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 ~~September~~December 3031, 2023

☐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

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~~504 shares outstanding as of ~~November~~February 14, ~~2023~~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 –September 30, 2023 (unaudited) and March 31, 2023	3
	Condensed Consolidated Balance Sheets –December 31, 2023 (unaudited) and March 31, 2023	3
	Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended September 30, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended December 31, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and 2022 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2023 and 2022 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1415
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	1719
Item 4.	Controls and Procedures	1819
Part II - Other Information
Item 1.	Legal Proceedings	1820
Item 1A.	Risk Factors	1820
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1820
Item 3.	Defaults Upon Senior Securities	1820
Item 4.	Mine Safety Disclosures	1820
Item 5.	Other Information	1920
Item 6.	Exhibits	1920

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			March 31,
	December 31,			March 31,
	2023			2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	~~716~~661,~~323~~985		$	1,003,730
Accounts receivable, net of allowance for credit losses of $429,872 and $694,871 at September 30, 2023 and March 31, 2023, respectively		873,603			497,793
Accounts receivable, net of allowance for credit losses of $429,972 and $694,871 at December 31, 2023 and March 31, 2023, respectively		780,882			497,793
Inventories		~~396~~487,~~761~~431			443,465
Prepaid expenses and other current assets		238,~~904~~082			41,251
Total current assets		21,~~010~~938,~~591~~380			1,986,239
Other Assets:
Long-term inventory	$	~~188~~141,~~117~~696		$	228,451
Operating lease right-of-use asset		~~441~~420,~~053~~421			481,535
Loan receivable		-			209,809
Loan receivable,		-			209,809
Due from affiliate		-			80,090
Intangible assets, net of accumulated amortization of $24,071 and $22,631 at September 30, 2023 and March 31, 2023, respectively		11,723			13,163
Intangible assets, net of accumulated amortization of $26,001 and $22,631 at December 31, 2023 and March 31, 2023, respectively		24,308			13,163
Other assets		90,538			90,538
Total other assets		731,431			1,103,586
Deferred tax asset		-			-
Total assets	$	2,742,022		$	3,089,825
Total other assets		676,963			1,103,586
Total assets	$	2,615,343		$	3,089,825
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	~~282~~293,~~408~~497		$	322,639
Bank overdraft		53145,~~236~~115			134,837
Accrued expenses and other current liabilities		76100,~~709~~531			75,659
PPP loan		87,~~966~~621			11,656
Line of credit		~~297~~298,~~339~~378			112,809
Operating lease liability		8687,~~639~~727			82,917
Customer deposits		~~363~~235,~~272~~348			359,723
Due to stockholder		-			13,626
Total current liabilities		1,168,~~569~~217			1,113,866
Long-term liabilities
Operating lease liability less current portion		366,270			410,474
PPP loan less current portion		-			-
Total long-term liabilities		366,270			410,474
Operating lease liability less current portion		343,926			410,474
Total liabilities		1,534,839			1,524,340
Total long-term liabilities		343,926			410,474
Total liabilities		1,512,143			1,524,340
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,~~601~~602,~~580~~612			33,599,516
Accumulated deficit		(32,~~428~~533,~~191~~206	)		(32,067,825	)
Total stockholders' equity		1,~~207~~103,~~183~~200			1,565,485
Total liabilities and stockholders' equity	$	2,~~742~~615,~~022~~343		$	3,089,825

See accompanying notes to the unaudited condensed consolidated financial statements

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY ~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)~~

	Three months ended						Six months ended
	September 30,						September 30,
	2023			2022			2023			2022
Net revenues	$	754,132		$	1,140,268		$	1,516,821		$	2,061,676
Cost of sales		547,980			582,235			985,527			1,120,584
Gross Profit		206,152			558,033			531,294			941,092
Operating expenses:
Research and development		131,743			136,102			262,330			259,702
Selling, general and administrative		302,059			319,039			634,410			613,123
Total operating expenses		433,802			455,141			896,740			872,825
Income (loss) from operations		(227,650	)		102,892			(365,446	)		68,267
Other income (expense):
Interest income		6,592			521			14,593			994
Interest and finance expenses		(7,047	)		(3,370	)		(9,513	)		(7,884	)
Total other income (expense)		(455	)		(2,849	)		5,080			(6,890	)
Income (loss) before provision for income taxes		(228,105	)		100,043			(360,366	)		61,377
Net income (loss)	$	(228,105	)	$	100,043		$	(360,366	)	$	61,377
Basic and diluted per common share:	$	(0.00	)	$	0.00		$	(0.01	)	$	0.00
Weighted average shares of common stock outstanding - basic and diluted		67,588,492			67,588,492			67,588,492			67,588,492

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022

	Three months ended						Nine months ended
	December 31,						December 31,
	2023			2022			2023			2022

Net revenues	$	696,496		$	983,162		$	2,213,317		$	3,044,838

Cost of sales		375,075			507,684			1,360,602			1,628,268

Gross Profit		321,421			475,478			852,715			1,416,570

Operating expenses:
Research and development		177,502			140,192			439,832			399,894
Selling, general and administrative		249,306			242,533			883,716			855,656

