-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M3+DIHB9iiw4D7EelIqZ6vgSDkomJvthV1g2I6zZdMLkR/8dusyDBsq0/VSaeEGw js9mG4E66C6XVhq7sg9sBg== 0000849401-99-000012.txt : 19990222 0000849401-99-000012.hdr.sgml : 19990222 ACCESSION NUMBER: 0000849401-99-000012 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADM TRONICS UNLIMITED INC/DE CENTRAL INDEX KEY: 0000849401 STANDARD INDUSTRIAL CLASSIFICATION: ADHESIVES & SEALANTS [2891] IRS NUMBER: 221896032 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-17629 FILM NUMBER: 99545734 BUSINESS ADDRESS: STREET 1: 224 S PEGASUS AVE CITY: NORTHVALE STATE: NJ ZIP: 07647 BUSINESS PHONE: 2017676040 MAIL ADDRESS: STREET 1: 224 S PEGASUS AVE CITY: MORTHVALE STATE: NJ ZIP: 07647 10QSB/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 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. (Exact name of registrant as specified in its Charter) Delaware 22-1896032 (State or Other Jurisd- (I.R.S. Employer Identifi- iction of Incorporation cation Number) or organization) 224-S Pegasus Avenue, 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 the filing requirements for at least the past 90 days: YES X NO______ Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 47,406,652 shares of Common Stock, $.0005 par value, as of February 18, 1999 ADM TRONICS UNLIMITED, INC. INDEX Part I. Financial Information Page Number Item 1. Consolidated Financial Statements: Consolidated Balance Sheets - September 30, 1998 and March 31, 1998 2 Consolidated Statements of Operations - For The Three Months Ended September 30, 1998 and 1997 and For The Six Months Ended September 30, 1998 and 1997 3 Consolidated Statements of Changes in Stockholders' Equity - For The Six Months Ended September 30, 1998 4 Consolidated Statements of Cash Flows - For The Six Months Ended September 30, 1998 and 1997 5 Notes To Consolidated Financial Statements 6 Item 2. Management's Discussion And Analysis of Financial Condition and Results of Operations 7-8 1 ADM TRONICS UNLIMITED, INC. CONSOLIDATED BALANCE SHEETS September 30, March 31, 1998 1998 (Unaudited) ASSETS CURRENT ASSETS: Cash and equivalents $ 611,198 1,127,847 Accounts receivable--trade less allowance for doubtful accounts of $20,500 325,095 317,888 Inventories: Raw materials and supplies 257,224 261,000 Finished goods--chemicals 66,251 59,535 Other current assets 113,601 24,101 Total Current Assets 1,373,369 1,790,371 Property and Equipment 182,219 75,833 Equipment in use and underlease agreements, net of accumulated depreciation of $71,705 and $60,164, respectively 371,260 82,415 Equipment held for sale 1,419,557 302,218 Loan receivable from officer, bearing interest at 3% per annum 67,454 59,502 Other Assets 506,538 523,309 Total Assets $ 3,920,397 $2,833,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable--trade 151,104 397,338 Accrued expenses and other 80,474 46,139 Notes payable - current 97,920 110,842 Total Current Liabilities 329,498 554,319 Notes payable - non-current 34,147 48,676 Stockholders' Equity 3,556,752 2,230,653 Total Liabilities & Stockholders' Equity $3,920,397 $2,833,648 See accompanying notes to consolidated financial statements 2 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 Revenues: Net sales $ 445,281 $ 292,048 $1,001,103 $ 569,109 Costs And Expenses: Cost of sales 221,547 119,934 497,417 247,807 Selling, general and 385,342 297,676 763,145 588,425 administrative Total cost and expenses 606,889 417,610 1,260,562 836,232 Operating Income(loss) ($ 161,608) ($ 125,562) ($ 259,459) ($267,123) Other Income: 9,207 13,908 20,308 24,145 Net Income (loss) ($152,401) ($ 111,654) ($ 239,151) ($242,978) Net income (loss) per common share (0.003) (0.003) (0.005) (0.006) See accompanying notes to consolidated financial statements. 3 ADMTRONICS UNLIMITED, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 (Unaudited) Common Capital In Stock Par Excess Of Accumulated Shares Value Par Value Deficit Total Balance, March 31, 1998 43,724,907 21,862 5,137,176 (2,928,385) 2,230,653 Issuance of common stock 3,645,000 1,822 1,563,428 1,565,250 Net income (loss) Six months ended September 30, 1998 (239,151) (239,151) Balance September 30, 1998 47,369,907 23,684 6,700,604 (3,167,536) 3,556,752 See accompanying notes to consolidated financial statements 4 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended September 30, 1998 1997 Cash Flows From Operating Activities: Net income(loss) ($ 239,151) ($ 242,978) Adjustments to reconcile net income(loss) to net cash flows from operating activities: Depreciation and amortization 42,578 11,165 Stock issued for services 83,953 - Changes in operating assets and liabilities: Accounts receivable--trade (7,207) 49,643 Inventories (2,940) 15,834 Other current assets 41,797 4,138 Equipment in use or under lease 5,015 0 Equipment held for sale or lease (339) (13,096) Net change in other assets (701) (49,123) Accounts payable--trade (246,234) 52,836 Accrued expenses and prepayments from customers 34,335 (72,316) Net cash flows provided by (used in) operating activities (288,894) (243,897) Cash Flows From Investing Activities: Purchases of property and equipment (14,352) (5,958) Acquisition of SofPulse assets (178,000) 0 Down payment for purchase of stock of Precision Assembly Corporation 0 (1,000) Loan to officer net of repayments (7,952) 4,600 Net changes in certificates of deposit 0 107,000 Net cash flows provided by (used in) investing activities (200,304) 104,642 Cash Flows From Financing Activities: Additional borrowings of notes payable, net (27,451) 0 Net cash flows provided by (used in) financing activities (27,451) 0 Net change in cash and cash equivalents (516,649) (139,255) Cash and cash equivalents-- Beginning of period 1,127,847 1,174,965 Cash and cash equivalents-- End of period 611,198 1,035,710 Supplemental disclosure of Cash flow activities: Interest paid 4,900 0 Non-cash investing and financing activities: Fair value of assets acquired relating to SofPulse assets 1,605,135 0 Common stock issued in connection with acquisition of SofPulse assets 1,427,135 0 Common stock issued in connection with consulting agreement 138,115 0 See accompanying notes to consolidated financial statements. 