UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

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 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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth 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 ☐	Smaller reporting company ☒
	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 ☒

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

The Company has 67,588,492 shares outstanding as of August 19, 2024. 

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

INDEX

		Page Number
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets –June 30, 2024 (unaudited) and March 31, 2024	3
	Condensed Consolidated Statements of Operations for the three months ended June 30, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statement of Stockholders’ Equity for the three months ended June 30, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2024 and 2023 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
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 

	June 30,			March 31,
	2024			2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	469,365		$	537,041
Accounts receivable, net of credit losses of $1,216,562 at June 30, 2024 and March 31, 2024, respectively		503,810			344,526
Inventories		431,322			313,409
Prepaid expenses and other current assets		19,180			19,223
Total current assets		1,423,677			1,214,199
Other Assets:
Property and equipment, net of accumulated depreciation
Long-term inventory		241,508			226,722
Operating lease right-of-use asset		378,352			399,521
Loan receivable, net of allowance for doubtful accounts of $240,965 at June 30, 2024 and March 31, 2024, respectively.		89,125			89,125
Investments		338,500			-
Intangible assets, net of accumulated amortization of $29,866 and $27,936 at June 30, 2024 and March 31, 2024, respectively		20,443			22,373
Other assets		15,917			186,788
Total other assets		1,083,846			924,529
Total assets	$	2,507,522		$	2,138,728
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	307,244		$	266,082
Bank overdraft		105,993			112,391
Accrued expenses and other current liabilities		69,154			61,268
PPP loan		4,931			6,276
Line of credit		382,345			389,530
Operating lease liability		89,943			87,727
Customer deposits		148,729			200,661
Total current liabilities		1,108,339			1,123,935
Long-term liabilities
Due to employee		80,449			-
Operating lease liability less current portion		298,393			322,402
Total long-term liabilities		378,842			322,402
Total liabilities		1,487,181			1,446,337
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		33,604,676			33,603,644
Accumulated deficit		(32,618,129	)		(32,945,047	)
Total stockholders' equity		1,020,341			692,391
Total liabilities and stockholders' equity	$	2,507,522		$	2,138,728

See accompanying notes to the unaudited condensed consolidated financial statements

3

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023 

(Unaudited)

	2024			2023
Net revenues	$	857,845		$	762,689
Cost of sales		336,942			437,547
Gross Profit		520,903			325,142
Operating expenses:
Research and development		127,993			130,587
Selling, general and administrative		228,629			332,351
Total operating expenses		356,622			462,938
Profit (loss) from operations		164,281			(137,796	)
Other income (expense):
Interest income		4,324			8,001
Interest and finance expenses		(8,437	)		(2,466	)
Gain from investment		112,500			-
Total other income		108,387			5,535
Profit (loss) before provision for taxes		272,668			(132,261	)
Provision (benefit) for income taxes:
Current		500			-
Deferred		-			-
					.
Total benefit (provision) for income taxes		500			-
Net profit (loss)	$	272,168		$	(132,261	)
Basic and diluted earnings (loss) per common share:	$	0.00		$	(0.00	)
Weighted average shares of common stock outstanding - basic and diluted		67,588,492			67,588,492

See accompanying notes to the unaudited condensed consolidated financial statements

4

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023 

(Unaudited)

	Common Stock		Common Stock		Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance at April 1, 2023		67,588,492	$	33,794	$	33,599,516	$	(32,067,825	)	$	1,565,485
Stock based compensation						1,032					1,032
Net income (loss)								(132,261	)		(132,261	)
Balance at June 30, 2023		67,588,492	$	33,794	$	33,600,548	$	(32,200,086	)	$	1,434,256
Balance at April 1, 2024		67,588,492	$	33,794	$	33,603,644	$	(32,945,047	)	$	692,391
Stock based compensation						1,032					1,032
Prior period adjustment								54,750			54,750
Net income (loss)								272,168			272,168
Balance at June 30, 2024		67,588,492	$	33,794	$	33,604,676	$	(32,618,129	)	$	1,020,341

