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, 1998
                                      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
                                Newton, CT 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 13, 1997, there were 3,590,100 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, 1998 and June 30, 1997                           3
 
           Consolidated Condensed Statements of Operations -
             For the Three and Nine Months Ended
             March 31, 1998 and 1997                                    4
 
 
           Consolidated Condensed Statements of Cash Flows -
             For the Nine Months Ended
             March 31, 1998 and 1997                                    5

           Notes to Consolidated Condensed Financial Statements         6

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                8

PART II - OTHER INFORMATION

Item 2 (d) Changes in Securities and Use of Proceeds11

Item 4.    Submission of Matters to a Vote of Security Holders11

Item 6.    Exhibits and Reports on Form 8-K                             11

Signatures                                                              13

Index to Exhibits                                                       14

Exhibit 27 - Financial Data Schedule                                    15





*  The Balance Sheet at June 30, 1997 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

                                                 March 31,            June 30,
                                                  1998                  1997
                                               (unaudited)               *
ASSETS
CURRENT ASSETS
           Cash and cash equivalents            $     74,508        $    271,593
             Short-term investments                1,576,922           1,665,470
    Accounts receivable, net of allowance
        for doubtful accounts of $97,000
        at March 31,1998 and $45,000
        at June 30, 1997                           2,276,399           1,854,118
    Inventories                                    4,421,426           3,718,250
    Prepaid income taxes                             175,387             150,061
    Deferred taxes                                    80,000              80,000
    Other current assets                               5,066             137,562
                                                ____________        ____________

        Total current assets                       8,609,708           7,877,054

PROPERTY PLANT & EQUIPMENT - NET                   3,111,498             364,354

GOODWILL - NET                                     1,017,590                   -

OTHER ASSETS                                         748,002             917,709

RESTRICTED CASH FROM INDUSTRIAL REVENUE BOND       1,296,944                   -
                                                ____________        ____________
 
                                                $ 14,783,742        $  9,159,117
                                                ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Notes payable                               $  1,465,101        $    500,000
    Current maturities of long-term debt             342,259             116,600
    Accounts payable                               1,081,329             804,653
    Commissions payable                              143,907             235,203
    Other accrued expenses and sundry 
      liabilities                                    422,811             278,310
                                                ____________        ____________
 
        Total current liabilities                  3,455,407           1,934,766

LONG TERM DEBT, NET OF CURRENT PORTION             4,285,936             406,911

COMMITMENTS                                             -                   -

STOCKHOLDERS' EQUITY
    Common stock - par value $.03 per share; 
        authorized 10,000,000 shares; issued 
        and outstanding, 3,590,100 shares at 
        March 31, 1998, and 3,520,100 shares 
        at June 30, 1997                             107,703             105,603
    Additional paid in capital                     6,766,897           6,539,597
    Retained earnings                                167,799             172,240
                                                ____________        ____________

        Total stockholders' equity                 7,042,399           6,817,440
                                                ____________        ____________

                                                $ 14,783,742        $  9,159,117
                                                ============        ============


    * Taken from the audited financial statements at June 30, 1997.

               The accompanying notes are an integral part of these statements.

                                        3
<PAGE>
                         Sonics & Materials, Inc.
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                  (unaudited)

                         For the Three Months Ended    For the Nine Months Ended
                                 March 31,                    March 31, 
                      _____________________________  ___________________________

                           1998            1997          1998          1997   
                      _______________  ____________  ____________ ______________

Net sales                $2,990,272     $2,483,067   $8,922,039     $7,764,822
Cost of sales             1,784,302      1,285,710    5,139,179      4,015,449
                      _______________  ____________  ____________ ______________
 
Gross profit              1,205,970      1,197,357    3,782,860      3,749,373
 
Operating expenses
    Selling expense         806,612        790,256    2,421,431      2,350,366
    General and 
      administrative        382,346        205,926    1,009,583        717,697
    Research and
      development           141,347        131,444      440,600        381,181
                      _______________  ____________  ____________ ______________
 
Total operating 
  expenses                1,330,305      1,127,626    3,871,614      3,449,244
 Other income 
  (expense)
    Interest income          70,959         43,227      124,089        118,691
    Interest expense        (23,872)        (9,335)    (138,609)       (60,646)
    Other                      (971)         2,671       72,506          1,478
                      _______________  ____________  ____________ ______________
 
