UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

(Mark One)

[X]   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934

                    For the fiscal year ended March 31, 2005
                                              --------------

[_]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number 0-17629
                                                -------

                           ADM TRONICS UNLIMITED, INC.
                 (Name of Small Business Issuer in its Charter)

             Delaware                                     22-1896032
----------------------------------         -------------------------------------
 (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                224-S Pegasus Avenue, Northvale, New Jersey 07647
                -------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (201) 767-6040
                                 --------------
                           (Issuer's Telephone Number)

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

   Title of Each Class             Name of Each Exchange on which Registered
   -------------------             -----------------------------------------
         None                                      None

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

                         Common Stock, $.0005 par value
                         ------------------------------
                                (Title of Class)

      Check  whether the issuer:  (1) filed all reports  required to be filed by
Section  13 or 15 (d ) of the  Exchange  Act  during the past 12 months ( or for
such shorter period that the registrant was required to file such reports),  and
(2 ) has been subject to such filing  requirements for the past 90 days. YES [X]
NO [_]

      Check if there is no disclosure of delinquent  filers pursuant to Item 405
of Regulation S-B contained in the form, and no disclosure will be contained, to
the  best  of  the  issuer's  knowledge,  in  definitive  proxy  or  information
statements incorporated by reference in Part III of the Form 10-KSB. [X]

      The issuer's  revenues for its most recent fiscal year were  approximately
$1,382,113.

      The aggregate  market value of the issuer's common stock, par value $.0005
per share (the "Common Stock"),  held by non-affiliates of the issuer as of June
29,  2005,  based on the average of the closing bid and asked  prices of $0.285,
for such shares on such date, was approximately $7,200,000. For purposes of such
calculation,  shares of Common Stock held by each executive officer and director
and by each  person  who owns more than 5% of the  outstanding  shares of Common
Stock have been  excluded in that such  persons may be deemed to be  affiliates.
This   determination  of  affiliate  status  is  not  necessarily  a  conclusive
determination for other purposes.

      The number of shares of the Common Stock  outstanding  as of June 29, 2005
was 53,882,037.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Not applicable.

      Transitional Small Business Disclosure Format (check one): Yes [_] No [X]

<PAGE>

                                TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS ..............................................    2

PART I ..................................................................    3

Description of Business .................................................    3

Description of Property .................................................   32

Legal Proceedings .......................................................   33

Submission of Matters to a Vote of Security Holders .....................   33

PART II .................................................................   34

Market For Common Equity and Related Stockholder Matters ................   34

Management's Discussion and Analysis or Plan of Operation ...............   35

Financial Statements ....................................................   38

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ..............................................................   39

Controls and Procedures .................................................   39

Other Information .......................................................   39

PART III ................................................................   39

Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act ..................................   39

Executive Compensation ..................................................   41

Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters .............................................   41

Certain Relationships and Related Transactions ..........................   43

PART IV .................................................................   45

Exhibits ................................................................   45

Principal Accountant Fees and Services ..................................   47


                                      -i-
<PAGE>

                           FORWARD LOOKING STATEMENTS

         This Annual  Report on Form  10-KSB  contains  various  forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation  Reform  Act of 1995 and  information  that is based on  management's
beliefs as well as assumptions  made by and information  currently  available to
management.  Although  we  believe  that  the  expectations  reflected  in  such
forward-looking  statements are  reasonable,  we can give no assurance that such
expectations  will  prove to be  correct.  When used in this  report,  the words
"anticipate,"  "believe," "estimate," "expect," "predict," "project" and similar
expressions  are  intended to  identify  forward-looking  statements.  We cannot
guarantee  the  accuracy of the  forward-looking  statements,  and you should be
aware that our actual results could differ  materially  from those  contained in
the  forward-looking  statements  due to a  number  of  factors,  including  the
statements  under "Risk Factors" set forth in "Item 1 - Description of Business"
and the statements under "Critical  Accounting  Policies" set forth in "Item 6 -
Management's  Discussion  and  Analysis  or Plan  of  Operation."  Due to  these
uncertainties  and risks,  readers are cautioned not to place undue  reliance on
these forward-looking statements, which speak only as of the date of this Annual
Report on Form 10-KSB.

         Unless  otherwise  indicated in this  prospectus,  references  to "we,"
"us,"  "our" or the  "Company"  refer to ADM  Tronics  Unlimited,  Inc.  and its
subsidiaries.


                                      -2-
<PAGE>

PART I

Item 1.   Description of Business

Company Overview

         ADM  Tronics  Unlimited,  Inc.  is  a  technology-based  developer  and
manufacturer of diversified  lines of products in the following three areas: (1)
environmentally  safe  chemical  products for  industrial  use, (2)  therapeutic
non-invasive   electronic   medical   devices  and  (3)   cosmetic  and  topical
dermatological products. The Company currently derives most of its revenues from
the  development,  manufacture and sale of chemical  products,  and, to a lesser
extent, from its therapeutic non-invasive electronic medical devices and topical
dermatological products.

         The Company is a corporation  that was organized  under the laws of the
State of Delaware on November 24, 1969.  The Company's  operations are conducted
through the Company itself and its three subsidiaries,  Ivivi Technologies, Inc.
("Ivivi"), Pegasus Laboratories,  Inc. ("Pegasus") and Sonotron Medical Systems,
Inc. ("SMI"). As of June 29, 2005, the Company owned  approximately  68.5%, 100%
and  88%  of  the  outstanding   capital  stock  of  Ivivi,   Pegasus  and  SMI,
respectively.

Company Products

Chemical Products for Industrial Use

         The  Company  develops,  manufactures  and sells  chemical  products to
industrial users. Such products consist primarily of the following:

         o        Water-based primers and adhesives;

         o        Water-based coatings and resins; and

         o        Water-based chemical additives.

         Water-based  primers and adhesives are chemical  compounds used to bind
different  plastic  films,  metal foils and papers.  Examples are the binding of
polyethylene to polyester,  nylon, vinyl,  aluminum,  paper and cellophane.  The
Company's   water-based  primers  and  adhesives  are  similar  in  function  to
solvent-based  primers  that are widely used to bind plastic  films,  papers and
foils.  Solvent-based  systems  have come under  criticism  since they have been
found to be highly  pollutant,  dangerous  to health  and  generally  caustic in
nature. Based upon the Company's  experience since 1969,  including  information
furnished to the Company by certain of its customers,  the Company believes that
water-based  systems  have no known  polluting  effects and pose no known health
hazards.   There  can,  of  course,   be  no  assurance  that  any  governmental
restrictions will not be imposed on the Company's  water-based  products or that
such products will be accepted as replacements for solvent based products.

         Coatings  and  resins  for the  printing  industry  are used to  impart
properties to the printed  substrate.  The Company's  coatings and resins can be
used to coat  printed  material  for  glossy  or  aesthetic  appeal to make such
material  virtually  impervious  to certain  types of grease and to impart other
characteristics required or desired for various products and specifications.

         Certain  of  the  Company's  chemical  additives  are  used  to  impart
properties to inks and other  chemical  products used in the food  packaging and
printing  industries.  These additives are used for their ability to improve the
performance of such products.

         None of the  Company's  chemical  products  are  protected  by patents,
although the names of some of such products have been  protected by  trademarks.
The  Company  does not  believe  that any such  trademarks  are  material to its
business.  As of March 31,  2005,  the dollar  amount of backlog  orders for the
Company's  chemical  products  believed  by the  Company  to be  firm,  was  not
material.


                                      -3-
<PAGE>

Therapeutic Non-Invasive Medical Devices

Sonotron Technology

         SMI,  a  wholly-owned  subsidiary  of  the  Company,  has  developed  a
technology,  known as the  "Sonotron  Technology,"  which is described in detail
below,  and has utilized the Sonotron  Technology to develop  medical devices to
treat  subjects  suffering  from  the  pain of  inflammatory  joint  conditions.
Although  some  of  the  devices  utilizing  this  technology  are  commercially
available  for the  treatment of animals,  none of such  devices  have  received
clearance  from the U.S.  Food and Drug  Administration  (the  "FDA")  for human
application in the United States.

         The late Dr. Alfonso Di Mino, founder of the Company, while employed by
the Company,  conceived  and  developed a technique  pursuant to which a subject
being treated is exposed to a corona discharge beam generated by combining audio
and radio frequency waves (the "Sonotron  Technology").  The Sonotron Technology
is the subject of four United States  patents (the  "Sonotron  Patents"),  which
expire in 2006,  2011, 2012 and 2016.  Foreign patents  relating to the Sonotron
Technology have been issued in Brazil,  Canada, France,  Holland,  Italy, Japan,
Sweden,  Switzerland,  the United Kingdom and West Germany, which patents expire
on various dates from 2007 through 2009.

         The Company  believes that the Sonotron  Technology  can be utilized to
reduce  lameness  in  both  thoroughbred  and  standard-bred   horses.  In  this
connection,  the Company  commissioned the School of Veterinary  Medicine of the
University of  Wisconsin-Madison  (the "SVM") to gather data which would confirm
the  effectiveness of the Sonotron Device on horses.  In a report dated December
10, 1987,  the SVM concluded  that the evidence from its  experiments  indicated
that  treatment  with a  Sonotron  Device  designed  for  veterinary  use  had a
significant  effect in  reducing  the  level of  lameness  in  ponies  which had
arthritis  experimentally  induced  and  as  the  degree  of  arthritic  changes
increased,  the reduction in lameness was more dramatic and became statistically
more significant.  The SVM further found that there is statistical evidence that
the  therapy  had a  beneficial  effect  on the  level  of joint  motion  in the
arthritic  ponies and resulted in reduced  joint  swelling in ponies with severe
arthritis.  A significant reduction occurred in the degree of joint changes seen
radiographically  in the ponies with severe arthritis and in the milder cases of
arthritis  treated with low doses of the therapy.  The SVM further reported that
there were significant  reductions in the severity of the growth of pathological
lesions seen in ponies with mild  arthritis  which received low doses of therapy
and that a trend appears to exist toward seeing  reduced  severity of lesions in
ponies which had a severe  degree of arthritis  and were treated with a Sonotron
Device   designed  for   veterinary   use.  No  differences  in  the  degree  of
histopathological  changes  were  noted  between  the  treated  ponies  and  the
untreated  ponies with mild or severe  arthritis.  The SVM did not arrive at any
conclusions  with respect to whether  treatment with a Sonotron  Device designed
for  veterinary  use has a  beneficial  effect upon chronic  degenerative  joint
disease in a horse and whether such  treatment  will be effective upon naturally
occurring cases of equine degenerative joint disease.  The Company has conducted
tests  utilizing  Sonotron  Devices  designed for veterinary use on several race
horses  and has  obtained  results  substantially  as those of SVM.  Significant
further testing will be required to determine whether or not the  administration
of the Sonotron  Technology to race horses will support the  establishment  of a
viable market.

         The Company  granted to each of SMI and VET Sonotron  Systems,  Inc., a
former  majority-owned  subsidiary  of  the  Company  ("VET"),  a  royalty-free,
worldwide,  exclusive,  irrevocable license to the Sonotron Patents, the foreign
patent  applications  and the Sonotron  Technology.  The license  granted to SMI
permits SMI to manufacture, to have manufactured and to sell apparatus utilizing
the  Sonotron   Technology   exclusively   in  connection   with  human  medical
applications  thereof (the "SMI License").  The SMI License provides that future
improvements or discoveries relating to the Sonotron  Technology,  if any, which
are made by any officer or employee  of the Company or any  affiliates  thereof,
whether or not patentable, and applicable to human medical applications,  are to
be included in the SMI  License.  The  license  granted to VET is  substantially
identical  in its terms to that of the SMI  License,  except that the use of the
Sonotron Technology by VET is limited exclusively to veterinary applications. In
2003, all of the assets of VET, including such license, were transferred to SMI,
and VET ceased  operations and was abandoned by the Company in order to minimize
the  ongoing  expense of  maintaining  the  corporate  entity and for other cost
saving reasons.


                                      -4-
<PAGE>

         The FDA  permits  companies  to begin to  recoup  certain  expenses  by
charging  others  for use of  medical  machines,  provided  that the use of such
machines does not constitute a commercial distribution thereof. Accordingly, the
Company  is  permitted  to  maintain  a clinic and  treatment  center  utilizing
Sonotron Devices, but may not advertise or otherwise promote Sonotron Devices as
being safe and effective for their intended use.  Since 1989,  four clinics have
operated at various times, none of which produced any significant revenues.

         The Company  intends to use data  obtained  from clinics  utilizing the
Sonotron  Device as well as  additional  data it may obtain  from  others in the
Company's  FDA  application,  if filed.  As of June 29,  2005,  there  were five
Sonotrons in use by clinical investigators collecting data for submission to the
FDA. The Company  believes  that  sufficient  data may be  collected  from these
investigations  to support a  submission  to the FDA;  however,  there can be no
assurance that such data will be sufficient or if sufficient  will result in the
filing  of an  application  with the FDA.  There  can be no  assurance  that the
Company will obtain  sufficient  data in the foreseeable  future,  if at all, to
file an FDA  application  for FDA clearance of the Sonotron Device for marketing
in the  United  States for human  application  or that any data  theretofore  or
thereafter obtained by the Company will be satisfactory or will be sufficient to
support the Company's FDA  application.  The Company does not intend to make any
material  changes to the  Sonotron  Devices nor have any such  changes been made
since the completion of the research and development. In the event that Sonotron
Devices  cannot be marketed  pursuant to FDA  clearance and the data obtained by
the  Company are not  favorable  or, for any other  reason,  the  Company's  FDA
application is not filed or, if filed,  is not approved by the FDA,  neither the
Company nor SMI will be able to market the Sonotron Devices in the United States
to others  in  connection  with  human  applications,  other  than for  research
purposes.  Under such  circumstances,  it is probable that the Sonotron  Devices
will not be able to be marketed  with respect to human  applications  thereof in
many foreign countries.

         In 1997,  Dr. Di Mino  developed a device  which  utilizes the Sonotron
Technology  to  non-invasively  treat  neural-cerebral   conditions  (the  "NCCD
Device").  The NCCD Device is a non-invasive  electronic therapy device which is
designed to emit certain radio and audio waves at prescribed  power outputs to a
patient's  brain and spinal  cord.  Since 1997,  the NCCD Device has been in the
prototype  stage.  Limited  initial  preliminary  tests on human  subjects  on a
non-controlled  basis appear to indicate that treatment with the NCCD Device has
a beneficial effect on the symptoms related to certain neuro-cerebral disorders.
The  results  ranged  from minor  improvement  in certain  limited  symptoms  to
dramatic  overall  improvements.  Based upon such results,  subject to obtaining
sufficient capital, the Company intends to conduct extensive controlled clinical
studies of the NCCD Device.  Testing involves  applying radio and audio waves to
the  patients'  spinal cords and cerebrum on a weekly basis for several weeks to
small  groups  of  patients  having  cerebral  palsy,   multiple  sclerosis  and
Parkinson's Disease.

         In order to  commercially  exploit the NCCD  Device,  the Company  must
successfully conduct significant engineering and design work. Such work includes
the design and  manufacture  of a  pre-production  model and the  production  of
approximately 40 similar units for use in the proposed clinical studies.  If the
clinical studies establish the efficacy of the NCCD Device,  the Company intends
to seek  FDA  approval  of the  NCCD  Device.  The  Company  also  plans to file
applications  for certain  foreign and domestic  patents in connection  with the
NCCD  Device.  There can be no assurance  that any clinical  studies of the NCCD
Device will yield successful results or that FDA approval will be obtained.  The
Company  believes  that the cost of  clinical  studies and the  engineering  and
design work will be  approximately  $2,000,000.  Because  the  Company  does not
presently have sufficient funds to complete such tests and studies,  the Company
has sought and will continue to seek financing for such  purposes.  There can be
no assurance that the Company will be able to obtain such financing on terms not
unfavorable to the Company, if at all.

         As of March 31, 2005,  the dollar amount of backlog orders for Sonotron
Devices was not material.


                                      -5-
<PAGE>

SofPulseTM

         Ivivi, a majority-owned subsidiary of the Company, focuses on designing
and commercializing its proprietary electrotherapeutic technologies and products
for the non-invasive treatment of a wide array of acute and chronic disorders of
soft  tissue.   Its  most   advanced   proprietary   products   utilize   pulsed
electromagnetic  field, or PEMF,  technology to induce small electrical currents
in soft tissue to stimulate a therapeutic  physiological  response in the target
area.  Ivivi is  currently  utilizing  PEMF  technology,  through  its  patented
SofPulse device line of products, for the treatment of edema (swelling) and pain
in soft tissue.

         Ivivi  was  incorporated  in March  1989  under  the name AA  Northvale
Medical  Associates,  Inc. as a majority-owned  subsidiary of the Company.  From
March 1989 until August 1998, Ivivi had very limited operations,  which included
the  operation of medical  clinics for  conducting  clinical  studies on certain
products of the Company.  In August 1998, the Company  purchased  certain assets
from Electropharmacology,  Inc. ("EPI") that were then used by EPI in connection
with the SofPulse device  business,  including the right to use the EPI patents,
and immediately  transferred  all of those assets to Ivivi.  The assets included
all of EPI's rights,  title and interest in the SofPulse device business as well
as certain rights related to three patents  related to the SofPulse  device that
were issued in 1994,  1996 and 1998. In January 2000,  Ivivi acquired all of the
rights to the EPI patents.  While Ivivi has conducted  development and sales and
marketing  activities,  it has  generated  limited  revenues  and have  incurred
significant losses to date.

         The SofPulse  device has been  cleared by the FDA for the  treatment of
pain and edema in soft tissue. The SofPulse device can be used for the treatment
of chronic wounds, as well as for post-surgical treatments,  including following
plastic and  reconstructive  surgery.  In July 2004, the Center for Medicare and
Medicaid Services (formerly the Health Care Financing  Administration),  or CMS,
issued a National Coverage  Determination,  or NCD,  requiring  reimbursement by
Medicare  for the use of  electromagnetic  therapy for the  treatment of chronic
wounds.

         The SofPulse device consists of the following two components:

         o        a PEMF signal generator; and

         o        an applicator that is placed over the area to be treated.

The signal generator produces a specific  electromagnetic  signal that is pulsed
through a cable and into the applicator, which functions as a broadcast antenna.
Without touching the skin, the applicator  transmits the electromagnetic  signal
into the desired area, penetrating medical dressings, casts, coverings, clothing
and virtually all other  non-metal  materials.  This process allows the SofPulse
device to be used  immediately  following  acute  injury,  trauma  and  surgical
wounds,  as  well as in  chronic  conditions,  unimpeded  by  standard  clinical
practices and more  importantly,  requiring no alteration of those  practices to
accommodate the therapy provided by the SofPulse device. The SofPulse device has
been used in over 600,000  treatments  by  healthcare  professionals  on medical
conditions, such as:

         o        acute or chronic wounds, including post-surgical wounds;

         o        edema and pain following  reconstructive  and plastic surgery;
                  and

         o        pain  associated  with  the  inflammatory   phase  of  chronic
                  conditions.

For such purpose, the Company regards each 15-minute application of the SofPulse
device on a target area of a patient as one treatment.

         The Company has included the SofPulse device,  which consists of a PEMF
signal  generator and an applicator  that is placed over the area to be treated,
in each of the following products:

         o        SofPulse I. The first  generation of the SofPulse  device that
                  consists of a unit that houses the PEMF signal generator and a
                  swing arm that positions the applicator  over the target area.
                  The unit is  self-contained,  and is supplied  with a portable
                  cart and swing arm assembly that enables it to be  transported
                  easily. Both the generator and the applicator easily disengage
                  from the cart and arm for situations where space is limited or
                  where the patient is in an awkward position.


                                      -6-
<PAGE>

         o        SofPulse II. The SofPulse II is a smaller and lighter  version
                  of the swing arm  applicator  used in the first  generation of
                  the SofPulse  device,  eliminating the need for the swing arm.
                  This  version  is a  comfortable,  flexible  ring,  ranging in
                  diameter  from four to ten inches,  and weighing  only ounces,
                  that  plugs  in to  the  same  signal  generator  used  in the
                  Company's first generation of SofPulse device.

         o        Podiatric Boot. The Podiatric Boot utilizes an applicator that
                  is  ergonomically  designed  to  position  around the foot and
                  lower calf and plugs into the same  signal  generator  used in
                  the Company's first generation of SofPulse device.

         o        Compression   Garments.    The   Company   has   developed   a
                  battery-operated,  disposable  version of the SofPulse  device
                  that weighs ounces and can be  incorporated  into or onto post
                  surgical  compression  garments,  including  garments that are
                  placed on virtually all plastic surgery  patients  immediately
                  following surgery.  These "smart" compression garments will be
                  activated  at the time the garments are placed on the patient.
                  This  new  technology  will  cycle  on and  off  automatically
                  throughout the day for up to 30 days. The Company expects that
                  this product will be sold,  and not rented to  physicians  and
                  patients.

         The Company is  considering  additional  applications  of the  SofPulse
device,  as well as  developing  other  products  using PEMF.  For example,  the
Company is currently  researching and clinically testing potential  applications
of the PEMF technology for  therapeutic  angiogenisis  (the  regeneration of new
blood vessels) and  vascularization  (the creation of new blood vessels) for use
in circulatory and cardiac impairment conditions as well as for proliferation of
implanted stem cells. The Company is also exploring the possibility of utilizing
PEMF technology in an over-the-counter application for pain and edema to compete
as a  non-invasive,  non-pharmacological  alternative to other pain  treatments,
such as  acetaminophen,  without  any of the  potential  known  side-effects  or
complications  that are associated with such products.  The Company's ability to
successfully  expand the use of the SofPulse device for these  applications will
depend on a number of risks, including:

         o        establishing the efficacy of such applications;

         o        obtaining  regulatory  approval or clearance as needed for the
                  use of the Company's technology for these applications;

         o        developing  and  commercializing  new products  utilizing  the
                  Company's technology for these applications; and

         o        establishing   market  acceptance  and  reimbursement  of  its
                  products for these uses.

Aurex-3

         Dr. Di Mino  developed an  electronic  device (the  "Aurex-3")  for the
treatment of Tinnitus.  Tinnitus is a human medical  condition  which  manifests
itself in a constant and annoying  ringing in the ears. The Aurex-3 uses a probe
that transmits a vibratory and audio signal. In February 1997, Dr. Di Mino filed
a patent  application  for a United  States  patent with respect to the Tinnitus
Device.  Dr. Di Mino  advised  the  Company  that any  patents  issued to him in
connection  with the Tinnitus  Device will be assigned to the Company.  Although
significant  testing of the Aurex-3 has not been conducted,  pre-production  and
production  prototypes were built and testing and marketing strategies have been
developed. In May 1998, a 510-K Pre-market Notification ("PMN") was filed by the
Company with the FDA. In August 1998,  the United  States  Patent and  Trademark
Office  issued a patent with  respect to the Aurex-3  and the FDA  notified  the
Company  that the PMN was  accepted.  Accordingly,  the  Company  may market the
product in the United States for its intended  indication,  "[t]he treatment and
control of tinnitus."  From August 1998 to November 1999, the Company  finalized
manufacturing  plans for the  Aurex-3.  In July 1999 the  Company  began  taking
advance  orders for Aurex-3  units from  distributors  and patients and began to
deliver the units in November 1999. Sales of the Aurex-3 have not been material.
There can be no assurance that the Company will receive  significant  orders for
the Aurex-3 or, if such orders are  received,  that the Company  will be able to
manufacture the Aurex-3 in sufficient quantities.


                                      -7-
<PAGE>

         At the end of December 1999, six Aurex-3 devices were made available to
the Dutch Commission on Tinnitus & Hyperacusis by a third party. On December 24,
1999, six participants  were examined by the Dutch Commission for their tinnitus
and  trained in the use of the  Aurex-3  by an  audiologist  and  adviser of the
group.  After a six-week  trial period with six  participants,  during which one
participant  reported a worsening of tinnitus,  the Dutch  Commission  concluded
that no  positive  results  could be  reported.  Although  the Dutch  Commission
tentatively  concluded that the Aurex-3 seldom or never has a positive effect on
tinnitus,  especially  on  high  frequency  tinnitus,  it did  not  exclude  the
possibility that application of the Aurex-3 on patients with a low tone tinnitus
might show better results.

         The Company believes that the Dutch Commission's conclusions are flawed
primarily because of the small number of participants and the probable selection
of participants  whose  condition  could not be improved  through the use of the
Aurex-3. In addition, in the Company's limited experience,  when potential users
of the Aurex-3 were  pre-screened to eliminate  those with non-noise  induced or
variable  intensity  tinnitus,  more than 60% of the users of the  Aurex-3  have
experienced significant improvement.

         In November 2002, the Company sold, among other things,  certain rights
to the Aurex-3 to a wholly owned  subsidiary of New England  Acquisitions,  Inc.
The  purchase  price was 150,375  shares of New  England's  common stock and its
subsidiary's  agreement  to make certain  payments  with  respect  thereto.  New
England's  subsidiary provided a sample Aurex-3 to a Chinese distributor for its
evaluation. The distributor advised the subsidiary, on the basis of limited use,
that the sample has not been found to be effective.  If the  subsidiary  did not
make  required  minimum  royalty  payments or  purchase  certain  quantities  of
products from the company within one year of its purchase of the rights, subject
to extension by the Company,  it could lose certain  rights of  exclusivity.  In
January,  2004 the Company  notified New England that it had not  purchased  the
minimum  quantity of Aurex-3  devices and  therefore  the Company  exercised its
right to terminate the exclusive provision of the agreement.

