SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10KSB
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
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 Juris- (I.R.S. Employer Identifi-
diction of Incorpora- cation Number)
tion or Organization)
224-S Pegasus Avenue, Northvale, New Jersey 07647
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (201) 767-6040
Securities Registered under Section 12(b) of the Act:
NONE
Securities Registered under Section 12(g) of the Act:
Common Stock, $.0005 par value
<PAGE>
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 the filing
requirements for at least the past 90 days:
YES X NO
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year
$1,572,677
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of
a specified date within the past 60 days prior to the date of
filing:
Approximately $7,600,000 as of June 25, 1997
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
42,474,907 shares of Common Stock, $.0005 par value
as of June 25, 1997
If the following documents are incorporated by reference, briefly
describe them and identify the Part of the Form 10-KSB (e.g., Part
I, Part II, etc.) into which the document is incorporated: (1) Any
annual report to security holders; (2) Any proxy or information
statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933:
Not Applicable
Transitional Small Business Disclosure Format (check one):
YES NO X
<PAGE>
Item 1. Description of Business
ADM Tronics Unlimited, Inc. (the "Company"), was organized
under the laws of the State of Delaware on November 24, 1969.
Sonotron Technology
Dr. Alfonso Di Mino, while employed by the Company, conceived
and developed a technique pursuant to which a subject being
treated is exposed to a corona discharge beam generated by
combining audio and radio frequency waves (the "Sonotron
Technology"). The Sonotron Technology is the subject of a United
States Patent (the "Di Mino U.S. Patent") granted in 1987 to Dr. Di
Mino entitled, "Corona Discharge Thermotherapy Technique". Dr. Di
Mino assigned to the Company the Di Mino U.S. Patent without any
consideration therefrom. There are no arrangements, understandings
or agreements whereby Dr. Di Mino will be provided with any
consideration in the future with respect to the Di Mino U.S.
Patent. Foreign Patent applications bearing the same title and
corresponding to the Di Mino U.S. Patent have been issued as
follows:
European Patent Office - (United Kingdom, West Germany,
France, Sweden, Switzerland, Italy and Holland).
Brazil.
Japan.
The Company has utilized the Sonotron Technology to develop
Sonotron Devices which are designed to treat subjects suffering
from the pain of osteoarthritis and inflammatory joint conditions.
The Company commissioned the Instrumentation Systems Center of
the University of Wisconsin-Madison (the "ISC") to monitor a study
of the Sonotron Device which are for human application to evaluate
its effect on the knee joint in subjects with osteoarthritis and
inflammatory joint conditions. The purpose of the study was to
gather data to submit to the United States Food and Drug
Administration (the "FDA"). The study was conducted at five
regional centers on 98 human subjects during 1987 and 1988. Data
were analyzed by an analysis on non-parametric measures to compare
the relative responses of the randomly assigned control and treated
subjects. ISC, in a report dated July 18, 1988, found that two of
the ten data sets showed a high probability that the subjects'
assessment of pain one week after administration was reduced in the
treated, relative to the untreated, subjects. ISC further found,
with respect to two additional data sets, that certain other data
suggested a trend of improvement one week after administration in
the treated, relative to the untreated, subjects, but with lower
probability. None of the 98 subjects in the study reported adverse
reactions to the administration of the Sonotron Technology which
were deemed significant or long lasting.
The Company believes that the Sonotron Technology can be
utilized to reduce lameness in both thoroughbred and standardbred
horses. In this connection, the Company commissioned the School of
Veterinary Medicine of the University of Wisconsin-Madison (the
"SVM") to gather data which would confirm the effectiveness of the
Sonotron Device on horses. In a report dated December 10, 1987,
the SVM concluded that the evidence from its experiments indicated
that treatment with a Sonotron Device designed for veterinary use
had a significant effect in reducing the level of lameness in
ponies which had arthritis experimentally induced and as the degree
of arthritic changes increased, the reduction in lameness was more
dramatic and became statistically more significant. The SVM
further found that there is statistical evidence that the therapy
had a beneficial effect on the level of joint motion in the
arthritic ponies and resulted in reduced joint swelling in ponies
with severe arthritis. A significant reduction occurred in the
degree of joint changes seen radiographically in the ponies with
severe arthritis and in the milder cases of arthritis treated with
low doses of the therapy. The SVM further reported that there were
significant reductions in the severity of the growth of
pathological lesions seen in ponies with mild arthritis which
received low doses of therapy and that a trend appears to exist
toward seeing reduced severity of lesions in ponies which had a
severe degree of arthritis and were treated with a Sonotron Device
designed for veterinary use. No differences in the degree of
histopathological changes were noted between the treated ponies and
the untreated ponies with mild or severe arthritis. The SVM did
not arrive at any conclusions with respect to whether treatment
with a Sonotron Device designed for veterinary use has a beneficial
effect upon chronic degenerative joint disease in a horse and
whether such treatment will be effective upon naturally occurring
cases of equine degenerative joint disease. The Company has
conducted preliminary tests utilizing a Sonotron Device designed
for veterinary use on several race horses. Significant further
testing will be required to determine whether or not the
administration of the Sonotron Technology to race horses will prove
beneficial and support the establishment of a viable market.
The Company has granted to each of Sonotron Medical Systems,
Inc. ("SMI") and VET Sonotron Systems, Inc. ("VET") a royalty-free,
worldwide, exclusive, irrevocable license to the Di Mino U.S.
Patent, the foreign patent applications and the Sonotron
Technology. The license granted to SMI permits SMI to manufacture,
to have manufactured and to sell apparatus utilizing the Sonotron
Technology exclusively in connection with human medical
applications thereof (the "SMI License"). The SMI License provides
that future improvements or discoveries relating to the Sonotron
Technology, if any, which are made by Dr. Di Mino or any other
officer or employee of the Company or any affiliates thereof,
whether or not patentable, and applicable to human medical
applications, are to be included in the SMI License. The license
granted to VET is substantially identical in its terms to that of
the SMI License, except that the use of the Sonotron Technology by
VET is limited exclusively to veterinary applications. SMI and VET
are majority owned subsidiaries of the Company.
The Company acts as a sublicensee of SMI for the purpose of
manufacturing Sonotron Devices. The Company has agreed to
manufacture Sonotron Devices to be used for human medical
applications at the Company's cost plus ten percent.
The Company has been registered by the FDA as a Registered
Medical Device Establishment for the manufacture of Sonotron
Devices. Such registration is renewable annually and although the
Company does not believe that the registration will not be renewed
annually by the FDA, there can be no assurance of such renewal.
Any failure to obtain an annual renewal could be expected to have
a material adverse effect on the Company.
In March 1989, in response to a Pre-Market Notification filed
by the Company with the FDA, the FDA notified the Company that the
Sonotron Device, under the FDA's standards, is not substantially
equivalent to certain medical device marketed in interstate
commerce prior to May 28, 1976. In March 1991, a further Pre-Market
Notification was filed with the FDA on behalf of the Company with
respect to the then current model of the Sonotron Devices which
Notification was subsequently voluntarily withdrawn by the Company.
