10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(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, 2017

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 (State or Other Jurisdiction of Incorporation or organization) 22-1896032 (I.R.S. Employer Identification Number)

224-S Pegasus Ave., Northvale, New Jersey 07647
(Address of Principal Executive Offices)

Registrant's Telephone Number, including area code: (201) 767-6040

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  YES [X] NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer  [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [X]
	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [  ] NO [X]

State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date:

67,588,492 shares of Common Stock, $.0005 par value, as of November 20, 2017.

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

INDEX

		Page Number
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets – September 30, 2017 (unaudited) and March 31, 2017 (audited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2017 and 2016 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2017 and 2016 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
Part II - Other Information
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17

 PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			March 31,
	2017			2017
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,799,300		$	1,982,276
Accounts receivable, net of allowance for doubtful accounts of $25,000		1,296,896			862,619
Inventories		483,423			369,796
Prepaid expenses and other current assets		22,312			35,752
Total current assets		3,601,931			3,250,443
Property and equipment, net of accumulated depreciation of $51,733 and $32,562, respectively		151,827			170,998
Inventories - long-term portion		56,611			56,611
Intangible assets, net of accumulated amortization of $9,942 and $9,244, respectively		10,992			11,690
Other assets		92,114			104,907
Deferred tax asset		772,000			926,000
Total other assets		1,083,544			1,270,206
Total assets	$	4,685,475		$	4,520,649
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease payable	$	31,499		$	30,895
Accounts payable		288,806			269,007
Accrued expenses and other current liabilities		163,047			148,731
Customer deposits		125,142			125,142
Due to stockholder		112,612			195,562
Total current liabilities		721,106			769,337
Long-term liabilities
Capital lease payable, net of current portion		70,427			83,812
Total liabilities		791,533			853,149
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.0005 par value; 150,000,000 shares authorized, 67,588,492 shares issued and outstanding		33,794			33,794
Additional paid-in capital		33,294,069			33,294,069
Accumulated deficit		(29,433,921	)		(29,660,363	)
Total stockholders' equity		3,893,942			3,667,500
Total liabilities and stockholders' equity	$	4,685,475		$	4,520,649

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Unaudited)

	Three months ended						Six months ended
	September 30,						September 30,
	2017			2016			2017			2016
Net revenues	$	1,069,706		$	1,380,338		$	2,216,061		$	2,757,769
Cost of sales		355,938			636,231			812,483			1,096,158
Gross Profit		713,768			744,107			1,403,578			1,661,611
Operating expenses:
Research and development		139,227			17,395			289,184			37,796
Selling, general and administrative		359,431			296,762			723,802			671,369
Depreciation and amortization		3,752			1,487			11,243			2,939
Total operating expenses		502,410			315,644			1,024,229			712,104
Income from operations		211,358			428,463			379,349			949,507
Other income (expense):
Interest income		4,928			762			6,548			1,460
Interest and finance expenses		(727	)		(331	)		(1,455	)		(843	)
Total other income (expense)		4,201			431			5,093			617
Income before provision for income taxes		215,559			428,894			384,442			950,124
Provision for income taxes:
Current		2,000			-			4,000			-
Deferred		79,000			-			154,000			-
Total provision for income taxes		81,000			-			158,000			-
Net income	$	134,559		$	428,894		$	226,442		$	950,124
Basic and diluted earnings per common share:	$	0.00		$	0.01		$	0.00		$	0.01
Weighted average shares of common stock outstanding - basic and diluted		67,588,492			67,008,502			67,588,492			67,008,502

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THESIX MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Unaudited)

	2017			2016
Cash flows from operating activities:
Net income	$	226,442		$	950,124
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		19,869			4,772
Deferred taxes		154,000			-
Changes in operating assets and liabilities balances:
Accounts receivable		(434,277	)		(328,879	)
Inventories		(113,627	)		(118,604	)
Prepaid expenses and other current assets		26,234			(750	)
Accounts payable		19,799			(159,759	)
Accrued expenses and other current liabilities		14,315			(82,368	)
Due to shareholder		(82,950	)		28,512
Net cash provided by (used in) operating activities		(170,195	)		293,048
Cash flows from investing activities:
Purchase of equipment		-			(4,970	)
Restricted cash		-			(165	)
Net cash used in investing activities		-			(5,135	)
Cash flows from financing activities:
Repayments on notes payable		-			(10,000	)
Repayments on capital lease payable		(12,781	)		-
Net cash provided by (used in) financing activities		(12,781	)		(10,000	)
Net increase (decrease) in cash and cash equivalents		(182,976	)		277,913
Cash and cash equivalents - beginning of period		1,982,276			1,398,848
Cash and cash equivalents - end of period	$	1,799,300		$	1,676,761
Cash paid for interest	$	1,455		$	843

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

SEPTEMBER 30, 2017 AND MARCH 31, 2017

NOTE 1 - NATURE OF BUSINESS

ADM Tronics Unlimited, Inc. ("we", "us", the “Company" or "ADM"), was incorporated under the laws of the state of Delaware on November 24, 1969. We are a technology-based developer and manufacturer of diversified lines of products and derive revenues from the production and sale of electronics for medical devices and other applications; environmentally safe chemical products for industrial, medical and cosmetic uses; and, research, development, regulatory and engineering services.

The accompanying unaudited condensed consolidated financial statements have been prepared by ADM pursuant to generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission (“SEC”) including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the condensed financial position and operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and explanatory notes for the year ended March 31, 2017 as disclosed in our annual report on Form 10-K for that year. The operating results and cash flows for three and six months ended September 30, 2017 (unaudited) are not necessarily indicative of the results to be expected for the pending full year ending March 31, 2018.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its wholly owned subsidiary Sonotron. All significant intercompany balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Significant estimates made by management include expected economic life and value of our medical devices, reserves, deferred tax assets, valuation allowance, impairment of long lived assets, fair value of equity instruments issued to consultants for services and fair value of equity instruments issued to others, option and warrant expenses related to compensation to employees and directors, consultants and investment banks, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates.  

REVENUE RECOGNITION

CHEMICAL PRODUCTS:

Revenues are recognized when products are shipped to end users. Shipments to distributors are recognized as revenue when no right of return exists.

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ELECTRONICS:

We recognize revenue from the sale of our electronic products when they are shipped to the purchaser. We offer a limited 90-day warranty on our electronics products and a limited 5-year warranty on our electronic controllers for spas and hot tubs. We have no other post shipment obligations. Based on prior experience, no amounts have been accrued for potential warranty costs and actual costs were less than $2,000, for each of the three and six months ended September 30, 2017 and 2016. For contract manufacturing, revenues are recognized after shipment of the completed products. 