                             46,116         36,563       57,986         59,523
Income (loss) 
  before provision 
  for income taxes          (78,219)       106,294      (30,768)       359,652
 
Provision (benefit)  
  for income taxes           (3,918)        42,518             0       143,861
                      _______________  ____________  ____________ ______________
 
Net Income (loss)        $  (74,301)    $   63,776   $  (30,768)    $  215,791
                      ===============  ============  ============ ==============
INCOME (LOSS) PER
  SHARE - BASIC                                 
Net income per 
  share                      $ (.02)         $ .02      $  (.01)         $ .06
                      ===============  ============  ============ ==============
Weighted average 
  number of shares 
  outstanding             3,590,100      3,501,233    3,583,759      3,500,472
                      ===============  ============  ============ ==============
INCOME (LOSS) PER 
  SHARE - DILUTED                                   
Net income per share         $ (.02)         $ .02      $  (.01)         $ .05
                      ===============  ============  ============ ==============
Weighted average 
  number of shares 
  outstanding             3,590,100      3,829,839    3,583,759      4,455,342
                      ===============  ============  ============ ==============

        The accompanying notes are an integral part of these statements.


                                        4
<PAGE>
                           Sonics & Materials, Inc.
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (unaudited)
                      For the Nine Months Ended March 31,

                                                   1998               1997
                                            _________________  _________________

Net cash used in operations                 $     (801,894)      $    (532,272)
 
Net cash  provided by (used in)
 investing activities                           (2,707,033)          1,098,437
 
Net cash provided by (used in) 
 financing activities                            3,311,842            (480,000)
                                            _________________  _________________
 
Net increase (decrease) in cash and
  cash equivalents for the period                  197,085              86,165
 
Cash and cash equivalents - at beginning 
  of period                                        271,593              73,129
                                            _________________  _________________
                                    
Cash and cash equivalents - at end of 
  period                                    $       74,508       $     159,294
                                            =================  =================
Cash paid during period for:
    Interest                                $      134,527       $      65,903
                                            =================  =================
    Income taxes                            $            -       $           -
                                            =================  =================

Supplemental schedule of noncash
  financing activities:
    Net proceeds from Industrial 
      Revenue Bond                          $    3,810,000
    Repayment of Bridge Loan                    (1,343,538)
    Purchase and preparation of 
      new facility                              (1,169,518)
                                            ______________
        Restricted cash from Industrial
          Revenue Bond                      $    1,296,944
                                            ==============


        The accompanying notes are an integral part of these statements.

                                        5
<PAGE>
                           Sonics & Materials, Inc.
                Notes to Consolidated Financial Statements
                              March 31, 1998
                                (unaudited)
 
     NOTE 1:  Basis of Presentation 
The  accompanying  financial  statements  of  Sonics  &  Materials,   Inc.  (the
"Company")  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 management's discussion and analysis, contained on Form 10-KSB for the year
ended June 30,  1997.  The results of  operations  for the three and nine months
ended  March 31,  1998 are not  necessarily  indicative  of the  results for the
entire fiscal year ending June 30, 1998.

     NOTE 2: Consolidation 
The accompanying  financial statements for the three and nine months ended March
31, 1998 reflect the  consolidated  operations of Sonics & Materials,  Inc., and
its  wholly-owned   subsidiary,   Tooltex,  Inc.  ("Tooltex).   All  significant
intercompany accounts and transactions have been eliminated in consolidation.

     NOTE 3:  Net  Income  Per Share  
Basic income per share is based on the weighted  average number of common shares
outstanding  during  the  period.  Diluted  income  per  share  is  based on the
assumption  that all dilutive  securities were converted at the beginning of the
period or at the issue date, if later.