The Company intends to refile a Pre-Market Notification accompanied
by additional data. In the event that Sonotron Devices cannot be
marketed pursuant to a Pre-Market Notification, the Company will be
required to obtain an approved Pre-Market Approval Application
("PMA") from the FDA before the Sonotron Devices can be marketed in
the United States for commercial distribution in connection with
human applications. The FDA advised the Company that its
determination with respect to the initial Pre-Market Notification
was based upon (a) the new intended use of applying superficial
heat at non-therapeutic temperatures for the treatment of
osteoarthritis, and (b) new types of safety and effectiveness
questions that are raised by the new technological characteristics
of the Sonotron Devices when compared to certain devices marketed
before May 28, 1976.
The FDA permits companies to begin to recoup certain expenses
by charging others for use of medical machines, provided that the
use of such machines does not constitute a commercial distribution
thereof. Accordingly, the Company is permitted to maintain a
clinic and treatment center utilizing Sonotron Devices, but may not
advertise or otherwise promote Sonotron Devices as being safe and
effective for their intended use. In order to generate revenues
from the Sonotron Devices and to gather information in support of
a PMA which may be filed by the Company, in April 1989 the Company
opened a clinic for the treatment of pain. The clinic consisted of
approximately 1,200 square feet of space in the Company's premises
in Northvale, New Jersey. The Company's clinic did not realize any
significant revenues and was closed in 1991. Three additional
clinics have been opened beginning in 1992, none of which has
produced any significant revenues.
In 1991, SMI appointed a Canadian company as its sole and
exclusive distributor in Canada of the Sonotron Devices. Because
the Canadian company was unable to obtain approval of the Quebec
Association of Physicians and Surgeons in order for Sonotron
Devices to be utilized in Quebec for the treatment of pain and
decreased function associated with inflammatory diseases prior to
a mutually agreed upon date, the Distribution Agreement between SMI
and such company terminated.
In 1991 SMI entered into an agreement with Arthronix, Inc.
("Arthronix") which, as subsequently amended, provided that
Arthronix shall become the sole and exclusive distributor of
Sonotron Devices in substantially all of the United States and all
other countries exclusive of Austria, Canada, Germany and
Switzerland for a maximum period of 19 years (the "Arthronix
Distribution Agreement"). The exclusive distributorship with
respect to the United States was not to commence unless the FDA
approved a PMA with respect to the Sonotron Devices or the Sonotron
Devices could be marketed pursuant to a Pre-Market Notification,
and the obligation of Arthronix under the Arthronix Distribution
Agreement with respect to Sonotron Devices to be used in the United
States was subject to the occurrence of either of such events. As
a result of the settlement of litigation between SMI and Arthronix,
the Arthronix Distribution Agreement was cancelled in November
1993.
In August 1993 the Company entered into an agreement (the
"1993 Distribution Agreement") with Arthronix and a Japanese
corporation (the "Japanese Distributor") pursuant to which, on
behalf of the Company, Arthronix granted the Japanese Distributor
the exclusive right to sell and distribute the Sonotron Device
within Japan for a one year period. The Japanese Distributor has
represented to SMI that the Japanese Distributor has received all
necessary government approvals to import, sell, distribute and use
the Sonotron Device in Japan. Arthronix has received a commission
in connection with the sales to the Japanese Distributor. The 1993
Distribution Agreement terminated in accordance with its terms in
August 1994. In June 1995, the Company appointed the Japanese
Distributor as the exclusive distributor of Sonotron Devices in
Japan, Singapore and Malaysia.
Reference is made to Note 4 of Notes to Consolidated Financial
Statements and the response to Item 3 hereof.
Subsequent to the termination of the Arthronix Distribution
Agreement, SMI has sold additional Sonotron Devices in Belgium,
Brazil, Chile, France, Germany, Israel, Italy, Lebanon, Mexico and
South Africa. Unlike the sales to the Japanese Distributor, the
Sonotron Devices delivered to the purchasers in the foregoing
countries included a limited number of dosages ("Treatment Units")
by means of a telephone connection. Any additional Treatment Units
will be sold by SMI.
In 1992, SMI granted to Advent Medical Technology, Inc.
("AMT") the exclusive right to manage clinics in certain counties
in Florida which, if opened, would utilize Sonotron Devices for
human medical purposes. At such time, if any, that the United
States Food and Drug Administration permits marketing of Sonotron
Devices, AMT would have the right to purchase any such clinics from
SMI and to be the exclusive distributor of Sonotron Devices within
the eight counties. At the same time, VET granted to AMT the
exclusive right to use, distribute or sublicense the use of
Sonotron Devices designed for veterinary use solely for veterinary
use in Florida. The response to Item 5 of the Company's Current
Report on Form 8-K dated June 9, 1992 is hereby incorporated by
reference. The Company does not believe that AMT has sufficient
resources to manage any clinics. There can be no assurance that any
such clinics which the Company may open will be successful or that
the results of the treatment of human subjects with the Sonotron
Devices will be favorable or will support the Company's PMA.
The Company intends to use data obtained from clinics
utilizing the Sonotron Device as well as additional data it may
obtain from others in the Company's PMA, if filed, at the time the
PMA is filed with the FDA. There can be no assurance that the
Company will obtain sufficient data in the foreseeable future, if
at all, to file a PMA or that any data theretofore or thereafter
obtained by the Company will be satisfactory or will be sufficient
to support the Company's PMA. The Company does not intend to make
any material changes to the Sonotron Devices nor have any such
changes been made since the completion of the research and
development. In the event that Sonotron Devices cannot be marketed
pursuant to a Pre-Market Notification and the data obtained by the
Company are not favorable or, for any other reason, the Company's
PMA is not filed or, if filed, is not approved by the FDA, neither
the Company nor SMI will be able to market the Sonotron Devices in
the United States to others in connection with human applications,
other than for research purposes. Under such circumstances, it is
probable that the Sonotron Devices will not be able to be marketed
with respect to human applications thereof in many foreign
countries.
During the Company's fiscal years ended March 31, 1996 and
1997, other than the regular compensation paid by the Company to
its executive officers, the Company did not spend any appreciable
amounts on testing, application, clinical studies and some company-sponsored
research and development activities in connection with
the Sonotron Technology and other activities determined in
accordance with generally accepted accounting principles. During
such years no amounts were spent on customer-sponsored research and
development activities relating to the development of new products,
services or techniques or the improvement of any of the foregoing.
Dr. Di Mino has developed a device which utilizes the Sonotron
Technology to non-invasively treat neural-cerebral conditions (the
"NCCD Device"). The NCCD Device is a non-invasive electronic
therapy device which is designed to emit certain radio and audio
waves at prescribed power outputs to a patient's brain and spinal
cord. The NCCD Device is in the prototype stage. Limited initial
preliminary tests on human subjects on a non-controlled basis
appear to indicate that treatment with the NCCD Device has a
beneficial effect on the symptoms related to certain neural-cerebral
disorders. The results ranged from minor improvement in
certain limited symptoms to dramatic overall improvements. Based
upon such results, subject to obtaining sufficient capital, the
Company intends to conduct extensive controlled clinical studies of
the NCCD Device. Testing involves applying radio and audio waves to
the patients' spinal cords and cerebrum on a weekly basis for
several weeks to small groups of patients having cerebral palsy,
multiple sclerosis and Parkinson's Disease.
In order to commercially exploit the NCCD Device, the Company
must successfully conduct significant engineering and design work.
