SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. 2)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-17629
ADM TRONICS UNLIMITED, INC.
(Name of Small Business Issuer in its Charter)
Delaware 22-1896032
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
224-S Pegasus Avenue, Northvale, New Jersey 07647
(Address of Principal Executive Offices) (Zip Code)
(201) 767-6040
(Issuer's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0005 par value
(Title of Class)
Check whether the issuer: (1) 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 registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES[X] NO[_]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in the form, and no disclosure will be contained, to
the best of the issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were approximately
$1,382,113.
The aggregate market value of the issuer's common stock, par value $.0005 per
share (the "Common Stock"), held by non-affiliates of the issuer as of June
29, 2005, based on the average of the closing bid and asked prices of $0.285,
for such shares on such date, was approximately $7,200,000. For purposes of
such calculation, shares of Common Stock held by each executive officer and
director and by each person who owns more than 5% of the outstanding shares of
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The number of shares of the Common Stock outstanding as of June 29, 2005 was
53,882,037.
Documents Incorporated by Reference:
Not applicable.
Transitional Small Business Disclosure Format (check one): Yes [_] No [X]
EXPLANATORY NOTE
This Amendment No. 2 on Form 10-KSB/A to the Annual Report on Form 10-KSB (the
"Annual Report") of ADM Tronics Unlimited, Inc. (the "Company" or "ADM") filed
with the Securities and Exchange Commission (the "SEC") on July 14, 2005 and
amended on December 9, 2005, is filed to clarify the beneficial ownership of
the securities of the Company and to resubmit the audit opinion of the
Company's independent accountants which includes an additional paragraph
regarding the restatement of the Company's financial statements. The Company
is amending and restating in its entirety Item 7 of Part II and Item 11 of
Part III of the Annual Report. Except as described above, no other amendments
are being made to the Annual Report. This Form 10-KSB/A does not reflect
events occurring after the July 14, 2005 filing of our Annual Report or modify
or update the disclosure contained in the Annual Report in any way other than
as required to reflect the amendments discussed above and reflected below.
Unless otherwise indicated in this prospectus, references to "we," "us," "our"
or the "Company" refer to ADM Tronics Unlimited, Inc. and its subsidiaries.
Part II
Item 7. Financial Statements
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
MARCH 31, 2005
I N D E X
Page No.
FINANCIAL STATEMENTS:
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheet as of March 31, 2005 F-2
Consolidated Statements of Operations
For the Years Ended March 31, 2005 and 2004
F-3
Consolidated Statements of Changes in
Stockholders' Equity (Deficiency)
For the Years Ended March 31, 2005 and 2004 F-4
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2005 and 2004 F-5
Notes to Consolidated Financial Statements F-6/F-19
THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY WEINICK
SANDERS LEVENTHAL & CO., LLP AND HAS NOT BEEN REISSUED BY WEINICK SANDERS
LEVENTHAL & CO., LLP.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
ADM Tronics Unlimited, Inc. and Subsidiaries
Northvale, New Jersey
We have audited the accompanying consolidated balance sheet of ADM Tronics
Unlimited, Inc. and subsidiaries as of March 31, 2005, and the related
consolidated statements of operations, changes in stockholders' equity
(deficiency), and cash flows for the years ended March 31, 2005 and 2004.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ADM
Tronics Unlimited, Inc. and subsidiaries as of March 31, 2005, and the results
of their operations and their cash flows for the years ended March 31, 2005
and 2004, in conformity with United States generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from
operations and has a stockholders' deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ Weinick Sanders Leventhal & Co., LLP
New York, New York
July 13, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
ADM Tronics Unlimited, Inc. and Subsidiaries
Northvale, New Jersey
We have audited the accompanying restated balance sheets of ADM Tronics
Unlimited, Inc. and Subsidiaries as of March 31, 2005, and the related
restated consolidated statements of operations, changes in stockholders'
equity (deficiency), and cash flows for the year ended March 31, 2005. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ADM
Tronics Unlimited, Inc. and Subsidiaries as of March 31, 2005, and the results
of their operations and their cash flows for the year ended March 31, 2005, in
conformity with accounting principles generally accepted in the United States
of America.
As discussed in Note 1r to the financial statements, the March 31, 2005
financial statements have been restated primarily to record a beneficial
conversion feature related to the Company's convertible notes payable and an
additional discount related to the fair value of warrants issued with the
debt.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in note 2 to the
financial statements, the company has suffered recurring losses from
operations and has a stockholders deficiency that raises substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Raich Ende Malter & Co. LLP
East Meadow, New York
October 26, 2005
F-1
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2005
(RESTATED)
ASSETS
Current assets:
Cash and cash equivalents $3,011,631
Accounts receivable - trade, less allowance
for doubtful accounts of $72,593 102,691
Inventories:
Raw materials and supplies 124,393
Finished goods 248,324
Prepaid expenses 283,048
Other current assets 36,248
----------
Total current assets $3,806,335
Property and equipment - at cost, net of
accumulated depreciation of $271,188 40,550
Equipment in use and under lease agreements - at cost,
net of accumulated depreciation of $832,059 51,791
Inventory - long term portion 287,582
Loan receivable from officer, bearing interest
at 3% per annum, unsecured 49,188
Deferred financing costs, net of accumulated
amortization of $127,644 823,564
Other assets 238,053
----------
Total assets $5,297,063
==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 172,978
Accrued expenses and other current liabilities 299,790
----------
Total current liabilities $ 472,768
Long-term debt:
Warrants issued with registration rights 1,449,326
6% unsecured notes payable - long-term, 6,087,500
Discount on unsecured notes payable (2,628,219)
----------
Total long-term debt 4,908,607
Commitments and contingencies --
Stockholders' deficiency:
Preferred stock, $.01 par value, 5,000,000 shares
authorized --
Common stock, $.0005 par value, 150,000,000 shares
authorized; 53,882,037 shares issued and outstanding 26,941
Capital in excess of par value 9,391,972
Deferred compensation ( 327,615)
Accumulated deficit (9,175,610)
----------
Total stockholders' deficiency ( 84,312)
----------
Total liabilities and stockholders' deficiency $5,297,063
==========
See accompanying notes to consolidated financial statements.