ENGINEERING SERVICES:

We provide certain engineering services, including research, development, quality control, and quality assurance services along with regulatory compliance services. We recognize revenue from engineering services as the services are provided.

EARNINGS PER SHARE

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share is computed similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.

Per share basic and diluted earnings amounted to $0.00 and $0.01 for the three and six months ended September 30, 2017 and 2016, respectively. There were 3,000,000 common stock equivalents at September 30, 2017 and 2016, respectively.

RECLASSIFICATION

Certain items in the prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

Management is still evaluating the impact of recently issued, but not yet effective accounting pronouncements, if adopted. The effects of the standards on the Company’s consolidated financial statements are not known at this time.  

NOTE 3 - INVENTORIES

Inventories at September 30, 2017 consisted of the following:

	Current		Long Term		Total
Raw materials	$	447,639	$	56,611	$	504,250
Finished goods		35,784		-		35,784
	$	483,423	$	56,611	$	540,034

Inventories at March 31, 2017 consisted of the following:

	Current		Long Term		Total
Raw materials	$	338,443	$	56,611	$	395,054
Finished goods		31,353		-		31,353
	$	369,796	$	56,611	$	426,407

The Company values its inventories at the first in, first out method at the lower of cost or market.

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 NOTE 4 – CONCENTRATIONS

During the three months ended September 30, 2017 three customers accounted for 49% of our revenue. During the six months ended September 30, 2017 three customers accounted for 47% of our revenue. During the three months ended September 30, 2016 one customer accounted for 58% of our revenue. During the six months ended September 30, 2016, one customer accounted for 57% of our revenue. 

As of September 30, 2017, three customers represented 92% of our accounts receivable.

As of March 31, 2017, one customer represented 83% of our accounts receivable.

The Company’s customer base is comprised of foreign and domestic entities with diverse demographics. Revenues from foreign customers for the three and six months ended September 30, 2017 was $90,625 or 8% and $158,657 or 7%, respectively.

Revenue from foreign customers for the three and six months ended September 30, 2016 was $97,866 or 7% and $198,398 or 7%, respectively.

As of September 30, 2017, and March 31, 2017, accounts receivable included $3,904 and $48,213, respectively, from foreign customers.

NOTE 5 - SEGMENT INFORMATION

Information about segments is as follows:

	Chemical		Electronics		Engineering		Total
Three months ended September 30, 2017
Revenue from external customers	$	310,757	$	343,165	$	415,784	$	1,069,706
Segment operating income	$	21,105	$	74,333	$	115,920	$	211,358
Six months ended September 30, 2017
Revenue from external customers	$	619,112	$	836,757	$	760,192	$	2,216,061
Segment operating income	$	86,555	$	116,981	$	175,813	$	379,349
Three months ended September 30, 2016
Revenue from external customers	$	363,364	$	370,450	$	646,524	$	1,380,338
Segment operating income	$	102,390	$	98,384	$	227,689	$	428,463
Six months ended September 30, 2016
Revenue from external customers	$	654,848	$	937,073	$	1,165,848	$	2,757,769
Segment operating income	$	101,215	$	378,958	$	469,334	$	949,507
Total assets at September 30, 2017	$	1,309,003	$	1,769,178	$	1,607,294	$	4,685,475
Total assets at March 31, 2017	$	1,110,111	$	1,553,484	$	1,857,054	$	4,520,649

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NOTE 6 - OPTIONS OUTSTANDING

On September 2, 2015, ADM granted 3,000,000 stock options to employees at an exercise price of $0.20 per option and with a term of three years. The options were valued at $598,699 using the Black Scholes option pricing model with the following assumptions: risk free interest rate of 2.03%, volatility of 353%, estimated useful life of 3 years and dividend rate of 0%.

The following table summarizes information on all common share purchase options issued by us for the periods ended September 30, 2017 and March 31, 2017.

	September 30, 2017				March 31, 2017
	# of Shares		Weighted Average Exercise Price		# of Shares		Weighted Average Exercise Price
Outstanding, beginning of period		3,000,000	$	0.20		3,000,000	$	0.20
Issued		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired		-	$	-		-	$	-
Outstanding, end of period		3,000,000	$	0.20		3,000,000	$	0.20
Exercisable, end of period		3,000,000	$	0.20		3,000,000	$	0.20

NOTE 7 - COMMITMENTS AND CONTINGENCIES

We lease our office and manufacturing facility under a non-cancelable operating lease, which expires on June 30, 2019. The Company’s future minimum lease commitment at September 30, 2017 is as follows: 

For the twelve months ended September 30,

Period	Per year
2018	$	78,469
	$	78,469

9

Rent and real estate tax expense for all facilities for the three and six months ended September 30, 2017 and 2016 was approximately $28,000 and $60,000, respectively. 

On December 2, 2016, the Company entered into a capital lease agreement with a commercial bank in the amount of $85,680, including $6,930 in deferred interest, for the purchase of certain property and equipment. The lease has a term of forty-eight (48) months and is payable in forty-eight equal installments of $1,785. The balance of this obligation as of September 30, 2017, was $62,343.

On December 2, 2016, the Company entered into a capital lease agreement with a commercial bank in the amount of $54,710, including $4,710 in deferred interest, for the purchase of certain property and equipment. The lease has a term of forty-eight (48) months and is payable in forty-eight equal installments of $1,139. The balance of this obligation as of September 30, 2017, was $39,583.

NOTE 8 - INCOME TAXES

At September 30, 2017, the Company had federal net operating loss carry-forwards ("NOL")'s of approximately $1,902,000, which are due to expire through fiscal 2034. These NOLs may be used to offset future taxable income through their respective expiration dates and thereby reduce or eliminate our federal income taxes otherwise payable. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Ultimate utilization of such NOL's and credits is dependent upon the Company's ability to generate taxable income in future periods and may be significantly curtailed if a significant change in ownership occurs.

The Company provides a partial valuation allowance for the deferred tax asset resulting from the uncertainty that the stock-based compensation will be deductible. During the six months ended September 30, 2017, the Company utilized approximately $386,000 in net operating losses and expects to utilize the entire $1,902,000 before expiration.

The effective rates were approximately 41% and (6%) for the three and six months ended September 30, 2017 and 2016, respectively. The 2016 tax rates were favorably impacted relative to the statutory rate by a decrease in the valuation allowance related to the estimated net operating loss carry-forward utilization.