Total operating expenses		426,808			382,725			1,323,548			1,255,550

Income (loss) from operations		(105,387	)		92,753			(470,833	)		161,020

Other income (expense):
Interest income		5,663			3,676			20,256			4,670
Interest and finance expenses		(5,291	)		(2,658	)		(14,804	)		(10,542	)
Total other income (expense)		372			1,018			5,452			(5,872	)

Income (loss) before provision for income taxes		(105,015	)		93,771			(465,381	)		155,148

Total provision (benefit) for income taxes		-			-			-			-

Net income (loss)	$	(105,015	)	$	93,771		$	(465,381	)	$	155,148

Basic and diluted per common share:	$	(0.00	)	$	0.00		$	(0.01	)	$	0.00

Weighted average shares of common stock outstanding - basic and diluted		67,588,492			67,588,492			67,588,492			67,588,492

See accompanying notes to the unaudited condensed consolidated financial statements

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~December 3031, 2023 AND 2022

	Common Stock		Common Stock		Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance at April 1, 2022		67,588,492	$	33,794	$	33,311,672	$	(31,971,503	)	$	1,373,963
Stock based compensation						287,844					287,844
Net (loss)							$	(38,666	)		(38,666	)
Balance at June 30, 2022		67,588,492	$	33,794	$	33,599,516	$	(32,010,169	)	$	1,623,141
Net (loss)							$	100,043			100,043
Net income							$	100,043			100,043
Balance at September 30, 2022		67,588,492	$	33,794	$	33,599,516	$	(3231,~~110~~910,~~212~~126	)	$	1,~~523~~723,~~098~~184
Net income							$	93,771			93,771
Balance at December 31, 2022		67,588,492	$	33,794	$	33,599,516	$	(31,816,355	)	$	1,816,955
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 (loss)								(132,261	)		(132,261	)
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
Stock based compensation						1,032					1,032
Net (loss)								(228,105	)		(228,105	)
Balance at September 30, 2023		67,588,492	$	33,794	$	33,601,580	$	(32,428,191	)	$	1,207,183
Stock based compensation						1,032					1,032
Net (loss)								(105,015	)		(105,015	)
Balance at December 31, 2023		67,588,492	$	33,794	$	33,602,612	$	(32,533,206	)	$	1,103,200

See accompanying notes to the unaudited condensed consolidated financial statements

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY ~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (Unaudited)~~

	2023			2022
Cash flows from operating activities:
Net loss	$	(360,366	)	$	61,377
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization		1,440			1,440
Write-off of inventories		28,710			23,853
Credit recoveries		(305,090	)		-
Loan impairment		209,809
Non-cash interest expense		11,706			13,780
Amortization of right-to-use asset		40,482			41,051
Stock based compensation		2,064			(2,876	)
Changes in operating assets and liabilities balances:
Accounts receivable		(70,720	)		125,549
Due from affiliate		80,090			-
Inventories		58,328			(121,590	)
Prepaid expenses and other current assets		17,347			46,091
Loan receivable		-			(76,504	)
Accounts payable		(40,231	)		2,685
Bank overdraft		(81,601	)		-
Customer deposits		3,549			(70,995	)
Accrued expenses and other current liabilities		1,050			(56,813	)
Payments of operating lease liability		(52,188	)		(50,937	)
Net cash provided by (used in) operating activities		(455,621	)		(63,889	)
Cash flows provided (used) in financing activities:
Due to shareholder		(13,626	)		(20,373	)
Proceeds from line of credit		192,060			82,424
Repayments of line of credit		(7,530	)		(179,477	)
Borrowing from (repayments to) stockholder		-			-
Proceeds (payments) from/to PPP loan		(2,690	)		(2,690	)
Net cash provided by (used in) financing activities		168,214			(120,116	)
Net decrease in cash and cash equivalents		(287,407	)		(184,005	)
Cash and cash equivalents - beginning of period		1,003,730			1,038,498
Cash and cash equivalents - end of period	$	716,323		$	854,493
Cash paid for:
Interest	$	9,513		$	7,884

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022

	2023			2022
Cash flows from operating activities:
Net income (loss)	$	(465,381	)	$	155,148
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization		3,370			2,160
Write-off of inventories		33,945			54,692
Change in allowance for credit losses		(305,090	)
Loan impairment		209,809
Non-cash interest expense		17,168			20,320
Amortization of right-to-use asset		61,114			61,577
Stock based compensation		3,096			33,310
Changes in operating assets and liabilities balances:
Accounts receivable		102,091			171,436
Inventories		8,844			(189,971	)
Prepaid expenses and other current assets		33,169			47,622
Loan receivable		-			(72,881	)
Accounts payable		(29,142	)		(66,215	)
Bank overdraft		10,278			-
Customer deposits		(124,375	)		98,565
Accrued expenses and other current liabilities		24,873			(24,335	)
Payments of operating lease liability		(78,906	)		(76,406	)
Net cash provided by (used in) operating activities		(495,137	)		215,022

