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, 2005
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 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:
53,882,037 shares of Common Stock, $.0005 par value,
as of August 22, 2005
1
ADM TRONICS UNLIMITED, INC.
INDEX
Page Number
Part I. Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets - June 30, 2005
and March 31, 2005 3
Consolidated Statements of Operations - For the
three months ended June 30, 2005 and 2004 4
Consolidated Statements of Cash Flows - For the
three months ended June 30, 2005 and 2004 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Controls and Procedures 12
Part II. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
2
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June March
30, 2005 31, 2005
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $1,722,441 $3,011,631
Accounts receivable, net of allowance for doubtful
accounts of $132,827 and $72,593, respectively 92,679 102,691
Inventories:
Raw materials and supplies 170,031 124,393
Finished goods 183,805 204,074
Equipment held for sale 342,820 331,832
Prepaid expenses and other current assets 389,360 319,296
Total current assets 2,901,136 4,093,917
Property and equipment, net of accumulated
depreciation of $275,483 and $271,188, respectively 53,319 40,550
Equipment in use and under rental agreements, net of
accumulated depreciation of $862,497 and $832,059,
respectively 21,353 51,791
Loan receivable, officer 49,188 49,188
Other assets 103,107 104,928
Deferred loan costs, net 581,446 570,498
Deferred consulting expense 93,245 105,880
Deferred offering costs 187,891 133,125
Total assets $4,090,585 $5,250,877
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable-trade $ 230,165 $ 172,978
Accrued expenses and other current liabilities 178,480 299,790
Interest payable 116,140 -
Total current liabilities 524,785 472,768
Convertible debentures payable, net of
unamortized debt discount of $283,255 and
$299,000, respectively 5,804,244 5,788,500
Warrants issued with registration rights 325,000 325,000
Total liabilities 5,554,029 5,585,258
Stockholders' deficit:
Preferred stock, $.01 par value, 5,000,000
authorized, no shares issued and outstanding - -
Common stock, $.0005 par value, 150,000,000
authorized 53,882,037 issued and outstanding 26,941 26,941
Additional paid-in capital 7,022,397 7,003,968
Accumulated deficit (9,612,682) (8,366,300)
Total stockholders' deficit (2,563,344) (1,335,391)
Total liabilities and stockholders' deficit $4,090,685 $5,250,877
See accompanying notes to consolidated financial statements.
3
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
THREE MONTHS ENDED
June 30,
2005 2004
Revenues $ 321,010 $ 385,297
Costs and expenses:
Cost of revenue 133,262 169,579
Research and development 167,349 -
Interest and finance costs, net 95,340 (67)
Selling, general and administrative 1,171,441 191,807
Total operating expenses 1,567,392 361,319
Net (loss) income ($1,246,382) $ 23,978
Net loss per share, basic and diluted $ (0.02) $ 0.00
Weighted average shares
outstanding 53,882,037 51,882,037
See accompanying notes to consolidated financial statements.
4
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIOS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
THREE MONTHS ENDED
JUNE 30,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(1,246,382) 23,978
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 36,533 33,309
Stock based compensation 6,185 -
Amortization of loan costs 54,976 -
Bad debts 55,490 -
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable--trade (45,478) (45,667)
Inventories and equipment held for sale (36,357) 62,513
Prepaid expenses (70,064) (6,059)
Deposits and other assets - 1,311
Increase (decrease) in:
Accounts payable and accrued expenses 27,716 (32,311)
Accrued expenses and other - (4,561)
Net cash (used) provided by operating activities (1,217,381) 32,513
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (17,043) -
Net cash used by investing activities (17,043) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs (54,766) (19,785)
Net cash provided by financing activities (54,766) (19,785)
Net increase in cash (1,289,190) 12,728
Cash and cash equivalents, beginning of period 3,011,631 90,081
Cash and cash equivalents, end of period 1,722,441 102,808
Cash paid for:
Interest 51,133 -
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 AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements include the
accounts of ADM Tronics Unlimited, Inc. and its subsidiaries (collectively,
the "Company"). These consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America for interim financial information and the instructions to
Form 10-QSB and do not include all the information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation of the results for the interim periods have been
included. Operating results for the three months ended June 30, 2005 are
not necessarily indicative of the results that may be expected for the year
ending March 31, 2006. The accompanying consolidated financial statements
and the information included under the heading "Management's Discussion and
Analysis" should be read in conjunction with the Company's audited
consolidated financial statements and related notes included in the
Company's Form 10-KSB for the fiscal year ended March 31, 2005.
