SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
10-Q
(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, 2008
OR
o 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.
(Exact
name of registrant as specified in its charter)
Delaware
|
22-1896032
|
(State
or Other Jurisdiction
|
(I.R.S.
Employer
|
of
Incorporation or organization)
|
Identification
Number)
|
224-S
Pegasus Ave., Northvale, New Jersey 07647
(Address
of Principal Executive Offices)
Registrant's
Telephone Number, including area code: (201) 767-6040
Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 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 o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
|
Large accelerated filer o
|
Accelerated filer o
|
|
|
|
|
Non-accelerated filer o (Do not check if
a smaller reporting company)
|
Smaller reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES o NO
x
State the
number of shares outstanding of each of the Issuer's classes of common equity,
as of the latest practicable date:
53,939,537
shares of Common Stock, $.0005 par value, as of August 14, 2008
ADM
TRONICS UNLIMITED, INC.
INDEX
|
|
Page Number
|
|
|
|
|
|
PART I. FINANCIAL
INFORMATION |
|
|
|
|
Item 1.
|
Consolidated Financial
Statements:
|
|
|
|
|
|
|
Condensed Consolidated Balance
Sheets – June 30, 2008
|
|
|
(unaudited) and March 31,
2008
|
3
|
|
|
|
|
|
Condensed Consolidated Statements
of Operations - For
|
|
|
the three months ended June 30,
2008 and 2007 (unaudited)
|
4
|
|
|
|
|
|
Condensed Consolidated Statements
of Cash Flows - For
|
|
|
the three months ended June 30,
2008 and 2007 (unaudited)
|
5
|
|
|
|
|
|
Notes to Condensed Consolidated
Financial Statements
|
|
|
(unaudited)
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL
|
|
|
|
CONDITION AND RESULTS OF
OPERATIONS
|
12
|
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
|
14
|
|
|
|
|
|
ITEM 4T. CONTROLS AND
PROCEDURES
|
14
|
|
|
|
|
|
|
PART II. OTHER
INFORMATION
|
|
|
|
|
|
|
ITEM 1.
|
LEGAL
PROCEEDINGS
|
15
|
|
|
|
|
|
ITEM 1A. RISK
FACTORS
|
15
|
|
|
|
|
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
|
15
|
|
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
15
|
|
|
|
|
|
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
|
15
|
|
|
|
|
|
ITEM 5.
|
OTHER
INFORMATION
|
15
|
|
|
|
|
|
ITEM 6.
|
EXHIBITS
|
15
|
|
|
|
|
|
|
PART I.
FINANCIAL INFORMATION
|
|
|
|
|
|
ITEM
1. CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
JUNE
30, 2008
|
MARCH
31, 2008
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
1,921,752 |
|
|
$ |
2,072,325 |
|
Accounts
receivable, net of allowance for doubtful
|
|
|
|
|
|
|
|
|
accounts
of $1,088 and $1,088, respectively
|
|
|
60,936 |
|
|
|
101,270 |
|
Receivables
– Ivivi
|
|
|
10,235 |
|
|
|
- |
|
Inventories
|
|
|
414,769 |
|
|
|
469,403 |
|
Prepaid
expenses and other current assets
|
|
|
22,317 |
|
|
|
83,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
2,430,009 |
|
|
|
2,726,729 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net of accumulated depreciation
|
|
|
|
|
|
|
|
|
of
$18,681 and $17,873, respectively
|
|
|
54,480 |
|
|
|
55,288 |
|
|
|
|
|
|
|
|
|
|
Inventory
- long term portion
|
|
|
84,880 |
|
|
|
78,416 |
|
Investment
in Ivivi
|
|
|
6,077,500 |
|
|
|
2,154,517 |
|
Advances
to related parties
|
|
|
65,504 |
|
|
|
74,299 |
|
Other
assets
|
|
|
27,782 |
|
|
|
28,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
8,740,155 |
|
|
$ |
5,117,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
138,539 |
|
|
$ |
237,331 |
|
Accrued
expenses and other current liabilities
|
|
|
44,308 |
|
|
|
87,439 |
|
Customer
deposits – Ivivi
|
|
|
154,793 |
|
|
|
241,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
337,640 |
|
|
|
566,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax liability
|
|
|
277,612 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $.01 par value; 5,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
no
shares issued and outstanding
|
|
|
-- |
|
|
|
-- |
|
Common
stock, $.0005 par value; 150,000,000 shares
|
|
|
|
|
|
|
|
|
authorized,
53,939,537 shares issued and outstanding at
|
|
|
|
|
|
|
|
|
June
30, 2008 and March 31, 2008
|
|
|
26,970 |
|
|
|
26,970 |
|
Additional
paid-in capital
|
|
|
32,153,597 |
|
|
|
32,153,597 |
|
Accumulated
deficit
|
|
|
(24,055,664 |
) |
|
|
(27,629,430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
8,124,903 |
|
|
|
4,551,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$ |
8,740,155 |
|
|
$ |
5,117,735 |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
condensed
consolidated financial statements.
ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS |
FOR
THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
600,941 |
|
|
$ |
293,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
399,210 |
|
|
|
170,059 |
|
Research
and development
|
|
|
- |
|
|
|
2,493 |
|
Selling,
general and administrative
|
|
|
288,668 |
|
|
|
248,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
687,878 |
|
|
|
421,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(86,937 |
) |
|
|
(128,185 |
) |
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
15,334 |
|
|
|
25,143 |
|
|
|
|
|
|
|
|
|
|
Change
in fair value of investment
|
|
|
|
|
|
|
|
|
in
Ivivi
|
|
|
(5,297,500 |
) |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
Equity
in net loss of Ivivi
|
|
|
-- |
|
|
|
(469,607 |
) |
|
|
|
|
|
|
|
|
|
Net
loss before income taxes (credit)
|
|
|
(5,369,103 |
) |
|
|
(572,649 |
) |
|
|
|
|
|
|
|
|
|
Income
taxes (credit)
|
|
|
(2,147,576 |
) |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(3,221,527 |
) |
|
$ |
(572,649 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding,
|
|
|
|
|
|
|
|
|
basic
and diluted
|
|
|
53,939,537 |
|
|
|
53,882,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited
|
|
condensed
consolidated financial statements. |
|
|
|
|
|
|
|
|
|
ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR
THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(3,221,527 |
) |
|
$ |
(572,649 |
) |
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
used
by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,510 |
|
|
|
3,223 |
|
Deferred
income tax benefit
|
|
|
(2,147,576 |
) |
|
|
-- |
|
Loss
from equity investment
|
|
|
-- |
|
|
|
469,607 |
|
Bad
debts
|
|
|
-- |
|
|
|
100 |
|
Change
in fair value of investment in Ivivi
|
|
|
5,297,500 |
|
|
|
-- |
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
40,334 |
|
|
|
42,861 |
|
Inventory
|
|
|
48,170 |
|
|
|
(124,188 |
) |
Prepaid
expenses and other current assets
|
|
|
61,414 |
|
|
|
21,180 |
|
Receivables
– Ivivi
|
|
|
(10,235 |
) |
|
|
-- |
|
Other
assets
|
|
|
-- |
|
|
|
(369 |
) |
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
(141,923 |
) |
|
|
7,647 |
|
Customer
deposit – Ivivi
|
|
|
(87,035 |
) |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used by operating activities
|
|
|
(159,368 |
) |
|
|
(152,588 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
-- |
|
|
|
(11,189 |
) |
Collections
of advances to related parties
|
|
|
8,795 |
|
|
|
-- |
|
Receivable
from Ivivi |
|
|
-- |
|
|
|
1,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) by investing activities
|
|
|
8,795 |
|
|
|
(9,817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash
|
|
|
(150,573 |
) |
|
|
(162,405 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
|
2,072,325 |
|
|
|
2,498,276 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
$ |
1,921,752 |
|
|
$ |
2,335,871 |
|
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
-- |
|
|
$ |
-- |
|
Income
taxes
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
|
|
NONCASH
FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the three months ended June 30, 2007, Ivivi recorded an increase
in
|
|
|
|
|
|
|
|
|
additional
paid-in capital as a result of the recognition of
compensation
|
|
|
|
|
|
|
|
|
expense
related to option grants to employees and others. We have recorded
a
|
|
|
|
|
|
proportional
increase in our investment in Ivivi in the amount of $112,290,
with
|
|
|
|
|
|
a
related credit to additional paid-in capital. We have also recorded a
change
|
|
|
|
|
|
of
ownership percentage adjustment of $121.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited |
|
condensed
consolidated financial statements.
|
|
ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30,
2008
(Unaudited)
NOTE
1 - ORGANIZATIONAL MATTERS
ADM
Tronics Unlimited, Inc. ("we", "us", the “Company" or "ADM"), was incorporated
under the laws of the state of Delaware on November 24, 1969. We are
authorized under our Certificate of Incorporation to issue 150,000,000 common
shares, with $.0005 par value, and 5,000,000 preferred shares with $.01 par
value.