Cash flows from investing activities:
Purchase of software		(14,515	)		-
Net cash (used in) investing activities		(14,515	)		-

Cash flows provided (used) in financing activities:
Due to shareholder		(13,626	)		(29,104	)
Proceeds from line of credit		233,328			85,067
Repayments of line of credit		(47,760	)		(307,764	)
Proceeds (payments) from/to PPP loan		(4,035	)		(4,034	)

Net cash provided by (used in) financing activities		167,907			(255,835	)

Net (decrease) in cash and cash equivalents		(341,745	)		(40,813	)

Cash and cash equivalents - beginning of period		1,003,730			1,038,498

Cash and cash equivalents - end of period	$	661,985		$	997,685


Cash paid for:
Interest	$	20,256		$	7,884
Non-cash activities:
Reclass of Warrant Liability to Additional Paid in Capital	$	-		$	(182,161	)
Initial recognition of prepaid warrant expense	$	-		$	(105,683	)

See accompanying notes to the unaudited condensed consolidated financial statements

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~December 3031, 2023 AND 2022

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, 2023 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, 2024. The consolidated balance sheet as of March 31, 2023 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 ~~the~~ 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 ~~September~~December 3031, 2023 and March 31, 2023, approximately $~~466~~412,000 and $~~638~~754,000, respectively, exceeded the FDIC limit.

7ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

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 have 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 $57128,000 and $84212,000 ~~were recognized~~ as ~~revenues~~of ~~during~~March ~~the three and six months ended September 30~~31, 2023 ~~and~~were ~~$27,000~~recognized ~~and~~as ~~$62,000~~revenues ~~for~~during the three and ~~six~~nine months ended ~~September~~December 3031, ~~2022~~2023, respectively.

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 $120,000 and $209,000 as of March 31, 2022 were recognized as revenues during the three and nine months ended December 31, 2022, respectively.

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 ~~September~~December 3031, 2023 and March 31, 2023, all fixed assets were fully depreciated.

ADVERTISING COSTS

Advertising costs are expensed as incurred and amounted to $45,~~434~~908 and $1117,~~133~~041 for the three and nine months ended December 31, 2023 and $86,~~796~~184 and $1521,~~031~~216 for the three and ~~six~~nine months ended ~~September~~December 3031, ~~2023~~2022 ~~and September 30~~, ~~2022,~~ respectively.

8NET EARNINGS PER SHARE

NET LOSS 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 no200,000 and -0- anti-dilutive instruments in force during the periods ended ~~September~~December 3031, 2023 and 2022, respectively.

Per share basic and diluted ~~income/~~(loss) amounted to $(0.00) and $(0.0001) ~~for the three months ended September 30, 2023~~ and ~~2022, respectively. Per share basic and diluted income/(loss) amounted to~~ $(0.~~01)~~00 and $0.00 for the ~~six~~three and nine months ended ~~September~~December 3031, 2023 and 2022, 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.

NOTE 3 - INVENTORIES

Inventories at ~~September~~December 3031, 2023 consisted of the following:

Current

Long Term

Total

Raw materials

~~335~~426,~~572~~480

~~182~~135,~~119~~698

~~517~~562,~~691~~178

Finished goods

6160,~~189~~951

5,998

6766,~~187~~949

Totals

~~396~~487,~~761~~431

~~188~~141,~~117~~696

~~584~~629,~~878~~127

Inventories at March 31, 2023 consisted of the following:

	Current		Long Term		Total
Raw materials	$	390,792	$	201,317	$	592,109
Finished goods		52,673		27,134		79,807
Totals	$	443,465	$	228,451	$	671,916

NOTE 4 - INTANGIBLE ASSETS

Intangible assets are being amortized using the straight-line method over periods ranging from 10-15 years with a weighted average remaining life of approximately 6 years.

	September 30, 2023													March 31, 2023
	December 31, 2023														March 31, 2023
	Cost		Weighted Average Amortization Period (Years)				~~Accumulated Amortization~~	Accumulated Amortization			~~Net Carrying Amount~~	Net Carrying Amount		~~Cost~~	Cost		~~Weighted Average Amortization Period (Years)~~	Weighted Average Amortization Period (Years)				~~Accumulated Amortization~~		Accumulated Amortization		~~Net Carrying Amount~~		Net Carrying Amount
Patents & Trademarks	$	35,794	10	-10	15-	15	$	~~(24,071~~$	)(24,791	)	$	~~11,723~~$	11,003	$	~~35,794~~$	35,794	10	-	1510	-	15	$	~~(22,631~~	)$	(22,631	$)	~~13,163~~	$	13,163
Software	$	14,515			3			$	(1,210	)		$	13,305		$	-								$	-			$	-
	$	50,309						$	(26,001	)		$	24,308		$	35,794								$	(22,631	)		$	13,163

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

For the fiscal years ended March 31,
2024	$	13,~~443~~862
2025		27,~~466~~115
2026		16,~~980~~716
2027		12,~~725~~931
2028		1,~~725~~726
Thereafter		21,~~384~~958
	$	1124,~~723~~308

NOTE 5 – CONCENTRATIONS

During the three months ended ~~September~~December 3031, 2023, two customers accounted for 4853% of our net revenue. During the three months ended ~~September~~December 3031, 2022, ~~three~~two customers accounted for 6550% of our net revenue.