NOTE 9 – DUE TO STOCKHOLDER

The Company’s President has been deferring his salary and bonuses periodically to assist the Company’s cash flow. There are no repayment terms or interest accruing on this liability.

NOTE 10 – SUBSEQUENT EVENTS

We evaluated all subsequent events from the date of the condensed consolidated balance sheet through the issuance date and determined that there are no events or transactions occurring during the subsequent event reporting period which require recognition or disclosure in the condensed consolidated financial statements. 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our operations and financial condition should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the "safe harbor" provisions under section 21E of the Securities and Exchange Act of 1934 and the Private Securities Litigation Act of 1995. We use forward-looking statements in our description of our plans and objectives for future operations and assumptions underlying these plans and objectives. Forward-looking terminology includes the words "may", "expects", "believes", "anticipates", "intends", "forecasts", "projects", or similar terms, variations of such terms or the negative of such terms. These forward-looking statements are based on management's current expectations and are subject to factors and uncertainties which could cause actual results to differ materially from those described in such forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Form 10-Q to reflect any change in our expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based. Factors which could cause such results to differ materially from those described in the forward-looking statements include those set forth under "Item. 1 Description of Business – Risk Factors" and elsewhere in or incorporated by reference into our Annual Report on Form 10-K for the year ended March 31, 2017.      

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CRITICAL ACCOUNTING POLICIES

REVENUE RECOGNITION

We recognize revenue from engineering services on a project or monthly basis and contract manufacturing revenues are recognized after shipment of completed products. For the sale of our electronic products, revenues are recognized when they are shipped to the purchaser. Shipping and handling charges and costs are de minimis. We offer a limited 90-day warranty on our electronics products and a limited 5-year warranty on our electronic controllers for spas and hot tubs. Historically, the amount of warranty revenue included in the sales of our electronic products have been de minimis. We have no other post shipment obligations and sales returns have been de minimis.

Revenues from sales of chemical products are recognized when products are shipped to end users.  Shipments to distributors are recognized as sales where no right of return exists.

USE OF ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to reserves, deferred tax assets and valuation allowance, impairment of long-lived assets, fair value of equity instruments issued to consultants for services and fair value of equity instruments issued to others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above described items, are reasonable.

BUSINESS OVERVIEW

The Company is a technology-based developer and manufacturer of diversified lines of products and derives revenue from the production and sale of electronics for medical devices and other applications; environmentally safe chemical products for industrial, medical and cosmetic uses; and, research, development, regulatory and engineering services.

The Company is a corporation that was organized under the laws of the State of Delaware on November 24, 1969. Our operations are conducted through ADM Tronics Unlimited, Inc. ("ADM") and its subsidiary Sonotron Medical Systems, Inc. ("SMI").

11

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2017 AS COMPARED TO SEPTEMBER 30, 2016  

For the Three Months Ended September 30, 2017
	Chemical			Electronics			Engineering			Total
Revenue	$	310,757		$	343,165		$	415,784		$	1,069,706
Cost of Sales		138,418			118,317			99,203			355,938
Gross Profit		172,339			224,848			316,581			713,768
Gross Profit Percentage		55	%		66	%		76	%		67	%
Operating Expenses		151,230			150,513			200,667			502,410
Operating Income (Loss)		21,109			74,335			115,914			211,358
Other income (expenses)		1,183			1,560			1,458			4,201
Income (loss) before benefit from income taxes	$	22,292		$	75,895		$	117,372		$	215,559

For the Three Months Ended September 30, 2016
	Chemical			Electronics			Engineering			Total
Revenue	$	363,364		$	370,450		$	646,524		$	1,380,338
Cost of Sales		175,777			193,184			267,269			636,231
Gross Profit		187,587			177,266			379,255			744,107
Gross Profit Percentage		52	%		48	%		59	%		54	%
Operating Expenses		85,197			78,882			151,565			315,644
Operating Income (Loss)		102,390			98,384			227,689			428,463
Other income (expenses)		108			133			190			431
Income (loss) before benefit from income taxes	$	102,498		$	98,517		$	227,879		$	428,894

Variance
	Chemical			Electronics			Engineering			Total
Revenue	$	(52,607	)	$	(27,285	)	$	(230,740	)	$	(310,632	)
Cost of Sales		(37,359	)		(74,867	)		(168,066	)		(280,293	)
Gross Profit		(15,248	)		47,582			(62,674	)		(30,339	)
Gross Profit Percentage		4	%		18	%		17	%		13	%
Operating Expenses		66,033			71,631			49,102			186,766
Operating Income (Loss)		(81,281	)		(24,049	)		(111,775	)		(217,105	)
Other income (expenses)		1,075			1,427			1,268			3,770
Income (loss) before benefit from income taxes	$	(80,206	)	$	(22,622	)	$	(110,507	)	$	(213,335	)

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For the Six Months Ended September 30, 2017
	Chemical			Electronics			Engineering			Total
Revenue	$	619,112		$	836,757		$	760,192		$	2,216,061
Cost of Sales		246,413			333,040			233,030			812,483
Gross Profit		372,699			503,717			527,162			1,403,578
Gross Profit Percentage		60	%		60	%		69	%		63	%
Operating Expenses		286,144			386,736			351,349			1,024,229
Operating Income (Loss)		86,555			116,981			175,813			379,349
Other income (expenses)		1,423			1,944			1,726			5,093
Income (loss) before benefit from income taxes	$	87,978		$	118,925		$	177,539		$	384,442

For the Six Months Ended September 30, 2016
	Chemical			Electronics			Engineering			Total
Revenue	$	654,848		$	937,073		$	1,165,848		$	2,757,769
Cost of Sales		384,540			316,146			395,471			1,096,158
Gross Profit		270,308			620,927			770,377			1,661,611
Gross Profit Percentage		41	%		66	%		66	%		60	%
Operating Expenses		169,093			241,969			301,042			712,104
Operating Income (Loss)		101,215			378,958			469,334			949,507
Other income (expenses)		147			210			260			617
Income (loss) before benefit from income taxes	$	101,362		$	379,168		$	469,594		$	950,124

13

Variance
	Chemical			Electronics			Engineering			Total
Revenue	$	(35,736	)	$	(100,316	)	$	(405,656	)	$	(541,708	)
Cost of Sales		(138,127	)		16,894			(162,441	)		(283,675	)
Gross Profit		102,391			(117,210	)		(243,215	)		(258,033	)
Gross Profit Percentage		19	%		-6	%		3	%		3	%
Operating Expenses		117,051			144,767			50,307			312,125
Operating Income (Loss)		(14,660	)		(261,977	)		(293,521	)		(570,158	)
Other income (expenses)		1,276			1,734			1,466			4,476
Income (loss) before benefit from income taxes	$	(13,384	)	$	(260,243	)	$	(292,055	)	$	(565,682	)

Revenues for the three and six months ended September 30, 2017 decreased by$310,632 and $541,708, respectively.