The
accompanying condensed consolidated financial statements as of June 30, 2008
(unaudited) and March 31, 2008 and for the three month periods ended June 30,
2008 and 2007 (unaudited) have been prepared by ADM pursuant to the rules and
regulations of the Securities and Exchange Commission, including Form 10-Q and
Regulation S-K. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and adjustments), which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote
disclosures normally present in annual financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations. We
believe that the disclosures provided are adequate to make the information
presented not misleading. These financial statements and the
information included under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" should be read in conjunction
with the audited financial statements and explanatory notes for the year ended
March 31, 2008 as disclosed in our 10-KSB for that year as filed with the SEC,
as it may be amended. The results of the three months ended June 30,
2008 (unaudited) are not necessarily indicative of the results to be expected
for the pending full year ending March 31, 2009.
NATURE
OF BUSINESS
We are a
manufacturer and engineering concern whose principal lines of business are the
production and sale of chemical products and the manufacture and sale of medical
devices. Our chemical product line is principally comprised of
water-based chemical products used in the food packaging and converting
industries. These products are sold to customers located in the
United States, Australia, and Europe. Medical equipment is manufactured in
accordance with customer specification on a contract basis. Our
medical device product line consists principally of proprietary devices used in
the treatment of joint pain, postoperative edema, and tinnitus. These
devices are known own as "Electroceutical" units. These products are
sold or rented to customers located principally in the United
States.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The
consolidated financial statements include the accounts of ADM Tronics Unlimited,
Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
USE
OF ESTIMATES
These
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States and, accordingly, require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
estimates made by management include expected economic life and value of our
medical devices, deferred tax assets, option and warrant expenses related to
compensation to employees and directors, consultants and investment banks, the
value of warrants issued in conjunction with convertible debt, allowance for
doubtful accounts, and warranty reserves. Actual results could differ from those
estimates.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
On April
1, 2008, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 157, "Fair Value Measurements", and SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities". Please refer to Notes 4
and 5 for additional details. For certain of our financial instruments,
including accounts receivable, inventories, accounts payable and accrued
expenses, the carrying amounts approximate fair value due to their relatively
short maturities.
CASH
AND EQUIVALENTS
Cash
equivalents are comprised of certain highly liquid investments with maturity of
three months or less when purchased. We maintain our cash in bank deposit
accounts, which at times, may exceed federally insured limits. We have not
experienced any losses to date as a result of this policy.
ACCOUNTS
RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts
receivable represent uncollateralized customer obligations due under normal
trade terms generally requiring payment within 30 days from the invoice date.
Follow-up calls and correspondence is made if unpaid accounts receivable go
beyond the invoice due date. Payments of accounts receivable are allocated to
the specific invoices identified on the customer's remittance
advice.
Accounts
receivable are stated at the amount management expects to collect from
outstanding balances. The carrying amounts of accounts receivable is reduced by
a valuation allowance that reflects management's best estimate of the amounts
that will not be collected. Management individually reviews all accounts
receivable balances that exceed the due date and estimates the portion, if any,
of the balance that will not be collected. Management provides for probable
uncollectible amounts through a charge to expenses and a credit to a valuation
allowance, based on its assessment of the current status of individual accounts.
Balances that are still outstanding after management has used reasonable
collection efforts are written off through a charge to the valuation allowance
and a credit to accounts receivable.
REVENUE
RECOGNITION
CHEMICAL
PRODUCTS:
Revenues
are recognized when products are shipped to end users. Shipments to
distributors are recognized as sales where no right of return
exists.
MEDICAL
DEVICES:
We
recognize medical device revenue from the sale of our medical devices and
medical devices we manufacture for Ivivi Technologies, Inc. (“Ivivi”). Sales of
medical devices are recognized when our products are shipped to end users
including medical facilities and distributors. Revenue from the sale of the
medical devices we manufacture for Ivivi is recognized upon completion of the
manufacturing process. Our products are principally shipped on a "freight
collect" basis. Shipping and handling charges and costs are immaterial. We have
no post shipment obligations and sales returns have been
immaterial.
INVENTORY
Inventories
are stated at the lower of cost (first-in, first-out method) or market.
Inventory that is expected to be sold within one operating cycle (1 year) is
classified as a current asset. Inventory that is not expected to be sold within
1 year, based on historical trends, is classified as Inventory - long
term.
PROPERTY
& EQUIPMENT
We record
our equipment at historical cost. We expense maintenance and repairs as
incurred. Depreciation is provided for by the straight-line method over five to
seven years, the estimated useful lives of the property and
equipment.
LONG-LIVED
ASSETS
We follow
SFAS No. 144, "Accounting for Impairment of Disposal of Long-Lived Assets",
which established a "primary asset" approach to determine the cash flow
estimation period for a group of assets and liabilities that represents the unit
of accounting for a long lived asset to be held and used. Long-lived assets to
be held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset. Long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less cost to
sell.
ADVERTISING
COSTS
Advertising
costs are expensed as incurred and amounted to approximately $8,500 and $8,400
for the three months ended June 30, 2008 and 2007, respectively.