Use of Estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Loss Per Share
Basic and diluted loss per common share for all periods presented is
computed based on the weighted average number of common shares outstanding
during the periods presented as defined by SFAS No. 128, "Earnings Per
Share". The assumed exercise of common stock equivalents was not utilized
for the three month periods ended June 30, 2005 and 2004 since the effect
would be anti-dilutive. There were 45,231,034 common stock equivalents at
June 30, 2005 and none at June 30, 2004.
Stock Options and Warrants
The Company accounts for its stock-based employee compensation plans using
the intrinsic value based method, under which compensation cost is measured
as the excess of the stock's market price at the grant date over the amount
an employee must pay to acquire the stock. Stock options and warrants
issued to non-employees are accounted for using the fair value based method,
under which the expense is measured as the fair value of the security at the
6
date of grant based on the Black-Scholes pricing model. A subsidiary of the
Company had 766,200 and 714,500 employee stock options outstanding at June
30, 2005 and 2004, respectively.
Pro Forma Information
Employee and Director Common Share Purchase Options- Pro forma information
regarding the effects on operations of employee and director common share
purchase options as required by SFAS No. 123 and SFAS No. 148 has been
determined as if the Company's subsidiary had accounted for those options
under the fair value method. Pro forma information is computed using the
Black Scholes method at the date of grant of the options based on the
following assumptions ranges: (1) risk free interest rate of 3.62%;
(2) dividend yield of 0%; (3) volatility factor of the expected market price
of our common stock of 67%; and (4) an expected life of the options of 6
years. The foregoing option valuation model requires input of highly
subjective assumptions. Because common share purchase options granted to
employees and directors have characteristics significantly different from
those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value of estimates, the existing
model does not in the opinion of our management necessarily provide a
reliable single measure of the fair value of common share purchase options
we have granted to our employees and directors.
Pro forma information relating to employee and director common share
purchase options is as follows:
For the Three For the Three
Months Ended Months Ended
June 30, 2005 June 30, 2004
Net loss as reported $(1,245,382) $ 23,978
Current period expense calculated
under APB 25 - -
Stock compensation calculated under SFAS 123 (5,140) (4,579)
Pro forma net loss $(1,251,522) $ 19,299
Basic and diluted historical loss per share $ (0.02) $ 0.00
Pro forma basic and diluted loss per share $ (0.02) $ 0.00
Recent Accounting Pronouncements
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board
Opinions No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28."
SFAS 154 provides guidance on the accounting for and reporting of accounting
changes and error corrections. It establishes retrospective application, or
the latest practicable date, as the required method for reporting a change
in accounting principle and the reporting of a correction of an error. SFAS
154 is effective for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005 and is required to be adopted
by the Company in the first quarter of fiscal 2007. The Company is
currently evaluating the effect that the adoption of SFAS 154 will have on
its consolidated results of operations and financial condition.
7
In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
Payment". SFAS 123(R) will provide investors and other users of financial
statements with more complete and neutral financial information by requiring
that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the
fair value of the equity or liability instruments issued. SFAS 123(R) covers
a wide range of share-based compensation arrangements including share
options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SFAS 123(R) replaces
FASB Statement No. 123, "Accounting for Stock-Based Compensation", and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees".