During the ~~six~~nine months ended ~~September~~December 3031, 2023, two customers accounted for 4244% of our net revenue. During the ~~three~~nine months ended ~~September~~December 3031, 2022, two customers accounted for 5045% of our net revenue.

As of ~~September~~December 3031, 2023, ~~three~~four customers represented 6991% of our gross accounts receivable. As of March 31, 2023, two customers accounted for 75% of our gross accounts receivable.

As of ~~September~~December 3031, 2023, ~~two~~three vendors accounted for 4236% of our accounts payable balance. As of March 31, 2023 three vendors accounted for 45% of our accounts payable.

The Company’s customer base is comprised of foreign and domestic entities with diverse demographics. Net revenues from foreign customers for the three and ~~six~~nine months ended ~~September~~December 3031, 2023 were $7940,~~106~~029 or 106% ~~of net sales~~ and $~~198~~238,~~141~~170 or 1311% ~~of net sales~~, respectively.

Net revenues from foreign customers for the three and ~~six~~nine months ended ~~September~~December 3031, 2022 were $86,296 or 8% ~~of net sales~~ and $~~211~~237,~~571~~852 or 108% ~~of net sales~~, respectively.

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 September 30,
	Three months Ended December 31,
	2023		2022
Net Revenue in the US
Chemical	$	~~203~~175,~~804~~402	$	~~259~~245,~~099~~582
Electronics		~~392~~423,~~878~~593		~~633~~485,~~857~~454
Engineering		7857,~~344~~472		~~161~~165,~~016~~830
		675,026		1,053,972
		656,467		896,866
Net Revenue outside the US
Chemical		7940,~~106~~029		86,296
Electronics		-		-
Engineering		-		-
		79,106		86,296
		40,029		86,296
Total Revenues	$	~~754~~696,~~132~~496	$	1983,~~140,268~~162

	Six Months Ended September 30,
	2023		2022
Net Revenue in the US
Chemical	$	422,774	$	505,999
Electronics		659,041		1,098,549
Engineering		236,865		245,557
		1,318,680		1,850,105
Net Revenue outside the US
Chemical		198,141		211,571
Electronics		-		-
Engineering		-		-
		198,141		211,571
Total Revenues	$	1,516,821	$	2,061,676

Information about segments is as follows:

	Chemical			Electronics			Engineering			Total
Three months ended September 30, 2023
Revenue from external customers	$	282,910		$	392,878		$	78,344		$	754,132
Segment operating (loss)	$	(115,567	)	$	(102,070	)	$	(10,013	)	$	(227,650	)
Six months ended September 30, 2023
Revenue from external customers	$	620,915		$	681,307		$	214,599		$	1,516,821
Segment operating (loss)	$	(195,355	)	$	(153,512	)	$	(16,579	)	$	(365,446	)
Three months ended September 30, 2022
Revenue from external customers	$	345,395		$	633,857		$	161,016		$	1,140,268
Segment operating income	$	1,018		$	43,226		$	58,648		$	102,892
Six months ended September 30, 2022
Revenue from external customers	$	717,570		$	1,098,549		$	245,557		$	2,061,676
Segment operating income (loss)	$	12,411		$	(23,429	)	$	79,285		$	68,267
Total assets at September 30, 2023	$	1,124,229		$	1,233,910		$	383,883		$	2,742,022
Total assets at March 31, 2023	$	1,050,541		$	1,575,811		$	463,473		$	3,089,825

	Nine Months Ended December 31,
	2023		2022
Net Revenue in the US
Chemical	$	598,176	$	811,596
Electronics		1,082,634		1,584,003
Engineering		294,337		411,387
		1,975,147		2,806,986

Net Revenue outside the US
Chemical		238,170		237,852
Electronics		-		-
Engineering		-		-
		238,170		237,852

Total Revenues	$	2,213,317	$	3,044,838

NOTE 7 – DUE FROM AFFILIATE

The Company has a $75,000 investment for 23.2% of Qol Devices Inc. (Qol). It was determined that the Company does not hold a significant influence which results in us carrying this asset at cost and reported as a component of other assets in the accompanying consolidated balance sheets.

The Company provided $330,090 in engineering services to Qol during the year ~~ended~~ March 31, 2018. This amount is shown net of a $330,090 and $250,000 allowance for credit losses on the consolidated balance sheets as of ~~September~~December 3031, 2023 and March 31, 2023.