F-2
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
March 31,
2005 2004
(RESTATED)
Revenues:
Sales $ 955,438 $ 999,282
Rental income 330,636 106,085
Other income (including interest income) 96,039 57,889
Total revenues 1,382,113 1,163,256
Costs and expenses:
Cost of sales 530,872 528,569
Depreciation and amortization of property
and equipment and equipment in use and under
lease agreements 139,213 146,717
Salaries and officer's compensation 609,365 189,569
Research and development 270,894 --
Write-off of investments -- 52,259
Selling, general and administrative 2,048,935 379,780
Interest expense 154,756 8,100
Amortization of debt discount 180,052 --
Change in fair value of warrant liability 581,749 --
Total costs and expenses 4,515,836 1,304,994
Net loss ($ 3,133,723) ($ 141,738)
Weighted average number
of common shares outstanding 52,548,704 51,007,037
Net loss per share, basic and diluted ($ 0.06) $ 0.00
See accompanying notes to consolidated financial statements.
F-3
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED MARCH 31, 2005 and 2004
(Restated)
Preferred Common
Shares Shares
5,000,000 150,000,000
Authorized Authorized Capital in
$.01 Par $.0005 Par Par Excess of Par Def'd Accumulated
Value Value Value Value Comp Deficit Total
Balance at
April 1, 2003 -- 50,382,037 $25,191 $6,773,724 $ -- ($5,900,149) $898,766
Issuance of
common stock -- 1,500,000 750 14,250 -- -- 15,000
Valuation of
920,000 shares
issued by
subsidiary -- -- -- 73,600 (69,600) -- 4,000
Net loss -- -- -- -- -- (141,738) (141,738)
Balance
March 31, 2004 -- 51,882,037 25,941 6,861,574 (69,600) (6,041,887) 776,028
Valuation of
warrants
issued to
underwriter
for services -- -- -- 67,253 -- -- 67,253
Beneficial
conversion
feature 1,940,694 -- 1,940,694
Issuance of
warrants 294,761 (294,761) --
Issuance of
warrants
for placement
services 208,690 208,690
Issuance of
common stock -- 2,000,000 1,000 19,000 -- -- 20,000
Amortization of
deferred
compensation 36,746 36,746
Net loss -- -- -- -- (3,133,723)(3,133,723)
Balance -
March 31, 2005
As restated -- 53,882,037 $26,941 $9,391,972 ($327,615)($9,175,610) ($84,312)
See accompanying notes to consolidated financial statements.
F-4
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
March 31,
2005 2004
(RESTATED)
Cash flows from operating activities:
Net loss ($3,133,723) ($ 141,738)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 143,796 147,475
Amortization of deferred financing costs 86,884 --
Amortization of deferred compensation 36,746 --
Stock based compensation 67,253 --
Amortization of debt discount 180,052 --
Change in fair value of warrant liability 581,749 --
Issuance of common stock for services 20,000 14,250
Other 19,148 11,000
Write-off of investments -- 52,259
Increase (decrease) in allowance for doubtful
accounts 43,593 (10,000)
Increase (decrease) in cash flows as a result
of changes in asset and liabilities account
balances:
Accounts receivable - trade (27,851) (32,811)
Inventories (105,532) 25,402
Other current assets (286,303) 1,096
Equipment held for sale 56,883 16,056
Other assets (3,446) 4,946
Accounts payable 13,180 (40,833)
Accrued expenses and other current
liabilities 248,450 (8,239)
Total adjustments 1,074,602 180,601
Net cash provided by (used in) operating activities (2,059,121) 38,863
Cash flows from investing activities:
Repayments of loans by officer -- 703
Purchase of equipment, net (46,594) --
Patent costs incurred (49,612) --
Net cash provided by (used in) investing activities (96,206) 703
Cash flows from financing activities:
Issuance of common stock -- 750
Private placements costs incurred (742,498) --
Registration costs incurred (133,125) --
Payment of note payable - estate of former
officer/stockholder (135,000) --
Proceeds from issuance of unsecured notes payable 6,087,500 --
Net cash provided by financing activities 5,076,877 750
Net increase in cash and cash equivalents 2,921,550 40,316
Cash and cash equivalents - beginning of year 90,081 49,765
Cash and cash equivalents - end of year $ 3,011,631 $ 90,081
Supplemental information:
Interest paid $ 105,890 $ --
Income taxes paid $ 3,414 $ 3,434
Supplemental disclosure of non-cash operating
and financing activities:
Common stock and warrants issued as
consideration for consulting services $ 449,000 $ 87,850
See accompanying notes to consolidated financial statements.
F-5
ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2005 and 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(a) Consolidation:
The consolidated financial statements include the accounts of
ADM Tronics Unlimited, Inc. and its subsidiaries (the "Company").
All significant intercompany balances and transactions have been
eliminated in consolidation.
(b) Business Activity:
The Company is a manufacturer and engineering concern whose
principal lines of business are the production and sale of chemical
products and manufacturing, selling and leasing of medical equipment
and medical devices. The 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. The medical device product line
consists principally of proprietary devices used in the treatment of
joint pain, postoperative edema, and tinnitus. These products are
sold or leased to customers located in the United States and Asia.
For the years ended March 31, 2005 and 2004, the chemical
product line accounted for approximately 68% and 80% of revenues and
the medical device product line accounted for approximately 32% and
20%, respectively.
(c) Cash and Cash Equivalents:
The Company considers all highly-liquid investments with a
remaining maturity of three months or less at the time of purchase
and excess operating funds invested in cash management and money
market accounts to be cash.
The Company places its cash and money market investments with
high credit quality financial institutions. At times, such
investments may be in excess of the FDIC insurance limit. At March
31, 2005, cash balances exceeded FDIC insurance limits by $2,811,631.
(d) Inventories:
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.
(e) Property and Equipment:
Property and equipment are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of 5 to 10 years. Leasehold improvements are amortized over
the lease term or useful lives, whichever is shorter. Expenditures
for major betterments and additions are charged to the asset
accounts while replacements, maintenance and repairs, which do not
improve or extend the lives of the respective assets, are charged to
expense currently.