SFAS 123, as originally issued in 1995, established as preferable a fair-
value-based method of accounting for share-based payment transactions with
employees. However, that statement permitted entities the option of
continuing to apply the guidance in Opinion 25, as long as the footnotes to
financial statements disclosed what net income would have been had the
preferable fair-value-based method been used. Public entities (other than
those filing as small business issuers) would have been required to apply
SFAS 123(R) as of the first interim or annual reporting period that begins
after June 15, 2005. SFAS 123(R) would have been applicable for the Company
effective the first interim period that starts after December 15, 2005. In
April 2005, the Securities and Exchange Commission announced the adoption of
a rule that defers the required effective date of SFAS 123(R) for
registrants. SFAS 123(R) is now effective for all registrants as of the
beginning of the first fiscal year beginning after June 15, 2005. SFAS
123(R), when effective, will supercede both SFAS 123 and SFAS 148. All
public companies will transition to the new standard under the "modified
prospective method", which means that the fair value of any stock options
which vest after the effective date would be expensed and recorded in the
statement of operations. Companies must use fair values reported on a pro
forma basis in the notes to the financial statements previously filed. The
Company has evaluated the impact of the adoption of SFAS 123(R), and
believes that the impact may be significant to the company's future overall
results of operations and financial position.
NOTE 2 GOING CONCERN
The accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal
course of business. As reflected in the accompanying condensed consolidated
financial statements, the Company has a net loss of $1,246,382 and a
negative cash flow from operations of $1,217,381 for the three months ended
June 30, 2005, and a stockholders' deficiency of $2,563,344 as of June 30,
2005. These factors raise substantial doubt about its ability to continue
as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company's ability to raise additional funds to
finance its operations. The consolidated financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
8
NOTE 3 SEGMENT INFORMATION
Segment information is as follows:
Three Months Ended June 30, 2005: Chemical Medical Total
Revenues from external customers 280,506 40,504 321,010
Segment profit (loss) 30,095 (1,276,477) (1,246,382)
Three Months Ended June 30, 2004:
Revenues from external customers 239,957 145,340 385,297
Segment profit (loss) 34,113 (10,135) 23,978
NOTE 4 SUBSEQUENT EVENTS
On April 1, 2005, Ivivi Technologies, Inc. ("Ivivi"), a majority-owned
subsidiary of the Company, entered into an agreement (the "Agreement") with
Global Medical, L.L.C. ("Global") pursuant to which Global was to provide
Ivivi with certain managerial services (the "Services") with respect to the
medical devices and products manufactured, distributed, sold or rented by
Ivivi (the "Ivivi Products"). The term of the Agreement was two years
commencing on April 1, 2005 and was renewable for successive one-year terms
if mutually agreed in writing by the parties.
After evaluation of the Agreement, Ivivi elected to terminate the Agreement.
Accordingly, on July 22, 2005, Ivivi and Global entered into an agreement
(the "Termination Agreement") pursuant to which the Agreement was terminated
(the "Termination"). Pursuant to the terms of the Termination Agreement,
from July 15, 2005 through September 16, 2005 (the "Transition Period"),
Global shall continue to provide certain of the Services to Ivivi as set
forth in the Termination Agreement. As compensation for such Services,
Ivivi shall pay Global: (i) $20,000 each month during the Transition Period;
and (ii) an amount equal to 13% of the aggregate amount invoiced by Global
(net of taxes, returns and adjustments) on behalf of and in the name of
Ivivi, for the sale or rental of Ivivi Products during the Transition
Period.
Pursuant to the terms of the Termination Agreement, from the date of the
Termination Agreement until September 30, 2005, or such later date as
mutually agreed to by the parties (the "Managed Care Commission Period"),
Global shall have the right to enter into agreements with managed care
companies pursuant to which Global shall service the managed care companies
and their respective patients/members, utilizing Ivivi Products on a
local/regional basis. Pursuant to the Termination Agreement, for a period
of three years following the date of the Termination, Global shall be
entitled to receive commissions equal to 45% of revenues generated from such
agreements entered into during the Managed Care Commission Period; provided,
that Global continues to service the managed care companies and their
respective patients/members under such agreements during such three-year
period.
Notwithstanding the Termination, Ivivi and Global agreed that Global may
continue to act as a distributor of Ivivi Products under the existing
distributor agreement between Ivivi and Global, as such agreement may
otherwise be amended by such parties from time to time.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion of the Company's operations and financial condition
should be read in conjunction the Financial Statements and notes thereto
included elsewhere in this Quarterly Report on Form 10-QSB.