RESEARCH
AND DEVELOPMENT COSTS
Research
and development costs consist of expenditures for the research and development
of patents and technology, which are not capitalizable. Our research and
development costs consist mainly of costs for raw materials used in developing
new products.
STOCK
OPTIONS AND WARRANTS
In April
2006, we adopted the fair value recognition provisions of SFAS No. 123(R),
Accounting for Stock-Based Compensation, to account for compensation costs under
our stock option plans and those of our subsidiary. We previously utilized the
intrinsic value method under Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (as amended) ("APB 25").
INCOME
TAXES
We
adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income
Taxes”, on April 1, 2007(“the adoption date”). As required by FIN
No. 48, which clarifies SFAS No. 109, “Accounting for Income Taxes”,
the Company recognizes the financial statement benefit of a tax position only
after determining that the relevant tax authority would more likely than not
sustain the position following an audit. For tax positions meeting the
more-likely-than-not threshold, the amount recognized in the consolidated
financial statements is the largest benefit that has a greater than
50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority. At the adoption date, and at June 30, 2008 and 2007, we
applied FIN No. 48 to all tax positions for which the statute of
limitations remained open, and determined there was no material impact on the
consolidated financial statements. There are currently no tax years
under examination by any major tax jurisdictions.
We report
the results of our operations as part of a consolidated tax return with our
subsidiaries. We have entered into a tax sharing arrangement where each of the
members compensates each other to the extent that their respective taxes are
affected as a result of this arrangement. Deferred income taxes result primarily
from temporary differences between financial and tax reporting. Deferred tax
assets and liabilities are determined based on the difference between the
financial statement bases and tax bases of assets and liabilities using enacted
tax rates. A valuation allowance is recorded to reduce a deferred tax asset to
that portion that is expected to more likely than not be realized.
NET
LOSS PER SHARE
We use
SFAS No. 128, "Earnings Per Share" for calculating the basic and diluted loss
per share. We compute basic loss per share by dividing net loss by
the weighted average number of common shares outstanding. Diluted
loss per share is computed similar to basic loss per share, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential shares had been issued and if the
additional shares were dilutive. Common equivalent shares are
excluded from the computation of net loss per share if their effect is
anti-dilutive.
Per share
basic and diluted net loss amounted to $0.06 and $0.01 for the three months
ended June 30, 2008 and 2007, respectively. The assumed exercise of
common stock equivalents was not utilized for the three month periods ended June
30, 2008 and 2007, since the effect would be anti-dilutive. There
were 11,626,854 common stock equivalents at June 30, 2008 and 2007.
RECENT
ACCOUNTING PRONOUNCEMENTS
On May 9,
2008, the FASB issued Staff Position (“FSP”) APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlements), which clarifies that convertible debt
instruments that may be settled in cash upon conversion (including partial cash
settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting
for Convertible Debt and Debt Issued with Stock Purchase Warrants. The FSP
specifies that issuers of such instruments should separately account for the
liability and equity components in a manner that will reflect the entity’s
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements
issued for fiscal years beginning after December 15, 2008 and interim periods
within those fiscal years. We have not completed our evaluation of the impact of
the effect, if any, the adoption of FSP APB 14-1 would have.
NOTE
3 - INVENTORY
Inventory
at June 30, 2008 (unaudited) consists of the following:
|
|
Current
|
|
|
Long
Term
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Raw
materials
|
|
$ |
369,235 |
|
|
$ |
45,650 |
|
|
$ |
414,885 |
|
Finished
goods
|
|
|
45,534 |
|
|
|
39,230 |
|
|
|
84,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
414,769 |
|
|
$ |
84,880 |
|
|
$ |
499,649 |
|
|
|
|
|
|
|
|
|
|
|
Inventory
at March 31, 2008 consists of the following:
|
|
Current
|
|
|
Long
Term
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Raw
materials
|
|
$ |
361,897 |
|
|
$ |
39,186 |
|
|
$ |
401,083 |
|
Finished
goods
|
|
|
107,506 |
|
|
|
39,230 |
|
|
|
146,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
469,403 |
|
|
$ |
78,416 |
|
|
$ |
547,819 |
|
|
|
|
|
|
|
|
|
|
|
NOTE
4 - INVESTMENT IN IVIVI
Our
former majority owned subsidiary, Ivivi Technologies, Inc., filed a Registration
Statement with the Securities and Exchange Commission ("SEC") for the initial
public offering of a portion of its common stock. The Registration
Statement was declared effective by the SEC on October 18, 2006. As a
result of the consummation of Ivivi's initial public offering, we no longer
owned a majority of the outstanding common stock of Ivivi. Since
October 18, 2006, we could exert significant influence based upon the percentage
of Ivivi's stock we owned. As a result, our investment in Ivivi was
reported during the period from October 18, 2006 until March 31, 2008 under the
equity method of accounting, whereby we recognized our share of Ivivi's earnings
or losses as they are incurred. Effective April 1, 2008 (“the
Adoption Date”), we have adopted SFAS No. 159 “The Fair Value Option for
Financial Assets and Liabilities” with respect to our investment in Ivivi,
whereby we report our investment in Ivivi at fair value. Management’s
reason for electing the fair value option for its investment in Ivivi is to
increase the efficiency of our financial reporting
responsibilities. The fair value of our investment in Ivivi at the
adoption date was approximately $11,375,000. The adoption of SFAS No.
