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, 2008
 
 [_]
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
registrant as specified in its charter)
 
 
 Delaware
              22-1896032(State
      or other jurisdiction of
              (I.R.S.
      Employer Identification No.)incorporation
      or organization)
 
 224
Pegasus Avenue, Northvale, New Jersey 07647
 (Address
of Principal Executive Offices) (Zip Code)
 
 (201)
767-6040
 (Registrant’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
 
 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
$1,897,000.
 
 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 June 19,
2008, based on the average of the closing bid and asked prices of $0.14,
for such shares on such date, was approximately $5,650,000.
For purposes of such calculation, shares of Common Stock held by each executive
officer and director and by each person who owns more than 5% of the outstanding
shares of Common Stock have been excluded in that such persons may be deemed to
be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
 
 The
number of shares of the Common Stock outstanding as of June 19,
2008 was 53,939,537.
 
 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.
  
  PART
I
 
 ITEM 1.
DESCRIPTION OF BUSINESS
 
 COMPANY
OVERVIEW
 
 The
Company is a technology-based developer and manufacturer of diversified lines of
products and derives revenue from 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 is a corporation that was organized under the laws of the State of
Delaware on November 24, 1969. Our operations are conducted through ADM Tronics
Unlimited, Inc. ("ADM") and its subsidiaries, Ivivi Technologies, Inc. (through
October 18, 2006) ("Ivivi"), Pegasus Laboratories, Inc. ("Pegasus") and Sonotron
Medical Systems, Inc. ("SMI"). As of June 19, 2008, ADM owned approximately 100%
and 94% of the outstanding capital stock of Pegasus and SMI, respectively. Ivivi
has been deconsolidated as of October 18, 2006 upon the consummation of Ivivi's
initial public offering, as we no longer own a majority of the outstanding
common stock of Ivivi and do not control Ivivi's operations, but can exert
significant influence based on the percentage of Ivivi's stock owned by us. As a
result, our investment in Ivivi subsequent to October 18, 2006 is reported under
the equity method of accounting. As of June 19,
2008, we owned approximately 30% of the outstanding capital stock of
Ivivi.
 
 COMPANY
PRODUCTS
 
 CHEMICAL
PRODUCTS FOR INDUSTRIAL USE
 
 We
develop, manufacture and sell chemical products to industrial users. Such
products consist primarily of the following:
 
 ●
                Water-based
      primers and adhesives;●
                Water-based
      coatings and resins; and●
                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. Our 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 our experience since 1969,
including information furnished to us by certain of our customers, we believe
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 our 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. Our 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.
  2
  Certain
of our 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
our chemical products are protected by patents, although the names of some of
such products have been protected by trademarks. We do not believe that any such
trademarks are material to our business. As of March 31, 2008, the dollar amount
of backlog orders for our chemical products believed by us to be firm, was not
material.
 
 COSMETIC
AND TOPICAL PRODUCTS
 
 The
Company, through its subsidiary, Pegasus, has developed several cosmetic and
topical products. We have 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
we believe that our 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 we will be able to derive any profits there
from.
 
 THERAPEUTIC
NON-INVASIVE MEDICAL DEVICES
 
 CONTRACT
MANUFACTURING
 
 In
conjunction with the therapeutic non-invasive medical devices we have internally
developed and produce for sale, the Company’s revenues from contract
manufacturing of medical devices for its affiliate Ivivi and other customers,
continues to grow.  During the year ended March 31, 2008, revenues
from contract manufacturing were approximately $1,000,000, or 53% of total
revenues, up from approximately $57,000, or 4% of total revenues during the year
ended March 31, 2008.
 
 SONOTRON
TECHNOLOGY
 
 SMI, a
majority-owned subsidiary of ADM, has developed a technology, known as 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
Sonotron Technology is the subject of three United States patents (the "Sonotron
Patents"), which expire in 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 through 2009.
 
 In 1997,
the Company 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,
we intend 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, we 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, we intend to seek FDA approval of the
NCCD Device. We also plan 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 $3,000,000.
Because we do not presently have sufficient funds to complete such tests and
studies, we have sought and will continue to seek financing for such purposes.
There can be no assurance that the Company will be able to obtain such financing
on terms not unfavorable to it, if at all.
 
 As of
March 31, 2008, the dollar amount of backlog orders for Sonotron Devices was not
material.
  3
 
 AUREX-3
 
 The
Company has 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 April 2001 United States patent was
issued with respect to the Tinnitus Device and such was assigned to the Company
by Dr. DiMino. In May 1998, a 510-K Pre-market Notification ("PMN") was filed by
the Company with the FDA and in August 1998, the FDA notified the Company that
the PMN was accepted. Accordingly, we may market the product in the United
States for its intended indication, "the treatment and control of tinnitus."
From August 1998 to November 1999, we finalized manufacturing plans for the
Aurex-3. Sales of the Aurex-3 have not been material. There can be no assurance
that we will receive significant orders for the Aurex-3 or, if such orders are
received, that we will be able to manufacture the Aurex-3 in sufficient
quantities.
 
 CUSTOMERS
 
 During
our fiscal years ended March 31, 2008 and 2007, sales of chemical products
accounted for approximately 45% and 48% of our operating revenues, respectively;
sales, rentals and manufacturing charges of medical device products accounted
for approximately 55%, and 52% of our operating revenues, respectively; and
sales of our cosmetic and topical dermatological products were not material. No
contract exists with any of our customers that would obligate any customer to
continue to purchase and/or rent products from us.
 
 During
the year ended March 31, 2008, five customers accounted for 77% of ADM's
revenue. During the fiscal year ended March 31, 2007, four customers accounted
for 59% of ADM's revenue. As of March 31, 2008, three customers represented 66%
of our accounts receivable. As of March 31, 2007, two customers represented 53%
of our accounts receivable. The loss of these major customers could have a
material impact on our 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 its
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.
  4
 
 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
entities. Pursuant to the terms of the manufacturing agreement, for each product
that ADM manufactures for the entity, the entity 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 entity by the Company, if any, plus (ii)
a labor charge based on ADM's standard hourly manufacturing labor
rate.
 
 ADM
warranties the products it manufactures for SMI and Ivivi against defects in
material and workmanship for a period of 90 days after the completion of
manufacture. After such 90-day period, ADM has agreed to provide repair services
for the products to the entity at its customary hourly repair rate plus the cost
of any parts, components or items necessary to repair the products unless the
entity provides such parts, components or items to ADM.
 
 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 entities' products and technologies shall
be and become the exclusive proprietary and confidential information of such
entity or any person to whom such entity 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 entity without such entity's prior written
consent. ADM has also agreed to cooperate with each entity in securing for it
any patents, copyrights, trademarks or the like which it may seek to obtain in
connection therewith. If ADM breaches any of the confidentiality agreements
contained in the manufacturing agreement, or if these agreements are not
sufficient to protect the entity's technology or are found to be unenforceable,
the entity's competitors could acquire and use information that it considers to
be our trade secrets and the entity may not be able to compete
effectively.
 
 Since ADM
is the exclusive manufacturer of all of SMI's and Ivivi's current and future
products under the manufacturing agreement, if the operations of ADM are
interrupted or if orders or orders of other customers of the Company exceed our
manufacturing capabilities, we may not be able to deliver products on time and
the entities may not be able to deliver their respective products to their
respective customers on time. Under the terms of the manufacturing agreement, if
ADM is unable to perform its obligations there under or is otherwise in breach
of any provision thereof, the entities have the right, without penalty, to
engage third parties to manufacture some or all of their products. In addition,
if an entity elects to utilize a third-party manufacturer to supplement the
manufacturing being completed by ADM, such entity has the right to require us to
accept delivery of the products from these third-party manufacturers, finalize
the manufacture of the products to the extent necessary for such entity 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 SMI and Ivivi, ADM
is required to comply with quality 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, our
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 we do not believe that the registration will fail to be renewed by
the FDA, there can be no assurance of such renewal. Our failure to obtain
any annual renewal would have a material adverse effect on the entities if
they were not able to secure another
 manufacturer
of their products.
  5
  SUPPLIERS
 
 ADM
purchases the raw materials used in the manufacture of its chemical products
from numerous sources. We believe that all necessary raw materials for our
chemical products are readily available and will continue to be so in the
foreseeable future. We have never had, nor do we anticipate experiencing, any
shortages of such materials. The raw materials for chemical products consist
primarily of water, resins, elastomers and catalysts. We generally maintain
sufficient quantities of inventories of our chemical products to meet customer
demands. When orders are received by us for our chemical products, our customers
require immediate shipment thereof. Accordingly, in order to satisfy its
customers' needs, we have 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.
 
 We
purchase the raw materials, parts, components and other items that are required
to manufacture products for SMI and Ivivi. We rely on a 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, we are dependent on a limited number of suppliers for many of the
significant raw materials and components due to our customers’ requirements. We
do not have any long-term or exclusive purchase commitments with any of our
suppliers. The failure to maintain existing relationships with suppliers or to
establish new relationships in the future could also negatively affect our
ability to obtain raw materials and components used in the products in a timely
manner. If we are unable to obtain ample supply of product from our existing
suppliers or alternative sources of supply, we may be unable to satisfy SMI's
and Ivivi's orders which could reduce our revenues and adversely affect their
relationships with their customers.
 