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 ~~September~~December 3031, ~~2023~~2022:

	For the fiscal year ended:	Amount
FY 2024	March 31, 2024		$	5326,~~436~~718
FY 2025	March 31, 2025			106,872
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, 2028		26,718
				507,642
				480,924
	Less: Amount attributable to imputed interest			(5449,~~733~~271	)
			$	~~452~~431,~~909~~653
	Weighted average remaining lease term (in years)			2.97
	Weighted average discount rate			5	%

Rent and real estate tax expense for all facilities for the three and ~~six~~nine months ended ~~September~~December 3031, 2023 was approximately was approximately $35,000 and $69104,000, respectively.

Rent and real estate tax expense for all facilities for the three and ~~six~~nine months ended ~~September~~December 3031, 2022 was approximately was approximately $34,000 and $68102,000, respectively.

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.

12The 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 December 31, 2023, the outstanding balance is $7,621.

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 September 30, 2023, the outstanding balance is $8,966.13

NOTE 10 – ~~WARRANTS~~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, 2024, renewing automatically every year. The Company is required to make monthly interest payments, at a rate of 8.87% as of June 30, 2023. Any unpaid principal will be due upon maturity. At December 31, 2023 and March 31, 2023, the outstanding balance was $298,378 and $112,809, 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

Weighted-

Range of Exercise prices

Number outstanding

Weighted average remaining life in years

Weighted Average Exercise Price

Exercisable

Range of

average

0.20

200,000

1.28

0.20

200,000

exercise

Number

remaining life

exercise

Number

prices

outstanding

in years

price

exercisable

0.20

200,000

1.78

0.20

200,000

See below

	2023				2022
	# of Shares		Weighted Average Exercise Price		# of Shares		Weighted Average Exercise Price
			Average				Average
Outstanding, beginning of year		-		-		-		-
			Exercise				Exercise
Issued		200,000	$	0.20		-		-
			Price				Price
Outstanding, beginning of year		-	$	-		-	$	-
Issued		200,000		0.20		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Cancelled		-		-		-		-
Outstanding, end of period		200,000	$	0.20		-	$	-
Exercisable, end of period		200,000	$	0.20		-	$	-

NOTE 1112 – ~~LINE~~LEGAL ~~OF CREDIT~~PROCEEDINGS

On June 15, 2018, the Company obtained an unsecured revolving line of credit, with a limit of $400,000. The line expires May 15, 2024, renewing automatically every year. The Company is required to make monthly interest payments, at a rate of 8.87% as of September 30, 2023. Any unpaid principal will be due upon maturity. At September 30, 2023 and March 31, 2023, the outstanding balance was $297,339 and $112,809, respectively.

NOTE 12 – DUE TO STOCKHOLDER

The Company’s President and a stockholder 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. As of September 30, 2023 and March 31, 2023, the amount due was $0.00 and $13,626, respectively.

NOTE 13 – 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.

1314

NOTE 1413 – ~~CONTRACTUAL~~CONTRACTURAL OBLIGATIONS AND OTHER COMMITMENTS

Legal Contingencies

Product Liability

As of ~~September~~December 3031, 2023 and March 31, 2023, there were no claims against us for product liability.

COVID-19 Pandemic

The Company had reduced revenues in the electronic and chemical segments as a result of the Covid pandemic. In the electronic segment certain orders of medical devices manufactured by the Company were reduced or delayed due to the cessation of elective surgeries during the pandemic and generally reduced activities by customers. In the chemical segment certain of the Company’s water-based industrial coatings and adhesives orders were reduced due to some customers having shutdowns or reduced activities during the pandemic. We intend to continue to evaluate and may, in certain circumstances, take preemptive actions to preserve liquidity during the COVID-19 pandemic. As the circumstances around the COVID-19 pandemic remain uncertain, we continue to actively monitor the pandemic's impact on us, including our financial position, liquidity, results of operations, and cash flows.

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, ~~2022~~2023.

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 AND ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2023 AS COMPARED TO ~~SEPTEMBER~~DECEMBER 3031, 2022.

For the three months ended September 30, 2023

For the three months ended December 31, 2023

Chemical

Electronics

Engineering

Total

Revenue

~~282~~215,~~910~~431

~~392~~423,~~878~~593

7857,~~344~~472

~~754~~696,~~132~~496

Cost of Sales

~~234~~148,~~508~~519

~~253~~215,~~444~~508

6011,~~028~~048

~~547~~375,~~980~~075

Gross Profit

4866,~~402~~912

~~139~~208,~~434~~085

1846,~~316~~424

~~206~~321,~~152~~421

Gross Profit Percentage

1731

3549

2381

2746

Operating Expenses

~~163~~135,~~969~~290

~~241~~245,~~504~~006

2846,~~329~~512

~~433~~426,~~802~~808

Operating Income (Loss)

(~~115~~68,~~567~~378

)

(~~102~~36,~~070~~921

)

(~~10,013~~88

)

(~~227~~105,~~650~~387

)

Other income (expenses)

(~~302~~61

)

~~299~~436

(~~452~~3

)

~~(455~~372

)

Income (loss) before benefit from income taxes

(~~115~~68,~~869~~439

)