Such work includes the design and manufacture of a pre-production
model and the production of approximately 40 similar units for use
in the proposed clinical studies. If the clinical studies
establish the efficacy of the NCCD Device, the Company intends to
seek FDA approval of the NCCD Device. The Company also plans to
file applications for certain foreign and domestic patents in
connection with the NCCD Device. There can be no assurance that any
clinical studies of the NCCD Device will yield successful results
or that FDA approval will be obtained. The Company believes that
the cost of clinical studies and the engineering and design work
will be approximately $2,000,000 and the completion of such studies
will occur not earlier than January 1999, if at all. Because the
company does not presently have sufficient funds to complete such
tests and studies, the Company has sought and will continue to seek
financing for such purposes. There can be no assurance that the
Company will be able to obtain such financing on terms not
unfavorable to the Company, if at all.
The manufacture, distribution and sale of medical devices and
equipment designed to relieve the suffering of pain in subjects
having osteoarthritis is highly competitive and substantially all
of the Company's competitors possess greater experience, financial
resources, operating history and marketing capabilities than does
the Company. There can be no assurance that the Company will be
able to effectively compete with any or all of the foregoing on the
basis of product, effectiveness, price, service or otherwise.
During the fiscal year ended March 31, 1997, one customer
accounted for more than 10% of the Company's net sales of medical
devices. Reference is made to Note 6 of Notes to Consolidated
Financial Statements. The termination of business relations with
any of the Company's significant customers would have a material
adverse effect on the Company's business and the financial
condition of the Company.
As of March 31, 1997, the dollar amount of backlog orders for
Sonotron Devices was not material.
Chemical Products for Industrial Use
The Company develops, manufactures and sells chemical products
to industrial users. Such products consist primarily of the
following:
1. Water based primers and adhesives;
2. Water based coatings and resins for the printing and
packaging industry;
3. Water based chemical additives; and
4. Cosmetic, medical and related adhesives and formulations.
Water based primers and adhesives are chemical compounds used
to bind different plastic films. Examples are the binding of
polyethylene to polyester, nylon, vinyl and cellophane. The
Company's products are similar in function to solvent based primers
that are widely used to bind plastic film, papers and foils.
Solvent based systems have come under criticism since they have
been found to be highly pollutant, dangerous to health and
generally caustic in nature. Based upon the Company's experience
since 1969, including information furnished to the Company by
certain of its customers, the Company believes that water based
systems have no known polluting effects and pose no known health
hazards. There can, of course, be no assurance that any
governmental restrictions will not be imposed on the Company's
water based products or that such products will be accepted as
replacements for solvent based products.
Coatings and resins for the printing industry are used to
impart properties to the printed substrate. The Company's products
can be used to coat printed material for glossy or aesthetic appeal
to make such material virtually impervious to certain types of
grease and to impart other characteristics required or desired for
various products and specifications.
Certain of the Company's chemical additives are used to impart
properties to inks and other chemical products used in the food
packaging and printing industries. These additives are used for
their ability to improve the performance of such products.
During the Company's fiscal years ended March 31, 1997, 1996
and 1995, sales of chemical based products accounted for
approximately 64%, 46% and 55% of operating revenues, respectively.
No contract exists with any of the Company's customers which would
obligate any customer to continue to purchase products from the
Company.
During the fiscal year ended March 31, 1996, two customers
each accounted for more than 10% of the Company's net sales of
chemical products. Reference is made to Note 6 of Notes to
Consolidated Financial Statements. The termination of business
relations with any of the Company's significant customers would
have a material adverse effect on the Company's business and the
financial condition of the Company.
The Company purchases the raw materials used in the
manufacture of its chemical products from numerous sources. The
Company believes that all necessary raw materials for its chemical
products are readily available and will continue to be so in the
foreseeable future. The Company has never had, nor does it
anticipate experiencing, any shortages of such materials. The raw
materials consist primarily of water, resins, elastomers and
catalysts.
The Company generally maintains sufficient quantities of
inventories of its chemical products to meet customer demands.
When orders are received by the Company for its chemical products,
the Company's customers require immediate shipment thereof.
Accordingly, in order to satisfy its customers' needs, the Company
has maintained an inventory ranging, in dollar amounts, from 15% to
30% of sales of chemical products in the form of either raw
materials or finished goods.
A majority of the Company's sales are distributed to customers
directly from the Company's location. Customers place purchase
orders with the Company and products are then shipped via common
carrier truck delivery on an "FOB shipping point" basis. A portion
of the sales are accomplished through distributors who place
purchase orders with the Company for certain quantities of the
Company's chemical products which are shipped by common carrier to
their respective warehouses. These stocking distributors then ship
product to the ultimate customer via common carrier from their
inventory of the Company's products.
None of the Company's chemical products is protected by
patents, although the names of some of such products have been
protected by trademarks. The Company does not believe that any
such trademarks are material to its business.
As of March 31, 1997, the dollar amount of backlog orders for
the Company's chemical products believed by the Company to be firm,
was not material.
The Company's chemical business is highly competitive and
substantially all of the Company's competitors possess greater
experience, financial resources, operating history and marketing
capabilities than does the Company. The Company does not believe
that there are one or more dominant competitors in such industry.
There can be no assurance that the Company will be able to
effectively compete with any or all of its competitors on the basis
of price, service or otherwise. The Company cannot be considered
a significant factor with respect to the chemical products
industry.
During the Company's fiscal years ended March 31, 1997 and
1996, the Company made no material expenditures with respect to
company-sponsored research and development activities relating to
its chemical business as determined in accordance with generally
accepted accounting principles other than a portion of the regular
salaries of its executive officers which may be allocated thereto.
During such fiscal years the Company did not expend any funds on
customer-sponsored research and development activities with respect
thereto.
The Tinnitus Device
Dr. Di Mino has developed an electronic device for the
treatment of Tinnitus (the "Tinnitus Device") which is presently in
the prototype stage. Tinnitus is a human medical condition which
manifests itself in a constant and annoying ringing in the ears.
The Tinnitus Device uses a probe that transmits a signal. No
significant testing has been conducted using the Tinnitus Device.
In February 1997, Dr. Di Mino filed a patent application for a
United States patent with respect to the Tinnitus Device. Dr. Di
Mino has advised the Company that any patents issued to him in
connection with the Tinnitus Device will be assigned to the
Company. There can be no assurance that any patent will be used
therefor or that the Tinnitus Device will achieve its purpose or
that FDA approval can be obtained.
Other Products
The Company has developed several cosmetic and pharmaceutical
products. The Company has not realized any significant revenues
from such products and there can be no assurance that any such
products will account for significant revenues or any profits in
the future.
Although the Company believes that its proposed products can
be successfully marketed for over-the-counter use through one or
more entities representing numerous retail pharmacies and
otherwise, there can be no assurance that sales of such products
will be material or that the Company will be able to derive any
profits therefrom.
Personnel
On June 25, 1997, the Company employed eleven persons, three
of which are executive officers of the Company. One employee was
employed by the Company on a part-time basis.
Item 2. Properties
The Company leases approximately 16,000 square feet of
combined office and warehouse space from an unaffiliated third
party.
Item 3. Legal Proceedings
On May 10, 1996 Arthronix filed a demand for arbitration
against the Company, SMI, the Japanese Distributor and Validux.