Needle Eater

         In  May  1999  the  Company  acquired  certain  assets  related  to the
Needle-Eater,  a patented  device  used to dispose  of used  syringes  and other
medical sharps. The Company acquired the worldwide rights to the patent covering
the technology in the Needle-Eater  product;  an inventory of finished units and
parts;  the  rights  to  trademarks;  and,  information  needed  to assist it in
manufacturing  the units.  The Company paid $14,206 to the previous owner of the
Needle-Eater,  and issued  options to purchase an aggregate of 500,000 shares of
the Company's common stock at an exercise price of $.625 per share, all of which
have expired.  The Company also agreed to pay a consulting fee of $750 per month
for 24 months and a royalty of 5% on gross sales of  Needle-Eater  products  for
the life of the patent as well as certain other compensation.  To date, sales of
Needle Eater products have not been material.

Ultra-Violet Blood Irradiation

         From 1997 to 2001,  the  Company,  through a  wholly-owned  subsidiary,
engaged in  biotechnology  research in the development of a medical  therapeutic
technology  to treat viral and bacterial  infections in humans and animals.  The
technology utilizes a process, commonly referred to as UBI or Ultra-Violet Blood
Irradiation,  wherein a measured sample of blood is intravenously removed from a
patient,  exposed  to a  specific  ultra-violet  light  source,  collected  in a
container  and  then  returned  to the  patient,  all in a  closed  system.  The
Company's  subsidiary  pursued the development of a blood irradiation device and
related   components.   In  December,   2001  the  Company  and  its  subsidiary
discontinued  such research as a result of litigation  between the Company and a
former employee of a Company's subsidiary.


                                      -8-
<PAGE>

Cosmetic and Topical Products

         The Company,  through its subsidiary,  Pegasus,  has developed  several
cosmetic and topical  products.  The Company has not  realized  any  significant
revenues from such products and there can be no assurance that any such products
will account for significant revenues or any profits in the future.

         Although  the  Company  believes  that  its  proposed  products  can be
successfully  marketed  for  over-the-counter  use through one or more  entities
representing numerous retail pharmacies and otherwise, there can be no assurance
that sales of such products will be material or that the Company will be able to
derive any profits therefrom.

         In November  2002,  the Company sold certain  rights to an ethnic shave
cream, a burn lotion and the Aurex-3 to a wholly owned subsidiary of New England
Acquisitions, Inc. The purchase price was 150,375 shares of New England's common
stock and its  subsidiary's  agreement to make certain  payments.  The agreement
provided that if the subsidiary did not make required  minimum royalty  payments
or purchase  certain  quantities of products from the Company within one year of
its purchase of the rights,  it would lose  certain  rights of  exclusivity.  In
January, 2004 the Company notified New England's subsidiary that it had not made
the required payments and the Company thereby terminated the exclusive rights.

Customers

         During the Company's  fiscal years ended March 31, 2005, 2004 and 2003,
sales of chemical products  accounted for approximately  68%, 80% and 80% of the
Company's  operating  revenues,  respectively;  sales and/or  rentals of medical
device products  accounted for  approximately  32%, 20% and 20% of the Company's
operating  revenues,  respectively;  and  sales  of  our  cosmetic  and  topical
dermatological  products were not material.  No contract  exists with any of the
Company's  customers  that would  obligate  any customer to continue to purchase
and/or rent products from the Company.

         During the  fiscal  year  ended  March 31,  2005,  two  customers  each
accounted for approximately 8% of the Company's net sales of chemical  products.
The  termination  of business  relations  with any of the Company's  significant
chemical  customers  would  have a  material  adverse  effect  on the  Company's
business and the financial condition of the Company.

         During the fiscal  year ended March 31,  2005,  although  sales  and/or
rentals of Sonotron  devices and  SofPulse  devices  were not  significant,  one
customer  accounted for  approximately  85% of sales of the Sonotron devices and
one customer accounted for approximately 34% of sales and/or rentals of SofPulse
devices.  Because the Company is seeking to increase future sales and/or rentals
to those customers,  the termination of business  relations with those customers
could  have a material  adverse  effect on the  Company's  future  business  and
financial condition.

Marketing and Distribution

         A majority of the Company's  chemical  product sales are distributed to
customers  directly from the Company's  headquarters.  Customers  place purchase
orders  with the  Company  and  chemical  products  are then  shipped via common
carrier truck delivery on an "FOB shipping  point" basis. A portion of the sales
are accomplished through distributors who place purchase orders with the Company
for certain  quantities of the Company's  chemical products which are shipped by
common carrier to their respective warehouses.  These stocking distributors then
ship product to the ultimate customer via common carrier from their inventory of
the Company's chemical products.

         In April  2003,  SMI entered  into a  distribution  agreement  with THM
Group,  LLC  ("THM")  with  respect to the  distribution  and sale by THM of the
veterinary  Sonotron  Device  for the  treatment  of  animals.  Pursuant  to the
agreement THM was granted an exclusive  territory  comprising  North America and
Europe for a term of three years conditioned upon THM arranging for the purchase
of certain  minimum  quantities of product from SMI on an annual basis. In April
2005,  SMI terminated the agreement with THM due to THM's failure to arrange for
the minimum purchases required thereby.


                                      -9-
<PAGE>

         Ivivi is currently  marketing and generating revenues in the wound care
and  plastic  surgery  markets.  In order to  facilitate  the  marketing  of its
products,  it has developed and intends to further  develop  relationships  with
sales and distribution  companies  currently  operating in these markets. In the
wound care market,  it is focusing its marketing  efforts on the long-term acute
care  hospitals  because of the high  concentration  of wound care  patients and
fixed  reimbursements  from  Medicare.  In the  plastic  surgery  market,  it is
currently  focusing  its efforts on surgical  procedures  requiring  compression
garments,  by establishing  relationships  with garment  manufacturers and their
principle  distributors.  Ivivi also  intends to pursue  additional  markets and
applications,  assuming  it  obtains  FDA  approval,  such as  angiogenesis  and
vascularization for the treatment of certain circulatory  impairment  conditions
and pain relief.  As Ivivi develops  additional  products and  technologies,  it
intends to develop the distribution arrangements for this market in concert with
overall regulatory and marketing approaches.

         Ivivi is  currently  a party  to,  and  intends  to  continue  to seek,
collaborative  and  strategic  agreements  to assist it in the  marketing of its
products.  Ivivi has engaged third-party  distributors to market its products in
the  United  States  and  intends to engage  additional  distributors  and sales
organizations to expand the scope of its markets nationally and internationally,
with an initial  international focus in Western Europe.  Ivivi has granted these
distributors  the exclusive  right to distribute its SofPulse device products to
long-term  acute care  hospitals,  acute care  facilities,  rehabilitation/wound
centers, nursing homes and skilled nursing facilities.  Additionally,  Ivivi has
contracted  with one  distributor  to help it  penetrate  the home  health  care
market.  Ivivi  intends to continue to seek similar  agreements  with  strategic
partners to establish new marketing  and  distribution  channels for SofPulse as
well as its next generation products.

         On  April  1,  2005,  Ivivi  entered  into an  agreement  (the  "Global
Agreement")  with Global  Medical,  L.L.C.  ("Global")  pursuant to which Global
shall provide to Ivivi certain managerial services (the "Services") with respect
to the medical devices and products manufactured, distributed, sold or rented by
Ivivi (the  "Ivivi  Products").  The term of the Global  Agreement  is two years
commencing  on April 1, 2005,  which term shall  renew for  successive  one-year
terms if mutually agreed in writing by the parties.

         The Services to be provided under the Global Agreement  include,  among
others, marketing and promotion of the Ivivi Products; management and support of
Ivivi's  outside  sales  force;  customer  service  and  support;   warehousing,
packaging, shipment, delivery,  distribution and tracking of the Ivivi Products;
biomedical service,  preventative maintenance and other  repair/refurbishment of
the Ivivi Products; invoicing and collections; training of customers, caregivers
and  distributors   and  other  outside  sales  personnel;   tracking  of  trial
evaluations and  demonstrations of the Ivivi Products;  and  data-gathering  and
reporting  for  regulatory  compliance  purposes.  Under the terms of the Global
Agreement, as compensation for the Services, Ivivi shall pay Global: (i) $45,000
each month during the term of the Global  Agreement  (prorated  for each partial
calendar  month  during  the term of the Global  Agreement);  and (ii) an amount
equal to 18% of the aggregate  amount invoiced by Global (net of taxes,  returns
and  adjustments) on behalf of and in the name of Ivivi,  for the sale or rental
of Ivivi Products during the preceding month ("Percentage Payments");  provided,
however,  that if any additional  personnel (beyond the amount designated in the
Global  Agreement)  hired to perform the Services  becomes an employee of Ivivi,
the amount of the  Percentage  Payments  with respect to invoices  from accounts
within territories covered by such additional personnel shall be reduced to 5%.

         Subject to the terms and conditions of the Global Agreement, during the
two-year  period  commencing  on October  1, 2005 and ending on October  1,2007,
Ivivi shall have the right (but not the  obligation)  to purchase some or all of
the assets of Global that are utilized in the  performance  of the Services (the
"Acquisition")  in exchange for: (i) Ivivi's  assumption of the on-going  salary
obligations  (exclusive of previously  granted but not yet paid bonuses or other
incentive compensation) of the Global personnel performing the Services who will
thereafter become employees of Ivivi; and (ii) Ivivi's grant to Global of equity
securities of Ivivi. Under the terms of the Global Agreement, if Ivivi exercises
its right with respect to the  Acquisition  pursuant to the terms and conditions
thereof,  Ivivi and Global shall use their good faith best efforts to consummate
the Acquisition in a timely fashion.


                                      -10-
<PAGE>

         In April 2004, the Company signed an agreement with Carepoint  Group of
the United Kingdom ("Carepoint") granting Carepoint exclusive,  worldwide rights
to  manufacture  and  distribute  the Aurex-3,  for the treatment and control of
tinnitus.  The agreement  provides that Carepoint will  manufacture a redesigned
version of the device and market it throughout the world.  Carepoint is required
to pay royalties to the Company on revenues generated pursuant to the agreement.
The Company retains manufacturing and distribution rights for the new version of
the device for the  United  States.  There can be no  assurance  that  Carepoint
and/or the Company will successfully distribute the new version of the device or
generate meaningful revenues pursuant to the agreement.

Manufacturer and Suppliers

         Manufacturer

         The Company  manufactures  its chemical  products and SMI's and Ivivi's
medical device products at its facilities located in Northvale, New Jersey.

         The Company,  Ivivi and SMI are parties to a  manufacturing  agreement,
pursuant  to which the  Company  serves  as the  exclusive  manufacturer  of all
current and future medical, non-medical electronic and other devices or products
to be produced by such subsidiaries.  Pursuant to the terms of the manufacturing
agreement, for each product that the Company manufactures for a subsidiary,  the
subsidiary  pays  the  Company  an  amount  equal  to 120% of the sum of (i) the
actual,  invoiced cost for raw  materials,  parts,  components or other physical
items that are used in the manufacture of the product and actually purchased for
the  subsidiary  by the Company,  if any,  plus (ii) a labor charge based on the
Company's standard hourly  manufacturing labor rate. The subsidiaries  generally
purchase  and  provide  the  Company  with all of the raw  materials,  parts and
components  necessary to manufacture their respective products and, as a result,
the  manufacturing  fee paid to the Company is generally  120% of the labor rate
charged by the Company.

         The Company  warrants the products it manufactures for its subsidiaries
against  defects in material and  workmanship  for a period of 90 days after the
completion of manufacture.  After such 90-day period,  the Company has agreed to
provide  repair  services for the products to the  subsidiary  at its  customary
hourly repair rate plus the cost of any parts,  components or items necessary to
repair the products  unless the  subsidiary  provides such parts,  components or
items to the Company.

         Under  the  manufacturing  agreement,  all  inventions,  patentable  or
otherwise, trade secrets, discoveries,  ideas, writings,  technology,  know-how,
improvements  or  other  advances  or  findings  relating  to the  subsidiaries'
products and  technologies  shall be and become the  exclusive  proprietary  and
confidential  information  of  such  subsidiary  or  any  person  to  whom  such
subsidiary may have assigned  rights  therein.  The Company has no rights in any
such  proprietary or  confidential  information  and is prohibited from using or
disclosing  any of such  proprietary  or  confidential  information  for its own
benefit or  purposes,  or for the benefit or purpose of any other  person  other
than the subsidiary without such subsidiary's prior written consent. The Company
has also  agreed  to  cooperate  with each  subsidiary  in  securing  for it any
patents,  copyrights,  trademarks  or the like  which it may seek to  obtain  in
connection  therewith.  If the  Company  breaches  any  of  the  confidentiality
agreements contained in the manufacturing  agreement, or if these agreements are
not  sufficient  to  protect  a  subsidiary's  technology  or  are  found  to be
unenforceable,  the subsidiary's  competitors  could acquire and use information
that it considers to be our trade secrets and the  subsidiary may not be able to
compete effectively.

         Since  the  Company  is  the  exclusive  manufacturer  of  all  of  the
subsidiaries' current and future products under the manufacturing  agreement, if
the  operations of the Company are  interrupted  or if orders or orders of other
customers of the Company exceed the  manufacturing  capabilities of the Company,
the Company may not be able to deliver products on time and the subsidiaries may
not be able to deliver their respective  products to their respective  customers
on time.  Under the terms of the  manufacturing  agreement,  if the  Company  is
unable to perform its  obligations  thereunder  or is otherwise in breach of any
provision thereof,  the subsidiaries have the right,  without penalty, to engage
third parties to manufacture  some or all of their products.  In addition,  if a
subsidiary  elects to  utilize a  third-party  manufacturer  to  supplement  the
manufacturing  being completed by the Company,  such subsidiary has the right to
require the Company to accept  delivery of the products  from these  third-party
manufacturers,  finalize the manufacture of the products to the extent necessary
for such  subsidiary to comply with FDA  regulations and ensure that the design,
testing,  control,  documentation and other quality assurance  procedures during
all aspects of the manufacturing process have been met.


                                      -11-
<PAGE>

         As  the  exclusive   manufacturer   of  the  medical   devices  of  its
subsidiaries,  the Company is required  to comply with QSR  requirements,  which
require manufacturers,  including third-party manufacturers, to follow stringent
design, testing,  control,  documentation and other quality assurance procedures
during all aspects of the  manufacturing  process.  In addition,  the  Company's
manufacturing  facility  is  required  to  be  registered  as a  medical  device
manufacturing  site with the FDA and is subject to  inspection  by the FDA.  The
Company  has  been  registered  by  the  FDA  as  a  Registered  Medical  Device
Establishment   since  1988  allowing  it  to  manufacture  medical  devices  in
accordance with procedures  outlined in FDA  regulations,  which include quality
control and related  activities.  Such  registration  is renewable  annually and
although  the Company  does not believe  that the  registration  will fail to be
renewed by the FDA,  there can be no assurance of such  renewal.  The failure of
the Company to obtain any annual renewal would have a material adverse effect on
its  subsidiaries if they were not able to secure another  manufacturer of their
products.

         Suppliers

         The Company  purchases the raw materials used in the manufacture of its
chemical products from numerous sources. The Company believes that all necessary
raw materials for its chemical  products are readily available and will continue
to be so in the  foreseeable  future.  The  Company  has never had,  nor does it
anticipate experiencing,  any shortages of such materials. The raw materials for
chemical products consist primarily of water, resins,  elastomers and catalysts.
The Company  generally  maintains  sufficient  quantities of  inventories of its
chemical  products to meet  customer  demands.  When orders are  received by the
Company for its chemical  products,  the Company's  customers  require immediate
shipment  thereof.  Accordingly,  in order to satisfy its customers'  needs, the
Company has maintained an inventory ranging, in dollar amounts,  from 15% to 30%
of sales of chemical  products in the form of either raw  materials  or finished
goods.

         Ivivi and SMI purchase and provide the Company with the raw  materials,
parts,  components  and other  items  that are  required  to  manufacture  their
respective  products.  Such  subsidiaries  rely on a single or limited number of
suppliers for such raw materials,  parts,  components and other items.  Although
there are many suppliers for each of these raw materials,  parts, components and
other items, the subsidiaries are dependent on a limited number of suppliers for
many of the significant raw materials and components. Neither Ivivi nor SMI have
any long-term or exclusive purchase commitments with any of its suppliers. Their
failure to maintain existing relationships with their respective suppliers or to
establish new  relationships  in the future could also  negatively  affect their
ability to obtain raw  materials  and  components  used in their  products  in a
timely  manner.  If either  Ivivi or SMI is unable  to  obtain  ample  supply of
product from its existing suppliers or alternative  sources of supply, it may be
unable to  satisfy  customers'  orders  which  could  reduce  its  revenues  and
adversely affect its relationship with its customers.

Research and Development

         During the  Company's  fiscal years ended March 31, 2005 and 2004,  the
Company made no material expenditures with respect to company-sponsored research
and  development  activities  relating  to its  chemical  business  other than a
portion of the regular salaries of its executive officers which may be allocated
thereto.  During  such  fiscal  years,  the  Company did not expend any funds on
customer-sponsored research and development activities with respect thereto.

         During the Company's  fiscal years ended March 31, 2005 and 2004, other
than the regular compensation paid by the Company to its executive officers, the
Company did not spend any appreciable amounts on testing, application,  clinical
studies and company-sponsored  research and development activities in connection
with the Sonotron Technology and other activities  determined in accordance with
generally accepted accounting principles.  During each of such years no material
amounts were spent on  customer-sponsored  research and  development  activities
relating to the  development  of new  products,  services or  techniques  or the
improvement of any of the foregoing.


                                      -12-
<PAGE>

         Ivivi's  research and  development  efforts  continue on several fronts
directly  related to the SofPulse  technology,  including its expansion into the
angiogenesis  and  vascularization  market,  as  well  as new  technologies  and
products.  Following the development of new  technologies and products by Ivivi,
Ivivi may enter into joint ventures,  license agreements or other  relationships
with  third-parties to  commercialize  such  technologies and products.  Ivivi's
research and development expenditures (excluding consulting fees and portions of
salaries related to research and development) were approximately $400,513 and $0
for the fiscal years ended March 31, 2005 and 2004, respectively.

         Ivivi is currently a party to two sponsored  research  agreements  with
Montefiore  Medical Center  pursuant to which Ivivi funds research in the fields
of pulsed magnetic frequencies and neurosurgery, each under the supervision of a
principal investigator who is affiliated with Montefiore Medical Center. Ivivi's
sponsored research agreement pursuant to which it funds research in the field of
pulsed magnetic  frequencies  under the supervision of Berish Strauch,  M.D., of
Montefiore Medical Center's Department of Plastic Surgery,  commenced on October
17,  2004 and  expires on  December  31,  2009,  subject to renewal in  one-year
increments by mutual agreement.  The sponsored  research  agreement  pursuant to
which  Ivivi  funds  the  research  in  the  field  of  neurosurgery  under  the
supervision of Diana Casper, Ph.D., of Montefiore Medical Center's Department of
Neurosurgery, commenced on September 24, 2004 and expires on September 24, 2005.
Ivivi's sponsored research  agreements provided for total payments to be made to
Montefiore  Medical Center of $524,435,  payable at various times from September
2004 through April 2005. The amounts owed to Montefiore Medical Center have been
paid in full.

         Under each sponsored research  agreement,  Montefiore Medical Center is
required to use its  reasonable  efforts to  complete  the  applicable  research
project that is directed and controlled by the principal  investigator,  subject
to informal consultation with Ivivi's technical representative, Arthur A. Pilla,
Ph.D.  Under each agreement,  Montefiore  Medical Center is required to promptly
disclose any discovery or invention  made by it, the principal  investigator  or
any other personnel in the performance of the research project, and title to any
and all of such  discoveries or inventions and all other  intellectual  property
rights developed that relate to any of Ivivi's products will be Ivivi's sole and
exclusive  property.  Ivivi  also has the first  option  to  obtain a  worldwide
royalty  bearing  license  to all other  inventions  not owned by Ivivi that are
conceived  or made during the  performance  of the  research  project.  Although
Montefiore  Medical  Center  and  its  employees  have  sole  ownership  of  any
copyrighted or copyrightable works (including reports and publications) that are
created  by  them in the  performance  of the  research  project,  Ivivi  has an
irrevocable  royalty-free,  nontransferable,  non-exclusive  right  to copy  and
distribute  research  reports  furnished  to Ivivi under each  agreement  and to
prepare,  copy and distribute  derivative works based on these research reports.
Further,  subject to certain  limited  exceptions,  each of  Montefiore  Medical
Center, the principal  investigator and us are required to keep all confidential
information  of the other party in strict  confidence for a period of five years
after the end of the term of each agreement.

         In June 2005, Diana Casper, Ph.D. received notification that an R-22, a
two-year  grant in the amount of  approximately  $270,000,  was  approved by the
National  Institute of Health, for the purpose of further studying the effect of
Ivivi's  technology on enhancing survival of brain cells, (i.e. neurons as basic
science  research  for  developing  treatments  for various  human  neurological
disorders).

Competition

         The Company's chemical business is highly competitive and substantially
all  of  the  Company's   competitors  possess  greater  experience,   financial
resources,  operating history and marketing  capabilities than does the Company.
Although  the  Company  does not  believe  that  there are one or more  dominant
competitors in such industry, there can be no assurance that the Company will be
able to effectively  compete with any or all of its  competitors on the basis of
price,  service or  otherwise.  Competitors  may be better  able to  withstand a
change in conditions  within the chemical  products  industry and throughout the
economy as a whole. In addition,  current and anticipated  future  consolidation
among our  competitors  and customers may cause the Company to lose market share
as well as put downward  pressure on pricing.  Furthermore,  there is a trend in
the  chemical  industry  toward   relocation  of  manufacturing   facilities  to
lower-cost  regions  such  as  Asia.  Such  relocation  may  permit  some of the
Company's  competitors  to lower  their  costs  and  improve  their  competitive
position. If the Company does not compete successfully,  its business, operating
margins,  financial  condition,  cash flows and profitability could be adversely
affected.


                                      -13-
<PAGE>

         The Company's results of operations  depend, in part, on its ability to
expand its chemical product  offerings.  The Company is committed to remaining a
competitive  producer and believes  that its  portfolio of new or  re-engineered
products is strong.  However, the Company may not be able to continue to develop
new products,  re-engineer our existing  products  successfully or bring them to
market in a timely manner. While the Company believes that the products, pricing
and services it offers customers are competitive, it may not be able to continue
to attract and retain customers to which to sell its chemical products.

         The manufacture, distribution and sale of medical devices and equipment
designed  to  relieve  swelling  and pain or to treat  chronic  wounds is highly
competitive and substantially many of the Company's  competitors possess greater
experience,  financial resources,  operating history and marketing  capabilities
than  the  Company.  For  example,   Diapulse   Corporation  of  America,   Inc.
manufactures  and markets devices that are deemed by the FDA to be substantially
equivalent to SofPulse,  Regenesis Biomedical,  Inc., manufactures and markets a
device that is similar to the Company's first generation  SofPulse  device,  and
KCI Concepts,  Inc.,  manufactures and markets  negative  pressure wound therapy
devices in the wound care market. A number of other manufacturers, both domestic
and foreign,  and distributors  market shortwave  diathermy devices that produce
deep  tissue  heat  and that may be used for the  treatment  of  certain  of the
medical  conditions  in which  the  SofPulse  is also  indicated.  In  addition,
SofPulse may be deemed to be competitive  with pain relief drugs as well as pain
relief medical devices.  The Company also faces  competition from companies that
have developed  other forms of treatment,  such as hyperbaric  oxygen  chambers,
thermal therapies and hydrotherapy.  Other companies with  substantially  larger
expertise  and  resources  than the Company's may develop or market new products
that directly compete with SofPulse or other products or technologies  developed
by the  Company.  In addition,  other forms of  treatment  that compete with the
Company's  technologies  and products may achieve more rapid  acceptance  in the
medical community.

         In addition,  several other companies manufacture medical devices based
on the principle of  electrotherapeutic  technologies  for  applications in bone
healing  and spinal  fusion,  and may adapt  their  technologies  or products to
compete directly with the Company.  The Company is also aware of other companies
that  manufacture  and market  devices in the same target markets as the Company
does. Certain of these companies have significant product sales and have greater
financial,  technical,  personnel and other  resources  than the Company.  Also,
universities  and research  organizations  may  actively  engage in research and
development  to develop  technologies  or products  that will  compete  with the
Company's technologies and products. Barriers to entry in the Company's industry
include (i) a large investment in research and development; (ii) numerous costly
and  time-consuming  regulatory  hurdles to overcome  before any products can be
marketed and sold;  (iii) high costs for marketing and for building an effective
distribution network; and (iv) the ability to obtain financing during the entire
start up period.

         The  medical  products  market is  characterized  by  rapidly  changing
technology that may result in product obsolescence or short product life cycles.
The Company's  ability to compete will be dependent on the Company's  ability to
continually  enhance and improve its  products  and to develop  successfully  or
acquire and market new products. There can be no assurance that the Company will
be able to compete successfully,  that competitors will not develop technologies
or products that render the Company's  medical device products  obsolete or less
marketable or that the Company will be able to enhance successfully its existing
products  or develop  or  acquire  new  products.  Furthermore,  there can be no
assurance that other  technologies or products that are functionally  similar to
those of the Company are not currently under development.