(~~101~~36,~~771~~485

)

(~~10,465~~91

)

(~~228,~~105,015

)

For the three months ended September 30, 2022
	Chemical			Electronics			Engineering			Total
Revenue	$	345,395		$	633,857		$	161,016		$	1,140,268
Cost of Sales		210,139			336,875			35,221			582,235
Gross Profit		135,256			296,982			125,795			558,033
Gross Profit Percentage		39	%		47	%		78	%		49	%
Operating Expenses		134,238			253,756			67,147			455,141
Operating Income (Loss)		1,018			43,226			58,648			102,892
Other income (expenses)		(754	)		(1,631	)		(464	)		(2,849	)
Income (loss) before benefit from income taxes	$	264		$	41,595		$	58,184		$	100,043

Variance
	Chemical			Electronics			Engineering			Total
Revenue	$	(62,485	)	$	(240,979	)	$	(82,672	)	$	(386,136	)
Cost of Sales		24,369			(83,431	)		24,807			(34,255	)
Gross Profit		(86,854	)		(157,548	)		(107,479	)		(351,881	)
Gross Profit Percentage		-22	%		-11	%		-55	%		-22	%
Operating Expenses		29,731			(12,252	)		(38,818	)		(21,339	)
Operating Income (Loss)		(116,585	)		(145,296	)		(68,661	)		(330,542	)
Other income (expenses)		452			1,930			12			2,394
Income (loss) before benefit from income taxes	$	(116,133	)	$	(143,366	)	$	(68,649	)	$	(328,148	)

For the six months ended September 30, 2023
	Chemical			Electronics			Engineering			Total
Revenue	$	620,915		$	659,041		$	236,865		$	1,516,821
Cost of Sales		448,609			431,287			105,631			985,527
Gross Profit		172,306			227,754			131,234			531,294
Gross Profit Percentage		28	%		35	%		55	%		35	%
Operating Expenses		367,661			403,533			125,546			896,740
Operating Income (Loss)		(195,355	)		(175,779	)		5,688			(365,446	)
Other income (expenses)		2,133			2,236			711			5,080
Income before provision for income taxes	$	(193,222	)	$	(173,543	)	$	6,399		$	(360,366	)

For the six months ended September 30, 2022
	Chemical			Electronics			Engineering			Total
Revenue	$	717,570		$	1,098,549		$	245,557		$	2,061,676
Cost of Sales		399,671			659,380			61,533			1,120,584
Gross Profit		317,899			439,169			184,024			941,092
Gross Profit Percentage		44	%		40	%		75	%		46	%
Operating Expenses		305,488			462,598			104,739			872,825
Operating Income (Loss)		12,411			(23,429	)		79,285			68,267
Other income (expenses)		(2,411	)		(3,652	)		(827	)		(6,890	)
Income before provision for income taxes	$	10,000		$	(27,081	)	$	78,458		$	61,377

Variance
For the three months ended December 31, 2022
	Chemical			Electronics			Engineering			Total
Revenue	$	~~(96~~331,~~655~~878	)	$	~~(439~~485,~~508~~454	)	$	(8165,~~692~~830	)	$	~~(544~~983,~~855~~162	)
Cost of Sales		48187,~~938~~341			~~(228~~277,~~093~~133	)		4443,~~098~~210			~~(135~~507,~~057~~684	)
Gross Profit		~~(145~~144,~~593~~537	)		~~(211~~208,~~415~~321	)		~~(52~~122,~~790~~620	)		~~(409~~475,~~798~~478	)
Gross Profit Percentage		~~-17~~44	%		-543	%		~~-20~~74	%		~~-11~~48	%
Operating Expenses		62121,~~173~~400			~~(59~~190,~~065~~287	)		2071,~~807~~038			23382,~~915~~725
Operating Income (Loss)		~~(207~~23,~~766~~137	)		~~(152~~18,~~350~~034	)		~~(73~~51,~~597~~582	)		~~(433~~92,~~713~~753	)
Other income (expenses)		~~4,544~~415			~~5,888~~598			~~1,538~~5			111,~~970~~018
Income (loss) before benefit from income taxes	$	~~(203~~23,~~222~~552	)	$	~~(146~~18,~~462~~632	)	$	~~(72~~51,~~059~~587	)	$	~~(421~~93,~~743~~771	)

Revenues for the three months ended September 30, 2023 decreased by $386,136. The decrease is a result of decreased sales of $62,485 in the Chemical segment, $240,979 in the Electronics segment and $82,672 in the Engineering segment.