 RESEARCH
AND DEVELOPMENT
 
 During
our fiscal years ended March 31, 2008 and 2007, we made no material expenditures
with respect to company-sponsored research and development activities relating
to our chemical business. During such fiscal years, we did not expend any funds
on customer-sponsored research and development activities with respect
thereto.
 
 During
our fiscal years ended March 31, 2008 and 2007, other than the regular
compensation paid by us to our executive officers, we 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.
 
 During
our fiscal years ended March 31, 2008 and 2007, aside from research and
development performed by Ivivi during the period from April 1, 2006 to October
18, 2007 when they were a fully consolidated subsidiary, we made no material
expenditures with respect to company-sponsored research and development
activities relating to our medical device business.
 
 COMPETITION
 
 Our
chemical business is highly competitive and substantially all of our competitors
possess greater experience, financial resources, operating history and marketing
capabilities than do we. Although we do not believe that there are one or more
dominant competitors in such industry, there can be no assurance that we will be
able to effectively compete with any or all of our 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 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. If we do not compete successfully,
our business, operating margins, financial condition, cash flows and
profitability could be adversely affected.
 
 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 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 we sell our chemical products.
  6
 
 INSURANCE
 
 The
Company may be exposed to potential product liability claims by those who use
our products. Therefore, we maintain a general liability insurance policy, which
includes aggregate product liability coverage of $2,000,000 for certain of our
products. The Company does not have product liability coverage for its medical
device products. We believe that our present insurance coverage is adequate for
the types of products currently marketed. There can be no assurance, however,
that such insurance will be sufficient to cover potential claims or that the
present level of coverage will be available in the future at a reasonable
cost.
 
 EMPLOYEES
 
 As of
June 19,
2008, we had an aggregate of 17 full-time and 8 part-time employees. As
of such date, we had five salaried employees in executive or managerial
positions.
 
 RECENT
DEVELOPMENTS
 
 None.
 
 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
annual report, 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. We
have made expenditures to comply with such laws and requirements. We believe,
based on information currently available to management, that we are in
compliance with applicable environmental and other legal requirements and that
we 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 our 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 us 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 there under, could significantly increase our
costs of operations.
  7
 
 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 are 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 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.
  8
  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
 
 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, THEY 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 our revenues could be materially delayed and/or reduced. In
addition, our failure to produce such products could result in claims against
us. See "Item 1. Business - Manufacturer and Suppliers."
 
 WE DEPEND
ON A LIMITED NUMBER OF SUPPLIERS FOR THE COMPONENTS AND RAW MATERIALS USED IN
OUR PRODUCTS AND THE PRODUCTS MANUFACTURED FOR THIRD PARTIES, INCLUDING SMI AND
IVIVI, AND ANY INTERRUPTION IN THE AVAILABILITY OF THESE COMPONENTS AND RAW
MATERIALS COULD REDUCE OUR REVENUE.
 
 We rely
on a limited number of suppliers for the components and raw materials used in
the products that we manufacture for others, including SMI and Ivivi. Although
there are many suppliers for each of their component parts and raw materials, we
are dependent on a single or limited number of suppliers for many of the
significant components and raw materials due to our customers’ specifications.
This reliance involves a number of significant risks, including:
 
 ●
              unavailability
      of materials and interruptions in delivery of components and raw materials
      from suppliers;●
              manufacturing
      delays caused by such unavailability or interruptions in delivery;
      and●
              fluctuations
      in the quality and the price of components and raw
    materials.
 
 We do not
have any long-term or exclusive purchase commitments with any of our suppliers.
Failure to maintain existing relationships with suppliers or to establish new
relationships in the future could also negatively affect our ability to obtain
components and raw materials used in these products in a timely manner. If we
are unable to obtain ample supply of product from existing suppliers or
alternative sources of supply, we may be unable to satisfy our customers' orders
which could reduce our revenues and adversely affect our relationships with
these customers. See "Item 1. Business - Manufacturers and
Suppliers."
  9
 
 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:
 
 ●
              subsequently
      discovered prior art;●
              lack
      of entitlement to the priority of an earlier, related application;
      or●
              failure
      to comply with the written description, best mode, enablement or other
      applicable requirements.
 
 In
general, the patent position of medical device companies are highly uncertain,
still evolving and involve complex legal, scientific and factual questions. We
are at risk that:
 
 ●
              other
      patents may be granted with respect to the patent applications filed by
      us; and●
              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.
 
 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.
  10
 
 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
testing and production of medical devices are subject to regulation by the FDA
as devices under the 1976 Medical Device Amendments to the Federal Food, Drug
and Cosmetic Act. In the United States, medical devices must be:
 
 ●
              manufactured
      in registered and quality approved establishments by the FDA;
      and●
              produced
      in accordance with the FDA Quality System Regulation ("QSR") for medical
      devices.
 
 As a
result we, as the manufacturer of Ivivi's and other parties' devices, are
required to comply with QSR requirements and if we fail to comply with these
requirements, Ivivi and other third parties will need to find another company to
manufacture its devices. 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 FDA
can impose civil and criminal enforcement actions and other penalties on us if
we fail 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. 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.
 
 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 $2.9 million and $8.2 million
for the fiscal years ended March 31, 2008 and 2007, respectively. At March 31,
2008, we had an accumulated deficit of $27.6 million. We expect to incur
additional operating losses, as well as negative cash flow from operations, for
the foreseeable future.
 
 WE MAY BE
EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROL OVER FINANCIAL
REPORTING AND OUR ABILITY TO HAVE THE OPERATING EFFECTIVENESS OF OUR INTERNAL
CONTROLS ATTESTED TO BY OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
  As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) the
Securities and Exchange Commission (“SEC”) adopted rules requiring public
companies to include a report of management on the company’s internal control
over financial reporting in their annual reports on Form 10-K. A report of our
management is included in our Annual Report on Form 10-KSB. In addition, Section
404 requires the independent registered public accounting firm auditing a
company’s financial statements to also attest to and report on the operating
effectiveness of such company’s internal control over financial reporting
commencing with our annual report for the fiscal year ending March 31, 2010. We
can provide no assurance that we will be able to comply with all of the
requirements imposed thereby. There can be no assurance that we will receive a
positive attestation from our independent registered public accounting firm. In
the event we identify significant deficiencies or material weaknesses in our
internal control over financial reporting that we cannot remediate in a timely
manner or we are unable to receive a positive attestation from our independent
registered public accountants with respect to our internal control over
financial reporting, investors and others may lose confidence in the reliability
of our financial statements.
  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.
  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:
 
 ●
              our
      insurance will provide adequate coverage against potential liabilities if
      a product causes harm or fails to perform as promised;●
              adequate
      product liability insurance will continue to be available in the future;
      or●
              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.
  11
 
 Andre'
DiMino, our President and Chief Executive Officer, also serves as Vice Chairman
and Co-Chief Executive Officer of Ivivi. While Mr. DiMino devotes a substantial
portion of his work-time toward ADM, 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 39.5% of our outstanding
common stock. In particular, Mr. DiMino, together with members of the DiMino
family, may be deemed to beneficially own approximately 31% 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:
 
 ●
              the
      election of directors;●
              adoption
      of stock option plans;●
              the
      amendment of charter documents; or●
              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.
 
 Our
common stock is subject to penny stock rules, which 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
 
 We are
headquartered at 224 Pegasus Avenue, Northvale, New Jersey. We lease
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 and we are currently finalizing an extension of this lease. Until
such lease is finalized, we will rent our facility on a month-to-month basis
under the terms of our current lease. The Company, its subsidiaries and Ivivi
utilize portions of the leased space. Pursuant to a management services
agreement to which the Company, its subsidiaries and Ivivi are parties, the
Company determines, on a monthly basis, the portion of space utilized by each
entity during such month, and each entity reimburses the Company for their
portion of the lease costs, real property taxes and related costs.
  12
 
 We
believe that our existing facilities are suitable as office, storage and
laboratory space, and are adequate to meet our current needs. We further believe
that such properties are adequately covered by insurance.
 
 We do not
own any real property for use in our operations or otherwise.
 
 ITEM 3.
LEGAL PROCEEDINGS
 
 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
      BidFiscal
      2007June
      30, 2006
              
              0.43
              
              
              0.23September
      30, 2006
              
              0.40
              
              
              0.20December
      31, 2006
              
              0.50
              
              
              0.23March
      31, 2007
              
              0.30
              
              
              0.18Fiscal
      2008June
      30, 2007
              
              0.27
              
              
              0.26September
      30, 2007
              
              0.29
              
              
              0.28December
      31, 2007
              
              0.27
              
              
              0.26March
      31, 2008
              
              0.17
              
              
              0.16
 
 HOLDERS
OF RECORD
 
 As of
March 31, 2008, 53,939,537 shares of the Company's common stock were issued and
outstanding. On March 31, 2008 there were 1,348 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
June 30,
2008, we did not have any compensation plans (including individual
compensation arrangements) under which our equity securities were authorized for
issuance.
 
 ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 FORWARD-LOOKING
STATEMENTS
 
 This
Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of the "safe harbor" provisions under section 21E of the Securities and
Exchange Act of 1934 and the Private Securities Litigation Act of 1995. We use
forward-looking statements in our description of our plans and objectives for
future operations and assumptions underlying these plans and objectives.
Forward-looking terminology includes the words "may", "expects", "believes",
"anticipates", "intends", "forecasts", "projects", or similar terms, variations
of such terms or the negative of such terms. These forward-looking statements
are based on management's current expectations and are subject to factors and
uncertainties which could cause actual results to differ materially from those
described in such forward-looking statements. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this Form 10-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.
  13
 
 CRITICAL
ACCOUNTING POLICIES
 
 REVENUE
RECOGNITION:
 
 Sales
revenues from our chemical products are recognized when products are shipped to
end users. Shipments to distributors are recognized as sales where no right of
return exists.
 
 We
recognize medical device revenue from the sale of our medical devices and
medical devices we manufacture for Ivivi. Sales of medical devices are
recognized when our products are shipped to end users including medical
facilities and distributors. Revenue from the sale of the medical devices we
manufacture for Ivivi is recognized upon completion of the manufacturing
process. 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.
 
 Prior to
October 18, 2006, revenue from the rental and sales of medical devices was
primarily generated by our former subsidiary Ivivi. The Ivivi operations have
been consolidated in these financial statements through October 18, 2006. Rental
revenue from medical devices, resulting from the Ivivi operations, has been
recognized as earned on either a monthly or pay-per-use basis in accordance with
individual customer agreements.
 
 USE OF
ESTIMATES:
 
 Our
discussion and analysis of our financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to reserves, deferred tax assets and valuation allowance, impairment of
long-lived assets, fair value of equity instruments issued to consultants for
services and fair value of equity instruments issued to others. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions; however, we believe
that our estimates, including those for the above- described items, are
reasonable.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 On July
13, 2006, FASB released its final interpretation on uncertain tax positions, FIN
48, "Account for Uncertainty in Income Taxes." FIN 48 addresses the recognition
and measurement of uncertain income tax positions using a "more-likely-than-not"
threshold and introduces a number of new disclosure requirements. The guidance
became effective as of the beginning of a company's fiscal year beginning after
December 15, 2006, for both public and non-public companies. There was no
material impact on our financial statements upon adoption of FIN
48.
 
 In
September 2006, FASB issued Statement of Financial Accounting Standards No. 157
("FAS 157"), Fair Value Measurements, which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
("GAAP"), and expands disclosures about fair value measurements. FAS 157 applies
under other accounting pronouncements that require or permit fair value
measurements. Prior to FAS 157, there were different definitions of fair value
and limited guidance for applying those definitions in GAAP. Moreover, that
guidance was dispersed among the many accounting pronouncements that require
fair value measurements. Differences in that guidance created inconsistencies
that added to the complexity in applying GAAP. The changes to current practice
resulting from the application of FAS 157 relate to the definition of fair
value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. We do not expect the adoption of FAS 157 to have an
effect on our financial statements.
 
 In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities." SFAS 159 permits entities to choose
to measure many financial instruments, and certain other items, at fair value.
SFAS 159 applies to reporting periods beginning after November 15, 2007. The
adoption of SFAS 159 is expected to have a material impact on our financial
condition and results of operations, as its adoption in our March 31, 2009
fiscal year end will change the way we report our investment in Ivivi from the
equity method of accounting, to fair value.
 
 In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations”.
This standard establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any non-controlling interest in the acquired
entity and the goodwill acquired. This statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS No.141R is effective for us for
acquisitions made after November 30, 2009. The Company is currently
evaluating the potential impact, if any, that the adoption of SFAS No. 141R
will have on its consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements”. This standard outlines the accounting and
reporting for ownership interest in a subsidiary held by parties other than the
parent. SFAS No. 160 is effective for the first quarter of 2010. We do not
expect the adoption of SFAS No. 160 to have a material impact on our financial
statements.
  In March
2008, the FASB issued SFAS No. 161 , “Disclosures about Derivative Instruments
and Hedging Activities – An Amendment of FASB Statement No.
133”.  This statement is intended to improve financial reporting of
derivative instruments and hedging activities by requiring enhanced disclosures
about (a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its
related interpretations and (c) how derivative instruments and related hedged
items affect an entity’s financial position, financial performance and cash
flows.  The provisions of SFAS 161 are effective for fiscal years
beginning after November 15, 2008.  SFAS 161 will be effective for the
Company on April 1, 2009.  We do not expect the
adoption of SFAS No. 161 to have a material impact on our financial
statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS No. 162). This statement identifies the sources of
accounting principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP
hierarchy).  The FASB believes that the GAAP hierarchy should be
directed to the entity and has concluded that the GAAP hierarchy should reside
in the accounting literature established by the FASB. This statement shall
become effective 60 days following the SEC’s approval of the Public company
Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting
Principles”.  We do not expect the adoption of SFAS No. 162 to have a
material impact on our financial statements.
  In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
insurance Contracts” (SFAS No. 163). This statement clarifies how FASB Statement
No. 60, “Accounting and Reporting by Insurance Enterprises”, applies to
financial guarantee insurance contracts issued by insurance enterprises,
including the recognition and measurement of premium revenue and claim
liabilities.  It also requires expanded disclosures about financial
guarantee insurance contracts.  This statement is effective for
financial statements issued for fiscal years beginning after December 15, 2008
and all interim periods within those fiscal years, except for disclosures about
the insurance enterprise’s risk-management activities. We do not expect the
adoption of SFAS No. 163 to have a material impact on our financial
statements.
  14
 
 BUSINESS
OVERVIEW
 
 ADM is a
corporation that was organized under the laws of the State of Delaware on
November 24, 1969. During the years ended March 31, 2008 and 2007, our
operations were conducted through ADM itself and its subsidiaries, Ivivi
Technologies, Inc. (through October 18, 2006), Pegasus Laboratories, Inc. and
Sonotron Medical Systems, Inc. Ivivi was deconsolidated as of October 18, 2006
upon the consummation of Ivivi's initial public offering. Our investment in
Ivivi subsequent to October 18, 2006 is reported under the equity method of
accounting.
 
 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) the manufacturing and sale of electronic medical devices and
(3) cosmetic and topical dermatological products. We have historically derived
most of our revenues from the development, manufacture and sale of chemical
products, and, to a lesser extent, from our electronic medical devices and
topical dermatological products.  However, during the fiscal years
ended March 31, 2008 and 2007, we derived an increased amount of our revenue
from the sale/rental (through October 18, 2006 with Ivivi) and manufacturing of
medical devices (subsequent to October 18, 2006). Our medical segment also
includes our Sonotron subsidiary.
 
 RESULTS
OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2008 AS COMPARED TO MARCH 31,
2007
 
 REVENUES
 
 Revenues
were $1,896,746 for the year ended March 31, 2008 as compared to $1,537,860 for
the year ended March 31, 2007, an increase of $358,886, or 23%. The increase
primarily resulted from increased manufacturing services performed for Ivivi.
Gross profit was $540,884 and $1,052,495 for the years ended March 31, 2008 and
2007, respectively. Gross margins decreased as a result of margins on $902,623
of sales of medical devices of approximately 17% to Ivivi, as compared to
margins achieved from chemical products, which are generally
higher.  We have also incurred higher raw material costs on our
chemical products during the year ended March 31, 2008.
 
 INTEREST
AND FINANCING COSTS
 
 There was
no such activity for the year ended March 31, 2008 as a result of the
deconsolidation of Ivivi. For the year ended March 31, 2007, net interest and
financing costs are primarily related to Ivivi debt and consist of interest
expense and accrued penalties and amortization of discount on the convertible
notes issued in Ivivi private placements partially offset by interest earned
from amounts invested in money market funds. We also recorded changes in the
fair value of our derivative instruments; all related to the Ivivi private
placements.
 
 OPERATING
LOSS
 
 Loss from operations for
the year ended March 31, 2008 was$642,915 compared to a loss from
operations for the year ended March 31, 2007 of $3,617,637. Selling, general and
administrative expenses decreased by $3,191,635, or 73%, from $4,371,611 to
$1,179,976, mainly due to decreased compensation, consulting and professional
fees, resulting from the deconsolidation of Ivivi. Research and development
expenses decreased by $294,698, or 99%, from $298,521 to $3,823 as a result of
the deconsolidation of Ivivi. We also recorded an equity method investment loss
of $2,339,716 for the year ended March 31, 2008, compared to a loss of
$1,069,563 for the year ended March 31, 2007, from our investment in
Ivivi.
 
