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, 2006


[_] 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]

Indicate by check mark whether the issuer is a shell company (as defined by in
Rule 12b-2 of the Exchange Act). YES [ ] No [X]

The issuer's revenues for its most recent fiscal year were approximately
$1,724,000.

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 July 5,
2006, based on the average of the closing bid and asked prices of $0.33, for
such shares on such date, was approximately $8,600,000. 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 July 5, 2006 was
53,882,037.


                       DOCUMENTS INCORPORATED BY REFERENCE

      Not applicable.


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


                           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.



Explanatory Note

Share information in this Form 10-KSB related to our subsidiary, Ivivi
Technologies, Inc. gives effect to a stock split of 1.625 shares for each
outstanding share of common stock of Ivivi to be effected by Ivivi.

PART I

Item 1.   Description of Business

Company Overview

         We are  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's currently derives its revenues
from the  development,  manufacture and sale of chemical  products and 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 ADM Tronics Unlimited, Inc. and its three subsidiaries, Ivivi
Technologies, Inc.("Ivivi"), Pegasus Laboratories,  Inc. ("Pegasus") and
Sonotron Medical Systems, Inc. ("SMI"). As of July 5, 2006, 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,  2006,  the dollar  amount of
backlog  orders for the Company's  chemical  products  believed  by the Company
to be firm, was not material.


Therapeutic Non-Invasive Medical Devices

SofPulse(R)

         Ivivi, a majority-owned subsidiary of ADM, 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 which we refer to as
"electroceuticals(tm)",  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, in the chronic wound and plastic and reconstructive surgery
markets.

         Ivivi  was  incorporated  in March  1989  under  the name AA Northvale
Medical  Associates,  Inc. as a majority-owned  subsidiary of ADM.  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.  Ivivi has conducted
development and sales and marketing  activities and has generated  increasing
revenues,  but has  incurred significant losses to date.

         The device has been  cleared by the FDA for the  treatment of pain and
edema in soft tissue. The device can be used for the treatment of chronic
wounds, as well as for post-surgical treatments,  including following plastic
and  reconstructive  surgery.

         The device consists of the following three components:

          o   the electroceutical signals
          o   a signal generator; and
          o   an applicator.

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 Company's product 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 device
on a target area of a patient as one treatment.


We are currently focusing on the commercialization of products utilizing our
PEMF technology for the treatment of a wide array of acute and chronic
disorders.  We are currently utilizing our PEMF technology, through the
following products, for the treatment of edema (swelling) and pain in soft
tissue.

SofPulse M-10.  The SofPulse M-10 utilizes a box-shaped signal generator that
weighs approximately seven pounds.  The signal generator delivers the
proprietary electroceutical signals through a lightweight and conformable
applicator that ranges in diameter.  The SofPulse M-10 is primarily marketed as
a rental product to the chronic wound care markets, particularly for use in
long-term acute care hospitals, as well as in long-term care nursing
facilities, rehabilitation hospitals, acute care hospitals and facilities and
home health systems.

Roma3.  We intend to replace the SofPulse M-10 with our new product, the Roma3.
The Roma3 utilizes a disk-shaped signal generator that is approximately nine
inches in diameter and weighs approximately two pounds.  The signal generator
delivers the proprietary electroceutical signals simultaneously through up to
three lightweight and conformable applicators that range in diameter, allowing
multiple treatments on the same patient.  The signal generator contains a
programmable microprocessor that can automatically activate and deactivate the
Roma3 for ongoing, unattended treatment.  The applicators utilized by the Roma3
are intended for single-patient use and are disposable.  The Roma3 is primarily
marketed as a rental product to the chronic wound care markets, particularly
for use in long-term acute care hospitals, as well as in long-term care nursing
facilities, rehabilitation hospitals, acute care hospitals and facilities and
home health systems.

Torino I.  The Torino I utilizes a portable, battery powered disk-shaped signal
generator that is approximately two and a half inches in diameter and weighs
approximately four ounces.  The signal generator delivers the proprietary
electroceutical signals through variable sized lightweight and conformable
applicators, depending on the application.  The signal generator used in the
Torino I is pre-programmed to provide treatment at optimal intervals throughout
the course of therapy.  The Torino I is primarily marketed in the plastic and
reconstructive surgery market, where the product is being sold to physicians
who then offer it to their patients.

Torino II.  The Torino II is a battery powered, disposable single unit
consisting of both the signal generator and applicator for ease of use.  The
Torino II is expected to replace the Torino I in mid-2006.   The applicators
that are incorporated into the Torino II are also lightweight and conformable
and come in varying sizes, depending on the application.   The signal generator
used in the Torino II is also pre-programmed to provide therapy at optimal
intervals throughout the course of therapy.  The Torino II is primarily
marketed in the plastic and reconstructive surgery market, where the product is
sold to physicians who then offer it to their patients.

         The Company is  considering  additional  applications  of its 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 its product 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.

Ivivi has built a portfolio of patents and applications covering its technology
and products, including its hardware design and methods. As July 5, 2006, Ivivi
had three issued U.S. patents, seven non-provisional pending U.S. patent
applications and one provisional U.S. patent pending covering various
embodiments and end use indications for PEMF and related signals and
configurations. The titles, patent numbers and normal expiration dates
(assuming all the U.S. Patent and Trademark Office fees are paid) of the three
issued U.S. patents are set forth in the chart below.

                                      Patent
Title                                 Number    Expiration Date

Apparatus and Method for
 Therapeutically Treating
 Human Body Tissue with
 Electromagnetic Radiation           5723001    March 3, 2019

Pulsed Radio Frequency
 Electrotherapeutic System           5584863    December 17, 2013

Athermapeutic Apparatus
 Employing Electro-Magnetic
 Fields                              5370680    December 6, 2011


Sonotron Technology

         SMI, a majority-owned  subsidiary  of  ADM,  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.

         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.

         SMI  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 July 5,  2006,  there  were
five Sonotrons in use by clinical investigators collecting data for submission
to the FDA. SMI  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.  SMI 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, Ivivi
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,  Ivivi  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,
Ivivi 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  Ivivi  does not presently have sufficient funds to
complete such tests and studies,  Ivivi has sought and will continue to seek
financing for such  purposes.  There can be no assurance that Ivivi will be
able to obtain such financing on terms not unfavorable to it, if at all.

         As of March 31, 2006,  the dollar amount of backlog orders for
Sonotron Devices was not material.


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.

         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.

         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.

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.


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, 2006 and 2005,
sales of chemical products  accounted for approximately 50% and 68% of the
Company's  operating  revenues,  respectively;  sales and/or  rentals of
medical device products  accounted for  approximately 50%, and 32% 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,  2006,  no one customer
accounted for more than 10% the Company's revenue.  During the year ended March
31, 2005, the Company sold 32% of its products to two customer.  At March 31,
2006, two customers accounted for 27% of the Company's accounts receivable. The
loss of these major customers could have a material impact on the Company's
operations and cash flow.

Marketing and Distribution

         A majority of ADM's  chemical  product sales are distributed to
customers  directly from ADM'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 ADM
for certain  quantities of it'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
ADM's chemical products.

         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, subject to maintaining certain revenue goals, 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
third party  to help it  penetrate  the home  health  care market.  Ivivi  is
also actively pursuing exclusive arrangements with strategic partners it
believes have leading positions in its target markets, in order to establish
nationwide, and in some cases worldwide, marketing and distribution channels
for its products. Generally, under these arrangements, the strategic partners
would be responsible for marketing, distributing and selling Ivivi's products
while Ivivi continues to provide the related technology, products and technical
support.  Through this approach, Ivivi expects  to achieve broader marketing
and distribution capabilities in multiple target markets.


         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.


Manufacturer and Suppliers

         Manufacturer

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

         ADM,  Ivivi and SMI are parties to a  manufacturing  agreement,
pursuant  to which ADM  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  ADM  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  ADM  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 ADM is generally  120% of the labor
rate charged by ADM.

         ADM  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  ADM  is  the  exclusive  manufacturer  of  all  of  its
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 ADM,
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.

         As  the  exclusive   manufacturer   of  the  medical   devices  of  its
subsidiaries,  ADM 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

         ADM  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, 2006 and 2005,  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, 2006 and 2005, 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.


Pursuant to a sponsored research agreement with Montefiore Medical Center that
expired in September 2005, Ivivi conducted, under the supervision of Dr. Diana
Casper, research studies relating to the potential benefits of its PEMF
technology in connection with the treatment of Parkinson's disease and other
neurodegenerative disorders. Ivivi completed the first phase of such studies in
September 2005. Based on the results of such studies, Ivivi initiated a second
phase of such studies under the supervision of Dr. Casper at Montefiore Medical
Center pursuant to an unwritten month-to-month arrangement with Montefiore
Medical Center. Such studies ceased during the fourth quarter of 2005 when Dr.
Casper received an NIH grant in the amount of $270,000 to commence studies to
examine the effects of pulsed magnetic fields on neurons and vessels in cell
culture and intact brain and neural transplants, as well as to explore the
potential of this modality to lessen neurodegeneration (progressive damage or
death of neurons leading to a gradual deterioration of the bodily functions
controlled by the affected part of the nervous system) and increase vascular
plasticity (the lifelong ability of the brain to reorganize neural pathways
based on new experiences). We believe this modality could have applications in
the treatment of chronic and acute vascular and neurodegenerative diseases,
including Parkinson's disease. Although Dr. Casper is not required to do so
pursuant to the NIH grant, she has advised us that she intends to use our PEMF
technology in connection with these studies.

Ivivi also expects to commence research studies with respect to pain relief at
Montefiore Medical Center and although we do not have any specific plans to
date, we are seeking opportunities to commence additional studies at other
research facilities. We believe that two studies to validate consumer pain
application for FTC purposes will be completed within four to six months from
commencement and estimate that the aggregate cost of such studies will be
approximately $200,000.

Ivivi's research and development efforts continue on several fronts directly
related to its technology, including its expansion into the angiogenesis and
vascularization market, as well as new technologies and products. Although we
do not have any specific plans to date, we intend to pursue entering into joint
ventures, license agreements or other relationships with third-parties to
commercialize any new technologies and products we develop in the future.
Ivivi's research and development expenditures were $544,426 and $270,894 for
the fiscal years ended March 31, 2006 and 2005, respectively.

Ivivi is currently a party to a sponsored research agreement with Montefiore
Medical Center pursuant to which it funds research in the fields of pulsed
electro-magnetic frequencies under the supervision of Berish Strauch, M.D., of
Montefiore Medical Center's Department of Plastic Surgery, that commenced on
October 17, 2004 and expires on December 31, 2009, subject to renewal in one-
year increments by mutual agreement. Ivivi also funded the research in the
field of neurosurgery under the supervision of Diana Casper, Ph.D., of
Montefiore Medical Center's Department of Neurosurgery pursuant to a sponsored
research agreement with Montefiore Medical Center that commenced on September
24, 2004 and expired on September 24, 2005. Although this sponsored research
agreement expired, Dr. Casper continued to conduct research in this field
pursuant to a month-to-month arrangement with Montefiore Medical Center during
the fourth quarter of 2005, for which Ivivi paid $23,000. 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. Montefiore Medical Center has been paid in full.

Under Ivivi's 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 our technical representative, Arthur A. Pilla,
Ph.D. Under the 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 our products will be our sole
and exclusive property. Ivivi also has the first option to obtain a worldwide
royalty bearing license to all other inventions not owned by us 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 us under the 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 the agreement.

In January 2006, Ivivi entered into a Master Clinical Trial Agreement with
Cleveland Clinic Florida, a not-for-profit multispecialty medical group
practice, to set forth the basic terms and conditions with respect to studies
to be conducted by Cleveland Clinic Florida thereunder from time to time during
the term of the agreement, which is from January 9, 2006 to January 9, 2009.
Ivivi expects to pay an aggregate of approximately $220,000 to Cleveland Clinic
Florida for its services during the term of the agreement. Ivivi also expects
to pay additional fees, costs and expenses in the aggregate amount of
approximately $125,000 to third parties for lab work to be handled by such
third parties during the term of the agreement. The IRB approved a double-blind
randomized placebo-controlled clinical trial in patients who are not candidates
for angioplasty or cardiac bypass surgery, which has begun at the Cleveland
Clinic Florida. The study is looking at the use of our PEMF technology on
patients with ischemic cardiomyopathy the primary endpoint of which will be the
improvement in regional myocardial perfusion and function and the secondary
endpoint of which will be improvement in patient angina and exercise tolerance.