See accompanying notes to the unaudited condensed consolidated financial statements

5

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

	2024			2023
Cash flows from operating activities:
Net income	$	272,168		$	(132,261	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization		1,929			720
Write-off of inventories		49,214			19,404
Bad debt		-			25,000
Unrealized gain in investment		(112,500	)		-
Non-cash interest expense		4,925			5,981
Amortization of right-to-use asset		21,169			20,114
Stock based compensation		1,032			1,032
Changes in operating assets and liabilities balances:
Accounts receivable		(159,663	)		(102,752	)
Due to employee		80,449			-
Inventories		(181,913	)		(46,179	)
Prepaid expenses and other current assets		43			9,264
Loan receivable		-			(5,500	)
Accounts payable		41,162			(43,925	)
Bank overdraft		(6,398	)		15,891
Customer deposits		(51,932	)		(27,281	)
Accrued expenses and other current liabilities		7,887			33,217
Payments of operating lease liability		(26,718	)		(25,469	)
Net cash provided by (used in) operating activities		(59,146	)		(252,744	)
Cash flows from investing activities:
Net cash provided by (used in) investing activities		-			-
Cash flows provided (used) in financing activities:
Due to shareholder		-			(7,217	)
Proceeds from line of credit		30,406			105,037
Repayments of line of credit		(37,591	)		(2,730	)
Repayments of PPP loan		(1,345	)		(1,345	)
Net cash provided by (used in) financing activities		(8,530	)		93,745
Net increase (decrease) in cash and cash equivalents		(67,676	)		(158,999	)
Cash and cash equivalents - beginning of period		537,041			1,003,730
Cash and cash equivalents - end of period	$	469,365		$	844,731
Cash paid for:
Interest	$	8,437		$	2,466

See accompanying notes to the unaudited condensed consolidated financial statements

6

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023 

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 manufacturing and engineering concern whose principal lines of business are the design, manufacture, and sale of electronics of our own products or on a contract manufacturing basis; the production and sale of chemical and antistatic products; and, research, development and engineering services.

Electronic equipment is manufactured in accordance with customer specifications on a contract basis. Our electronic device product line consists principally of proprietary devices used in diagnostics and therapeutics of humans and animals and electronic controllers for spas and hot tubs. These products are sold to customers located principally in the United States. We are registered with the FDA as a contract manufacturing facility, and we manufacture medical devices for customers in accordance with their designs and specifications. Our chemical product line is principally comprised of water-based chemical products used in the food packaging and converting industries, and anti-static conductive paints, coatings and other products. These products are sold to customers located in the United States, Australia, Asia and Europe. We also provide research, development, regulatory, and engineering services to customers. Our Sonotron Medical Systems, Inc. subsidiary (“Sonotron”) is involved in medical electronic therapeutic technology.

NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by ADM pursuant to accounting principles generally accepted in the United States of America (“GAAP”) 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 GAAP 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, 2024 as disclosed in our annual report on Form 10-K for that year. Unaudited interim results are not necessarily indicative of the results for the full fiscal year ending March 31, 2025. The consolidated balance sheet as of March 31, 2024 was derived from the audited consolidated financial statements as of and for the year then ended.

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its wholly owned subsidiary, Sonotron (the “Company”). 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 GAAP and, accordingly, requires 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 deferred tax assets and related valuation allowance, write down of inventory, impairment of long-lived assets, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For certain of our financial instruments, including accounts receivable, accounts payable, and accrued expenses, the carrying amounts approximate fair value due to their relatively short maturities.

CASH AND CASH EQUIVALENTS

Cash equivalents are comprised of highly liquid investments with original maturities of three months or less when purchased. We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses to date as a result of this policy. Cash and cash equivalents held in these accounts are currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. At June 30, 2024 and March 31, 2024, approximately $219,000 and $287,000, respectively, exceeded the FDIC limit.