Government Regulation

         Several  of the  Company's  products  are  medical  devices  subject to
extensive  and  rigorous  regulation  by the FDA,  as well as  other  regulatory
bodies.  The FDA  regulations  govern the following  activities that the Company
performs  and will  continue  to perform to help ensure  that  medical  products
distributed worldwide are safe and effective for their intended uses:


                                      -14-
<PAGE>

         o    product design and development;

         o    product testing;

         o    product manufacturing;

         o    product safety;

         o    product labeling;

         o    product storage;

         o    record keeping;

         o    pre-market clearance or approval;

         o    advertising and promotion;

         o    production; and

         o    product sales and distribution.

         FDA's Pre-market Clearance and Approval Requirements

         Unless an exemption applies,  each medical device the Company wishes to
commercially  distribute in the United  States will require  either prior 510(k)
pre-market  notification  ("PMN") clearance or pre-market  approval ("PMA") from
the FDA. The FDA classifies  medical devices into one of three classes.  Devices
deemed to pose lower risks are placed in either  class I or II,  which  requires
the  manufacturer  to  submit  to  the  FDA  a  PMN  requesting   permission  to
commercially  distribute the device.  This process is generally  known as 510(k)
clearance.  Some low risk  devices  are exempt  from this  requirement.  Devices
deemed  by  the  FDA  to  pose  the  greatest  risk,  such  as  life-sustaining,
life-supporting  or implantable  devices,  or devices  deemed not  substantially
equivalent  to a  previously  cleared  510(k)  device,  are placed in class III,
requiring pre-market approval.

         510(k) Clearance Pathway

         When a 510(k)  clearance  is  required,  the Company  must submit a PMN
demonstrating  that  its  proposed  device  is  substantially  equivalent  to  a
previously cleared 510(k) device or a device that was in commercial distribution
before May 28, 1976 for which the FDA has not yet called for the  submission  of
PMA  applications.  By  regulation,  the FDA is  required to clear or deny a PMN
within  90  days  of  submission  of the  application.  As a  practical  matter,
clearance  often  takes  significantly  longer.  The  FDA  may  require  further
information,   including  clinical  data,  to  make  a  determination  regarding
substantial  equivalence.  On January 17, 1991,  EPI received FDA  clearance for
commercial  marketing of the SofPulse device for the treatment of pain and edema
in soft  tissue  pursuant to a 510(k) PMN.  In 1999,  the Company  received  FDA
clearance for the commercial marketing of the Aurex-3 pursuant to a 510(k) PMN.

         Pre-market Approval Pathway

         A PMA application  must be submitted to the FDA if the device cannot be
cleared through the 510(k) process. The process of submitting a satisfactory PMA
application is significantly more expensive, complex and time consuming than the
process of establishing  "substantial equivalence" to a device marketed prior to
1976 pursuant to a PMN and requires  extensive  research and clinical studies. A
PMA application must be supported by extensive data, including,  but not limited
to,  technical,  preclinical,  clinical  trials,  manufacturing  and labeling to
demonstrate  to the FDA's  satisfaction  the  safety  and  effectiveness  of the
device.  Upon  completion of these tasks,  an applicant is required to submit to
the  FDA  all  relevant  clinical,  animal  testing,  manufacturing,  laboratory
specifications and other information. If accepted for filing, the application is
further  reviewed  by  the  FDA  and  subsequently  may  be  reviewed  by an FDA
scientific  advisory  panel  comprised of  physicians,  statisticians  and other
qualified  personnel.  A public meeting may be held before the advisory panel in
which the PMA  application  is reviewed and discussed.  Upon  completion of such
process, the advisory panel issues a favorable or unfavorable  recommendation to
the FDA or  recommends  approval  with  conditions.  The FDA is not bound by the


                                      -15-
<PAGE>

opinion of the advisory  panel.  The FDA may conduct an  inspection to determine
whether the applicant conforms with CGMP guidelines.  If the FDA's evaluation is
favorable,  the  FDA  will  subsequently  publish  a  letter  approving  the PMA
application  for the  device  for a  mutually  agreed  upon  indication  of use.
Interested  parties can file  comments on the order and seek further FDA review.
The PMA process may take several years and no assurance can be given  concerning
the ultimate outcome of PMA applications submitted by an applicant.

         In March 1989,  in response to a PMN filed by the Company with the FDA,
the FDA notified the Company that the then current model of the Sonotron Device,
under the FDA's standards,  was not substantially  equivalent to certain medical
devices marketed in interstate  commerce prior to May 28, 1976. In March 1991, a
further PMN was filed with the FDA on behalf of the Company  with respect to the
then current  model of the Sonotron  Device which was  subsequently  voluntarily
withdrawn  by the Company.  The FDA advised the Company  that its  determination
with  respect  to the  initial  PMN was based upon (a) the new  intended  use of
applying  superficial heat at non-therapeutic  temperatures for the treatment of
osteoarthritis, and (b) new types of safety and effectiveness questions that are
raised by the new  technological  characteristics  of the Sonotron  Devices when
compared to certain  devices  marketed  before May 28,  1976.  In the event that
Sonotron  Devices cannot be marketed  pursuant to a PMN, before Sonotron Devices
can be marketed in the United States,  the Company would be required to obtain a
PMA  before the  Sonotron  Devices  can be  marketed  in the  United  States for
commercial  distribution in connection with human applications.  There can be no
assurance  that any  approval  can be obtained  from the FDA in the  foreseeable
future, if at all.

         In January 1991, the FDA advised EPI of its  determination to treat the
MRT100,  the first model of the SofPulse device, as a class III device.  The FDA
retains  the right to require  the  manufacturers  of certain  Class III medical
devices to submit a PMA  application in order to sell such devices or to promote
such devices for specific  indications.  To date, the Company has not been asked
by the FDA to seek pre-market approval for the SofPulse device;  however,  there
can be no assurance  that the Company will not be required to do so and that, if
required,  the  Company  will be able to comply  with such  requirement  for the
SofPulse device.

         Pervasive and Continuing Regulation

         After  a  device  is  placed  on  the   market,   numerous   regulatory
requirements apply. These include:

         o    quality system regulations,  or QSR, which require  manufacturers,
              including third-party  manufacturers,  to follow stringent design,
              testing,  control,   documentation  and  other  quality  assurance
              procedures during all aspects of the manufacturing process;

         o    labeling regulations and FDA prohibitions against the promotion of
              products for uncleared, unapproved or "off-label" uses;

         o    medical   device   reporting   regulations,   which  require  that
              manufacturers report to the FDA if their device may have caused or
              contributed to a death or serious injury or malfunctioned in a way
              that would likely cause or contribute to a death or serious injury
              if the malfunction were to recur; and

         o    post-market surveillance  regulations,  which apply when necessary
              to protect the public health or to provide  additional  safety and
              effectiveness data for the device.

         The FDA has broad post-market and regulatory  enforcement  powers.  The
Company  is subject  to  unannounced  inspections  by the FDA to  determine  its
compliance with the QSR and other regulations, and these inspections may include
the   Company's   manufacturing   facilities,   or   any   other   manufacturing
subcontractors  that the Company may engage.  The Company has been registered by
the FDA as a Registered Medical Device Establishment  allowing it to manufacture
medical devices in accordance with procedures  outlined in FDA regulations which
include quality control and related  activities.  Such registration is renewable
annually and although  the Company does not believe that the  registration  will
fail to be renewed by the FDA,  there can be no assurance of such  renewal.  The
failure  of the  Company  to obtain  any  annual  renewal  would have a material
adverse effect on it.


                                      -16-
<PAGE>

         Failure to comply with applicable regulatory requirements can result in
enforcement action by the FDA, which may include any of the following sanctions:

         o        fines, injunctions, consent decrees and civil penalties;

         o        recall or seizure of the Company's products;

         o        operating  restrictions,  partial suspension or total shutdown
                  of production;

         o        refusing  the  Company's  requests  for  510(k)  clearance  or
                  pre-market approval of new products or new intended uses;

         o        withdrawing 510(k) clearance or pre-market  approvals that are
                  already granted; and

         o        criminal prosecution.

         The FDA also has the  authority  to require  us to  repair,  replace or
refund  the cost of any  medical  device  that has been  manufactured  for us or
distributed  by the Company.  If any of these  events were to occur,  they could
have a material adverse effect on the Company's business.

         The Company is also subject to a wide range of federal, state and local
laws and  regulations,  including those related to the  environment,  health and
safety,  land use and  quality  assurance.  The Company  believes  that it is in
compliance  with these laws and  regulations  as  currently  in effect,  and its
compliance  with  such  laws  will not have a  material  adverse  effect  on the
Company's capital expenditures, earnings and competitive and financial position.

         International Regulations

         International   sales  of  medical   devices  are  subject  to  foreign
governmental regulations,  which vary substantially from country to country. The
time required to obtain clearance or approval by a foreign country may be longer
or  shorter  than  that  required  for  FDA  clearance  or  approval,   and  the
requirements  may be different.  There can be no assurance that the Company will
be  successful  in obtaining or  maintaining  necessary  approvals to market its
products in certain  foreign  markets,  or obtain such  approvals for additional
products that may be developed or acquired by the Company.

         The primary  regulatory  environment  in Europe is that of the European
Union,  which consists of 25 countries  encompassing most of the major countries
in Europe.  Three member  states of the  European  Free Trade  Association  have
voluntarily adopted laws and regulations that mirror those of the European Union
with respect to medical  devices.  Other  countries,  such as Switzerland,  have
entered into Mutual  Recognition  Agreements  and allow the marketing of medical
devices that meet European Union requirements.

         The  European  Union  has  adopted  numerous  directives  and  European
Standardization  Committees have promulgated  voluntary standards regulating the
design,  manufacture,  clinical trials, labeling and adverse event reporting for
medical  devices.  Devices  that  comply  with the  requirements  of a  relevant
directive  will be entitled to bear a CE  conformity  marking  (which stands for
Conformite  Europeenne),  indicating that the device conforms with the essential
requirements of the applicable directives and, accordingly,  can be commercially
distributed  throughout  the member  states of the  European  Union,  the member
states of the European Free Trade  Association  and countries which have entered
into a Mutual Recognition  Agreement.  The method of assessing conformity varies
depending  on the type  and  class  of the  product,  but  normally  involves  a
combination  of  self-assessment  by  the  manufacturer  of  the  product  and a
third-party   assessment  by  a  Notified  Body,  an  independent   and  neutral
institution  appointed by a country to conduct the conformity  assessment.  This
third-party  assessment  may consist of an audit of the  manufacturer's  quality
system and specific  testing of the  manufacturer's  device.  An assessment by a
Notified Body in one member state of the European Union, the European Free Trade
Association or one country which has entered into a Mutual Recognition Agreement
is required in order for a manufacturer to  commercially  distribute the product
throughout these countries.  ISO 9001 and ISO 13845  certification are voluntary
harmonized standards.  Compliance establishes the presumption of conformity with
the essential requirements for a CE Marking.


                                      -17-
<PAGE>

Reimbursement

         In the United  States,  health care  providers,  such as hospitals  and
physicians,   that  purchase  or  lease  medical  devices,   generally  rely  on
third-party payors, principally Medicare,  Medicaid and private health insurance
plans, including health maintenance  organizations,  to reimburse all or part of
the cost of the treatment for which the medical device is being used. Successful
commercialization  of the  Company's  products  will depend,  in part,  upon the
availability  of  reimbursement  for the cost of the treatment  from third party
health care payors  such as  Medicare,  Medicaid  and private  health  insurance
plans, including health maintenance organizations.  Such third party payors have
increasingly  challenged the price of medical  products and services,  which has
and could continue to have a significant  effect on the  purchasing  patterns of
many  health care  providers.  Several  proposals  have been made by federal and
state  government  officials  that may lead to health care reforms,  including a
government directed national health care system and health care cost-containment
measures.  The  effect  of  changes  in the  health  care  system  or  method of
reimbursement  for the SofPulse  Device or any other medical device which may be
marketed  by the  Company  in the  United  States  cannot be  determined  by the
Company.

         The SofPulse Device is rented principally to nursing homes and extended
care  facilities  that receive  payment  coverage for products and services they
utilize  from  various  public and private  third-party  payors,  including  the
Medicare  program  and  private  insurance  plans.  As a result,  the demand and
payment for the Company's products are dependent,  in part, on the reimbursement
policies  of these  payors.  The  manner in which  reimbursement  is sought  and
obtained for any of the Company's  medical device products varies based upon the
type of payor  involved and the setting to which the product is furnished and in
which it is utilized by patients.

         The Company  cannot  determine the effect of changes in the  healthcare
system or method of  reimbursement  for the SofPulse device or any other medical
device which may be marketed by it in the United States. For example,  from 1991
to 1997, the SofPulse device was marketed primarily for use in nursing homes for
the Medicare reimbursable  treatment of chronic wounds through a rental program.
Due to changes in reimbursement made by CMS, in 1997, which prohibited  Medicare
coverage  of the  use of the  technology  used  in the  SofPulse  device  in the
treatment  of   non-healing   wounds,   the  nursing  home  revenue   diminished
significantly  by  2001  and  the  Company  pursued   alternative   markets  and
applications for use of the SofPulse device.  In December 2003, CMS reversed its
policy  and   issued  an  NCD   providing   for   Medicare   reimbursement   for
electromagnetic therapies for non-healing wounds, which became effective in July
2004. In response to this significant  regulatory change, the Company re-entered
the wound care market.

         The Company  believes that government and private efforts to contain or
reduce  health  care  costs  are  likely  to  continue.  These  trends  may lead
third-party  payors to deny or limit  reimbursement for the Company's  products,
which could negatively  impact the pricing and  profitability of, or demand for,
the Company's products.

         Medicare

         Medicare is a federally  funded program that provides  health  coverage
primarily to the elderly and disabled.  Medicare is composed of four parts: Part
A, Part B, Part C and Part D. Medicare Part A (hospital insurance) covers, among
other things,  inpatient  hospital  care,  home health care and skilled  nursing
facility  services.  Medicare Part B (supplementary  medical  insurance)  covers
various  services,  including  those services  provided on an outpatient  basis.
Medicare Part B also covers medically  necessary  durable medical  equipment and
medical supplies.  Medicare Part C, also known as "Medicare  Advantage,"  offers
beneficiaries a choice of various types of health care plans,  including several
managed care options.  Medicare Part D is the new  Voluntary  Prescription  Drug
Benefit  Program,  which  becomes  effective in 2006.  The Medicare  program has
established  guidelines for the coverage and reimbursement of certain equipment,
supplies  and  support  services.  In  general,  in  order to be  reimbursed  by
Medicare, a health care item or service furnished to a Medicare beneficiary must
be  reasonable  and  necessary  for the  diagnosis or treatment of an illness or
injury or to improve the  functioning of a malformed body part and not otherwise
excluded by statute.  In October 2004, CMS issued a quarterly update that allows
skilled nursing facilities,  or SNFs, and providers of healthcare in the home to
use the  electromagnetic  therapy code in the Healthcare  Common  Procedure Code
System, the standardized  coding system developed by CMS to ensure that Medicare
reimbursement  claims are  processed  in an orderly  and  consistent  manner for
consolidated  billing  enforcement.  Although CMS has provided for reimbursement
for the use of  electromagnetic  therapy by SNFs,  CMS has not yet  provided for
reimbursement for the use of electromagnetic  therapy by providers of healthcare
in the home.  However,  the Company is pursuing  obtaining  clearance for use of
electromagnetic  therapy by providers of healthcare in the home,  but it may not
be able to obtain such clearance.


                                      -18-
<PAGE>

         The methodology for determining the amount of Medicare reimbursement of
the Company's  products  varies based upon,  among other things,  the setting in
which a Medicare beneficiary receives health care items and services.

         Hospital Setting

         Since the  establishment  of the  prospective  payment  system in 1983,
acute care hospitals are generally  reimbursed for certain  patients by Medicare
for inpatient  operating costs based upon prospectively  determined rates. Under
the  prospective  payment  system,  or  PPS,  acute  care  hospitals  receive  a
predetermined payment rate based upon the Diagnosis-Related Group, or DRG, which
is assigned to each Medicare  beneficiary's stay,  regardless of the actual cost
of the services  provided.  Certain additional or "outlier" payments may be made
to a  hospital  for cases  involving  unusually  high  costs or lengths of stay.
Accordingly,  acute care  hospitals  generally  do not receive  direct  Medicare
reimbursement under PPS for the distinct costs incurred in purchasing or renting
the Company's products. Rather, reimbursement for these costs is included within
the DRG-based payments made to hospitals for the treatment of  Medicare-eligible
inpatients who utilize the products. Long-term care and rehabilitation hospitals
also are now paid under a PPS rate that does not directly account for all actual
services rendered.  Since PPS payments are based on predetermined rates, and may
be less than a  hospital's  actual  costs in  furnishing  care,  hospitals  have
incentives to lower their inpatient  operating costs by utilizing  equipment and
supplies,  such as our medical device  products,  that will reduce the length of
inpatient stays, decrease labor or otherwise lower their costs. In addition, the
amount  that the  hospital  receives  under PPS could  limit the amount that the
Company could charge a hospital for the use of its products.

         Certain  specialty  hospitals  also use the  Company's  medical  device
products.  Such  specialty  hospitals  are exempt  from the PPS and,  subject to
certain cost ceilings, are reimbursed by Medicare on a reasonable cost basis for
inpatient   operating   and  capital   costs   incurred  in  treating   Medicare
beneficiaries.   Consequently,  such  hospitals  may  have  additional  Medicare
reimbursement  for  reasonable  costs  incurred  in  purchasing  or renting  the
Company's products. There has been little experience with PPS for long-term care
and  rehabilitation  hospitals.  A final rule for  rehabilitation  hospital  PPS
became effective on January 1, 2002. A final ruling was published in August 2002
implementing  PPS for  long-term  care  hospitals  with a  phased-in  transition
period,  effective October 1, 2002. The Company cannot predict the impact of the
rehabilitation  hospital PPS or the  long-term  care  hospital PPS on the health
care industry or on the Company's financial position or results of operations.

         Skilled Nursing Facility Setting

         On July 1, 1998,  reimbursement  for SNFs under Medicare Part A changed
from a  cost-based  system to a  prospective  payment  system  which is based on
resource utilization groups ("RUGs").  Under the RUGs system, a Medicare patient
in a SNF is assigned to a RUGs category upon admission to the facility. The RUGs
category to which the patient is assigned  depends upon the medical services and
functional  support  the patient is  expected  to  require.  The SNF  receives a
prospectively  determined daily payment based upon the RUGs category assigned to
each  Medicare  patient.  These  payments  are  intended  generally to cover all
inpatient  services for  Medicare  patients,  including  routine  nursing  care,
capital-related costs associated with the inpatient stay and ancillary services.
Effective July 2002, the daily payments were based on the national average cost.
Although the  Refinement  Act and BIPA  increased  the payments for certain RUGs
categories,  certain  provisions of the  Refinement  Act and BIPA covering these
payment increases  expired on September 30, 2002 and, in effect,  the RUGs rates
for the most  common  categories  of SNF  patients  decreased.  Because the RUGs
system provides SNFs with fixed daily cost reimbursement,  SNFs have become less
inclined  to use  products  which had  previously  been  reimbursed  as variable
ancillary costs.


                                      -19-
<PAGE>

Insurance

         The Company may be exposed to  potential  product  liability  claims by
those who use the Company's products. Therefore, the Company maintains a general
liability insurance policy,  which includes aggregate product liability coverage
of $2,000,000 for certain of the Company's  products.  The Company does not have
product  liability  coverage  for its medical  device  products,  other than the
SofPulse  which is  covered by a product  liability  policy  held by Ivivi.  The
Company believes that its present  insurance  coverage is adequate for the types
of products currently marketed.  There can be no assurance,  however,  that such
insurance will be sufficient to cover potential claims or that the present level
of coverage will be available in the future at a reasonable cost.

Employees

         As of June 29, 2005,  the Company had an aggregate of 16 employees,  10
of which are  employed  directly by the Company and six of which are employed by
Ivivi.  As of such date,  the Company had five full-time  salaried  employees in
executive or managerial  positions,  two of whom were executive  officers of the
Company, and one part-time employee.

Recent Developments

Private Placement

         In December 2004 and February 2005,  the Company,  together with Ivivi,
its  majority-owned  subsidiary,  completed two private  placements  pursuant to
which  they  issued,   jointly  and  severally,   unsecured   convertible  notes
(collectively,  the "Notes") in an aggregate  principal amount of $3,637,500 and
$2,450,000,  respectively.  The  private  placements  were  completed  in  seven
separate  closings  from July 2004 through  February  2005.  The proceeds of the
private  placements  are being  used  primarily  by Ivivi for the  research  and
development  and sales and marketing of the SofPulse device line of products and
for the research and development of other potential  products being developed by
Ivivi.  Reference is made to the Company's  Current  Reports on Form 8-K,  dated
August 31, 2005, December 1, 2004 and February 10, 2005.

         The Notes are due and  payable  five years  from the date of  issuance,
unless  earlier  converted.  The Notes bear  interest  at 6% per annum and under
certain  circumstances,  the  principal  and accrued  interest on the Notes will
either be: (i) convertible  into the Company's common stock at $.29 per share or
(ii) convertible  into Ivivi's common stock at $8.30 per share.  Pursuant to the
terms of the private placements  completed in each of December 2004 and February
2005,  the  number of shares of the  Company's  common  stock and the  number of
shares of Ivivi's common stock issuable upon conversion of the convertible notes
issued  therein and the  exercise of the  warrants  will  increase by 1% and 2%,
respectively,  for each 30-day period,  or portion thereof,  after March 1, 2005
and June 30, 2005,  respectively,  that a  registration  statement  covering the
shares of the  Company's  common stock and the shares of Ivivi's  common  stock,
respectively,  underlying  securities  issued in the  private  placement  is not
declared effective.

         For each Note in the principal amount of $100,000 issued in the Private
Placements,  one  warrant  for  the  purchase  of up to  344,828  shares  of the
Company's common stock at $.41 per share (the "Company Warrant") and one warrant
for the  purchase of up to 12,048  shares of Ivivi's  common  stock at $5.70 per
share (the "Ivivi  Warrant") were issued.  Each of the Company  Warrants and the
Ivivi  Warrants  provides  that in addition to paying the  exercise  price,  the
holder  must  surrender  the  non-exercised  warrant  (i.e.,  either the Company
Warrant or the Ivivi Warrant).

Initial Public Offering of Ivivi

         On February 11, 2005,  the Company  issued a press release  pursuant to
which the Company announced the filing of a registration  statement on Form SB-2
by Ivivi  related to the  proposed  initial  public  offering of Ivivi's  common
stock.  Reference  is made to the  Company's  Current  Report  on Form 8-K dated
February 11, 2005. We cannot assure you that the offering will be consummated on
terms  acceptable to us, if at all. In the event the offering is completed,  the
Company's ownership of Ivivi will be decreased significantly.


                                      -20-
<PAGE>

Risk Factors

         An investment in our stock  involves a high degree of risk.  You should
carefully consider the following information, together with other information in
this  prospectus,  before  buying  shares of our stock.  If any of the following
risks or uncertainties  occur, our business,  financial condition and results of
operations could be materially and adversely affected,  the trading price of our
stock could  decline and you may lose all or a part of the money you paid to buy
our stock.

                     Risks Relating to Our Chemical Business

New environmental or other  regulations  could increase the Company's  operating
costs.

         Like other  manufacturers,  the  Company is subject to a broad range of
Federal,  state and  local  laws and  requirements,  including  those  governing
discharges  in the air and  water,  the  handling  and  disposal  of  solid  and
hazardous  substances and wastes,  the remediation of  contamination  associated
with the release of hazardous substances, work place safety and equal employment
opportunities.  The Company has made  expenditures  to comply with such laws and
requirements.  The Company believes, based on information currently available to
management,  that it is in compliance  with applicable  environmental  and other
legal  requirements  and that the  Company  will not  require  material  capital
expenditures to maintain  compliance  with such  requirements in the foreseeable
future.  Governmental authorities have the power to enforce compliance with such
laws and regulations, and violators may be subject to penalties,  injunctions or
both. Third parties may also have the right to enforce compliance with such laws
and  regulations.  As the Company  develops  new  formulations  for its chemical
products,  those products may become  subject to additional  review and approval
requirements governing the sale and use of its products.  Although the Company's
manufacturing  processes do not currently  result in the generation of hazardous
wastes, this may not always be the case and material costs or liabilities may be
incurred  by the  Company  in  the  future  as a  result  of  the  manufacturing
operations.  It is also possible that other developments,  such as additional or
increasingly  strict  requirements  of laws and  regulations of these types,  or
enforcement  policies  thereunder,  could  significantly  increase the Company's
costs of operations.

Because we use various  materials and substances in  manufacturing  our chemical
products,  our production facilities are subject to operating hazards that could
cause personal  injury and loss of life,  severe damage to, or  destruction  of,
property and equipment and environmental contamination.