(f) Sonotron Devices:
Sonotron Devices ("Devices") are held for sale or lease and
are included in the consolidated balance sheet under "Inventory -
long term" and "Equipment in use and under lease agreements" on a
specific identification basis. Unless and until clearance to market
is obtained from the United States Food and Drug Administration
(FDA), the Devices cannot be marketed in the United States for human
applications, other than for research purposes, and may not be
marketable in certain foreign countries.
F-7
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
Included in equipment in use and under lease agreements are
Devices used internally and Devices loaned out for marketing and
testing. Devices in use and under lease agreements are depreciated
over seven years commencing at the date placed in service. Revenues
from leasing activities have not been significant.
(g) Sofpulse Units:
Sofpulse Units ("Units"), an FDA cleared device, are included
in the consolidated balance sheet under "Equipment held for sale"
and "Equipment in use and under lease rental agreements," on a
specific identification basis. Included in equipment in use and
under lease agreements are Sofpulse Units leased to third parties,
Units used internally and Units loaned out for marketing and
testing. These Units are depreciated over seven years commencing on
the date placed in service.
(h) Other Assets:
Patents and patents assigned are stated at cost and are
included in other assets and are amortized on a straight-line basis
over the shorter of their legal or useful lives (15 to 17 years for
patents, and 2 years for patents assigned). Amortization expense is
expected to be approximately $10,000 in each of the succeeding five
years.
Deferred financing costs of the private placement offering are
being amortized through the five-year maturity dates of the related
unsecured notes payable.
The valuation of deferred compensation related to subsidiary
shares and warrants issued is being amortized over their respective
vesting periods of 5 to 6 years for those shares and warrants.
(i) Long-lived Assets:
Long-lived assets, including intangibles, to be held and used
are reviewed for impairment whenever events or changes in
circumstances indicate that the related carrying amount may not be
recoverable. If required, impairment losses on assets to be held and
used are recognized based on the excess of the asset's carrying
value over its fair value. Long-lived assets to be sold are reported
at the lower of carrying amount or fair value reduced by estimated
disposal costs.
The Company has adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The Company's adoption
of SFAS No. 144 did not have an effect on the Company's results of
operations, cash flows, or financial position.
(j) Revenue Recognition:
Sales revenues are recognized when products are shipped to end users and
rental and lease revenues are recognized principally on either a monthly or a
pay-per use basis in accordance with individual rental or lease agreements and
are recognized on a monthly basis as earned. Shipments to distributors are
recognized as sales where no right of return exists. This is generally the
case with sales of chemicals. This is generally not the case with sales of the
SofPulse units. The Company recognizes revenue from the sale of the SofPulse
products when the products are shipped to end users. An increasing amount of
rental revenue is recognized on a fixed monthly recurring basis as product is
utilized by the end-user. Sales returns have been immaterial. Lease revenues
through third party distributors have also been immaterial and there have been
no sales through third party distributors. The Company's products are
principally shipped on a "freight collect" basis. Shipping and handling
charges and costs are immaterial.
F-8
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
Other income for the year ended March 31, 2005 consists of
legal settlements of $64,833, interest income of $29,106 and
miscellaneous income of $2,100. For the year ended March 31, 2004
other income consists of office space rental and technical services
of $52,039, interest income of $1,997 and miscellaneous income of
$3,853.
(k) Advertising:
Advertising (approximately $138,000 and $4,000 in 2005 and
2004, respectively) is expensed as incurred and is included with
selling, general and administrative expenses in the consolidated
statements of operations.
(l) Net Loss Per Share:
The Company applies Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (FAS 128). Net loss per
share excludes dilution and is computed by dividing net loss by the
weighted average number of common shares outstanding during the
reported periods. The assumed exercise of common stock equivalents
was not utilized for the year ended March 31, 2005 since the effect
would be anti-dilutive. There were 50,182,341 common stock
equivalents at March 31, 2005 and none at March 31, 2004.
(m) Use of Estimates:
The preparation of 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 disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
(n) Fair Value of Financial Instruments:
The carrying values of cash, cash equivalents, accrued
expenses and notes payable approximate their fair values due to the
maturity of these instruments, net of discount.
The fair value of the officer loan receivable is determined by
calculating the present value of the note by a current market rate
of interest as compared to the stated rate of interest. The
difference between fair value and carrying value is not deemed to be
significant.
(o) Basis of Presentation:
The financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of
America.
(p) Minority Interest:
A subsidiary, Ivivi Technologies, Inc. ("Ivivi"), of the
Company has a minority interest which owns 31.5% of that company.
Since the losses applicable to the minority interest in the
Ivivi subsidiary exceed the minority interest in the equity capital
of the subsidiary, such excess and any further losses applicable to
the minority interest are charged against the majority interest, as
there is no obligation of the minority interest to make good such
losses. However, if future earnings do materialize, the majority
interest shall be credited to the extent of such losses previously
absorbed.
(q) Research and Development Costs
Research and development costs are expensed as incurred.
(r) Restatement:
The March 31, 2005 financial statements have been restated to record a
beneficial conversion feature related to the Company's convertible notes
payable described in Note 3. The Company has also recorded an additional
discount related to the fair value of warrants issued with the debt. The
result is to increase the total discount on debt to $2,808,271 from $325,000.
Also, the fair value of the warrants has been corrected to reflect a fair
value of $1,449,326 at March 31, 2005 as opposed to $325,000 as previously
reported.
Additionally, the Company issued compensation warrants related to the debt
placement with a fair value of $208,690 and has recorded deferred compensation
of $294,761 related to warrants issued for services. As a result of these
corrections, net loss for the year ended March 31, 2005 has increased by
$809,310, to $3,133,723, and loss per share has increased to $0.06 from $0.04.
Changes to the balance sheet at March 31, 2005 resulting from these
corrections are as follows:
As reported Restated
Deferred financing costs 670,498 823,564
Deferred compensation 106,880 327,615
Unamortized debt discount $ 299,000 $ 2,628,219
Warrants issued with
registration rights 325,000 1,449,326
Capital in excess of par value 7,003,968 9,391,972
Accumulated deficit (8,366,300) (9,175,610)
The financial statements as at and for the year ended March
31, 2004 have been restated to reflect the fair market value of
920,000 shares of IVIVI's common stock issued in the fourth quarter
of the fiscal year ended March 31, 2004 to officers, employees, and
others in the amount of $73,600, and $4,000 additional amortization
of the related deferred compensation for the year ended March 31,
2004.