7

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The carrying amounts of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances that exceed the due date and estimates the portion, if any, of the balance that will be collected. Management provides for probable uncollectible amounts through a charge to expenses and a credit to a valuation allowance, based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

REVENUE RECOGNITION

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 contract manufacturing, and a limited 5-year warranty on our electronic controllers for spas and hot tubs. Historically, the amount of warranty expense included in sales of our electronic products has been de minimis. We have no other post shipment obligations. For contract manufacturing, revenues are recognized after shipments of the completed products.

Amounts received from customers in advance of our satisfaction of applicable performance obligations are recorded as customer deposits. Such amounts are recognized as revenues when the related performance obligations are satisfied. Customer deposits of approximately $52,000 as of March 31, 2024 were recognized as revenues during the three months ended June 30, 2024.

Amounts received from customers in advance of our satisfaction of applicable performance obligations are recorded as customer deposits. Such amounts are recognized as revenues when the related performance obligations are satisfied. Customer deposits of approximately $27,000 as of March 31, 2023 were recognized as revenues during the three months ended June 30, 2023.

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.

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 over time as the applicable performance obligations are satisfied.

All revenue is recognized net of discounts.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) and net realizable value. Inventories that are expected to be sold within one operating cycle (1 year) are classified as a current asset. Inventories that are not expected to be sold within 1 year, based on historical trends, are classified as Inventories - long term portion. Obsolete inventory is written off based on prior and expected future usage.

Long-Term Inventory: Due to recent shortages of materials relating to supply chain and COVID issues, when an item the Company believes will be used in the future, even beyond the current fiscal year, becomes available, it will purchase as many items as management deems necessary to fulfill future orders.

PROPERTY AND EQUIPMENT

We record our property and equipment at historical cost. We expense maintenance and repairs as incurred. Depreciation is provided for by the straight-line method over five to seven years, the estimated useful lives of the property and equipment. As of June 30, 2024 and March 31, 2024, all fixed assets were fully depreciated.

ADVERTISING COSTS

Advertising costs are expensed as incurred and amounted to $4,464 for the three months ended June 30, 2024 and $6,184 for the three months ended June 30, 2023.

8

NET EARNINGS PER SHARE

We compute basic earnings per share by dividing net income/loss by the weighted average number of common shares outstanding. 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. Common equivalent shares are excluded from the computation of net earnings per share if their effect is anti-dilutive.

There were 200,000 anti-dilutive instruments in force during the periods ended June 30, 2024 and 2023, respectively.

Per share basic and diluted (loss) amounted to $0.00 and $(0.00) for the three months ended June 30, 2024 and 2023, respectively.

LEASES

In February 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which changed financial reporting as it relates to leasing transactions. Under the new guidance, lessees are required to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. The Company adopted this guidance as of April 1, 2019, using the modified retrospective approach which allowed it to initially apply the guidance as of the adoption date. The Company elected the package of practical expedients available under the new standard, which allowed the Company to forgo a reassessment of (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases.

The Company made a policy election to recognize short-term lease payments as an expense on a straight-line basis over the lease term. The Company defines a short-term lease as a lease that, at the commencement date, has a lease term of twelve months or less and does not contain an option to purchase the underlying asset that the lease is reasonably certain to exercise. Related variable lease payments are recognized in the period in which the obligation is incurred.

The Company's lease agreement contains related non-lease components (e.g. taxes, etc.). The Company separates lease components and non-lease components for all underlying asset classes.

RECLASSIFICATION

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net loss.

NEW ACCOUNTING STANDARDS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of April 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company determined that this change does not have a material impact to the financial statements or financial statement disclosures.

INVESTMENTS

Investments in publicly  held companies are net book value or fair value.

