10QSB 1 q93002.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 OR [ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File No. 0-17629 ADM TRONICS UNLIMITED, INC. (Exact name of registrant as specified in its Charter) Delaware 22-1896032 (State or Other Jurisdiction (I.R.S. Employer Identifi- of Incorporation or organization) cation Number) 224-S Pegasus Ave., Northvale, New Jersey 07647 (Address of Principal Executive Offices) Issuer's Telephone Number, including area code: (201) 767-6040 Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for Such shorter period that the Issuer was required to file such reports), And (2) has been subject to the filing requirements for the past 90 days: YES X NO ______ State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: 47,382,037 shares of Common Stock, $.0005 par value, as of November 8, 2002 ADM TRONICS UNLIMITED, INC. INDEX Page Number Part I. Financial Information Item 1. Consolidated Financial Statements: Consolidated Balance Sheets - September 30, 2002 and March 31, 2002 2 Consolidated Statements of Operations - For the three months and six months ended September 30, 2002 and 2001 3 Consolidated Statement of Changes in Stockholders' Equity - For the six months ended September 30, 2002 3 Consolidated Statements of Cash Flows - For the six months ended September 30, 2002 and 2001 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-7 CERTIFICATION OF PERIODIC REPORT I, Andre' Di Mino, President of ADM Tronics Unlimited, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) the Quarterly Report on Form 10-QSB of the Company for the quarterly period ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 18, 2002 /s/ Andre' Di Mino Andre' Di Mino President 1 ADM TRONICS UNLIMITED, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER MARCH ASSETS 30, 2002 31, 2002 Current assets: Cash and equivalents $ 39,464 $ 51,565 Accounts receivable - trade, less allowance for doubtful accounts of $4,593 133,026 215,502 Inventories: Raw materials and supplies 266,969 303,202 Finished goods 23,589 35,628 Equipment held for sale 699,349 681,154 Other current assets 28,787 30,504 Total current assets 1,191,184 1,317,555 Property and equipment 44,753 60,671 Equipment in use and under lease agreements, net of accumulated depreciation of $587,207 and $523,007 respectively 367,847 432,047 Loan receivable from officer, bearing interest at 3% per annum, unsecured 51,191 53,791 Other assets 144,985 143,952 Total assets 1,799,960 2,008,016 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable - trade 245,345 252,478 Accrued expenses and other 58,159 79,473 Notes payable 125,000 110,000 Total current liabilities 428,504 441,951 Note payable, long-term portion 10,000 25,000 Stockholders' equity 1,361,456 1,541,065 Total liabilities and stockholders' equity $1,799,960 $2,008,016 2 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2002 2001 2002 2001 Revenues $175,131 $448,586 $428,741 $ 834,511 Costs and expenses: Cost of sales 75,592 327,802 154,227 536,046 Selling, general and Administrative 274,589 272,236 523,566 617,851 Total costs and expenses 350,181 600,038 677,793 1,153,897 Operating loss (175,050) (151,452) (249,052) (319,386) Other income: Interest and other income 63,550 1,500 69,443 3,556 Net loss (111,500) (149,952) (179,609) (315,830) Net loss per share $(0.002) $(0.003) $(0.004) $(0.007) ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED) CAPITAL IN EXCESS OF PAR PAR ACCUMULATED SHARES VALUE VALUE DEFICIT TOTAL Balance, March 31, 2002 47,382,037 $23,691 $6,763,618 $(5,246,244) $1,541,065 Net loss For the period ended September 30, 2001 (179,609) (179,609) Balance, September 30, 2002 47,382,037 $23,691 $6,763,618 $(5,425,853) $1,361,456 3 ADM TRONICS UNLIMITED, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED SEPTEMBER 30, 2002 2001 Cash flows from Operating activities: Net loss $(179,609) $(315,830) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 84,761 94,338 Changes in operating assets and liabilities: Accounts receivable - trade 82,476 (48,628) Inventories 48,272 (274,085) Other current assets 5,009 (10,066) Equipment in use or under lease (18,195) 105,527 Equipment held for sale 64,200 320,027 Other assets (4,324) 7,987 Accounts payable - trade (7,134) 144,873 Accrued expenses and other (21,314) (72,033) Net cash flows provided by (used in) operating activities 54,142 (47,890) Cash flows from Investing activities: Purchases of property and equipment (68,843) (14,607) Repayments of loan to officer 2,600 2,600 Net cash flows provided by (used in) investing activities (66,243) (12,007) Cash flows from Financing activities: Payments on notes payable - (10,904) Net change in cash and cash equivalents $(12,101) $(70,801) Cash and cash equivalents--beginning of year $ 51,565 $113,458 Cash and cash equivalents--end of period $ 39,464 $ 42,657 Supplemental disclosure of cash flow activities: Interest paid - 1,546 4 ADM TRONICS