The weighted average number of shares  outstanding for the periods  presented is
as follows:

                    Three months ended March 31,    Nine months ended March 31,
                    ____________________________   _____________________________

                       1998            1997           1998              1997
                    _____________  _____________   _____________  ______________

Basic shares        3,590,100       3,501,233      3,583,759         3,500,472
Dilution (warrants 
  and options)         -              328,606           -              954,869
                    _____________  _____________   _____________  ______________

Diluted shares      3,950,100       3,829,839      3,583,759         4,455,342

                    =============  =============   =============  ==============

     NOTE 4:  Acquisition  of Tooltex,  Inc.  
On July 25, 1997,  the Company  acquired,  through a newly  formed  wholly-owned
subsidiary, 100% of the stock of Tooltex. Tooltex is a manufacturer of automated
systems used in the plastics industry.  The shareholders  received,  in exchange
for 100% of the stock of  Tooltex,  (i) an  aggregate  of  70,000  shares of the
Company's common stock, par value $.03 per share, (ii) $70,000 and (iii) options
to purchase 10,000 shares of the Company's  common stock. The purchase price was
allocated to the assets acquired based on their estimated fair value. The excess
total  acquisition  costs  over the fair  value of the net  assets  acquired  of
approximately  $1,057,000  is to be amortized  on a straight  line basis over 20
years. The Company had sales to Tooltex of approximately $38,000 and $67,000 for
the three and nine months ended March 31, 1997, respectively. At the time of the
acquisition,  the  Company  had a  receivable  of  approximately  $254,000  from
Tooltex. The sales and results of operations of Tooltex for the period from July
1, 1997, to July 25, 1997 were not material.

The following  unaudited pro forma  consolidation  for the three and nine months
ended  March 31,  1997,  shows the  results  of  operations,  assuming  that the
purchase had occurred on July 1, 1996.  The  unaudited pro forma results are not
necessarily  indicative of what actually would have occurred if the  acquisition
had been in effect for the entire period. In addition,  they are not intended to
be a projection of future results.
 
                                Three Months Ended        Nine Months Ended 
                                  March 31, 1997            March 31, 1997
                                __________________        _________________
Revenues                           $2,812,773                 $9,219,975
Net loss                              (11,145)                   (98,647)
Net loss per share                        ($-)                     ($.03)

                                        6
<PAGE>
                           Sonics & Materials, Inc.
           Notes to Consolidated Financial Statements (Continued)
                              March 31, 1998
                                (unaudited)

     NOTE 5:  Financing  
On September 19, 1997, the Company  entered into three credit  facilities with a
bank (the "Bank"), each of which is secured by a first mortgage lien on property
the Company acquired in Newtown, CT: (i) a Bridge Loan in the original principal
amount of  $1,600,000;  (ii) a Line of Credit of up to  $1,500,000;  and (iii) a
Term Loan in the original principal amount of $427,000.

The Bridge  Loan which  bore  interest  at the  Bank's  base  lending  rate plus
one-half percent (9.0% at March 31, 1998), was repaid in full in December 1997.

The Line of Credit  is used by the  Company  for  working  capital.  The Line of
Credit  bears  interest,  at the  Company's  option,  at either the Bank's  base
lending  rate (8.5% at March 31,  1998) or LIBOR  plus 2.5%  (8.19% at March 31,
1998). 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,  1998 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. In the event of the  prepayment of any portion
of the Line of Credit  during  any  period  in which  the Line of  Credit  bears
interest at a LIBOR rate,  Sonics will be  obligated  to pay the Bank a breakage
fee relating to the LIBOR interest component. The Line of Credit is also secured
by all of the Company's assets.

     The  proceeds  of the Term  Loan  were used to pay in full a term loan with
another bank with interest and principal totaling  $427,000.  The term loan with
the other bank bore  interest at such bank's loan pricing rate of interest  plus
one-half percent.  The outstanding  principal amount of the Term Loan at May 15,
1998 is $345,972,  which bears interest, at Sonics' option, at either the Bank's
base  lending  rate (8.5% at March 31,  1998) or LIBOR plus 2.5% (8.19% at March
31,  1998).  The  principal  of the Term Loan  must be paid in 36 equal  monthly
installments  of  $11,861,  which  commenced  on November 1, 1997 and the entire
remaining  principal  balance  will  mature and be due and payable on October 1,
2000. 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.  The
Term Loan is also secured by all of the Company's assets.