Investments in privately held companies are valued at cost, net book value or fair value when available. Investments valued at cost or net book value is a departure from accounting principles generally accepted in the United States of America

NOTE 3 - INVENTORIES     

Inventories at June 30, 2024 consisted of the following:

	Current		Long Term		Total
Raw materials	$	372,834	$	230,351	$	603,185
Finished goods		58,488		11,157		69,645
Totals	$	431,322	$	241,508	$	672,830

Inventories at March 31, 2024 consisted of the following:

	Current		Long Term		Total
Raw materials	$	238,227	$	216,185	$	454,412
Finished goods		75,182		10,537		85,719
Totals	$	313,409	$	226,722	$	540,131

9

NOTE 4 - INTANGIBLE ASSETS

	June 30, 2024										March 31, 2024
	Cost		Weighted Average Amortization Period (Years)			Accumulated Amortization			Net Carrying Amount		Cost		Weighted Average Amortization Period (Years)			Accumulated Amortization			Net Carrying Amount
Patents & Trademarks	$	35,794	10	-	15	$	(26,236	)	$	9,558	$	35,794	10	-	15	$	(25,516	)	$	10,278
Software	$	14,515		3		$	(3,630	)	$	10,885	$	14,515		3		$	(2,420	)	$	12,095
	$	50,309				$	(29,866	)	$	20,443	$	50,309				$	(27,936	)	$	22,373

Estimated aggregate future amortization expense related to intangible assets is as follows:

For the fiscal years ended March 31,
2025	$	5,376
2026		6,817
2027		4,143
2028		1,725
2029		1557
thereafter		825
	$	20,443

NOTE 5 – CONCENTRATIONS

During the three months ended June 30, 2024,  one customer accounted for 35% of our net revenue.

As of June 30, 2024, three customers represented 78% of our gross accounts receivable. As of March 31, 2024, four customers accounted for 89% of our gross accounts receivable.

As of June 30, 2024, three vendors accounted for over 39% of our accounts payable balance.

The Company’s customer base is comprised of foreign and domestic entities with diverse demographics. Net revenues from foreign customers for the three months ended June 30, 2024 were $118,281 or 14%.

During the three months ended June 30, 2023, two customers accounted for 40% of our net revenue.

As of June 30, 2023, two customers represented 79% of our gross accounts receivable. As of March 31, 2023, two customers accounted for 40% of our gross accounts receivable.

As of June 30, 2023, three vendors accounted for over 50% of our accounts payable balance.

The Company’s customer base is comprised of foreign and domestic entities with diverse demographics. Net revenues from foreign customers for the three months ended June 30, 2023 were $119,034 or 16%.

10

NOTE 6 - DISAGGREGATED REVENUES AND SEGMENT INFORMATION

The following tables show the Company's revenues disaggregated by reportable segment and by product and service type:

	Three Months Ended June 30,
	2024		2023
Net Revenue in the US
Chemical	$	201,377	$	218,971
Electronics		411,166		266,163
Engineering		127,021		158,521
		739,564		643,655
Net Revenue outside the US
Chemical		118,281		119,034
Electronics		-		-
Engineering		-		-
		118,281		119,034
Total Revenues	$	857,845	$	762,689

NOTE 7 – DUE FROM AFFILIATE 

The Company provided $330,090 in engineering services to Qol during the year March 31, 2018. This amount is shown net of a $240,965 allowance for credit losses on the consolidated balance sheets as of June 30, 2024 and March 31, 2024, respectively.

NOTE 8 – LEASES

We lease our office and manufacturing facility under a non-cancelable operating lease, which expires on June 30, 2028. The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2024:

	For the fiscal year ended:	Amount
FY 2025	March 31, 2025		$	80,154
FY 2026	March 31, 2026			106,872
FY 2027	March 31, 2027			106,872
FY 2028	March 31, 2028			106,872
FY 2029	March 31, 2029	ends June 30, 2029		26,718
				427,488
	Less: Amount attributable to imputed interest			(39,152	)
			$	388,336
	Weighted average remaining lease term (in years)			2.4

Rent and real estate tax expense for all facilities for the three months ended June 30, 2024 was approximately $37,000.