The decreases are a result of reduced sales in all segments of the company and, for the three months ended September 30, 2017, are comprised of a decrease in chemical of $52,607, a decrease in electronics of $27,285 and a decrease in engineering of $230,740. The decrease in the engineering division is primarily the result of decreased sales volume from one customer. The decrease in the electronics and chemical divisions is primarily the result of overall decreased sales volume.

The decrease in the six-month revenue of $541,708 is comprised a decrease of $35,736 in the chemical segment, $100,316 in the electronics segment and $405,656 in engineering. The decrease in the engineering division is primarily the result of decreased sales volume from one customer. The decrease in the electronics and chemical divisions is primarily the result of overall decreased sales volume.

Gross profit for the three months ended September 30, 2017 decreased by $30,339. Gross profit for the six months ended September 30, 2017 decreased $283,675 The decrease in gross profit resulted from lower sales for the three and six-month periods.

We are highly dependent upon certain customers. During the three months ended September 30, 2017 three customers accounted for 49% of our revenue. During the six months ended September 30, 2017 three customers accounted for 47% of our revenue. During the three months ended September 30, 2016 one customer accounted for 58% of our revenue. During the six months ended September 30, 2016, one customer accounted for 57% of our revenue. The complete loss of or significant reduction in business from, or a material adverse change in the financial condition of any of our customers could cause a material and adverse change in our revenues and operating results.

Income from operations for the three months ended September 30, 2017 decreased by $217,105. Income from operations for the six months ended September 20, 2017 decreased by $570,158. The reduction of operating income for both periods is from reduced sales as described above coupled with increased operating expenses of $186,766 and $312,125 for the three and six-month periods, respectively. For the three months ended September 30, 2017, operating expense increase is partly due to increased wages of approximately $39,000, increase in insurance costs of approximately $24,400 and an increase in research and development costs of approximately $121,600. For the six months ended September 30, 2017 wages increased approximately $45,600, advertising increased approximately $20,900 and research and development increased approximately $251,400.

14

Interest income increased $4,166 and $5,088 for the three and six months ended September 30, 2017, respectively. The increase is due to increased funds invested in a money market account. 

The foregoing resulted in net income for the three and six months ended September 30, 2017 of $134,559 and $226,442, respectively. Earnings per share were $0.00 for both the three months and six months ended September 30, 2017. Earnings per share for the three and six months ended September 30, 2016 are 0.01 per share, respectively.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2017, we had cash and cash equivalents of $1,799,300 as compared to $1,982,276 at March 31, 2017. The $182,976 decrease was primarily the result of cash used in operations during the six-month period in the amount of $170,195, coupled by cash used in financing activities of $12,781. Our cash will continue to be used for increased marketing costs, and the related administrative expenses all in an attempt to increase our revenue, as well as increased expenditures for our internal R&D.  We expect to have enough cash to fund operations for the next twelve months.    

Future Sources of Liquidity:

We expect that growth in profitable revenues and continued focus on new customers will enable us to continue to generate cash flows from operating activities during fiscal 2017.

If we do not generate sufficient cash from operations, face unanticipated cash needs or do not otherwise have sufficient cash, we may need to consider the sale of certain intellectual property which does not support the Company’s operations. In addition, we have the ability to reduce certain expenses depending on the level of business operation.

Based on current expectations, we believe that our existing cash of $1,799,300 as of September 30, 2017, and other potential sources of cash will be sufficient to meet our cash requirements. Our ability to meet these requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

OPERATING ACTIVITIES

Net cash used in operating activities was $170,195 for the six months ended September 30, 2017, as compared to net cash provided by operating activities of $293,048 for the six months ended September 30, 2016.  The cash used during the six months ended September 30, 2017 was primarily due to net income of $226,442 plus depreciation and amortization of $19,869 coupled with a decrease in net operating liabilities of $48,836,coupled by a decrease in net operating assets of $521,670

In addition, we have increased our internal R&D expenditures as we are now devoting more of our engineering resources to advance our own proprietary medical device technologies.

INVESTING ACTIVITIES

No cash was provided for or used in investing activities for the six months ended September 30, 2017.

FINANCING ACTIVITIES

For the six months ended September 30, 2017, net cash used in financing activities was $12,781. Cash was used for repayments on capital lease obligations. 

15

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and our investment in ITI. We have no control over the market value of our investment in ITI.

Cash and cash equivalents – For financial statement purposes, the Company considers as cash equivalents all highly liquid investments with an original maturity of three months or less at inception. The Company deposits cash and cash equivalents with high credit quality financial institutions and believes that any amounts in excess of insurance limitations to be at minimal risk. Cash and cash equivalents held at these accounts are current insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. At September 30, 2017, approximately $1,427,000 exceeded the FDIC limit.

Our sales are materially dependent on a small group of customers, as noted in Note 4 of our condensed consolidated financial statements. We monitor our credit risk associated with our receivables on a routine basis. We also maintain credit controls for evaluating and granting customer credit.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company's management, including the Company's principal executive officer and principal financial officer, have evaluated the effectiveness of the Company's "disclosure controls and procedures," as such term is defined in Ru1e 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were not effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the "SEC") (1) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (2) is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. During the quarterly period ended September 30, 2017, there were no changes in the Company's internal control over financial reporting which materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting. 

The determination that our disclosure controls and procedures were not effective as of September 30, 2017, is a result of:

a. Deficiencies in Internal Control Structure Environment. During the current year, the Company’s focus was on expanding their customer base to initiate revenue production.  

b. Inadequate staffing and supervision within the accounting operations of our company. The relatively small number of employees who are responsible for accounting functions prevents the Company from segregating duties within its internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.  The Company’s plan is to expand its accounting operations as the business of the Company expands.

16

The Company believes that the financial statements present fairly, in all material respects, the Company’s condensed consolidated balance sheets as of September 30, 2017, and March 31, 2017 and the related condensed consolidated statements of operations, and cash flows for the three and six months ended September 30, 2017 and 2016, in conformity with generally accepted accounting principles, notwithstanding the material weaknesses we identified. 

