ADM TRONICS UNLIMITED, INC. 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 endedMarch 31, 2022 . 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 theState of Delaware onNovember 24, 1969 . Our operations are conducted throughADM and its subsidiary Sonotron.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED
For the three months endedSeptember 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 14
--------------------------------------------------------------------------------
For the three months endedSeptember 30, 2021 Chemical Electronics Engineering Total Revenue$ 370,826 $ 341,084 $ 139,949 $ 851,859 Cost of Sales 203,890 246,655 38,650 489,195 Gross Profit 166,936 94,429 101,299 362,664 Gross Profit Percentage 45 % 28 % 72 % 43 % Operating Expenses 397,792 344,571 172,875 915,238 Operating Income (Loss) (230,856 ) (250,142 ) (71,576 ) (552,574 ) Other income (expenses) 154,425 129,217 75,458 359,100 Income (loss) before benefit from income taxes$ (76,431 ) $ (120,925 ) $ 3,882 $ (193,474 ) Variance Chemical Electronics Engineering Total Revenue$ (25,431 ) $ 292,773 $ 21,067 $ 288,409 Cost of Sales 6,249 90,220 (3,429 ) 93,040 Gross Profit (31,680 ) 202,553 24,496 195,369 Gross Profit Percentage -6 % 19 % 6 % 6 % Operating Expenses (263,554 ) (90,815 ) (105,728 ) (460,097 ) Operating Income (Loss) 231,874 293,368 130,224 655,466 Other income (expenses) (155,179 ) (130,848 ) (75,922 ) (361,949 ) Income (loss) before benefit from income taxes$ 76,695 $ 162,520 $ 54,302 $ 293,517
For the six months ended
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
15-------------------------------------------------------------------------------- For the six months endedSeptember 30, 2021 Chemical Electronics Engineering Total Revenue$ 686,083 $ 563,658 $ 323,476 $ 1,573,217 Cost of Sales 378,463 455,758 74,350 908,571 Gross Profit 307,620 107,900 249,126 664,646 Gross Profit Percentage 45 % 19 % 77 % 42 % Operating Expenses 549,583 451,515 259,119 1,260,217 Operating Income (Loss) (241,963 ) (343,615 ) (9,993 ) (595,571 ) Other income (expenses) 153,908 128,853
75,164 357,925
Income before provision for income taxes$ (88,055 ) $ (214,762 ) $ 65,171 $ (237,646 ) Variance Chemical Electronics Engineering Total Revenue$ 31,487 $ 534,891 $ (77,919 ) $ 488,459 Cost of Sales 21,208 203,622 (12,817 ) 212,013 Gross Profit 10,279 331,269 (65,102 ) 276,446 Gross Profit Percentage -1 % 21 % -2 % 3 % Operating Expenses (244,095 ) 11,083 (154,380 ) (387,392 ) Operating Income (Loss) 254,374 320,186 89,278 663,838 Other income (expenses) (156,319 ) (132,505 )
(75,991 ) (364,815 )
Income (loss) before benefit from income taxes$ 98,055 $ 187,681 $ 13,287 $ 299,023 Revenues for the three months endedSeptember 30, 2022 increased by$288,409 . The increase is a result of increased sales of$21,067 in the Engineering segment and$292,773 in the Electronics segment offset by a decrease of$25,431 in the Chemical segment.
Gross profit for the three months ended
Revenues for the six months endedSeptember 30, 2022 increased by$488,459 . The increase is a result of increased sales of$31,487 in the Chemical segment and$534,891 in the Electronics segment offset by a decrease of$77,919 in the Engineering segment.
Gross profit for the six months ended
We are highly dependent upon certain customers. During the three months endedSeptember 30, 2022 , three customers accounted for 65% of our net revenue. Net revenues from foreign customers for the three months endedSeptember 30, 2022 was$86,296 or 8%. During the three months endedSeptember 30, 2021 , two customers accounted for 51% of our net revenue. Net revenues from foreign customers for the three months endedSeptember 30, 2021 was$75,541 or 9%.
During the six months ended
The complete loss of or significant reduction in business from, or a material adverse change in the financial condition of any of our customers could cause a material and adverse change in our revenues and operating results.
Income from operations for the three months ended
Other income decreased
Other income decreased
The foregoing resulted in net income before provision for income taxes for the three and six months endedSeptember 30, 2022 of$61,377 and$100,043 , respectively. Earnings per share were$0.00 for the three and six months endedSeptember 30, 2022 . 16
--------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
AtSeptember 30, 2022 , we had cash and cash equivalents of$854,493 as compared to$1,038,498 atMarch 31, 2022 . The$184,005 decrease was primarily the result of cash used in operations during the six-month period in the amount of$63,889 and cash used in financing activities of$120,116 . 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-month ending periods indicated:
© Edgar Online, source