Competition

         ADM's chemical business is highly competitive and substantially all of
it's competitors  possess  greater  experience,   financial resources,
operating history and marketing  capabilities than does ADM. Although  the
Company  does not  believe  that  there are one or more  dominant competitors
in such industry, there can be no assurance that ADM 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 ADM 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 ADM does not compete successfully,  its business,
operating margins,  financial  condition,  cash flows and profitability could
be adversely affected.

         ADM's results of operations  depend, in part, on its ability to expand
its chemical product  offerings.  ADM is committed to remaining a competitive
producer and believes  that its  portfolio of new or  re-engineered products is
strong.  However, ADM 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 ADM 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 Ivivi'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 Ivivi'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.  Ivivi 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 Ivivi'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 Ivivi.  Ivivi is also aware of other
companies that  manufacture  and market  devices in the same target markets as
it does. Certain of these companies have significant product sales and have
greater financial,  technical,  personnel and other  resources  than Ivivi.
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
Ivivi'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. Ivivi's  ability to compete will be dependent on it'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 Ivivi will be
able to compete successfully,  that competitors will not develop technologies
or products that render it's  medical device products  obsolete or less
marketable or that Ivivi 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 Ivivi 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:

         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
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.

         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.

Reimbursement

        Ivivi's products are 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 our products are dependent, in part, on the reimbursement policies
of these payors. The manner in which reimbursement is sought and obtained for
any of our 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.

Ivivi cannot determine the effect of changes in the healthcare system or method
of reimbursement for its products or any other products that may be produced by
us in the United States. For example, from 1991 to 1997, products utilizing our
technology were 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 our products in the treatment of
non-healing wounds, the nursing home revenue diminished significantly by 2001
and Ivivi pursued alternative markets and applications for use of its
technology. 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, Ivivi re-entered the wound care market.

CMS has not yet cleared reimbursement for the home health use of the technology
used in our products. Accordingly, in December 2005, Ivivi retained a
consulting company specializing in CMS reimbursement and coverage matters to
assist it in arranging and preparing for a meeting with CMS to request such
clearance. In May 2006, with the assistance of this consulting company, Ivivi
held a meeting with CMS and made a presentation in support of reimbursement for
the home health use of the technology used in our products, and we currently
await feedback from CMS. Even if Ivivi were to obtain clearance from CMS for
reimbursement for home health use of the technology used in our products, the
regulatory environment could again be changed to bar CMS coverage for treatment
of chronic wounds utilizing the technology used in our products, whether for
home health use or otherwise, which could limit the amount of coverage patients
or providers are entitled to receive.

Ivivi 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 our products, which could negatively impact the
pricing and profitability of, or demand for, our 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,  Ivivi 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.

         The methodology for determining the amount of Medicare reimbursement
of Ivivi'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 Ivivi'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. Ivivi cannot predict
the impact of the rehabilitation  hospital PPS or the  long-term  care hospital
PPS on the health care industry or on Ivivi'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.

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 July 5, 2006,  the Company had an aggregate of 19 employees,  11
of which are  employed  directly by the Company and 8 of which are employed by
Ivivi.  As of such date,  the Company had four salaried  employees in executive
or managerial  positions.

Recent Developments


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. On June 19, 2006, Ivivi filed an update to the above
referenced registration statement. Upon the effectiveness of the
registration statement and the consummation of a public offering of
Ivivi common stock, ADM will no longer own a majority of the
outstanding common stock of Ivivi, and, if so, then Ivivi's operations
will no longer be reported on a consolidated basis.

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 ADM  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,
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.

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
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;
            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 customers are unable to receive reimbursement  from  third-parties, including
reimbursement from Medicare,  our growth and revenues will be adversely affected
in markets where our customers 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.

         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."

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.

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:


       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.

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
Ivivi  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
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 a history of significant and continued operating losses and a
substantial accumulated earnings deficit and we may continue to incur
significant losses.

	We have incurred substantial net losses of approximately $7.2 million
and $3.4 million for the fiscal years ended March 31, 2006 and 2005,
respectively.  At March 31, 2006, we had an stockholders' deficiency of
approximately $6.2 million and an accumulated deficit of $16.6 million.  We
expect to incur additional operating losses, as well as negative cash flow from
operations, for the foreseeable future.  As a result of our continued losses
and the debt incurred by us in connection with our financings, our independent
auditors have included an explanatory paragraph in our financial statements for
the fiscal years ended March 31, 2006 and 2005, expressing doubt as to 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.
The inclusion of a going concern explanatory paragraph in the report of our
independent auditors could make it more difficult for us to secure additional
financing or enter into strategic relationships with distributors on terms
acceptable to us, if at all, and may materially and adversely affect the terms
of any financing that we may obtain.

Our existing indebtedness may adversely affect our ability to obtain additional
funds and may increase our vulnerability to economic or business downturns.

	Our outstanding notes issued in our financings aggregated approximately
$8.0 million principal amount as of March 31, 2006 (not including trade
payables and other account payables).  In addition, we may incur additional
indebtedness in the future. Accordingly, we are subject to the risks associated
with significant indebtedness, including:

o   we must dedicate a portion of our cash flows from operations to pay
    principal and interest and, as a result, we may have less funds
    available for operations and other purposes;

o   it may be more difficult and expensive to obtain additional funds
    through financings, if available at all;

o   we are more vulnerable to economic downturns and fluctuations in
    interest rates, less able to withstand competitive pressures and
    less flexible in reacting to changes in our industry and general
    economic conditions; and

o   if we default under any of our existing debt instruments, including
    paying the outstanding principal when due, and if our creditors demand
    payment of a portion or all of our indebtedness, we may not have
    sufficient funds to make such payments.

	The occurrence of any of these events could materially adversely affect
our results of operations and financial condition and adversely affect our
stock price.

	The agreements governing the terms of our notes contain numerous
affirmative and negative covenants that limit the discretion of our management
with respect to certain business matters and place restrictions on us,
including obligations on our part to preserve and maintain our assets and
restrictions on our ability to incur or guarantee debt, to merge with or sell
our assets to another company, and to make significant capital expenditures
without the consent of the noteholders. Our ability to comply with these and
other provisions of such agreements may be affected by changes in economic or
business conditions or other events beyond our control.

We have restated our financial statements in the past to reflect various
corrections.  No assurances can be given that similar restatements will not be
required in the future.

	We restated our financial statements in the past to reflect various
corrections of certain errors.  The impact of the restatement of such financial
statements is included in our financial statements as of and for the years
ended March 31, 2006 and 2005.  While we believe we have put processes in place
to begin to remedy areas in our internal controls, no assurances can be given
that we will not be faced with situations which may require us to restate our
financial statements again.  Any such restatements could adversely effect the
credibility of our reported financial results and the price of our common
stock.

         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.

         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.

         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:

         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.

         Ivivi  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, 2007.

         Ivivi 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 May 25, 2005, we also filed a complaint against Regenesis Biomedical, Inc.,
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. We are 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 Court denied the
defendants' motion and permitted a period of discovery to determine
jurisdiction as to defendants, Terrence Kennedy, Mary C. Ritz and Frank R.
George.

On August 17, 2005, we filed a complaint against Conva-Aids, Inc. t/a New York
Home Health Care Equipment, or NYHHC, in the Superior Court of New Jersey, Law
Division, Docket No. BER-L-5792-05, alleging breach of contract with respect to
a distributor agreement that we and NYHHC entered into on or about August 1,
2004, pursuant to which: (i) we appointed NYHHC as exclusive distributor of our
products in a defined market place for so long as NYHHC secured a minimum
number of placements of our products and (ii) NYHHC agreed to pay us $2,500 per
month for each product shipped to NYHHC. By letter, dated August 9, 2005, we
terminated the agreement due to NYHHC's failure to make the payments required
under the agreement and failure to achieve the minimum number of placements
required under the agreement. We are seeking various forms of relief,
including: (i) money damages, including amounts due under unpaid invoices in an
aggregate amount of $236,560, (ii) an accounting and (iii) the return of our
products. The defendants filed a motion to dismiss alleging lack of
jurisdiction and failure to state a claim with regard to Harry Ruddy. We
opposed the defendant's motion to dismiss. On November 18, 2005, the Court
denied the defendant's motion to dismiss, without prejudice, based upon lack of
jurisdiction, which has not been completely decided. The Court permitted a
period of discovery to determine the jurisdiction issue, which discovery is
substantially complete. The defendants filed another motion to dismiss based
upon a claim of lack of jurisdiction, which was heard and denied by the Court
on June 9, 2006.

Other than the foregoing, we are not a party to, and none of our property is
the subject of, any pending legal proceedings other than routine litigation
that is incidental to our business. To our knowledge, no governmental authority
is contemplating any such proceedings.



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

         None.

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.

Quarter Ended          High Bid          Low Bid

Fiscal 2005
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

Fiscal 2006
June 30, 2005            0.29              0.28
September 30, 2005       0.33              0.32
December 31, 2005        0.25              0.25
March 31, 2006           0.27              0.27

Holders of Record

         As of March 31, 2006, 53,882,037 shares of the Company's common stock
were issued and outstanding. On March 31, 2006 there were 1,381 shareholders of
record.

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 July 5, 2006,  ADM 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 2,437,500  shares of common  stock of Ivivi,  1,584,347
shares of which have been granted as of July 5,  2006,  at exercise  prices
ranging from $.06 to $7.00 per share.


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 ADM and its three subsidiaries, Ivivi Technologies, Inc.,
Pegasus Laboratories, Inc. and Sonotron Medical Systems, Inc.


Results of Operations for the Fiscal Years Ended March 31, 2006 and March 31,
2005

	Our Ivivi subsidiary has filed a registration statement for an initial
public offering of its stock in order to raise the funds necessary to fully
implement its plan to market its products.  The table at the end of this
section summarizes our results of operations as if Ivivi had been separately
stated.  Our medical segment includes our Sonotron  subsidiary as well as
Ivivi.

Revenues

	Revenues were $1,724,269 for the year ended March 31, 2006 as compared
to $1,286,074 for the year ended March 31, 2005, an increase of $438,195, or
34%. Revenues from our chemical activities decreased by $14,873 and revenues
from our medical technology activities (primarily from our Ivivi Subsidiary)
increased by $453,068. During 2006, a significant customer of our chemical
products ceased operations and curtailed purchases. Such customer accounted for
approximately $39,000 of the Company's revenues for 2006, and approximately
$261,000 for 2005. The increase in revenues from the Company's medical
technology activities was primarily due to increased marketing of Ivivi's
products. Revenues from our Ivivi subsidiary were $786,512 in 2006 and $328,996
in 2005.

Operating Loss

	Our operating loss for 2006 was $4,981,806 compared to an operating
loss for 2005 of $2,468,760, an increase of $2,513,046. Selling, general and
administrative expenses increased by $2,515,583, primarily due to the
significant increase in personnel, marketing, and overhead costs from our Ivivi
subsidiary to support Ivivi's expanded activities related to the distribution
and marketing of its products and share based compensation of $705,900 for 2006
compared to $284,278 for 2005. Research and development expense was $544,426
for 2006 for Ivivi's laboratory studies for its technology at Montefiore
Medical Center and Cleveland Clinic started in January 2006, compared with an
expense of $270,894 in 2005.  The Cleveland Clinic study is expected to be
completed by December 2006 at an estimated expense of $300,000.