Variance
	Chemical			Electronics			Engineering			Total
Revenue	$	(116,447	)	$	(61,861	)	$	(108,358	)	$	(286,666	)
Cost of Sales		(38,822	)		(61,625	)		(32,162	)		(132,609	)
Gross Profit		(77,625	)		(236	)		(76,196	)		(154,057	)
Gross Profit Percentage		-12	%		6	%		7	%		-2	%

Operating Expenses		13,890			54,719			(24,526	)		44,083
Operating Income (Loss)		(91,515	)		(54,955	)		(51,670	)		(198,140	)
Other income (expenses)		(476	)		(162	)		(8	)		(646	)

Income (loss) before benefit from income taxes	$	(91,991	)	$	(55,117	)	$	(51,678	)	$	(198,786	)

Revenues for the six months ended September 30, 2023 decreased by $544,855. The decrease is a result of decreased sales of $96,655 in the Chemical segment, $439,508 in the Electronics segment and $8,692 in the Engineering segment.

For the nine months ended December 31, 2023
	Chemical			Electronics			Engineering			Total
Revenue	$	836,346		$	1,082,634		$	294,337		$	2,213,317
Cost of Sales		597,128			646,795			116,679			1,360,602
Gross Profit		239,218			435,839			177,658			852,715
Gross Profit Percentage		29	%		40	%		60	%		39	%

Operating Expenses		502,951			648,539			172,058			1,323,548
Operating Income (Loss)		(263,733	)		(212,700	)		5,600			(470,833	)
Other income (expenses)		2,072			2,672			708			5,452

Income before provision for income taxes	$	(261,661	)	$	(210,028	)	$	6,308		$	(465,381	)

Gross profit for the three and six months ended September 30, 2023 decreased by $351,881 and $409,798, respectively. The decrease in gross profit resulted primarily from decreased sales in all segments, Chemical, Electronics and Engineering.

For the nine months ended December 31, 2022
	Chemical			Electronics			Engineering			Total
Revenue	$	1,049,448		$	1,584,003		$	411,387		$	3,044,838
Cost of Sales		587,012			936,513			104,743			1,628,268
Gross Profit		462,436			647,490			306,644			1,416,570
Gross Profit Percentage		44	%		41	%		75	%		47	%

Operating Expenses		426,888			652,885			175,777			1,255,550
Operating Income (Loss)		35,548			(5,395	)		130,867			161,020
Other income (expenses)		(1,996	)		(3,054	)		(822	)		(5,872	)

Income before provision for income taxes	$	33,552		$	(8,449	)	$	130,045		$	155,148

During the three months ended September 30, 2023, two customers accounted for 48% of our net revenue. During the three months ended September 30, 2022, three customers accounted for 65% of net revenue.

During the six months ended September 30, 2023, two customers accounted for 42% of our net revenue. During the three months ended September 30, 2022, two customers accounted for 50% of net 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.

Loss from operations for the three months ended September 30, 2023 was $227,650 compared to income from operations for the three months ended September 30, 2022 of $102,892.

Loss from operations for the six months ended September 30, 2023 was $365,446 compared to income from operations for the six months ended September 30, 2022 of $68,267.

Other income increased $2,394 for the three months ended September 30, 2023. The increase is mainly attributable to an increase in interest income.

Other income increased $11,970 for the six months ended September 30, 2023. The increase is mainly attributable to an increase in interest income.

The foregoing resulted in net loss before provision for taxes for the three and six months ended September 30, 2023 of $228,105 and $360,366.

Loss per share were ($0.00) and ($0.01) for the three and six months ended September 30, 2023.

Variance
	Chemical			Electronics			Engineering			Total
Revenue	$	(213,102	)	$	(501,369	)	$	(117,050	)	$	(831,521	)
Cost of Sales		10,116			(289,718	)		11,936			(267,666	)
Gross Profit		(223,218	)		(211,651	)		(128,986	)		(563,855	)
Gross Profit Percentage		-15	%		-1	%		-14	%		-8	%

Operating Expenses		76,063			(4,346	)		(3,719	)		67,998
Operating Income (Loss)		(299,281	)		(207,305	)		(125,267	)		(631,853	)
Other income (expenses)		4,068			5,726			1,530			11,324

Income (loss) before benefit from income taxes	$	(295,213	)	$	(201,579	)	$	(123,737	)	$	(620,529	)

Revenues for the three months ended December 31, 2023 decreased by $286,666. The decrease is a result of decreased sales of $108,358 in the Engineering segment, $61,861 in the Electronics segment and $116,447 in the Chemical segment.

Gross profit for the three months ended December 31, 2023 decreased by $154,057. The decrease in gross profit resulted primarily from decreased sales in all segments.

Revenues for the nine months ended December 31, 2023 decreased by $831,521. The decrease is a result of decreased sales of $213,102 in the Chemical segment, $501,369 in the Electronics segment and $117,050 in the Engineering segment.

Gross profit for the nine months ended December 31, 2023 decreased by $563,855. The decrease in gross profit resulted primarily from decreased sales in all segments.

We are highly dependent upon certain customers. During the three months ended December 31, 2023, two customers accounted for 53% of our net revenue. Net revenues from foreign customers for the three months ended December 31, 2023 was $40,029 or 6%.

Revenues for the three months ended December 31, 2022 increased by $233,508. The increase is a result of increased sales of $95,899 in the Engineering segment, $137,543 in the Electronics segment and $66 in the Chemical segment.