 NET LOSS
AND NET LOSS PER SHARE
 
 Net loss
for the year ended March 31, 2008 was $2,894,316 or $(0.05) per share, compared
to a net loss of $8,165,886, or $(0.15) per share, for the year ended March 31,
2007.  Our net loss decreased $5,271,570, or $0.10 per share, as a
result of a reduction of $3,100,653 in interest expense related to debt that was
converted into shares of our affiliate Ivivi with its initial public offering, a
decrease of $378,033 in liabilities associated with rights and warrants of Ivivi
as a result of its deconsolidation, and an increase of $1,270,153 in equity
losses from our investment in Ivivi since its deconsolidation on October 18,
2006.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 At March
31, 2008, we had cash and equivalents of $2,072,325 as compared to $2,498,276 at
March 31, 2007. The decrease of $425,951 was primarily the result of cash used
in operations.  The market value of our investment in Ivivi at March
31, 2008 was $11,050,000. However, our common shares of Ivivi have not been
registered with the SEC and are subject to restriction as a result of securities
laws.
  15
 
 OPERATING
ACTIVITIES
 
 Net cash
used by operating activities was $416,246 for the year ended March 31, 2008, as
compared to net cash used by operating activities of $636,064 for the year ended
March 31, 2007. The use of cash in 2008 was primarily due to a net loss of
$2,894,316 and increases in operating assets of $287,000, which was primarily
offset by a non-cash charge for the equity investment loss of $2,339,716,
depreciation of $76,347, and increases in net operating liabilities of
$350,373.
 
 The use
of cash during the year ended March 31, 2007 was primarily due to a net loss of
$8,165,886, related mostly to Ivivi's operations, partially offset by non cash
charges for the amortization of loan costs and  amortization of
discount of $1,692,354 on the convertible notes issued in the private
placements, stock based compensation of $1,779,913, equity based penalty expense
of $1,355,837, equity investment loss of $1,069,563, a  change in fair
value of derivative liabilities of $196,682, and increases in operating
liabilities of $1,621,569.
 
 INVESTING
ACTIVITIES
 
 For the
year ended March 31, 2008, cash used in investing activities was $9,706. Of this
amount, $29,706 was used for the purchase of equipment and $20,000 was received
from an officer for repayment of advances made to the officer prior to 2000. For
the year ended March 31, 2007, cash provided by investing activities was
$2,477,236. Of this amount, we received $2,570,609 from advances made to Ivivi,
$25,890 was used for the purchase of office equipment and $67,483 was retained
by Ivivi after its IPO.
 
 FINANCING
ACTIVITIES
 
 During
the year ended March 31, 2007, we paid $571,291 for deferred costs related to
the private placements of Ivivi and had net proceeds from notes payable of
$245,725. We had no comparable items during the year ended March 31,
2008.
 
 Subsequent
to the receipt of funds from Ivivi in repayment of Ivivi's indebtedness to us,
management launched a sales and marketing initiative  which included,
among other things, the re-branding of our water-based industrial chemical
products through the establishment of a new division, Aqua-Based Technologies.
In addition, we hired a Director of Sales and Marketing for such division. This
is part of a business plan to enhance our operations and to increase sales and
marketing efforts for its products. Such plan includes seeking to hire
additional sales employees as well as pursuing strategic relationships to help
market and promote certain product lines. Although we expect available funds and
funds generated from our operations to be sufficient to meet our anticipated
needs for a minimum of 12 months, we may need to obtain additional capital to
continue to operate and grow our business. Our cash requirements may vary
materially from those currently anticipated due to changes in our operations,
including our marketing and sales activities, product development, and the
timing of our receipt of revenues. We do not have any material external sources
of liquidity or unused sources of funds. 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.
  16
  PRO-FORMA
RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2008 AS COMPARED TO MARCH 31,
2007
  We
believe the following table, which compares the results of operations for the
year ended March 31, 2008 with the pro-forma results of operations for the year
ended March 31, 2007 as if Ivivi's operations were reported on one line, gives a
more informative disclosure of our ongoing operations.
  The pro forma financial information set
forth below should be read in conjunction with a reading of our historical
financial statements. The pro forma information is presented for illustrative
purposes only and is not intended to be indicative of our results of operations
that may be reported in the future.
  YearEndedMarch
      31,2007Pro
      FormaYear
              
              
              IviviEnded
              
              
              OperationsMarch
      31,
              
              
              Reported2008
              
              
              on
      One LineRevenues
              
              $
              1,896,746
              
              
              $
              922,553Costs
      and expenses:Cost
      of sales
              
              
              1,355,862
              
              
              
              413,905Research
      and development
              
              
              3,823
              
              
              
              303Selling,
      general and administrative
              
              
              1,179,976
              
              
              
              1,344,942Total
      operating expenses
              
              
              2,539,661
              
              
              
              1,759,150Operating
      loss
              
              
              (642,915
              )
              
              
              (836,597
              )Interest
      income
              
              
              88,315
              
              
              
              27,981Equity
      in net loss of Ivivi
              
              
              (2,339,716
              )
              
              
              (1,069,563
              )Loss
      from Ivivi operations
              
              
              --
              
              
              
              (6,287,707
              )Net
      loss
              
              $
              (2,894,316
              )
              
              $
              (8,165,886
              )Net
      loss per share, basic and diluted
              
              $
              (0.05
              )
              
              $
              (0.15
              )Weighted
      average shares outstanding,basic
      and diluted
              
              
              53,939,537
              
              
              
              53,882,037
 
 REVENUES
  Net
revenues were $1,896,746 for the year ended March 31, 2008 compared to $922,553
for the year ended March 31, 2007 (excluding Ivivi's operations), an increase of
$974,193, or 106%.  The increase primarily resulted from increased
manufacturing services performed for Ivivi.  Gross profit was $540,884
and $508,648 (excluding Ivivi's operations) for the years ended March 31, 2008
and 2007, respectively.  Gross margins decreased as a result of
margins on $902,623 of sales of medical devices of approximately 17% to Ivivi,
as compared to margins achieved from chemical products, which are generally
higher. We have also incurred higher raw material costs on our chemical products
during the year ended March 31, 2008.
  OPERATING
LOSS
  Loss from
operations for the years ended March 31, 2008 and 2007 was $642,915 and
$836,597, respectively.  Selling, general and administrative expenses
decreased by $164,966 or 12%, from $1,344,942 (excluding Ivivi's operations) to
$1,179,976, mainly due to decreased consulting and professional fees, offset by
increased compensation and various other expenses.
  17
 
 ITEM 7.
FINANCIAL STATEMENTS
 
 ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 MARCH 31,
2008
 
 I N D E
X
 
 
 FINANCIAL
      STATEMENTS:
              Page
      NO.Report
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets as of March 31, 2008 and 2007
              F-2Consolidated
      Statements of Operations For the Years Ended March 31, 2008 and
      2007
              F-3Consolidated
      Statements of Changes in Stockholders' Equity For the Years Ended March
      31, 2008 and 2007
              F-4Consolidated
      Statements of Cash Flows For the Years Ended March 31, 2008 and
      2007
              F-5Notes
      to Consolidated Financial Statements
              F-6
  18
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors and
 Stockholders
of ADM Tronics Unlimited, Inc.
 
  We have
audited the accompanying consolidated balance sheets of ADM Tronics Unlimited,
Inc. and subsidiaries as of March 31, 2008 and 2007, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the two 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 audit 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 audit provides a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ADM Tronics Unlimited, Inc. and
subsidiaries as of March 31, 2008 and 2007, and the results of its operations
and its cash flows for each of the two years then ended in conformity with
accounting principles generally accepted in the United States of
America.
 
 /s/ Raich
Ende Malter & Co. LLP
 East
Meadow, New York
 June 30,
2008
  F-1
  ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 MARCH 31,
2008 AND 2007
 
 
 MARCH
      31, 2008
              
              
              MARCH
      31, 2007ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              2,072,325
              
              
              $
              2,498,276Accounts
      receivable, net of allowance for doubtfulaccounts
      of $1,088 and $900, respectively
              
              
              101,270
              
              
              
              89,598Receivables
      – Affiliate
              
              
              -
              
              
              
              36,657Inventories
              
              
              469,403
              
              
              
              205,517Prepaid
      expenses and other current assets
              
              
              83,731
              
              
              
              35,130Total
      current assets
              
              
              2,726,729
              
              
              
              2,865,178Property
      and equipment, net of accumulated depreciationof
      $17,873 and $5,467, respectively
              
              
              55,288
              
              
              
              37,989Inventory
      - long term portion
              
              
              78,416
              
              
              
              81,573Investment
      in Ivivi
              
              
              2,154,517
              
              
              
              2,638,562Advances
      to related parties
              
              
              74,299
              
              
              
              92,933Other
      assets
              
              
              28,486
              
              
              
              89,772Total
      assets
              
              $
              5,117,735
              
              
              $
              5,806,007LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              237,331
              
              
              $
              180,935Accrued
      expenses and other current liabilities
              
              
              87,439
              
              
              