Interest and Financing Costs

	Net interest and financing costs increased $1,593,273, from $305,702 in
the 2005 period to $1,898,975 in 2006, due to interest expense and accrued
penalties and amortization of discount on the convertible notes issued in our
private placements partially offset by interest earned from amounts invested in
money market funds. During 2006 we recorded an expense of $290,349 due to the
increase in the fair value of warrants and registration rights liabilities,
compared to an expense of $581,749 in 2005.

Net Loss

Net loss was $7,171,130, or $0.13 per share, for the 2006 period as compared to
$3,356,211, or $0.06 per share, for the 2005 period, an increase of 3,814,919,
or $0.07 per share.

Ivivi Operations

	The following table summarizes our results of operations for 2006 as if
Ivivi had been separately stated:

                               Ivivi         Others      Total

Revenues                  $   786,512    $   937,757   $ 1,724,269
Costs and expenses:
Cost of sales                 216,984        476,014       692,998
Research and development      544,426           -          544,426
Selling, general
and administrative          4,706,950        761,701     5,468,651

Operating income (loss)   $(4,681,848)   $  (299,958)  $(4,981,806)

Liquidity and Capital Resources

	We have had significant operating losses for the fiscal years ended
March 31, 2006 and 2005. As of March 31, 2006, we had an accumulated deficit of
approximately $16.6 million. Our continuing operating losses have been funded
principally from the proceeds of our private placement financings in which we
have received gross proceeds of approximately $8.1 million and net proceeds of
approximately $7.4 million. We expect to incur additional operating losses, as
well as negative cash flow from operations, for the foreseeable future, as we
continue to expand our marketing efforts with respect to our products and to
continue our research and development of additional applications for our
technology and other technologies that we may develop in the future.

	We have had net losses of $7,171,130 and $3,356,211 for the years ended
March 31, 2006 and 2005, respectively, and had a stockholders' deficiency of
$6,199,807 at March 31, 2006. These factors raise substantial doubt about our
ability to continue as a going concern. The significant increase in the net
loss for the year ended March 31, 2006 is the result of our expanded
activities. In anticipation of expanding our operations, we raised $8,087,500
in private placements, and at March 31, 2006, we had cash and cash equivalents
of $982,670 and working capital of $333,726. Our net loss for the year ended
March 31, 2006 has been principally funded from the net proceeds received from
the private placement offering of the 6% unsecured notes payable described in
Note 6 of the financial statements for the years ended March 31, 2006 and 2005.
Our continuation as a going concern is dependent on our ability to increase
revenues, in receiving additional financing from outside sources, including a
public offering of Ivivi's common stock and a return to profitable operations.
We have developed additional commercially viable product offerings for both the
wound market and the cosmetic surgery markets and we are actively pursuing
exclusive arrangements with strategic partners, having leading positions in our
target markets in order to establish revenue relationships and nationwide, and
in some cases worldwide, marketing and distributions channels for our products.

Operating Activities:

	Net cash flows used by operating activities was $3,719,371 for 2006 as
compared to net cash used by operating activities of $2,059,121 for 2005. The
use of cash in 2006 was primarily due to a net loss of $7,171,130 related
mostly to the Company's medical technologies activities, and an increase in
accounts receivable of $276,984 offset by decreases in other current assets of
$272,365 and increases in accounts payable and accrued expenses of $751,564.
The net loss was partially offset by an aggregate of non cash charges of
$2,646,926 for share based compensation costs, depreciation and amortization
bad debt expense, amortization of loan costs and discount on the convertible
notes issued in the private placements, equity based penalties and the change
in fair value of warrant and registration rights liabilities.

	The use of cash in 2005 was primarily due to a net loss of $3,356,211
related mostly to the Company's medical technologies activities, and increases
in accounts receivable of $27,851, inventory of $48,649 and other current
assets of $286,303, offset by an increase in accounts payable of $261,630. The
net loss was partially offset by an aggregate of non cash charges of $1,238,765
for share based compensation costs, depreciation and amortization, bad debt
expense, amortization of loan costs and discount on the convertible notes
issued in the private placements and the change in fair value of warrant and
registration rights liabilities.

Investing Activities:

	Cash used in investing activities was of $22,320 for 2006 as compared
to $96,206 for 2005 related to the purchase of equipment.

Financing Activities:

	On December 1, 2004 and February 11, 2005, we completed private
placement financings (collectively, the "Placements") to "accredited investors"
only, consisting of an aggregate of $6,087,500 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 1,191,830 shares of Ivivi common stock, subject to adjustment,
plus up to an additional 60,003 shares of Ivivi common stock for the payment of
interest on the notes through April 30, 2006 and 5,959 shares for each month
thereafter until the date that a registration statement filed with the
Securities and Exchange Commission is declared effective, assuming each holder
elects to have his interest paid in shares of Ivivi common stock. Interest on
the notes is payable quarterly in cash or shares of Ivivi common stock, at the
direction of the holder. The Placements are also convertible into shares of ADM
common stock at $0.29 per share. 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 have the additional right to receive interest
payments in shares of ADM common stock in lieu of cash or shares of Ivivi
common stock. In connection with the issuance of the notes, we also issued to
the investors warrants to purchase an aggregate of 1,191,830 shares of Ivivi
common stock at $3.51 per share, as well as warrants to purchase an aggregate
of 20,991,379 shares of the common stock of ADM at $.41 per share. The warrants
to purchase shares of ADM common stock automatically expire upon the
consummation of a public offering of Ivivi common stock. 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 Ivivi 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 common stock is not declared effective.

	On November 10, 2005, Ivivi completed a private placement of securities
to two institutional accredited investors (the "Private Placement"). In
connection with the Private Placement, Ivivi realized aggregate gross proceeds
of $1,250,000 from the sale of unsecured convertible promissory notes (the
"Notes") and warrants (the "Warrants") to purchase shares of Ivivi common
stock.The Notes are due and payable in November 2010, unless earlier converted.
The Notes bear interest at a rate of 8% per annum, payable in cash, increasing
by 1% every 365 days from the date of issuance to a maximum of 12% per annum.
The principal and accrued and unpaid interest on the Notes will be
automatically converted into shares of Ivivi common stock upon consummation of
an initial public offering (an "IPO") at 85% of the initial public offering
price of the common stock (the "IPO Price"); provided, however, that each
holder of a Note may elect to convert all or any portion of the outstanding
principal amount of the Note into shares of Ivivi common stock at $4.31 per
share at any time from and after the earlier to occur of (i) the first
anniversary of the date of the Note and (ii) a withdrawal of Ivivi's
registration statement.

	The holder of each Warrant is entitled to purchase shares of Ivivi
common stock at an initial exercise price per share equal to (i) if an IPO has
occurred prior to the exercise of the Warrant 100% of the IPO Price or (ii) if
an IPO has not occurred prior to the exercise of the Warrant, $4.31 per share,
subject to adjustment. The aggregate number of shares of Ivivi common stock
issuable upon exercise of the Warrants shall equal either (i) if the Note has
been converted as of the date of exercise of the Warrant, the number of shares
of Ivivi common stock into which the Note was converted or (ii) if the Note has
not been converted as of the date of exercise of the Warrant, such number of
shares of Ivivi common stock into which the Note is then convertible.

	Ivivi has entered into registration rights agreements with the
investors that participated in the Private Placement, under which the investors
received demand and piggy-back registration rights for the common stock
underlying the securities sold in the Private Placement.

	Each investor in the Private Placement is affiliated with an individual
who has agreed to serve as a director of Ivivi upon effectiveness of Ivivi's
proposed initial public offering of its common stock.

	In March 2006, Ivivi completed a private placement of securities to two
institutional accredited investors (the "March Private Placement"). In
connection with the March Private Placement, Ivivi  realized aggregate gross
proceeds of $750,000 from the sale of unsecured convertible promissory notes
(the "2006 Notes") and warrants (the "2006 Warrants") to purchase shares of
common stock of Ivivi.

	The 2006 Notes are due and payable in March 2011, unless earlier
converted. The 2006 Notes bear interest at a rate of 8% per annum, payable in
cash, increasing by 1% every 365 days from the date of issuance to a maximum of
12% per annum. The principal and accrued and unpaid interest on the 2006 Notes
will be automatically converted into shares of Ivivi common upon consummation
of an initial public offering of Ivivi (an "IPO") at 85% of the initial public
offering price of the common stock (the "IPO Price"); provided, however, that
each holder of a 2006 Note may elect to convert all or any portion of the
outstanding principal amount of the Note into shares of Ivivi common stock at
$4.31 per share at any time from and after the earlier to occur of (i) the
first anniversary of the date of the Note and (ii) a withdrawal of the
registration statement.

	On June 16, 2006, Ivivi entered into a $250,000 unsecured subordinated
loan with Ajax Capital LLC. This loan bears interest at an annual rate of 8%
and is due upon the earlier to occur of (i) December 31, 2006, (ii) the
consummation of an offering of Ivivi securities, whether in a private or public
offering, in which Ivivi raises gross proceeds of at least $5,000,000 and (iii)
receipt by Ivivi from a strategic partner of a lump sum cash payment of at
least $5,000,000. If the principal amount, together with all accrued and unpaid
interest, is not paid on or before the maturity date, the interest rate will
increase by 1% every year after the maturity date to a maximum of 13% per annum
until all amounts due and payable under the note are paid in full.

	As of July 5, 2006, ADM and Ivivi were in compliance with the financial
covenants  contained in the notes.  These covenants will terminate upon
conversion of the notes.

	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


                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
                                 MARCH 31, 2006

                                    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, 2006 and 2005       F-2

     Consolidated Statements of Operations
        For the Years Ended March 31, 2006 and 2005                 F-3

     Consolidated Statements of Changes in
        Stockholders' Equity (Deficiency)
           For the Years Ended March 31, 2006 and 2005              F-3

     Consolidated Statements of Cash Flows
        For the Years Ended March 31, 2006 and 2005                 F-4

     Notes to Consolidated Financial Statements                     F-5
















            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
ADM Tronics Unlimited, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of ADM Tronics
Unlimited, Inc. and subsidiaries as of March 31, 2006 and 2005, and the
related statements of operations, changes in stockholders' equity
(deficiency), and cash flows for the years then ended. 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. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 consolidated financial position of ADM
Tronics Unlimited, Inc. and subsidiaries as of March 31, 2006 and 2005, and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared assuming
that the company will continue as a going concern.  As discussed in note 1 to
the consolidated financial statements, the company has had recurring losses and
has accumulated deficits and stockholders' deficiencies at March 31, 2006 and
2005.  Those conditions 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 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

As discussed in note 2 to the consolidated financial statements, certain errors
resulting in understatement of previously recorded deferred compensation and
additional paid-in capital as of March 31, 2005, were discovered by management
of the company during the current year.  Accordingly, the 2005 consolidated
financial statements have been restated to correct these errors.