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

During September 2017, a suit was filed by a vendor for $33,000 claiming non-payment for services regarding investor relations and marketing.  The Company has filed a countersuit for $12,000 and 300,000 shares of its common stock, paid to the vendor due to lack of performance and other factors.  The Company believes the suit is without merit and intends to vigorously pursue its counterclaims.  As the lawsuit is in the initial stages, additional detail is not available at this time.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors contained in our Annual Report on Form 10-K for the year ended March 31, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS.

(a) Exhibit No.

31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

17

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.
(Registrant)
By:	/s/ Andre' DiMino
	Andre' DiMino, Chief Executive
	Officer and Chief Financial Officer

Dated:	Northvale, New Jersey
	November 20, 2017

 18

EX-31.1

EXHIBIT 31.1

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002 AND

SECURITIES AND EXCHANGE COMMISSION RELEASE 34-46427

I, Andre' DiMino, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ADM Tronics Unlimited, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am the registrant's only certifying officer and am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 20, 2017	/s/ Andre' DiMino
	Andre' DiMino
	Chief Executive Officer and Chief Financial Officer

A signed original of this written statement required by Section 302 has been provided to ADM Tronics Unlimited, Inc. and will be retained by ADM Tronics Unlimited, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ADM Tronics Unlimited, Inc. (the "Company") on Form 10-Q for the three and six months ended September 30, 2017, (the "Report"), filed with the Securities and Exchange Commission, Andre' DiMino, Chief Executive Officer and Chief Financial Officer, of the Company hereby certifies pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and the result of operations of the Company for the periods presented.

Date: November 20, 2017	/s/ Andre' DiMino
	Chief Executive Officer and
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to ADM Tronics Unlimited, Inc. and will be retained by ADM Tronics Unlimited, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Sep. 30, 2017	Nov. 20, 2017
Document Information [Line Items]
Entity Registrant Name	ADM TRONICS UNLIMITED, INC.
Entity Central Index Key	0000849401
Trading Symbol	admt
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		67,588,492
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Mar. 31, 2017
ASSETS
Cash and cash equivalents	$ 1,799,300	$ 1,982,276
Accounts receivable, net of allowance for doubtful accounts of $25,000	1,296,896	862,619
Inventories	483,423	369,796
Prepaid expenses and other current assets	22,312	35,752
Total current assets	3,601,931	3,250,443
Property and equipment, net of accumulated depreciation of $51,733 and $32,562, respectively	151,827	170,998
Inventories - long-term portion	56,611	56,611
Intangible assets, net of accumulated amortization of $9,942 and $9,244, respectively	10,992	11,690
Other assets	92,114	104,907
Deferred tax asset	772,000	926,000
Total other assets	1,083,544	1,270,206
Total assets	4,685,475	4,520,649
LIABILITIES AND STOCKHOLDERS' EQUITY
Capital lease payable	31,499	30,895
Accounts payable	288,806	269,007
Accrued expenses and other current liabilities	163,047	148,731
Customer deposits	125,142	125,142
Due to stockholder	112,612	195,562
Total current liabilities	721,106	769,337
Capital lease payable, net of current portion	70,427	83,812
Total liabilities	791,533	853,149
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.0005 par value; 150,000,000 shares authorized, 67,588,492 shares issued and outstanding	33,794	33,794
Additional paid-in capital	33,294,069	33,294,069
Accumulated deficit	(29,433,921)	(29,660,363)
Total stockholders' equity	3,893,942	3,667,500
Total liabilities and stockholders' equity	$ 4,685,475	$ 4,520,649

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Mar. 31, 2017
Allowance for doubtful accounts	$ 25,000	$ 25,000
Property and equipment, accumulated depreciation	51,733	32,562
Intangible assets, accumulated amortization	$ 9,942	$ 9,244
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0005	$ 0.0005
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	67,588,492	67,588,492
Common stock, shares outstanding (in shares)	67,588,492	67,588,492

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net revenues	$ 1,069,706	$ 1,380,338	$ 2,216,061	$ 2,757,769
Cost of sales	355,938	636,231	812,483	1,096,158
Gross Profit	713,768	744,107	1,403,578	1,661,611
Operating expenses:
Research and development	139,227	17,395	289,184	37,796
Selling, general and administrative	359,431	296,762	723,802	671,369
Depreciation and amortization	3,752	1,487	11,243	2,939
Total operating expenses	502,410	315,644	1,024,229	712,104
Income from operations	211,358	428,463	379,349	949,507
Other income (expense):
Interest income	4,928	762	6,548	1,460
Interest and finance expenses	(727)	(331)	(1,455)	(843)
Total other income (expense)	4,201	431	5,093	617
Income before provision for income taxes	215,559	428,894	384,442	950,124
Provision for income taxes:
Current	2,000		4,000
Deferred	79,000		154,000
Total provision for income taxes	81,000		158,000
Net income	$ 134,559	$ 428,894	$ 226,442	$ 950,124
Basic and diluted earnings per common share: (in dollars per share)	$ 0	$ 0.01	$ 0	$ 0.01
Weighted average shares of common stock outstanding - basic and diluted (in shares)	67,588,492	67,008,502	67,588,492	67,008,502

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 226,442	$ 950,124
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	19,869	4,772
Deferred taxes	154,000
Changes in operating assets and liabilities balances:
Accounts receivable	(434,277)	(328,879)
Inventories	(113,627)	(118,604)
Prepaid expenses and other current assets	26,234	(750)
Accounts payable	19,799	(159,759)
Accrued expenses and other current liabilities	14,315	(82,368)
Due to shareholder	(82,950)	28,512
Net cash provided by (used in) operating activities	(170,195)	293,048
Cash flows from investing activities:
Purchase of equipment		(4,970)
Restricted cash		(165)
Net cash used in investing activities		(5,135)
Cash flows from financing activities:
Repayments on notes payable		(10,000)
Repayments on capital lease payable	(12,781)
Net cash provided by (used in) financing activities	(12,781)	(10,000)
Net increase (decrease) in cash and cash equivalents	(182,976)	277,913
Cash and cash equivalents - beginning of period	1,982,276	1,398,848
Cash and cash equivalents - end of period	1,799,300	1,676,761
Cash paid for interest	$ 1,455	$ 843

XML

Note 1 - Nature of Business

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

1

- NATURE OF BUSINESS

ADM Tronics Unlimited, Inc. ("we", "us", the “Company" or "ADM"), was incorporated under the laws of the state of Delaware on

November 24, 1969.