              35,290Customer
      deposits – affiliate
              
              
              241,828
              
              
              
              --Total
      current liabilities
              
              
              566,598
              
              
              
              216,225Stockholders'
      equity:Preferred
      stock, $.01 par value; 5,000,000 shares authorized,no
      shares issued and outstanding
              
              
              --
              
              
              
              --Common
      stock, $.0005 par value; 150,000,000 sharesauthorized,
      53,939,537 shares issued and outstanding atMarch
      31, 2008 and 53,882,037 at March 31, 2007
              
              
              26,970
              
              
              
              26,941Additional
      paid-in capital
              
              
              32,153,597
              
              
              
              30,297,955Accumulated
      deficit
              
              
              (27,629,430
              )
              
              
              (24,735,114
              )Total
      stockholders' equity
              
              
              4,551,137
              
              
              
              5,589,782Total
      liabilities and stockholders' equity
              
              $
              5,117,735
              
              
              $
              5,806,007
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-2
  ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 FOR THE
YEARS ENDED MARCH 31, 2008 AND 2007
 
 
 2008
              
              
              2007Revenues
              
              $
              1,896,746
              
              
              $
              1,537,860Costs
      and expenses:Cost
      of sales
              
              
              1,355,862
              
              
              
              485,365Research
      and development
              
              
              3,823
              
              
              
              298,521Selling,
      general and administrative
              
              
              1,179,976
              
              
              
              4,371,611Total
      operating expenses
              
              
              2,539,661
              
              
              
              5,155,497Operating
      loss
              
              
              (642,915
              )
              
              
              (3,617,637
              )Interest
      and financing costs, net
              
              
              88,315
              
              
              
              (3,100,653
              )Change
      in fair value of warrant andregistration
      rights liabilities
              
              
              -
              
              
              
              (378,033
              )Equity
      in net loss of Ivivi
              
              
              (2,339,716
              )
              
              
              (1,069,563
              )Net
      loss
              
              $
              (2,894,316
              )
              
              $
              (8,165,886
              )Net
      loss per share, basic and diluted:
              
              $
              (0.05
              )
              
              $
              (0.15
              )Weighted
      average shares outstanding
              
              
              53,939,537
              
              
              
              53,882,037
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 F-3
 
 
 ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR THE
YEARS ENDED MARCH 31, 2008 AND 2007
 
 
 AdditionalCommon
      Stock
              
              
              Paid-in
              
              
              AccumulatedShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalBalance,
      March 31, 2006
              
              
              53,882,037
              
              
              $
              26,941
              
              
              $
              10,342,480
              
              
              $
              (16,569,228
              )
              
              $
              (6,199,807
              )Share
      based compensation
              
              
              -
              
              
              
              -
              
              
              
              1,779,913
              
              
              
              -
              
              
              
              1,779,913Reclassification
      of warrantliability
      upon effectivenessof
      subsidiary registrationstatement
              
              
              -
              
              
              
              -
              
              
              
              630,312
              
              
              
              -
              
              
              
              630,312Reclassification
      of unamortizedloan
      costs and discount uponconversion
      of subsidiary debt
              
              
              -
              
              
              
              -
              
              
              
              (669,347
              )
              
              
              -
              
              
              
              (669,347
              )Adjustment
      to reflect net assetsof
      equity method investment
              
              
              -
              
              
              
              -
              
              
              
              3,401,810
              
              
              
              -
              
              
              
              3,401,810Adjustment
      to reflect increasein
      investee paid in capital
              
              
              -
              
              
              
              -
              
              
              
              305,315
              
              
              
              -
              
              
              
              305,315Adjustment
      for deconsolidationof
      former subsidiary
              
              
              -
              
              
              
              -
              
              
              
              14,507,472
              
              
              
              -
              
              
              
              14,507,472Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (8,165,886
              )
              
              
              (8,165,886
              )Balance,
      March 31, 2007
              
              
              53,882,037
              
              
              
              26,941
              
              
              
              30,297,955
              
              
              
              (24,735,114
              )
              
              
              5,589,782Adjustment
      to reflect equity raiseof
      equity method investment
              
              
              -
              
              
              
              -
              
              
              
              1,319,094
              
              
              
              -
              
              
              
              1,319,094Adjustment
      to reflect increasein
      investee paid in capital
              
              
              -
              
              
              
              -
              
              
              
              536,577
              
              
              
              -
              
              
              
              536,577Prior
      period correction
              
              
              57,500
              
              
              
              29
              
              
              
              (29
              )
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,894,316
              )
              
              
              (2,894,316
              )Balance,
      March 31, 2008
              
              
              53,939,537
              
              
              $
              26,970
              
              
              $
              32,153,597
              
              
              $
              (27,629,430
              )
              
              $
              4,551,136
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
 
 ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR THE
YEARS ENDED MARCH 31, 2008 AND 2007
 
 
 2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (2,894,316
              )
              
              $
              (8,165,886
              )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
              
              
              19,253
              
              
              
              22,360Write-downs
      of intangible assets
              
              
              57,094
              
              
              
              -Loss
      from equity investment
              
              
              2,339,716
              
              
              
              1,069,563Stock
      based compensation
              
              
              -
              
              
              
              1,779,913Amortization
      of loan costs and discount
              
              
              -
              
              
              
              1,692,354Share
      based financing penalties
              
              
              -
              
              
              
              1,355,837Bad
      debts
              
              
              -
              
              
              
              20,666Change
      in fair value of warrant and registration rights
    liabilities
              
              
              -
              
              
              
              196,682Amortization
      of deferred revenue
              
              
              -
              
              
              
              (4,833
              )Interest
      accrued on officer loan
              
              
              (1,366
              )
              
              
              -Changes
      in operating assets and liabilities:(Increase)
      decrease in:Accounts
      receivable
              
              
              (11,672
              )
              
              
              (79,433
              )Receivable
      from affiliate
              
              
              36,657
              
              
              
              -Inventory
              
              
              (260,729
              )
              
              
              (9,462
              )Prepaid
      expenses and other current assets
              
              
              (48,601
              )
              
              
              (133,919
              )Other
      assets
              
              
              (2,655
              )
              
              
              (1,475
              )Increase
      (decrease) in:Accounts
      payable and accrued expenses
              
              
              108,545
              
              
              
              1,331,569Customer
      deposit – affiliate
              
              
              241,828
              
              
              
              -Deferred
      revenue
              
              
              -
              
              
              
              290,000Net
      cash used in operating activities
              
              
              (416,246
              )
              
              
              (636,064
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      retained by former consolidated subsidiary
              
              
              -
              
              
              
              (67,483
              )Purchases
      of property and equipment
              
              
              (29,705
              )
              
              
              (25,890
              )Receivable
      from Ivivi
              
              
              -
              
              
              
              2,570,609Repayment
      of officer loan receivable
              
              
              20,000
              
              
              
              -Net
      cash provided (used) by investing activities
              
              
              (9,705
              )
              
              
              2,477,236CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from notes payable, net
              
              
              -
              
              
              
              245,725Deferred
      offering costs
              
              
              -
              
              
              
              (571,291
              )Net
      cash used in financing activities
              
              
              -
              
              
              
              (325,566
              )Net
      increase (decrease) in cash
              
              
              (425,951
              )
              
              
              1,515,606Cash
      and cash equivalents, beginning of period
              
              
              2,498,276
              
              
              
              982,670Cash
      and cash equivalents, end of period
              
              $
              2,072,325
              
              
              $
              2,498,276Cash
      paid for:Interest
              
              $
              -
              
              
              $
              166,174Income
      taxes
              
              $
              4,060
              
              
              $
              -
  The
accompanying notes are an integral part of these consolidated financial
statements.
 
 F-5
  ADM
TRONICS UNLIMITED, INC. AND SUBSIDIARIES
 
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 MARCH 31,
2008 AND 2007
 
 
 NOTE 1 -
ORGANIZATIONAL MATTERS
 
 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 the manufacturing and selling 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, Asia and Europe. Medical equipment is manufactured in accordance with
customer specifications on a contract basis. Our medical device product line
consists principally of proprietary devices used in the treatment of joint pain
and tinnitus. These devices are FDA cleared medical devices known as
"Electroceutical" units. These products are sold to customers located
principally in the United States.
 
 IVIVI
OPERATIONS
 
 Our
former majority owned subsidiary, Ivivi Technologies, Inc. ("Ivivi"), filed a
Registration Statement with the Securities and Exchange Commission ("SEC") for
the initial public offering of a portion of its common stock. The Registration
Statement was declared effective by the SEC on October 18, 2006. As a result of
the consummation of Ivivi's initial public offering, we no longer own a majority
of the outstanding common stock of Ivivi and do not control Ivivi's operations.
We do own approximately 30% of Ivivi's outstanding common stock and can exert
significant influence based upon the percentage of Ivivi's stock owned by us. As
a result, our investment in Ivivi subsequent to October 18, 2006 is reported
under the equity method of accounting, whereby we recognize our share of Ivivi's
earnings or losses as they are incurred.
 
