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 NINE MONTHS ENDED
For the three months ended
Chemical Electronics Engineering Total
Revenue $ 331,878 $ 485,454 $ 165,830 $ 983,162
Cost of Sales 187,341 277,133 43,210 507,684
Gross Profit 144,537 208,321 122,620 475,478
Gross Profit Percentage 44 % 43 % 74 % 48 %
Operating Expenses 121,400 190,287 71,038 382,725
Operating Income (Loss) 23,137 18,034 51,582 92,753
Other income (expenses) 415 598 5 1,018
Income (loss) before benefit from
income taxes $ 23,552 $ 18,632 $ 51,587 $ 93,771
For the three months ended December 31,
2021
Chemical Electronics Engineering Total
Revenue $ 331,812 $ 347,911 $ 69,931 $ 749,654
Cost of Sales 183,678 206,725 33,138 423,541
Gross Profit 148,134 141,186 36,793 326,113
Gross Profit Percentage 45 % 41 % 53 % 44 %
Operating Expenses 331,519 329,459 81,307 742,285
Operating Income (Loss) (183,385 ) (188,273 ) (44,514 ) (416,172 )
Other income (expenses) 149,123 139,742 41,914 330,779
Income (loss) before benefit
from income taxes $ (34,262 ) $ (48,531 ) $ (2,600 ) $ (85,393 ) --------------------------------------------------------------------------------
Variance
Chemical Electronics Engineering Total
Revenue $ 66 $ 137,543 $ 95,899 $ 233,508
Cost of Sales 3,663 70,408 10,072 84,143
Gross Profit (3,597 ) 67,135 85,827 149,365
Gross Profit Percentage -1 % 2 % 21 % 5 %
Operating Expenses (210,119 ) (139,172 ) (10,269 ) (359,560 )
Operating Income (Loss) 206,522 206,307 96,096 508,925
Other income (expenses) (148,708 ) (139,144 ) (41,909 ) (329,761 )
Income (loss) before benefit
from income taxes $ 57,814 $ 67,163 $ 54,187 $ 179,164 For the nine months ended
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
For the nine months ended
Chemical Electronics Engineering Total
Revenue $ 1,017,895 $ 911,569 $ 393,407 $ 2,322,871
Cost of Sales 562,141 662,483 107,488 1,332,112
Gross Profit 455,754 249,086 285,919 990,759
Gross Profit Percentage 45 % 27 % 73 % 43 %
Operating Expenses 881,102 780,974 340,426 2,002,502
Operating Income (Loss) (425,348 ) (531,888 ) (54,507 ) (1,011,743 )
Other income (expenses) 303,031 268,595 117,078 688,704
Income before provision for income taxes
$ 62,571 $ (323,039 )
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Variance
Chemical Electronics Engineering Total
Revenue $ 31,553 $ 672,434 $ 17,980 $ 721,967
Cost of Sales 24,871 274,030 (2,745 ) 296,156
Gross Profit 6,682 398,404 20,725 425,811
Gross Profit Percentage -1 % 14 % 2 % 4 %
Operating Expenses (454,214 ) (128,089 ) (164,649 ) (746,952 )
Operating Income (Loss) 460,896 526,493 185,374 1,172,763
Other income (expenses) (305,027 ) (271,649 ) (117,900 ) (694,576 )
Income (loss) before benefit from
income taxes $ 155,869 $ 254,844 $ 67,474 $ 478,187
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
Revenues for the nine months ended
Gross profit for the nine months ended
We are highly dependent upon certain customers. During the three months
ended
During the three months endedDecember 31, 2021 , two customers accounted for 66% of our net revenue. Net revenues from foreign customers for the three months endedDecember 31, 2021 was$80,358 or 11%.
During the nine 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 endedDecember 31, 2022 was$92,753 compared to loss from operations for the three months endedDecember 31, 2021 of ($416,172 ).
Other income decreased
Other income decreased
The foregoing resulted in net income before provision for income taxes for the three and nine months endedDecember 31, 2022 of$93,771 and$155,148 respectively. Earnings per share were$0.00 for the three and nine months endedDecember 31, 2022 .
LIQUIDITY AND CAPITAL RESOURCES
AtDecember 31, 2022 , we had cash and cash equivalents of$997,685 as compared to$1,038,498 atMarch 31, 2022 . The$40,813 decrease was primarily the result of cash provided in operations during the nine-month period in the amount of$215,022 and cash used in financing activities of$255,835 . 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:
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