F-9
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
(s)Trade Accounts Receivable
Trade accounts receivable are stated at the amount management expects to
collect from outstanding balances. Management provides for probable
uncollectible amounts through a charge to earnings 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 trade accounts receivable.
(t) 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 date of grant
based on the Black-Scholes pricing model. A subsidiary of the Company had
578,500 employee stock options outstanding at March 31, 2005 and 2004.
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 Year For the Year
Ended Ended
March 31, 2005 March 31, 2004
Net loss as reported $(3,133,723) $ (141,738)
Current period expense calculated
under APB 25 - -
Stock compensation calculated
under SFAS 123 (9,966) (12,458)
Pro forma net loss $(3,143,689) $ (154,196)
Historical basic and diluted
loss per share $ (0.06) $ 0.00
Pro forma basic and diluted
loss per share $ (0.06) $ 0.00
(u) New Accounting Pronouncements:
In December 2004, the FASB issued SFAS No.153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting
for Nonmonetary Transactions." The amendments made by Statement 153
are based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged.
Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do
not have commercial substance. Previously, Opinion 29 required that
the accounting for an exchange of a productive asset for a similar
productive asset or an equivalent interest in the same or similar
productive asset should be based on the recorded amount of the asset
relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar
productive assets. The FASB believes that exception required that
some nonmonetary exchanges, although commercially substantive, be
recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes this
statement produces financial reporting that more faithfully
represents the economics of the transactions. SFAS 153 is effective
for nonmonetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. Earlier application is permitted for
nonmonetary asset exchanges occurring in fiscal periods beginning
after the date of issuance. The provisions of SFAS 153 shall be
applied prospectively. The Company has evaluated the impact of the
adoption of SFAS 153, and does not believe the impact will be
significant to the Company's overall results of operations or
financial position.
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) will be required
to apply SFAS 123(R) as of the first interim or annual reporting
period that begins after June 15, 2005. SFAS 123(R) is applicable
for the Company effective the first interim period that starts after
December 15, 2005. 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 overall results of operations and
financial position (a pro forma effect, as estimated by management,
is disclosed elsewhere in these notes).
In January 2003, the FASB issued FASB Interpretation No.
("FIN") 46, "Consolidation of Variable Interest Entities" ("FIN
46"). In December 2003, FIN 46 was replaced by FASB interpretation
No. 46(R) "Consolidation of Variable Interest Entities." FIN 46(R)
clarifies the application of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements," to certain entities in which
equity investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the
F-10
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
entity to finance its activities without additional subordinated
financial support from other parties. FIN 46(R) requires an
enterprise to consolidate a variable interest entity if that
enterprise will absorb a majority of the entity's expected losses,
is entitled to receive a majority of the entity's expected residual
returns, or both. FIN 46(R) is effective for entities being
evaluated under FIN 46(R) for consolidation no later than the end of
the first reporting period that ends after March 15, 2004. The
Company does not currently have any variable interest entities that
will be impacted by adoption of FIN 46(R).
NOTE 2 - CONTINUATION AS A GOING CONCERN.
The Company has had substantial net losses of $3,133,723 and
$141,738 for the years ended March 31, 2005 and 2004, respectively.
The Company has a stockholders' deficiency of $84,312 at March
31, 2005. These factors raise substantial doubt about the ability to
continue as a going concern. The significant increase in the net
loss for the year ended March 31, 2005 is the result of expanded
activities of Ivivi. In anticipation of expanding the Company's
subsidiary operation, the Company raised $6,087,500 in a private
placement, (see Note 3), and at March 31, 2005 had cash and cash
equivalents of $3,011,631 and working capital of $3,333,567.
The Company's net loss for the year ended March 31, 2005 has
been principally funded from the net proceeds received from the
Private Placement Offering of the 6% Unsecured Notes Payable (see
Note 3).
The continuation of the Company as a going concern is
dependent on the Company's ability to increase revenues, in
receiving additional financing from outside sources including a
public offering of stock of a subsidiary company, and a return to
profitable operations. Management is pursuing a number of financing
avenues for the subsidiary as well as attempting to secure ongoing
revenue relationships for the subsidiary's products.
NOTE 3 - PRIVATE PLACEMENT FINANCINGS.
On December 1, 2004 and February 11, 2005, the Company
completed private placement financings (collectively, the
"Placements") to "accredited investors" only, consisting of an
aggregate of $6,087,500 aggregate principal amount of unsecured
convertible notes bearing interest at an annual rate of 6%. The
notes are due at various times from July 2009 through February 2010,
unless converted earlier, and will convert automatically upon the
consummation of a public offering into 733,434 shares of Ivivi's
common stock, subject to adjustment, plus up to an additional 5,060
shares of Ivivi's common stock for the payment of interest on the
notes through April 30, 2005 and 3,708 shares for each month
thereafter until the date that Ivivi files a registration statement
with the Securities and Exchange Commission and the offering of its
common stock is declared effective, assuming each holder elects to
have their interest paid in shares of the Ivivi's common stock.
Interest on the notes is payable quarterly in cash or shares of our
common stock, at the direction of the holder. In addition,
commencing March 1, 2005, with respect to the investors holding the
notes issued in the private placement that was completed in December
2004, and June 30, 2005, with respect to the investors holding the
notes issued in the private placement that was completed in February
2005, the investors will have the additional right to receive
interest payments in shares of ADM Tronics common stock in lieu of
cash or shares of the Ivivi's common stock. In connection with the
F-11
NOTE 3 - PRIVATE PLACEMENT FINANCINGS. (Continued)
issuance of the notes, Ivivi also issued to the investors warrants
to purchase an aggregate of 733,434 shares of Ivivi's common stock
at $5.70 per share, as well as warrants to purchase an aggregate of
20,991,379 shares of the common stock of ADM Tronics at $.41 per
share. Warrants to purchase shares of ADM Tronic's common stock
automatically expire upon the consummation of a public offering.
