SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 18, 1998
ADM Tronics Unlimited, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-17629 22-1896032
(Commission File Number) (IRS Employer Identification Number)
224-S Pegasus Avenue, Northvale, NJ 07647
(Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code 201-767-6040
1
Item 5. Other Events
The Company has been notified by the Nasdaq Stock Market ("Nasdaq")
that if the closing bid price of the Company's Common Stock (the "Common
Stock") is not at least $1.00 per share on or before December 11, 1998 and
at least the next ten trading days or if the Company is not otherwise in
compliance with Nasdaq's requirements, the Common Stock will be delisted
from Nasdaq. Accordingly, the Company intends to effect a 1 for 4 reverse
split of the Common Stock, subject to shareholder approval. If such
de-listing were to occur, an investor could find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, the
Common Stock. In addition, if the Common Stock were to become de-listed
from trading on Nasdaq and the trading price of the Common Stock were below
$5.00 per share, which it is as of the date of this Prospectus, trading in
the Common Stock would also be subject to the requirements of certain rules
promulgated under the Exchange Act which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market
price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks
associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established
customers and accredited investors (generally institutions). For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. The additional burdens imposed
upon broker-dealers by such requirements may discourage broker-dealers from
effecting transactions in the Common Stock, which could severely limit the
market liquidity of the Common Stock and the ability of purchasers in this
offering to sell the Common Stock and Warrants in the secondary market.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a), (b)
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
ADM Tronics Unlimited, Inc. (the Company) acquired certain assets
from Electropharmacology, Inc. (the acquired business or EPI) included
in the Unaudited Pro Forma combined financial statements. This
transaction was consummated on August 18, 1998.
The following pro forma financial information presents a) the
Company and EPI's pro forma unaudited combining statement of operations
for the year ended March 31, 1998 as if the acquisition of
the entity occurred on April 1, 1997; and b) the Company and EPI's
pro forma unaudited combining statement of operations for the three
months ended June 30, 1998 as if the acquisition of the entity
occurred on April 1, 1998; and c) the Company and EPI's pro forma
unaudited combining balance sheet as of June 30, 1998, as if the
acquisition of the business occurred on June 30, 1998.
This unaudited pro forma financial information does not purport to
represent what the Company's financial position or results of
operations would actually have been if such transaction in fact
occurred on those dates, or to project the Company's financial
position or results of operations for any future date or period.
These unaudited pro forma combining financial statements should be
read in conjunction with the historical financial statements of ADM
Tronics Unlimited, Inc. and those of the business acquired.
<TABLE>
ADM TRONICS UNLIMITED, Inc.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1998
<CAPTION> (4)
(1) (2) ADJUSTED
ADM TRONICS ACQUIRED ACQUIRED PRO FORMA PRO FORMA
UNLIMITED, INC. ENTITY ADJUSTMENTS ENTITY ADJUSTMENTS COMBINED
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Cash 805,028 62,465(3) (62,465) 0 (5) (75,000) 730,028
Accts. receivable 325,798 126,723(3) (126,723) 0 325,798
Inventories:
Raw materials 204,729 159,043(3) (159,043) 0 204,729
Finished goods 56,426 0 0 0 56,426
Other current
assets 23,395 164,143(3) (164,143) 0 23,395
Property and
Equipment 79,153 84,327(3) 20,673 105,000 184,153
Equipment in use and under
lease agreements 78,412 484,170(3) 178,170 306,000 384,412
Equipment held
for sale 303,633 0(3) 1,117,000 1,117,000 1,420,633
Loan receivable
from officer 71,877 0 71,877
Other assets 593,250 91,163(3) (91,163) 0 (5) (75,000) 518,250
Total assets 2,541,701 1,172,034 355,966 1,528,000 (150,000) 3,919,701
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 144,437 509,330 (3) (509,330) 0 144,437
Accrued expenses
and other 80,825 324,253 (3) (324,253) 0 80,825
Deferred revenue 0 75,000 (3) (75,000) 0 0
Notes payable-
Current 104,629 785,202 (3) (785,202) 0 104,629
Long-term 41,412 90,260 (3) (90,260) 0 41,412
Stockholders' equity
(deficit) 2,170,398 (612,011) (3) 612,011 0 (5)1,378,000 3,548,398
Total liabilities and stockholders'
equity 2,541,701 1,172,034 (1,172,034) 0 1,378,000 3,919,701
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Note 1.
This column includes the historical balance sheet of ADM Tronics
Unlimited, Inc. as of June 30, 1998.
Note 2.
This column includes the historical balance sheet of the
acquired business. As of August 18, 1998, the acquisition has been
completed.
Note 3.
The transaction was consummated on August 18, 1998 whereby the Company
purchased certain assets from EPI including, but not limited to, a number of
"SofPulse" (the Device) medical devices along with certain manufacturing
equipment, marketing rights, patents and other items associated with the Device,
in exchange for $150,000 and the issuance of 2,925,000 shares of the Company's
common stock. This column reflects adjustments to remove assets and
liabilities from EPI's historical balance sheet not included as part of the
purchase and to adjust assets acquired to fair value.
Note 4.
This column reflects assets acquired from EPI at estimated fair value.
Note 5.
This adjustment reflects the issuance of 2,925,000 shares of the Company's
common stock and the $150,000 cash consideration pursuant to the transaction
with EPI. The fair value of the assets acquired approximate the fair value of
the common stock issued and accordingly, there was no goodwill to reflect
incidental to the transaction.
The Company agreed that if the shares had not been registered under the
Securities Act by October 17, 1998, then on that day and on each thirty day
anniversary thereof until the shares are so registered, if timely requested, the
Company would purchase $20,000 worth of such shares based on a formula. In
October, pursuant to a request, the Company purchased 37,647 shares pursuant to
this provision of the agreement for $20,000. The Company's obligation to
purchase shares is limited to an aggregate purchase price of $60,000 if such
registration has not occurred due to circumstances not reasonably within the
control of the Company.