         We are  dependent  on the  continued  operation of our  production  and
distribution  facility.  This facility is subject to hazards associated with the
manufacture,  handling,  storage and  transportation  of chemical  materials and
products, including natural disasters, mechanical failure, unscheduled downtime,
labor difficulties,  transportation  interruptions,  and environmental  hazards,
such as spills,  discharges  or releases of toxic or  hazardous  substances  and
remediation  complications.  These hazards can cause personal injury and loss of
life,   severe  damage  to,  or  destruction  of,  property  and  equipment  and
environmental  contamination  and other  environmental  damage  and could have a
material  adverse  effect on our financial  condition.  In addition,  due to the
nature of our  business  operations,  we could become  subject to scrutiny  from
environmental action groups.

We  rely  significantly  on raw  materials  in the  production  of our  chemical
products and  fluctuations  in costs of such raw  materials  would  increase our
operating expenses.

      Our manufacturing  operations with respect to our chemical products depend
upon  obtaining  adequate  supplies of our raw materials on a timely basis.  The
loss of a key  source of supply or a delay in  shipments  could  have an adverse
effect on our business.  We are exposed to price risks associated with these raw
material purchases.  The availability and prices of raw materials may be subject
to  curtailment or change due to, among other things,  new laws or  regulations,


                                      -21-
<PAGE>

suppliers'  allocations  to other  purchasers,  interruptions  in  production by
suppliers,  changes in exchange  rates,  cost  components  of raw  materials and
worldwide price levels. Our results of operations could be adversely affected if
we were unable to obtain  adequate  supplies of raw materials in a timely manner
or if the costs of raw materials increased significantly.

We face competition from other chemical companies,  which could adversely affect
our revenue and financial condition.

         We  actively  compete  with  companies  producing  the same or  similar
products and, in some instances,  with companies  producing  different  products
designed  for the same  uses.  We  encounter  competition  in  price,  delivery,
service,  performance,  product innovation and product  recognition and quality,
depending on the product involved. For some of our products, our competitors are
larger and have greater financial resources.  As a result, these competitors may
be better able to  withstand a change in  conditions  within the  industries  in
which we  operate,  a change in the prices of raw  materials  or a change in the
economy as a whole.  Our  competitors can be expected to continue to develop and
introduce  new and  enhanced  products,  which  could  cause a decline in market
acceptance of our chemical products.  Current and future consolidation among our
competitors  and  customers may also cause a loss of market share as well as put
downward  pressure on pricing.  Our  competitors  could cause a reduction in the
prices  for some of our  chemical  products  as a result  of  intensified  price
competition.  Competitive  pressures  can  also  result  in the  loss  of  major
customers. If we cannot compete successfully,  our business, financial condition
and results of operations could be adversely affected.

We face competition from other chemical companies, which could force us to lower
our  prices  thereby  adversely  affecting  our  operating  margins,   financial
condition, cash flows and profitability.

         The  markets  in which we  operate  are  highly  competitive,  and this
competition  could  harm our  business,  results  of  operations,  cash flow and
financial  condition.  Our competitors include major international  producers as
well as smaller regional competitors.  We believe that a significant competitive
factor for our products is selling price. We could be subject to adverse results
caused  by  our  competitors'  pricing  decisions.  In  addition,   current  and
anticipated future  consolidation  among our competitors and customers may cause
us  to  lose  market  share  as  well  as  put  downward  pressure  on  pricing.
Furthermore,  there is a trend in the chemical  industry  toward  relocation  of
manufacturing facilities to lower-cost regions such as Asia. Such relocation may
permit  some  of  our  competitors  to  lower  their  costs  and  improve  their
competitive position. Some of our competitors are larger, have greater financial
resources and have less debt than we do. As a result,  those  competitors may be
better  able to  withstand  a change  in  conditions  within  our  industry  and
throughout  the  economy  as a whole.  If we do not  compete  successfully,  our
business,  operating margins,  financial condition, cash flows and profitability
could be adversely affected.

Failure to develop new chemical  products  and/or improve our existing  products
will make us less competitive.

      Our results of  operations  depend,  in part, on our ability to expand our
chemical product offerings. We are committed to remaining a competitive producer
and  believe  that our  portfolio  of new or  re-engineered  products is strong.
However, we may not be able to continue to develop new products, re-engineer our
existing products successfully or bring them to market in a timely manner. While
we believe  that the  products,  pricing  and  services we offer  customers  are
competitive,  we may not be able to continue to attract and retain  customers to
which to sell our chemical products.

Failure  to make  continued  improvements  in our  productivity  could  hurt our
competitive position.

         In order to obtain and maintain a competitive position, we believe that
we must continue to make improvements in our productivity. When we invest in new
technologies  or  processes,   we  face  risks  related  to  cost  overruns  and
unanticipated technical difficulties. Our inability to anticipate, respond to or
utilize  changing  technologies  could  have a  material  adverse  effect on our
business and our results of operations.


                                      -22-
<PAGE>

Changes in our  customers'  products  could  reduce the demand for our  chemical
products, which may decrease our net sales and operating margins.

         Our chemical products are used for a broad range of applications by our
customers.  Changes, including technological changes, in our customers' products
or processes may make our chemical products unnecessary,  which would reduce the
demand for those  products.  Other customers may find  alternative  materials or
processes  that no longer  require our products.  If the demand for our chemical
products is reduced, our net sales and operating margins may be reduced as well.

We have few proprietary rights with respect to our chemical  products,  the lack
of which may make it easier for our competitors to compete against us.

         None of our chemical  products are protected by patents.  We do attempt
to protect the names of some of our chemical  products  through  trademarks  and
some  of  our  other  limited   proprietary   property   through  trade  secret,
nondisclosure and confidentiality  measures;  however,  such protections may not
preclude competitors from developing similar technologies.

                  Risks Relating to Our Medical Device Business

The medical  products  market is highly  competitive  and  susceptible  to rapid
change and such changes could render any products  developed by us  uneconomical
or obsolete.

         The medical products market is characterized by extensive  research and
development  activities and  significant  technological  change.  Our ability to
execute our  business  strategy  depends in part upon our ability to develop and
commercialize  efficient and effective  products based on our  technologies.  We
compete against  established  companies as well as numerous  independently owned
small  businesses,  including  Diapulse  Corporation  of  America,  Inc.,  which
manufactures  and markets devices that are deemed by the FDA to be substantially
equivalent to SofPulse;  Regenesis  Biomedical,  which  manufactures and markets
devices  that are  similar  to our first  generation  SofPulse  device;  and KCI
Concepts,  Inc., which  manufactures and markets negative pressure wound therapy
devices in the wound care market.  We also face  competition from companies that
have developed  other forms of treatment,  such as hyperbaric  oxygen  chambers,
thermal  therapies and  hydrotherapy.  In addition,  companies are developing or
may, in the future,  engage in the development of products  and/or  technologies
competitive with our products.  We expect that  technological  developments will
occur and that  competition  is  likely to  intensify  as new  technologies  are
employed.  Many of our competitors  are capable of developing  products based on
similar  technology,  have  developed  and are capable of  continuing to develop
products based on other  technologies,  which are or may be competitive with our
products and  technologies.  Many of these companies are  well-established,  and
have  substantially   greater  financial  and  other  resources,   research  and
development  capabilities and more experience in obtaining regulatory approvals,
manufacturing  and  marketing  than we do. Our ability to execute  our  business
strategy and  commercially  exploit our SofPulse  device must be  considered  in
light  of  the  problems,  expenses,  difficulties,   complications  and  delays
frequently  encountered  in  connection  with  the  development  of new  medical
processes,  devices and  products and their level of  acceptance  by the medical
community.  Our  competitors  may succeed in developing  competing  products and
technologies that are more effective than our products and technologies, or that
receive   government   approvals   more   quickly  than  our  new  products  and
technologies,  which may render our  existing  and new  products  or  technology
uncompetitive, uneconomical or obsolete. See "Item 1. Business - Competition."

A portion of our revenues are  currently  dependent on our products that utilize
PEMF  technology,  and  increasing  our  revenues  will depend on our ability to
increase market penetration, as well as our ability to develop and commercialize
new products and technologies.

         Products  based  on   non-invasive,   electrotherapeutic   technologies
represent  known methods of treatment  that we believe have been  under-utilized
clinically.  Physicians and other healthcare  professionals may not use SofPulse


                                      -23-
<PAGE>

or other  potential  products  and  technologies  developed  by us  unless  they
determine  that the  clinical  benefits to the  patient  are greater  than those
available from competing  products or therapies or represent equal efficacy with
lower  cost.  Even  if  the  advantage  of  our  products  and  technologies  is
established  as  clinically  and  fiscally  significant,  physicians  and  other
healthcare  professionals  may not elect to use  SofPulse or other  products and
technologies  developed by us for any number of reasons.  For example, the first
generation  of the SofPulse  device  cannot be used in hospital  intensive  care
units  because  the power  output  of the  device  can  interfere  with  medical
monitoring  equipment.  The rate of adoption and  acceptance of our products and
technologies,  including the SofPulse device,  may also be affected adversely by
unexpected  side  effects  or   complications   associated  with  our  products,
consumers'  reluctance to invest in new products and technologies,  the level of
third-party  reimbursement  and  widespread  acceptance  of other  products  and
technologies.  Consequently,  physicians  and  other  healthcare  professionals,
healthcare  payors and consumers may not accept  SofPulse device products or new
products  or  technologies  developed  by us.  Broad  market  acceptance  of the
SofPulse device products and other products and technologies  developed by us in
the future may require the  education  and training of numerous  physicians  and
other healthcare professionals, as well as conducting or sponsoring clinical and
fiscal  studies to  demonstrate  the cost  efficiency and other benefits of such
products and technologies. The amount of time required to complete such training
and studies  could be costly and result in a delay or  dampening  of such market
acceptance.  Moreover,  healthcare  payors' approval of use for our products and
technologies  in development may be an important  factor in establishing  market
acceptance.

         We may be required to undertake  time-consuming  and costly development
activities  and seek  regulatory  clearance  or  approval  for new  products  or
technologies.  Although we have received FDA  clearance for the SofPulse  device
for the treatment of edema and pain in soft tissue, we may not be able to obtain
regulatory  clearance  or  approval  of  new  products  or  technologies  or new
treatments through existing products.  In addition,  we have not demonstrated an
ability to market and sell our  SofPulse  device  products,  much less  multiple
products  simultaneously.  If we are unable to increase market acceptance of our
current  products or develop and  commercialize  new products in the future,  we
will not be able to increase our revenues.  The completion of the development of
any new products or  technologies  or new uses of existing  products will remain
subject to all the risks associated with the  commercialization  of new products
based on innovative technologies, including:

      o     our  ability  to fund  and  establish  research  that  supports  the
            efficacy of new technologies and products;

      o     our  ability to obtain  regulatory  approval  or  clearance  of such
            technologies and products, if needed;

      o     our ability to obtain market acceptance of such new technologies and
            products;

      o     our ability to  effectively  and  efficiently  market and distribute
            such new products;

      o     the ability of ADM Tronics or other manufacturers  utilized by us to
            effectively and efficiently manufacture such new products; and

      o     our  ability to sell such new  products at  competitive  prices that
            exceed our per unit costs for such products.

We will need additional  capital to market our existing  medical device products
and to  develop  and  commercialize  new  technologies  and  products  and it is
uncertain whether such capital will be available.

         Our medical  device  business  is capital  intensive  and will  require
additional financing in order to:

            o     fund research and development;

            o     expand sales and marketing activities;

            o     develop new or enhanced technologies or products;


                                      -24-
<PAGE>

            o     respond to competitive pressures; and

            o     acquire  complementary   technologies  or  take  advantage  of
                  unanticipated opportunities.

         Our need for additional capital will depend on:

            o     the  costs  and  progress  of  our  research  and  development
                  efforts;

            o     the preparation of pre-market  application  submissions to the
                  FDA for our new products and technologies and costs associated
                  therewith;

            o     the  number  and  types  of   product   development   programs
                  undertaken;

            o     the number of medical devices,  including the SofPulse device,
                  we have manufactured for sale or rental;

            o     the  costs  and  timing of  expansion  of sales and  marketing
                  activities;

            o     the  amount  of  revenues  from  sales  of  our  existing  and
                  potentially new products;

            o     the cost of obtaining and maintaining, enforcing and defending
                  patents and other intellectual property rights;

            o     competing technological and market developments; and

            o     developments  related to regulatory and  third-party  coverage
                  matters.

We will need to obtain  capital  to  continue  to operate  and grow our  medical
device business.  Our ability to obtain additional  financing in the future will
depend in part upon the  prevailing  capital market  conditions,  as well as our
business  performance.  There can be no assurance  that we will be successful in
our efforts to arrange  additional  financing on terms  satisfactory to us or at
all. If  additional  financing is raised by the issuance of common stock you may
suffer  additional  dilution and if additional  financing is raised through debt
financing,  it may involve significant  restrictive covenants which could affect
our ability to operate our business. If adequate funds are not available, or are
not  available  on  acceptable  terms,  we  may  not be  able  to  continue  our
operations,  grow our medical device business or take advantage of opportunities
or otherwise respond to competitive pressures and remain in business.

If  we  are  unable  to  receive  reimbursement  from  third-parties,  including
reimbursement from Medicare,  our growth and revenues will be adversely affected
in markets where we rely on insurance coverage for payment.

         Some  healthcare  providers  such  as  hospitals  and  physicians  that
purchase,  lease or rent medical devices in the United States  generally rely on
third-party  payors,  principally  Medicare and private health  insurance plans,
including health maintenance organizations, to reimburse all or part of the cost
of the treatment for which the medical  device is being used.  Commercialization
of our medical device  products and  technologies  marketed in the United States
will depend in part upon the availability of  reimbursement  for the cost of the
treatment from third-party healthcare payors such as Medicare and private health
insurance plans,  including health maintenance  organizations,  in non-capitated
markets,  markets  where  we  rely  on  insurance  coverage  for  payment.  Such
third-party payors are increasingly challenging the cost of medical products and
services,  which have and could  continue  to have a  significant  effect on the
ratification of such  technologies  and services by many  healthcare  providers.
Several proposals have been made by federal and state government  officials that
may  lead to  healthcare  reforms,  including  a  government  directed  national
healthcare  system  and  healthcare  cost-containment  measures.  The  effect of
changes in the  healthcare  system or method of  reimbursement  for the SofPulse
device and any other products or  technologies  that we may market in the United
States cannot be determined.


                                      -25-
<PAGE>

         While third-party  payors generally make their own decisions  regarding
which medical procedures, technologies and services to cover, Medicare and other
third-party  payors  may  apply  standards  similar  to  those  used  by  CMS in
determining whether to provide coverage for a particular  procedure,  technology
or service.  The Medicare statute prohibits payment for any medical  procedures,
technologies or services that are not reasonable and necessary for the diagnosis
or  treatment  of illness or injury.  In 1997,  CMS,  which is  responsible  for
administering the Medicare  program,  had interpreted this provision to prohibit
Medicare  coverage of procedures that,  among other things,  are not deemed safe
and effective  treatments  for the  conditions for which they are being used, or
which are still investigational. However, in July 2004, reimbursement of the use
of the  technology  used in our SofPulse  device in the treatment of non-healing
wounds was  reinstated  by CMS after being  discontinued  from July 1997 through
July 2004. In October 2004,  CMS issued a quarterly  update that allows  skilled
nursing facilities,  or SNFs, and providers of healthcare in the home to use the
electromagnetic therapy code in the Healthcare Common Procedure Code System, the
standardized   coding   system   developed  by  CMS  to  ensure  that   Medicare
reimbursement  claims are  processed  in an orderly  and  consistent  manner for
consolidated  billing  enforcement.  Although CMS has provided for reimbursement
for the use of  electromagnetic  therapy by SNFs,  CMS has not yet  provided for
reimbursement for the use of electromagnetic  therapy by providers of healthcare
in the home. In addition,  the regulatory  environment could again be changed to
bar CMS coverage for treatment of chronic wounds  utilizing our SofPulse  device
or to limit the  amount of  coverage  patients  or  providers  are  entitled  to
receive.  Either  of these  events  would  adversely  affect  our  revenues  and
operating results. See "Item 1. Business - Reimbursement."

         We cannot predict what additional  legislation or regulations,  if any,
may be  enacted  or  adopted  in the  future  relating  to our  business  or the
healthcare industry,  including third-party coverage and reimbursement,  or what
effect  any  such  legislation  or  regulations  may  have  on us.  Furthermore,
significant  uncertainty  exists as to the  coverage  status  of newly  approved
healthcare  products,  and there can be no assurance  that adequate  third-party
coverage  will be available  with  respect to any of our future  products or new
applications  for our present  products.  In  currently  non-capitated  markets,
failure by physicians,  hospitals, nursing homes and other users of our products
to obtain sufficient  reimbursement for treatments using our technologies  would
adversely affect our revenues and operating results.  Alternatively, as the U.S.
medical  system  moves  to more  fixed-cost  models,  such as  payment  based on
diagnosis  related  groups,  prospective  payment  systems  or  other  forms  of
capitation,  the market  landscape may be altered,  and the amount we can charge
for our products may be limited.

If we are unable to achieve market  acceptance of our medical device products or
any new  technologies  or uses  we  develop  in new  markets  where  third-party
reimbursement is unlikely,  our growth could be impeded which could result in an
inability to increase our revenues.

         As part of our growth strategy, we intend to market our SofPulse device
products to plastic surgeons and other plastic surgery practitioners. The use of
the SofPulse  device in these  markets is unlikely to be reimbursed by insurance
and, accordingly, we may experience cost resistance from physicians and patients
in these markets that could adversely affect our growth strategy,  our operating
results and our ability to increase our revenues.

Our subsidiaries,  SMI and Ivivi,  outsource the manufacturing of their products
to us and  if our  operations  are  interrupted  or if  our  orders  exceed  our
manufacturing  capabilities,  our  subsidiaries may not be able to deliver their
products to customers on time.

         Pursuant to a manufacturing agreement between SMI, Ivivi and us, we are
the exclusive manufacturer of the products of SMI and Ivivi. We operate a single
facility and have limited  capacity  that may be  inadequate if SMI's or Ivivi's
customers place orders for unexpectedly  large quantities of their products,  or
if our other  customers  place large orders of  products,  which could limit our
ability to produce the products of SMI or Ivivi. In addition,  if our operations
were halted or restricted,  even temporarily,  or we are unable to fulfill large
orders, SMI and Ivivi could experience business  interruption,  increased costs,
damage to their reputations and loss of their customers.  Although SMI and Ivivi
have the right to utilize other  manufacturers if we are unable to perform under
our agreement, manufacturers of their products need to be licensed with the FDA,
and  identifying  and  qualifying  a new  manufacturer  to  replace  us  as  the
manufacturer of their products could take several months during which time, they
would likely lose  customers  and their  revenues  could be  materially  delayed
and/or reduced. See "Item 1. Business - Manufacturer and Suppliers."


                                      -26-
<PAGE>

SMI and Ivivi  depend on a limited  number  of  suppliers  for their  respective
components and raw materials and any  interruption in the  availability of these
components  and  raw  materials  used  in  their  products  could  reduce  their
respective revenues.

         SMI and Ivivi rely on a limited  number of suppliers for the components
and raw  materials  used in  their  medical  devices.  Although  there  are many
suppliers  for  each of  their  component  parts  and raw  materials,  they  are
dependent on a single or limited number of suppliers for many of the significant
components  and raw  materials.  This reliance  involves a number of significant
risks, including:

         o        unavailability  of materials and  interruptions in delivery of
                  components and raw materials from suppliers;

         o        manufacturing   delays  caused  by  such   unavailability   or
                  interruptions in delivery; and

         o        fluctuations  in the quality and the price of  components  and
                  raw materials.

         Neither  SMI  nor  Ivivi  has  any  long-term  or  exclusive   purchase
commitments  with any of its  suppliers.  Their  failure  to  maintain  existing
relationships  with their  suppliers or to establish  new  relationships  in the
future could also negatively  affect their ability to obtain  components and raw
materials  used in their  products  in a timely  manner.  If they are  unable to
obtain  ample  supply of product from their  existing  suppliers or  alternative
sources of supply,  they may be unable to satisfy their customers'  orders which
could reduce their revenues and adversely affect their  relationships with their
customers. See "Item 1. Business - Manufacturers and Suppliers."

Our  ability  to  execute  our  business  plan  depends  on  the  scope  of  our
intellectual property rights and not infringing the intellectual property rights
of others. The validity, enforceability and commercial value of these rights are
highly uncertain.

         Our ability to compete  effectively  with other companies is materially
dependent upon the proprietary nature of our technologies.  We rely primarily on
patents and trade secrets to protect our medical device technologies.

         We have:

         o        one patent on the SofPulse  device,  which expires in 2015, as
                  well as two other patents for certain  embodiments of PEMF and
                  other aspects of the SofPulse device,  and four patents on the
                  Sonotron  Technology,  which  expire in 2006,  2011,  2012 and
                  2016.

         o        one U.S.  patent  application  with  respect  to the  SofPulse
                  device pending; and

         o        seven  U.S.  patents  with  respect  to  the  SofPulse  device
                  pending.

Third  parties  may  seek  to  challenge,   invalidate,   circumvent  or  render
unenforceable  any patents or  proprietary  rights  owned by us based on,  among
other things:

         o        subsequently discovered prior art;

         o        lack of  entitlement  to the  priority of an earlier,  related
                  application; or

         o        failure to comply  with the  written  description,  best mode,
                  enablement or other applicable requirements.

         In general,  the patent position of medical device  companies is highly
uncertain,  still evolving and involves  complex  legal,  scientific and factual
questions. We are at risk that:


                                      -27-
<PAGE>

         o        other  patents  may be  granted  with  respect  to the  patent
                  applications filed by us; and

         o        any patents issued to us may not provide commercial benefit to
                  us or  will  be  infringed,  invalidated  or  circumvented  by
                  others.

         The  United  States  Patent  and  Trademark   Office  currently  has  a
significant  backlog of patent  applications,  and the  approval or rejection of
patents may take several years. Prior to actual issuance, the contents of United
States patent  applications are generally published 18 months after filing. Once
issued,  such a patent would  constitute  prior art from its filing date,  which
might predate the date of a patent  application  on which we rely.  Conceivably,
the  issuance of such a prior art  patent,  or the  discovery  of "prior art" of
which we are  currently  unaware,  could  invalidate a patent of ours or prevent
commercialization of a product claimed thereby.

         Although we generally  conduct a cursory review of issued patents prior
to engaging in research or development activities,  we may be required to obtain
a  license  from  others  to  commercialize   any  of  our  new  products  under
development.  If patents  that cover our  existing or new products are issued to
other companies,  there can be no assurance that any necessary  license could be
obtained on favorable terms or at all.

         There can be no  assurance  that we will not be  required  to resort to
litigation to protect our patented  technologies and other proprietary rights or
that we will not be the subject of  additional  patent  litigation to defend our
existing  and  proposed   products  and  processes   against  claims  of  patent
infringement or any other  intellectual  property claims.  Such litigation could
result in substantial costs, diversion of management's attention,  and diversion
of our  resources.  In fact, on June 29, 2005,  Ivivi filed a complaint  against
Regenesis  Biomedical,  Inc.  alleging  that  Regenesis is  infringing on one of
Ivivi's U.S.  patents  through its sales of a product that competes with Ivivi's
SofPulse(R)  product.  Although Ivivi is seeking money damages and an injunction
against future sales of the competing product, there can be no assurance that it
will be successful. See "Item 3. Legal Proceedings."

         We  also  have  applied  for  patent   protection  in  several  foreign
countries.  Because  of the  differences  in  patent  laws and  laws  concerning
proprietary rights between the United States and foreign  countries,  the extent
of protection  provided by patents and  proprietary  rights granted to us by the
United States may differ from the protection provided by patents and proprietary
rights granted to us by foreign countries.

         We attempt to  protect  our trade  secrets,  including  the  processes,
concepts, ideas and documentation associated with our technologies,  through the
use of  confidentiality  agreements  and  non-competition  agreements  with  our
current  employees  and with other  parties to whom we have  divulged such trade
secrets. If our employees or other parties breach our confidentiality agreements
and  non-competition  agreements or if these  agreements  are not  sufficient to
protect our technology or are found to be  unenforceable,  our competitors could
acquire and use information  that we consider to be our trade secrets and we may
not be able to compete  effectively.  Most of our competitors have substantially
greater financial, marketing, technical and manufacturing resources than we have
and we may not be profitable if our  competitors are also able to take advantage
of our trade secrets.

         We may decide for business reasons to retain certain  knowledge that we
consider  proprietary as confidential and elect to protect such information as a
trade  secret,  as business  confidential  information  or as know-how.  In that
event,  we  must  rely  upon  trade  secrets,   know-how,   confidentiality  and
non-disclosure  agreements and continuing  technological  innovation to maintain
our  competitive  position.  There  can be no  assurance  that  others  will not
independently  develop  substantially   equivalent  proprietary  information  or
otherwise gain access to or disclose such information.


                                      -28-
<PAGE>

If the FDA or other state or foreign agencies impose regulations that affect our
medical device products, our development, manufacturing and marketing costs will
be increased.