159, with respect to our investment in Ivivi, resulted in the recognition of the
following:
Pre-tax
cumulative-effect adjustment to retained earnings:
|
|
$ |
9,220,483 |
|
|
|
|
|
|
Deferred
tax liability:
|
|
|
2,425,188 |
|
|
|
|
|
|
Post-tax
cumulative-effect adjustment to retained earnings:
|
|
$ |
6,795,295 |
|
As of
June 30, 2008, the fair value of our investment in Ivivi was
$6,077,500. Our common shares of Ivivi have not been registered with
the SEC and are subject to restriction as a result of securities
laws.
The
following table sets forth summarized results of operations of Ivivi for the
three months ended June 30, 2008 and 2007:
|
Three
Months Ended
|
Three
Months Ended
|
|
June
30, 2008
|
June
30, 2007
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
398,196 |
|
|
$ |
460,999 |
|
Costs
and expenses, net
|
|
|
2,600,511 |
|
|
|
1,873,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(2,202,315 |
) |
|
$ |
(1,412,608 |
) |
|
|
|
|
|
|
|
|
|
Assets
at June 30, 2008
|
|
$ |
6,822,553 |
|
Liabilities
at June 30, 2008
|
|
|
1,401,103 |
|
|
|
|
|
|
Equity
at June 30, 2008
|
|
$ |
5,421,450 |
|
|
|
|
|
|
Assets
at June 30, 2007
|
|
$ |
8,141,533 |
|
Liabilities
at June 30, 2007
|
|
|
1,403,894 |
|
|
|
|
|
|
Equity
at June 30, 2007
|
|
$ |
6,737,639 |
|
|
|
|
|
|
NOTE
5 – FAIR VALUE MEASUREMENTS
In
September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements” (“Statement No. 157”) which defines
fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. Statement No. 157 applies to
other accounting pronouncements that require or permit fair value measurements
and does not require any new fair value measurements.
In
February 2008, the FASB issued FASB Staff Position 157-2, which provides
for a one-year deferral of the provisions of Statement No. 157 for
non-financial assets and liabilities that are recognized or disclosed at fair
value in the consolidated financial statements on a non-recurring basis. The
company is currently evaluating the impact of adopting the provisions of
Statement No. 157 for non-financial assets and liabilities that are
recognized or disclosed on a non-recurring basis.
Effective
April 1, 2008, the company adopted the provisions of Statement No. 157
for financial assets and liabilities, as well as for any other assets and
liabilities that are carried at fair value on a recurring basis. The adoption of
the provisions of Statement No. 157 related to financial assets and
liabilities and other assets and liabilities that are carried at fair value on a
recurring basis did not materially impact the company’s consolidated financial
position and results of operations.
Statement
No. 157 defines fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. Statement No. 157 also
establishes a fair value hierarchy, which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. Statement No. 157 describes three levels of inputs that may be
used to measure fair value:
|
|
|
Level
1
|
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or liabilities.
|
|
|
|
Level
2
|
|
Quoted
prices in markets that are not active; or other inputs that are
observable, either directly or indirectly, for substantially the full term
of the asset or liability.
|
|
|
|
Level
3
|
|
Prices
or valuation techniques that require inputs that are both significant to
the fair value measurement and
unobservable.
|
The
following table presents assets/(liabilities) measured at fair value on a
recurring basis at June 30, 2008:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in Ivivi
|
|
$ |
6,077,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
NOTE
6 - CONCENTRATIONS
During
the three month period ended June 30, 2008, Ivivi accounted for approximately
54% of our revenue. As of June 30, 2008, two customers represented
approximately 62% of our accounts receivable.
During
the three month period ended June 30, 2007, Ivivi accounted for approximately
21% of our revenue, and one other customer accounted for approximately 16% of
our revenue. As of June 30, 2007, one customer represented
approximately 55% of our accounts receivable.