The matter is being conducted through the American Arbitration
Association of New York City. Arthronix has claimed commissions are
owed to it in the amount of $51,000 pursuant to the 1993
Distribution Agreement. Arthronix also asserted claims for a breach
of contract and a share of the proceeds on the sales of Sonotron
Devices in the Pacific Rim countries in the alledged amount of
at least $2,126,270. Arthronix further asserted claims for tortious
interference and is seeking punitive and compensatory damages based upon an
alleged failure to execute an extension of the 1993 Distribution Agreement
and fraudulent inducement in connection with the entering into of
the 1993 Distribution Agreement by Arthronix.
On May 30, 1996 the Company, SMI and a wholly-owned subsidiary
of the Company (the "Subsidiary") instituted an action against Arthronix,
Joseph P. Laico and James Bridges in the Superior Court of New Jersey, Bergen
County, Law Division. The Plaintiffs are seeking to recover
approximately $615,000 from Arthronix based upon breaches of
settlement agreements by Arthronix. The Complaint also alleges that
the 1993 Distribution Agreement was entered into based upon
fraudulent misrepresentations of the individual defendants and that
all of the defendants tortiously interfered with the a contract
between the Company and the Japanese Distributor. The Complaint
seeks multiple forms of relief including entry of judgment for the
breach of prior settlement agreements, unliquidated damages,
staying of the above described arbitration proceedings, a
declaratory judgment revoking the 1993 Distribution Agreement,
unliquidated compensatory damages, punitive damages, late fees,
interest and costs and other equitable relief. In 1997, judgements
aggregating approximately $355,000 and $369,000 were entered by
the Court in favor of SMI and the Subsidiary, respectively. Two
motions filed by Arthronix to vacate the judgements have been
denied by the Court. Arthronix has moved the Court to reconsider
in favor of SMI.
Other than the foregoing there are no material pending or
threatened legal proceedings to which the Company or any of its
subsidiaries is a party or of which any of their property is the
subject or to the knowledge of the Company, any proceedings
contemplated by governmental authorities.
Item 4. Submission of Matters to a Vote of
Security Holders
Not Applicable.
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters
(a) Market Information
(1) The Company's Common Stock is principally traded in
the over-the-counter market. The following table sets forth the
approximate range of high and low bid prices for the Company's
Common Stock for the Company's fiscal quarters indicated in which
such stock was regularly quoted. The quotations were obtained from
NASDAQ and reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions.
Quarter Ended High Bid Low Bid
June 30, 1995 .22 .22
September 30, 1995 .31 .28
December 31, 1995 .18 .18
March 31, 1996 .47 .21
June 30, 1996 .56 .28
September 30, 1996 .40 .25
December 31, 1996 .40 .19
March 31, 1997 .38 .25
Due to maintenance standards for companies seeking to maintain
their listing on NASDAQ, there can be no assurance that the Company
will be able to continue such listing.
(b) Holders
On June 25, 1997 the Company's Common Stock was held by
approximately 760 holders of record.
(c) Dividends
The Company has never paid any cash dividends on its
Common Stock and has no intention of paying cash dividends in the
foreseeable future. The Company intends to retain any earnings it
may realize to finance its future growth.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Fiscal 1997 Compared to 1996
Revenues
Revenues were $1,574,855 in 1997 as compared to $1,839,006 in 1996
representing a decrease of $264,151 or 14%. This decrease was the
result of reduced sales of Sonotron Devices in foreign countries
and increased sales to chemical customers.
Gross Profit
Gross profit of $977,403 in 1997 was $258,991 or 21%, lower than
the gross profit of $1,236,394 for 1996. Gross profit was 63% of
revenues in 1997 as compared to 67% of revenues in 1996. The
moderate reduction in gross profit is related to the product mix of
sales with varying gross profit margins.
Operating Income (Loss)
Operating loss of ($36,930) in 1997 compared to operating income of
$244,289 in 1996 resulted from a reduction in gross profit coupled
with an increase in selling, general and administrative expenses.
Other Income, Net
Other income of $63,682 in 1997 was $15,963 or 20% lower than other
income of $79,645 in 1996 due to a decrease in interest income from
lower amounts invested and at lower rates of return on amounts
invested. Additionally, the company had write downs of equity
securities available for sale of $20,000 in 1997 compared to
$279,000 in 1996.
Results of Operations
Fiscal 1996 Compared to 1995
Revenues
Revenues were $1,839,006 in 1996 as compared to $1,556,885 in 1995
representing an increase of $282,121 or 18%. This increase was the
result of increased sales of Sonotron Devices in foreign countries
and increased sales to chemical customers.
Gross Profit
Gross profit of $1,236,394 in 1996 was $151,251 or 14%, greater
than the gross profit of $1,085,145 for 1995. Gross profit was 67%
of revenues in 1996 as compared to 70% of revenues in 1995. The
moderate reduction in gross profit is related to the product mix of
sales with varying gross profit margins.
Operating Income
Operating income of $244,289 in 1996 was $175,806 or 25% increase
above the operating income of $68,483 in 1995. This was primarily
the result of an increase in gross profit coupled with a decrease
in selling general and administrative expenses. Gross profits
increased by $151,251, and selling, general and administrative
expenses decreased by $24,555.
Other Income, Net
Other income of $79,645 in 1996 was $16,919 or 27% greater than
other income of $62,726 in 1996 due to an increase in interest
income from increased amounts invested but at lower rates of return
on amounts invested. Additionally, the company charged $279,000 to
operations in 1996 resulting from declines in market value of
equity securities available for sale.
Liquidity and Capital Resources
At March 31, 1997 the Company had cash of $1,174,965 as compared to
$1,113,626 at March 31, 1996. This increase is the result of cash
flows from investing activities offset by cash outflows from
operating activities. Additionally, at March 31, 1997 the Company
had certificates of deposit and other liquid investments of
$107,000.
Operating Activities
The Company had reduced operating results due to lower
international sales of its medical electronic devices and an
increase in sales of its aqueous chemical products and an increase
in selling general and administrative expenses.
Investing Activities
The Company received proceeds of $100,297 from matured treasury
notes and purchased property and equipment of $33,456. The Company
also received $1,600 on repayments from loans to officers.
Financing Activities
In 1997 the Company did not have any cash flows from financing
activities.
The Company does not have any material sources of liquidity or
unused sources of liquid assets.
Item 7. Financial Statements
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
ADM Tronics Unlimited, Inc.
Northvale, New Jersey
We have audited the accompanying consolidated balance sheet of ADM Tronics
Unlimited, Inc.and subsidiaries as of March 31, 1997, and the related
consolidated statements of operations,changes in stockholders' equity, and
cash flows for each of the two years in the period ended March 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, 1997, and the
results of their operations and their cash flows for each of the two years
in the period ended March 31, 1997, in conformity with generally accepted
accounting principles.
KAUFMAN, ROSSIN & CO.