 We are a technology-based developer and manufacturer of diversified lines of products and derive revenues from the production and sale of electronics for medical devices and other applications; environmentally safe chemical products for industrial, medical and cosmetic uses; and, research, development, regulatory and engineering services.

The accompanying unaudited condensed consolidated financial statements have been prepared by ADM pursuant to generally accepted accounting principles in the United States and

 the rules and regulations of the Securities and Exchange Commission (“SEC”) including Form

10

-Q and Regulation S-

X.

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the condensed financial position and operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and explanatory notes for the year ended

March 31, 2017

as disclosed in our annual report on Form

10

-K for that year. The operating results and cash flows for

three

and

six

months ended

September 30, 2017 (

unaudited) are

not

necessarily indicative of the results to be expected for the pending full year ending

March 31, 2018.

XML

Note 2 - Significant Accounting Policies

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2

- SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its wholly owned subsidiary Sonotron. All significant intercompany balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America

 and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Significant estimates made by management include expected economic life and value of our medical devices, reserves, deferred tax assets, valuation allowance, impairment of long lived assets, fair value of equity instruments issued to consultants for services and fair value of equity instruments issued to others, option and warrant expenses related to compensation to employees and directors, consultants and investment banks, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates.  

REVENUE RECOGNITION

CHEMICAL PRODUCTS:

Revenues are recognized when products are shipped to end users. Shipments to distributors are recognized as revenue when

no

right of return exists.

ELECTRONICS:

We recognize revenue from the sale of our electronic products when they are shipped to the purchaser. We offer a limited

90

-day warranty on our electronics products and a limited

5

-year warranty on our electronic controllers for spas and hot tubs. We have

no

other post shipment obligations. Based on prior experience,

no

amounts have been accrued for potential warranty costs and actual costs were less than

$2,000

,

for each of the

three

and

six

months ended

September 30, 2017

and

2016.

For contract manufacturing, revenues are recognized after shipment of the completed products. 

ENGINEERING SERVICES:

We provide certain engineering services, including research, development, quality control, and quality assurance services along with regulatory compliance services. We recognize revenue from engineering services as the services are provided.

EARNINGS

 PER SHARE

Basic

 earnings per share is calculated based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share is computed similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.

Per share basic and diluted

 earnings amounted to

$0.00

and

$0.01

for the

three

and

six

months ended

September 30, 2017

and

2016,

respectively. There were

3,000,000

common stock equivalents at

September 30, 2017

and

2016,

respectively.

RECLASSIFICATION

Certain items in the prior

period condensed consolidated financial statements have been reclassified to conform to the current period presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

Management is still evaluating the impact of recently issued, but

not

yet effective accounting pronouncements, if adopted. The effects of the standards on the Company

’s consolidated financial statements are

not

known at this time.  

XML

Note 3 - Inventories

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

3

- INVENTORIES

Inventories at

September 30, 2017

consisted of the following:

	Current		Long Term		Total
Raw materials	$	447,639	$	56,611	$	504,250
Finished goods		35,784		-		35,784
	$	483,423	$	56,611	$	540,034

Inventories at

March 31, 2017

consisted of the following:

	Current		Long Term		Total
Raw materials	$	338,443	$	56,611	$	395,054
Finished goods		31,353		-		31,353
	$	369,796	$	56,611	$	426,407

The Company values its inventories at the

first

in,

first

out method at the lower of cost or market.

XML

Note 4 - Concentrations

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

 

NOTE 

4

– CONCENTRATIONS

During the

three

months ended

September 30, 2017

three

customers accounted for

49%

of our revenue. During the

six

months ended

September 30, 2017

three

customers accounted for

47%

of our revenue. During the

three

months ended

September 30, 2016

one

customer accounted for

58%

of our revenue. During the

six

months ended

September 30, 2016,

one

customer accounted for

57%

of our revenue. 

As of

 

September 30, 2017,

three

customers represented

92%

of our accounts receivable.

As of

March 31, 2017,

one

customer represented

83%

of our accounts receivable.

The Company

’s customer base is comprised of foreign and domestic entities with diverse demographics. Revenues from foreign customers for the

three

and

six

months ended

September 30, 2017

was

$90,625

or

8%

and

$158,657

or

7%,

respectively.

Revenue from foreign customers for the

three

and

six

months ended

September 30, 2016

was

$97,866

or

7%

and

$198,398

or

7%,

respectively.

As of

September 30, 2017,

and

March 31, 2017,

accounts receivable included 

$3,904

and

$48,213,

respectively, from foreign customers.

XML

Note 5 - Segment Information

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

 

5

 - SEGMENT INFORMATION

Information about segments is as follows:

	Chemical		Electronics		Engineering		Total
Three months ended September 30, 2017
Revenue from external customers	$	310,757	$	343,165	$	415,784	$	1,069,706
Segment operating income	$	21,105	$	74,333	$	115,920	$	211,358
Six months ended September 30, 2017
Revenue from external customers	$	619,112	$	836,757	$	760,192	$	2,216,061
Segment operating income	$	86,555	$	116,981	$	175,813	$	379,349
Three months ended September 30, 2016
Revenue from external customers	$	363,364	$	370,450	$	646,524	$	1,380,338
Segment operating income	$	102,390	$	98,384	$	227,689	$	428,463
Six months ended September 30, 2016
Revenue from external customers	$	654,848	$	937,073	$	1,165,848	$	2,757,769
Segment operating income	$	101,215	$	378,958	$	469,334	$	949,507
Total assets at September 30, 2017	$	1,309,003	$	1,769,178	$	1,607,294	$	4,685,475
Total assets at March 31, 2017	$	1,110,111	$	1,553,484	$	1,857,054	$	4,520,649

XML

Note 6 - Options Outstanding

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE

 

6

 - OPTIONS OUTSTANDING

On

September 2, 2015,

ADM granted

3,000,000

stock options to employees at an exercise price of

$0.20

per option and with a term of

three

years. The options were valued at

$598,699

using the Black Scholes option pricing model with the following assumptions: risk free interest rate of

2.03%,

volatility of

353%,

estimated useful life of

3

years and dividend rate of

0%.

The following table summarizes information on all common share purchase options issued by us for the periods ended

September 30, 2017

and

March 31, 2017.

	September 30, 2017				March 31, 2017
	# of Shares		Weighted Average Exercise Price		# of Shares		Weighted Average Exercise Price
Outstanding, beginning of period		3,000,000	$	0.20		3,000,000	$	0.20
Issued		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired		-	$	-		-	$	-
Outstanding, end of period		3,000,000	$	0.20		3,000,000	$	0.20
Exercisable, end of period		3,000,000	$	0.20		3,000,000	$	0.20

XML

Note 7 - Commitments and Contingencies

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

 

7

 - COMMITMENTS AND CONTINGENCIES

We lease our office and manufacturing facility under a non-cancelable operating lease, which expires on

June 30, 2019.