Forward-Looking Statements
This Quarterly Report on Form 10-QSB 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. The Company uses forward-looking statements in its description
of its 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. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any forward-
looking statements contained in this report 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 the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2005 and other filings with the Securities and Exchange Commission.
Critical Accounting Policies
For the three months ended June 30, 2005, there were no significant changes
to the Company's critical accounting policies from those reported in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2005.
Business Overview
The Company is 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. The Company currently derives most of its revenues from the
development, manufacture and sale of chemical products, and, to a lesser
extent, from its therapeutic non-invasive electronic medical devices and
topical dermatological products.
The Company is a corporation that was organized under the laws of the State
of Delaware on November 24, 1969. The Company's operations are conducted
through the Company itself and its three subsidiaries, Ivivi Technologies,
Inc., Pegasus Laboratories, Inc. and Sonotron Medical Systems, Inc.
10
Results of Operations for the three months ended June 30, 2005
as compared to June 30, 2004
Revenues
Revenues were $321,010 in 2005 as compared to $385,297 in 2004, a decrease
of $64,287 or 17%. Revenues from the Company's chemical activities
increased by $40,549, offset by a decrease of $104,836 in the Company's
medical activities in 2005 as compared to 2004. Although chemical revenues
increased for the current period, a customer of the Company's chemical
products that had previously represented approximately 15% of the Company's
chemical revenues in prior periods informed the Company on August 19, 2005,
that it was ceasing operations. Such customer had limited orders during the
quarter ended June 30, 2005 and accounted for approximately $30,000 of the
Company revenues for such period. The decrease in revenues from the
Company's medical technology activities was due to a loss of revenue of
$54,560 from a customer, due to the uncertainty of collectability of amounts
due to the Company. The Company intends to continue seeking payment of such
receivable; however, there can be no assurance that the Company will be able
to collect any or all of such receivable.
Operating (Loss)
Operating loss in 2005 was $1,246,382 compared to operating income in 2004
of $23,978. Selling, general and administrative expenses increased by
$979,634 of which, approximately $850,000 or 87% was due to the significant
increase in personnel, marketing, and overhead costs from the Company's Ivivi
subsidiary to support Ivivi's expanded activities related to the distribution
and marketing of its SofPulse technology and the balance of approximately
$129,000 was attributable to the Company's chemical activities primarily
comprised of an increase in personnel costs by the addition of an employee and
increased technical consulting expenses. Research and development expense was
$167,349 during the six months ended June 30, 2005 for the Ivivi subsidiary
for laboratory studies for its SofPulse technology, with no expense in the
2004 period. Net Interest and financing costs increased $95,273 due to
interest expense on the convertible notes issued in the private placement
offset by interest earned from amounts invested in money market funds.
Liquidity and Capital Resources
At June 30, 2005, the Company had cash and equivalents of $1,722,441 as
compared to $3,011,631 at March 31, 2005. The decrease was primarily the
result of the increased operating expenses at the Company's subsidiary,
Ivivi Technologies, Inc. ("Ivivi").
Operating Activities
Net cash flows used by operating activities were $1,217,381 for the three
months ended June 30, 2005 as compared to net cash flows provided by
operating activities of $32,513 for the quarter ended June 30, 2004. This
decrease in cash used was primarily due to a net loss of $1,246,382 related
mostly to the Company's medical technologies activities, increases in
prepaid expenses of $70,064, and inventories of $36,357. These increases
were partially offset by non cash charges for the amortization of loan costs
related to the Company's Private Placement of $54,976 and bad debt expense
$55,490.
11
Investing Activities
For the quarter ended June 30, 2005 cash used in investing activities of
$17,043 related to the purchase of equipment. For the quarter ended June 30,
2004 zero cash was used in investing activities.
Financing Activities
During the quarter ended June 30, 2005 the Company paid $54,766 for deferred
costs related to the private placement offering as compared to $19,785 paid
during the quarter ended June 30, 2004.
The Company does not have any material external sources of liquidity or
unused sources of funds.