/s/ Raich Ende Malter & Co. LLP

Raich Ende Malter & Co. LLP
East Meadow, New York
June 27, 2006
                                       F-1
                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2006 AND 2005
                                                            March 31, 2005
                                           March 31, 2006    (Restated)
                                           --------------   --------------
ASSETS

Current assets:
 Cash and cash equivalents                      $    982,670     $  3,011,631
 Accounts receivable, net of allowance for
  doubtful accounts of $20,015 and $72,593,
  respectively                                       295,163          102,691
Inventories                                          273,594          372,717
Prepaid expenses and other current assets             13,452          278,502
                                                   ---------       ----------

Total current assets                               1,564,879        3,765,541

Property and equipment, net of accumulated
 depreciation of $254,162 and $271,188,
 respectively                                         49,599           40,550

Equipment in use and under rental
 agreements, net of accumulated
 depreciation of $883,850 and $832,059,
  respectively                                          -              51,791

Inventory - long term portion                        327,342          287,582
Loan receivable and accrued interest, officer         91,458           89,982
Other assets                                          97,712          104,928
Deferred loan costs, net                             785,016          823,564
Deferred offering costs                              323,657          133,125
                                                  ----------     ------------

Total assets                                    $  3,239,663     $  5,297,063
                                                ============     ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
 Accounts payable                                   $419,557         $172,978
 Accrued expenses and other current liabilities      519,089          225,252
 Accrued interest                                    319,823          101,359
                                                  ----------        ---------

Total current liabilities	                     1,258,469          499,589

Convertible debentures payable, net of
 unamortized debt discount of $2,434,281
 and $2,628,219, respectively                      5,653,219        3,459,281
Warrant and registration rights
 liabilities                                       2,527,782        1,449,326
                                                  ----------       ----------
Total liabilities                                  9,439,470        5,408,196
                                                  ----------       ----------

Stockholders' deficiency:
 Preferred stock, $.01 par value; 5,000,000
  shares authorized, -0- shares issued and
   outstanding                                          -                 -
 Common stock, $.0005 par value; 150,000,000
  shares	authorized, 53,882,037 shares issued
  and outstanding                                     26,941            26,941
 Additional paid-in capital                       10,342,480        10,003,561
 Deferred compensation                                  -             (743,537)
 Accumulated deficit                             (16,569,228)       (9,398,098)
                                                  ----------        ----------
Total stockholders' deficiency                    (6,199,807)         (111,133)
                                                   ---------          --------
Total liabilities and stockholders' deficiency  $  3,239,663       $ 5,297,063
                                                 ===========       ===========

  See accompanying notes to consolidated financial statements.


                                      F-2


                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                              For the Years Ended
                                                   March 31,
                                                              2005
                                            2006           (Restated)
                                          ---------         ---------

Revenues                                $1,724,269         $1,286,074
                                         ---------          ---------

Costs and expenses:
  Cost of sales                            692,998            530,872
  Research and development                 544,426            270,894
  Selling, general and administrative    5,468,651          2,953,068
                                         ---------          ---------

Total operating expenses                 6,706,075          3,754,834
                                         ---------          ---------

Operating loss                          (4,981,806)        (2,468,760)

Interest and finance costs, net         (1,898,975)          (305,702)
Change in fair value of warrant and
 registration rights liabilities          (290,349)          (581,749)
                                         ---------          ---------

Net (loss)                             $(7,171,130)       $(3,356,211)
                                         =========          =========

Net loss per share, basic and diluted       $(0.13)            $(0.06)

Weighted average shares outstanding     53,882,037         52,548,704

          See accompanying notes to consolidated financial statements.



<TABLE>
<CAPTION>
		ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                 FOR THE YEARS ENDED MARCH 31, 2006 AND 2005


                                                       Additional
		              Common Stock       Paid-in      Deferred      Accumulated
		           Shares      Amount    Capital      Compensation  Deficit	        Total
                          ------     -------    -------      ------------  -------        -----
<S>
<C>                       <C>         <C>       <C>         <C>          <C>          <C>
Balance, March 31, 2004   51,882,037  $25,941   $6,861,574  $(69,600)     $(6,041,887)   $776,028

Valuation of warrants
 issued to underwriter
 for services                                       67,253                                 67,253
Beneficial conversion
 feature                                         1,940,694                              1,940,694
Contributed services                                62,109                                 62,109
Issuance of warrants                               844,241  (844,241)                        -
Issuance of warrants
 for placement services                            208,690                                208,690
Issuance of common stock   2,000,000    1,000       19,000                                 20,000
Amortization of deferred
 compensation                                                170,304                      170,304

Net loss                                                                   (3,356,211) (3,356,211)
                          ----------   ------   ---------   --------       ----------  ----------

Balance, March 31, 2005   53,882,037   26,941   10,003,561  (743,537)      (9,398,098)   (111,133)

Reclassify deferred
 compensation                                     (743,537)  743,537                         -
Beneficial conversion
 feature                                           133,776                                133,776
Share based compensation                           705,900                                705,900
Warrants issued with debt                          242,780                                242,780

Net loss                                                                   (7,171,130) (7,171,130)
                          ----------  -------  -----------   -------       ----------   ---------

Balance, March 31, 2006   53,882,037  $26,941  $10,342,480   $   -       $(16,569,228)$(6,199,807)
                          ==========  =======  ==========    =======      ===========  ==========



                                         F-3

</TABLE>
                  ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        For the Years Ended
                                                             March 31,
                                                      2006             2005
                                                                    (Restated)
                                                     --------       ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                           $(7,171,130)    $(3,356,211)
Adjustments to reconcile net loss to net
 cash used by operating activities:
    Depreciation and amortization                       72,278         143,796
    Contributed services                                  -             62,109
    Stock based compensation                           705,900         284,378
    Amortization of loan costs and discount            705,780         266,936
    Equity based penalty expense                       788,107            -
    Bad debts                                           84,512          43,593
    Change in fair value of warrant and
     registration rights liabilities                   290,349         581,749
    Other                                                 -             19,148
Changes in operating assets and liabilities:
  (Increase) decrease in:
    Accounts receivable                               (276,984)        (27,851)
    Inventory                                           59,363         (48,649)
    Other current assets                               272,365        (286,303)
    Deposits and other assets                           (1,475)         (3,446)
  Increase (decrease) in:
    Accounts payable and accrued expenses              751,564         261,630
                                                       -------         -------

Net cash used by operating activities               (3,719,371)     (2,059,121)
                                                    -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                    (22,320)        (96,206)
                                                       --------        --------

Net cash used by investing activities                  (22,320)        (96,206)
                                                       --------        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, net of
 costs deducted                                      1,895,792       5,345,002
Payment of note payable                                   -           (135,000)
Deferred offering costs                               (183,062)       (133,125)
                                                      ---------       ---------

Net cash  provided by financing activities           1,712,730       5,076,877
                                                     ---------       ---------

Net (decrease) increase in cash and
 cash equivalents                                   (2,028,961)      2,921,550

Cash and cash equivalents, beginning of year         3,011,631          90,081
                                                     ---------          ------
Cash and cash equivalents, end of year                $982,670      $3,011,631
                                                      ========      ==========

Supplemental disclosures of cash flow information:
Cash paid for:
  Interest                                            $170,164         $70,890
  Income taxes                                            -               -
Non-cash financing and investing activities:
During the year ended March 31, 2006 the Company:
 Issued warrants valued at $242,780 in connection
  with convertible debt.
 Recorded a beneficial conversion feature related to
  convertible debt in the amount of $133,776,
  presented as a debt discount.
During the year ended March 31, 2005 the Company:
  Issued convertible debt with detachable warrants
   valued at $867,577.
  Recorded a beneficial conversion feature related to
   convertible debt in the amount of $1,940,694,
   presented as a debt discount.

          See accompanying notes to consolidated financial statements.


                                      F-4

ADM TRONICS UNLIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2006

1. ORGANIZATIONAL MATTERS
				ORGANIZATION

	ADM Tronics Unlimited, Inc. ("we", "us", "the company" or "ADM"), was
incorporated under the laws of the state of Delaware on November 24, 1969. We
are authorized under our Certificate of Incorporation to issue 150,000,000
common shares, with $.0005 par value, and 5,000,000 preferred shares with $.01
par value.
				NATURE OF BUSINESS

	We are 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  devices.  Our 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.
Our medical device product line consists principally of proprietary devices
used in the treatment of joint pain,  postoperative  edema, and tinnitus. These
devices are FDA cleared medical devices known as "SofPulse" units. These
products are sold or rented to customers located principally in the United
States.
				IVIVI OPERATIONS

	Our majority owned subsidiary, Ivivi Technologies, Inc., has filed a
Registration Statement with the Securities and Exchange Commission for the
public offering of a portion of its common stock. Upon the effectiveness of the
registration statement and the consummation of a public offering of Ivivi
common stock, ADM will no longer own a majority of the outstanding common stock
of Ivivi, and, if so, then Ivivi's operations will no longer be reported on a
consolidated basis. For the years ended March 31, 2006 and 2005, Ivivi's
revenues included in these consolidated financial statements were $786,512 and
$328,996, respectively, and Ivivi's operating loss was $4,681,848 and
$2,390,173.
				GOING CONCERN

	We have had net losses of $7,171,130 and $3,356,211 for the years ended
March 31, 2006 and 2005, respectively, negative cash flow from operating
activities of $3,719,371 and $2,059,121 for the years ended March 31, 2006 and
2005, respectively, and a stockholders' deficiency of $6,199,807 and $111,133
at March 31, 2006 and 2005 respectively. These factors raise substantial doubt
about our ability to continue as a going concern.

	The continuation of the company as a going concern is dependent on our
ability to increase revenues, receive additional financing from outside
sources, including a public offering of the common stock of a subsidiary, Ivivi
Technologies, Inc.("Ivivi") and a return to profitable operations. Management
is continuing to secure ongoing revenue relationships for our products,
including those with several strategic partners who will assist us in marketing
and distribution of our products. On June 16, 2006, we received additional
financing in the form of an unsecured loan in the amount of $250,000 from Ajax
Capital LLC (see Note 13, Subsequent Events). We have developed additional
commercially viable product offerings for both the wound market and the
cosmetic surgery markets, and we are currently seeking strategic partnerships
that would provide upfront payments, in return for possible geographic and/or
market exclusivity, as well as certain guaranteed annual minimum revenue.

	If we are not able to raise the necessary funding, we may be forced to
curtail our operations and this may have a material adverse impact on our
future financial position and results of operations.

                                      F-5




2. SIGNIFICANT ACCOUNTING POLICIES

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

USE OF ESTIMATES-- These financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and,
accordingly, require management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates made by management include expected
economic life and value of our SofPulse devices, deferred tax assets, option
and warrant expenses related to compensation to employees and directors,
consultants and investment banks, the value of warrants issued in conjunction
with convertible debt, allowance for doubtful accounts, and warranty reserves.
Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS-- For certain of our financial instruments,
including accounts receivable, inventories, accounts payable and accrued
expenses and advances payable-affiliates, the carrying amounts approximate fair
value due to their relatively short maturities.

	Our convertible debt and loan receivable have interest rates that
approximate market and therefore the carrying amounts approximate their fair
values.  The warrant and registration rights liabilities, as well as deferred
loan costs, are discussed in note 6.

CASH AND EQUIVALENTS-- Cash equivalents are comprised of certain highly liquid
investments with maturity of three months or less when purchased. We maintain
our cash in bank deposit accounts, which at times, may exceed federally insured
limits. We have not experienced any losses to date as a result of this policy.

REVENUE RECOGNITION-

Chemical Products:

Sales revenues are recognized when products are shipped to end users. Shipments
to distributors are recognized as sales where no right of return exists.

Medical Devices:

	We recognize revenue primarily from the rental and to a lesser extent
from the sale of our medical devices.

	Rental revenue is recognized as earned on either a monthly or pay-per-
use basis in accordance with individual customer agreements. In most cases, we
allow the rental end user to evaluate our equipment on a 30-day trial basis,
during which time we provide any demonstration or education necessary for the
use of our equipment. Rental revenue recognition commences after the end of the
trial period. All of our rentals are terminable by either party at any time.
When we use a third party to bill insurance companies, we still recognize
revenue as our products are used. When certain of our distributors bill end
users, we recognize rental revenue when we are paid by the distributor.

	Sales are recognized when our products are shipped to end users
including medical facilities and distributors. Our products are principally
shipped on a "freight collect" basis. Shipping and handling charges and costs
are immaterial. We have no post shipment obligations and sales returns have
been immaterial.

	We provide an allowance for doubtful accounts determined primarily
through specific identification and evaluation of significant past due
accounts, supplemented by an estimate applied to the remaining balance of past
due accounts.

INVENTORY AND EQUIPMENT HELD FOR RENTAL-

	Chemical product inventories  are  stated  at  the  lower  of  cost
(first-in, first-out method) or market. Inventory that is expected to be sold
within one operating cycle (1 year) is classified as a current asset. Inventory
that is not expected to be sold within 1 year, based on historical  trends, is
classified as Inventory - long term.

	Our medical device inventories consist principally of  Sofpulse Units
("Units"), FDA cleared devices, and are included in the balance sheet under
three categories:

o Inventory - current portion for finished units expected to be sold within one
year.