     In December 1997, the Company issued  Industrial  Revenue Bonds through the
Connecticut Development Authority in the amount of $3,810,000. The proceeds were
used in part to pay in full the  outstanding  interest and  principal due on the
Bridge Loan discussed above.  The remaining  proceeds are to be used exclusively
for the purchase and preparaion of the Company's new facilities, and to purchase
new machinery and  equipment.  The Company has used a total of $1,369,518 of the
proceeds for these purposes  through March 31, 1998.  Unapplied  funds have been
invested  in  short-term  securities.  The  Bonds,  held by the Bank,  mature in
November  2017,  and bear interest at 75% of the Bank's base lending rate (6.4 %
at March 31, 1998). The Company is to begin to redeem the principal in 228 equal
monthly installments of $16,700 beginning December 1998.

     NOTE 6:  Recently Issued Accounting Pronouncements
In June  1997,  SAFS  130,  "Reporting  Comprehensive  Income",  and  SFAS  131,
"Disclosures  About  Segmens of an  Enterprise  and  Related  Information"  were
issued.  SFAS 130 addresses standards for reporting and display of comprehensive
income  and its  components,  and SFAS 131  requires  disclosure  of  reportable
operating  segments.  In February 1998, SFAS 132,  "Employers'  Disclosure About
Pensions  and Other  Post-retirement  Plans" was issued.  SFAS 132  standardizes
pension disclosures. These statements are effective in 1998. The Company will be
reviewing these  pronouncements to determine their applicability to the Company,
if any.

                                        7
<PAGE>

Any  statements in this filing that are not  statements  of historical  fact are
forward-looking  statements that are subject to a number of  uncertainties  that
could  cause  actual  results to differ  materially.  Specifically,  any forward
looking statements in this filing related to the Company's  objectives of 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  division  products,  pricing,
market  acceptance  of existing and new  products,  a  fluctuation  in the sales
product mix, general economic conditions,  competitive products, and product and
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 a patent will be granted for the Company's  ultrasonic  surgical device,
or whether any related  patent  litigation  may hinder the Company's  ability to
market the 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.  The Company
undertakes no obligation to release data hereof or for this statement to reflect
the occurrence of unanticipated events.

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     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  annual report on Form 10-KSB for the year ended June
30, 1997.

RESULTS OF OPERATIONS

     Three months ended March 31, 1998  compared to three months ended March 31,
1997.

     Net  sales.  Net sales for the  quarter  ended  March  31,  1998  increased
$507,000  or  20.4%.  This  increase  is  the  result  of  the  acquisition  and
consolidation of Tooltex.

     Cost of Sales.  Cost of sales  increased  from 51.8% of sales for the three
months  ended March 31, 1997 to 59.7% of sales for the three  months ended March
31, 1998. A portion of this increase is attributable to increased coast of sales
associated with the acquisition and consolidation of Tooltex.  In addition,  the
Company has experienced  increased costs  associated with the manufacture of the
vibration  welder in connection with the continuing  redesign of the product for
better cost  effectiveness.  These factors,  combined with a change in the sales
product mix, account for this increase in cost of sales as a percent of sales.

     Selling  Expenses.  Selling  expenses for the third  quarter of fiscal 1998
increased  $16,000 or 2.1% over the same period in fiscal 1997.  As a percentage
of net sales, these expenses remained relatively  constant,  decreasing to 27.0%
for the three  months ended March 31, 1998 from 31.8% for the three months ended
March 31,  1997.  This  increase is  primarily a result of the  acquisition  and
consolidation of Tooltex.

     General and Administrative  Expenses.  General and administrative  expenses
for the third quarter of fiscal 1998 increased  $176,000 or 85.7% over the third
quarter of fiscal 1997. As a percentage of net sales,  these expenses  increased
to 12.8%  from 8.3% over the same  period in fiscal  1997.  This  increase  is a
result  of  increased   professional   fees  as  well  as  the  acquisition  and
consolidation of Tooltex.  The Company began consolidating the financial results
of  Tooltex  as of July 1,  1997.  As such,  the  March  1998  quarter  reflects
consolidated results, whereas the comparable 1997 quarter does not.

     Research  and  Development  Expenses.  Research  and  development  expenses
remained  relatively  constant over the two periods,  increasing $9,900 or 7.5%.
This increase is primarily  attributable to testing of the Company's Vibra-Surge
ultrasonic aspirator to certify the product of sale in European markets.