NOTE
7 - SEGMENT INFORMATION
Information
about segments is as follows:
|
|
Chemical
|
|
|
Medical
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended June 30, 2008
|
|
|
|
|
|
|
|
|
|
Revenues
from external customers
|
|
$ |
240,264 |
|
|
$ |
360,677 |
|
|
$ |
600,941 |
|
Segment
operating loss
|
|
|
(57,934 |
) |
|
|
(29,003 |
) |
|
|
(86,937 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended June 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
from external customers
|
|
|
198,214 |
|
|
|
94,872 |
|
|
|
293,086 |
|
Segment
operating profit (loss)
|
|
|
(139,251 |
) |
|
|
11,066 |
|
|
|
(128,185 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets at June 30, 2008
|
|
|
8,323,133 |
|
|
|
417,022 |
|
|
|
8,740,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets at March 31, 2008
|
|
|
4,592,031 |
|
|
|
525,704 |
|
|
|
5,117,735 |
|
NOTE
8 - RELATED PARTY TRANSACTIONS
ADVANCES
TO RELATED PARTIES
As of
June 30, 2008 and March 31, 2008, ADM was owed $20,174 and $29,188,
respectively, from advances made to an officer. No advances have been made since
2000. The advances bear interest at the rate of 3% per year. Interest accrued
for the three months ended June 30, 2008 and 2007 was $218 and $369,
respectively. Total accrued interest at June 30, 2008 and March 31, 2008 was
$38,013 and $37,795, respectively.
At March
31, 2008, ADM has advances to an employee, the wife of the above referenced
officer, aggregating $7,316. No advances have been made since 2000. These
advances bear no interest.
MANAGEMENT
SERVICES AGREEMENT
ADM
entered into a management services agreement with Ivivi, as of August 15, 2001,
as amended, under which ADM provides Ivivi with management services and
allocates portions of its real property facilities for use by Ivivi for the
conduct of its business. The management services provided by ADM under the
management services agreement include managerial and administrative services,
marketing and sales services, clerical and communication services, the
maintenance of a checking account and the writing of checks, the maintenance of
accounting records and other services in the ordinary course of business. Ivivi
pays ADM for such services on a monthly basis pursuant to an allocation
determined by ADM and Ivivi based on a portion of its applicable costs plus any
invoices it receives from third parties specific to Ivivi. ADM and Ivivi also
use office, manufacturing and storage space in a building located in Northvale,
New Jersey, currently leased by ADM, pursuant to the terms of the management
services agreement. ADM determines the portion of space allocated to Ivivi on a
monthly basis, and Ivivi is required to reimburse ADM for its portion of the
lease costs, real property taxes and related costs.
During
the three months ended June 30, 2008 and June 30, 2007, Ivivi had approximately
$31,400 and $59,700, respectively; in management services provided to it by ADM
pursuant to the management services agreement.
INFORMATION
TECHNOLOGY SERVICE AGREEMENT
ADM
entered into an information technology (“IT”) service agreement with Ivivi on
February 1, 2008, pursuant to which Ivivi, in conjunction with its outside IT
professionals, will service ADM’s IT needs on an as needed
basis. Ivivi will invoice ADM monthly for any time it spends in
providing such services to ADM. The rate that Ivivi will charge ADM will be
determined at date of invoice. Such invoices that Ivivi issues ADM, with respect
to such services, will be due within 30 days. IT services include, but are not
limited to: Computer hardware and software related issues, network
administration, e-mail hosting and administration, telephone and cabling
installations and maintenance. There were no charges under this
agreement for the quarter ended June 30, 2008.
MANUFACTURING
AGREEMENT
ADM and
Ivivi are parties to a manufacturing agreement, dated as of August 15, 2001, and
as amended in February, 2005. Under the terms of the agreement, ADM has agreed
to serve as the exclusive manufacturer of all current and future medical and
nonmedical electronic and other devices or products to be sold or rented by
Ivivi. For each product that ADM manufactures, Ivivi pays ADM an amount equal to
120% of the sum of (i) the actual, invoiced cost for raw materials, parts,
components or other physical items that are used in the manufacture of the
product and actually purchased for such entity by ADM, if any, plus (ii) a labor
charge based on ADM's standard hourly manufacturing labor rate, which ADM
believes is more favorable than could be attained from unaffiliated third
parties. Under the terms of the agreement, if ADM is unable to perform its
obligations to Ivivi under the manufacturing agreement or is otherwise in breach
of any provision of the manufacturing agreement, Ivivi has the right, without
penalty, to engage third parties to manufacture some or all of its products. In
addition, if Ivivi elects to utilize a third-party manufacturer to supplement
the manufacturing being completed by ADM, Ivivi has the right to require ADM to
accept delivery of its products from these third-party manufacturers, finalize
the manufacture of the products to the extent necessary and ensure that the
design, testing, control, documentation and other quality assurance procedures
during all aspects of the manufacturing process have been met.