The Company

’s future minimum lease commitment at

September 30, 2017

is as follows: 

For the

twelve

months ended

September 30,

Period	Per year
2018	$	78,469
	$	78,469

Rent and real estate tax expense for all facilities for the

three

and

six

months ended

September 30, 2017

and

2016

was approximately

$28,000

and

$60,000

,

respectively. 

On

December 2, 2016,

the Company entered into a capital lease agreement with a commercial bank in the amount of

$85,680,

including

$6,930

in deferred interest, for the purchase of certain property and equipment. The lease has a term of

forty-eight

(

48

) months and is payable in

forty-eight

equal installments of

$1,785.

The balance of this obligation as of

September 30, 2017,

was

$62,343.

On

December 2, 2016,

the Company entered into a capital lease agreement with a commercial bank in the amount of

$54,710,

including

$4,710

in deferred interest, for the purchase of certain property and equipment. The lease has a term of

forty-eight

(

48

) months and is payable in

forty-eight

equal installments of

$1,139.

The balance of this obligation as of

September 30, 2017,

was

$39,583.

XML

Note 8 - Income Taxes

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

 

8

 - INCOME TAXES

At

September 30, 2017,

the Company had federal net operating loss carry-forwards ("NOL")'s of approximately

$1,902,000,

which are due to expire through fiscal

2034.

These NOLs

may

be used to offset future taxable income through their respective expiration dates and thereby reduce or eliminate our federal income taxes otherwise payable. A valuation allowance is provided when it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Ultimate utilization of such NOL's and credits is dependent upon the Company's ability to generate taxable income in future periods and

may

be significantly curtailed if a significant change inownership occurs.

The Company provides a

 partial valuation allowance for the deferred tax asset resulting from the uncertainty that the stock-based compensation will be deductible. During the

six

months ended

September 30, 2017,

the Company utilized approximately

$386,000

in net operating losses and expects to utilize the entire

$1,902,000

before expiration.

The effective rates were approximately

41%

and

(

6%

)

for the

three

and

six

months ended

September 30, 2017

and

2016,

respectively. The

2016

tax rates were favorably impacted relative to the statutory rate by a decrease in the valuation allowance related to the estimated net operating loss carry-forward utilization.

XML

Note 9 - Due to Stockholder

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Compensation Related Costs, General [Text Block]

NOTE

 

9

 – DUE TO STOCKHOLDER

The Company

’s President has been deferring his salary and bonuses periodically to assist the Company’s cash flow. There are

no

repayment terms or interest accruing on this liability.

XML

Note 10 - Subsequent Events

6 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

10

 – SUBSEQUENT EVENTS

We evaluated all subsequent events from the date of the condensed consolidated balance sheet through the issuance date

 and determined that there are

no

events or transactions occurring during the subsequent event reporting period which require recognition or disclosure in the condensed consolidated financial statements. 

XML

Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its wholly owned subsidiary Sonotron. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

USE OF ESTIMATES

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America

 and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Significant estimates made by management include expected economic life and value of our medical devices, reserves, deferred tax assets, valuation allowance, impairment of long lived assets, fair value of equity instruments issued to consultants for services and fair value of equity instruments issued to others, option and warrant expenses related to compensation to employees and directors, consultants and investment banks, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates.  

Revenue Recognition, Policy [Policy Text Block]

REVENUE RECOGNITION

CHEMICAL PRODUCTS:

Revenues are recognized when products are shipped to end users. Shipments to distributors are recognized as revenue when

no

right of return exists.

ELECTRONICS:

We recognize revenue from the sale of our electronic products when they are shipped to the purchaser. We offer a limited

90

-day warranty on our electronics products and a limited

5

-year warranty on our electronic controllers for spas and hot tubs. We have

no

other post shipment obligations. Based on prior experience,

no

amounts have been accrued for potential warranty costs and actual costs were less than

$2,000

,

for each of the

three

and

six

months ended

September 30, 2017

and

2016.

For contract manufacturing, revenues are recognized after shipment of the completed products. 

ENGINEERING SERVICES:

We provide certain engineering services, including research, development, quality control, and quality assurance services along with regulatory compliance services. We recognize revenue from engineering services as the services are provided.

Earnings Per Share, Policy [Policy Text Block]

EARNINGS

 PER SHARE

Basic

 earnings per share is calculated based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share is computed similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.

Per share basic and diluted

 earnings amounted to

$0.00

and

$0.01

for the

three

and

six

months ended

September 30, 2017

and

2016,

respectively. There were

3,000,000

common stock equivalents at

September 30, 2017

and

2016,

respectively.

Reclassification, Policy [Policy Text Block]

RECLASSIFICATION

Certain items in the prior

period condensed consolidated financial statements have been reclassified to conform to the current period presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

RECENT ACCOUNTING PRONOUNCEMENTS

Management is still evaluating the impact of recently issued, but

not

yet effective accounting pronouncements, if adopted. The effects of the standards on the Company

’s consolidated financial statements are

not

known at this time.  

XML

Note 3 - Inventories (Tables)

6 Months Ended

Sep. 30, 2017

Notes Tables

Schedule Of Inventory [Table Text Block]

	Current		Long Term		Total
Raw materials	$	447,639	$	56,611	$	504,250
Finished goods		35,784		-		35,784
	$	483,423	$	56,611	$	540,034

	Current		Long Term		Total
Raw materials	$	338,443	$	56,611	$	395,054
Finished goods		31,353		-		31,353
	$	369,796	$	56,611	$	426,407

XML

Note 5 - Segment Information (Tables)

6 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Chemical		Electronics		Engineering		Total
Three months ended September 30, 2017
Revenue from external customers	$	310,757	$	343,165	$	415,784	$	1,069,706
Segment operating income	$	21,105	$	74,333	$	115,920	$	211,358
Six months ended September 30, 2017
Revenue from external customers	$	619,112	$	836,757	$	760,192	$	2,216,061
Segment operating income	$	86,555	$	116,981	$	175,813	$	379,349
Three months ended September 30, 2016
Revenue from external customers	$	363,364	$	370,450	$	646,524	$	1,380,338
Segment operating income	$	102,390	$	98,384	$	227,689	$	428,463
Six months ended September 30, 2016
Revenue from external customers	$	654,848	$	937,073	$	1,165,848	$	2,757,769
Segment operating income	$	101,215	$	378,958	$	469,334	$	949,507
Total assets at September 30, 2017	$	1,309,003	$	1,769,178	$	1,607,294	$	4,685,475
Total assets at March 31, 2017	$	1,110,111	$	1,553,484	$	1,857,054	$	4,520,649