The current portion of inventory at March 31 consists of the following:

                         2006         2005
Raw Materials          $129,444     $124,393
Finished Goods          144,150      248,324
                       $273,594	$372,717


o Inventory - long term portion, for finished units of $232,053 held for sale
and raw materials of $75,289 used to refurbish and build units. Units held for
sale are stated at the lower of cost (first-in, first-out method) or market.

o Equipment held for rental, on a specific identification basis, for 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. At March 31, 2006, units held for rental were
fully depreciated.


PROPERTY & EQUIPMENT - We record our equipment at historical cost. We expense
maintenance and repairs as incurred. Depreciation is provided for by the
straight-line method over five to seven years, the estimated useful lives of
the property and equipment.

LONG-LIVED ASSETS - We follow SFAS No. 144, "Accounting for Impairment of
Disposal of Long-Lived Assets", which established a "primary asset" approach to
determine the cash flow estimation period for a group of assets and liabilities
that represents the unit of accounting for a long lived asset to be held and
used. Long-lived assets to be held and used are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset. Long-
lived assets to be disposed of are reported at the lower of carrying amount or
fair value less cost to sell. During the years ended March 31, 2006 and 2005,
no impairment loss was recognized.

ADVERTISING COSTS - Advertising costs are expensed as incurred and amounted to
approximately $333,000 and $138,000 for the years ended March 31, 2006 and
2005, respectively. Costs incurred in connection with the sponsorship of a PBS
promotional medical television program were capitalized until the completion
and initial airing of the program, at which time they were expensed in full.
Capitalized costs were $101,500 at March 31, 2005, and these costs were charged
to expense during the year ended March 31, 2006.

RESEARCH AND DEVELOPMENT COSTS - Research and development costs consist of
expenditures for the research and development of patents and technology, which
are not capitalizable. Our research and development costs consist mainly of
payments for third party research and development arrangements.

DEFERRED LOAN COSTS - Deferred loan costs are being amortized on a straight-
line basis over a five year period through the maturity date of the related
convertible notes (see Note 6). There is no material difference between the
straight-line basis of amortization of debt costs and the effective interest
method.

SHARE BASED COMPENSATION - Our share based compensation results primarily from
the use of Ivivi common stock and common stock options.

	SFAS No. 123, "Accounting for Share-Based Compensation," establishes
and encourages the use of the fair value based method of accounting for share-
based compensation arrangements under which compensation cost is determined
using the fair value of share-based compensation determined as of the date of
the grant or the date at which the performance of the services is completed and
is recognized over the periods in which the related services are rendered. The
statement also permits companies to elect to continue using the current
intrinsic value accounting method specified in Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," to account
for share-based compensation to employees. We have elected to use the intrinsic
value based method for grants to our employees and directors and have disclosed
the pro forma effect of using the fair value based method to account for our
share-based compensation to employees.

	We also follow the provisions of FASB Interpretation No. 44 (as
amended), Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of APB Opinion No. 25 (FIN 44), which provides guidance for
certain stock compensation issues, such as changes in grantee status that occur
after July 1, 2000.

	We use the fair value method for equity instruments granted to non-
employees and use the Black Scholes option value model for measuring the fair
value of warrants and options. The stock based fair value compensation is
determined as of the date of the grant or the date at which the performance of
the services is completed (measurement date) and is recognized over the periods
in which the related services are rendered.

	In December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-
Based Payment". SFAS 123(R) provides 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) are 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 us effective the
first interim period of our first fiscal year beginning on or after December
15, 2005. We will transition to the new standards under the "modified
prospective method," which means that the fair value of any stock options which
vest after the effective date would be expensed and recorded to the statement
of operations. Companies must use fair value reported on a pro forma basis in
the notes to the financial statements previously filed. We have evaluated the
impact of the adoption of SFAS 123(R), and believe that the impact will be
significant to our overall results of operations and financial position.

	In November 2005, the FASB issued Staff Position No. FAS 123(R)-3,
"Transition Election Related to Accounting for the Tax Effects of Share-Based
Payment Awards." FAS 123(R)-3 provides that companies may elect to use a
specified alternative method to calculate the historical pool of excess tax
benefits available to absorb tax deficiencies recognized upon adoption of SFAS
No. 123 (R). The option to use the alternative method is available regardless
of whether SFAS No. 123 (R) was adopted using the modified prospective or
modified retrospective application transition method, and whether it is has the
ability to calculate its pool of excess tax benefits in accordance with the
guidance in paragraph 81 of SFAS No. 123 (R). This method only applies to
awards that are fully vested and outstanding upon adoption of SFAS No. 123 (R).
FAS 123(R)-3 became effective after November 10, 2005. The adoption of FAS
123(R)-3did not have a material impact on our financial position or results of
operations.

	Pro forma information regarding the effects on operations of employee
and director common share purchase options as required by SFAS No. 123 and SFAS
No. 148 has been determined as if we had accounted for those options under the
fair value method. Pro forma information is computed using the Black Scholes
method at the date of grant of the options based on the following assumption
ranges for Ivivi: (1) risk free interest rate of 3.62%; to 4.6% (2) dividend
yield of 0%; (3) volatility factor of the expected market price of our common
stock of 60% to 67%; and (4) an expected life of the options of 2.5 to 5 years.
The foregoing option valuation model requires input of highly subjective
assumptions. Because common share purchase options granted to employees and
directors have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially
affect the fair value of estimates, the existing model does not in the opinion
of our management necessarily provide a reliable single measure of the fair
value of common share purchase options we have granted to our employees and
directors.

	Pro forma information relating to employee and director common share
purchase options is as follows:

                                               FOR THE YEAR     FOR THE YEAR
                                                   ENDED           ENDED
                                               MARCH 31, 2006   MARCH 31, 2005


Net loss as reported .........................  $(7,171,130)    $(3,356,211)
Stock-based compensation expense included in
   reported net loss .........................       11,424          11,424
Stock compensation calculated under fair value
   method ....................................      (46,511)        (21,043)

Pro forma net loss ...........................  $(7,206,217)    $(3,365,830)

Basic and diluted loss per share as
   reported ..................................  $     (0.13)    $     (0.06)

Pro forma basic and diluted loss per share ... $      (0.13)    $     (0.06)



INCOME TAXES - We report the results of our operations as part of a
consolidated tax return with our subsidiaries. We have entered into a tax
sharing arrangement where each of the members compensates each other to the
extent that their respective taxes are affected as a result of this
arrangement. Deferred income taxes result primarily from temporary differences
between financial and tax reporting. Deferred tax assets and liabilities are
determined based on the difference between the financial statement bases and
tax bases of assets and liabilities using enacted tax rates. A valuation
allowance is recorded to reduce a deferred tax asset to that portion that is
expected to more likely than not be realized.

NET LOSS PER SHARE - We use SFAS No. 128, "Earnings Per Share" for calculating
the basic and diluted loss per share. We compute basic loss per share by
dividing net loss and net loss attributable to common shareholders by the
weighted average number of common shares outstanding. Diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have
been outstanding if the potential shares had been issued and if the additional
shares were dilutive. Common equivalent shares are excluded from the
computation of net loss per share if their effect is anti-dilutive.

	Per share basic and diluted net loss amounted to $0.13 for the year
ended March 31, 2006 and $0.06 for the year ended March 31, 2005. For each of
the years ended March 31, 2006 and 2005, 50,182,341 potential shares were
excluded from the shares used to calculate diluted earnings per share as their
inclusion would reduce net loss per share.

CONVERTIBLE DEBT - In accordance with EITF 00-27, a portion of the proceeds of
our convertible debt has been allocated to the warrants issued with the debt
based on their fair value. This allocation has resulted in a discount on the
debt and the discount is being amortized over the term of the notes to their
maturity date. When the fair value of the underlying common stock is greater
than the effective conversion price, we record a beneficial conversion feature,
which is also amortized over the term of the notes to their maturity date.

	In conjunction with the issuance of the convertible debt, we have
issued warrants that have registration rights for the underlying shares. As the
contracts must be settled by the delivery of registered shares and the shares
were not registered by the balance sheet date, pursuant to EITF 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock", the value of the warrants at the date of
issuance was recorded as a warrant liability on the balance sheet. We have
included the change in fair value from the date of issuance to March 31, 2006
in other income (expense), in accordance with EITF 00-19. The fair value of the
warrant liability was $433,630 at March 31, 2006 and $1,449,326 at March 31,
2005. Upon the registration statement being declared effective, the fair value
of the warrants on that date will be reclassified as equity.

	In June 2005, the EITF issued EITF 05-2, "The Meaning of Conventional
Convertible Debt Instrument in Issue No. 00-19." EITF 05-2 retained the
definition of a conventional convertible debt instrument as set forth in EITF
00-19, and which is used in determining certain exemptions to the accounting
treatments prescribed under SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities." EITF 05-2 also clarified that certain contingencies
related to the exercise of a conversion option would not be outside the
definition of "conventional" and determined that convertible preferred stock
with a mandatory redemption date would also qualify for similar exemptions if
the economic characteristics of the preferred stock are more akin to debt than
equity. EITF 05-2 is effective for new instruments entered into and instruments
modified in periods beginning after June 29, 2005. We adopted the provisions of
EITF 05-2 on July 1, 2005, which did not have a material effect on our
financial position or results of operations.

	In September 2005, the FASB ratified the EITF's Issue No. 05-7,
"Accounting for Modifications to Conversion Options Embedded in Debt
Instruments and Related Issues" (EITF 05-7"), which addresses whether a
modification to a conversion option that changes its fair value effects the
recognition of interest expense for the associated debt instrument after the
modification, and whether a borrower should recognize a beneficial conversion
feature, not a debt extinguishment, if a debt modification increases the
intrinsic value of the debt (for example, the modification reduces the
conversion price of the debt). The statement is effective for accounting
modifications of debt instruments beginning in the first interim or annual
reporting period beginning after December 15, 2005. The adoption of EITF 05-7
did not have a material impact on our financial position or results of
operations.

	In September 2005, the FASB ratified the EITF's Issue No. 05-8, "Income
Tax Consequences of Issuing Convertible Debt with a Beneficial Conversion
Feature" ("EITF 05-8"), which discusses whether the issuance of convertible
debt with a beneficial conversion feature results in a basis difference arising
from the intrinsic value of the beneficial conversion feature on the commitment
date (which is recorded in the stockholder's equity for book purposes, but as a
liability for income tax purposes) and, if so, whether that basis difference is
a temporary difference under FASB Statement No. 109, "Accounting for Income
Taxes." The statement will be effective for financial statements beginning in
the first interim or annual reporting period beginning after December 15, 2005.
The adoption of EITF 05-8 did not have a material impact on our financial
position or results of operations.

RECLASSIFICATIONS - Certain reclassifications have been made to the
consolidated financial statements for the prior period in order to have them
conform to the current period's classifications. These reclassifications have
no effect on previously reported net income.

RESTATEMENT - The March 31, 2005 financial statements have been restated to
reflect additional expense of $222,488 resulting from contributed services of
$62,109, accrued financing expense of $26,821, and the revaluation of equity
based compensation of $133,558. As a result of these corrections, net loss for
the year ended March 31, 2005 has increased by $222,488, to $3,356,211 from
$3,133,723, and loss per share remained unchanged at $0.06 per share

	Changes to the balance sheet at March 31, 2005 resulting from these
corrections are as follows:
                                           As reported in Form 10-KSB/A
                                           (Amendment No. 2)     Restated

         Accrued interest and penalties       $    74,538        $   101,359
         Additional paid-in capital           $ 9,391,972        $10,003,561
         Deferred compensation                $  (327,615)       $  (743,537)
         Accumulated deficit                  $(9,175,610)       $(9,398,098)


                       NEW ACCOUNTING PRONOUNCEMENTS

	In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies that abnormal
inventory costs such as costs of idle facilities, excess freight and handling
costs, and wasted materials (spoilage) are required to be recognized as current
period costs. The provisions of SFAS No. 151 are effective for fiscal years
beginning after June 15, 2005. The adoption of SFAS No. 151 is not expected to
have a material effect on our financial position, results of operations, or
cash flows.