Miami, Florida
June 6, 1997
ADM TRONICS UNLIMITED, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
ASSETS
CURRENT ASSETS
Cash and equivalent $1,174,965
Certificate of deposit 107,000
Accounts receivable - trade,
net of allowance for doubtful
accounts of $5,000 315,164
Inventories:
Raw materials and supplies 130,543
Finished goods - chemicals 73,634
Other current assets 35,526
Total current assets 1,836,832
PROPERTY AND EQUIPMENT 54,831
EQUIPMENT HELD FOR SALE OR LEASE,
net of accumulated depreciation of $51,014 321,823
NOTE RECEIVABLE 82,306
LOAN RECEIVABLE FROM OFFICER,
bearing interest at 3% per annum 66,652
OTHER ASSETS 506,864
$ 2,869,308
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 142,394
Accrued expenses 22,556
Prepayments from customer 69,293
Total current liabilities 234,243
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY 2,635,065
$ 2,869,308
ADM TRONICS UNLIMITED, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1997 AND 1996
1997 1996
REVENUES
Sales $ 1,574,855 $ 1,839,006
Interest 63,682 79,645
Total revenues 1,638,537 1,918,651
COSTS AND EXPENSES
Cost of sales 597,452 602,612
Selling, general and administrative 1,014,333 992,105
Total costs and expenses 1,611,785 1,594,717
INCOME BEFORE UNREALIZED LOSS ON
EQUITY SECURITIES AVAILABLE FOR SALE
AND INCOME TAX BENEFIT 26,752 323,934
UNREALIZED LOSS ON EQUITY SECURITIES
AVAILABLE FOR SALE 20,000 279,000
INCOME BEFORE INCOME TAX BENEFIT 6,752 44,934
INCOME TAX BENEFIT - 153,000
NET INCOME $ 6,752 $ 197,934
WEIGHTED AVERAGE NUMBER OF COMMON
AND EQUIVALENT SHARES OUTSTANDING 43,301,274 43,865,782
NET INCOME PER SHARE $ .0002 $ .005
ADM TRONICS UNLIMITED, INC.
CONSOLOIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1997 AND 1996
Unrealized
Loss On
Shares Equity
(150,000,000 Capital Securities
Authorized; in Available
$.00005 Par Excess of Accumulated for
Par Value) Value Par Value Deficit Sale Total
BALANCES
3/31/95 42,474,907 $21,237 $4,819,436 ($2,410,294) ($258,000) $2,172,379
Unrealized loss
on equity
securities
available
for sale charged
to operations - - - - 258,000 258,000
Net income - - - 197,934 - 197,934
BALANCES -
3/31/96 42,474,907 21,237 4,819,436 ( 2,212,360) - 2,628,313
Net income - - - 6,752 - 6,752
BALANCES -
3/31/97 42,474,907 $21,237 $4,819,436 ($2,205,608) $ - $ 2,635,065
ADM TRONICS UNLIMITED, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997 AND 1996
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,752 $ 197,934
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 27,254 40,935
Provision for losses on accounts
receivable - 8,766
Unrealized loss on equity securities
available for sale 20,000 279,000
Change in deferred revenue (65,860) -
Changes in operating assets and
liabilities:
Accounts receivable - trade (114,406) 159,280
Inventories (14,274) 1,078
Other current asset 136,756 (121,289)
Equipment held for sale or lease 141,677 (186,970)
Other assets (166,834) (15,334)
Accounts payable 83,968 (80,982)
Accrued expenses and prepayments
from customer (60,525) 115,988
Total adjustments (12,244) 200,472
Net cash provided by (used in)
operating activities (5,492) 398,406
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in treasury note - (100,000)
Maturities of treasury notes 100,297 250,500
Principal collections on note receivable - 287,287
Purchase of property and equipment (33,456) (2,765)
Net changes in certificate of deposit (1,610) (4,029)
Repayments from loans to officer 1,600 -
Net cash provided by investing
activities 66,831 430,993
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of long-term liabilities - (2,319)
NET INCREASE IN CASH AND EQUIVALENTS 61,339 827,080
CASH AND EQUIVALENTS - BEGINNING 1,113,626 286,546
CASH AND EQUIVALENTS - ENDING $ 1,174,965 $ 1,113,626
ADM TRONICS UNLIMITED, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of ADM
Tronics Unlimited, Inc (the Company) and its subsidiaries. All
significant intercompany balances and transactionshave been
eliminated in consolidation.
Organization
The Company is a manufacturer and engineering concern whose
principal lines of business are the production and sale of chemical
products and the manufacturing and sale of medical devices. The
chemical product line includes water-based chemical products which
are used in the food packaging and converting industries which are
sold to customers located in various parts of the United States and
Europe. The medical device products are for use in the treatment
of joint pain which, at this point, have been sold primarily to a
particular customer located in Japan (See Sonotron Devices and
Segment Information).
Cash and Equivalents
The Company considers excess operating funds invested in cash
management and money market accounts to be cash. The cash
management account is not insured by the FDIC.
Equity Securities Available for Sale
The Company considered its investments in equity securities as
available for sale and during the years ended March 31, 1997 and
1996, management determined that aggregate declines in market
value of its investments in equity securities were deemed to be
other than temporary and accordingly, charged to operations
$20,000 and $279,000, respectively.
Inventories
Inventories are stated at the lower of cost (first-in, first-out
method) or market.
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 improve-ments 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.
NOTE 1. SUMMARY OF SIGNIFICATN ACCOUNTING POLICIES (Continued)
Sonotron Devices
Sonotron Devices (Devices) are held for sale or lease
internationally and are included as equipment held for sale or
lease on a specific identification basis. Until clearance to
market is obtained from the 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.
Devices are available for sale outright, are available for sale
under terms providing for additional charges based upon usage, and
are available to be leased, with charges based solely upon usage.
Contingent rental revenues are recognized at the time treatments
are released to the lessee. Leased Sonotron devices are
depreciated over seven years commencing at the date of lease.
Revenues from leasing activities have not been significant.
Intangible Assets
Patents and other intangible assets are stated at cost, are
included in other assets and are amortized on a straight-line
basis over the shorter of their legal or useful lives.
Income Taxes
Deferred income taxes are provided for the estimated tax effect of
temporary differences between financial and taxable income.
Net Income Per Share
Net income per share is computed by dividing net income by the sum
of the number of shares of common stock outstanding during 1997 and
1996 (42,474,907 for both years and common stock assumed to be
outstanding upon the exercise of all stock options and warrants
(826,367 and 1,390,875, respectively), computed utilizing the
treasury stock method. Fully diluted earnings per share is not
presented as it is not materially different.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments," requires the Company to
disclose information regarding fair values for its financial
instruments and the underlying methodology and assumptions used
therein. The following methods and assumptions were used by the
Company in estimating the fair values of its financial instruments:
Certificate of deposit - The carrying amount of the certificate
of deposit approximates fair value due to the short maturity of
the instrument.
Loan receivable from officer - The fair value of the officer
loan 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.
Note receivable - The fair value of amounts due from Arthronix
(see Note 4) is based on future net cash flows the Company
expects to generate by operating the product line relating to
such assets, discounted by an appropriate market rate of
interest. The difference between fair value and carrying value
is not deemed to be significant.
NOTE 2 PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1997 was as follows:
Production equipment $ 43,330
Other machinery and equipment 233,700
Office furniture and fixtures 60,989
Leasehold improvements 131,800
Computer equipment 100,141
569,960
Less accumulated depreciation
and amortization 515,129
$54,831
Depreciation and amortization on property and equipment for the
years ended March 31, 1997 and 1996 was $27,254 and $35,100,
respectively.