 NOTE 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.
  F-6
 
 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 Sonotron 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 and allowance for doubtful accounts.
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, the carrying amounts
approximate fair value due to their relatively short maturities.
 
 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.
 
 ACCOUNTS
RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
 
 Accounts
receivable represent uncollateralized customer obligations due under normal
trade terms generally requiring payment within 30 days from the invoice date.
Follow-up calls and correspondence is made if unpaid accounts receivable go
beyond the invoice due date. Payments of accounts receivable are allocated to
the specific invoices identified on the customer's remittance
advice.
 
 Accounts
receivable are stated at the amount management expects to collect from
outstanding balances. The carrying amounts of accounts receivable is reduced by
a valuation allowance that reflects management's best estimate of the amounts
that will not be collected. Management individually reviews all accounts
receivable balances that exceed the due date and estimates the portion, if any,
of the balance that will not be collected. Management provides for probable
uncollectible amounts through a charge to expenses and a credit to a valuation
allowance, based on its assessment of the current status of individual accounts.
Balances that are still outstanding after management has used reasonable
collection efforts are written off through a charge to the valuation allowance
and a credit to accounts receivable.
 
 REVENUE
RECOGNITION
 
 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 medical device revenue from the sale of our medical devices and
medical devices we manufacture for Ivivi. Sales of medical devices are
recognized when our products are shipped to end users including medical
facilities and distributors. Revenue from the sale of the medical devices we
manufacture for Ivivi is recognized upon completion of the manufacturing
process. 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.
 
 Prior to
October 18, 2006, revenue from the rental and sales of medical devices was
primarily generated by our former subsidiary Ivivi. The Ivivi operations have
been consolidated in these financial statements through October 18, 2006. Rental
revenue from medical devices, resulting from the Ivivi operations, has been
recognized as earned on either a monthly or pay-per-use basis in accordance with
individual customer agreements.
 
 INVENTORY
 
 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.
  F-7
 
 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, 2008 and 2007, no impairment loss was
recognized.
 
 ADVERTISING
COSTS
 
 Advertising
costs are expensed as incurred and amounted to approximately $32,000 and $56,000
for the years ended March 31, 2008 and 2007, respectively.
 
 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 costs for raw materials used in developing
new products.
 
 DEFERRED
LOAN COSTS
 
 Deferred
loan costs have been amortized on a straight- line basis over a five year period
through the maturity date of the related convertible notes. There was no
material difference between the straight-line basis of amortization of debt
costs and the effective interest method.
 
 STOCK
OPTIONS AND WARRANTS
 
 In April
2006, we adopted the fair value recognition provisions of SFAS No. 123(R),
Accounting for Stock-Based Compensation, to account for compensation costs under
our stock option plans and those of our subsidiary. We previously utilized the
intrinsic value method under Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (as amended) ("APB 25").
  F-8
 
 INCOME
TAXES
 
 The
Company adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income
Taxes”, on April 1, 2007. Previously, the Company had accounted for tax
contingencies in accordance with Statement of Financial Accounting Standards
(“SFAS”) No. 5, “Accounting for Contingencies”. As required by FIN
No. 48, which clarifies SFAS No. 109, “Accounting for Income Taxes”,
the Company recognizes the financial statement benefit of a tax position only
after determining that the relevant tax authority would more likely than not
sustain the position following an audit. For tax positions meeting the
more-likely-than-not threshold, the amount recognized in the consolidated
financial statements is the largest benefit that has a greater than
50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority. At the adoption date and at March 31, 2008, the Company
applied FIN No. 48 to all tax positions for which the statute of
limitations remained open, and determined there was no material impact on the
consolidated financial statements.  There are currently no tax years
under examination by any major tax jurisdictions.
 
 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 $0.05 for the year ended March 31, 2008
and $0.15 for the year ended March 31, 2007. The assumed exercise of common
stock equivalents was not utilized for the years ended March 31, 2008 and 2007
since the effect would be anti-dilutive. There were 11,626,854 common stock
equivalents at March 31, 2008 and March 31, 2007.
 
 CONVERTIBLE
DEBT
 
 In
accordance with EITF 00-27, a portion of the proceeds of our convertible debt
was allocated to warrants issued with the debt, based on their fair value. This
allocation resulted in a discount on the debt and the discount was amortized
over the term of the notes, until their conversion to Ivivi common stock in
October of 2006. When the fair value of the underlying common stock is greater
than the effective conversion price, we record a beneficial conversion feature,
which was also amortized over the term of the notes, until their conversion to
Ivivi common stock during October, 2006.
  F-9
 
 In
conjunction with the issuance of the convertible debt, we issued warrants that
had registration rights for the underlying shares. As the contracts were
required to be settled by the delivery of registered shares, 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 April 1, 2006 to October 18, 2006 (the
date of cancellation upon the registration of the underlying Ivivi common stock)
in other income (expense), in accordance with EITF 00-19. The fair value of the
warrant liability was $630,312 on October 18, 2006. Upon the registration
statement being declared effective, the fair value of the warrants on that date
was reclassified as equity.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In
September 2006, FASB issued Statement of Financial Accounting Standards No. 157
("FAS 157"), Fair Value Measurements, which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
("GAAP"), and expands disclosures about fair value measurements. FAS 157 applies
under other accounting pronouncements that require or permit fair value
measurements. Prior to FAS 157, there were different definitions of fair value
and limited guidance for applying those definitions in GAAP. Moreover, that
guidance was dispersed among the many accounting pronouncements that require
fair value measurements. Differences in that guidance created inconsistencies
that added to the complexity in applying GAAP. The changes to current practice
resulting from the application of FAS 157 relate to the definition of fair
value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. We do not expect the adoption of FAS 157 to have an
effect on our financial statements.
 
 In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities." SFAS 159 permits entities to choose
to measure many financial instruments, and certain other items, at fair value.
SFAS 159 applies to reporting periods beginning after November 15, 2007. The
adoption of SFAS 159 is expected to have a material impact on our financial
condition and results of operations, as its adoption in our March 31, 2009
fiscal year end will change the way we report our investment in Ivivi from the
equity method of accounting, to fair value.
 
 In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations”.
This standard establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any non-controlling interest in the acquired
entity and the goodwill acquired. This statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS No.141R is effective for us for
acquisitions made after November 30, 2009. We do not expect the adoption of
SFAS No. 141R to have an effect on our financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements”. This standard outlines the
accounting and reporting for ownership interest in a subsidiary held by parties
other than the parent. SFAS No. 160 is effective for the first quarter of
2010. We do not expect the adoption of SFAS No. 160 to have a material impact on
our financial statements.
 
 In March
2008, the FASB issued SFAS No. 161 , “Disclosures about Derivative Instruments
and Hedging Activities – An Amendment of FASB Statement No.
133”.  This statement is intended to improve financial reporting of
derivative instruments and hedging activities by requiring enhanced disclosures
about (a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its
related interpretations and (c) how derivative instruments and related hedged
items affect an entity’s financial position, financial performance and cash
flows.  The provisions of SFAS 161 are effective for fiscal years
beginning after November 15, 2008.  SFAS 161 will be effective for the
Company on April 1, 2009.  We do not expect the
adoption of SFAS No. 161 to have a material impact on our financial
statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS No. 162). This statement identifies the sources of
accounting principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP
hierarchy).  The FASB believes that the GAAP hierarchy should be
directed to the entity and has concluded that the GAAP hierarchy should reside
in the accounting literature established by the FASB. This statement shall
become effective 60 days following the SEC’s approval of the Public company
Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting
Principles”.  We do not expect the adoption of SFAS No. 162 to have a
material impact on our financial statements.
 
 In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts” (SFAS No. 163). This statement clarifies how FASB Statement
No. 60, “Accounting and Reporting by Insurance Enterprises”, applies to
financial guarantee insurance contracts issued by insurance enterprises,
including the recognition and measurement of premium revenue and claim
liabilities.  It also requires expanded disclosures about financial
guarantee insurance contracts.  This statement is effective for
financial statements issued for fiscal years beginning after December 15, 2008
and all interim periods within those fiscal years, except for disclosures about
the insurance enterprise’s risk-management activities. We do not expect the
adoption of SFAS No. 163 to have a material impact on our financial
statements.
 