	In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections" ("SFAS No. 154"). SFAS 154 requires retrospective
application to prior periods' financial statements of changes in accounting
principle. It also requires that the new accounting principle be applied to the
balances of assets and liabilities as of the beginning of the earliest period
for which retrospective application is practicable and that a corresponding
adjustment be made to the opening balance of retained earnings for that period
rather than being reported in an income statement. The statement will be
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. We do not expect that the adoption of SFAS
No. 154 will have a material effect on our financial position or results of
operations.

3. PROPERTY AND EQUIPMENT

Our property and equipment as of March 31, 2006 is as follows:

                                               2006     2005

   Computer equipment....................   $ 19,691  $ 12,986
   Leasehold improvements................      3,401     3,401
   Machinery and equipment...............    280,669   295,351

      Total property and equipment.......    303,761   311,738

   Accumulated depreciation and
    amortization                             254,162   271,188

   Property and equipment, net              $ 49,599  $ 40,550


Depreciation and amortization expense related to property and equipment
amounted to $13,271 and $7,722 during the years ended March 31, 2006 and 2005,
respectively.

4. EQUIPMENT IN USE AND UNDER RENTAL AGREEMENTS

	Equipment in use and under rental agreements consists of the
following at March 31, 2006:

                                               2006     2005
SofPulse units...........................   $883,850   $883,850
Accumulated depreciation.................    883,850    832,059

   Equipment in use and under
      rental agreements, net..........      $     --   $ 51,791


	Depreciation expense related to equipment in use and under rental
agreements amounted to $51,791 and $131,470 during the years ended March 31,
2006 and 2005, respectively.

5. INCOME TAXES

	Net operating losses for tax purposes of approximately $11,567,000 at
March 31, 2006 are available for carryover. The net operating losses will
expire from 2010 through 2026. We have provided a 100% valuation allowance for
the deferred tax benefit resulting from the net operating loss carryover due to
our limited operating history. In addressing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences are
deductible. A reconciliation of the statutory Federal income tax rate and the
effective income tax rate for the years ended March 31, 2006 and 2005 follows:

Significant components of deferred tax assets and liabilities are as follows:

                                         MARCH 31,     MARCH 31,
                                         2006          2005
Deferred tax assets (liabilities):
Bad debts..................................   $     8,000   $    29,000
Net operating loss carryforwards...........   $ 4,627,000   $ 2,729,000

Deferred tax assets, net...................     4,635,000     2,758,000
Valuation allowance........................    (4,635,000)   (2,758,000)

Net deferred tax assets....................   $        --   $        --

                                                MARCH 31,     MARCH 31,
                                                   2006          2005

Statutory federal income tax rate..........        (34)%         (34)%
State income taxes, net of federal taxes...         (6)%          (6)%
Non-deductible items.......................         12%            11%
Valuation allowance........................         28%            29%

Effective income tax rate..................          0%             0%


6. PRIVATE PLACEMENTS OF CONVERTIBLE DEBT

	On December 1, 2004 and February 11, 2005, we completed private
placement financings (collectively, the "Placements") to "accredited investors"
only, consisting of an aggregate of $6,087,500 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 1,191,830 shares of Ivivi common stock, subject to adjustment,
plus up to an additional 60,003 shares of Ivivi common stock for the payment of
interest on the notes through April 30, 2006 and 5,959 shares for each month
thereafter until the date that a registration statement filed with the
Securities and Exchange Commission is declared effective, assuming each holder
elects to have his interest paid in shares of Ivivi common stock. Interest on
the notes is payable quarterly in cash or shares of Ivivi common stock, at the
direction of the holder. The Placements are also convertible into shares of ADM
common stock at $0.29 per share. 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 have the additional right to receive interest
payments in shares of ADM common stock in lieu of cash or shares of Ivivi
common stock. In connection with the issuance of the notes, we also issued to
the investors warrants to purchase an aggregate of 1,191,830 shares of Ivivi
common stock at $3.51 per share, as well as warrants to purchase an aggregate
of 20,991,379 shares of the common stock of ADM at $.41 per share. The warrants
to purchase shares of ADM common stock automatically expire upon the
consummation of a public offering of Ivivi common stock. 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 Ivivi 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 common stock is not declared effective. In accordance with
EITF 00-27, a portion of the proceeds were allocated to the warrants based on
their fair value, which totaled $867,577 using the Black Scholes option pricing
model based on the following assumptions: (1) risk free interest rate of 1.5%;
(2) dividend yield of 0%; (3) volatility factor of the expected market price of
our common stock of 64%; and (4) an expected life of 6 months. The remaining
balance was allocated to the convertible debt instruments and was used to
compute the beneficial conversion feature. We attributed a beneficial
conversion feature of $1,940,694 to the convertible debt instruments based upon
the difference between the effective conversion price of the instruments and
the closing price of our shares on the date of issuance. Accordingly, the notes
payable were discounted by a total of $2,808,271. The discount is being
amortized over the term of the notes to their maturity date. During the years
ended March 31, 2006 and 2005, amortization as interest expense amounted to
$560,115 and $180,052, respectively. Since the fair value of the underlying
common stock was less than the effective conversion price, there was no
beneficial conversion feature.

	In conjunction with the issuance of the convertible debt, we have
issued warrants that have registration rights for the underlying shares. As the
contracts must be settled by the delivery of registered shares and the shares
were not registered by the balance sheet date, pursuant to EITF 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock", the value of the warrants at the date of
issuance was recorded as a warrant liability on the balance sheet. We have
included the change in fair value from the date of issuance to March 31, 2006
in other income (expense), in accordance with EITF 00-19. The fair value of the
warrant liability was $433,630 at March 31, 2006 and $1,449,326 at March 31,
2005. Upon the registration statement being declared effective, the fair value
of the warrants on that date will be reclassified as equity.

	Ivivi has filed a Registration Statement with the Securities and
Exchange Commission for the public offering of a portion of their common stock.

	Because Ivivi does not have an effective registration statement, we
have incurred the penalties described above. As a result, as of March 31, 2006,
we are obligated to issue an additional 281,094 shares of Ivivi common stock
and 281,094 additional Ivivi warrants. Included in interest and finance costs,
we have recorded an expense of $788,107 during the year ended March 31, 2006
related to this penalty, based on the fair value of the Ivivi shares and
warrants as incurred. Additionally, during the year ended March 31, 2006, we
have recorded an additional expense of $1,306,045 due to the increase in value
of the Ivivi shares and warrants at March 31, 2006.

	On November 10, 2005, Ivivi completed a private placement of securities
to two institutional accredited investors (the "Private Placement"). In
connection with the Private Placement, Ivivi realized aggregate gross proceeds
of $1,250,000 from the sale of unsecured convertible promissory notes (the
"Notes") and warrants (the "Warrants") to purchase shares of Ivivi common
stock.

	The Notes are due and payable in November 2010, unless earlier
converted. The Notes bear interest at a rate of 8% per annum, payable in cash,
increasing by 1% every 365 days from the date of issuance to a maximum of 12%
per annum. The principal and accrued and unpaid interest on the Notes will be
automatically converted into shares of Ivivi common stock upon consummation of
an initial public offering (an "IPO") at 85% of the initial public offering
price of the common stock (the "IPO Price"); provided, however, that each
holder of a Note may elect to convert all or any portion of the outstanding
principal amount of the Note into shares of Ivivi common stock at $4.31 per
share at any time from and after the earlier to occur of (i) the first
anniversary of the date of the Note and (ii) a withdrawal of Ivivi's
registration statement.

	The holder of each Warrant is entitled to purchase shares of Ivivi
common stock at an initial exercise price per share equal to (i) if an IPO has
occurred prior to the exercise of the Warrant 100% of the IPO Price or (ii) if
an IPO has not occurred prior to the exercise of the Warrant, $4.31 per share,
subject to adjustment. The aggregate number of shares of Ivivi common stock
issuable upon exercise of the Warrants shall equal either (i) if the Note has
been converted as of the date of exercise of the Warrant, the number of shares
of Ivivi common stock into which the Note was converted or (ii) if the Note has
not been converted as of the date of exercise of the Warrant, such number of
shares of Ivivi common stock into which the Note is then convertible. In
accordance with EITF 00-27, a portion of the proceeds was allocated to the
warrant based on its relative fair value, which totaled $64,886 using the
Black-Scholes option pricing model. The remaining balance was allocated to the
convertible notes. The assumptions used in the Black-Scholes model are as
follows: (1) dividend yield of 0%; (2) expected volatility of 67%, (3) risk-
free interest rate of 3.62%,(4) expected life of 5 years and (5) estimated fair
value of Ivivi common stock was $0.83 per share. The debt discount is being
amortized over the term of the notes. During the year ended March 31, 2006,
amortization as interest expense amounted to $5,084. Since the fair value of
the underlying common stock was less than the effective conversion price, there
was no beneficial conversion feature.

	Ivivi has entered into registration rights agreements with the
investors that participated in the Private Placement, under which the investors
received demand and piggy-back registration rights for the common stock
underlying the securities sold in the Private Placement.

	Each investor in the Private Placement is affiliated with an individual
who has agreed to serve as a director of Ivivi upon effectiveness of Ivivi's
proposed initial public offering of its common stock.

	In March 2006, Ivivi completed a private placement of securities to two
institutional accredited investors (the "March Private Placement"). In
connection with the March Private Placement, Ivivi  realized aggregate gross
proceeds of $750,000 from the sale of unsecured convertible promissory notes
(the "2006 Notes") and warrants (the "2006 Warrants") to purchase shares of
common stock of Ivivi.

	The 2006 Notes are due and payable in March 2011, unless earlier
converted. The 2006 Notes bear interest at a rate of 8% per annum, payable in
cash, increasing by 1% every 365 days from the date of issuance to a maximum of
12% per annum. The principal and accrued and unpaid interest on the 2006 Notes
will be automatically converted into shares of Ivivi common upon consummation
of an initial public offering of Ivivi (an "IPO") at 85% of the initial public
offering price of the common stock (the "IPO Price"); provided, however, that
each holder of a 2006 Note may elect to convert all or any portion of the
outstanding principal amount of the Note into shares of Ivivi common stock at
$4.31 per share at any time from and after the earlier to occur of (i) the
first anniversary of the date of the Note and (ii) a withdrawal of the
registration statement.

	The holder of each 2006 Warrant is entitled to purchase shares of Ivivi
common stock at an initial exercise price per share equal to (i) if an IPO has
occurred prior to the exercise of the 2006 Warrant 100% of the IPO Price or
(ii) if an IPO has not occurred prior to the exercise of the 2006 Warrant,
$4.31 per share, subject to adjustment. The aggregate number of shares of Ivivi
common stock issuable upon exercise of the 2006 Warrants shall equal either (i)
if the 2006 Note has been converted as of the date of exercise of the 2006
Warrant, the number of shares of Ivivi common stock into which the Note was
converted or (ii) if the 2006 Note has not been converted as of the date of
exercise of the Warrant, such number of shares of Ivivi common stock into which
the Note is then convertible. In accordance with EITF 00-27, a portion of the
proceeds was allocated to the warrant based on its relative fair value, which
totaled $177,894 using the Black-Scholes option pricing model. The remaining
balance was allocated to the convertible notes. The assumptions used in the
Black-Scholes model are as follows: (1) dividend yield of 0%; (2) expected
volatility of 60%, (3) risk-free interest rate of 4.6%,(4) expected life of 2.5
years and (5) estimated fair value of our common stock was $5.60 per share. The
debt discount is being amortized over the term of the notes. During the year
ended March 31, 2006, amortization as interest expense amounted to $2,663. We
attributed a beneficial conversion feature of $133,776 to the 2006 Notes based
upon the difference between the effective conversion price of those shares and
the fair value of Ivivi common shares on the date of issuance. Since the debt
is considered to be conventional convertible debt, we have not bifurcated the
embedded conversion feature as a separate derivative instrument.

