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 June 30, 2004
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No. 0-17629
ADM TRONICS UNLIMITED, INC.
(Name of Small Business Issuer in its Charter)
Delaware 22-1896032
(State or Other Jurisdiction (I.R.S. Employer Identifi-
of Incorporation or Organization) cation Number)
224-S Pegasus Ave., Northvale, New Jersey 07647
(Address of Principal Executive Offices)
Issuer's Telephone Number, including area code: (201) 767-6040
Check whether the Issuer (1) has 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 Issuer was required to file such reports),
And (2) has been subject to the filing requirements for the past 90 days:
YES X NO ______
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
51,882,037 shares of Common Stock, $.0005 par value,
as of August 3, 2004
1
ADM TRONICS UNLIMITED, INC.
INDEX
Page Number
Part I. Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets - June 30, 2004
and March 31, 2004 3
Consolidated Statements of Operations - For the
three months ended June 30, 2004 and 2003 4
Consolidated Statement of Changes in Stockholders'
Equity - For the three months ended June 30, 2004 4
Consolidated Statements of Cash Flows - For the
three months ended June 30, 2004 and 2003 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
2
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE MARCH
Assets 30, 2004 31, 2004
Current assets:
Cash and cash equivalents $ 102,809 $ 90,081
Accounts receivable--trade, less allowance
for doubtful accounts of $29,000 164,100 118,433
Inventories:
Raw materials and supplies 167,610 159,497
Finished goods 37,832 63,438
Equipment held for sale 343,695 388,715
Other current assets 39,052 32,993
Total current assets 855,098 853,157
Property and equipment, at cost net of
Accumulated depreciation of $269,930 and
$268,353, respectively 7,310 8,887
Equipment in use and under lease agreements -
at cost net of accumulated depreciation of
$790,062 and $758,330, respectively 148,163 179,895
Loan receivable from officer, bearing
interest at 3% per annum, unsecured 49,188 49,188
Other assets 74,907 56,433
Total assets $1,134,666 $1,147,560
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable-trade $ 127,487 $ 159,798
Accrued expenses and other
current liabilities 46,779 51,340
Total current liabilities 174,266 211,138
Notes payable - long-term 135,000 135,000
Commitments and contingencies
Stockholders' equity 825,400 801,422
Total liabilities and
stockholders' equity $1,134,666 $1,147,560
See accompanying notes to consolidated financial statements.
3
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
June 30,
2004 2003
Revenues $ 385,297 $ 272,308
Costs and expenses:
Cost of sales 169,579 159,253
Selling, general and
administrative 191,807 160,632
Total costs and expenses 361,386 319,885
Operating income (loss) $ 23,911 $ (47,577)
Other income 67 87
Net income (loss) $ 23,978 $ (47,490)
Weighted average number of
common shares outstanding 51,882,037 50,382,037
Net income (loss) per share 0.0005 (0.0009)
See accompanying notes to consolidated financial statements.
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2004
Preferred Common
Shares Shares Capital
5,000,000 150,000,000 in
Authorized Authorized excess
$.01 Par $.0005 Par of Par Accumulated
Value Par Value Value Value Deficit Total
Balances -
March 31,
2004 - 51,882,037 $25,941 $6,813,368 $(6,037,887) $801,422
Net income for
for the
period ended
June 30, 2004 23,978 23,978
Balances -
June 30,
2004 - 51,882,037 $25,941 $6,813,368 $(6,013,909) $825,400
See accompanying notes to consolidated financial statements.
4
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
2004 2003
Cash flows from Operating activities:
Net income (loss) 23,978 (47,490)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation and amortization 33,309 37,863
Changes in operating assets and liabilities:
Accounts receivable--trade (45,667) (23,970)
Inventories and equipment held for sale 62,513 40,021
Other current assets (6,059) -
Other assets 1,311 2,158
Accounts payable--trade (32,311) (10,691)
Accrued expenses and other (4,561) (14,391)
Net cash flows provided by
(used in) operating activities 32,513 (16,500)
Cash flows from Investing activities: - -
Cash flows from Financing activities:
Deferred private placement costs (19,785) -
Net cash used in Financing activities (19,785) -
Net change in cash and cash equivalents 12,728 (16,500)
Cash and cash equivalents--beginning of year 90,081 49,765
Cash and cash equivalents--end of period 102,809 33,265
Supplemental disclosures:
Interest paid - -
Income taxes paid - -
See accompanying notes to consolidated financial statements.
5
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1-Basis of Presentation:
The consolidated balance sheet at the end of the preceding fiscal year
has been derived from the audited consolidated balance sheet contained in
the Company's annual report on Form 10-KSB for the fiscal year ended March 31,
2004 (the "Form 10-KSB") and is presented for comparative purposes. All
other financial statements are unaudited. In the opinion of management, all
adjustments which include only normal recurring adjustments necessary to
present fairly the financial position, results of operations and changes in
financial positions for all periods presented have been made. The results
of operations for interim periods are not necessarily indicative of the
operating results for the full year.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read
in conjunction with the financial statements and notes thereto included in
the Form 10-KSB.
