-----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, PfcOSQT7DfHKqU05b32/Db3ftI686k5ce+YZoxrpvp3USiOFAM2WdLId7M96x37r fHDvdW6QXBe8L1pTL9KI/g== 0000849401-99-000017.txt : 19990222 0000849401-99-000017.hdr.sgml : 19990222 ACCESSION NUMBER: 0000849401-99-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 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 SEC ACT: SEC FILE NUMBER: 000-17629 FILM NUMBER: 99545779 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 1 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 December 31, 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 Small Business Issuer 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) Issuer's Telephone Number: (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 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______ State 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 - December 31, 1998 and March 31, 1998 2 Consolidated Statements of Operations - For The Three Months Ended December 31, 1998 and 1997 3 Consolidated Statements of Operations - For The Nine Months Ended December 31, 1998 and 1997 3 Consolidated Statement of Changes in Stockholders' Equity - For The Nine Months Ended December 31, 1998 4 Consolidated Statements of Cash Flows - For The Nine Months Ended December 31, 1998 and 1997 5 Notes To Consolidated Financial Statements 6 Item 2. Management's Discussion And Analysis of Financial Condition and Results of Operations 6 Part II. Other Information 8 1 ADM TRONICS UNLIMITED, INC. CONSOLIDATED BALANCE SHEETS December 31, March 31, 1998 1998 (Unaudited) ASSETS CURRENT ASSETS: Cash and equivalents $ 567,153 1,127,847 Accounts receivable--trade less allowance for doubtful accounts of $46,000 and $20,500, respectively 439,917 317,888 Inventories: Raw materials and supplies 316,988 261,000 Finished goods 59,595 59,535 Other current assets 101,196 24,101 Total Current Assets 1,484,849 1,790,371 Property and Equipment 188,050 75,833 Equipment in use and under lease agreements, net of accumulated depreciation of $86,079 and $60,164, respectively 337,837 82,415 Equipment held for sale 1,341,844 302,218 Loan receivable from officers, bearing interest at 3% per annum 67,498 59,502 Other Assets 497,833 523,309 Total Assets $ 3,917,911 $2,833,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable--trade 251,015 397,338 Accrued expenses and other 58,084 46,139 Notes payable - current 134,687 110,842 Total Current Liabilities 443,786 554,319 Notes payable - non-current 26,883 48,676 Stockholders' Equity 3,447,242 2,230,653 Total liabilities and stockholders' equity $3,917,911 $2,833,648 See accompanying notes to consolidated financial statements 2 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, 1998 1997 1998 1997 Revenues $ 631,405 $ 358,580 $1,632,508 $ 927,689 Costs And Expenses: Cost of sales 290,096 184,527 787,513 432,334 Selling, general and 450,988 223,533 1,214,133 811,958 administrative Total costs and expenses 741,084 408,060 2,001,646 1,244,292 Operating income (Loss) ($ 109,679) ($ 49,480) ($ 369,138)($ 316,603) Other Income: Interest, net of expense 8,919 13,302 29,227 37,447 and other income Net Income (loss) ($ 100,760) ($ 36,178) ($ 339,911)($ 279,156) Net Income (loss) per (0.002) (0.001) (0.007) (0.007) common share See accompanying notes to consolidated financial statements. 3 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 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 3,745,000 1,872 1,594,628 1,596,500 Repurchase of common stock (63,255) (32) (39,968) (40,000) Net income (loss) nine months ended December 31,1998 (339,911) (339,911) Balance December 31,1998 47,406,652 23,702 6,691,836 (3,268,296) 3,447,242 See accompanying notes to consolidated financial statements 4 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Nine Months Ended December 31, 1998 1997 Cash Flows From Operating Activities: Net income(loss) ($ 339,911) ($ 279,156) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 80,067 18,155 Stock issued for services 98,536 - Changes in operating assets and liabilities: Accounts receivable--trade (122,029) 16,168 Inventories (56,048) 48,547 Other current assets 70,869 6,885 Equipment in use or under lease 22,070 - Equipment held for sale 77,374 (7,689) Net change in other assets (1,248) (49,696) Accounts payable--trade (146,323) (42,951) Accrued expenses and prepayments from customers 11,945 (64,320) Net cash flows provided by (used in) operating activities (304,698) (354,057) Cash Flows From Investing Activities: Purchase of property and equipment (32,052) (5,958) Acquisition of SofPulse business (178,000) - Down payment for purchase of stock of Precision Assembly Corporation - (53,000) Cash balance of company acquired - 8,851 Pepurchase of common stock (40,000) - Loan to officer, net of repayments (7,996) 7,200 Net changes in certificates of deposit - 6,817 Net cash flows provided by (used in) investing activities (258,048) (36,090) Cash Flows From Financing Activities: Additional borrowings of notes payable, net 2,052 2,072 Net cash flows provided by (used in) financing activities 2,052 2,072 Net change in cash and cash equivalents (560,694) (388,075) Cash and cash equivalents -Beginning of year 1,127,847 1,174,965 Cash and cash equivalents -End of period 567,153 786,890 Supplemental disclosure of cash flow activities: Interest paid 7,384 - Non-cash investing and financing activities: Fair value of assets acquired realting to SofPulse business 1,605,135 - Common stock issued in connection with acquisition of SofPulse business 1,427,135 - Common stock issued in connection with consulting agreements 169,365 - Fair value of assets received in connection with acquisition of Precision Assembly Corporation - 309,272 Fair value of liabilities assumed in connection with acquisition of Precision Assembly Corporation - 327,184 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 - Acquisition of SofPulse On August 18, 1998 the Company purchased certain assets from