	We entered into registration rights agreements with the investors that
participated in the Private Placement, under which the investors received
demand and piggy-back registration rights for the common stock underlying the
securities sold in the Private Placement.

	These securities were issued in a private placement of securities
exempt from registration under the Act, pursuant to Section 4(2) of the Act.

	On the effective date of the registration statement of which these
financial statements form a part, Ivivi will effect a 1.625 to 1 stock split of
all shares outstanding at that time. All Ivivi share and per share data give
retroactive effect to the stock split.


7. STOCKHOLDERS' EQUITY TRANSACTIONS

	During the year ended March 31, 2006, Ivivi issued in the aggregate
227,500 common share purchase options to consultants. The fair value of the
options is being expensed over the vesting period. In accordance with EITF 96-
18, the fair value of the vesting options will be recomputed at each reporting
period and any increase will be charged to expense.

	During the year ended March 31, 2006, Ivivi issued in the aggregate
87,750 common share purchase options to employees.

	During the year ended March 31, 2005, Ivivi issued 260,000 warrants to
purchase shares of Ivivi common stock to consultants with an exercise price of
$5.63 per share. The warrants are also exercisable into 4,564,997 shares of ADM
common stock. The warrants to purchase shares of ADM common stock automatically
expire upon the consummation of a public offering of Ivivi common stock. The
fair market of the ADM warrants was $294,761 using the Black Scholes method at
the date of grant of the options based on the following assumptions ranges: (1)
risk free interest rate of 1.8%; (2) dividend yield of 0%; (3) volatility
factor of the expected market price of our common stock of 64%; and (4) an
expected life of the options of .5 years. The value of the warrants is being
amortized over a five year vesting period.

	In connection with the February 2005 private placement described in
Note 6, the underwriter was issued 184,426 Ivivi warrants. Of these warrants,
92,214 have an exercise price of $3.51 per share and 92,214 have an exercise
price of $5.11 per share. The warrants expire in five years. The warrants are
also exercisable into 3,247,804 shares of ADM common stock, 1,623,902 at an
exercise price of $0.41 per share and 1,623,902 at an exercise price of $0.29
per share. The warrants to purchase shares of ADM common stock automatically
expire upon the consummation of a public offering of Ivivi common stock. The
fair market of the ADM warrants was $208,690 using the Black Scholes method at
the date of grant of the options based on the following assumptions ranges: (1)
risk free interest rate of 1.8%; (2) dividend yield of 0%; (3) volatility
factor of the expected market price of our common stock of 64%; and (4) an
expected life of the options of .5 years. The fair value of the warrants has
been classified as debt issue costs and is being amortized over the life of the
related notes.
	During the year ended March 31, 2005, the underwriter for the private
placement was issued 142,899 Ivivi warrants for financial services performed.
The warrants are also exercisable into 386,782 shares of ADM common stock at an
exercise price of $0.27 per share. The warrants to purchase shares of ADM
common stock automatically expire upon the consummation of a public offering of
Ivivi common stock. The fair market of the ADM warrants was $67,253 using the
Black Scholes method at the date of grant of the options based on the following
assumptions ranges: (1) risk free interest rate of 1.8%; (2) dividend yield of
0%; (3) volatility factor of the expected market price of our common stock of
64%; and (4) an expected life of the options of .5 years. The fair value of the
warrants has been charged to operations during the year ended March 31, 2005.
During the year ended March 31, 2005, Ivivi issued in the aggregate 108,387
common share purchase options to consultants. The options were issued with
exercise prices ranging from $1.23 to $6.15. Of these awards, 20% vested
immediately and the balance vests equally over the next five years of service.
The fair value of the options is being expensed over the vesting period. In
accordance with EITF 96-18, the fair value of the vesting options will be
recomputed at each reporting period and any increase will be charged to
expense.

	During the year ended March 31, 2004, Ivivi issued an aggregate of
958,750 shares of common stock for consulting services. Of these shares,
112,125 vested immediately and the balance vests equally over the next five
years of service. During April 2004, certain of the grantees became employees
of Ivivi. The value of the unvested shares was remeasured using the intrinsic
value method at the date of change. The balance of the shares held by
consultants is being accounted for in accordance with EITF 96-18, and the fair
value of the vesting options will be recomputed at each reporting period. We
have recorded the expense related to these shares based on the fair value of
the stock issued, either as determined by a third party valuation or estimated
based on the anticipated IPO price.

	During the year ended March 31, 2004, Ivivi issued in the aggregate
736,125 common share purchase options to consultants. The options were issued
with exercise prices ranging from $0.06 to $0.31. Of these awards, 20% vested
immediately and the balance vests equally over the next five years of service.
During April 2004, certain of the grantees became employees of Ivivi. The value
of the options was remeasured at that time, and an additional $11,424 of
expense has been recorded during the years ended March 31, 2006 and 2005
related to the intrinsic value resulting from the remeasurment. The balance of
the options held by consultants is being accounted for in accordance with EITF
96-18, and the fair value of the vesting options will be recomputed at each
reporting period.

8. OPTIONS AND WARRANTS OUTSTANDING

	ADM has an aggregate of 29,190,962 common stock purchase warrants
outstanding as of March 31, 2006 and 2005. The warrants have a weighted average
exercise price of $0.39 per share, are all exerciseable at March 31, 2006, and
automatically expire upon the consummation of a public offering of Ivivi common
stock.

	Ivivi has instituted a stock option plan for the issuance of 2,437,500
shares. As of March 31, 2006 and 2005, 1,544,725 and 1,220,700 of options,
respectively, were awarded, with 892,775 reserved for future issuance. The
weighted average fair value of options issued to employees and directors during
the years ended March 31, 2006 and 2005 is $1.82 and $0.34 per share,
respectively.

	The following table summarizes information on all common share purchase
options and warrants issued by Ivivi for the periods ended March 31, 2006 and
2005, including common share equivalents relating to the convertible debenture
share purchase warrants.

                                  MARCH 31, 2006         MARCH 31, 2005

                                           WEIGHTED               WEIGHTED
                                           AVERAGE                AVERAGE
                                           EXERCISE               EXERCISE
                               NUMBER      PRICE      NUMBER      PRICE

Outstanding at beginning
  of the year                  3,003,105     $2.68    1,115,562     $0.17
Granted during the year          737,003      7.00    1,887,543      4.13
Exercised during the year             --        --           --        --
Terminated during the year            --        --           --        --
                               ---------      ----    ---------     -----

Outstanding at end of
 the year                      3,740,107     $3.50    3,003,105     $2.68
                               =========     =====    =========     =====

Exercisable at end of
 the year                        876,627     $2.83      423,280     $0.32
                                 =======     =====      =======     =====


	The number and weighted average exercise prices of Ivivi common shares
and common share equivalents issuable and stock purchase options and warrants
outstanding as of March 31, 2006 is as follows:




                     REMAINING WEIGHTED AVERAGE

   RANGE OF          NUMBER       CONTRACTUAL LIFE    WEIGHTED AVERAGE
   EXERCISE PRICES  OUTSTANDING       (YEARS)         EXERCISE PRICE

   $0 to 1          1,112,963           8.2              $0.17
    1 to 3             67,763           8.3               1.58
    3 to 4          1,284,041           4.0               3.51
    4 to 6            352,214           8.4               5.48
    6 to 9            923,126           7.6               6.88
                      -------
   Total            3,740,107           6.6              $3.50
                    =========


9. COMMITMENTS AND CONTINGENCIES

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, 2006 are as follows:

            Years Ending:

           	March 31, 2007                     85,000
            March 31, 2008                     85,000
            March 31, 2009                     22,000
                                               ------

                                             $192,000
                                             ========

	 Other leases are month-to-month.

	Rent expense for all  facilities for the years ended March 31, 2006 and
2005 was approximately $152,000 and $127,000, respectively.

	In January 2006 Ivivi entered into a Master Clinical Trial Agreement
with the Cleveland Clinic Florida to perform a clinical trial of our device for
a new use. The estimated cost of the clinical trial is $300,000. The Cleveland
Clinic Florida is a not-for-profit multi-specialty medical group practice.

	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 we 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 Chairman of
Ivivi's Medical Advisory Board and advises us 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 130,000 shares of Ivivi common
stock, 16,250 of which vested immediately upon us entering into the consulting
agreement with him, 17.5% of which vested on January 5, 2005 and the remaining
70% of which vest in four 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 annual revenues in excess of $20 million and up
to $80 million, 0.25% of that portion of Ivivi 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 our 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 our consulting
agreement and certain other restrictions.

	Our medical devices are sold under agreements providing for the repair
or replacement of any devices in need of repair, at our cost, for up to one
year from the date of delivery, unless such need was caused by misuse or abuse
of the device. Based on prior experience, at March 31, 2006 and 2005 no amounts
have been accrued for potential warranty costs and such costs are expected to
be nominal.

10. LEGAL PROCEEDINGS

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

	On May 25, 2005, we also filed a complaint against Regenesis
Biomedical, Inc., 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. We are 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 Court denied the defendants' motion and permitted a period of discovery to
determine jurisdiction as to defendants, Terrence Kennedy, Mary C. Ritz and
Frank R. George.

	On August 17, 2005, we filed a complaint against Conva-Aids, Inc. t/a
New York Home Health Care Equipment ("NYHCC"), in the Superior Court of New
Jersey, Law Division, Docket No. BER-L-5792-05, alleging breach of contract
with respect to a distributor agreement that we and NYHCC entered into on or
about August 1, 2004, pursuant to which (i) we appointed NYHHC as exclusive
distributor of our products in a defined market place for so long as NYHHC
secured a minimum number of placements of our products and (ii) NYHHC agreed to
pay us $2,500 per month for each product shipped to NYHHC. By letter, dated
August 9, 2005, we terminated the agreement due to NYHCC's failure to make the
payments required under the agreement and failure to achieve the minimum number
of placements required under the agreement. We are seeking various forms of
relief, including (i) money damages, including amounts due under unpaid
invoices in an aggregate amount of $236,560, (ii) an accounting and (iii) the
return of our products. The defendants filed a motion to dismiss alleging lack
of jurisdiction and failure to state a claim with regard to Harry Ruddy. We
opposed the defendant's motion to dismiss. On November 18, 2005, the Court
denied the defendant's motion to dismiss, without prejudice, based upon lack of
jurisdiction, which has not been completely decided. The Court permitted a
period of discovery to determine the jurisdiction issue, which discovery is
substantially complete. The defendants filed another motion to dismiss based
upon a claim of lack of jurisdiction, which was heard and denied by the Court
on June 9, 2006.

	We believe that the ultimate resolution of the foregoing matters will
not have a material adverse impact on our cash flows or financial condition.

11. CONCENTRATIONS

	During the year ended March 31, 2006, no one customer accounted for
more than 10% of our revenue. During the year ended March 31, 2005, we sold 32%
of our products to 2 customers. At March 31, 2006, two customers accounted for
27% of our accounts receivable. The loss of these major customers could have a
material adverse impact on our operations and cash flow.

12. SEGMENT INFORMATION AND GEOGRAPHICAL INFORMATION

	We  operate in two reportable  segments,  the  production and sale of
chemicals and the manufacture  and sale or lease of medical  device.  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:

Year Ended March 31, 2006       Chemical           Medical        Total
Revenues                       $ 861,806       $   862,463     $1,724,269
Segment (loss)                  (220,440)       (6,950,690)    (7,171,130)
Segment assets                   685,718         2,546,629      3,232,347
Capital expenditures              15,725             6,595         22,320

Year Ended March 31, 2005       Chemical           Medical         Total
Revenues                       $ 876,679       $   409,395     $ 1,286,074
Segment income (loss)             96,537        (3,452,748)     (3,356,211)
Segment assets                   934,382         4,362,681       5,297,063
Capital expenditures              60,771	          35,435          96,206

Geographical Information:

 	Sales and rentals to unaffiliated customers, based on location of
customer, is as follows:
                                   Years Ended March 31,
                                  2006               2005

   Chemical Segment:
     United States      $792,711          $797,020
     Foreign              69,095            76,659

                        $861,806          $876,679

   Medical Segment:
     United States      $759,719          $338,058
     Foreign             102,744            71,337

                        $862,463         $409,395

13. RELATED PARTY TRANSACTIONS

	At March 31, 2006 and 2005, ADM has advances to an officer of $49,188,
no advances have been made since 2000.  This advance bears interest at the rate
of 3% per year.  Interest accrued for the year ended March 31, 2006 and 2005
was $1,476 in each year and total accrued interest at March 31, 2006 and 2005
was $34,954 and $33,478, respectively.