11

Rent and real estate tax expense for all facilities for the three months ended June 30, 2024 was approximately $34,000.

These are reported as a component of cost of sales and selling, general and administrative expenses in the accompanying consolidated statements of operations.

NOTE 9 – PAYCHECK PROTECTION PROGRAM (PPP) LOAN

In May 2020, the Company obtained funding through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) of $381,000. In February 2021, a second PPP loan was obtained in the amount of $332,542, for a total of $713,542. The loans will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities, with at least 60% being used for payroll. The Company did use the funds for these expenses during the year ended March 31, 2021. The Company applied for loan forgiveness of both PPP loans. On September 7, 2021, the Company received approval from the SBA for $361,275 of PPP loan forgiveness. On December 21, 2021, the Company received approval from the Bank for $332,542. This amount was recorded as Forgiveness of Paycheck Protection loan in the accompanying condensed Consolidated Statements of Operations during the fiscal year ended March 31, 2022.

The unforgiven portion of the first PPP loan is $19,725, which was converted to a term loan payable in equal installments of principal plus interest at 1% with a maturity date of May 15, 2025. No collateral or personal guarantees is required for the loan. At June 30, 2024, the outstanding balance is $4,931.

NOTE 10 – LINE OF CREDIT

On June 15, 2018, the Company obtained an unsecured revolving line of credit, with a limit of $400,000. The line expires May 15, 2025, renewing automatically every year. The Company is required to make monthly interest payments, at a rate of 8.87% as of June 30, 2024. Any unpaid principal will be due upon maturity. At June 30, 2024 and March 31, 2024, the outstanding balance was $382,345 and $389,530, respectively.

NOTE 11  – WARRANTS

On April 11, 2023, warrants to purchase Company stock were issued to two outside consultants. Each consultant was granted 100,000 warrants with a strike price of $0.20. The Warrants vested and were exercisable immediately. The warrants were valued using a Black Scholes model effective April 11, 2023, cumulative volatility was computed at 123.52% and the total valuation was $8,256 which will be amortized over the 24-month life.

Outstanding and exercisable
Range of Exercise prices		Number outstanding		Weighted average remaining life in years		Weighted Average Exercise Price		Exercisable
$	0.20		200,000		0.78	$	0.20		200,000

	2024				2023
	# of Shares		Weighted Average		# of Shares		Weighted Average
			Exercise Price				Exercise Price
Outstanding, beginning of year		200,000	$	0.20		-		-
Issued		-		-		200,000	$	0.20
Exercised		-		-		-		-
Expired		-		-		-		-
Cancelled		-		-		-		-
Outstanding, end of period		200,000	$	0.20		200,000	$	0.20
Exercisable, end of period		200,000	$	0.20		200,000	$	0.20

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NOTE 12 – LEGAL PROCEEDINGS

We are involved, from time to time, in litigation and proceedings arising out of the ordinary course of business. There are no pending material legal proceedings or environmental investigations to which we are a party or to which our property is subject.

NOTE 13 – CONTRACTURAL OBLIGATIONS AND OTHER COMMITMENTS

Legal Contingencies

We are involved, from time to time, in litigation and proceedings arising out of the ordinary course of business. There are no pending material legal proceedings or environmental investigations to which we are a party or to which our property is subject.

Product Liability

As of June 30, 2024 and March 31, 2024, there were no claims against us for product liability.

NOTE 14 – FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

____________________________________________________________________________

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.

____________________________________________________________________________

Level 2 Inputs to the valuation methodology include

● Quoted prices for similar assets or liabilities in active markets;

● Quoted prices for identical or similar assets or liabilities in active markets;

● Inputs other than quoted prices that are observable for the asset or liability

● Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

____________________________________________________________________________

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets at fair value. There have been no changes in the methodologies used at June 30, 2024.