XML

Note 6 - Options Outstanding (Tables)

6 Months Ended

Sep. 30, 2017

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

	September 30, 2017				March 31, 2017
	# of Shares		Weighted Average Exercise Price		# of Shares		Weighted Average Exercise Price
Outstanding, beginning of period		3,000,000	$	0.20		3,000,000	$	0.20
Issued		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired		-	$	-		-	$	-
Outstanding, end of period		3,000,000	$	0.20		3,000,000	$	0.20
Exercisable, end of period		3,000,000	$	0.20		3,000,000	$	0.20

XML

Note 7 - Commitments and Contingencies (Tables)

6 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Period	Per year
2018	$	78,469
	$	78,469

XML

Note 2 - Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share, Basic and Diluted	$ 0	$ 0.01	$ 0	$ 0.01
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		3,000,000	3,000,000
Maximum [Member]
Product Warranty Expense	$ 2,000	$ 2,000	$ 2,000	$ 2,000
Electronic Products [Member]
Warranty Term			90 days
Electronic Controllers for Spas and Hot Tubs [Member]
Warranty Term			5 years

XML

Note 3 - Inventories - Summary of Inventory (Details) - USD ($)	Sep. 30, 2017	Mar. 31, 2017
Raw materials	$ 504,250	$ 395,054
Finished Goods	35,784	31,353
Total	540,034	426,407
Current [Member]
Raw materials	447,639	338,443
Finished Goods	35,784	31,353
Total	483,423	369,796
Long Term [Member
Raw materials	56,611	56,611
Finished Goods
Total	$ 56,611	$ 56,611

XML

Note 4 - Concentrations (Details Textual)	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Mar. 31, 2017 USD ($)
Revenues	$ 1,069,706	$ 1,380,338	$ 2,216,061	$ 2,757,769
Accounts Receivable, Net, Current	1,296,896		1,296,896		$ 862,619
Foreign Customers [Member]
Accounts Receivable, Net, Current	$ 3,904		$ 3,904		$ 48,213
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Concentration Risk, Number of Customers	3	1	3	1
Concentration Risk, Percentage	49.00%	58.00%	47.00%	57.00%
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Foreign Customers [Member]
Concentration Risk, Percentage	8.00%	7.00%	7.00%	7.00%
Revenues	$ 90,625	$ 97,866	$ 158,657	$ 198,398
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Number of Customers			3		1
Concentration Risk, Percentage			92.00%		83.00%

XML

Note 5 - Segment Information - Summary of Segment Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Mar. 31, 2017
Revenues	$ 1,069,706	$ 1,380,338	$ 2,216,061	$ 2,757,769
Segment operating income	211,358	428,463	379,349	949,507
Total assets	4,685,475		4,685,475		$ 4,520,649
Chemical [Member]
Revenues	310,757	363,364	619,112	654,848
Segment operating income	21,105	102,390	86,555	101,215
Total assets	1,309,003		1,309,003		1,110,111
Electronics [Member]
Revenues	343,165	370,450	836,757	937,073
Segment operating income	74,333	98,384	116,981	378,958
Total assets	1,769,178		1,769,178		1,553,484
Engineering [Member]
Revenues	415,784	646,524	760,192	1,165,848
Segment operating income	115,920	$ 227,689	175,813	$ 469,334
Total assets	$ 1,607,294		$ 1,607,294		$ 1,857,054

XML

Note 6 - Options Outstanding (Details Textual) - USD ($)		6 Months Ended	12 Months Ended
	Sep. 02, 2015	Sep. 30, 2017	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	3,000,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.20
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 598,699
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.03%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	353.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%

XML

Note 6 - Options Outstanding - Summary of Stock Option Activity (Details) - $ / shares		6 Months Ended	12 Months Ended
	Sep. 02, 2015	Sep. 30, 2017	Mar. 31, 2017
Outstanding, beginning of period (in shares)		3,000,000	3,000,000
Outstanding, beginning of period (in dollars per share)		$ 0.20	$ 0.20
Issued (in shares)	3,000,000
Issued (in dollars per share)	$ 0.20
Exercised (in shares)
Exercised (in dollars per share)
Expired (in shares)
Expired (in dollars per share)
Outstanding, end of period (in shares)		3,000,000	3,000,000
Outstanding, end of period (in dollars per share)		$ 0.20	$ 0.20
Exercisable, end of period (in shares)		3,000,000	3,000,000
Exercisable, end of period (in dollars per share)		$ 0.20	$ 0.20

XML

Note 7 - Commitments and Contingencies (Details Textual)		3 Months Ended		6 Months Ended
	Dec. 02, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Operating Leases, Rent Expense		$ 28,000	$ 60,000	$ 28,000	$ 60,000
Capital Lease Agreement One [Member]
Capital Lease Obligations, Gross	$ 85,680
Capital Lease Obligations, Deferred Interest	$ 6,930
Debt Instrument, Term	4 years
Capital Lease Obligations, Number of Installments	48
Debt Instrument, Periodic Payment	$ 1,785
Capital Lease Obligations		62,343		62,343
Capital Lease Agreement Two [Member]
Capital Lease Obligations, Gross	54,710
Capital Lease Obligations, Deferred Interest	$ 4,710
Debt Instrument, Term	4 years
Capital Lease Obligations, Number of Installments	48
Debt Instrument, Periodic Payment	$ 1,139
Capital Lease Obligations		$ 39,583		$ 39,583

XML

Note 7 - Commitments and Contingencies - Future Minimum Lease Payments (Details)	Sep. 30, 2017 USD ($)
2018	$ 78,469
Total	$ 78,469

XML

Note 8 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating Loss Carryforwards	$ 1,902,000		$ 1,902,000
Operating Loss Carry-Forward, Amount Utilized			386,000
Operating Loss Carry-Forward, Expected Utilization Amount			$ 1,902,000
Effective Income Tax Rate Reconciliation, Percent	41.00%	(6.00%)	41.00%	(6.00%)

XML

Note 9 - Due to Stockholder (Details Textual) $ in Thousands	Sep. 30, 2017 USD ($)
Deferred Compensation Liability, Interest Accrued	$ 0