The Company's revenues, operations and cash flows over the past few years
have declined. Management has recognized the situation and has developed a
business plan to enhance the activities of one of its subsidiaries which
markets the SofPulse medical device. In December 2004 and February 2005,
the Company, together with Ivivi, its majority-owned subsidiary, completed
two private placements pursuant to which they issued, jointly and severally,
unsecured convertible notes in an aggregate principal amount of $3,637,500
and $2,450,000, respectively. The private placements were completed in
eight separate closings from July 2004 through February 2005. The proceeds
of the private placements are being used primarily by Ivivi for the research
and development and sales and marketing of the SofPulse device line of
products and for the research and development of other potential products
being developed by Ivivi. Approximately $448,000 of the net proceeds of the
private placements were used to repay a portion of Ivivi's indebtedness to
the Company. The liability for such borrowings has been recorded in the
Company's financial statements.
The notes are due and payable five years from the date of issuance, unless
earlier converted. The notes bear interest at 6% per annum and under
certain circumstances, the principal and accrued interest on the notes will
either be: (i) convertible into the Company's common stock at $.29 per
share or (ii) convertible into Ivivi's common stock at $8.30 per share. For
each Note in the principal amount of $100,000 issued in the private
placements, one warrant for the purchase of up to 344,828 shares of the
Company's common stock at $.41 per share (the "Company Warrant") and one
warrant for the purchase of up to 12,048 shares of Ivivi's common stock at
$5.70 per share (the "Ivivi Warrant") were issued. Each of the Company
Warrants and the Ivivi Warrants provides that in addition to paying the
exercise price, the holder must surrender the non-exercised warrant (i.e.,
either the Company Warrant or the Ivivi Warrant).
Pursuant to the terms of the private placements completed in each of
December 2004 and February 2005, the number of shares of the Company's
common stock and the number of shares of Ivivi's common stock issuable upon
conversion of the convertible notes issued therein and the exercise of the
warrants will increase by 1% and 2%, respectively, for each 30-day period,
or portion thereof, after March 1, 2005 and June 30, 2005, respectively,
that a registration statement covering the shares of the Company's common
stock and the shares of Ivivi's common stock, respectively, underlying
securities issued in the private placement is not declared effective.
12
The notes contain covenants that limit each of the Company's and Ivivi's
ability to take certain actions without the consent of the holders of the
notes, including:
o incurring additional indebtedness for borrowed money, except in the
ordinary course of business;
o merging, selling substantially all of its assets or acquiring another
entity;
o making loans or investments;
o paying dividends or making distributions;
o incurring liens on its assets;
o making capital expenditures;
o entering into certain transactions with affiliates; and
o materially changing its business.
The Company will need to obtain additional capital to continue to operate
and grow its business, including the business of its subsidiaries, and its
ability to obtain additional financing in the future will depend in part
upon the prevailing capital market conditions, as well as its and its
subsidiaries' business performance. In February 2005, the Company's
subsidiary, Ivivi, filed a registration statement with the Securities and
Exchange Commission related to the proposed initial public offering of
Ivivi's common stock. There can be no assurance that the Company or Ivivi
will be successful in their efforts to arrange additional financing,
including through the proposed initial public offering of Ivivi's common
stock, on terms satisfactory to the Company and/or Ivivi or at all.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains 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 its 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-QSB,
the Company carried out an evaluation, with the participation of its
management, including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of its disclosure controls and procedures
pursuant to Securities Exchange Act Rule 13a-15. Based upon that
13
evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by the
Company in the reports that the Company files or submits under the
Securities Exchange Act is accumulated and communicated to the Company's
management including its Chief Executive Officer and Chief Financial Officer,
to ensure that such information is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Changes In Internal Controls Over Financial Reporting.
There have been no changes in the Company's internal controls over financial
reporting that occurred during the Company's last fiscal quarter to which
this Quarterly Report on Form 10-QSB relates that have materially affected,
or are reasonably likely to materially affect, the Company's internal
controls over financial reporting.
PART II. OTHER INFORMATION
Item 6. Exhibits.
(a) Exhibit No.
10.1 Termination Agreement with Global Medical, LLC.
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.
By:\s\ Andre' DiMino
Andre' DiMino
President
Dated: Northvale, New Jersey
August 22, 2005
14
Exhibit 10.1
Termination Agreement with Global Medical, LLC.