         The  development,  testing,  production  and  marketing of our existing
medical  devices are, and devices we may develop in the future will be,  subject
to regulation by the FDA as devices under the 1976 Medical Device  Amendments to
the Federal Food, Drug and Cosmetic Act. Although we have received FDA clearance
for the  SofPulse  device for the  treatment  of pain and edema in soft  tissue,
alternative  uses for the SofPulse  device and any new products  developed by us
may be subject to FDA regulation as well. In addition, although we have not been
asked by the FDA to seek pre-market approval for the SofPulse device,  there can
be no assurance that we will not be required to do so and that, if required,  we
will be able to comply with such requirement for the SofPulse  device.  Before a
new medical  device,  or a new use of, or claim for, an existing  product can be
marketed in the United States,  it must first receive either 510(k) clearance or
pre-market  approval from the FDA, unless an exemption  applies.  Either process
can be expensive and lengthy.  The FDA's 510(k) clearance  process usually takes
from three to twelve months,  but it can take longer and is  unpredictable.  The
process of obtaining  pre-market approval is much more costly and uncertain than
the 510(k) clearance  process and it generally takes from one to three years, or
even longer,  from the time the  application is filed with the FDA. See "Item 1.
Business - Government Regulation."

         In the United States, medical devices must be:

         o        manufactured in registered and quality approved establishments
                  by the FDA; and

         o        produced in accordance with the FDA Quality System  Regulation
                  ("QSR") for medical devices.

As a result,  we, as well as ADM  Tronics,  the  exclusive  manufacturer  of our
SofPulse  device,  are required to comply with QSR requirements and if they fail
to comply  with  these  requirements,  we will need to find  another  company to
manufacture  our SofPulse  devices which could delay the shipment of our product
to our customers. In addition, the Company's manufacturing facility:

         o        is required to be registered as a medical device manufacturing
                  site with the FDA; and

         o        is subject to inspection by the FDA.

The FDA requires  producers of medical  devices to obtain FDA licensing prior to
commercialization  in the  United  States.  Testing,  preparation  of  necessary
applications  and the processing of those  applications  by the FDA is expensive
and time  consuming.  We do not know if the FDA will act favorably or quickly in
making such reviews, and significant difficulties or costs may be encountered by
us in our efforts to obtain FDA licenses.  The FDA may also place  conditions on
licenses that could restrict commercial  applications of such products.  Product
approvals  may be  withdrawn  if  compliance  with  regulatory  standards is not
maintained or if problems occur following initial  marketing.  Delays imposed by
the FDA licensing  process may materially reduce the period during which we have
the  exclusive  right  to  commercialize   patented   products.   We  have  made
modifications to our devices and may make additional modifications in the future
that we believe do not or will not require  additional  clearances or approvals.
If the  FDA  disagrees,  and  requires  new  clearances  or  approvals  for  the
modifications,  we may be required to recall and to stop  marketing the modified
devices.  We also are subject to Medical  Device  Reporting  regulations,  which
require us to report to the FDA if our products  cause or  contribute to a death
or serious injury, or malfunction in a way that would likely cause or contribute
to a death or serious  injury.  We are not aware of any death or serious  injury
caused by or contributed to by our medical device products,  however,  we cannot
assure you that any such problems will not occur in the future with our existing
or future products.

         Additionally,  our  existing  and  future  products  may be  subject to
regulation by similar agencies in other states and foreign  countries.  While we
believe  that we  have  complied  with  all  applicable  laws  and  regulations,
continued  compliance with such laws or  regulations,  including any new laws or
regulations in connection with our medical devices or any new products developed


                                      -29-
<PAGE>

by us,  might impose  additional  costs on us or  marketing  impediments  on our
products  which could  adversely  affect our revenues and increase our expenses.
The FDA and state  authorities  have broad  enforcement  powers.  Our failure to
comply with  applicable  regulatory  requirements  could  result in  enforcement
action by the FDA or state  agencies,  which may  include  any of the  following
sanctions:

         o        warning letters, fines, injunctions, consent decrees and civil
                  penalties;

         o        repair,  replacement,   refunds,  recall  or  seizure  of  our
                  products;

         o        operating restrictions or partial suspension or total shutdown
                  of production;

         o        refusing  our  requests  for  510(k)  clearance  or  premarket
                  approval of new products,  new intended uses, or modifications
                  to existing products;

         o        withdrawing 510(k) clearance or premarket  approvals that have
                  already been granted; and

         o        criminal prosecution.

If any of these events were to occur, it could harm our business.

The FDA can impose civil and criminal enforcement actions and other penalties on
us if we or our manufacturer fails to comply with stringent FDA regulations.

         Medical device  manufacturing  facilities must maintain records,  which
are available for FDA inspectors documenting that the appropriate  manufacturing
procedures  were followed.  The FDA has authority to conduct  inspections of our
facility, as well as the facility of our manufacturer.  Labeling and promotional
activities are also subject to scrutiny by the FDA and, in certain instances, by
the  Federal  Trade  Commission.  Any failure by us or the  manufacturer  of our
products  to take  satisfactory  corrective  action in  response  to an  adverse
inspection  or to  comply  with  applicable  FDA  regulations  could  result  in
enforcement  action against us or our  manufacturer,  including a public warning
letter, a shutdown of manufacturing  operations, a recall of our products, civil
or criminal penalties or other sanctions.  From time to time, the FDA may modify
such  requirements,  imposing  additional  or different  requirements  which may
require  us to alter our  business  methods  which  could  result  in  increased
expenses. See "Item 1. Business - Governmental Regulation."

                          Risks Related to Our Company

We have been the  subject  of a "going  concern"  opinion  from our  independent
auditors, which means that we may not be able to continue operations.

         Our independent  auditors have added an explanatory  paragraph to their
audit  opinion  issued in  connection  with the fiscal year ended March 31, 2005
financial  statements,  which  states  that we had  substantial  net  losses  of
$2,324,413   and  $141,738  for  the  years  ended  March  31,  2005  and  2004,
respectively,  and we had a stockholders'  deficiency of $1,010,391 at March 31,
2005,  which raises  substantial  doubt about our ability to continue as a going
concern.  Our  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.  This may have an adverse effect on
our ability to obtain  financing for our operations  and to further  develop and
market our products.

We may be exposed to product  liability  claims for which our  insurance  may be
inadequate.

         Our business exposes us to potential product liability risks, which are
inherent in the testing,  manufacturing  and marketing of chemical  products and
medical  devices.  Although we maintain a general  liability  insurance  policy,
which includes aggregate product liability coverage of $2,000,000 for certain of
our products, there can be no assurance,  that such insurance will be sufficient
to  cover  potential  claims  or that the  present  level  of  coverage  will be
available in the future at a reasonable cost.


                                      -30-
<PAGE>

         We do not  have  product  liability  coverage  for our  medical  device
products  other than the  SofPulse,  which is covered by a $2.0 million  product
liability policy held by Ivivi. While we are not aware of side-effects resulting
from the use of any of our products,  there may be unknown  long-term effects of
their use that may result in product liability claims in the future. Further, we
cannot provide any assurance that:

         o        our insurance will provide adequate coverage against potential
                  liabilities  if a product  causes  harm or fails to perform as
                  promised;

         o        adequate  product  liability  insurance  will  continue  to be
                  available in the future; or

         o        our insurance can be maintained on acceptable terms.

         The obligation to pay any product liability claim in excess of whatever
insurance  we are able to obtain would  increase our expenses and could  greatly
reduce our assets. See "Item 1. Business - Insurance."

The loss of any of our executive  officers or key personnel may adversely affect
our operations and our ability to execute our growth strategy.

         Our ability to execute our business  plan  depends  upon the  continued
services of Andre' DiMino, our President and Chief Executive Officer, as well as
our key  technology,  marketing,  sales and  support  personnel.  We do not have
employment or consulting agreements containing  non-compete  agreements with Mr.
DiMino and certain of our key personnel,  and we may not be able to retain these
individuals.  If we lost the services of Mr.  DiMino or our key  personnel,  our
business may be adversely affected and our stock price may decline. In addition,
our ability to execute our business  plan is dependent on our ability to attract
and  retain  additional  highly  skilled  personnel.  We have  key  person  life
insurance  in the amount of $2 million  for Mr.  DiMino,  but not for any of our
other executive officers or key employees.

Our  President  and Chief  Executive  Officer  also serves as Chairman and Chief
Financial Officer of Ivivi, which may cause him to devote a substantial  portion
of his work-time to Ivivi.

         Andre' DiMino, our President and Chief Executive  Officer,  also serves
as Chairman and Chief  Financial  Officer of Ivivi.  While Mr. DiMino  devotes a
substantial portion of his work-time toward ADM Tronics, the remaining amount of
his work-time may be devoted  elsewhere,  including at Ivivi.  As a result,  Mr.
DiMino's  attention  to our  business  and  operations  may be  diverted  by his
obligations elsewhere, including at Ivivi, and we may not be able to have access
to Mr. DiMino as needed by us.

Our  executive  officers and directors  and entities  affiliated  with them have
substantial  control  over us,  which  could  delay or  prevent  a change in our
corporate control favored by our other shareholders.

            Our executive  officers and directors and entities  affiliated  with
them may be deemed to beneficially own, in the aggregate, approximately 51.7% of
our outstanding common stock. In particular,  Mr. DiMino,  together with members
of the DiMino family,  may be deemed to beneficially own approximately  38.7% of
the outstanding shares of our common stock. The interests of our current officer
and  director   shareholders   may  differ  from  the  interests  of  our  other
shareholders.  As a result,  the current  officers and directors  would have the
ability to exercise  substantial  control over all corporate  actions  requiring
shareholder  approval,  irrespective  of how our  other  shareholders  may vote,
including the following actions:


                                      -31-
<PAGE>

         o        the election of directors;

         o        adoption of stock option plans;

         o        the amendment of charter documents; or

         o        the  approval  of  certain   mergers  and  other   significant
                  corporate transactions,  including a sale of substantially all
                  of our assets.

Penny stock regulations may impose certain  restrictions on marketability of our
securities.

         If our common  stock were to be subject  to penny  stock  rules,  these
rules may discourage  broker-dealers  from effecting  transactions in our common
stock or affect their ability to sell our  securities.  As a result,  purchasers
and current holders of our securities could find it more difficult to sell their
securities. Our stock is traded on the OTC Bulletin Board. Trading volume of OTC
Bulletin Board stocks have been historically lower and more volatile then stocks
traded on an exchange or the Nasdaq Stock Market.  In addition we may be subject
to rules of the  Securities  and  Exchange  Commission  that  impose  additional
requirements on  broker-dealers  when selling penny stocks to persons other than
established  customers  and  accredited  investors.  In general,  an  accredited
investor  is a person  with  assets  in excess of  $1,000,000  or annual  income
exceeding  $200,000  individually,  or $300,000 together with his or her spouse.
The relevant Securities Exchange Commission  regulations  generally define penny
stocks to include  any equity  security  not traded on an exchange or the Nasdaq
Stock Market with a market price (as defined in the regulations) of less than $5
per  share.  Under the penny  stock  regulations,  a  broker-dealer  must make a
special  suitability  determination  as to  the  purchaser  and  must  have  the
purchaser's  prior written consent to the transaction.  Prior to any transaction
in a penny  stock  covered  by these  rules,  a  broker-dealer  must  deliver  a
disclosure  schedule  about the penny stock  market  prepared by the  Securities
Exchange  Commission.   Broker-dealers  must  also  make  disclosure  concerning
commissions payable to both the broker-dealer and any registered  representative
and provide current quotations for the securities.  Finally,  broker-dealers are
required to send monthly statements  disclosing recent price information for the
penny stock held in an account and  information  on the limited  market in penny
stocks.

Our stock price, like that of many small companies, has been and may continue to
be volatile.

         We expect that the market price of our common stock will fluctuate as a
result of variations in our quarterly operating results and other factors beyond
our control.  These fluctuations may be exaggerated if the trading volume of our
common stock is low.

We have not paid dividends in the past and do not expect to pay dividends in the
future, and any return on investment may be limited to the value of your stock.

         We have never paid any cash  dividends  on our common  stock and do not
anticipate  paying any cash  dividends  on our common  stock in the  foreseeable
future and any return on  investment  may be limited to the value of your stock.
We plan to retain any future earnings to finance growth.

Item 2.  Description of Property

         The Company is  headquartered at 224-S Pegasus Avenue,  Northvale,  New
Jersey. The Company leases  approximately  16,000 square feet of combined office
and  warehouse  space from an  unaffiliated  third party with a monthly  rent of
$7,200.  The lease expires in June, 2008. The Company and its three subsidiaries
utilize  portions  of  the  leased  space.  Pursuant  to a  management  services
agreement to which the Company and its  subsidiaries  are  parties,  the Company
determines, on a monthly basis, the portion of space utilized by each subsidiary
during such month, and each subsidiary  reimburses the Company for their portion
of the lease costs, real property taxes and related costs.


                                      -32-
<PAGE>

         The Company  also has  research  facilities  located at 3120 De La Cruz
Boulevard,  Santa  Clara,  California.  On July 23, 2004,  one of the  Company's
subsidiaries  entered  into a lease for this space with a monthly  rent of $400.
The term of the lease ends on July 31, 2005.

         The Company also maintains additional executive offices in Los Angeles,
California.  One of the  Company's  subsidiaries  rents this  office  space on a
month-to-month basis with a monthly rent of approximately $2,000.

         The Company  believes  that its  existing  facilities  are  suitable as
office,  storage  and  laboratory  space,  and are  adequate to meet its current
needs. The Company further believes that such properties are adequately  covered
by insurance.

         The Company does not own any real property for use in its operations or
otherwise.

Item 3.  Legal Proceedings

         On June 29, 2005, Ivivi filed a complaint against Regenesis Biomedical,
Inc.  ("Regenesis")  in the United States District Court for the District of New
Jersey,  Docket No. 05-CV-3300  (JAP),  alleging that Regenesis is infringing on
one of  Ivivi's  United  States  patents  through  its sales of a  product  that
competes with Ivivi's SofPulse(R) product. Ivivi is seeking money damages and an
injunction against future sales of the competing product.  Ivivi is currently in
the process of serving the summons and complaint on Regenesis.

         In June 2005, Ivivi also filed a complaint against Regenesis,  Virginia
Rybski,  Vice President of Sales and Marketing of Regenesis,  Terrence  Kennedy,
Regional  Sales Manager for the South  Eastern  Territories  of Regenesis,  Mary
Ritz,  President of Regenesis,  and Frank George,  Chief Science and  Technology
Officer of  Regenesis,  in the  Superior  Court of New  Jersey - Law  Division -
Bergen County, Docket 3724-05 alleging breach of contract, tortious interference
and conversion.  Ivivi is seeking money damages and an injunction against future
sales of the competing product. On July 5, 2005 the defendants filed a motion to
dismiss for lack of personal  jurisdiction  or for failure to state a claim upon
which relief can be granted.  The Company is opposing the defendants'  motion to
dismiss.

         The Company  believes  that the ultimate  resolution  of the  foregoing
matters  will not have a  material  adverse  impact on the  Company's  financial
condition.

         Other than the foregoing,  no material  legal  proceedings to which the
Company or any of its subsidiaries (or any officer or director  thereof,  or any
affiliate  or owner of record or  beneficially  of more than five percent of the
common  stock  thereof,  to  management's  knowledge)  is party or to which  the
property of the Company or any of its subsidiaries is subject is pending, and no
such  material   proceeding  is  known  by  management  of  the  Company  to  be
contemplated.  Reference  is  made to Note 8 of the  Notes  to the  Consolidated
Financial Statements.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.


                                      -33-
<PAGE>

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

Market Information

         The Company's common stock trades on the  OTC-Bulletin  Board under the
symbol  "ADMT." For the periods  indicated,  the following  table sets forth the
high and low bid quotations for the Company's  common stock,  as reported by the
National Quotation Bureau, Inc. The quotations represent inter-dealer quotations
without  retail  mark-up,  mark-down  or  commission  and  may  not  necessarily
represent actual transactions.

<TABLE>
<CAPTION>
       ----------------------------------------- ---------------------------------- -----------------------------
                    Quarter Ended                            High Bid                         Low Bid
       ----------------------------------------- ---------------------------------- -----------------------------
<S>                                                            <C>                              <C>
                        June 30, 2003                          0.08                             0.03
       ----------------------------------------- ---------------------------------- -----------------------------
                   September 30, 2003                          0.20                             0.06
       ----------------------------------------- ---------------------------------- -----------------------------
                    December 31, 2003                          0.40                             0.16
       ----------------------------------------- ---------------------------------- -----------------------------
                       March 31, 2004                          0.40                             0.31
       ----------------------------------------- ---------------------------------- -----------------------------
                        June 30, 2004                          0.40                             0.29
       ----------------------------------------- ---------------------------------- -----------------------------
                   September 30, 2004                          0.41                             0.23
       ----------------------------------------- ---------------------------------- -----------------------------
                    December 31, 2004                          0.47                             0.20
       ----------------------------------------- ---------------------------------- -----------------------------
                       March 31, 2005                          0.49                             0.35
       ----------------------------------------- ---------------------------------- -----------------------------
</TABLE>

Holders of Record

         As of March 31, 2005,  53,882,037  shares of the Company's common stock
were issued and outstanding, which were held of record by 1,790 persons.

Dividends

         The Company has never paid any cash  dividends  on its common stock and
has no intention of paying cash dividends in the foreseeable future. The Company
intends to retain all  earnings,  if any, for use in the operation and expansion
of its business.

Equity Compensation Plan

         As of June 29, 2005,  the Company did not have any  compensation  plans
(including  individual   compensation   arrangements)  under  which  its  equity
securities were authorized for issuance.  Ivivi has a stock option plan pursuant
to which up to  1,500,000  shares of common  stock of Ivivi,  766,200  shares of
which have been granted as of June 29,  2005,  at exercise  prices  ranging from
$.10 to $4.15 per share.

Recent Sales of Unregistered Securities

         Reference is made to Item 3.02 of the Company's  Current Report on Form
8-K dated December 1, 2005 for information  regarding  securities  issued by the
Company in a private  placement during the third quarter of the Company's fiscal
year ended March 31, 2005. These  securities were issued in a private  placement
of securities exempt from  registration  under the Act, pursuant to Section 4(2)
of the Act.  Each of the  investors  represented  to the Company  that it was an
"accredited   investor."   The  Company  will   arrange  for  the   certificates
representing  such  securities  to be  legended  and  subject  to stop  transfer
restrictions  pending  completion  of the  planned  registration  of the  shares
underlying  the  securities  issued in the private  placement  for  resale.  The
Company  did  not  engage  in  any  form  of  general  solicitation  or  general
advertising in connection with this issuance.


                                      -34-
<PAGE>

         Reference is made to Item 3.02 of the Company's  Current Report on Form
8-K dated February 11, 2005 for information  regarding  securities issued by the
Company in a private placement during the fourth quarter of the Company's fiscal
year ended March 31, 2005. These  securities were issued in a private  placement
of securities exempt from  registration  under the Act, pursuant to Section 4(2)
of the Act.  Each of the  investors  represented  to the Company  that it was an
"accredited   investor."   The  Company  will   arrange  for  the   certificates
representing  such  securities  to be  legended  and  subject  to stop  transfer
restrictions  pending  completion  of the  planned  registration  of the  shares
underlying  the  securities  issued in the private  placement  for  resale.  The
Company  did  not  engage  in  any  form  of  general  solicitation  or  general
advertising in connection with this issuance.

Item 6.  Management's Discussion and Analysis or Plan of Operation

Forward-Looking Statements

         This Annual Report on Form 10-KSB 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 its  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-KSB 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 this Annual Report
on Form 10-KSB.

Critical Accounting Policies

         See  "Summary  of  Significant  Accounting  Policies"  in the  Notes to
Consolidated  Financial Statements for our critical accounting  policies.  These
policies  include  revenue  recognition,  determining our allowance for doubtful
accounts  receivable,  accounting  for cost of revenue,  valuation of long-lived
assets  and  research  and  development  costs.  No  significant  changes in our
critical accounting policies have occurred since March 31, 2005.

Business Overview

         The  Company  is  a  technology-based  developer  and  manufacturer  of
diversified lines of products in the following three areas: (1)  environmentally
safe  chemical  products  for  industrial  use,  (2)  therapeutic   non-invasive
electronic medical devices and (3) cosmetic and topical dermatological products.
The  Company  currently  derives  most of its  revenues  from  the  development,
manufacture  and sale of chemical  products,  and, to a lesser extent,  from its
therapeutic  non-invasive  electronic medical devices and topical dermatological
products.

         The Company is a corporation  that was organized  under the laws of the
State of Delaware on November 24, 1969.  The Company's  operations are conducted
through the Company itself and its three subsidiaries, Ivivi Technologies, Inc.,
Pegasus Laboratories, Inc. and Sonotron Medical Systems, Inc.


                                      -35-
<PAGE>

Results of  Operations  for the Fiscal  Years Ended March 31, 2005 and March 31,
2004

Revenues

         Sales  were  $1,286,074  in  2005 as  compared  to  $1,105,367  in 2004
representing  an increase of $180,707 or 16%.  The increase was the result of an
increase in medical segment  revenues of $191,339 as a result of increased sales
and/or rentals of our SofPulse products offset by a decrease in chemical segment
revenues of $10,632.  Other  income of $96,039 in 2005 was $38,150 or 66% higher
than other income of $57,889 in 2004.

Gross Profit

         Gross  profit of $755,202  in 2005 was  $178,404 or 31% higher than the
gross profit of $576,798 for 2004.  Gross profit was 59% of revenues in 2005 and
52% of revenues in 2004.  The increase in gross profit in 2005 was the result of
increased sales of products with a higher gross margin and increased  rentals of
the Company's SofPulse devices during such period.

Operating Loss

         Operating loss before other income of $2,228,374 in 2005 was $2,028,747
higher than the  operating  loss of $199,627 in 2004.  The increase in operating
loss  resulted  from  increased  selling,  general and  administrative  expenses
related  to the  expanded  activities  of Ivivi  subsequent  to the  receipt  of
proceeds from the private placements completed by the Company and Ivivi.

Results of  Operations  for the Fiscal  Years Ended March 31, 2004 and March 31,
2003

Revenues

         Sales  were  $1,105,367  in  2004 as  compared  to  $1,009,225  in 2003
representing  an increase of $96,142 or 10%.  The  increase was the result of an
increase in chemical  revenues of $78,200 and an increase in medical revenues of
$17,942.  Other  income of  $57,889  in 2004 was  $7,191 or 11% lower than other
income of $65,080 in 2003.

Gross Profit

         Gross  profit of $576,798 in 2004 was  $343,603 or 147% higher than the
gross profit of $233,195 for 2003.  Gross profit was 52% of revenues in 2004 and
23% of revenues in 2003. The increase in gross profit margin in 2004 as compared
to 2003 was  principally  attributable  to inventory and equipment held for sale
write downs of $297,000 at March 31, 2004.  The  inventory  write-down  taken in
2003 was principally the result of the lack of  reimbursement  available for the
use of the Company's medical equipment,  which significantly  impacted potential
demand for such  equipment.  In July 2004,  the Center for Medicare and Medicaid
Services implemented a National Coverage Determination  approving  reimbursement
for the use of such equipment in the treatment of wounds. Therefore,  management
anticipates  the demand for such  equipment  to  increase  resulting  in greater
revenues to the Company. As such, no additional write-downs have been taken.


                                      -36-
<PAGE>

Operating Loss

         Operating  loss before  other  income of $195,627 in 2004 was  $523,268
less than the operating loss of $718,895 in 2003. The decrease in operating loss
resulted from reduced selling,  general and administrative  expenses and reduced
cost of goods sold. Selling,  general and administrative  expenses were $720,166
in 2004 which was $232,014 or 24% less as compared to 2003. The principal reason
for  the  decrease  in  selling,   general  and   administrative   expenses  was
attributable  to reductions in salaries,  rent, bad debts and  professional  and
consulting  fees as  management  sought to reduce  operating  losses of previous
years.

Liquidity and Capital Resources

At March 31, 2005,  the Company had cash of $3,011,631 as compared to $90,081 at
March 31,  2004 an  increase  of  $2,921,550.  This  increase  is the  result of
proceeds from the private placements completed by the Company and Ivivi.

Operating Activities

Cash  used in  operating  activities  of  $2,060,121  was due to the net loss of
$2,324,413  from cash used for expanded  operations  of Ivivi,  and increases in
accounts receivable of $27,851, inventories of $105,532 and other current assets
of $286,303  offset  primarily by  depreciation  and  amortization  of $306,318,
accrued  expenses of $248,450 and equipment held for sale of $56,883.  Operating
costs and expenses were increased due to the significant expansion of operations
of Ivivi funded by the  proceeds  from the private  placements  completed by the
Company and Ivivi.

Cash used in investing  activities  of $96,206 was for the purchase of equipment
and patent costs.

Financing Activities

The Company received gross proceeds of $6,087,500 from private placements offset
by costs related  thereto of $875,623 and repaid a note payable in the principal
amount of $135,000.

The Company's  revenues,  operations and cash flows over the past few years have
declined.  Management  has recognized the situation and has developed a business
plan to enhance the  activities  of one of its  subsidiaries  which  markets the
SofPulse  medical  device.  In December  2004 and  February  2005,  the Company,
together  with  Ivivi,  its  majority-owned  subsidiary,  completed  two private
placements  pursuant  to which they  issued,  jointly and  severally,  unsecured
convertible notes in an aggregate principal amount of $3,637,500 and $2,450,000,
respectively.  The private  placements were completed in seven separate closings
from July 2004 through February 2005. The proceeds of the private placements are
being used  primarily by Ivivi for the research  and  development  and sales and
marketing  of the  SofPulse  device line of products  and for the  research  and
development of other potential products being developed by Ivivi.  Approximately
$448,000  of the net  proceeds of the  private  placements  were used to repay a
portion of its  indebtedness  to the Company.  The liability for such borrowings
has been recorded in the Company's financial statements.