Note 2. Segment Information
Information about segment information is as follows:
Three Months Ended June 30, 2004: Chemical Medical Total
Revenues from external customers 239,957 145,340 385,297
Segment profit (loss) 34,113 (10,202) 23,911
Three Months Ended June 30, 2003:
Revenues from external customers 241,216 31,092 272,308
Segment profit (loss) (23,182) (24,395) (47,577)
Note 3. Private Placement Offering
a) The Company is in the process of a private placement offering with regard
to its subsidiary, AA Northvale Medical Associates, Inc. (AAN) offering of up
to 35 Units for an aggregate price of $3,500,000. Each Unit consists of a
i) $100,000 Joint Unsecured Convertible Note, ii) one Class A Common Stock
Purchase Warrant of the Company and iii) one Class A Common Stock Purchase
Warrant of AAN. Investors may exercise either warrant, but not both. Those
warrants which are non-exercised must be surrendered to either the Company or
AAN. The Joint Unsecured 6% Convertible Notes may be converted into Common
Stock of AAN or Common Stock of the Company at a conversion price as defined
in the private placement memorandum. As of August 2, 2004 the Company has
received approximately $900,000 in net proceeds from this offering. In
connection with the private placement offering AAN is planning a Registration
Statement with the Securities and Exchange Commission.
6
Note 4. Subsequent Events
a) Effective July 2004, the Centers for Medicare and Medicaid Services issued a
National Coverage Determination (NCD) providing coverage for the use of the
Company's SofPulse medical device for treatment of wounds. The issuance of the
NCD enables nursing homes, hospitals, physicians and rehabilitation clinics to
obtain reimbursement for treatment of chronic, non-healing wounds with the
Company's SofPulse medical devices.
b) In November 2001, a company filed an order to show cause against a
subsidiary of the Company and the subsidiary's former officer seeking to
prohibit sale, rental or transfer of the subsidiary's blood irradiator device,
and claiming monetary damages of $750,000 for violation of a contract. The
Company's subsidiary has counterclaimed and the court denied the plaintiff's
motion for a preliminary injunction and vacated its order to show cause.
In April 2003, a former employee filed a suit against the Company seeking a
declaratory judgment claiming that the Company has no rights or interest in a
particular invention and patent related to the blood chamber device. In
addition, the former employee alleged wrongful termination of employment and
seeks unspecified compensatory damages. The Company defended the action and
counterclaimed, and asserted that it has all rights to the invention and
patent and that the employee breached the terms of his employment.
As of July 20, 2004 the suits described above have been settled with no
liability to the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At June 30, 2004 the Company had cash and equivalents of $102,809 as compared
to $90,081 at March 31, 2004. This increase was principally the result of net
income for the three month period plus depreciation and amortization less cash
used to pay accounts payable and prepaid costs of the private placement.
Operating Activities
Net cash flows provided by operating activities were $32,513 for the three
months ended June 30, 2004 as compared to net cash flows used in operating
activities of $16,500 for the quarter ended June 30, 2003. This decrease
in cash used was primarily due to net income of $23,978, cash from
inventories, equipment in use or under lease and other assets.
Investing Activities
There were no investing activities for the quarter ended June 30, 2004.
Financing Activities
During the quarter ended June 30, 2004 the Company paid $19,785 for deferred
costs related to the private placement offering.
The Company does not have any material external sources of liquidity or unused
sources of funds.
7
Results of Operations
Quarter Ended June 30, 2004
Revenues
Revenues were $385,297 in 2004 as compared to $272,308 in 2003 representing an
increase of $112,989 or 41%. Revenues from the Company's medical electronics
activities increased $114,249 offset by a decrease in chemical revenues of
$1,260.
Gross Profit
Gross profit of $215,718 in 2004 was $102,663 or 91% above the gross profit of
$113,055 in 2003. Gross profit was 56% of revenues in 2004 as compared with
42% of revenues in 2003. The increase in gross profit margin was primarily
due to the product mix of sales with higher sales of products with a higher
gross margin.
Operating Income (Loss)
Operating income in 2004 was $23,911 compared to operating loss of ($47,577)
in 2003. Selling, general and administrative expenses increased by $31,175
primarily due to an increase in operating expenditures related to increased
overhead costs and legal fees related to litigation.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No.
99.1 Certificate of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADM Tronics Unlimited, Inc.
By:\s\ Andre' DiMino
Andre' DiMino
President
Dated: Northvale, New Jersey
August 12, 2004
8
EXHIBIT 99.1
Section 302 Certification
CERTIFICATION
I, Andre' Di Mino, certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of ADM Tronics
Unlimited, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. I am the registrant's only certifying officer and am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under my supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: August 12, 2004 By: /s/ Andre' Di Mino
Andre' Di Mino, Chief Executive
Officer and Chief Financial Officer
EXHIBIT 99.2
CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ADM Tronics Unlimited, Inc.
(the "Company") on Form 10-QSB for the period ended June 30, 2004 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Andre' Di Mino, as Chief Executive Officer and Chief
Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, to the best of his knowledge that:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company at the dates and for the periods shown in such report.
Date: August 12, 2004 By: /s/ Andre' Di Mino
Andre' Di Mino
Chief Executive Officer
And Chief Financial
Officer