     Interest  Income.  Interest  income for the third  quarter  of fiscal  1998
increased by $28,000 over the same period in fiscal 1997.  This is the result of
the investment of the proceeds from the Industrial  Revenue Bond issue discussed
further under Liquidity and Capital Resources.

                                        8
<PAGE>

     Interest  Expense.  Total interest expense  increased by $14,000 or 155.7%.
This is due to  increased  debt  carried by the Company in  connection  with the
purchase of real property in Newtown,  Connecticut.  A more detailed explanation
of the new credit  facilities  can be found in Liquidity and Capital  Resources.
The Company also had higher  average  borrowings  on it's line of credit than in
the third quarter of fiscal 1997.

     Income Taxes. Total income tax expense for the three months ended March 31,
1998  decreased  $46,000 or 109.2%  compared to the three months ended March 31,
1997. The lower provision is the result of lower income before taxes,  offset by
an increase in non-deductible expenses, namely, amortization of goodwill arising
from the acquisition of Tooltex.

Nine months ended March 31, 1998 compared to nine months ended March 31, 1997.

     Net sales.  Net sales for the nine months  ended  March 31, 1998  increased
$1,157,000  or 14.9%  over the same  period in fiscal  1997.  This  increase  is
primarily the result of the acquisition and consolidation of Tooltex,  offset by
decreased sales volume generated by the Company's Aston, PA division.

     Cost of Sales. Cost of sales increased $1,124,000,  from 51.7% of sales for
the nine months ended March 31, 1997 to 57.6% of sales for the nine months ended
March 31, 1998.  This increase is partially  attributable to the acquisition and
consolidation of Tooltex.  In addition,  cost of sales for the nine months ended
March 31, 1998 was 55.5% of sales,  excluding the effect of the consolidation of
Tooltex,  compared  to 51.7% for the same  period  last year.  The  Company  has
experienced  increased  costs  associated  with the manufacture of the vibration
welder in an effort to redesign the product for better cost effectiveness. These
factors, combined with a change in the product mix, account for this increase in
cost of sales as a percent of sales.

     Selling Expenses. Selling expenses for the first nine months of fiscal 1998
increased  $71,000 or 3.0% over the same period in fiscal 1997.  As a percentage
of net sales these  expenses  decreased to 27.1% from 30.3% over the same period
in fiscal 1997.  This decrease in selling  expenses as a percentage of net sales
is a result of the Company maintaining fixed costs while increasing sales.

     General and Administrative  Expenses.  General and administrative  expenses
for the first six months of fiscal  1998  increased  $292,000  or 40.7% over the
same  period in fiscal  1997.  As a  percentage  of net  sales,  these  expenses
increased to 11.3% from 9.2% over the same period in fiscal 1997.  This increase
is a  result  of  increased  professional  fees as well as the  acquisition  and
consolidation of Tooltex.  The Company began consolidating the financial results
of Tooltex as of July 1, 1997.  As such,  the first nine  months of fiscal  1998
reflects consolidated results, whereas the comparable 1997 period does not.

     Research  and  Development  Expenses.  Research  and  development  expenses
increased $59,000 or 15.6% over the same period in fiscal 1997. The increase was
primarily  due to  increased  use of outside  consulting  services  for  several
development projects in the first quarter.

     Interest Income.  Interest income remained relatively constant,  increasing
approximately $4,000 or 3.7% over the same period in fiscal 1997.

     Interest  Expense.  Total interest expense  increased by $78,000 or 128.6%.
This is due to  increased  debt  carried by the Company in  connection  with the
purchase of real property in Newtown,  Connecticut.  A more detailed explanation
of the new credit facilities can be found under Liquidity and Capital Resources.
The Company also had higher average borrowings on its line of credit than in the
second  quarter of fiscal 1997.  

     Other  Income.  Other  income  for the nine  months  ended  March 31,  1998
increased by $71,000, or 4,738% over the same period in fiscal 1997. This is the
result of the  acquisition  and  consolidation  of Tooltex.  Tooltex  recognized
approximately $62,000 resulting from the forgiveness of debts by its vendors.