The notes are due and  payable  five  years  from the date of  issuance,  unless
earlier  converted.  The notes bear  interest at 6% per annum and under  certain
circumstances,  the principal and accrued  interest on the notes will either be:
(i)  convertible  into the  Company's  common  stock  at $.29 per  share or (ii)
convertible into Ivivi's common stock at $8.30 per share.  Pursuant to the terms
of the private placements  completed in each of December 2004 and February 2005,
the number of shares of the  Company's  common stock and the number of shares of
Ivivi's common stock issuable upon  conversion of the  convertible  notes issued
therein  and  the  exercise  of  the  warrants  will  increase  by  1%  and  2%,
respectively,  for each 30-day period,  or portion thereof,  after March 1, 2005
and June 30, 2005,  respectively,  that a  registration  statement  covering the
shares of the  Company's  common stock and the shares of Ivivi's  common  stock,
respectively,  underlying  securities  issued in the  private  placement  is not
declared effective.


                                      -37-
<PAGE>

For  each  Note in the  principal  amount  of  $100,000  issued  in the  private
placements,  one  warrant  for  the  purchase  of up to  344,828  shares  of the
Company's common stock at $.41 per share (the "Company Warrant") and one warrant
for the  purchase of up to 12,048  shares of Ivivi's  common  stock at $5.70 per
share (the "Ivivi  Warrant") were issued.  Each of the Company  Warrants and the
Ivivi  Warrants  provides  that in addition to paying the  exercise  price,  the
holder  must  surrender  the  non-exercised  warrant  (i.e.,  either the Company
Warrant or the Ivivi Warrant).

The notes contain covenants that limit each of the Company's and Ivivi's ability
to take  certain  actions  without  the  consent  of the  holders  of the notes,
including:

      o     incurring additional  indebtedness for borrowed money, except in the
            ordinary course of business;

      o     merging,  selling  substantially  all of  its  assets  or  acquiring
            another entity;

      o     making loans or investments;

      o     paying dividends or making distributions;

      o     incurring liens on its assets;

      o     making capital expenditures;

      o     entering into certain transactions with affiliates; and

      o     materially changing its business.

As of June 30,  2005,  each of the Company and Ivivi was in material  compliance
with the covenants  contained in the notes.  These covenants will terminate upon
conversion of the notes upon consummation of this offering.

The Company is seeking sources of additional financing from several sources. The
Company  does not have any material  sources of  liquidity or unused  sources of
liquid assets.

Item 7.       Financial Statements


                                      -38-
<PAGE>

                           ADM TRONICS UNLIMITED, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2005

<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

                                 MARCH 31, 2005

                                    I N D E X
                                    ---------

                                                                   Page No.
                                                                   --------

FINANCIAL STATEMENTS:

     Report of Independent Registered Public Accounting Firm        F - 1

     Consolidated Balance Sheet as of March 31, 2005                F - 2

     Consolidated Statements of Operations
        For the Years Ended March 31, 2005 and 2004                 F - 3

     Consolidated Statements of Changes in
        Stockholders' Equity (Deficiency)
           For the Years Ended March 31, 2005 and 2004              F - 4

     Consolidated Statements of Cash Flows
        For the Years Ended March 31, 2005 and 2004              F - 5/F - 6

     Notes to Consolidated Financial Statements                 F - 7/F - 22

<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
ADM Tronics Unlimited, Inc. and Subsidiaries
Northvale, New Jersey

We have  audited  the  accompanying  consolidated  balance  sheet of ADM Tronics
Unlimited,  Inc.  and  subsidiaries  as of  March  31,  2005,  and  the  related
consolidated   statements  of  operations,   changes  in  stockholders'   equity
(deficiency),  and cash flows for the years ended March 31, 2005 and 2004. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  ADM  Tronics
Unlimited,  Inc. and subsidiaries as of March 31, 2005, and the results of their
operations  and their cash flows for the years ended March 31, 2005 and 2004, in
conformity with United States generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has a  stockholders'  deficiency  that  raise  substantial  doubt  about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 2. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Weinick Sanders Leventhal & Co., LLP

New York, New York
July 13, 2005

<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 2005

                                     ASSETS

<TABLE>
<S>                                                          <C>            <C>
Current assets:
  Cash and cash equivalents                                  $3,011,631
  Accounts receivable - trade, less allowance
    for doubtful accounts of $72,593                            102,691
  Inventories:
    Raw materials and supplies                                  124,393
    Finished goods                                              204,074
  Equipment held for sale                                       331,832
  Other current assets                                          319,296
                                                             ----------
        Total current assets                                                $4,093,917

  Property and equipment - at cost, net of
    accumulated depreciation of $271,188                                        40,550

  Equipment in use and under lease agreements - at cost,
    net of accumulated depreciation of $832,059                                 51,791

  Loan receivable from officer, bearing interest
    at 3% per annum, unsecured                                                  49,188

  Other assets                                                               1,015,431
                                                                            ----------

        Total assets                                                        $5,250,877
                                                                            ==========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
  Accounts payable                                           $  172,978
  Accrued expenses and other current liabilities                299,790
                                                             ----------
        Total current liabilities                            $  472,768

Long-term debt:
  Warrants issued with registration rights                      325,000
  6% unsecured notes payable - long-term                      6,087,500
  Discount on unsecured notes payable                          (299,000)
                                                             ----------
        Total long-term debt                                                 6,113,500

Commitments and contingencies                                                       --

Stockholders' deficiency:
  Preferred stock, $.01 par value, 5,000,000 authorized              --
  Common stock, $.0005 par value, 150,000,000
    authorized 53,882,037 issued and outstanding                 26,941
  Capital in excess of par value                              7,003,968
  Accumulated deficit                                        (8,366,300)
                                                             ----------
         Total stockholders' deficiency                                     (1,335,391)
                                                                            ----------

        Total liabilities and stockholders' deficiency                      $5,250,877
                                                                            ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                For the Years Ended
                                                                                                     March 31,
                                                                                          ------------------------------
                                                                                              2005              2004
                                                                                          ------------      ------------
<S>                                                                                       <C>               <C>
Revenues:
  Sales                                                                                   $    955,438      $    999,282
  Rental income                                                                                330,636           106,085
  Other income (including interest income)                                                      96,039            57,889
                                                                                          ------------      ------------
Total revenues                                                                               1,382,113         1,163,256
                                                                                          ------------      ------------

Costs and expenses:
  Cost of sales                                                                                530,872           528,569
  Depreciation and amortization of property and equipment
    and equipment in use and under lease agreements                                            139,213           146,717
  Salaries and officer's compensation                                                          609,365           189,569
  Research and development                                                                     270,894                --
  Write-off of investments                                                                          --            52,259
  Selling, general and administrative                                                        1,975,426           379,780
  Interest expense                                                                             180,756             8,100
                                                                                          ------------      ------------
Total costs and expenses                                                                     3,706,526         1,304,994
                                                                                          ------------      ------------

Net loss                                                                                  ($ 2,324,413)     ($   141,738)
                                                                                          ============      ============

Weighted average number
  of common shares outstanding                                                              52,548,704        51,007,037
                                                                                          ============      ============

Net loss per share                                                                        ($      0.04)     $       0.00
                                                                                          ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY(DEFICIENCY)

                   FOR THE YEARS ENDED MARCH 31, 2005 and 2004

<TABLE>
<CAPTION>
                                       Preferred    Common
                                        Shares      Shares
                                       5,000,000  150,000,000
                                      Authorized  Authorized                   Capital in
                                       $.01 Par   $.0005 Par        Par       Excess of Par   Accumulated
                                         Value      Value          Value         Value          Deficit         Total
                                         ------     ------         ------        ------         --------        -----
<S>                                        <C>    <C>           <C>            <C>            <C>             <C>
Balance at April 1, 2003                   --     50,382,037    $    25,191    $ 6,792,118    ($5,900,149)    $   917,160

Issuance of common stock                   --      1,500,000            750         14,250             --          15,000

Valuation of 920,000 shares
  issued by subsidiary                     --             --             --         73,600             --          73,600

Net loss                                   --             --             --             --       (141,738)       (141,738)
                                          ----    ----------    -----------    -----------    -----------     -----------

Balance - March 31, 2004                   --     51,882,037         25,941      6,879,968     (6,041,887)        864,022

Valuation of 158,959 subsidiary
warrants
  issued to consultants                    --             --             --         72,000             --          72,000

Valuation of 87,938 subsidiary warrants
  issued to underwriter for services       --             --             --         33,000             --          33,000

Issuance of common stock                   --      2,000,000          1,000         19,000             --          20,000

Net loss                                   --             --             --             --     (2,324,413)     (2,324,413)
                                          ----    ----------    -----------    -----------    -----------     -----------

Balance - March 31, 2005                   --     53,882,037    $    26,941    $ 7,003,968    ($8,366,300)    ($1,335,391)
                                          ====    ==========    ===========    ===========    ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     For the Years Ended
                                                                           March 31,
                                                                 ---------------------------
                                                                     2005            2004
                                                                 -----------     -----------
<S>                                                              <C>             <C>
Cash flows from operating activities:
  Net loss                                                       ($2,324,413)    ($  141,738)
                                                                 -----------     -----------
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation and amortization of fixed assets and other
        assets and discount on notes payable and 2004
        writedown of goodwill                                        306,318         158,475
      Issuance of common stock for services                           19,000          14,250
      Write-off of investments                                            --          52,259
      Increase (decrease) in allowance for doubtful accounts          43,593         (10,000)
      Increase (decrease) in cash flows as a result of
       changes in asset and liabilities account balances:
        Accounts receivable - trade                                  (27,851)        (32,811)
        Inventories                                                 (105,532)         25,402
        Other current assets                                        (286,303)          1,096
        Equipment held for sale                                       56,883          16,056
        Other assets                                                  (3,446)          4,946
        Accounts payable                                              13,180         (40,833)
        Accrued expenses and other current liabilities               248,450          (8,239)
                                                                 -----------     -----------
  Total adjustments                                                  264,292         180,601
                                                                 -----------     -----------

Net cash provided by (used in) operating activities               (2,060,121)         38,863
                                                                 -----------     -----------

Cash flows from investing activities:
  Repayments of loans by officer                                          --             703
  Purchase of equipment, net                                         (46,594)             --
  Patent costs incurred                                              (49,612)             --
                                                                 -----------     -----------
Net cash provided by (used in) investing activities                  (96,206)            703
                                                                 -----------     -----------

Cash flows from financing activities:
  Issuance of common stock                                             1,000             750
  Private placements costs incurred                                 (742,498)             --
  Registration costs incurred                                       (133,125)             --
  Payment of note payable - estate of former
    officer/stockholder                                             (135,000)             --
  Proceeds from issuance of unsecured notes payable                6,087,500              --
                                                                 -----------     -----------
Net cash provided by financing activities                          5,077,877             750
                                                                 -----------     -----------

Net increase in cash and cash equivalents                          2,921,550          40,316

Cash and cash equivalents - beginning of year                         90,081          49,765
                                                                 -----------     -----------

Cash and cash equivalents - end of year                          $ 3,011,631     $    90,081
                                                                 ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

<TABLE>
<CAPTION>
                                                                     For the Years Ended
                                                                           March 31,
                                                                 ---------------------------
                                                                     2005            2004
                                                                 -----------     -----------
<S>                                                                <C>              <C>

Supplemental information:
  Interest paid                                                    $105,890         $    --
                                                                   ========         =======
  Taxes paid                                                       $  3,414         $ 3,434
                                                                   ========         =======

Supplemental disclosure of non-cash operating
  and financing activities:
    Common stock and warrants issued as consideration
      for consulting services                                      $449,000         $87,850
                                                                   ========         =======
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED MARCH 31, 2005 and 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

            (a) Consolidation:

                  The consolidated  financial statements include the accounts of
            ADM Tronics  Unlimited,  Inc. and its subsidiaries  (the "Company").
            All significant  intercompany  balances and  transactions  have been
            eliminated in consolidation.

            (b) Business Activity:

                  The Company is a manufacturer  and  engineering  concern whose
            principal  lines of business are the production and sale of chemical
            products and manufacturing, selling and leasing of medical equipment
            and  medical  devices.  The  chemical  product  line is  principally
            comprised  of  water-based   chemical  products  used  in  the  food
            packaging  and  converting  industries.  These  products are sold to
            customers  located  in the United  States,  Australia,  and  Europe.
            Medical  equipment  is  manufactured  in  accordance  with  customer
            specification  on a contract basis.  The medical device product line
            consists principally of proprietary devices used in the treatment of
            joint pain,  postoperative  edema, and tinnitus.  These products are
            sold or leased to customers located in the United States and Asia.

                  For the years  ended  March 31,  2005 and 2004,  the  chemical
            product line accounted for approximately 68% and 80% of revenues and
            the medical device product line accounted for  approximately 32% and
            20%, respectively.

            (c) Cash and Cash Equivalents:

                  The Company  considers all  highly-liquid  investments  with a
            remaining  maturity of three  months or less at the time of purchase
            and excess  operating  funds  invested in cash  management and money
            market accounts to be cash.

                  The Company places its cash and money market  investments with
            a  high  credit  quality  financial  institutional  At  times,  such
            investments may be in excess of the FDIC insurance limit.

            (d) Inventories:

                  Inventories  are  stated  at  the  lower  of  cost  (first-in,
            first-out method) or market.


                                      F-7
<PAGE>

NOTE    1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (e) Property and Equipment:

                  Property and equipment are recorded at cost.  Depreciation  is
            computed using the  straight-line  method over the estimated  useful
            lives of 5 to 10 years.  Leasehold  improvements  are amortized over
            the lease term or useful lives,  whichever is shorter.  Expenditures
            for  major  betterments  and  additions  are  charged  to the  asset
            accounts while replacements,  maintenance and repairs,  which do not
            improve or extend the lives of the respective assets, are charged to
            expense currently.

            (f) Sonotron Devices:

                  Sonotron  Devices  ("Devices")  are held for sale or lease and
            are included in the consolidated balance sheet under "Equipment held
            for sale" and  "Equipment  in use and under lease  agreements"  on a
            specific  identification basis. Unless and until clearance to market
            is  obtained  from the United  States  Food and Drug  Administration
            (FDA), the Devices cannot be marketed in the United States for human
            applications,  other  than  for  research  purposes,  and may not be
            marketable in certain foreign countries.

                  Included in  equipment in use and under lease  agreements  are
            Devices used  internally  and Devices  loaned out for  marketing and
            testing.  Devices in use and under lease  agreements are depreciated
            over seven years commencing at the date placed in service.  Revenues
            from leasing activities have not been significant.

            (g) Sofpulse Units:

                  Sofpulse Units ("Units"),  an FDA cleared device, are included
            in the  consolidated  balance sheet under  "Equipment held for sale"
            and  "Equipment  in use and under  lease  rental  agreements,"  on a
            specific  identification  basis.  Included in  equipment  in use and
            under lease  agreements  are Sofpulse Units leased to third parties,
            Units  used  internally  and  Units  loaned  out for  marketing  and
            testing.  These Units are depreciated over seven years commencing on
            the date placed in service.

            (h) Other Assets:

                  Patents  and  patents  assigned  are  stated  at cost  and are
            included in other assets and are amortized on a straight-line  basis
            over the shorter of their legal or useful  lives (15 to 17 years for
            patents, and 2 years for patents assigned).  Amortization expense is
            expected to be approximately  $10,000 in each of the succeeding five
            years.

                  Deferred financing costs of the private placement offering are
            being amortized through the five-year  maturity dates of the related
            unsecured notes payable.

                  The valuation of deferred  compensation  related to subsidiary
            shares and warrants issued is being amortized over their  respective
            vesting periods of 5 to 6 years for those shares and warrants.


                                      F-8
<PAGE>

NOTE    1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (i) Long-lived Assets:

                  Long-lived assets, including intangibles,  to be held and used
            are  reviewed  for   impairment   whenever   events  or  changes  in
            circumstances  indicate that the related  carrying amount may not be
            recoverable. If required, impairment losses on assets to be held and
            used are  recognized  based on the  excess of the  asset's  carrying
            value over its fair value. Long-lived assets to be sold are reported
            at the lower of carrying  amount or fair value  reduced by estimated
            disposal costs.

                  The  Company has adopted  SFAS No.  144,  "Accounting  for the
            Impairment or Disposal of Long-Lived Assets." The Company's adoption
            of SFAS No. 144 did not have an effect on the  Company's  results of
            operations, cash flows, or financial position.

            (j) Revenue Recognition:

                  Sales  revenues are  recognized  when products are shipped and
            rental and lease  revenues are  recognized  principally  on either a
            monthly or a pay-per use basis in accordance with individual  rental
            or lease agreements and are recognized on a monthly basis as earned.
            The  Company  recognizes  revenue  from  the  sale  of the  SofPulse
            products  when the products are shipped to end users.  An increasing
            amount of rental revenue is recognized on a fixed monthly  recurring
            basis as product is utilized by the  end-user.  Sales  returns  have
            been  immaterial.  Lease revenues  through third party  distributors
            have also been immaterial and there have been no sales through third
            party distributors.

                  The Company's  products are principally  shipped on a "freight
            collect"  basis.   Shipping  and  handling  charges  and  costs  are
            immaterial.

                  Other  income for the year ended  March 31,  2005  consists of
            legal  settlements  of  $64,833,  interest  income  of  $29,106  and
            miscellaneous  income of $2,100.  For the year ended  March 31, 2004
            other income consists of office space rental and technical  services
            of $52,039,  interest income of $1,997 and  miscellaneous  income of
            $3,853.

            (k) Advertising:

                  Advertising  (approximately  $138,000  and  $4,000 in 2005 and
            2004,  respectively)  is expensed as incurred  and is included  with
            selling,  general and  administrative  expenses in the  consolidated
            statements of operations.

            (l) Net Loss Per Share:

                  The  Company   applies   Statement  of  Financial   Accounting
            Standards  No. 128,  "Earnings  Per Share"  (FAS 128).  Net loss per
            share excludes  dilution and is computed by dividing net loss by the
            weighted  average  number of common  shares  outstanding  during the
            reported periods.  Diluted net loss per share has not been presented
            for 2005 and 2004 as its results would be anti-dilutive.

            (m) Use of Estimates:

                  The  preparation  of financial  statements in conformity  with
            accounting  principles  generally  accepted in the United  States of
            America  requires  management to make estimates and assumptions that
            affect the reported amounts of assets and liabilities and disclosure
            of contingent  assets and  liabilities  at the date of the financial
            statements and the reported  amounts of revenues and expenses during
            the  reporting  period.  Actual  results  could  differ  from  those
            estimates.


                                      F-9
<PAGE>

NOTE    1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

            (n) Fair Value of Financial Instruments:

                  The  carrying  values  of  cash,  cash  equivalents,   accrued
            expenses and notes payable  approximate their fair values due to the
            maturity of these instruments, net of discount.

                  The fair value of the officer loan receivable is determined by
            calculating  the present value of the note by a current  market rate
            of  interest  as  compared  to the  stated  rate  of  interest.  The
            difference between fair value and carrying value is not deemed to be
            significant.

            (o) Basis of Presentation:

                  The financial statements have been prepared in accordance with
            generally  accepted  accounting  principles  in the United States of
            America.

            (p) Minority Interest:

                  A  subsidiary,  IVIVI  Technologies,  Inc.  ("IVIVI"),  of the
            Company has a minority interest which owns 31.5% of that company.

                  Since the losses  applicable  to the minority  interest in the
            IVIVI subsidiary  exceed the minority interest in the equity capital
            of the subsidiary,  such excess and any further losses applicable to
            the minority interest are charged against the majority interest,  as
            there is no  obligation  of the minority  interest to make good such
            losses.  However,  if future earnings do  materialize,  the majority
            interest  shall be credited to the extent of such losses  previously
            absorbed.

            (q) New Accounting Pronouncements:

                  In December 2004,  the FASB issued SFAS No.153,  "Exchanges of
            Nonmonetary  Assets,  an amendment of APB Opinion No. 29, Accounting
            for Nonmonetary  Transactions." The amendments made by Statement 153
            are based on the  principle  that  exchanges of  nonmonetary  assets
            should be measured based on the fair value of the assets  exchanged.
            Further,   the  amendments   eliminate  the  narrow   exception  for
            nonmonetary  exchanges of similar  productive  assets and replace it
            with a broader exception for exchanges of nonmonetary assets that do
            not have commercial substance.  Previously, Opinion 29 required that
            the accounting  for an exchange of a productive  asset for a similar
            productive  asset or an  equivalent  interest in the same or similar
            productive asset should be based on the recorded amount of the asset
            relinquished.   Opinion  29  provided  an  exception  to  its  basic
            measurement   principle   (fair  value)  for  exchanges  of  similar
            productive  assets.  The FASB believes that exception  required that


                                      F-10
<PAGE>

            some nonmonetary exchanges,  although commercially  substantive,  be
            recorded  on  a  carryover  basis.  By  focusing  the  exception  on
            exchanges  that lack  commercial  substance,  the FASB believes this
            statement   produces   financial   reporting  that  more  faithfully
            represents the economics of the transactions.  SFAS 153 is effective
            for  nonmonetary   asset  exchanges   occurring  in  fiscal  periods
            beginning after June 15, 2005. Earlier  application is permitted for
            nonmonetary  asset exchanges  occurring in fiscal periods  beginning
            after  the date of  issuance.  The  provisions  of SFAS 153 shall be
            applied  prospectively.  The Company has evaluated the impact of the
            adoption  of SFAS  153,  and does not  believe  the  impact  will be
            significant  to the  company's  overall  results  of  operations  or
            financial position.

                  In December 2004, the FASB issued SFAS No.123  (revised 2004),
            "Share-Based Payment".  SFAS 123(R) will provide investors and other
            users  of  financial  statements  with  more  complete  and  neutral
            financial  information  by  requiring  that  the  compensation  cost
            relating  to  share-based  payment  transactions  be  recognized  in
            financial  statements.  That cost will be measured based on the fair
            value of the equity or  liability  instruments  issued.  SFAS 123(R)
            covers  a  wide  range  of  share-based  compensation   arrangements
            including share options,  restricted share plans,  performance-based
            awards,  share  appreciation  rights,  and employee  share  purchase
            plans. SFAS 123(R) replaces FASB Statement No. 123,  "Accounting for
            Stock-Based  Compensation",  and  supersedes  APB  Opinion  No.  25,
            "Accounting for Stock Issued to Employees".  SFAS 123, as originally
            issued in 1995, established as preferable a fair-value-based  method
            of accounting for share-based  payment  transactions with employees.
            However,  that statement permitted entities the option of continuing
            to apply the  guidance  in Opinion 25, as long as the  footnotes  to
            financial  statements  disclosed what net income would have been had
            the preferable  fair-value-based  method been used.  Public entities
            (other than those filing as small business issuers) will be required
            to apply SFAS  123(R) as of the first  interim  or annual  reporting
            period that begins  after June 15, 2005.  SFAS 123(R) is  applicable
            for the Company effective the first interim period that starts after
            December  15,  2005.  The  Company has  evaluated  the impact of the
            adoption  of SFAS  123(R),  and  believes  that  the  impact  may be
            significant  to the  company's  overall  results of  operations  and
            financial  position (a pro forma effect, as estimated by management,
            is disclosed elsewhere in these notes).

                  In January  2003,  the FASB  issued  FASB  Interpretation  No.
            ("FIN") 46,  "Consolidation  of Variable  Interest  Entities"  ("FIN
            46"). In December 2003,  FIN 46 was replaced by FASB  interpretation
            No. 46(R)  "Consolidation of Variable Interest  Entities." FIN 46(R)
            clarifies the  application of Accounting  Research  Bulletin No. 51,
            "Consolidated  Financial  Statements," to certain  entities in which
            equity  investors do not have the  characteristics  of a controlling
            financial  interest or do not have sufficient equity at risk for the
            entity to finance its  activities  without  additional  subordinated
            financial  support  from  other  parties.   FIN  46(R)  requires  an
            enterprise  to  consolidate  a  variable  interest  entity  if  that
            enterprise will absorb a majority of the entity's  expected  losses,
            is entitled to receive a majority of the entity's  expected residual
            returns,  or  both.  FIN  46(R)  is  effective  for  entities  being
            evaluated under FIN 46(R) for consolidation no later than the end of
            the first  reporting  period  that ends after  March 15,  2004.  The
            Company does not currently have any variable  interest entities that
            will be impacted by adoption of FIN 46(R).


                                      F-11
<PAGE>

NOTE    2 - CONTINUATION AS A GOING CONCERN.

                  The Company has had  substantial  net losses of $2,324,413 and
            $141,738 for the years ended March 31, 2005 and 2004,  respectively.
            The Company has a  stockholders'  deficiency  of $1,010,391 at March
            31, 2005. These factors raise substantial doubt about the ability to
            continue as a going  concern.  The  significant  increase in the net
            loss for the year ended  March 31,  2005 is the  result of  expanded
            activities  of Ivivi.  In  anticipation  of expanding  the Company's
            subsidiary  operation,  the Company  raised  $6,087,500 in a private
            placement, (see  Note 3), and at  March  31,  2005 had Cash and cash
            equivalents  of $3,011,631  and working  capital of  $3,621,149.  In
            addition,  as  previously  stated in Note 1 (p),  the Company is not
            liable for the losses of its subsidiary.