 NOTE 3 -
INVENTORY
 
 Inventory
as of March 31, 2008 and 2007, consists of the following:
 
 March
      31, 2008:Current
              
              
              Long
      Term
              
              
              TotalRaw
      materials
              
              $
              361,897
              
              
              $
              39,186
              
              
              $
              401,083Finished
      goods
              
              
              107,506
              
              
              
              39,230
              
              
              
              146,736$
              469,403
              
              
              $
              78,416
              
              
              $
              547,819March
      31, 2007:Current
              
              
              Long
      Term
              
              
              TotalRaw
      materials
              
              $
              136,351
              
              
              $
              79,071
              
              
              $
              215,422Finished
      goods
              
              
              69,166
              
              
              
              2,502
              
              
              
              71,668$
              205,517
              
              
              $
              81,573
              
              
              $
              287,090
  F-10
 
 NOTE 4 -
INVESTMENT IN IVIVI AND RELATED CAPITAL TRANSACTIONS
 
 Upon the
consummation of Ivivi's initial public offering, we no longer owned a majority
of the outstanding common stock of Ivivi and do not control Ivivi's operations.
As a result, we have deconsolidated the operations of Ivivi subsequent to
October 18, 2006. We do own approximately 30% of Ivivi's outstanding common
stock as of March 31, 2008 and can exert significant influence based upon the
percentage of Ivivi's stock owned by us. Accordingly, our investment in Ivivi
subsequent to October 18, 2006 is reported under the equity method of
accounting, whereby we recognize our share of Ivivi's earnings or losses as they
are incurred.
 
 During
the period from October 18, 2006 to March 31, 2007, Ivivi recorded an increase
in additional paid-in capital as a result of the recognition of compensation
expense related to option grants to employees and others. We have recorded a
proportional increase in our investment in Ivivi in the amount of $305,315, with
a related credit to additional paid-in capital.
 
 The
market value of our investment in Ivivi as of March 31, 2008 and 2007 was
$11,050,000 and $13,487,500, respectively. However, our common shares of Ivivi
have not been registered with the SEC and are subject to securities laws
restrictions.
 
 The
following table sets forth summarized results of operations of Ivivi for the
years ended:
 
 March
      31, 2008
              
              
              March
      31, 2007Revenues,
      net
              
              $
              1,606,441
              
              
              $
              1,182,340Gross
      profit
              
              $
              953,867
              
              
              $
              1,001,257Operating
      loss
              
              $
              (7,802,333
              )
              
              $
              (6,087,023
              )Net
      loss
              
              $
              (7,503,091
              )
              
              $
              (7,778,611
              )Current
      assets
              
              $
              7,414,088
              
              
              $
              8,926,511Non-Current
      assets
              
              $
              1,340,743
              
              
              $
              376,962Current
      liabilities
              
              $
              1,029,143
              
              
              $
              1,042,632Non-current
      liabilities
              
              $
              411,458
              
              
              $
              473,958
  F-11
  NOTE 5 -
NONCASH FINANCING AND INVESTING ACTIVITIES
 
 On
October 18, 2006, our former subsidiary Ivivi's Registration Statement on Form
SB-2 being was declared effective by the SEC. Unsecured convertible notes in the
aggregate principal amount of $6,087,500, issued in our December 2004 and
February 2005 joint private placement with Ivivi, automatically converted into
shares of Ivivi common stock. Also upon effectiveness of the Registration
Statement, unsecured convertible notes in the aggregate principal amount of
$2,000,000 issued in connection with Ivivi's November 2005 and March 2006
private placement to four institutional investors, automatically converted into
shares of Ivivi common stock.
 
 Upon the
conversion of the above indebtedness into Ivivi common stock, unamortized loan
costs and loan discount in the aggregate amount of $669,347 were charged to
additional paid-in capital.
 
 Also upon
the effectiveness of Ivivi's Registration Statement, certain ADM warrants which
contained registration rights were cancelled. On October 18, 2006, the liability
related to these warrants in the amount of $630,312 was reclassified to
additional paid-in capital.
 
 We no
longer own a majority of the outstanding common stock of Ivivi and do not
control Ivivi's operations but can exert significant influence based upon the
percentage of Ivivi's stock owned by us. As a result, we have deconsolidated the
operations of Ivivi subsequent to October 18, 2006. We  recorded a
credit to additional paid-in capital in the amount of $3,401,810 to record our
proportionate investment in the net assets of Ivivi at October 18,
2006.
 
 During
the period from October 18, 2006 to March 31, 2007, Ivivi recorded an increase
in additional paid-in capital as a result of the recognition of compensation
expense related to option grants to employees and others. We have recorded a
proportional increase in our investment in Ivivi in the amount of $305,315, with
a related credit to additional paid-in capital.
 
 During
the year ended March 31, 2008, Ivivi recorded increases in additional paid in
capital as a result of a private placement of its common stock and the
recognition of compensation expense related to options granted to employees and
others.  We have recorded a proportional increase in our investment in
Ivivi of $1,319,094 and $536,577, respectively, with related credits to
additional paid-capital.
 
 NOTE 6 -
CONCENTRATIONS
 
 During
the year ended March 31, 2008, five customers accounted for 77% of our revenue.
As of March 31, 2008 three customers accounted for 66% of our accounts
receivable.
 
 During
the year ended March 31, 2007, four customers accounted for 59% of our revenue.
As of March 31, 2007, two customers represented 53% of our accounts
receivable.
  F-12
  NOTE 7 -
SEGMENT INFORMATION
 
 Information
about segments is as follows:
 
 Chemical
              
              
              Medical
              
              
              TotalYear
      ended March 31, 2008Revenues
      from external customers
              
              $
              859,137
              
              
              $
              1,037,609
              
              
              $
              1,896,746Segment
      loss (operating loss)
              
              
              (323,677
              )
              
              
              (319,238
              )
              
              
              (642,915
              )Year
      ended March 31, 2007Revenues
      from external customers
              
              $
              738,865
              
              
              $
              798,995
              
              
              $
              1,537,860Segment
      loss (operating loss)
              
              
              (863,704
              )
              
              
              (2,753,933
              )
              
              
              (3,617,637
              )Total
      assets at March 31, 2008
              
              $
              4,592,031
              
              
              $
              525,704
              
              
              $
              5,117,735
 
 
 NOTE 8 -
PROPERTY AND EQUIPMENT
 
 Our
property and equipment as of March 31, 2008 and 2007 is as follows:
 
 2008
              
              
              2007Computer
      equipment
              
              $
              10,318
              
              
              $
              1,109Machinery
      and equipment
              
              
              62,843
              
              
              
              42,34673,161
              
              
              
              43,455Accumulated
      depreciation
              
              
              17,873
              
              
              
              5,466Property
      and equipment, net
              
              $
              55,288
              
              
              $
              37,989
 
 Depreciation
expense related to property and equipment amounted to $12,407 and $14,420 during
the years ended March 31, 2008 and 2007, respectively.
 
 NOTE 9 -
INCOME TAXES
 
 At March
31, 2008, the Company had federal and state net operating loss carryforwards, or
“NOLs,” of approximately $4.2 million, which are due to expire through
fiscal 2028. These NOLs may be used to offset future taxable income through
their respective expiration dates and thereby reduce or eliminate our federal
and state income taxes otherwise payable. A valuation allowance is provided when
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Ultimate utilization/availability of such net operating
losses and credits is dependent upon the Company’s ability to generate taxable
income in future periods and may be significantly curtailed if a significant
change in ownership occurs in accordance with the provisions of the Tax Reform
Act of 1986.
 
 Due to
the uncertainty related to, among other things, the extent and timing of its
future taxable income, the Company offset the deferred tax assets related to bad
debts and NOL’s by an equivalent valuation allowance at March 31, 2008. A
reconciliation of the statutory Federal income tax rate and the effective income
tax rate for the years ended March 31, 2008 and 2007 follows:
 
 Significant
components of deferred tax assets and liabilities are as follows:
 
 2008
              
              
              2007Deferred
      tax assets:Bad
      debts
              
              $
              -
              
              
              $
              3,000Net
      operating loss carryforward
              
              
              1,661,000
              
              
              
              1,443,000Deferred
      tax assets
              
              
              1,661,000
              
              
              
              1,446,000Valuation
      allowance
              
              
              (1,661,000
              )
              
              
              (1,446,000
              )Net
      deferred tax assets
              
              $
              -
              
              
              $
              -
 
 The
provision for income taxes at March 31, 2008 and 2007 differs from that amount
using the statutory federal income tax rate as follows:
 
 2008
              
              
              2007Statutory
      federal income tax rate
              
              
              (34
              )%
              
              
              (34
              )%State
      income taxes, net of federal taxes
              
              
              (6
              )
              
              
              (6
              )Nondeductible
      items
              
              
              26
              
              
              
              23Valuation
      allowance
              
              
              14
              
              
              
              17Effective
      income tax rate
              
              
              0
              %
              
              
              0
              %
  F-13
 
 NOTE 10 -
OPTIONS AND WARRANTS OUTSTANDING
 
 ADM has
an aggregate of 8,126,854 common stock purchase warrants outstanding as of March
31, 2008. The warrants have a weighted average exercise price of $0.33 per
share, all were exercisable at March 31, 2008, and have a weighted average
remaining life of 1.5 years at March 31, 2008.
 
 No
options were granted during the year ended March 31, 2008.  During the
year ended March 31, 2007 ADM granted an aggregate of 3,500,000 stock options to
employees and consultants. The options have an exercise price of $0.29, were
fully vested at the date of grant and expire August 30, 2009. The options were
valued at $351,529 using the Black Scholes option pricing model with the
following assumptions: risk free interest rate of 4.9%, volatility of 85%,
estimated life of 1.5 years and dividend rate of 0%. The options have a
remaining life of 1.4 years at March 31, 2008.
 