Gross profit for the three months ended December 31, 2022 increased by $149,365. The increase in gross profit resulted primarily from increased sales in Electronics and Engineering sales.

Revenues for the nine months ended December 31, 2022 increased by $721,967. The increase is a result of increased sales of $31,553 in the Chemical segment, $672,434 in the Electronics segment and $17,980 in the Engineering segment.

Gross profit for the nine months ended December 31, 2022 increased by $425,811. The increase in gross profit resulted primarily from increased sales in Electronics and Chemical sales.

We are highly dependent upon certain customers. During the three months ended December 31, 2022, two customers accounted for 50% of our net revenue. Net revenues from foreign customers for the three months ended December 31, 2022 was $80,465 or 8%.

Loss from operations for the three months ended December 31, 2023 was $105,387 compared to income from operations for the three months ended December 31, 2022 of $92,753.

Other income decreased $827 for the three months ended December 31, 2023.

Other income increased $11,324 for the nine months ended December 31, 2023. The increase is mainly attributable reduced interest and finance costs.

The foregoing resulted in net loss before provision for income taxes for the three and nine months ended December 31, 2023 of $(105,015) and $(465,381) respectively. Earnings per share were $(0.00) and $(0.01) for the three and nine months ended December 31, 2023, respectively.

LIQUIDITY AND CAPITAL RESOURCES

At ~~September~~December 3031, 2023, we had cash and cash equivalents of $~~716~~661,~~323~~985 as compared to $1,003,730 at March 31, 2023. The $~~287~~341,~~407~~745 decrease was primarily the result of cash used in operations during the ~~six~~nine-month period in the amount of $~~453~~495,~~602~~138, ~~and~~cash used in investing activities in the amount of $14,515 offset by cash provided in financing activities of $~~166~~167,~~193~~908. 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 ~~three~~nine-month ending periods indicated:

	September 30, 2023			September 30, 2022
	December 31, 2023			December 31, 2022
Net cash used in operating activities	$	(453,602	)	$	(63,889	)
Net cash provided by (used in) operating activities	$	(495,137	)	$	215,022
Cash flows provided (used) in financing activities:		166,195			(120,116	)
Net cash provided by (used in) investing activities		(14,515	)		-
Net (decrease) in cash and cash equivalents		(287,407	)		(184,005	)
Cash flows provided (used) in financing activities:		167,907			(255,835	)
Cash and cash equivalents - beginning of period		1,003,730			1,038,498
Net increase (decrease) in cash and cash equivalents	$	(341,745	)	$	(40,813	)
Cash and cash equivalents - end of period		716,323			854,493
Cash and cash equivalents - beginning of period	$	1,003,730		$	1,038,498
Cash and cash equivalents - end of period	$	661,985		$	997,685

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 2024.

Based on current expectations, we believe that our existing cash and cash equivalents of $~~716~~661,~~323~~985 as of ~~September~~December 3031, 2023, 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 by operating activities was $~~453~~(495,~~523~~137) for the ~~six~~nine months ended ~~September~~December 3031, 2023, as compared to net cash ~~used~~provided by operating activities of $63215,~~889~~022 for the ~~six~~nine months ended ~~September~~December 3031, 2022. The cash used during the ~~six~~nine months ended ~~September~~December 3031, 2023 was primarily due to a ~~decrease~~net loss of $465,381, an increase in net operating assets of $35144,~~236~~104, ~~combined~~offset ~~with~~by a decrease in net operating liabilities of $~~167~~197,~~324~~273, ~~net~~ ~~loss of $360,366 offset by~~ write-off of inventories of $2833,~~710~~945, depreciation and amortization of $413,~~922~~370, and stock based compensation of $23,~~064~~ 096 (see Note 11 Warrant Liability), and non-cash interest expense of $1117,~~706, and~~ 167.

INVESTING ACTIVITIES

NoCash ~~cash was provided for or~~ used in investing activities for the ~~six~~nine months ended ~~September~~December 3031, 2023 was $14,515 for the purchase of an intangible asset.

FINANCING ACTIVITIES

For the ~~six~~nine months ended ~~September~~December 3031, 2023, net cash provided by financing activities was $~~166~~167,~~116~~907 due to a net borrowing and payments in the line of credit of $~~184~~185,~~530~~569, a decrease in due to stockholder of $1513,~~724~~626 and repayments on the PPP loan of $24,~~690~~035.

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 ~~September~~December 3031, 2023, approximately $~~604~~412,000 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 ~~September~~December 3031, ~~2023~~2022, 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~~December 3031, 2023, 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.

The Company believes that the financial statements present fairly, in all material respects, the Company’s condensed consolidated balance sheets as of ~~September~~December 3031, 2023, and March 31, 2023 and the related condensed consolidated statements of operations, and cash flows for the three and ~~six~~nine months ended ~~September~~December 3031, 2023 and 2022, 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, ~~2023~~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.

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~~February 1420, ~~2023~~2024

1920

Filing Compare · ADM TRONICS UNLIMITED, INC.