5 ADM TRONICS UNLIMITED, INC. 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, 1998 (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. - Pro forma On August 18, 1998 the Company purchased certain assets from Electropharma- cology, Inc. ("EPI") including, but not limited to, a number of SofPulse (the "Device") medical devices along with certain manufacturing equipment, marketing rights, patents and other items associated with the Devices, in exchange for $150,000 and the issuance of 2,925,000 shares of the Company's common stock. Unaudited pro forma results of operations, assuming the acquisition of the SofPulse business occurred as of the beginning of the six month periods ending September 30, 1998 and 1997, after giving effect to certain adjustments such as additional depreciation and a consulting agreement resulting from the acquisition was as follows. The pro forma summary does not necessarily reflect the results of operations as they would have been if the companies had constituted a single entity during such periods. (Unaudited) (Unaudited) September 30, 1998 September 30, 1997 Revenues $ 1,311,209 $ 1,749,947 Net loss $(12,481,763) $ (1,048,768) Loss per share $ (.26) $ (.02) Included in the net loss for the six months ended September 30, 1998 are expenses associated with EPI's reorganization, more specifically, the following: a $7,500,000 in-process research and development expense representing an up-front license fee that EPI paid for the acquisition of technology; a $4,000,000 in-process research and development expense associated with the acquisition of two biotechnology companies acquired by EPI during the period. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At September 30, 1998 the Company had cash and certificates of deposit of $611,198 as compared to $1,127,847 at March 31, 1998. This decrease was the result of net cash flows used in operating activities, investing activities and financing activities. Operating Activities Net cash flows used increased $44,997 to ($288,894) for the six months ended September 30, 1998 as compared to net cash flows of ($243,897) for six months ended September 30, 1997. This increase was primarily the result of significant payments to accounts payable offset by a reduction in the operating loss for the period ended September 30, 1998. Investing Activities Capital expenditures consisted of $178,000 for the acquisition of the SofPulse assets coupled with purchases of property and equipment of $14,352. Financing Activities The Company repaid $27,451 in notes payable. The Company does not have any material external sources of liquidity or unused sources of funds. Results of Operations Quarter Ended September 30, 1998 Revenues Revenues were $445,281 in 1998 as compared to $292,048 in 1997 representing an increase of $153,233 or 53%. Revenues from the Company's medical electronics activities increased $235,733 from revenues realized from acquisitions offset by a decrease in chemical revenues of $82,500. Gross Profit Gross profit of $223,734 in 1998 as compared to $172,114 in 1997 was $51,620, or 30%, above the gross profit in 1997. Gross profit was 50% of revenues in 1998 as compared with 59% of revenues in 1997. The reduction in gross profit margin was due primarily to the product mix of sales with increased sales of products with a lower gross margin. Operating Income(Loss) Operating loss in 1998 was ($161,608) compared to ($125,562) in 1997. Selling general and administrative expenses increased by $87,666 primarily due to increased legal and administrative expenses related to the arbitration with Arthronix and an increase in additional consulting services incurred during the period. Other Income Other income in 1998 was $9,207 as compared to $13,908, a reduction of $4,701, due to a decrease in interest income from reduced amounts invested. 7 Results of Operations Six Months Ended September 30, 1998 Revenues Revenues were $1,001,103 in 1998 as compared to $569,109 in 1997 representing an increase of $431,994 or 76%. Revenues from the Company's medical electronics activities increased $513,069 from revenues realized from acquisitions offset by a reduction in chemical revenues of $81,075. Gross Profit Gross profit of $503,686 in 1998 as compared to $321,302 in 1997 was $182,384, or 57% above the gross profit in 1997. Gross profit was 50% of revenues in 1998 and 57% 1997. The reduction in gross profit is due to the mix in product sales with higher sales of products with a lower gross margin. Operating Income(Loss) Operating loss was ($259,459) in 1998 compared to ($267,123) in 1997. Selling, general and administrative expenses increased by $174,720 due to increased legal and administrative expenses related to arbitration with Arthronix and an increase in consulting services incurred. Other Income Other income of $20,308 in 1998 decreased $3,837 from $24,145 in 1997, due to a decrease in interest income from reduced amounts invested. 8 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\Alfonso DiMino Dr. Alfonso DiMino President and Chief Executive Officer And By:\s\Andre' DiMino Andre' DiMino Principal Financial Officer Dated: Northvale, New Jersey February 18, 1999 -----END PRIVACY-ENHANCED MESSAGE-----