Investments in publicly  held companies are net book value or fair value.

Investments in privately held companies are valued at cost, net book value or fair value when available. Investments valued at cost or net book value is a departure from accounting principles generally accepted in the United States of America.

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Partnership believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Partnership's assets at fair value as of June 30,2024:

Assets at Fair Value as of June 30, 2024:

	Level 1		Level 2		Level 3		Total
Investment	$	262,500	$	0	$	0	$	262,500
TOTAL ASSETS AT FAIR VALUE	$	262,500	$	0	$	0	$	262,500

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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, 2024.

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 has increased internal research and development by utilizing their engineering resources to advance their own proprietary medical device technologies.

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 and its subsidiary Sonotron.  

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2024 AS COMPARED TO JUNE 30, 2023.  

For the three months ended June 30, 2024

	Chemical			Electronics			Engineering			Total
Revenue	$	319,658		$	411,166		$	127,021		$	857,845
Cost of Sales		114,594			160,622			62,250			337,466
Gross Profit		205,064			250,544			64,771			520,379
Gross Profit Percentage		64	%		61	%		51	%		61	%
Operating Expenses		131,758			170,923			53,417			356,098
Operating Income (Loss)		73,306			79,621			11,354			164,281
Other income (expenses)		40,103			52,025			16,259			108,387
Income (loss) before provision from income taxes	$	113,409		$	131,646		$	27,613		$	272,668

For the three months ended June 30, 2023

	Chemical			Electronics			Engineering			Total
Revenue	$	338,005		$	266,163		$	158,521		$	762,689
Cost of Sales		214,101			177,843			45,603			437,547
Gross Profit		123,904			88,320			112,918			325,142
Gross Profit Percentage		37	%		33	%		71	%		43	%
Operating Expenses		203,692			162,029			97,217			462,938
Operating Income (Loss)		(79,788	)		(73,709	)		15,701			(137,796	)
Other income (expenses)		2,435			1,937			1,163			5,535
Income (loss) before provision from income taxes	$	(77,353	)	$	(71,772	)	$	16,864		$	(132,261	)

Variance

	Chemical			Electronics			Engineering			Total
Revenue	$	(18,347	)	$	145,003		$	(31,500	)	$	95,156
Cost of Sales		(99,507	)		(17,221	)		16,647			(100,081	)
Gross Profit		81,160			162,224			(48,147	)		195,237
Gross Profit Percentage		27	%		28	%		-20	%		18	%
Operating Expenses		(71,934	)		8,894			(43,800	)		(106,840	)
Operating Income (Loss)		153,094			153,330			(4,347	)		302,077
Other income (expenses)		37,668			50,088			15,096			102,852
Income (loss) before benefit from income taxes	$	190,762		$	203,418		$	10,749		$	404,929

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Revenues for the three months ended June 30, 2024 increased by $95,156. The increase is a result of increased sales of $145,003 in the Electronics segment offset by decreases of $18,347 in the Chemical segment a decrease of $31,500 in the Engineering segment.

Gross profit for the three months ended June 30, 2024 increased by $195,237. The increase in gross profit resulted primarily from a net sales increase caused by an increase in sales prices of approximately 10% along with a decrease in cost of sales of $100,081

We are highly dependent upon certain customers. During the three months ended June 30, 2024, three customers accounted for 78% of our net revenue. Net revenues from foreign customers for the three months ended June 30, 2024 was $118,281 or 14%.

Revenues for the three months ended June 30, 2023 decreased by $158,719. The decrease is a result of decreased sales of $34,170 in the Chemical segment, $198,529 in the Electronics segment offset by an increase of $73,980 in the Engineering segment.

Gross profit for the three months ended June 30, 2023 decreased by $57,917. The decrease in gross profit resulted primarily from decreased sales in Chemical and Electronics segments.