	At March 31, 2006 and 2005, ADM has advances to an employee, the wife
of the above referred officer, of $7,316, no advances have been made since
2000.  This advance bears no interest.

14. SUBSEQUENT EVENTS

	On June 16, 2006, Ivivi entered into a $250,000 unsecured subordinated
loan with Ajax Capital LLC. This loan bears interest at an annual rate of 8%
and is due upon the earlier to occur of (i) December 31, 2006, (ii) the
consummation of an offering of Ivivi securities, whether in a private or public
offering, in which Ivivi raises gross proceeds of at least $5,000,000 and (iii)
receipt by Ivivi from a strategic partner of a lump sum cash payment of at
least $5,000,000. If the principal amount, together with all accrued and unpaid
interest, is not paid on or before the maturity date, the interest rate will
increase by 1% every year after the maturity date to a maximum of 13% per annum
until all amounts due and payable under the note are paid in full. Steven
Gluckstern, the Chairman of Ajax Capital LLC, will serve as the Ivivi Chairman
of the Board upon the effectiveness of Ivivi's public offering.


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

         As previously reported in a Form 8-K dated August 11, 2006, on August
11, 2006, we appointed Raich Ende Malter & Co. LLP as our certifying accounts
to replace Weinick Sanders Leventhal & Co., LLP, which ceased operations
effective as of August 1, 2006.  This engagement was approved by the Company's
board of directors.

	During the Company's fiscal years ended March 31, 2005 and 2004 and the
subsequent interim period through August 1, 2005, the Company had no
disagreements with Weinick Sanders Leventhal & Co., LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Weinick Sanders Leventhal & Co., LLP, would have caused it to make reference to
the subject matter of the disagreements in its reports for such years.

	Weinick Sanders Leventhal & Co., LLP's report on the Company's
financial statements for the fiscal year ended March 31, 2005 contained a
statement that the Company has suffered recurring losses from operations and
has a stockholders' deficiency that raise substantial doubt about the Company's
ability to continue as a going concern.  Except for the statement discussed in
the immediately preceding sentence, Weinick Sanders Leventhal & Co., LLP's
report on the Company's financial statements for the fiscal year ended March
31, 2005 did not contain any adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope or accounting
principles.

	We provided Weinick Sanders Leventhal & Co., LLP with a copy of the
disclosures made pursuant to the Form 8-K (which disclosures are consistent
with the disclosures noted above) and Weinick Sanders Leventhal & Co., LLP
furnished us with a letter addressed to the Securities and Exchange Commission
stating that it agreed with the statements made by us in the Form 8-K filing, a
copy of which was filed as an exhibit to an amendment to the Form 8-K.

Item 8A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

         During the fourth quarter of the Company's  fiscal year ended March 31,
2006, 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, 2006, 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.

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.


            Name                    Age          Position

         Andre' DiMino              50        President, Chief Executive
                                               Officer, Chief Financial Officer
                                               and Director
         Vincent DiMino             80        Vice President of Production
                                               and Director
         David Saloff               53        Director


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

         Vincent  DiMino has  served as Vice  President  of  Production  of the
Company  since 1969 and as a director of the Company  since August 1987.  Mr.
DiMino 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  DiMino is Andre' DiMino'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 the Annual Report on Form 10-K for the
fiscal year ended March 31, 2005.

Item 10. Executive Compensation

         The following table provides certain summary information for the
fiscal years ended March 31,  2006 and  2005 concerning  compensation  paid, or
accrued,  by ADM to, or on behalf of, ADM's  President and Chief Executive
Officer (the "Named Officer").  Other than ADM'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, 2006.

                           Summary Compensation Table

                                              Annual Compensation
Name and                            Fiscal                       Other Annual
Principal Position                    Year    Salary     Bonus    Compensation

Andre' Di Mino                        2006    $101,760     --           --
President, Chief Executive Officer    2005     $88,664     --           --
And Chief Financial Officer           2004     $86,600     --           --


Option Grants in Last Fiscal Year

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

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

         Mr. DiMino 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.  DiMino did not  exercise  any stock
options during the fiscal year ended March 31, 2005.

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

         ADM 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 July 5, 2006, by (i) each person known
to ADM to be the owner of 5% or more of ADM's  common stock (ii) each director
and director nominee of ADM, (iii) each Named Officer, and (iv) all directors
and officers of ADM 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 July 5, 2006. 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 July 5, 2005.

                                               Number of Shares
Name and Address                              Beneficially Owned     Percentage

Andre' DiMino ............................       20,856,935               38.7%
c/o ADM Tronics Unlimited, Inc.
224-S Pegasus Ave.
Northvale, NJ 07647

Vincent DiMino ...........................        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)

(1)      Includes  9,172,696 shares of the Company's common stock directly
owned by Andre DiMino;  1,700,000  shares of the Company's common stock held
by the Andre' DiMino Irrevocable  Trust, a Trustee and the beneficiary of which
is Andre' DiMino, 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 DiMino
Trust,  a Trustee of which is Andre' DiMino, 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 DiMino
Irrevocable Trust, a Trustee of which is Andre' DiMino,  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 DiMino (the "DiMino Estate"), the administrator of which
is Andre' DiMino 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 DiMino, as a
beneficiary  of the DiMino Estate,  is entitled to receive  167,374 shares;
1,330,000 shares of the Company's  common stock,  which the DiMino 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' DiMino may be deemed to be a  beneficial
owner by reason of his power to vote such shares pursuant to an agreement.

(2)      Includes  1,287,928 shares of the Company's common stock directly
owned by Mr. Vincent DiMino,  300,000  shares of the Company's  common stock
owned by the  spouse  of  Vincent  DiMino,  as to  which  Mr.  DiMino disclaims
beneficial ownership;  300,000 shares of the Company's common stock  owned by a
child of Mr. DiMino,  who  resides  in Mr. DiMino's home,  as to which  Mr.
DiMino  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' DiMino  Irrevocable  Trust,  the Maria Elena  DiMino  Irrevocable  Trust
and  the  Maurice  DiMino Irrevocable  Trust,  a Trustee of which is Vincent
DiMino,  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,  2006 was  approximately
$84,000.

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
ADM's majority-owned  subsidiaries,   and  serves  as  Chairman  and  Chief
Financial  Officer of Ivivi.  During the past two years,  ADM and Ivivi
have engaged in the transactions set forth below:

         Private Placements

         In December 2004 and February 2005,  ADM,  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,  2006,  Ivivi owed  approximately  $2.6  million to
ADM.  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

         ADM 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 ADM for such services on a monthly basis
pursuant to an allocation determined by ADM and such subsidiaries based on a
portion of its applicable costs plus any invoices it receives from third
parties  specific to each  such subsidiary.   ADM'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.  ADM  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.

         Ivivi  had approximately  $216,000 and  $227,000 in management
services provided to it by ADM pursuant to the  management  services  agreement
during  the fiscal year ended March 31, 2005 and the fiscal
year ended March 31, 2006, respectively.

         Manufacturing Agreement

         ADM, 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 ADM manufactures  for each  subsidiary,  the subsidiary pays ADM 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 ADM  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 ADM, such subsidiary has the right to require ADM 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  $4,000
and $10,000 for the Company's  manufacture  of its products  pursuant to the
manufacturing  agreement  during the fiscal  year ended  March 31,  2005 and
the fiscal  year ended  March 31,  2006, 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.

Item 13. Exhibits

Exhibit
No.   Description
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 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 DiMino
      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.
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 DiMino, Dr. Alfonso
      DiMino, 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. is incorporated by reference to the Company's Annual
      Report on Form 10-KSB form the fiscal year ended March 31, 2005.
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. is incorporated by reference to the
      Company's Annual Report on Form 10-KSB form the fiscal year ended March
      31, 2005.
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. is incorporated by reference to Exhibit 10.11 of
      Amendment No. 2 to the Registration Statement on SB-2 of Ivivi
      Technologies, Inc. File No. 333-122768.
10.11 Master Clinical Trial Agreement, dated as of January 9, 2006, between
      Ivivi Technologies, Inc. and Cleveland Clinic Florida is incorporated
      by reference to Exhibit 10.11 of Amendment No. 4 to the Registration
      Statement on SB-2 of Ivivi Technologies, Inc. File No. 333-122768.
10.12 Promissory Note, dated June 16, 2006, made in the principal amount of
      $250,000 by Ivivi Technologies, LLC in favor of Ajax Capital LLC. is
      incorporated by reference to Exhibit 10.5 of Amendment No. 4 to the
      Registration Statement on SB-2 of Ivivi Technologies, Inc. File No.
      333-122768.
10.13 Option Agreement, dated as of June 16, 2006, between Ivivi Technologies,
      Inc. and Steven M. Gluckstern is incorporated by reference to Exhibit
      10.17 of Amendment No. 4 to the Registration Statement on SB-2 of Ivivi
      Technologies, Inc. File No. 333-122768.
10.14 Share Purchase Agreement, dated as of November 8, 2005, between Ivivi
      Technologies, Inc. and Steven Gluckstern is incorporated by reference to
      Exhibit 10.18 of Amendment No. 4 to the Registration Statement on SB-2 of
      Ivivi Technologies, Inc. File No. 333-122768.
14.1  Code of Ethics is incorporated by reference to the Company's Annual
      Report on Form 10-KSB form the fiscal year ended March 31, 2005.
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
31.2  Certification of the Chief Financial Officer of the Company pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002
32.1  Certification of the Chief Executive Officer and Chief Financial Officer
      of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Item 14. Principal Accountant Fees and Services

Audit Fees

         The aggregate fees billed for professional services rendered by Raich
Ende Malter & Co. LLP ("Raich") for the audit of the Company's annual
consolidated financial  statements  for the fiscal  year ended  March 31, 2006,
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,  2006,
were $55,057.  The aggregate fees for professional services rendered by Weinick
Sanders Leventhal & Co., LLP ("WSL") 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 $48,000.  In addition, Raich billed $30,545 for the re-audit of the
Company's financial statements for the fiscal year ended March 31, 2005 due to
their restatement.

Audit-Related Fees

         The  aggregate  fees billed for each of the fiscal years ended March
31, 2006 and March 31, 2005 for  assurance and related  services by Raich and
WSL and 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 for each of the fiscal years ended March
31, 2006 and March 31, 2005 for  professional  services  rendered by Raich for
tax  compliance were $0 and $15,500, respectively.

All Other Fees

         The aggregate  fees billed in each of the fiscal years ended March 31,
2006 and March 31,  2005 for  products  and  services  provided  by Raich and
WSL  (other than those covered above under "Audit Fees," "Audited-Related Fees"
and "Tax Fees") were $141,658 and $75,000 respectively.  The other fees billed
in the years ended March 31, 2006 and 2005 were for audit 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 Raich Ende
Malter & Co., LLP were  attributed  to work  performed by persons  other than
Raich Ende Malter & Co. LLP's full-time, permanent employees.


                                   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,
2006.

                                        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.


      Signature                      Title                           Date

/s/ Andre' Di Mino       Chief Executive Officer (Principal      July 14, 2006
    Andre' Di Mino            Executive Officer, Principal
                              Financial Officer and Principal
                              Accounting Officer) and Director

/s/ Vincent Di Mino       Director                               July 14, 2006
    Vincent Di Mino

/s/ David Saloff          Director                               July 14, 2006
    David Saloff