NOTE 3 INCOME TAXES
The components of income taxes for the years ended March 31, 1997
and 1996, are as follows:
1997 1996
Deferred $ - $ 19,000
Change in valuation allowance - ( 172,000)
Income tax benefit $ - ($153,000)
The difference between the income tax benefit and the amount
computed by applying the maximum federal statutory income tax rate
of 34% to income before income tax benefit are as follows:
1997 1996
Tax expense at U.S. statutory rates $ - $15,000
State income taxes - 4,000
Change in valuation allowance - (172,000)
Income tax benefit $ - ($153,000)
At March 31, 1997, the Company had deferred tax assets of
approximately $600,000 resulting from net operating loss
carryforwards of $489,000 and unrealized declines in market value
of securities of $111,000. The deferred tax assets are offset by a
valuation allowance in the amount of $335,000. The net deferred
tax asset of $265,000 is included in other assets in the
accompanying balance sheet at March 31, 1997.
Deferred tax assets, net of a valuation allowance, are recorded
when management believes it is more likely than not that tax
benefits will be realized. The change in the valuation allowance
was based upon the consistent application of management's valuation
procedures and new circumstances surrounding its future
realization. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.
The Company and its subsidiaries file consolidated income tax
returns. As of March 31, 1997, the Company had consolidated net
operating loss carryforwards of approximately $1,298,000 that will
expire primarily during the years 1998 through 2008.
NOTE 4 COMMITMENTS AND CONTINGENCIES
Lease
The Company occupies its premises under an operating lease expiring
June 1998 requiring a monthly rental of $6,780. Minimum annual
payments due under the lease are $81,354 per year through fiscal
year ending March 31, 1998 and $20,338 due in fiscal year 1999,
aggregating a total commitment of $101,692.
Rent expense for the years ended March 31, 1997 and 1996 was
$81,354 for each year.
Warranties
Sonotron 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, 1997, no amount has been accrued for potential
warranty costs and such costs are expected to be nominal.
Arthronix - Note Receivable
In connection with the settlement of a lawsuit with Arthronix
relating to an Ozone Sterilizer (Sterilizer), on July 13, 1993 a
subsidiary of the Company and Arthronix entered into an agreement
allowing Arthronix to acquire the Sterilizer for $550,000, payable
under two promissory notes. At March 31, 1997, $300,000 plus
accrued interest was outstanding on one note and management
determined that Arthronix was in default of the repayment terms.
As the outstanding balance is unsecured and recoverability is
uncertain, at March 31, 1997, the note, plus all accrued interest
are offset by a reserve in the same amount.
Arthronix - Note Receivable 2
In connection with the settlement of a second lawsuit with
Arthronix on November 1, 1993, a subsidiary of the Company and
Arthronix executed an agreement providing for, among other things,
the execution of a note payable to the subsidiary for $147,000,
collateralized by an interest in substantially all tangible and
intangible assets relating to an Arthronix product line. In
addition, the settlement provided that upon default of any payment
on such note, for a period of 30 days or more, Arthronix would
become liable for approximately $372,000 (the full pre-settlement
amount due the subsidiary), less payments made to date.
NOTE 4 COMMITMENTS AND CONSTINGENCIES(Continued)
At March 31, 1997, $82,306 was outstanding on this note and
management determined that Arthronix was in default of the payment
terms. In May 1996, the Company commenced legal action to obtain
the tangible and intangible assets collateralizing the note.
Management believes the Company will likely be successful in its
efforts to obtain such collateral and at March 31, 1997, management
determined that the fair value of the assets to be recovered
exceeds the carrying amount of the receivable. In January, 1997
judgments in favor of the Company were entered by the court on both
notes in an amount aggregating approximately $750,000. Arthronix
has since filed two motions to vacate the judgments, however, both
have been denied by the court. A motion for reconsideration on one
of the judgments is presently pending. Due to the uncertainties
relating to the timing of the recovery of the underlying
collateral, the Company reclassified the receivable by recording
the full amount due as a non-current asset.
In response to the Company's actions to obtain the collateral,
Arthronix filed a demand for arbitration claiming that amounts are
due them pursuant to an agreement dated August 25, 1993 (the
Agreement) between Arthronix and a subsidiary of the Company and a
major customer of the Company which, by its terms, expired on
August 24, 1994. Arthronix has alleged, among other things, breach
of contract, tortuous interference, and is seeking punitive and
compensatory damages in an amount alleged to be approximately
$2.1 million based upon a failure to execute an extension of such
Agreement. Further, Arthronix alleges it is owed commissions of
$51,000 resulting from the sale of Sonotron devices to the major
customer based upon a sales order dated March 31, 1994. Management
deems the claims made by Arthronix to be without merit and is
vigorously defending the arbitration, however, in the opinion of
the Company's counsel, the likelihood of an unfavorable outcome
with regard to these allegations cannot presently be determined.
NOTE 5 COMMON STOCK
Options
From time to time, the Company grants stock options to directors,
officers and key employees of the Company. Each option is
exercisable for five years from the date of grant. At March 31,
1996 there were options outstanding for 1,777,229 shares, with an
exercise price of $.18 per share, which expired February 28, 1997.
No options were granted or exercised during 1997 or 1996.
Additional Shares Authorized
On October 16, 1996 the Board of Directors and stockholders of the
Company increased the number of common shares authorized to be
issued from 44,000,000 to 150,000,000. Additionally, the Board of
Directors and stockholders authorized the issuance of 5,000,000
shares of $.01 par value preferred stock to be issued with terms and
conditions to be determined. As of March 31, 1997 no shares of
preferred stock were issued and outstanding.
NOTE 6 MAJOR CUSTOMERS, CREDIT, CONCENTRATION, EXPORT SALES AND
SEGMENT INFORMATION
Major Customers
Sales to individual unaffiliated customers in excess of 10% of net
sales to unaffiliated
customers are shown below.
Year Ended March 31,
1997 1996
Chemical Segment:
Customer A $364,000 $316,469
Medical Segment:
Customer B $447,000 $814,000
Credit Concentration
The Company sells chemicals primarily to the printing and packaging
industry (see Item 1(c) - Narrative Description of Business
elsewhere herein for additional information).
The Company maintains account balances and a certificate of deposit
in a financial institution in excess of federally insured limits.
Export Sales
For the years ended March 31, 1997 and 1996, export sales were
approximately $530,000 and $890,000, respectively.
Segment Information
The Company operates in two industry segments - the production and
sale of chemicals and the manufacture and sale or lease of medical
products.
NOTE 6 MAJOR CUSTOMERS, CREDIT CONCENTRATION, EXPORT SALES AND
SEGMENT INFORMATION (Coninued)
Information about segment operations follows:
Chemical Medical Consolidated
Year Ended March 31,1997
Net sales - unaffiliated
customers $ 977,037 $597,818 $1,574,855
Income (loss) from
operations* ($130,491) $93,561 ($36,930)
Identifiable assets $2,164,299 ** $705,009 $2,869,308
Depreciation and
amortization $16,612 $10,642 $27,254
Capital expenditures $33,456 $ - $33,456
Year Ended March 31, 1996
Net sales - unaffiliated
customers $947,067 $891,939 $1,839,006
Income from operations* $11,118 $233,171 $244,289
Identifiable assets $2,166,696 ** $738,277 $2,904,973
Depreciation and
amortization $24,979 $19,956 $40,935
Capital expenditures $2,765 $ - $2,765
*Excludes interest, income tax benefit, and loss on securities
available for sale.