Under the terms of the notes sold in the private placement that was
completed in December 2004 and February 2005, the number of shares
of the Ivivi's common stock issuable upon conversion of the notes
and exercise of the warrants will increase by 2% for each 30-day
period, or portion thereof, after March 1, 2005 and June 30, 2005,
respectively, that the registration statement in connection to the
public offering of Ivivi's common stock is not declared effective.
As a result, as of April 30, 2005, an additional 17,530 shares of
common stock underlying the notes and 17,530 shares underlying the
warrants will be issuable by Ivivi. Based upon a Black Scholes
Option Valuation Model, the value attributable to the warrants
issued in the private placement through March 31, 2005 was
$2,031,075. Accordingly, the notes payable were discounted by
$2,808,271. The discount will be amortized over the term of the
notes to their maturity date.
As additional consideration for the purchase of the notes, the Company granted
to the purchasers warrants entitling them to purchase 20,991,379 common shares
at the price of $0.41 per share. These warrants lapse if unexercised after
five years, or upon an effective registration statement of Ivivi. A
registration rights agreement was executed requiring the Company to register
the shares of its common stock underlying the notes and warrants so as to
permit the public resale thereof. In accordance with EITF 00-27, a portion of
the proceeds was allocated to the warrant liability based on its fair value,
which totaled $867,577 using the Black-Scholes option pricing model. The
remaining balance was allocated to the convertible notes and was used to
compute the beneficial conversion feature. The Company attributed a beneficial
conversion feature of $1,940,694 to the convertible notes based upon the
difference between the effective conversion price of those shares and the
closing price of the Company's common shares on the date of issuance. The
assumptions used in the Black-Scholes model are as follows: (1) dividend
yield of 0%; (2) expected volatility of 64%, (3) risk-free interest rate
of 1.5%, and (4) expected life of six months. The total debt discount
of $2,808,271 is being amortized over the term of the notes. During the year
ended March 31, 2005, amortization as interest expense amounted to 180,052.
Since the warrant is a contract requiring settlement through the delivery of
registered shares, and the delivery of such registered shares was not deemed
controllable by the Company, the Company recorded the net value of the
warrants at the date of issuance as a warrant liability on the balance sheet
($867,577) and included the change in fair value from the date of issuance to
March 31, 2005 in other income (expense), in accordance with EITF 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock". The fair value of the warrants
was $1,449,326 at March 31, 2005.
Upon a registration statement covering the underlying shares being declared
effective, the fair value of the warrants on that date will be reclassified to
equity.
Ivivi has filed a Registration Statement with the Securities and Exchange
Commission for the issuance of a portion of its Common Stock.
NOTE 4 - PROPERTY AND EQUIPMENT.
Property and equipment at March 31, 2005 consist of the
following:
Machinery and equipment $277,225
Office furniture and fixtures and equipment 34,513
--------
311,738
Less accumulated depreciation and amortization 271,188
--------
$ 40,550
========
Depreciation and amortization on property and equipment for
the years ended March 31, 2005 and 2004 aggregated $7,722 and
$15,268, respectively.
F-12
NOTE 5 - EQUIPMENT IN USE AND UNDER LEASE AGREEMENTS.
Equipment in use and under lease agreements at March 31, 2005
consist of the following:
Sofpulse Units $874,580
Other Units 9,270
--------
883,850
Less accumulated depreciation 832,059
--------
$ 51,791
========
Depreciation of equipment in use and under lease agreements
for the years ended March 31, 2005 and 2004 aggregated $131,470 and
$126,965, respectively.
NOTE 6 - OTHER ASSETS.
Other assets at March 31, 2005 consist of the following:
Patents, net of accumulated amortization of $68,227 $ 91,320
Deferred registration costs of filings with the
Securities and Exchange Commission by Ivivi 133,125
Other 13,608
$ 238,053
(a) The costs connected with the registration statement
which is being filed with the SEC have been deferred.
Such costs will be charged to Paid-In Capital if the
Registration Statement becomes effective; otherwise,
such costs will be charged to operations.
NOTE 7 - INCOME TAXES.
The differences between the income taxes and the amount
computed by applying the federal statutory income tax rate of 34% to
income before taxes are as follows:
2005 2004
--------- ---------
Tax benefit at U.S. statutory rates $1,066,000 ($ 48,000)
Change in valuation allowance (1,066,000) 48,000
--------- ---------
Income taxes $ -- $ --
========= =========
F-13
NOTE 7 - INCOME TAXES. (Continued)
At March 31, 2005, the Company had deferred tax assets of
approximately $2,753,000 resulting from net operating loss
carryforwards. The deferred tax assets are offset by a valuation
allowance in the amount of $2,753,000.
A valuation allowance is recorded when management believes
it is more likely than not that tax benefits will not be realized. The
change in the valuation allowance was based upon the consistent
application of management's valuation procedures and circumstances
surrounding its future realization.
The Company and its subsidiaries file consolidated Federal
income tax returns. As of March 31, 2005, the Company has
consolidated net operating loss carryforwards of approximately
$6,883,000 that will expire during the years 2006 through 2024.
NOTE 8 - EMPLOYEE BENEFIT PLAN.
The Company has a 401(k) Plan covering substantially all
employees. Employer matching contributions to the plan are at the
discretion of management. There were no employer contributions to
the plan for the years ended March 31, 2005 and 2004.
NOTE 9 - COMMITMENTS AND CONTINGENCIES.
(a) Leases:
The Company leases its office and manufacturing facilities
under non-cancelable operating leases.
The approximate future minimum annual rental under these
leases at March 31, 2005 are as follows:
Years Ending:
---------------
March 31, 2006 $ 85,000
March 31, 2007 85,000
March 31, 2008 85,000
March 31, 2009 22,000
--------
$277,000
========
Other leases are month-to-month.
Rent expense for all facilities for the years ended March 31,
2005 and 2004 was approximately $127,000 and $92,000, respectively.
(b) Warranties:
The Company's medical devices are sold under agreements
providing for the repair or replacement of any devices in need of
repair, at the Company's cost, for up to one year from the date of
delivery, unless such need was caused by misuse or abuse of the
device.
At March 31, 2005, no amount has been accrued for potential
warranty costs and such costs are expected to be nominal.