We are highly dependent upon certain customers. During the three months ended June 30, 2023, two customers accounted for 40% of our net revenue. Net revenues from foreign customers for the three months ended June 30, 2023 was $119,034 or 16%.

Income from operations for the three months ended June 30, 2024 was $164,281 compared to loss from operations for the three months ended June 30, 2023 was $137,796

Other income increased $102,852 for the three months ended June 30, 2024. The increase is mainly attributable to an increase in interest income coupled with reduced interest expense.

The foregoing resulted in net profit before provision for taxes for the three months ended June 30, 2024 of $272,668 compared to a net loss before provision for taxes for the three months ended June 30, 2023 of $132,261. Net income per share for the three months ended June 30, 2024 is $0.00 compared to net loss per share were ($0.00) for the three months ended June 30, 2023.

LIQUIDITY AND CAPITAL RESOURCES  

At June 30, 2024, we had cash and cash equivalents of $469,365 as compared to $537,041 at March 31, 2024. The $67,676 decrease was primarily the result of cash used in operations during the three-month period in the amount of $59,146, cash used in investing cash used in financing activities of $8,530. There was no cash used or provided by investing activities. Our cash will continue to be used for increased marketing costs, and increased production labor costs 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.    

Below is a summary of our cash flow for the nine-month ending periods indicated:

	June 30, 2024			June 30, 2023
Net cash provided by (used in) operating activities	$	(59,146	)	$	(252,744	)
Net cash provided by (used in) investing activities		-			-
Cash flows provided (used) in financing activities:		(8,530	)		93,745
Net increase (decrease) in cash and cash equivalents	$	(67,676	)	$	(158,999	)
Cash and cash equivalents - beginning of period	$	537,041		$	1,003,730
Cash and cash equivalents - end of period	$	469,365		$	844,731

Future Sources of Liquidity:

We expect that growth with profitable customers and continued focus on new customers will enable us to generate cash flows from operating activities during fiscal 2025.

Based on current expectations, we believe that our existing cash and cash equivalents of $469,365 as of June 30, 2024, 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.

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OPERATING ACTIVITIES 

Net cash used by operating activities was $(59,146) for the three months ended June 30, 2024, as compared to net cash used by operating activities of $(252,744) for the three months ended June 30, 2023. The cash used during the three months ended June 30, 2024 was primarily due to a net income of $272,168, a decrease in net operating assets of $349,830, offset by an increase in net operating liabilities of $52,747, write-off of inventories of $49,214, amortization of $1,929, and stock based compensation of $1,032, and non-cash interest expense of $4,925.

INVESTING ACTIVITIES

There was no cash provided or used in investing activities for the three months ended June 30, 2024.

FINANCING ACTIVITIES

For the three months ended June 30, 2024, net cash used by financing activities was $8,530 due to net borrowing and payments in the line of credit of $(7,185) coupled repayments on the PPP loan of $(1,345).

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 and accounts receivable.

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 currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. At June 30, 2024, approximately $219,000 exceeded the FDIC limit.

Our sales are materially dependent on a small group of customers, as noted in Note 6 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 and year to date period ended June 30, 2024, 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 June 30, 2024, 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.  

16

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. 

The Company believes that the financial statements present fairly, in all material respects, the Company’s condensed consolidated balance sheets as of June 30, 2024, and March 31, 2024 and the related condensed consolidated statements of operations, and cash flows for the three months ended June 30, 2024 and 2023, 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

None

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, 2022. 

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.

21.1	Subsidiaries of the Company
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**	Inline XBRL Instance
101.SCH**	Inline XBRL Taxonomy Extension Schema
101.CAL**	Inline XBRL Taxonomy Extension Calculation
101.DEF**	Inline XBRL Taxonomy Extension Definition
101.LAB**	Inline XBRL Taxonomy Extension Labels
101.PRE**	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

** 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
	August 19, 2024

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