**Includes short term investments, officer loans, and deferred tax
asset.
NOTE 7 SIGNIFICANT TRANSACTION
Florida License and Management Agreement
In June 1992, a subsidiary of the Company granted an exclusive
license to distribute the Device for veterinary use in Florida in
exchange for shares of common stock of the publicly-held parent of
the licensee. Further, pursuant to a management agreement with
another subsidiary of the Company, the licensee was granted the
rights to capitalize, open and operate Company clinics in certain
Florida counties, using the human Device, also in exchange
for shares of common stock of the publicly-held parent of the
licensee. These agreements called for, among other things, the
Company to provide a certain number of Devices and treatment units
at the request of the licensee.
NOTE 7 SIGINIFICANT TRANSACTION (Continued)
The receipt of the common stock of the publicly-held parent of the licensee
had previously been reflected as equity securities available for sale, net of
write downs for declines in market value, and the obligation to provide
Devices and treatment units was reflected as deferred sales revenue in the
Company's financial statements. During 1997, the Company made available to
the licensee the agreed upon number of Devices and treatment units and
determined that its obligation under the agreements had been fulfilled.
Accordingly, the Company has included $65,860 in revenues in the accompanying
statement of operations for the year ended March 31, 1997.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not applicable.
PART III
Item 9.
I. Directors and Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act
(a) Identification of Executive
Officers and Directors
Name Age Position
Dr. Alfonso Di Mino 77 President, Chief
Executive
Officer and
Director
Vincent Di Mino 71 Vice President
of Production
and Director
Andre' Di Mino 41 Executive Vice
President,
Secretary,
Treasurer, Chief
Operating
Officer and
Director
Dr. Alfonso Di Mino has been President and a Director of the
Company since 1969.
Vincent Di Mino has been Vice President of Production since
1969 and a Director of the Company since 1987.
Andre' Di Mino has been Executive Vice President and Chief
Operating Officer since 1987 and Secretary and Treasurer of the Company
since 1978. Mr. Di Mino has been a Director of the Company since 1987.
(b) Identify Significamt Employees
Not Applicable.
(c) Family Relationships
Dr. Alfonso Di Mino is the father of Andre' Di Mino and the
brother of Vincent Di Mino. There are no other family relationships
between any of the Company's directors or executive officers.
(d) Involvement in Certain Legal Proceedings
During the last five years, none of the following events
occurred with respect to any executive officer or director of the Company
as of the date hereof.
(i) Any bankruptcy petition was filed by or against any
business of which such person was a general partner or an executive officer
at or within two years before the time of such filing;
(ii) Any conviction in a criminal proceeding or being
subject of a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(iii) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending
or otherwise limiting his involvement in any type of business, securities
or banking activities; and
(iv) Being found by a court of competent jurisdiction (in
a civil action), the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities
or commodities law, and the judgment has not been reversed, suspended or
vacated.
(g) Promoters and Control Persons
Not Applicable.
II. Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of any Forms 3 and 4 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(a) under the
Exchange Act during the Company's most recent fiscal year and any Forms
5 and amendments thereto furnished to the Company with respect to its
most recent fiscal year, and any written responses referred to in
subparagraph (b)(2)(i) of Item 405 of Regulation S-B, no person who at
any time during the fiscal year ended March 31, 1996 was a director,
officer, to the knowledge of the Company a beneficial owner of more than
10% of any class of equity securities of the Company registered pursuant
to Section 12 of the Exchange Act, failed to file on a timely basis, as
disclosed in Forms 3, 4 and 5, reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year or prior fiscal years.
Item 10. Executive Compensation
The following table (the "Summary Table") sets forth all plan
and non-plan compensation amended to, earned by, or paid to (i) the
Company's chief executive officer and (ii) the Company's four most highly
compensated executive officers other than the chief executive officer who
served as such on March 31, 1997 and whose total annual salary and bonus
exceeded $100,000 (the "Named Officers"):
Name and Fiscal
Principal Year
Position Ended Annual Compensation
March 31 Salary Other Compensation
Dr. Alfonso DiMino, 1997 $93,600 $-0-
President and Chief
Executive
Officer 1997
1996 $85,000 $-0-
1995 $85,000 $-0-
No options were exercised by Dr. Di Mino or granted to Dr. Di
Mino during the fiscal year ended March 31, 1997.
During the fiscal years ended March 31, 1997, 1996 and 1995,
no other compensation not otherwise referred to herein was paid or
awarded by the Company to any individual named in the Summary Table, the
aggregate amount of which compensation, with respect to any such person,
exceeded the lesser of $50,000 or 10% of the annual salary and bonus
reported in the Summary Table for such person.
There are no standard or other arrangements pursuant to which
any director of the Company is or was compensated during the Company's
last fiscal year for services as a director, for committee participation
or special assignments.
The Company has no employment contract with any person named
in the Summary Table.
The Company does not have any compensatory plan or arrangement,
including payments to be received from the Company with respect to any
person named in the Summary Table, which plan or arrangement results or
will result from the resignation, retirement or any other termination of
such person's employment with the Company and its subsidiaries or from
a change in control of the Company or a change in such person's
responsibilities following a change in control and the amount involved,
including all periodic payments or installments, exceeds $100,000.
Item 11. Security Ownership of Certain Beneficial
Owners and Management
(a), (b)
The following table sets forth certain information
as of June 23, 1997 with respect to any person who is known to the
Company to be the beneficial owner of more than 5% of any class of its
voting securities and as to each class of the Company's equity securities
beneficially owned by its directors and directors and officers as a
group:
Title Name and Address Amount Approximate
of of Beneficial 0f Percent
Class Owner Beneficial of
Ownership Class
____________________________________________________________________________
Common Dr. Alfonso Di Mino 2,434,239(1) 6%(1)
Stock, 224-S Pegasus Ave. shares
$.0005 Northvale, NJ 07647
par value
Common Andre' Di Mino 7,672,696(2) 18%(2)
Stock, 224-S Pegasus Ave. shares
$.0005 Northvale, NJ 07647
par value 1,700,000(3) 4%(3)
shares
3,400,000(4) 8%(4)
shares
Common Vincent Di Mino 1,887,928(5) 4%(5)
Stock, 224-S Pegasus Ave. shares
$.0005 Northvale, NJ 07647
par value
5,100,000(6) 12%(6)
shares
Common The American Heritage 4,230,000 10%
Stock, Fund, Inc. shares
$.0005 1370 Ave of the Americas
par value New York, N.Y. 10019
Common Officers and Direc- 17,094,863(7) 40%(7)
Stock, tors as a group shares
$.0005 (three persons)
par value
______________________________
(1) Represents (a) 804,239 shares of Common Stock directly owned
by Dr. Di Mino, (b) 1,000,000 shares of Common Stock
beneficially owned by the spouse of Dr. Di Mino, in which
shares Dr. Di Mino disclaims any beneficial ownership, and (c)
1,630,000 shares of Common Stock, which includes the 1,000,000
shares described in (b) above, subject to an agreement dated
July 8, 1987 pursuant to which Dr. Di Mino has the power to
vote such shares.
(2) Represents 7,672,696 shares of Common Stock directly owned by
Mr. Di Mino.
(3) Represents 1,700,000 shares of 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 the shares held by such Trust.