                                        9
<PAGE>

     Income Taxes.  Total income tax expense for the nine months ended March 31,
1998  decreased  $143,000 or 100.0%  compared to the nine months ended March 31,
1997. The lower provision is the result of lower income before taxes,  offset by
an increase in non-deductible expenses, namely, amortization of goodwill arising
from the acquisition of Tooltex.

LIQUIDITY AND CAPITAL RESOURCES

Operations  of the Company used  approximately  $802,000  during the nine months
ended March 31, 1998 as a result of increased  inventory and accounts receivable
and a reduction in accounts  payable  balances.  During the first nine months of
fiscal  1998,  the  Company  invested  approximately  $543,000  in  new  capital
equipment and leasehold  improvements and $2,175,000 in land and a building that
will be used to consolidate the Company's  manufacturing and office  facilities.
As of June 30, 1997, the Company's  working capital was $5,942,000.  As of March
31, 1998, the Company's working capital had decreased to 5,514,000  representing
a decrease of  approximately  13.3% over June 30, 1997 levels.  This decrease is
the result of increased current debt carried by the Company.

The  Company's  principal  credit line is a $1,500,000  bank credit  facility as
described below.

On September 19, 1997, the Company  entered into three credit  facilities with a
bank (the "Bank"), each of which is secured by a first mortgage lien on property
the Company acquired in Newtown, CT: (i) a Bridge Loan in the original principal
amount of  $1,600,000;  (ii) a Line of Credit of up to  $1,500,000;  and (iii) a
Term Loan in the original principal amount of $427,000.

The Bridge  Loan which  bore  interest  at the  Bank's  base  lending  rate plus
one-half percent (9.0% at March 31, 1998), was repaid in full in December 1997.

The Line of Credit  is used by the  Company  for  working  capital.  The Line of
Credit  bears  interest,  at the  Company's  option,  at either the Bank's  base
lending  rate (8.5% at March 31,  1998) or LIBOR  plus 2.5%  (8.19% at March 31,
1998). 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,  1998 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. In the event of the  prepayment of any portion
of the Line of Credit  during  any  period  in which  the Line of  Credit  bears
interest at a LIBOR rate,  Sonics will be  obligated  to pay the Bank a breakage
fee relating to the LIBOR interest component. The Line of Credit is also secured
by all of the Company's assets.

The  proceeds of the Term Loan were used to pay in full a term loan with another
bank with interest and principal totaling $427,000. The term loan with the other
bank bore  interest at such bank's loan pricing rate of interest  plus  one-half
percent.  The outstanding  principal  amount of the Term Loan at May 15, 1998 is
$345,972,  which bears interest,  at Sonics'  option,  at either the Bank's base
lending  rate (8.5% at March 31,  1998) or LIBOR  plus 2.5%  (8.19% at March 31,
1998).  The  principal  of the  Term  Loan  must  be paid  in 36  equal  monthly
installments  of  $11,861,  which  commenced  on November 1, 1997 and the entire
remaining  principal  balance  will  mature and be due and payable on October 1,
2000. 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.  The
Term Loan is also secured by all of the Company's assets.

In December  1997,  the Company  issued  Industrial  Revenue  Bonds  through the
Connecticut Development Authority in the amount of $3,810,000. The proceeds were
used in part to pay in full the  outstanding  interest and  principal due on the
Bridge Loan discussed above.  The remaining  proceeds are to be used exclusively
for the purchase and preparaion of the Company's new facilities, and to purchase
new machinery and  equipment.  The Company has used a total of $1,369,518 of the
proceeds for these purposes  through March 31, 1998.  Unapplied  funds have been
invested  in  short-term  securities.  The  Bonds,  held by the Bank,  mature in
November  2017,  and bear interest at 75% of the Bank's base lending rate (6.4 %
at March 31, 1998). The Company is to begin to redeem the principal in 228 equal
monthly installments of $16,700 beginning December 1998.

Management  has  initiated  a  company-wide  program  to prepare  the  Company's
computer system and applications for the year 2000, as well as identify critical
third parties which the Company relies upon to

                                        10
<PAGE>

operate its business to assess  their  readiness  for the year 2000.  Management
cannot presently  estimate the cost of this program;  however such costs are not
currently  expected to be  material to the  Company's  operations  or  financial
condition.  There can be no assurance that the systems of other  companies which
the Company's systems rely upon will be timely  converted,  or that such failure
to convert by another  company would not have a material  adverse  effect on the
Company's systems and results of operations.