Pursuant
to the manufacturing agreement, sales and manufacturing charges to Ivivi during
the three months ended June 30, 2008 and June 30, 2007 were approximately
$325,000 and $62,000, respectively.
The
following discussion of our operations and financial condition should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of the "safe harbor" provisions under section 21E of the Securities and
Exchange Act of 1934 and the Private Securities Litigation Act of 1995. We use
forward-looking statements in our description of our plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may", "expects", "believes",
"anticipates", "intends", "forecasts", "projects", or similar terms, variations
of such terms or the negative of such terms. These forward-looking statements
are based on management's current expectations and are subject to factors and
uncertainties which could cause actual results to differ materially from those
described in such forward-looking statements. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this Form 10-Q to reflect any change in
our expectations or any changes in events, conditions or circumstances on which
any forward-looking statement is based. Factors which could cause such results
to differ materially from those described in the forward-looking statements
include those set forth under "Item. 1 Description of Business – Risk Factors"
and elsewhere in or incorporated by reference into our Annual Report on Form
10-KSB for the year ended March 31, 2008.
CRITICAL
ACCOUNTING POLICIES
REVENUE
RECOGNITION:
Sales
revenues from our chemical products are recognized when products are shipped to
end users. Shipments to distributors are recognized as sales where no right of
return exists.
We
recognize medical device revenue from the sale of our medical devices and
medical devices we manufacture for Ivivi. Sales of medical devices are
recognized when our products are shipped to end users including medical
facilities and distributors. Revenue from the sale of the medical devices we
manufacture for Ivivi is recognized upon completion of the manufacturing
process. Our products are principally shipped on a "freight collect" basis.
Shipping and handling charges and costs are immaterial. We have no post shipment
obligations and sales returns have been immaterial.
USE
OF ESTIMATES:
Our
discussion and analysis of our financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to reserves, deferred tax assets and valuation allowance, impairment of
long-lived assets, fair value of equity instruments issued to consultants for
services and fair value of equity instruments issued to others. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions; however, we believe
that our estimates, including those for the above- described items, are
reasonable.
BUSINESS
OVERVIEW
ADM is a
corporation that was organized under the laws of the State of Delaware on
November 24, 1969. During the three months ended June 30, 2008 and
2007, our operations were conducted through ADM itself and its subsidiaries,
Pegasus Laboratories, Inc. and Sonotron Medical Systems, Inc. Ivivi
has been deconsolidated as of October 18, 2006 upon the consummation of Ivivi's
initial public offering, as we no longer own a majority of the outstanding
common stock of Ivivi and do not control Ivivi's operations, but can exert
significant influence based on the percentage of Ivivi's stock we
own. As a result, our investment in Ivivi from October 18, 2006 to
March 31, 2008 was reported under the equity method of accounting, whereby we
recognized our share of Ivivi's earnings or losses as they are
incurred. Effective April 1, 2008, we have adopted SFAS No. 159 “The
Fair Value Option for Financial Assets and Liabilities” with respect to our
investment in Ivivi, whereby we report our investment in Ivivi at fair
value.
We are a
technology-based developer and manufacturer of diversified lines of products in
the following three areas: (1) environmentally safe chemical products for
industrial use, (2) therapeutic non-invasive electronic medical devices and (3)
cosmetic and topical dermatological products. We have historically
derived most of our revenues from the development, manufacture and sale of
chemical products, and, to a lesser extent, from our therapeutic non-invasive
electronic medical devices and topical dermatological
products. Although, during the three months ended June 30, 2008 and
2007, we derived an increased amount of our revenue from contract manufacturing
of medical devices for Ivivi. We are near completion with our
scheduled production for Ivivi, and have not received any additional purchase
orders from Ivivi to date. Our medical segment
includes our Sonotron subsidiary and our chemical segment includes our Pegasus
Laboratories subsidiary.
RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2008 AS COMPARED TO JUNE 30,
2007
REVENUES
Revenues
were $600,941 for the three months ended June 30, 2008 as compared to $293,086
for the three months ended June 30, 2007, an increase of $307,855, or
105%. The increase mainly resulted from an increase in sales of
finished medical devices to Ivivi, along with moderate increased sales to new
and existing chemical customers. Gross profit was $201,731, or 34%,
for the three months ended June 30, 2008 and $123,027, or 42% for the three
months ended June 30, 2007. Gross margins decreased as a result of
margins on approximately $325,000 of sales of medical devices at approximately
17% to Ivivi, as compared to margins achieved from chemical products, which are
generally higher.