(4) Represents 1,700,000 shares of Common Stock held each by the
Maria Elena Di Mino and Maurice Di Mino Irrevocable Trusts, a
Trustee of which is Andre 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.
(5) Represents (a) 1,287,928 shares of Common Stock directly owned
by Mr. Di Mino, (b) 300,000 shares of Common Stock beneficially
owned by the spouse of Vincent Di Mino, and (c) 300,000 shares
of Common Stock owned by the child of Mr. Di Mino who resides
in his home, in all of which shares set forth in (b) and (c)
of this Note (5) Mr. Di Mino disclaims any beneficial
ownership.
(6) Represents 5,100,000 shares of Common Stock of which 1,700,000
such 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. Vincent Di Mino, a Trustee
of each of such Trusts, may be deemed to be a beneficial owner
of the shares held by such Trusts by reason of his power to
vote such shares.
(7) See Notes above.
(c) Changes in Control
The Company is not aware of any arrangement which may
result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions
(a) From time to time, the Company has loaned money to Andre'
Di Mino at an interest rate of 3% per annum. Reference is made to the
responses to items 9 and 11 hereof. The largest aggregate amount of
indebtedness, including interest, outstanding at any time since the
beginning of the Company's fiscal year ended March 31, 1997 was
approximately $66,000 which was also the approximate amount of principal
and interest outstanding as of March 31, 1997.
Other than as otherwise set forth herein, during the last two
years there was no transaction or proposed transaction to which the
Company was or is to be a party, in which any of the following persons
had or is to have a direct or indirect material interest and the amount
involved in the transaction or a series of similar transactions exceeded
$60,000:
(1)Any director or executive officer of the Company;
(2)Any nominee for election as a director;
(3)Any security holder named in response to Item 11
hereof; and
(4)Any member of the immediate family (including
spouse, parents, children, siblings and in-laws) of
any person named in paragraphs (1), (2) or (3) of
this Item 12(a).
(b), (c), (d) Not applicable.
Item 13. Exhibits and Reports of Form 8-K
(a) Exhibits
3(a)(1) Certificate of Incorporation
and amendments thereto filed on
August 9, 1976 and May 15,
1978. Exhibit 3(a) to the
Company's Registration
Statement on Form 10, File No.
0-17629 (the "Form 10"), is
hereby incorporated by
reference.
3(a)(2) Certificate of Amendment to
Certificate of Incorporation
filed December 9, 1996.
3(b) By-Laws. Exhibit 3(b) to the
Form 10 is hereby
incorporated by reference.
9. Trust Agreements of November
7, 1980 by and between Dr.
Alfonso Di Mino et al.
Exhibit 9 to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended
March 31, 1993 is hereby
incorporated by reference.
10(a) Memorandum of Lease by and
between the Company and
Cresskill Industrial Park III
dated as of August 26, 1993.
Exhibit 10(a) to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended March
31, 1994 is hereby incorporated
by reference.
10(b) Agreement of July 8, 1987 by
and between Donna Di Mino, Dr.
Alfonso Di Mino, et al. Exhibit
10(q) to the Company's Annual
Report on Form 10-KSB for the
fiscal year ended March 31,
1993 is hereby incorporated by
reference.
10(c) Agreement of July 13, 1993 by
and between ADM Medical
Ventures Corporation and
Arthronix, Inc. Exhibit 10(r)
to the Company's Annual Report
on Form 10-KSB for the fiscal
year ended March 31, 1993 is
hereby incorporated by
reference.
10(d) Agreement of June 9, 1992 by
and between Advent Medical
Technology, Inc. and Arthritic
Relief Centers, Inc. Exhibit 2
to the Company's Current Report
on Form 8-K dated June 9, 1992
is hereby incorporated by
reference.
10(e) Agreement of June 9, 1992 by
and between Advent Medical
Technology, Inc. and Vet
Sonotron Systems, Inc. Exhibit
3 to the Company's Current
Report on Form 8-K dated June
9, 1992 is hereby incorporated
by reference.
10(f) Stock Purchase Agreement and
Registration and Rights
Agreement (undated) by and
between The American Heritage
Fund, Inc. and the Company.
Exhibit 10(i) to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended March
31, 1993 is hereby incorporated
by reference.
10(g) Amendment to Agreement of March
16, 1993 by and between
Arthritic Relief Centers, Inc.
and Advent Medical Technology,
Inc. Exhibit 10(k) to the
Company's Annual Report on Form
10-KSB for the fiscal year
ended March 31, 1993 is hereby
incorporated by reference.
10(h) Voting Agreement of March 16,
1993 by and between Vet
Sonotron Systems, Inc. and
Advent Medical Technology, Inc.
Exhibit 10(l) to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended March
31, 1993 is hereby incorporated
by reference.
10(i) Voting Agreement of March 16,
1993 by and between Arthritic
Relief Centers, Inc. and Advent
Medical Technology, Inc.
Exhibit 10(m) to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended March
31, 1993 is hereby incorporated
by reference.
21 Subsidiaries of the Company.
Exhibit 22 to the Company's
Annual Report on Form 10-K
for the fiscal year ended
March 31, 1992 is hereby
incorporated by reference.
27 Financial Data Schedule.
(b) Reports on Form 8-K
Not applicable
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ADM TRONICS UNLIMITED, INC.
(Company)
By:\s\Alfonso Di Mino
Dr. Alfonso Di Mino
President
Dated: July 11, 1997
In accordance with the Exchange Act this report has been signed
below by the following persons on behalf of the Company and in the
capacities and on the dates indicated:
By:\s\Dr. Alfonso Di Mino, Principal
Executive Officer and Director
Dated: July 11, 1997
By:\s\Andre' Di Mino, Principal Fin-
ancial and Accounting Officer
and Director
Dated: July 11,1997
By:\s\Vincent Di Mino
Vincent Di Mino, Director
Dated: July 11, 1997
Exhibit (a)(2)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
A D M TRONICS UNLIMITED, INC., a corporation organized and
exisiting under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of A D M
Tronics Unlimited, Inc. resolutions were duly adopted setting forth
a proposed amendment to the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling a
meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that this Corporation is authorized to
issue ONE HUNDRED FIFTY MILLION (150,000,000)
Shares of Common Stock, $.0005 par value, which
shall be designated "Common Shares" and FIVE
MILLION (5,000,000) shares of Preferred Stock,
$.01 par value, which shall be designated
"Preferred Shares." The Preferred Shares shall
be designated and issued in such series and upon
such terms and conditions as the Board of Directors
may from time to time determine. Such terms and
conditions shall include, but not be limited to,
the entitlement of the holders of Preferred Shares
to (a) cumulative, non-cumulative or partially
cumulative dividends, (b) the preference over
any other class or classes of shares as to the
payment of dividends, (c) the preference in the
assets of the Corporation over any other class
or classes of shares upon the voluntary or
involuntary liquidation of the Corporation,
(d) the convertibility, if any, into shares of
any other class or into shares of any series
of the same or any other class, and (e) voting
rights, if any.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of stockholders of said corporation was duly
called and held, upon notice in accordance with Secion 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the
amemdment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said A D M TRONICS UNLIMITED, INC. has caused
this certificate to be signed by Dr. Alfonso Di Mino, its President,
this 8th day of November, 1996.
/s/ Dr. Alfonso Di Mino
Dr. Alfonso Di Mino, President
