professional fees.
Interest Expense. Interest expense for the third quarter of fiscal 2001
decreased by $11,000 compared with the same period in Fiscal Year 2000. This was
due to a decrease in interest rates and lower principal balances.
Income Taxes. A tax accrual of $36,000. for nine months ending March 31,
2001 consisted primarily of state income taxes. The Company has not accrued the
Federal tax benefit of the current period net operating loss because its
realization is uncertain.
Nine months ended March 31, 2001 compared to the nine months ended March 31,
2000.
Net sales. Net sales for the nine months ended March 31, 2001 decreased
$1,877,000 or 18.1% compared with the same period in Fiscal Year 2000. The
decrease is primarily the result of a decline in sales of specialty equipment by
Tooltex, Inc., as well as a continued slowdown in the economy, which appears to
have affected sales of the Company's plastic welding equipment. However, despite
the economic slowdown, the Company continues to see growth in its liquid
processing product line.
Cost of Sales. Cost of sales decreased from 63.4% of net sales for the
nine months ended March 31, 2000 to 62.2% of sales for the nine months ended
March 31, 2001. A shift to higher-margin standard products, as opposed to
specialty products, accounted for this improvement.
Selling Expenses. Selling expenses for the first three quarters of fiscal
2001 decreased $158,000 or 7.4% compared with the same period in Fiscal Year
2000. As a percentage of net sales, selling expenses increased from 20.6% to
23.2% over the same periods. The selling expenses decreased due to the second
quarter restructuring program. The selling expenses as a percentage of sales
increased due to the fact that the percentage decline of sales was greater than
the percentage decline of selling expenses.
General and Administrative Expenses. General and administrative expenses
for the first three quarters of fiscal 2001 increased $120,000 or 14.4% over the
first three quarters of fiscal 2000. As a percentage of net sales, these
expenses increased from 8.0% to 11.2% over the same periods. This increase is
the result of increased professional fees and legal fees.
Interest Expense. Total interest expense decreased for the first three
quarters of Fiscal Year 2001 by $8,000 or 2.6%. This is due to a decrease in
interest rates and lower principal balances.
Income Taxes. A tax accrual of $36,000. for nine months ended March 31,
2001, consisted primarily of state income taxes. The Company has not accrued the
Federal tax benefit of the current period net operating loss because its
realization is uncertain.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position increased approximately $167,000 during the three
months ended March 31, 2001.The principal factors accounting for this increase
were improved accounts receivable collection performance and a higher level of
accounts payable, which was partially offset by a reduction of customer
deposits. During the first three quarters of the Fiscal Year 2001, the Company's
cash position declined by $33,000. This slight decline was caused by a
combination of factors. The Company's cash flow increased by improved collection
of accounts receivable and increased accounts payable. This increase was
essentially offset by the losses sustained in the first half of the Fiscal Year
2001 and an increase in inventory.
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 (8.0% at March 31, 2001). 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, 2001 was $1,390,000, will mature and be due and payable upon
the demand of the Bank. The borrowings under the Line of Credit may be prepaid
in whole or in part, without premium or penalty, at any time.
The outstanding principal amount of the Company's Term Loan at March 31, 2001 is
$119,308, which bears interest, at the Bank's base lending rate (8.0% at March
31, 2001). 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 this 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 March 31, 2001 was
$3,358,816, which bears interest at a rate of 75% of the Bank's base lending
rate (6.00% at March 31, 2001). The Company's current lender purchased the bonds
pursuant to the credit agreement. The proceeds were used in part to pay then
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.
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 March 31, 2001, the company met the
quarterly test but was in violation of the trailing six-month test. The bank has
provided a waiver for this violation.
During the second and third quarter of Fiscal Year 2001, and continuing into the
fourth quarter of Fiscal Year 2001, the Company scaled back operations at both
its Newtown, Connecticut facility, and at Tooltex, Inc., its wholly-owned
subsidiary. Based on projected cost savings, management believes it is probable
that the Company will be in compliance with the loan covenants for the fourth
quarter.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 complies with the provisions 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.
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).
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 14, 2001 By /s/ Robert S. SOLOFF
----------------------- -----------------------------------
Robert S. Soloff
President, Chief Executive Officer,
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Location of Exhibit in
Description Sequential Numbering System
3(i) Certificate of Incorporation of Incorporated by reference from
the 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 Incorporated by reference from
between the Registrant and Robert Exhibit 10.1 of Registration
S. Soloff. Statement No. 33-96414
10(ii) 1995 Incentive Stock Option Plan Incorporated by reference from
and form of Stock Option Exhibit 10.3 of Registration
Agreement. 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 Incorporated by reference from
and Robert Lenert (Naperville, IL). Exhibit 10.6 of Amendment No. 4
to Registration Statement
No. 33-96414
10(v) Lease between Registrant and Incorporated by reference from
Janine Berger (Gland, Switzerland). 10.7 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 Incorporated by reference from
Agreement. Exhibit 10.9 of Registration
Statement No. 33-96414
10(viii) Agreement and Plan of Merger, Incorporated by reference from
dated as of July 25, 1997, among Exhibit 2(a) of Registrant's Form
the Registrant, SM Sub, Inc., 8-K dated July 25, 1997
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
July 25, 1997, among the Exhibit 2(b) of the Registrant's
Registrant, SM Sub, Inc. and Form 8-K dated July 25, 1997).
Tooltex, Inc.
10(x) Credit Agreement, dated September Incorporated by reference from
19, 1997, between Brown Brothers Exhibit 10 (xii) of the
Harriman & Co. and Registrant Registrant's Form 10-KSB for the
year ended June 30, 1997
10(xi) Term Loan 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 $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 Exhibit 10 (xiv) of the
Harriman & Co. dated September 19, Registrant's Form 10-KSB for the
1997. year ended June 30, 1997
10(xv) General Security Agreement from Incorporated by reference from
Registrant to Brown Brothers Exhibit 10 (xvii) of the
Harriman & Co. dated September 19, Registrant's Form 10-KSB for the
1997. year ended June 30, 1997
10(xvi) Loan Agreement between Connecticut Incorporated by reference from
Development Authority and Sonics & Exhibit 10 (xvi) of the
Materials dated December 1, 1997 Registrants Form 10-KSB 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 21 of the Registrants
Form 10-KSB for the year ended
June 30, 1998