                  The  Company's  net loss for the year ended March 31, 2005 has
            been  principally  funded from the net  proceeds  received  from the
            Private  Placement  Offering of the 6% Unsecured  Notes Payable (see
            Note 3).

                  The  continuation  of  the  Company  as  a  going  concern  is
            dependent  on  the  Company's  ability  to  increase  revenues,   in
            receiving  additional  financing  from outside  sources  including a
            public  offering of stock of a subsidiary  company,  and a return to
            profitable operations.  Management is pursuing a number of financing
            avenues for the  subsidiary as well as attempting to secure  ongoing
            revenue relationships for the subsidiary's products.


                                      F-12
<PAGE>

NOTE    3 - PRIVATE PLACEMENT FINANCINGS.

                  On  December  1,  2004 and  February  11,  2005,  the  Company
            completed   private   placement   financings   (collectively,    the
            "Placements")  to  "accredited  investors"  only,  consisting  of an
            aggregate  of  $6,087,500  aggregate  principal  amount of unsecured
            convertible  notes  bearing  interest  at an annual  rate of 6%. The
            notes are due at various times from July 2009 through February 2010,
            unless converted  earlier,  and will convert  automatically upon the
            consummation  of a public  offering  into 733,434  shares of IVIVI's
            common stock, subject to adjustment,  plus up to an additional 5,060
            shares of IVIVI's  common  stock for the  payment of interest on the
            notes  through  April  30,  2005 and  3,708  shares  for each  month
            thereafter until the date that IVIVI files a registration  statement
            with the Securities and Exchange  Commission and the offering of its
            common stock is declared  effective,  assuming each holder elects to
            have their  interest  paid in shares of the  IVIVI's  common  stock.
            Interest on the notes is payable  quarterly in cash or shares of our
            common  stock,  at  the  direction  of  the  holder.   In  addition,
            commencing March 1, 2005, with respect to the investors  holding the
            notes issued in the private placement that was completed in December
            2004, and June 30, 2005,  with respect to the investors  holding the
            notes issued in the private placement that was completed in February
            2005,  the  investors  will  have the  additional  right to  receive
            interest  payments in shares of ADM Tronics  common stock in lieu of
            cash or shares of the IVIVI's common stock.  In connection  with the
            issuance of the notes,  IVIVI also issued to the investors  warrants
            to purchase an aggregate of 733,434  shares of IVIVI's  common stock
            at $5.70 per share,  as well as warrants to purchase an aggregate of
            20,991,379  shares of the  common  stock of ADM  Tronics at $.41 per
            share which warrants to purchase shares of ADM Tronic's common stock
            automatically  expire upon the  consummation  of a public  offering.
            Under the terms of the notes sold in the private  placement that was
            completed in December 2004 and February  2005,  the number of shares
            of the IVIVI's  common stock  issuable upon  conversion of the notes
            and  exercise of the  warrants  will  increase by 2% for each 30-day
            period,  or portion thereof,  after March 1, 2005 and June 30, 2005,
            respectively,  that the registration  statement in connection to the
            public  offering of IVIVI's common stock is not declared  effective.
            As a result,  as of April 30, 2005, an  additional  17,530 shares of
            common stock  underlying the notes and 17,530 shares  underlying the
            warrants  will be  issuable  by IVIVI.  Based  upon a Black  Scholes
            Option  Valuation  Model,  the value  attributable  to the  warrants
            issued in the private placement through March 31, 2005 was $325,000.
            Accordingly,  the notes  payable were  discounted  by $325,000.  The
            discount  will be  amortized  over  the  term of the  notes to their
            maturity date.

                  In conjunction with the issuance of the convertible  debt, the
            Company has issued  warrants that have  registration  rights for the
            underlying  shares. As the contracts must be settled by the delivery
            of registered  shares and the delivery of the  registered  shares is
            not controlled by the Company,  pursuant to EITF 00-19,  "Accounting
            for Derivative  Financial  Instruments  Indexed to, and  Potentially
            Settled in, a Company's Own Stock", the net value of the warrants at
            the date of  issuance  was  recorded as a warrant  liability  on the
            balance  sheet in the  amount  of  $325,000.  Upon the  registration
            statement being declared  effective,  the fair value of the warrants
            on that date will be reclassified to equity.


                                      F-13
<PAGE>

                  IVIVI is in the  process  of filing a  Registration  Statement
            with the  Securities  and Exchange  Commission for the issuance of a
            portion of its Common Stock.

NOTE    4 - PROPERTY AND EQUIPMENT.

                  Property  and  equipment  at March  31,  2005  consist  of the
            following:

                  Machinery and equipment                               $277,225
                  Office furniture and fixtures and equipment             34,513
                                                                        --------
                                                                         311,738
                  Less accumulated depreciation and amortization         271,188
                                                                        --------
                                                                        $ 40,550
                                                                        ========

                  Depreciation  and  amortization  on property and equipment for
            the  years  ended  March 31,  2005 and 2004  aggregated  $7,722  and
            $15,268, respectively.

NOTE    5 - EQUIPMENT IN USE AND UNDER LEASE AGREEMENTS.

                  Equipment in use and under lease  agreements at March 31, 2005
            consist of the following:

                  Sofpulse Units                                        $874,580
                  Other Units                                              9,270
                                                                        --------
                                                                         883,850
                  Less accumulated depreciation                          832,059
                                                                        --------
                                                                        $ 51,791
                                                                        ========

                  Depreciation  of equipment  in use and under lease  agreements
            for the years ended March 31, 2005 and 2004 aggregated  $131,470 and
            $126,965, respectively.


                                      F-14
<PAGE>

NOTE    6 - OTHER ASSETS.

                  Other assets at March 31, 2005 consist of the following:

<TABLE>
<S>                                                                                                  <C>
                  Patents, net of accumulated amortization of $68,227                                $   91,320

                  Deferred financing costs of private placement offering of unsecured                   670,498
                  convertible notes payable, net of accumulated amortization of $72,000
                  (a)

                  Deferred registration costs of filings with the Securities and                        133,125
                  Exchange Commission (b) by IVIVI

                  Deferred compensation,  valuation of IVIVI's shares and warrants 106,880 issued,
                  net of accumulated amortization of $33,320 (c)

                  Other                                                                                  13,608
                                                                                                     ----------
                                                                                                     $1,015,431
                                                                                                     ==========
</TABLE>

                  (a)   The  valuation of $73,600 of 920,000 IVIVI shares issued
                        in the  year  ended  March  31,  2004 and  valuation  of
                        $72,000 of 158,959  IVIVI  warrants (see Note 10) issued
                        to consultants are being amortized over their respective
                        vesting periods.

                  (b)   The costs of $742,498  connected  with raising the funds
                        of the private placement offering (see Note 3) are being
                        amortized through the related 6% unsecured notes payable
                        maturity dates.

                  (c)   The  costs  connected  with the  registration  statement
                        which is being  filed  with the SEC have been  deferred.
                        Such costs  will be  charged  to Paid-In  Capital if the
                        Registration  Statement  becomes  effective;  otherwise,
                        such costs will be charged to operations.

NOTE    7 - INCOME TAXES.

                  The  differences  between  the  income  taxes  and the  amount
            computed by applying the federal statutory income tax rate of 34% to
            income before taxes are as follows:

                                                           2005         2004
                                                        ---------    ---------
                  Tax benefit at U.S. statutory rates   ($790,000)   ($ 48,000)
                  Change in valuation allowance           790,000       48,000
                                                        ---------    ---------
                  Income taxes                          $      --    $      --
                                                        =========    =========


                                      F-15
<PAGE>

NOTE    7 - INCOME TAXES.  (Continued)

                  At March 31,  2005,  the  Company had  deferred  tax assets of
            approximately   $2,280,000   resulting   from  net  operating   loss
            carryforwards.  The  deferred  tax assets are offset by a  valuation
            allowance in the amount of $2,280,000.

                  Deferred  tax  assets,  net  of  a  valuation  allowance,  are
            recorded  when  management  believes it is more likely than not that
            tax benefits will be realized. The change in the valuation allowance
            was based upon the consistent  application of management's valuation
            procedures and circumstances surrounding its future realization.

                  The Company and its  subsidiaries  file  consolidated  Federal
            income  tax  returns.   As  of  March  31,  2005,  the  Company  had
            consolidated  net  operating  loss  carryforwards  of  approximately
            $6,700,000 that will expire during the years 2006 through 2024.

NOTE    8 - EMPLOYEE BENEFIT PLAN.

                  The  Company  has a 401(k)  Plan  covering  substantially  all
            employees.  Employer  matching  contributions to the plan are at the
            discretion of management.  There were no employer  contributions  to
            the plan for the years ended March 31, 2005 and 2004.

NOTE    9 - COMMITMENTS AND CONTINGENCIES.

            (a) Leases:

                  The  Company  leases its office and  manufacturing  facilities
            under non-cancelable operating leases.

                  The  approximate  future  minimum  annual  rental  under these
            leases at March 31, 2005 are as follows:

                   Years Ending:
                  ---------------
                  March 31, 2006                   $ 85,000
                  March 31, 2007                     85,000
                  March 31, 2008                     85,000
                  June 30, 2008                      22,000
                                                   --------
                                                   $277,000
                                                   ========

                  Other leases are month-to-month.

                  Rent expense for all  facilities for the years ended March 31,
            2005 and 2004 was approximately $127,000 and $92,000, respectively.


                                      F-16
<PAGE>

NOTE    9 - COMMITMENTS AND CONTINGENCIES.  (Continued)

            (b)   Warranties:

                  The  Company's  medical  devices  are  sold  under  agreements
            providing  for the repair or  replacement  of any devices in need of
            repair,  at the Company's  cost, for up to one year from the date of
            delivery,  unless  such  need was  caused  by misuse or abuse of the
            device.

                  At March 31, 2005,  no amount has been  accrued for  potential
            warranty costs and such costs are expected to be nominal.

            (c)   Legal Matters:

                  i.    The  Company  is  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 the
                        Company  is a party  or to  which  the  property  of the
                        Company is subject.

                  ii.   On May 25,  2005,  IVIVI  filed  a  lawsuit  against  an
                        unrelated company and certain individuals. The complaint
                        alleges that certain confidential information of IVIVI's
                        was   disseminated  by  the  individuals  to  the  other
                        company.  IVIVI is seeking  injunctive  relief enjoining
                        the  other   company,   its  agents  and  employees  for
                        preliminary and permanent  injunctions for  compensatory
                        and  punitive   damages,   for  an  accounting  and  for
                        attorney's fees and costs.

                        IVIVI has filed a patent  infringement  suit against the
                        other  company to  protect  its  proprietary  interests.
                        Legal counsel for the other company advised that several
                        documents  were  forwarded  to   intellectual   property
                        counsel of the other company  related to the filing of a
                        patent  infringement  suit  against  ADM Tronics and its
                        subsidiaries.  Based  upon the  foregoing,  there is the
                        possibility  of  litigation  and  counterclaims.  It  is
                        certainly  possible and would not be unexpected  for the
                        other company to file a counterclaim against IVIVI.

                  iii.  On  April  30,   2004,   the  Company   entered  into  a
                        termination  agreement  with a  lessor  of  some  of the
                        SofPulse  Units.  The lessor  agreed to pay the  Company
                        $85,000 and return the rental units that were leased. In
                        the opinion of management,  the agreement's  termination
                        did not have a material  adverse effect on rental income
                        of the Company.

                  The  Company  believes  that the  ultimate  resolution  of the
            foregoing  matters  will not have a material  adverse  impact on the
            Company's cash flows or financial condition.


                                      F-17
<PAGE>

NOTE    9 - COMMITMENTS AND CONTINGENCIES.  (Continued)

            (d)   Contractual Agreements:

                  i.    On  September  9, 2004 and on October  17,  2004,  IVIVI
                        entered  into  Sponsored  Research  Agreements  with the
                        Montefiore   Medical   Center    ("Montefiore").    Both
                        agreements  support  research  at  Montefiore  in  areas
                        related to IVIVI's  fields of  interest.  The  agreement
                        dated September 9, 2004, is for a period of one year and
                        the committed  funding amount is $28,750.  The agreement
                        dated October 17, 2004, remains in effect until December
                        31, 2009 and the committed  funding  amount is $495,685.
                        The research and  development  costs are being  expensed
                        over a one year period from inception of the agreements.

                  ii.   Effective   January  1,  2004,   IVIVI  entered  into  a
                        Consulting Agreement with the Chairman of the department
                        of Plastic Surgery at Montefiore Medical Center pursuant
                        to  which  IVIVI   engaged  the   consultant  to  render
                        consulting  services  to it for a term of six years with
                        automatic one-year renewals.  Pursuant to the consulting
                        agreement, the consultant serves as Medical Director and
                        Chairman of IVIVI's  Medical  Advisory Board and advises
                        IVIVI on technological developments, future clinical and
                        research   applications  and  product   development  and
                        efficacy in the pulsed magnetic frequencies field.

                        In exchange for the  consultant's  consulting  services,
                        the consultant  received 80,000 shares of IVIVI's common
                        stock,  10,000  of  which  vested  immediately  upon the
                        Company's  entering into the  consulting  agreement with
                        him,  17.5% of which  vested on  January 5, 2005 and the
                        remaining  70% of which shall vest in three equal yearly
                        installments  on January 5 of each year from  January 5,
                        2006 through  January 1, 2009.  In  addition,  IVIVI has
                        agreed to pay the  consultant  an annual  bonus  (not to
                        exceed  $500,000)  equal  to the  sum of  0.5%  of  that
                        portion  of  IVIVI's  annual  revenues  in excess of $20
                        million and up to $80 million,  0.25% of that portion of
                        IVIVI's annual revenues in excess of $120 million. IVIVI
                        has also agreed to pay the consultant a royalty equal to
                        0.05%  of  revenues   received  for  practicing   and/or
                        commercializing  any "new  inventions"  (as such term is
                        defined in the  agreement)  developed by the  consultant
                        under the agreement.  Bonuses and royalties  payable for
                        the  fiscal  years  ended  March  31,  2006 and 2007 are
                        subject to a cap of 10% of IVIVI's pre-tax profit (after
                        deduction of such bonuses and royalty payments) for such
                        fiscal years.  Bonuses and  royalties  payable under the
                        consulting   agreement   are  also  subject  to  certain
                        adjustments for returns,  allowances or setoffs,  to the
                        consultant's  compliance with the non-compete provisions
                        of  IVIVI's  consulting   agreement  and  certain  other
                        restrictions.


                                      F-18
<PAGE>

NOTE    9 - COMMITMENTS AND CONTINGENCIES.  (Continued)

            (d)   Contractual Agreements: (Continued)

                  iii.  On April 1, 2005,  IVIVI entered into an agreement  with
                        Global Medical LLC in which Global will provide  certain
                        management  services  in regard to medical  devices  and
                        products  manufactured,  distributed,  sold or rented by
                        IVIVI.  The term of the agreement  commences  October 1,
                        2005 for a two year period  during  which Global will be
                        paid  a  monthly  fee of  $45,000  and  earn  a  certain
                        percentage  of  each  sale or  rental  Global  makes  of
                        IVIVI's  products.  During  the  term of the  agreement,
                        IVIVI  has  the  right  to  purchase  some or all of the
                        assets  of Global  utilized  in the  performance  of the
                        management  services in exchange for IVIVI's  assumption
                        of certain  on-going  salary  obligations  of Global and
                        IVIVI's issuance of equity securities to Global.

            (e)   Other:

                  The Centers for Medicare and Medicaid  Services  have issued a
            National Coverage Determination (NCD) providing coverage for the use
            of the Company's  SofPulse  medical  device for treatment of wounds.
            The issuance of the NCD enables nursing homes, hospitals, physicians
            and rehabilitation  clinics to obtain reimbursement for treatment of
            chronic,  non-healing  wounds with the  Company's  SofPulse  medical
            devices.

NOTE   10 - STOCKHOLDERS' EQUITY.

            (a) Stock Options and Warrants:

                  From  time to  time,  the  Company  grants  stock  options  to
            directors, officers and outside consultants.

                  A summary of the Company's  stock option  activity and related
            information  for the  years  ended  March 31,  2005 and 2004,  is as
            follows:

<TABLE>
<CAPTION>
                                                      Year Ended             Year Ended
                                                    March 31, 2005         March 31, 2004
                                                   -----------------   ----------------------
                                                            Weighted                 Weighted
                                                            Average                  Average
                                                            Exercise                 Exercise
                                                   Options   Price     Options        Price
                                                   -------  --------   -------       --------
<S>                                                   <C>    <C>      <C>           <C>
                  Outstanding at beginning of year    --     $ --     5,192,819     $ 0.2927
                  Granted                             --       --            --           --
                  Expired                             --       --    (5,192,819)     (0.2927)
                                                     ----    -----    ---------     --------
                  Outstanding at end of year          --     $ --            --     $     --
                                                     ====    =====    =========     ========
                  Exercisable at end of year          --     $ --            --     $     --
                                                     ====    =====    =========     ========
</TABLE>


                                      F-19
<PAGE>

NOTE   10 - STOCKHOLDERS' EQUITY.  (Continued)

            (a)   Stock Options and Warrants:  (Continued)

                  IVIVI has  instituted  a stock option plan for the issuance of
            1,500,000  shares.  As of March  31,  2005  and  2004,  751,200  and
            686,500,  respectively,  options were awarded, with 748,800 reserved
            for future issuance.  The option holder, upon receiving the grant is
            immediately vested in 20% of the grant and the option holder earns a
            continuing  vesting right of the  remaining  balance for each of the
            next four years of service  with IVIVI.  The options  have  exercise
            prices ranging from $.10 to $10.00.

                  SFAS  No.  123,  "Accounting  for  Stock-based  Compensation,"
            defines a fair value  method of  accounting  for an  employee  stock
            option.  SFAS No.  123  allows a  company  to  continue  to  measure
            compensation  costs for  these  plans  using APB No. 25 and  related
            interpretations.  IVIVI has elected to continue using APB No. 25 for
            accounting for its employee stock compensation plan. Accordingly, no
            compensation  cost has been  recognized  for its fixed stock  option
            plan. If IVIVI had determined compensation cost for its stock option
            plan based on the fair value at the grant dates for awards under the
            plan, consistent with the method prescribed by SFAS 123, IVIVI's net
            loss and loss per share would have been  increased  to the pro forma
            amounts as follows:

                                                   For the Years Ended March 31,
                  IVIVI Data                            2005             2004
                  ----------                            ----             ----

                  Rental income                        $330,635        $106,085
                  Net loss                          ($2,406,989)      ($224,760)
                  Net loss pro forma                ($2,575,907)      ($313,750)
                  Shares - basic                      2,920,000       2,230,000
                  Basic loss per share                    ($.82)          ($.10)
                  Basic loss per share pro forma          ($.88)          ($.13)

                  In August 2004 and  February  of 2005,  IVIVI  issued  158,959
            warrants to purchase  shares of IVIVI's  common stock to consultants
            with an  exercise  price of $9.13 per share.  The fair market of the
            warrants is $72,000. The valuation of the warrants is amortized over
            a five year  vesting  period with the fair market  value having been
            credited to paid in capital.

                  During the fiscal year ended March 31, 2005,  the  underwriter
            for the private  placement  was issued  87,938  IVIVI  warrants  for
            financial  services performed valued at $33,000 which was charged to
            operations.


                                      F-20
<PAGE>

NOTE   10 - STOCKHOLDERS' EQUITY.  (Continued)

            (b)   Common Stock:

                  In November 2003, a consulting  company  provided  services to
            the Company valued at $15,000 and acquired 1,500,000  non-registered
            common shares of the Company.

                  In January  2004,  a group of  individuals  provided  services
            valued at $73,600 for IVIVI and received  920,000  common  shares of
            IVIVI,  approximately  31.5% of the  subsidiary's  common stock. The
            valuation of the shares is being  amortized over a five year vesting
            period with the fair market  value  having been  credited to paid-in
            capital.

                  In December 2004, a consulting  company  provided  services to
            the Company valued at $20,000 and acquired 2,000,000  non-registered
            common shares of the Company.

NOTE   11 - SEGMENT INFORMATION, GEOGRAPHICAL INFORMATION,
            MAJOR CUSTOMERS, AND CREDIT CONCENTRATION.

            (a)   Segment Information:

                  The  Company   adopted  the   provisions   of  SFAS  No.  131,
            "Disclosures   about   Segments   of  an   Enterprise   and  Related
            Information"  effective  April 1, 1999. The Company  operates in two
            reportable  segments,  the  production and sale of chemicals and the
            manufacture  and sale or lease of medical  products.  The reportable
            segments are strategic  business units that offer different products
            and services.  They are managed  separately  based on differences in
            customer base, marketing strategies or regulatory environment.

                  The accounting  policies of the segments are the same as those
            described in Note 1. The Company evaluates  performance on profit or
            loss from operations before income taxes.

                  Information about segment operations follows:

<TABLE>
<CAPTION>
                  Year Ended March 31, 2005          Chemical       Medical           Total
                  -------------------------          --------       -------           -----
<S>                                                <C>            <C>             <C>
                  Revenues                         $   876,679    $   409,394     $ 1,286,073
                  Interest revenue                       4,161         24,946          29,107
                  Interest expense                       1,228        179,528         180,756
                  Depreciation and amortization          8,304        130,909         139,213
                  Segment income (loss)                 96,537     (2,420,950)     (2,324,413)
                  Segment assets                       934,382      4,316,495       5,250,877
<CAPTION>
                  Year Ended March 31, 2004          Chemical       Medical           Total
                  -------------------------          --------       -------           -----
<S>                                                <C>            <C>             <C>
                  Revenues                         $   887,312    $   218,055     $ 1,105,367
                  Interest revenue                       1,997             --           1,997
                  Interest expense                       8,100             --           8,100
                  Depreciation and amortization         12,661        134,814         147,475
                  Segment loss                         101,747       (224,760)       (141,738)
                  Segment assets                       647,202        500,353       1,147,555
</TABLE>


                                      F-21
<PAGE>

NOTE   11 - SEGMENT INFORMATION, GEOGRAPHICAL INFORMATION,
            MAJOR CUSTOMERS, AND CREDIT CONCENTRATION.

            (b)   Geographical Information:

                  Sales and rentals to unaffiliated customers, based on location
            of customer, is as follows:

                                                        Years Ended March 31,
                                                       2005              2004
                                                     --------          --------
                  Chemical Segment:
                    United States                    $797,020          $813,273
                    Foreign countries                  79,659            74,039
                                                     --------          --------
                                                     $876,679          $887,312
                                                     ========          ========
                  Medical Segment:
                    United States                    $338,058          $110,974
                    Asia                               71,337           100,579
                    Other foreign countries                --             6,502
                                                     --------          --------
                                                     $409,395          $218,055
                                                     ========          ========

            (c)   Major Customers:

                  Sales to individual unaffiliated customers in excess of 10% of
            net sales to unaffiliated customers are shown below.

                                                        Years Ended March 31,
                                                       2005              2004
                                                     --------          --------

                  Chemical Segment:
                    Customer A                       $271,124          $255,254
                                                     ========          ========
                    Customer B                       $144,831          $169,281
                                                     ========          ========

                  Medical Segment                    $     --          $     --
                                                     ========          ========

NOTE   12 - RESTATEMENT.

                  The  financial  statements  as at and for the year ended March
            31, 2004 have been  restated  to reflect  the fair  market  value of
            920,000  shares of IVIVI's  common stock issued in the fourth qarter
            of the fiscal year ended March 31, 2004 to officers,  employees, and
            others in the amount of $73,600 and $4,000  additional  amortization
            of the related  deferred  compensation  for the year ended March 31,
            2004.

                  Certain  amounts in the year ended  March 31,  2004  financial
            statements have been reclassified for comparative purposes.


                                      F-22
<PAGE>

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

         None.

Item 8A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

         During the fourth quarter of the Company's  fiscal year ended March 31,
2005, the Company's  management,  including the principal  executive officer and
principal  financial officer,  evaluated our disclosure  controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e)  under the Securities  Exchange Act
of 1934) related to the recording,  processing,  summarization, and reporting of
information in the Company's  periodic reports that it files with the SEC. These
disclosure  controls and  procedures  have been designed to ensure that material
information relating to the Company,  including its subsidiaries,  is made known
to the Company's management, including these officers, by other of the Company's
employees,  and  that  this  information  is  recorded,  processed,  summarized,
evaluated, and reported, as applicable, within the time periods specified in the
SEC's rules and forms. Due to the inherent  limitations of control systems,  not
all  misstatements  may be  detected.  These  inherent  limitations  include the
realities that judgments in  decision-making  can be faulty and that  breakdowns
can occur  because of simple  error or mistake.  Additionally,  controls  can be
circumvented by the individual acts of some persons, by collusion of two or more
people,  or by management  override of the control.  The Company's  controls and
procedures can only provide reasonable,  not absolute,  assurance that the above
objectives have been met.

         Based on that evaluation as of March 31, 2005, the Company's  principal
executive  officer and principal  financial officer concluded that the Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange  Act of 1934) are  effective  to ensure that the
information required to be disclosed by the Company in the reports that it files
or submits  under the  Securities  Exchange Act of 1934 is recorded,  processed,
summarized  and  reported  within the time  periods  specified  in SEC rules and
forms.