(c) Legal Matters:
i. The Company is involved, from time to time, in
litigation and proceedings arising out of the ordinary
course of business. There are no pending material legal
proceedings or environmental investigations to which the
Company is a party or to which the property of the
Company is subject.
F-14
NOTE 9 - COMMITMENTS AND CONTINGENCIES. (Continued)
ii. On May 25, 2005, Ivivi filed a lawsuit against an
unrelated company and certain individuals. The complaint
alleges that certain of Ivivi's confidential information
was disseminated by the individuals to the other
company. Ivivi is seeking injunctive relief enjoining
the other company, its agents and employees for
preliminary and permanent injunctions for compensatory
and punitive damages, for an accounting and for
attorney's fees and costs.
Ivivi has filed a patent infringement suit against the
other company to protect its proprietary interests.
Legal counsel for the other company advised that several
documents were forwarded to intellectual property
counsel of the other company related to the filing of a
patent infringement suit against ADM Tronics and its
subsidiaries. Based upon the foregoing, there is the
possibility of litigation and counterclaims. It is
certainly possible and would not be unexpected for the
other company to file a counterclaim against Ivivi.
iii. On April 30, 2004, the Company entered into a
termination agreement with a lessor of some of the
SofPulse Units. The lessor agreed to pay the Company
$85,000 and return the rental units that were leased. In
the opinion of management, the agreement's termination
did not have a material adverse effect on rental income
of the Company.
The Company believes that the ultimate resolution of the
foregoing matters will not have a material adverse impact on the
Company's cash flows, financial condition or results of operations.
(d) Contractual Agreements:
i. On September 9, 2004 and on October 17, 2004, Ivivi
entered into Sponsored Research Agreements with the
Montefiore Medical Center ("Montefiore"). Both
agreements support research at Montefiore in areas
related to Ivivi's fields of interest. The agreement
dated September 9, 2004, is for a period of one year and
the committed funding amount is $28,750. The agreement
dated October 17, 2004 remains in effect until December
31, 2009 and the committed funding amount is $495,685.
The research and development costs are being expensed
over a one year period from inception of the agreements.
ii. Effective January 1, 2004, Ivivi entered into a
Consulting Agreement with the Chairman of the department
of Plastic Surgery at Montefiore Medical Center pursuant
to which Ivivi engaged the consultant to render
consulting services to it for a term of six years with
automatic one-year renewals. Pursuant to the consulting
agreement, the consultant serves as Medical Director and
Chairman of Ivivi's Medical Advisory Board and advises
Ivivi on technological developments, future clinical and
research applications and product development and
efficacy in the pulsed magnetic frequencies field.
In exchange for the consultant's consulting services,
the consultant received 80,000 shares of Ivivi's common
stock, 10,000 of which vested immediately upon the
Company's entering into the consulting agreement with
him, 17.5% of which vested on January 5, 2005 and the
remaining 70% of which shall vest in three equal yearly
installments on January 5 of each year from January 5,
2006 through January 1, 2009. In addition, Ivivi has
agreed to pay the consultant an annual bonus (not to
F-15
NOTE 9 - COMMITMENTS AND CONTINGENCIES. (Continued)
(d) Contractual Agreements: (Continued)
exceed $500,000) equal to the sum of 0.5% of that
portion of Ivivi's annual revenues in excess of $20
million and up to $80 million, 0.25% of that portion of
Ivivi's annual revenues in excess of $120 million. Ivivi
has also agreed to pay the consultant a royalty equal to
0.05% of revenues received for practicing and/or
commercializing any "new inventions" (as such term is
defined in the agreement) developed by the consultant
under the agreement. Bonuses and royalties payable for
the fiscal years ended March 31, 2006 and 2007 are
subject to a cap of 10% of Ivivi's pre-tax profit (after
deduction of such bonuses and royalty payments) for such
fiscal years. Bonuses and royalties payable under the
consulting agreement are also subject to certain
adjustments for returns, allowances or setoffs, to the
consultant's compliance with the non-compete provisions
of Ivivi's consulting agreement and certain other
restrictions.
iii. On April 1, 2005, Ivivi entered into an agreement with
Global Medical LLC in which Global will provide certain
management services in regard to medical devices and
products manufactured, distributed, sold or rented by
Ivivi. The term of the agreement commences October 1,
2005 for a two year period during which Global will be
paid a monthly fee of $45,000 and earn a certain
percentage of each sale or rental Global makes of
Ivivi's products. During the term of the agreement,
Ivivi has the right to purchase some or all of the
assets of Global utilized in the performance of the
management services in exchange for Ivivi's assumption
of certain on-going salary obligations of Global and
Ivivi's issuance of equity securities to Global.
(e) Other:
The Centers for Medicare and Medicaid Services have issued a
National Coverage Determination (NCD) providing coverage for the use
of the Company's SofPulse medical device for treatment of wounds.
The issuance of the NCD enables nursing homes, hospitals, physicians
and rehabilitation clinics to obtain reimbursement for treatment of
chronic, non-healing wounds with the Company's SofPulse medical
devices.
NOTE 10 - STOCKHOLDERS' EQUITY.
(a) Stock Options and Warrants:
From time to time, the Company grants stock options to
directors, officers and outside consultants.
A summary of the Company's stock option activity and related
information for the years ended March 31, 2005 and 2004 is as
follows:
F-16
NOTE 10 - STOCKHOLDERS' EQUITY. (Continued)
(a)Stock Options and Warrants: (Continued)
Year Ended Year Ended
March 31, 2005 March 31, 2004
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
Outstanding at beginning
of year -- $ -- 5,192,819 $ 0.2927
Granted 29,190,962 $0.39 -- --
Expired -- -- (5,192,819) $(0.2927)
Outstanding at end
of year 29,190,962 $0.39 -- --
Exercisable at end
of year 29,190,962 $0.39 -- --
IVIVI has instituted a stock option plan for the issuance of
1,500,000 shares. As of March 31, 2005 and 2004, 751,200 and
686,500, respectively, options were awarded, with 748,800 reserved
for future issuance. The option holder, upon receiving the grant is
immediately vested in 20% of the grant and the option holder earns a
continuing vesting right of the remaining balance for each of the
next four years of service with IVIVI. The options have exercise
prices ranging from $.10 to $10.00.