                                        11
<PAGE>

PART II - OTHER INFORMATION

Item 2.  Change in Securities.

(d)  The Company completed its initial public offering of securities pursuant to
     a  registration  statement (No.  33-96414)  that was declared  effective on
     February 26, 1996.  As of May 15,  1998,  the Company has applied  proceeds
     from the offering in the  following  approximate  amounts to the  following
     categories.

                                                           Amount of Payments
Repayment of Indebtedness                                     $1,670,000
Acquisition of other business                                     92,598
Working capital and general corporate use                      1,268,916
                                                           __________________
   Total                                                      $3,031,514
                                                           ==================


Item 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits.

   3(i)      Certificate of Incorporation of the Registrant, as amended.
             (Previously filed as Exhibit 3.1 of Amendment No. 3 to Registration
             Statement No. 33-96414)
   3(ii)     Amended By-laws of the Registrant. (Previously filed as Exhibit 3.2
             of Registration Statement No. 33-96414)
   10(i)     Form of Employment Agreement between the Registrant and Robert S.
             Soloff.  (Previously filed as Exhibit 10.1 of Registration 
             Statement No. 33-96414)
   10(ii)    1995 Incentive Stock Option Plan and form of Stock Option 
             Agreement. (Previously filed as Exhibit 10.3 of Registration 
             Statement No. 33-96414)
   10(iii)   Original Office Lease and Amendments between the Registrant and
             Nicholas R. DiNapoli, Jr. DBA DiNapoli Holding Co. (Danbury, CT).
             (Previously filed as Exhibit 10.4 of Registration Statement No. 
             33-96414)
   10(iv)    Lease between Registrant and Aston Investment Associates (Aston, 
             PA). (Previously filed as Exhibit 10.5 of Registration Statement 
             No. 33-96414)
   10(v)     Amended lease between Registrant and Robert Lenert (Naperville, 
             IL). (Previously filed as Exhibit 10.6 of Amendment No. 4 to 
             Registration Statement No. 33-96414)
   10(vi)    Lease between Registrant and Janine Berger (Gland, Switzerland).
             (Previously filed as Exhibit 10.7 of Registration Statement No. 
             33-96414)
   10(vii)   Form of Sales Representation Agreement.(Previously filed as Exhibit
             10.8 of Registration Statement No. 33-96414)
   10(viii)  Form of Sales Distribution Agreement. (Previously filed as Exhibit 
             10.9 of Registration Statement No. 33-96414)
   10(ix)    Consulting Agreement dated October 17, 1995 between the Registrant 
             and Alan Broadwin.  (Previously filed as Exhibit 10.10 of  
             Amendment No. 3 of Registration Statement No. 33-96414)

                                        12
<PAGE>

   10(x)     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(xi)    Agreement of Merger dated July 25, 1997, among the Registrant, SM 
             Sub, Inc., and Tooltex, Inc. (incorporated by reference from 
             Exhibit 2(b) of the Registrant's 8K dated July 25, 1997).
   10(xii)   Credit Agreement, dated September 19, 1997 between Brown Brothers
             Harriman & Co. and Registrant (filed with Registrant's 10KSB dated 
             September 25, 1997).
   10(xiii)  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  (filed with Registrant's 10KSB dated 
             September 25, 1997). 
   10(xiv)   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  (filed with Registrant's 10KSB 
             dated September 25, 1997).
   10(xv)    Bridge Loan Note of Registrant dated September 19, 1997, payable to
             the order of Brown Brothers Harriman & Co. in the original 
             principal amount of $1,600,000  (filed with Registrant's 10KSB 
             dated September 25, 1997).
   10(xvi)   Open-End Mortgage Deed from Registrant to Brown Brothers Harriman &
             Co. dated September 19, 1997 (filed with Registrant's 10KSB dated 
             September 25, 1997).
   10(xvii)  General Security Agreement from Registrant to Brown Brothers 
             Harriman & Co. dated September 19, 1997 (filed with Registrant's 
             10KSB dated September 25, 1997).
   27        Financial Data Schedule.  (Filed Herewith)