Electro- pharmacology, 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 nine month periods ending December 31, 1998 and 1997, after giving effect to certain adjustments such as additional depreciation and a consulting agreement resulting from the acquisition were 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) December 31, 1998 December 31, 1997 Revenues $ 2,128,059 $ 2,913,352 Net loss $(12,923,744) $ (1,350,975) Loss per share $ (.27) $ (.03) Included in the net loss for the nine months ended December 31, 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. Note 3 - Repurchase of Common Stock As part of the agreement dated May 27, 1998 between the Company, EPI and Jones, Day, Reavis & Pogue, ADM agreed that if the common stock issued to Jones, Day in said agreement, was not registered under the Securities Act and under applicable state securities laws by October 17, 1998, then on that day and on each thirty day anniversary until the common stock is so registered, if timely requested by Jones, Day, ADM will purchase from Jones, Day for $20,000 a number of shares of common stock equal to 20,000 divided by the then current value per share as determined in accordance with the asset purchase agreement. ADM's obligation to purchase shares of common stock from Jones, Day is limited to an aggregate purchase price of $60,000 if registration has not occurred due to circumstances not reasonably within the control of ADM. As of december 31, 1998, ADM purchased 63,255 shares from Jones, Day, as timely requested, on two anniversary dates for $40,000. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At December 31, 1998 the Company had cash and certificates of deposit of $567,153 as compared to $1,127,847 at March 31, 1998. This decrease was principally due to cash flows used in operating activities and cash used for the acquisition of the SofPulse business. Operating Activities Net cash flows decreased $172,619 to ($560,694) for the nine months ended December 31, 1998 as compared to ($388,075) for the nine months ended December 31, 1997. This decrease was primarily due to cash used in operating activities of $304,698 and cash used in investing activities of $258,048. Investing Activities Investing activities consisted of cash used for the SofPulse acquisition of $178,000, purchases of property and equipment of $32,052, repurchases of common stock, $40,000 and additional net borrowings by an officer of the Company of $7,996. Financing Activities The Company was provided $2,052 from additional borrowings, net of repayments. The Company does not have any material external sources of liquidity or unused sources of funds. 6 Results of Operations Quarter Ended December 31, 1998 Revenues Revenues were $631,405 in 1998 as compared to $358,580 in 1997 representing an increase of $272,825 or 76.1%. The increase in revenues was primarily from the SofPulse rental and sales activities, which increased by $171,149, coupled with an increase in chemical revenues of $41,772. Gross Profit Gross profit of $341,309 in 1998 was $167,256, or 96.1%, above the gross profit in 1997. Gross profit was 54.1% of revenues in 1998 as compared with 48% of revenues in 1997. The higher gross profit percentage was due to the revenues from the SofPulse business which has a higher gross profit margin. Operating Income (Loss) Operating loss of $109,679 in 1998 was $60,199 above the operating loss of $49,480 in 1997. Selling general and administrative expenses increased by $227,455. Other Income Other income of $8,919 in 1998 decreased by $4,383, or 32.9%, from $13,302 in 1997, principally due to a decrease in interest income from reduced amounts invested. Results of Operations Nine Months Ended December 31, 1998 Revenues Revenues were $1,632,508 in 1998 as compared to $927,689 in 1997 representing an increase of $704,819 or 76%. Chemical revenues decreased $39,303 and the Company's revenues from the sales and rentals of medical equipment increased by $744,122. Gross Profit Gross profit of $844,995 in 1998 was $349,640 or 71% higher than the gross profit in 1997. Gross profit was 52% of revenues in 1998 as compared with 54% of revenues in 1997. The lower gross profit percentage was due to the product mix of sales with higher sales volume of products with a lower gross profit margin. Operating Income (Loss) Operating loss of $369,138 in 1998 was $52,535 above the operating loss of $316,603 in 1997. Selling, general and administrative expenses increased by $402,175. 7 Other Income Other income of $29,227 in 1998 decreased $8,220 from $37,447 in 1997, due to a decrease in interest income from reduced amounts invested. Part II: Other Information Item 4 Submission of Matters to a Vote of Security Holders. (a) A Special Meeting was held on December 4, 1998. (b) Not applicable. (c) Shareholders voted upon a proposal to amend the Company's Certificate of Incorporation to effect a one for four reverse split and to decrease the number of shares of Common Stock which the Company is authorized to issue from 150,000,000 to 37,500,000. 21,767,156 votes were cast for the proposal, 104,200 votes were cast against or witheld. 6,500 shares abstained and 0 shares were represented by "broker non-votes." Although the proposal received sufficient votes to pass, the board of directors determined not to amend the Certificate of Incorporation. Item 6 Exhibits and reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Not applicable 8 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. ADM Tronics Unlimited, Inc. By:/s/ Dr. Alfonso DiMino Dr. Alfonso DiMino President And By:/s/ Andre' DiMino Andre' DiMino Principal Financial Officer Dated: Northvale, New Jersey February 18, 1999 EX-27 2
5 9-MOS MAR-31-1999 DEC-31-1998 567,153 0 439,917 46,000 376,583 1,484,849 188,050 86,079 3,917,911 443,786 0 23,702 0 0 3,447,242 3,917,911 1,632,508 1,661,735 787,513 2,001,646 0 0 0 (339,911) 0 (339,911) 0 0 0 (339,911) (.007) (.007)
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