Proposed Structure to End September 16, 2005:
1. Back-end services $12,000 Beginning July 15,2005 till
September 16, 2005, payable monthly
2. Jorge Gonzalez $8,000 Beginning July 15, 2005 till
September 16, 2005, payable monthly
Total $20,000 Beginning July 15, 2005 till September
16, 2005, payable monthly with first payment due
upon execution of this agreement.
3. Over-ride on
all institutional
revenue 13% for July, August, and September, through
September 16, 2005.
4. Arlis and Jeff Pass through costs to Ivivi - Global will be paid on
the actual overall costs of the employees as of July
1, 2005 till the date that Ivivi takes over the
payments/salary expense in its entirety from Global.
Ivivi may determine at anytime that the services
provided by the Employees will not be required and
that Ivivi will not be responsible for any additional
payments beyond such point. Ivivi will not be
responsible for any accrued vacation time nor will
Ivivi be responsible for any commission payments
and/or bonus payments due or any other expenses.
5. Managed Care 45% commission on Global Medical Contract Obtainment -
These contracts will be direct between Global Medical
and the managed care company. Patients would be
serviced via Global direct on a local/regional basis.
Global Medical will have the right to sign a contract
directly with a Managed Care Company until September
30, 2005, or such longer period as mutually agreeable.
This agreement will be valid for a period of 3 years
for any accounts that Global is responsible for
obtaining and for which Global services.
6. At the conclusion of this Agreement it is the understanding of both Ivivi
Technologies, Inc. and Global Medical L.L.C. that there will be no additional
obligations between the two companies as well as no additional obligations
between Ivivi Technologies, Inc. and Yoav Gershoni except for the obligation
of Ivivi Technologies to grant Yoav Gershoni one thousand (1,000) fully
vested options to purchase one thousand (1,000) shares in Ivivi Technologies
stock at an exercise price of $10 per share, subject to any Lock-Up Agreement
and such other documents and agreements as required of other grantees of
options by Ivivi and/or as deemed necessary and advisable by Ivivi's board of
directors, legal counsel, financial auditors and underwriters who will be
guided by applicable SEC guidelines and accounting rules and exercisable
subsequent to Ivivi Technologies going public. It is agreed, however, that
Global Medical L.L.C. may continue to operate as a distributor for Ivivi
Technologies, Inc. as such understanding may be amended from time to time.
By: /s/Yoav Gershoni By: /s/ Edward Hammel
Global Medical, LLC Ivivi Technologies, Inc.
Dated: 7/22/05 Dated: 7/22/05
Exhibit 31.1
Certification
Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
I, Andre' DiMino, 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)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our 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) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report my 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
c) 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 my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of 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 22, 2005 /s/ Andre' DiMino
Chief Executive Officer
A signed original of this written statement required by Section 302 has been
provided to ADM Tronics Unlimited, Inc. and will be retained by ADM Tronics
Unlimited, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
Exhibit 31.2
Certification
Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
I, Andre' DiMino, 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)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our 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) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report my 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
c) 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 my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of 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 22, 2005 /s/ Andre' DiMino
Chief Financial Officer
A signed original of this written statement required by Section 302 has been
provided to ADM Tronics Unlimited, Inc. and will be retained by ADM Tronics
Unlimited, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
Exhibit 32.1
CERTIFICATION 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, 2005 (the
"Report"), filed with the Securities and Exchange Commission, Andre' DiMino,
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, 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 consolidated financial condition of the Company as of the dates
presented and the consolidated result of operations of the Company for the
periods presented.
Date: August 22, 2005 /s/ Andre' DiMino
Chief Executive Officer and
Chief Financial Officer
The foregoing certification is being furnished solely pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, United States Code) and is not being filed as part of
the Form 10-QSB or as a separate disclosure document.
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature
that appears in typed form within the electronic version of this written
statement required by Section 906, has been provided to ADM Tronics
Unlimited, Inc. and will be retained by ADM Tronics Unlimited, Inc. and
furnished to the Securities and Exchange Commission or its staff upon
request.