 (b) none


                                        13
<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, 1998                 By /s/Robert S. Soloff     
                                   ---------------------------
                                   Robert S. Soloff
                                   President, Chief Executive Officer,
                                   Chief Financial Officer


                                        14
<PAGE>

                                 EXHIBIT INDEX

Exhibit                 Description                     Location of Exhibit in 
  No.                                                Sequential Numbering System
                                                        
3(i)      Certificate of Incorporation of the    Previously filed as Exhibit 3.1
          Registrant, as amended.                of Amendment No. 3 to 
                                                 Registration Statement No. 
                                                 33-96414
3(ii)     Amended By-laws of the Registrant.     Previously filed as Exhibit 3.2
                                                 of Registration Statement No. 
                                                 33-96414
10(i)     Form of Employment Agreement between   Previously filed as Exhibit
          the Registrant and Robert S. Soloff.   10.1 of Registration Statement
                                                 No. 33-96414 
10(ii)    1995 Incentive Stock Option Plan and   Previously filed as Exhibit
          form of Stock Option Agreement.        10.3 of Registration Statement
                                                 No. 33-96414
10(iii)   Original Office Lease and Amendments   Previously filed as Exhibit
          between the Registrant and Nicholas    10.4 of Registration Statement
          R. DiNapoli, Jr. DBA DiNapoli Holding  No. 33-96414
          Co. (Danbury, CT). 
10(iv)    Lease between Registrant and Aston     Previously filed as Exhibit
          Investment Associates (Aston, PA).     10.5 of Registration Statement
                                                 No. 33-96414
10(v)     Amended lease between Registrant       Previously filed as Exhibit
          and Robert Lenert (Naperville, IL).    10.6 of Amendment No. 4 to 
                                                 Registration Statement No. 
                                                 33-96414
10(vi)    Lease between Registrant and Janine    Previously filed as Exhibit
          Berger (Gland, Switzerland).           10.7 of Registration Statement
                                                 No. 33-96414
10(vii)   Form of Sales Representation           Previously filed as Exhibit
          Agreement.                             10.8 of Registration Statement
                                                 No. 33-96414
10(viii)  Form of Sales Distribution             Previously filed as Exhibit
          Agreement.                             10.9 of Registration Statement
                                                 No. 33-96414
10(ix)    Consulting Agreement dated             Previously filed as Exhibit
          October 17, 1995 between the           Exhibit 10.10 of Amendment No.
          Registrant and Alan Broadwin.          3 of Registration Statement
                                                 No. 33-96414
10(x)     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(xi)    Agreement of Merger dated July 25,    Incorporated by reference from
          1997, among the Registrant, SM Sub,   Exhibit 2(b) of the Registrant's
          Inc., and Tooltex, Inc.               8K dated July 25, 1997.
10(xii)   Credit Agreement, dated September     Previously filed with 
          19, 1997 between Brown Brothers       Registrant's 10KSB dated 
          Harriman & Co. and Registrant         September 25, 1997.
10(xiii)  Term Loan Note of Registrant          Previously filed with 
          dated September 19, 1997, payable     Registrant's 10KSB dated 
          to the order of Brown Brothers        September 25, 1997.
          Harriman & Co. in the original 
          principal amount of $427,000. 
10(xiv)   Line of Credit Note of Registrant     Previously filed with 
          dated September 19, 1997, payable     Registrant's 10KSB dated
          to the order of Brown Brothers        September 25, 1997.
          Harriman & Co. in the original 
          principal amount of $1,500,000. 
10(xv)    Bridge Loan Note of Registrant        Previously filed with 
          dated September 19, 1997, payable     Registrant's 10KSB dated 
          to the order of Brown Brothers        September 25, 1997.
          Harriman & Co. in the original 
          principal amount of $1,600,000. 
10(xvi)   Open-End Mortgage Deed from           Previously filed with 
          Registrant to Brown Brothers          Registrant's 10KSB dated
          Harriman & Co. dated September        September 25, 1997.
          19, 1997. 
10(xvii)  General Security Agreement from       Previously filed with 
          Registrant to Brown Brothers          Registrant's 10KSB dated
          Harriman & Co. dated September 19,    September 25, 1997.
          1997

27  Financial Data Schedule.                    Filed Herewith


                                        15