F-17
NOTE 10 - STOCKHOLDERS' EQUITY. (Continued)
(b) Common Stock:
In November 2003, a consulting company provided services to
the Company valued at $15,000 and acquired 1,500,000 non-registered
common shares of the Company.
In January 2004, a group of individuals provided services
valued at $73,600 for IVIVI and received 920,000 common shares of
Ivivi, approximately 31.5% of the subsidiary's common stock. The
valuation of the shares is being amortized over a five year vesting
period with the fair market value having been credited to paid-in
capital.
In December 2004, a consulting company provided services to
the Company valued at $20,000 and acquired 2,000,000 non-registered
common shares of the Company.
NOTE 11 - SEGMENT INFORMATION, GEOGRAPHICAL INFORMATION,
MAJOR CUSTOMERS, AND CREDIT CONCENTRATION.
(a) Segment Information:
The Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" effective April 1, 1999. The Company operates in two
reportable segments, the production and sale of chemicals and the
manufacture and sale or lease of medical products. The reportable
segments are strategic business units that offer different products
and services. They are managed separately based on differences in
customer base, marketing strategies or regulatory environment.
The accounting policies of the segments are the same as those
described in Note 1. The Company evaluates performance on profit or
loss from operations before income taxes.
Information about segment operations follows:
Year Ended March 31, 2005 Chemical Medical Total
Revenues $ 876,679 $ 409,395 $ 1,286,074
Interest income 4,161 24,945 29,106
Interest expense 1,228 153,528 154,756
Depreciation and amortization 8,304 130,909 139,213
Segment income (loss) 96,537 (3,230,260) (3,133,723)
Segment assets 934,382 4,362,681 5,297,063
Capital expenditures 46,594 46,594
Year Ended March 31, 2004 Chemical Medical Total
Revenues $ 887,312 $ 218,055 $ 1,105,367
Interest income 1,997 -- 1,997
Interest expense 8,100 -- 8,100
Depreciation and amortization 12,661 134,056 146,717
Segment loss 101,747 (224,760) (141,738)
Segment assets 647,202 500,358 1,147,560
F-18
NOTE 11 - SEGMENT INFORMATION, GEOGRAPHICAL INFORMATION,
MAJOR CUSTOMERS, AND CREDIT CONCENTRATION.
(b) Geographical Information:
Sales and rentals to unaffiliated customers, based on location
of customer, is as follows:
Years Ended March 31,
2005 2004
-------- --------
Chemical Segment:
United States $797,020 $813,273
Foreign countries 79,659 74,039
-------- --------
$876,679 $887,312
======== ========
Medical Segment:
United States $338,058 $110,974
Asia 71,337 100,579
Other foreign countries -- 6,502
-------- --------
$409,395 $218,055
======== ========
(c) Major Customers:
Sales to individual unaffiliated customers in excess of 10% of
net sales to unaffiliated customers are shown below.
Years Ended March 31,
2005 2004
-------- --------
Chemical Segment:
Customer A $271,124 $255,254
======== ========
Customer B $144,831 $169,281
======== ========
Medical Segment $ -- $ --
======== ========
F-19
Part III
Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The following table sets forth information regarding ownership of shares
of Company's common stock, as of June 29, 2005, by (i) each person known to
the Company to be the owner of 5% or more of the Company's common stock (ii)
each director and director nominee of the Company, (iii) each Named Officer,
and (iv) all directors and officers of the Company as a group. Except as
otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of the Company's common
stock indicated. For purposes of the table below, in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended, a person is
deemed to be the beneficial owner, for purposes of any shares of Common Stock
over which he or she has or shares, directly or indirectly, voting or
investment power; or of which he or she has the right to acquire beneficial
ownership at any time within 60 days after June 29, 2005. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" includes the power to dispose or direct the disposition of
shares. Common Stock beneficially owned and percentage ownership is based on
53,882,037 shares of Common Stock outstanding as of June 29, 2005.
Number of Shares
Name and Address Beneficially Owned Percentage
Andre' Di Mino 20,856,935(1) 38.7%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647
Vincent Di Mino 6,987,928 (2) 13.0%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647
David Saloff 0 0.0%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647
Eugene Stricker 4,250,000 (3) 7.9%
c/o Fifth Avenue Venture
Capital Partners
42 Barrett Road
Lawrence, NY 11559
Heiko H. Thieme 3,617,500 (4) 6.7%
1370 Ave of the Americas
New York, NY 10019
Burton Friedlander 3,313,900 (5) 6.2%
104 Field point Road.
Greenwich, CT 06830
All Executive Officers and
Directors as a group
(three persons) 27,844,863 (6) 51.7%
(1) Includes (i) 9,172,696 shares of the Company's common stock directly
owned by Andre Di Mino; (ii) 1,700,000 shares of the Company's common stock
held by the Andre' Di Mino Irrevocable Trust, a Trustee and the beneficiary of
which is Andre' Di Mino, who may be deemed to be a beneficial owner of such
shares; (iii) 1,700,000 shares of the Company's common stock held by the Maria
Elena Di Mino Trust, a Trustee of which is Andre' Di Mino, who may be deemed
to be a beneficial owner of such shares by reason of his power to vote such
shares; (iv) 1,700,000 shares of the Company's common stock held by the
Maurice Di Mino Irrevocable Trust, a Trustee of which is Andre' Di Mino, who
may be deemed to be a beneficial owner of such shares by reason of his power
to vote such shares; (v) 1,004,239 shares of the Company's common stock, which
are held by the Estate of Dr. Alfonso Di Mino (the "Di Mino Estate"), the
administrator of which is Andre' Di Mino who may be deemed to be a beneficial
owner of such shares by reason of his power to vote such shares, and of which
Andre Di Mino, as a beneficiary of the Di Mino Estate, is entitled to receive
167,374 shares; (vi) 1,330,000 shares of the Company's common stock, which the
Di Mino Estate has the power to vote pursuant to an agreement dated July 8,
1987, and with respect to which Andre' Di Mino may be deemed to be a
beneficial owner by reason of his power to vote such shares in his capacity as
administrator of the Di Mino Estate; and (vii) 4,250,000 shares of the
Company's common stock held by Eugene Stricker, of which Andre' Di Mino may be
deemed to be a beneficial owner by reason of his power to vote such shares
pursuant to an agreement between Andre' DiMino and Eugene Stricker.