OPERATING
LOSS
Loss from
operations for the three months ended June 30, 2008 was $86,937, compared to a
loss from operations for the three months ended June 30, 2007 of $128,185.
Selling, general and administrative expenses increased by $39,949, or 16%, from
$248,719 to $288,668, mainly due to increased compensation and health insurance
costs, and the implementation of a new accounting software system. Research and
development expenses decreased by $2,493, or 100%, from $2,493 to $0, as a
result of no research and development activities during the first quarter of
2008.
NET
LOSS AND NET LOSS PER SHARE
Net loss
for the three months ended June 30, 2008 was $3,221,527, or $0.06 per share,
compared to a net loss for the three months ended June 30, 2007 of $572,649, or
$0.01 per share. With the adoption of SFAS No. 159 “The Fair Value Option for
Financial Assets and Liabilities”, we recorded a decrease in fair value of
$5,297,500 with respect to our investment in Ivivi, for the three months ended
June 30, 2008. During the three months ended June 30, 2007, we
recorded an equity method investment loss of $459,607 from our investment in
Ivivi. Interest income decreased $9,809 to $15,334 in the three
months ended June 30, 2008, from $25,143 in the three months ended June 30,
2007, due to decreased funds invested in a money market
account. Income tax credits of approximately $2,147,000 were
recognized during the three months ended June 30, 2008, as a result of the
decrease in fair value of our investment in Ivivi.
LIQUIDITY
AND CAPITAL RESOURCES
At June
30, 2008, we had cash and equivalents of $1,921,752 as compared to $2,072,325 at
March 31, 2008. The $150,573 decrease was primarily the result of our loss from
operations during the three month period. Our cash will be used for
increased administrative and marketing costs in order to attempt to increase our
revenue. The market value of our investment in Ivivi at June 30, 2008
was $6,077,500. However, our common shares of Ivivi have not been registered
with the SEC and are subject to restriction as a result of securities
laws.
OPERATING
ACTIVITIES
Net cash
used by operating activities was $159,368 for the three months ended June 30,
2008 as compared to net cash used by operating activities of $152,588 for the
three months ended June 30, 2007. The use of cash during the three
months ended June 30, 2008 was primarily due to a net loss of $3,221,527,
recognition of a deferred tax benefit of $2,147,578 and a decrease in net
operating liabilities of $228,958, which was primarily offset by a change in the
fair market value of our investment in Ivivi of $5,297,500 and a decrease in net
operating assets of $139,683. The use of cash during the three months
ended June 30, 2007 was primarily due to a net loss of $572,649 and an increase
in net operating assets of $60,516, which was offset by a non-cash charge for
the equity investment loss of $469,607.
INVESTING
ACTIVITIES
For the
three months ended June 30, 2008, net cash provided by investing activities was
$8,795, which was received from an officer for repayment of advances made prior
to 2000. For the three months ended June 30, 2007, cash used in
investing activities was $9,817. Of this amount, $11,189 was used for the
purchase of property and equipment and $1,372 was received from Ivivi as
repayment of advances.
FINANCING
ACTIVITIES
There was
no such activity during the three months ended June 30, 2008 and
2007.
OFF
BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet
arrangements that have had or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist primarily of cash and cash equivalents, accounts
receivable and our investment in Ivivi.
The
Company maintains cash and cash equivalents with well-capitalized financial
institutions.
The
Company’s sales are materially dependent on a small group of customers, as noted
in Note 6 of our financial statements. We monitor our Credit risk associated
with the Company’s receivables on a routine basis. The Company also maintains
credit controls for evaluating and granting customer credit.
The
Company has no control over the market value of its investment in
Ivivi.
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) that are designed to ensure that information required to
be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applies its judgment in assessing
the costs and benefits of such controls and procedures, which, by their nature,
can provide only reasonable assurance regarding management's control
objectives.
As of the
end of the period covered by this Quarterly Report on Form 10- Q, we carried out
an evaluation, with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures pursuant to Securities Exchange Act Rule
13a-15. Based on that evaluation as of June 30, 2008, the Company's
principal executive officer and principal financial officer concluded that the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) are effective, as of the
date of their evaluation, to ensure that the information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms.
CHANGES
IN INTERNAL CONTROLS OVER FINANCIAL REPORTING.
There
were no changes in the Company's internal control over financial reporting that
occurred during the Company's last fiscal quarter to which this report relates
that have materially affected, or are reasonably likely to materially affect,
the Company's internal control over financial reporting.
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS.
(a)
Exhibit No.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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.
(Registrant)
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By:
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/s/ Andre'
DiMino |
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Andre'
DiMino, Chief Executive |
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Officer
and Chief Financial Officer |
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Dated: |
Northvale,
New Jersey
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August
14, 2008 |
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