         There have been no  changes in the  Company's  internal  controls  over
financial  reporting  that occurred  during the Company's last fiscal quarter to
which this Annual Report on Form 10-KSB relates that have  materially  affected,
or are reasonably likely to materially  affect,  the Company's internal controls
over financial reporting.

Internal Control over Financial Reporting.

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

Item 8B.      Other Information

         None.

PART III

Item 9.  Directors  and  Executive  Officers,  Promoters  and  Control  Persons;
         Compliance with Section 16(a) of the Exchange Act

         The  following  table sets forth the names,  positions  and ages of the
Company's executive officers and directors. All of the Company's directors serve
until the next annual  meeting of  stockholders  or until their  successors  are
elected and qualify.  Officers  are elected by the board of directors  and their
terms of offices are, except to the extent governed by employment contracts,  at
the discretion of the board of directors.


                                      -39-
<PAGE>

<TABLE>
<CAPTION>
                Name                          Age          Position
                ----                          ---          --------
<S>                                           <C>          <C>
                Andre' Di Mino                49           President, Chief Executive Officer and Director
                Vincent Di Mino               79           Vice President of Production and Director
                David Saloff                  52           Director
</TABLE>

         Andre' Di Mino has served as  President of the Company  since  December
2001 and a director of the Company since 1987. Prior thereto, Mr. Di Mino served
as Executive Vice President and Chief Operating Officer since 1991 and Secretary
and  Treasurer  of the  Company  since  1978.  Mr.  Di Mino  also  served as the
Technical Director of ADM Tronics from 1982 to 1991. Mr. Di Mino has also served
as Chairman and Chief  Financial  Officer of Ivivi since January 2004 and served
as President of Ivivi from 1989 to December 1993.

         Vincent  Di Mino has  served as Vice  President  of  Production  of the
Company  since 1969 and as a director of the Company  since August 1987.  Mr. Di
Mino has also served as a director of Ivivi since 1989.

         David Saloff has served as a director of the Company  since 2001.  From
1999 to 2003, Mr. Saloff served as President of Lifewaves  International Inc., a
health and wellness  start-up  company.] Prior thereto Mr. Saloff served as Vice
President  of  Electropharmacology,  Inc.,  from which the Company  acquired the
SofPulse  technology referred to elsewhere herein. Mr. Saloff has also served as
President and Chief Executive Officer and a director of Ivivi since 2004.

         The terms of office of each of the directors  and officers  expire upon
the election of their respective successors.

         Vincent  Di Mino is Andre' Di Mino's  uncle.  There is no other  family
relationship between any of the Company's directors or executive officers.

Audit Committee and Audit Committee Financial Expert

         Because of the  Company's  ongoing  efforts to engage  qualified  board
members,  the Company does not have a separately  designated  audit committee or
compensation  committee  at this  time.  Accordingly,  the  Company's  Board  of
Directors also has determined  that the Company does not have an audit committee
financial  expert.  The Company  continues to seek new board members in order to
appoint a separately  designated audit  committee.  The functions which would be
performed  by an audit  committee  are  performed by the Board of Directors as a
whole.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act, and the rules and regulations of the
Securities  and  Exchange  Commission  promulgated   thereunder,   requires  the
Company's  directors,  executive  officers and persons who own beneficially more
than 10% of the Company's  common stock to file reports of ownership and changes
in ownership of such stock with the  Securities and Exchange  Commission.  Based
solely  upon a review of such  reports,  the  Company  believes  that all of its
directors,  executive officers and 10% stockholders complied with all applicable
Section 16(a) filing requirements during the Company's last fiscal year.

Code of Ethics

         The Company has adopted a code of ethics that applies to its  principal
executive officer,  principal financial officer, principal accounting officer or
controller,  or persons  performing  similar  functions.  A copy of such Code of
Ethics has been filed as Exhibit 14.1 to this Annual Report on Form 10-K.


                                      -40-
<PAGE>

Item 10. Executive Compensation

         The following table provides certain summary information for the fiscal
years ended March 31,  2005,  2004 and 2003  concerning  compensation  paid,  or
accrued,  by the Company to, or on behalf of, the Company's  President and Chief
Executive Officer (the "Named Officer").  Other than the Company's President and
Chief Executive Officer, the Company does not have any executive officers of the
Company whose total annual salary and bonus exceeded  $100,000 during the fiscal
year ended March 31, 2005.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                      Annual Compensation
                                                              ----------------------------------
        Name and                                     Fiscal                         Other Annual
        Principal Position                            Year    Salary     Bonus      Compensation
        ------------------                            ----    ------     -----      ------------
<S>                                                   <C>     <C>         <C>            <C>
        Andre' Di Mino                                2005    $88,664     --             --
        President and Chief Executive Officer         2004    $86,600     --             --
                                                      2003    $83,000     --             --
</TABLE>

Option Grants in Last Fiscal Year

         There were no stock options to purchase shares of the Company's  common
stock granted to Mr. Di Mino during the fiscal year ended March 31, 2005.

Aggregated  Option  Exercises  in Last  Fiscal Year and Fiscal  Year-End  Option
Values

         Mr. Di Mino did not hold any stock  options to  purchase  shares of the
Company's  common  stock at any time during the fiscal year ended March 31, 2005
or at March  31,  2005.  Accordingly,  Mr.  Di Mino did not  exercise  any stock
options during the fiscal year ended March 31, 2005.

Employment   Contracts,   Terminations   of  Employment  and   Change-In-Control
Arrangements

         The Company does not have any employment contracts with any person.

Directors' Compensation

         The Company does not pay fees to its  directors,  nor does it reimburse
its directors for expenses incurred.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

         The  following  table sets forth  information  regarding  ownership  of
shares of Company's  common stock, as of June 29, 2005, by (i) each person known
to the Company to be the owner of 5% or more of the Company's  common stock (ii)
each director and director nominee of the Company, (iii) each Named Officer, and
(iv) all directors  and officers of the Company as a group.  Except as otherwise
indicated,  each  person and each group  shown in the table has sole  voting and
investment  power  with  respect  to the shares of the  Company's  common  stock
indicated.  For purposes of the table below, in accordance with Rule 13d-3 under
the  Securities  Exchange Act of 1934, as amended,  a person is deemed to be the
beneficial  owner,  for  purposes of any shares of Common Stock over which he or
she has or shares,  directly or indirectly,  voting or investment  power;  or of
which he or she has the right to acquire beneficial ownership at any time within
60 days after June 29, 2005. As used herein, "voting power" is the power to vote
or direct the  voting of shares and  "investment  power"  includes  the power to
dispose or direct the disposition of shares. Common Stock beneficially owned and
percentage  ownership is based on 53,882,037  shares of Common Stock outstanding
as of June 29, 2005.


                                      -41-
<PAGE>

<TABLE>
<CAPTION>
                                                     Number of Shares
Name and Address                                     Beneficially Owned        Percentage
<S>                                                    <C>                        <C>
Andre' Di Mino ....................................    20,856,935                 38.7%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647

Vincent Di Mino ...................................     6,987,928 (2)             13.0%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647

David Saloff ......................................             0                  0.0%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647

Sherleigh Associates Defined ......................     6,896,552 (3)             11.3%
  Benefit Pension Plan
660 Madison Avenue, 15th floor
New York, New York  10021

Eugene Stricker ...................................     4,250,000 (4)              7.9%
c/o Fifth Avenue Venture Capital Partners
42 Barrett Road
Lawrence, NY 11559

Heiko H. Thieme ...................................     3,617,500 (5)               6.7%
1370 Ave of the Americas
New York, NY 10019

Burton Friedlander ................................     3,313,900 (6)              6.2%
104 Field point Road.
Greenwich, CT 06830

ProMed Offshore Fund II, Ltd. .....................     3,275,862 (7)              5.7%
237 Park Avenue, 9th Floor
New York, NY 10021

All Executive Officers and Directors as a group ...    27,844,863 (8)             51.7%
(three persons)
</TABLE>

(1)      Includes  9,172,696 shares of the Company's common stock directly owned
         by Andre Di Mino;  1,700,000  shares of the Company's common stock held
         by the Andre' Di Mino Irrevocable  Trust, a Trustee and the beneficiary
         of which is Andre' Di Mino, who may be deemed to be a beneficial  owner
         of such shares;  1,700,000 shares of the Company's common stock held by
         the Maria  Elena Di Mino  Trust,  a Trustee of which is Andre' Di Mino,
         who may be deemed to be a beneficial  owner of such shares by reason of
         his power to vote such shares; 1,700,000 shares of the Company's common
         stock held by the Maurice Di Mino Irrevocable Trust, a Trustee of which
         is Andre' Di Mino,  who may be deemed to be a beneficial  owner of such
         shares by reason of his power to vote such shares;  1,004,239 shares of
         the Company's common stock, which are held by the Estate of Dr. Alfonso
         Di Mino (the "Di Mino Estate"), the administrator of which is Andre' Di
         Mino who may be  deemed  to be a  beneficial  owner of such  shares  by
         reason of his power to vote such shares, and of which Andre Di Mino, as
         a  beneficiary  of the Di Mino Estate,  is entitled to receive  167,374
         shares;  1,330,000 shares of the Company's  common stock,  which the Di
         Mino Estate has the power to vote  pursuant to an agreement  dated July
         8, 1987, and with respect to which Andre' Di Mino may be deemed to be a
         beneficial  owner by reason  of his  power to vote  such  shares in his
         capacity as administrator  of the Di Mino Estate;  and 4,250,000 shares
         of the Company's common stock held by Eugene Stricker,  of which Andre'
         Di Mino may be deemed to be a  beneficial  owner by reason of his power
         to vote such shares pursuant to an agreement.


                                      -42-
<PAGE>

(2)      Includes  1,287,928 shares of the Company's common stock directly owned
         by Mr. Vincent Di Mino,  300,000  shares of the Company's  common stock
         owned by the  spouse  of  Vincent  Di Mino,  as to  which  Mr.  Di Mino
         disclaims beneficial ownership;  300,000 shares of the Company's common
         stock  owned by a child of Mr. Di Mino,  who  resides  in Mr. Di Mino's
         home,  as to which  Mr. Di Mino  disclaims  beneficial  ownership;  and
         5,100,000  shares  of the  Company's  common  stock of which  1,700,000
         shares are held by each of the Andre' Di Mino  Irrevocable  Trust,  the
         Maria  Elena  Di  Mino  Irrevocable  Trust  and  the  Maurice  Di  Mino
         Irrevocable  Trust,  a Trustee of which is Vincent Di Mino,  who may be
         deemed to be a  beneficial  owner of the shares  held by such trusts by
         reason of his power to vote such shares.

(3)      Includes up to 6,896,552  shares of the Company's common stock issuable
         after  June  30,  2005  upon  conversion  of an  unsecured  convertible
         promissory  note. Does not include shares of the Company's common stock
         underlying  warrants that are not exercisable until after June 30, 2005
         and unless such shares are registered for resale with the SEC.

(4)      Mr. Di Mino may be deemed to be a  beneficial  owner of such  shares by
         reason of his  power to vote  such  shares  pursuant  to an  agreement.
         Reference is also made to Footnote No. 1.

(5)      Includes  2,000,000  shares of the Company's  common stock owned by The
         American  Heritage  Fund,  Inc. and  1,617,500  shares of the Company's
         common  stock Owned by The Global  Opportunity  Fund  Limited,  each of
         which Mr. Thieme is a principal.

(6)      Includes  2,896,600  shares  of the  Company's  common  stock  owned by
         Friedlander  International  Limited,  of  which  Mr.  Friedlander  is a
         principal.

(7)      Includes up to 3,275,862  shares of the Company's common stock issuable
         after  June  30,  2005  upon  conversion  of an  unsecured  convertible
         promissory  note. Does not include shares of the Company's common stock
         underlying  warrants that are not exercisable until after June 30, 2005
         and unless such shares are registered for resale with the SEC.

(8)      Reference is made to Footnote Nos. 1 and 2.

Item 12. Certain Relationships and Related Transactions

Loans

         In March  2005,  the  Company  repaid  the  outstanding  principal  and
interest  in the  amount of  approximately  $170,000  owed to the  Estate of Dr.
Alfonso  Di Mino,  Andre' Di Mino's  father,  pursuant  to a note  issued to the
Company  in  February  2001.  The  proceeds  of this note were used for  Ivivi's
working capital.

         From time to time, the Company has loaned funds to Andre' Di Mino at an
interest rate of 3% per annum.  The largest  aggregate  amount of  indebtedness,
including interest, outstanding at any time since the beginning of the Company's
fiscal  year ended March 31,  2003 was  approximately  $89,900 and the amount of
principal  and  interest  outstanding  as of March  31,  2005 was  approximately
$88,600.

Transactions with Ivivi

         Andre' Di Mino, the Company's  President and Chief  Executive  Officer,
owns  approximately  13.4% of the outstanding  common stock of Ivivi, one of the
Company's  majority-owned  subsidiaries,   and  serves  as  Chairman  and  Chief
Financial  Officer of Ivivi.  During the past two years,  the  Company and Ivivi
have engaged in the transactions set forth below:


                                      -43-
<PAGE>

         Private Placements

         In December 2004 and February 2005,  the Company,  together with Ivivi,
its  majority-owned  subsidiary,  completed two private  placements  pursuant to
which they issued,  jointly and  severally,  unsecured  convertible  notes in an
aggregate  principal  amount of $3,637,500  and  $2,450,000,  respectively.  The
proceeds of the private  placements  are being used  primarily  by Ivivi for the
research and  development and sales and marketing of the SofPulse device line of
products and for the research and development of other potential  products being
developed by Ivivi. See "Description of Business -- Recent Developments."

         Amounts Owed to the Company.

         As of March 31,  2005,  Ivivi owed  approximately  $2.5  million to the
Company.  No interest  is payable on such  amount.  Such amount was  incurred in
connection  with the  funding of  operations  under the terms of the  management
services  agreement,  as well as in connection with the manufacturing of Ivivi's
SofPulse device under the terms of the manufacturing agreement, since 1998. Each
of such agreements are described below.

         Management Services Agreement

         The Company entered into a management services  agreement,  dated as of
August 15, 2001,  with Ivivi,  SMI and Pegasus under which the Company  provides
such  subsidiaries with management  services and allocates  portions of its real
property  facilities  for use by such  subsidiaries  for the  conduct  of  their
respective businesses. The management services provided by the Company under the
management  services agreement include  managerial and administrative  services,
marketing  and  sales  services,   clerical  and  communication   services,  the
maintenance of a checking account and the writing of checks,  the maintenance of
accounting  records and other services in the ordinary  course of business.  The
subsidiaries pay the Company for such services on a monthly basis pursuant to an
allocation determined by the Company and such subsidiaries based on a portion of
its applicable  costs plus any invoices it receives from third parties  specific
to  each  such  subsidiary.   The  Company's   subsidiaries   also  use  office,
manufacturing and storage space in a building located in Northvale,  New Jersey,
currently  leased  by the  Company,  pursuant  to the  terms  of the  management
services  agreement.  The Company  determines the portion of space  allocated to
each  subsidiary  on a monthly  basis,  and the  subsidiaries  are  required  to
reimburse  the Company for their  respective  portions of the lease costs,  real
property taxes and related costs.


                                      -44-
<PAGE>

         Ivivi  accrued an  aggregate  of  approximately  $51,000,  $42,000  and
$199,000 for management  services and the use of real property provided to it by
the  Company  pursuant to the  management  services  agreement  during the three
months ended June 30, 2005,  the fiscal year ended March 31, 2005 and the fiscal
year ended March 31, 2004, respectively.

         Manufacturing Agreement

         The Company,  Ivivi and SMI are parties to a  manufacturing  agreement,
dated as of August 15, 2001, and as amended in February,  2005.  Under the terms
of the agreement,  the Company has agreed to serve as the exclusive manufacturer
of all current and future medical and  non-medical  electronic and other devices
or products to be sold or rented by the subsidiaries.  For each product that the
Company  manufactures  for each  subsidiary,  the subsidiary pays the Company an
amount  equal  to  120%  of the sum of (i) the  actual,  invoiced  cost  for raw
materials,  parts,  components  or  other  physical  items  that are used in the
manufacture  of the product and actually  purchased  for such  subsidiary by the
Company, if any, plus (ii) a labor charge based on the Company's standard hourly
manufacturing  labor rate,  which the Company  believes is more  favorable  than
could  be  attained  from  unaffiliated  third-parties.  The  Company  generally
purchases  and  provides the Company  with all of the raw  materials,  parts and
components necessary to manufacture the subsidiaries' products.  Under the terms
of the agreement,  if the Company is unable to perform its obligations to either
subsidiary  under the  manufacturing  agreement or is otherwise in breach of any
provision of the manufacturing agreement, such subsidiary has the right, without
penalty, to engage third parties to manufacture some or all of its products.  In
addition,  if a  subsidiary  elects to  utilize a  third-party  manufacturer  to
supplement the manufacturing being completed by the Company, such subsidiary has
the right to require the Company to accept  delivery of its products  from these
third-party  manufacturers,  finalize  the  manufacture  of the  products to the
extent necessary and ensure that the design, testing, control, documentation and
other  quality  assurance  procedures  during all  aspects of the  manufacturing
process  have  been  met.   Reference  is  made  to  "Item  1.   Description  of
Business--Manufacturers and Suppliers."

         Ivivi has accrued amounts owed to the Company of approximately  $9,000,
$42,000 and $46,000 for the Company's  manufacture  of its products  pursuant to
the  manufacturing  agreement  during the three months ended June 30, 2005,  the
fiscal  year ended  March 31,  2005 and the fiscal  year ended  March 31,  2004,
respectively.  The  amounts  owed  to the  Company  by  SMI  for  the  Company's
manufacture of its products pursuant to the manufacturing  agreement during such
periods were not material.

         The Company  believes that all of the transactions set forth above were
made on terms no less  favorable  to the Company  than could have been  obtained
from unaffiliated third parties.

Item 13. Exhibits

<TABLE>
<CAPTION>
         Exhibit No.        Description
         -----------        -----------
<S>                         <C>
         3.1                Certificate of  Incorporation  and  amendments  thereto filed on August 9, 1976 and May 15,
                            1978 is incorporated by reference to Exhibit 3(a) to the Company's  Registration  Statement
                            on Form 10 (File No. 0-17629) (the "Form 10").

         3.2                Certificate  of  Amendment  to  Certificate  of  Incorporation  filed  December  9, 1996 is
                            incorporated  by reference to Exhibit 3(a) to the  Company's  Annual  Report on Form 10-KSB
                            for the fiscal year ended March 31, 1997.

         3.3                By-Laws are incorporated by reference to Exhibit 3(b) to the Form 10.

         4.1                Warrant issued to the Global  Opportunity Fund Inc. is incorporated by reference to Exhibit
                            4.1 to Amendment  No. 1 to the  Company's  Annual Report on Form 10-KSB for the fiscal year
                            ended March 31, 1998.

         4.2                Warrant  issued to Heiko H.  Thieme is  incorporated  by  reference  to Exhibit  4.2 to the
                            Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999.

         4.3                Form of Company  Warrant  issued to certain  investors  (one in a series of  warrants  with
                            identical  terms) is  incorporated  by  reference to Exhibit 4.1 to the  Company's  Current
                            Report on Form 8-K dated February 11, 2005

         4.4                Form of Ivivi  Warrant  issued  to  certain  investors  (one in a series of  warrants  with
                            identical  terms) is  incorporated  by  reference to Exhibit 4.2 to the  Company's  Current
                            Report on Form 8-K dated February 11, 2005

         4.5                Form of Note issued to certain  investors (one in a series of notes with  identical  terms)
                            is  incorporated  by reference to Exhibit 4.3 to the Company's  Current  Report on Form 8-K
                            dated February 14, 2005.

         9.1                Trust  Agreements  of  November  7, 1980 by and  between  Dr.  Alfonso  Di Mino et al.  are
                            incorporated  by reference to Exhibit 9 to the  Company's  Annual Report on Form 10-KSB for
                            the fiscal year ended March 31, 1993.
</TABLE>


                                      -45-
<PAGE>

<TABLE>
<S>                         <C>
         10.1               Memorandum of Lease by and between the Company and Cresskill  Industrial  Park III dated as
                            of August 26, 1993 is hereby  incorporated  by reference to Exhibit  10(a) to the Company's
                            Annual Report on Form 10-KSB for the fiscal year March 31, 1994.

         10.2               Agreement  of July 8, 1987 by and between  Donna Di Mino,  Dr.  Alfonso Di Mino,  et al. is
                            hereby  incorporated  by reference to Exhibit 10(q) to the Company's  Annual Report on Form
                            10-KSB for the fiscal year ended March 31, 1993.

         10.3               Agreement of March 21, 2002 by and between the Company and New England  Acquisitions,  Inc.
                            is hereby  incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form
                            10-KSB for the fiscal year ended March 31, 2002.

         10.4               Agreement of April 29, 2003 by and between Vet-Sonotron Systems, Inc. and THM Group, LLC is
                            hereby  incorporated  by reference the Exhibit 10.4 to the Company's  Annual Report on Form
                            10-KSB for the fiscal year ended March 31, 2003.

         10.5               Agreement of January 17, 2003 by and between the Company and Fifth Avenue  Venture  Capital
                            Partners is hereby  incorporated  by  reference  to Exhibit  10.5 to the  Company's  Annual
                            Report on Form 10-KSB for the fiscal year ended March 31, 2003.

         10.6               Amended and Restated Manufacturing  Agreement,  dated February 10, 2005, among the Company,
                            Ivivi Technologies, Inc. and Sonotron Medical Systems, Inc.

         10.7               Management   Services  Agreement,   dated  August  15,  2001,  among  the  Company,   Ivivi
                            Technologies,  Inc.,  Sonotron Medical  Systems,  Inc. and Pegasus  Laboratories,  Inc., as
                            amended.

         10.8               Agreement of April 3, 2004 by and between the Company and Carepoint  Group is  incorporated
                            by reference to Exhibit 10.6 to the  Company's  Annual Report on Form 10-KSB for the fiscal
                            year ended March 31, 2004.

         10.9               Placement  Agency Agreement of May 20, 2004 by and between the Company and Maxim Group LLC.
                            is  incorporated  by reference to Exhibit 10.1 to the Company's  Current Report on Form 8-K
                            dated December 1, 2005.

         10.10              Agreement of April 1, 2005 by and between Ivivi Technologies, Inc. and Global Medical,
                            L.L.C.

         14.1               Code of Ethics

         21.1               Subsidiaries of the Company.

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

         32.1               Certification of the Chief Executive Officer of the Company pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002
</TABLE>


                                      -46-
<PAGE>

Item 14. Principal Accountant Fees and Services

Audit Fees

         The aggregate fees billed for professional services rendered by Weinick
Sanders Leventhal & Co., LLP for the audit of the Company's annual  consolidated
financial  statements  for the fiscal  year ended  March 31,  2005,  and for the
reviews of the financial  statements included in the Company's Quarterly Reports
on Form  10-QSB for the fiscal year ended March 31,  2005,  were $ $32,000.  The
aggregate fees for professional services rendered by Weinick Sanders Leventhal &
Co., LLP for the audit of the Company's annual consolidated financial statements
for the fiscal year ended March 31, 2004,  and for the reviews of the  financial
statements  included in the Company's  Quarterly  Reports on Form 10-QSB for the
fiscal year ended March 31, 2004, were $24,750.

Audit-Related Fees

         The  aggregate  fees billed in each of the fiscal years ended March 31,
2005 and March 31, 2004 for  assurance and related  services by Weinick  Sanders
Leventhal & Co., LLP that are reasonably related to the performance of the audit
or review of the Company's financial statements were $0 and $0, respectively.

Tax Fees

         The  aggregate  fees billed in each of the fiscal years ended March 31,
2005 and March 31, 2004 for  professional  services  rendered by Weinick Sanders
Leventhal & Co.,  LLP for tax  compliance,  tax advice,  and tax  planning  were
$2,500 and $2,500, respectively.

All Other Fees

         The aggregate  fees were billed in each of the fiscal years ended March
31,  2005 and March 31,  2004 for  products  and  services  provided  by Weinick
Sanders Leventhal & Co., LLP (other than those covered above under "Audit Fees,"
"Audited-Related Fees" and "Tax Fees") were $7,500 and $2,500 respectively.  The
other fees billed in the year ended March 31, 2005 were for services rendered in
connection with Ivivi's Registration Statement on Form SB-2.

Audit Committee Administration of the Engagement

         The Company does not have an audit committee.

         Less  than  50%  of  hours  expended  on  the  principal   accountant's
engagement  to audit the  Company's  financial  statements  for Weinick  Sanders
Leventhal & Co., LLP were  attributed  to work  performed by persons  other than
Weinick Sanders Leventhal & Co., LLP's full-time, permanent employees.


                                      -47-
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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 this 14th day of July,
2005.

                                        ADM TRONICS UNLIMITED, INC.

                                        By:  /s/ Andre' DiMino
                                             -----------------
                                             Andre' Di Mino
                                             Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
      Signature                          Title                                 Date
      ---------                          -----                                 ----
<S>                           <C>                                          <C>
/s/ Andre' Di Mino            Chief Executive Officer (Principal           July 14, 2005
------------------            Executive Officer, Principal
Andre' Di Mino                Financial Officer and Principal
                              Accounting Officer) and Director


/s/ Vincent Di Mino           Director                                     July 14, 2005
-------------------
Vincent Di Mino


/s/ David Saloff              Director                                     July 14, 2005
----------------
David Saloff
</TABLE>


                                      -48-