ADM TRONICS UNLIMITED, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998
(1) (2)
ADM TRONICS ACQUIRED PRO FORMA PRO FORMA
UNLIMITED, INC. ENTITY ADJUSTMENTS COMBINED
REVENUES 566,923 249,558 816,481
COSTS AND EXPENSES:
Cost of sales 275,870 71,534 (3) 23,486 370,890
Selling, general
and administrative 351,308 363,664 (4) (16,000) 698,972
Research and development 0 24,112 24,112
Other expenses 0 16,539 16,539
Total costs and expenses 627,178 475,849 7,486 1,110,513
LOSS BEFORE INCOME TAXES (60,255) (226,291) (7,486) (294,032)
INCOME TAXES 0 0 0 0
LOSS (60,255) (226,291) (7,486) (294,032)
Weighted average number of common and
Equivalent shares outstanding 43,724,907 (5) 2,925,000 46,649,907
Loss per share (.001) (.006)
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Note 1.
This column includes the historical results of operations of ADM
Tronics Unlimited, Inc. for the three month period ended June 30,
1998.
Note 2.
This column includes the historical results of operations of
Electropharmacology, Inc. for the three months ended June 30, 1998. The
historical data includes accounting fees of $65,000 and legal fees of $75,000.
These amounts are excessive due to a business purchase the acquired entity was
going to make and a law suit that is unrelated to the Sofpulse division of the
acquired entity. Conservatively, accounting and legal fees for one year,
exclusive of these items, would be $60,000 and $160,000, respectively.
Prorated for a three month period the amounts would be $15,000 and $40,000,
respectively.
Also included in the historical data are research and development costs
of $24,112, which the Company does not intend to continue as part of the
business acquired.
Interest expense of $16,539 was incurred by the acquired entity for the
three months ended June 30, 1998. The Company did not acquire the debt of the
acquired entity.
Note 3.
The adjustment represents the additional depreciation based on the
assets acquired at fair market value for the three months ended June
30, 1998.
Note 4.
The adjustment represents the net effect of reducing the salary of an
employee of the acquired entity who is now a consultant for the Company
prorated for a three month period. The employee's salary was $139,000 per
year and is now $75,000 per year.
Note 5.
Weighted average common and equivalent shares for the period ended
June 30, 1998 have been calculated assuming the shares of common stock
issued pursuant to the transaction were outstanding at the beginning of
the period. Outstanding stock options and warrants have not been included
in the calculation as its results would be anti-dilutive. Fully diluted
(which approximates primary) weighted average common and equivalent shares
outstanding, on a pro forma basis are as follows:
Common shares outstanding-Historical 43,724,907
Common stock issued in connection with
the business acquisition 2,925,000
46,649,907
ADM TRONICS UNLIMITED, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1998
(1) (2)
ADM TRONICS ACQUIRED PRO FORMA PRO FORMA
UNLIMITED, INC. ENTITY ADJUSTMENTS COMBINED
REVENUES 1,535,239 2,401,249 0 3,936,488
COSTS AND EXPENSES:
Cost of sales 644,763 611,702 (3) 115,359 1,371,824
Selling, general
and administrative 1,613,253 3,177,031 (4) (64,000) 4,726,284
Research and development 0 214,686 214,686
Other expenses 0 45,747 45,747
Total costs and expenses 2,258,016 4,049,166 51,359 6,358,541
LOSS INCOME TAXES (722,777) (1,647,917) (51,359) (2,422,053)
INCOME TAXES 0 0 0 0
LOSS (722,777) (1,647,917) (51,359)
(2,422,053)
Weighted average number of common and
Equivalent shares outstanding 42,477,832 (5) 2,925,000 45,402,832
Loss per share (.017) (.053)
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Note 1.
This column includes the historical results of operations of ADM
Tronics Unlimited, Inc. for the fiscal year ended March 31, 1998.
Note 2.
This column includes the historical results of operations of
Electropharmacology, Inc. for the year ended March 31, 1998. The historical
data includes accounting fees of $195,996 and legal fees of $713,965. These
amounts are excessive due to a business purchase the acquired entity was going
to make and a law suit that is unrelated to the Sofpulse division of the
acquired entity. Conservatively, accounting and legal fees for one year,
exclusive of these items, would be $60,000 and $160,000, respectively.
Also included in the historical data are research and development costs of
$214,686, which the Company does not intend to continue as part of the business
acquired.
Interest expense of $45,747 was incurred by the acquired entity for the
three months ended June 30, 1998. The Company did not acquire the debt of the
acquired entity.
Note 3.
The adjustment represents the additional depreciation based on the
assets acquired at fair market value for the year ended March 31, 1998.
Note 4.
The adjustment represents the net effect of reducing the salary of an
employee of the acquired entity who is now a consultant for the Company. The
employee's salary was $139,000 per year and is now $75,000 per year.
Note 5.
Weighted average common and equivalent shares for the year ended March
31, 1998 have been calculated assuming the shares of common stock issued
pursuant to the transaction were outstanding at the beginning of the period.
Outstanding stock options and warrants have not been included in the
calculation as its results would be anti-dilutive. Fully diluted (which
approximates primary) weighted average common and equivalent shares
outstanding, on a pro forma basis are as follows:
Common shares outstanding-Historical 42,477,832
Common stock issued in connection with
the business acquisition 2,925,000
45,402,832
(c) Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
ADM Tronics Unlimited, Inc.
(Registrant)
/s/ Dr. Alfonso Di Mino
President