UNLIMITED, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1-Basis of Presentation: The consolidated balance sheet at the end of the preceding fiscal year has been derived from the audited consolidated balance sheet contained in the Company's annual report on Form 10-KSB for the fiscal year ended March 31, 2002 (the "Form 10-KSB") and is presented for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments which include only normal recurring adjustments necessary to present fairly the financial position, results of operations and changes in financial positions for all periods presented have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year. Footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Form 10-KSB. Note 2. Segment Information Information about segment information is as follows: Six Months Ended September 30, 2002: CHEMICAL MEDICAL TOTAL Revenues from external customers 385,644 43,097 428,741 Segment profit (loss) 55,175 (274,185) (219,010) Six Months Ended September 30, 2001: Revenues from external customers 368,915 465,596 834,511 Segment loss (158,816) (149,196) (308,012) Three Months Ended September 30, 2002: Revenues from external customers 149,589 25,543 175,132 Segment profit (loss) 63,851 (208,859) (145,008) Three Months Ended September 30, 2001: Revenues from external customers 196,199 252,387 448,586 Segment loss (123,776) (16,302) (140,078) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At September 30, 2002 the Company had cash and equivalents of $39,464 as compared to $51,565 at March 31, 2002. This decrease was the result of net cash flows used by investing activities of $66,243 offset by net cash provided by operating activities of $54,142. Operating Activities Net cash flows provided by operating activities increased $102,032 to $54,142 for the six months ended September 30, 2002 as compared to net cash outflows of $47,890 for the six months ended September 30, 2001. This increase was primarily the result of a net increase in operating assets offset primarily by the loss for the six months ended September 30, 2002 of $179,609. Investing Activities Cash flows used in investing activities consisted of purchases of property And equipment of $68,843 offset by repayments of the officer loan of $2,600. Financing Activities There were no financing activities during the period. The Company does not have any material external sources of liquidity or unused sources of funds. Results of Operations Quarter Ended September 30, 2002 Revenues Revenues were $175,131 in 2002 as compared to $448,586 in 2001 representing a decrease of $273,455 or 61%. This decrease was the result of a decrease in revenues from the Company's medical electronic activities of $226,844 primarily due to a reduction in contract manufacturing activities and chemical revenues decreased $46,610. Gross Profit Gross profit of $99,539 in 2002 as compared to $120,784 in 2001 was $21,245 or 18% below the gross profit in 2001. Gross profit was 57% of revenues in 2002 as compared with 27% of revenues in 2001. The increase in gross profit margin was primarily due to the product mix of sales with higher sales of products with a higher gross margin. Operating Income (Loss) Operating loss in 2002 was ($175,050) compared to ($151,452) in 2001. Selling, general and administrative expenses increased by $2,353 in 2002 primarily due to increases in legal and professional fees incurred in the period due to litigation offset by reductions in personnel and overhead expenses. 6 Other Income Other income in 2002 was $63,550 as compared to $1,500 in 2001. The increase was primarily due to cash receipts from the settlement of a lawsuit. Results of Operations Six Months Ended September 30, 2002 Revenues Revenues were $428,741 in 2002 as compared to $834,511 in 2001 representing a decrease of $405,770 or 48%. Revenues from the Company's medical electronics activities decreased $422,499, primarily due to reductions in contract manufacturing activities offset be increased chemical revenues of $16,729. Gross Profit Gross profit of $274,514 in 2002 as compared to $298,465 in 2001 was $23,951 or 8% lower than the gross profit in 2001. Gross profit was 64% of revenues in 2002 and 36% in 2001. The increase in gross profit margin is due to the mix in product sales with higher sales of products with a higher gross margin. Operating Income (Loss) Operating loss was ($249,052) in 2002 compared to ($319,386) in 2001. Selling, general and administrative expenses decreased by $94,285 primarily due to a reduction in personnel and overhead expenses offset by increases in legal and professional fees incurred in the period due to litigation. Other Income Other income of $69,443 in 2002 increased $65,887 from $3,556 in 2001, primarily due to cash receipts from the settlement of a lawsuit. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ADM Tronics Unlimited, Inc. By:\s\ Andre' DiMino Andre' DiMino Principal Financial Officer Dated: Northvale, New Jersey November 18, 2002 7