(2) Includes 1,287,928 shares of the Company's common stock directly owned
by Mr. Vincent Di Mino, 300,000 shares of the Company's common stock owned by
the spouse of Vincent Di Mino, as to which Mr. Di Mino disclaims beneficial
ownership; 300,000 shares of the Company's common stock owned by a child of
Mr. Di Mino, who resides in Mr. Di Mino's home, as to which Mr. Di Mino
disclaims beneficial ownership; and 5,100,000 shares of the Company's common
stock of which 1,700,000 shares are held by each of the Andre' Di Mino
Irrevocable Trust, the Maria Elena Di Mino Irrevocable Trust and the Maurice
Di Mino Irrevocable Trust, a Trustee of which is Vincent Di Mino, who may be
deemed to be a beneficial owner of the shares held by such trusts by reason of
his power to vote such shares.
(3) Mr. Di Mino may be deemed to be a beneficial owner of such shares by
reason of his power to vote such shares pursuant to an agreement between
Andre' DiMino and Eugene Stricker. Reference is also made to Footnote No.
1.
(4) Includes 2,000,000 shares of the Company's common stock owned by The
American Heritage Fund, Inc. and 1,617,500 shares of the Company's common
stock Owned by The Global Opportunity Fund Limited, each of which Mr. Thieme
is a principal.
(5) Includes 2,896,600 shares of the Company's common stock owned by
Friedlander International Limited, of which Mr. Friedlander is a principal.
(6) Reference is made to Footnote Nos. 1 and 2.
Item 13. Exhibits
Exhibit
No. Description
3.1 Certificate of Incorporation and amendments thereto filed on August
9, 1976 and May 15, 1978 is incorporated by reference to Exhibit 3(a) to the
Company's Registration Statement Form 10 (File No. 0-17629) (the "Form 10").
3.2 Certificate of Amendment to Certificate of Incorporation filed December
9, 1996 is incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-KSB for the fiscal year ended March 31, 1997.
3.3 By-Laws are incorporated by reference to Exhibit 3(b) to the Form 10.
4.1 Warrant issued to the Global Opportunity Fund Inc. is incorporated by
reference to Exhibit 4.1 to Amendment No. 1 to the Company's Annual Report
on Form 10-KSB for the fiscal year ended March 31, 1998.
4.2 Warrant issued to Heiko H. Thieme is incorporated by reference to
Exhibit 4.2 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 1999.
4.3 Form of Company Warrant issued to certain investors (one in a series of
warrants with identical terms) is incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated February 11, 2005
4.4 Form of Ivivi Warrant issued to certain investors (one in a series of
warrants with identical terms) is incorporated by reference to Exhibit 4.2 to
the Company's Current Report on Form 8-K dated February 11, 2005
4.5 Form of Note issued to certain investors (one in a series of notes with
identical terms) is incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K dated February 14, 2005.
9.1 Trust Agreements of November 7, 1980 by and between Dr. Alfonso Di Mino
et al. are incorporated by reference to Exhibit 9 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended March 31, 1993.
10.1 Memorandum of Lease by and between the Company and Cresskill
Industrial Park III dated as of August 26, 1993 is hereby incorporated by
reference to Exhibit 10(a) to the Company's Annual Report on Form 10-KSB for
the fiscal year March 31, 1994.
10.2 Agreement of July 8, 1987 by and between Donna Di Mino, Dr. Alfonso Di
Mino, et al. is hereby incorporated by reference to Exhibit 10(q) to the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
1993.
10.3 Agreement of March 21, 2002 by and between the Company and New England
Acquisitions, Inc. is hereby incorporated by reference to Exhibit 10.8 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2002.
10.4 Agreement of April 29, 2003 by and between Vet-Sonotron Systems, Inc.
and THM Group, LLC is hereby incorporated by reference the Exhibit 10.4 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2003.
10.5 Agreement of January 17, 2003 by and between the Company and Fifth
Avenue Venture Capital Partners is hereby incorporated by reference to
Exhibit 10.5 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 2003.
10.6 Amended and Restated Manufacturing Agreement, dated February 10, 2005,
among the Company, Ivivi Technologies, Inc. and Sonotron Medical Systems, Inc.
is incorporated by reference to Exhibit 10.6 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended March 31, 2005.
10.7 Management Services Agreement, dated August 15, 2001, among the
Company, Ivivi Technologies, Inc., Sonotron Medical Systems, Inc. and
Pegasus Laboratories, Inc., as amended, is incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 2005.
10.8 Agreement of April 3, 2004 by and between the Company and Carepoint
Group is incorporated by reference to Exhibit 10.6 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended March 31, 2004.
10.9 Placement Agency Agreement of May 20, 2004 by and between the Company
and Maxim Group LLC. is incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated December 1, 2005.
10.10 Agreement of April 1, 2005 by and between Ivivi Technologies, Inc. and
Global Medical, L.L.C. is incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2005.
14.1 Code of Ethics is incorporated by reference to Exhibit 14.1 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2005.
21.1 Subsidiaries of the Company is incorporated by reference to Exhibit
21.1 to the Company's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 2005.
31.1 Certification of the Chief Executive Officer of the Company pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Financial Officer of the Company pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of the Chief Executive Officer and Chief Financial Officer
of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Risk Factors is incorporated by reference to Exhibit 99.1 to the
Company's Annual Report on Form 10-KSB/A for the fiscal year ended March 31,
2005.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused the amendment to this
report to be signed on its behalf by the undersigned, thereunto duly
authorized this 27th day of January, 2006.
ADM TRONICS UNLIMITED, INC.
By: /s/ Andre' DiMino
Andre' Di Mino
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Andre' DiMino Chief Executive Officer and Chief January 27, 2006
Andre' Di Mino Financial Officer (Principal
Executive Officer, Principal
Financial Officer and Principal
Accounting Officer) and Director
/s/ Vincent Di Mino Director January 27, 2006
Vincent Di Mino
/s/ David Saloff Director January 27, 2006
David Saloff