 NOTE 11 -
COMMITMENTS AND CONTINGENCIES
 
 We lease
our office and manufacturing facility under a non-cancelable operating lease,
which expires on June 30, 2008. The approximate future minimum annual rental
under this lease at March 31, 2008 is $22,000 for the year ended March 31,
2009.  We are currently negotiating a new lease with our current
landlord for our office and manufacturing facility. Other leases are
month-to-month.
 
 Rent
expense for all facilities for the years ended March 31, 2008 and 2007 was
approximately $73,000 and $109,000, respectively.
 
 NOTE 12 -
LEGAL PROCEEDINGS
 
 We are
involved, from time to time, in litigation and proceedings arising out of the
ordinary course of business. There are no pending material legal proceedings or
environmental investigations to which we are a party or to which our property is
subject.
 
 NOTE 13 -
RELATED PARTY TRANSACTIONS
 
 ADVANCES
TO RELATED PARTIES
 
 At March
31, 2008, ADM has advances to an officer aggregating $29,188. No advances
have been made since 2000. The advances bear interest at the rate of 3% per
year. Interest accrued for the years ended March 31, 2008 and 2007 was $1,353
and $1,476, respectively. Total accrued interest at March 31, 2008 was
$37,795.
 
 At March
31, 2008, ADM has advances to an employee, the wife of the above referenced
officer, aggregating $7,316. No advances have been made since 2000. This advance
bears no interest.
 
 MANAGEMENT
SERVICES AGREEMENT
 
 ADM
entered into a management services agreement with Ivivi under which ADM provides
Ivivi with management services and allocates portions of its real property
facilities for use by Ivivi for the conduct of its business. The management
services provided by ADM 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. Ivivi pays ADM for such services on a monthly
basis pursuant to an allocation determined by ADM and Ivivi based on a portion
of its applicable costs plus any invoices it receives from third parties
specific to Ivivi. ADM and Ivivi also use office, manufacturing and storage
space in a building located in Northvale, New Jersey, currently leased by ADM,
pursuant to the terms of the management services agreement. ADM determines the
portion of space allocated to Ivivi on a monthly basis, and Ivivi is required to
reimburse ADM for its portion of the lease costs, real property taxes and
related costs.
 
 During
the year ended March 31, 2008, Ivivi had approximately $198,000 in management
services provided to it by ADM pursuant to the management services
agreement.  Ivivi had approximately $108,000 in management services
provided to it by ADM pursuant to the management services agreement during the
period from October 19, 2006 (date of deconsolidation) to March 31,
2007.
 
 INFORMATION
TECHNOLOGY SERVICE AGREEMENT
 
 ADM entered into an
information technology (“IT”) service agreement with Ivivi, in which Ivivi,in conjunction with its outside IT professionals, will service ADM’s IT
needs on an as needed basis.Ivivi
will invoice ADM monthly for any time it spends in providing such services to
ADM. The rate that Ivivi will charge ADM will be determined at date of Invoice.
Such invoices that Ivivi issues ADM, with respect to such services, will be due
within 30 days. IT services include, but are not limited to: Computer hardware
and software related issues, network administration, e-mail hosting and
administration, telephone and cabling installations and
maintenance.
  F-14
 
 MANUFACTURING
AGREEMENT
 
 ADM and
Ivivi are parties to a manufacturing agreement, dated as of August 15, 2001, and
as amended in February, 2005. Under the terms of the agreement, ADM has agreed
to serve as the exclusive manufacturer of all current and future medical and
nonmedical electronic and other devices or products to be sold or rented by
Ivivi. For each product that ADM manufactures, Ivivi 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 entity by ADM, if any, plus (ii)
a labor charge based on ADM's standard hourly manufacturing labor rate, which
ADM believes is more favorable than could be attained from unaffiliated third
parties. Under the terms of the agreement, if ADM is unable to perform its
obligations to Ivivi under the manufacturing agreement or is otherwise in breach
of any provision of the manufacturing agreement, Ivivi has the right, without
penalty, to engage third parties to manufacture some or all of its products. In
addition, if Ivivi elects to utilize a third-party manufacturer to supplement
the manufacturing being completed by ADM, Ivivi 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.
 
 Pursuant
to the manufacturing agreement, sales and manufacturing charges to Ivivi during
the year ended March 31, 2008 were approximately $907,000. ADM charged Ivivi
approximately $24,000 for the Company's manufacture of Ivivi's products pursuant
to the manufacturing agreement during the period from October 19, 2006 (date of
deconsolidation) to March 31, 2007.
 
 NOTE 14 –
CUSTOMER DEPOSITS – AFFILIATE
 
 ADM is
holding deposits of $241,828 from Ivivi for purchase orders Ivivi has placed
with the Company.  Should ADM not fulfill these purchase orders, the
deposits will have to be refunded to Ivivi.
 
 NOTE 15 –
PRIOR PERIOD CORRECTION
 
 It has
come to the Company’s attention that 57,500 shares of the Company’s common
stock, that had been previously issued, were not included in outstanding shares.
This adjustment has no impact on the prior or current year’s Net Loss Per Share
(Basic and Diluted), Consolidated Balance Sheets, Consolidated Statements of
Operations and Consolidated Statements of Cash Flows.
  F-15
  ITEM 8A.
CONTROLS AND PROCEDURES
 
 EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES.
 
 We
maintain disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) that are designed to ensure that information required to
be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applies its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control
objectives.
 
 As of the
end of the period covered by this annual Report on Form 10-KSB, we carried out
an evaluation, with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures pursuant to Securities Exchange Act Rule
13a-15. Based on that evaluation as of March 31, 2008, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) are effective.
 
 MANAGEMENT’S
REPORT ON INTERNAL COTNROL OVER FINANCIAL REPORTING
 
 Management,
including our Chief Executive Officer and Chief Financial Officer, has evaluated
our internal control over financial reporting as of March 31, 2008, based on the
framework in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations (COSO) of the Treadway Commission.
  Management’s
assessment of the effectiveness of the Company’s internal control over financial
reporting as of March 31, 2008 excluded Sonotron Medical Systems, Inc. and
Pegasus Laboratories, Inc. Pegasus Laboratories, Inc. is a wholly owned
subsidiary of the Company, and the Company holds a 94% interest in Sonotron
Medical Systems, Inc. Their total operating revenues represent less than 4% of
consolidated operating revenues of the Company as of and for the fiscal year
ended March 31, 2008.
 
 Based on
its assessment, management has concluded that our internal control over
financial reporting was effective as of March 31, 2008.
 
 This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.
  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 of the fiscal year 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
              PositionAndre'
      DiMino
              52
              President,
      Chief ExecutiveOfficer,
      Chief Financial Officerand
      DirectorVincent
      DiMino
              82
              Vice
      President of Productionand
      DirectorDavid
      Saloff
              55
              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 currently serves
as Vice Chairman and Co-Chief Executive Officer of Ivivi Technologies, Inc., a
publicly traded company on the NASDAQ Exchange, and also served as Chairman and
Chief Financial Officer from January 2004 until October 2006 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.
  19
 
 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 Ivivi acquired the SofPulse technology
referred to elsewhere herein. Mr. Saloff currently serves as President and
Co-Chief Executive Officer of Ivivi Technologies, Inc. and also served as
President and Chief Executive Officer from 2004 until October 2006 and has
served as 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 there under, 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, 2008 and 2007 concerning compensation paid, or accrued, by ADM to, or
on behalf of, ADM's President, Chief Executive Officer and Chief Financial
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, 2008.
 
 Name
      & Principal Position
              Year
              
              Salary
      ($)
              
              
              Bonus
      ($)
              
              
              Option
      Awards ($)
              
              
              All
      Other Compensation ($)
              
              
              Total
      ($)Andre
      DiMino
              2008
              
              
              136,760
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              136,760Chief
      Executive
              2007
              
              
              99,840
              
              
              -
              
              
              
              130,572
              (1)
              
              -
              
              
              
              230,412Officer
 
 (1)
Represents the expense to the Company pursuant to FAS 123(R) for a five year
option to purchase 1,300,000 shares of ADM common stock at an exercise price of
$0.29 per share granted to Mr. DiMino on August 30, 2006. See notes to the
Company's financial statements for the fiscal years ended March 31, 2008 and
2007 for the assumptions used for valuing the options under FAS
123(R).
  Option
      AwardsEquity
      Incentive
              
              EstimatedPlan
      Awards:
              
              Per
      ShareNumber
      of
              Number
      of
              
              Market
      ValueNumber
      of
              Securities
              Securities
              
              at
      GrantSecurities
              Underlying
              Underlying
              
              Date
      ifUnderlying
              Unexercised
              Unexercised
              Option
              Greater
      than
              OptionUnexercised
      Options
              Options
      (#)
              Unearned
              Exercise
              Exercise
              ExpirationName
              (#)
      Exercisable
              Unexercisable
              Options
      (#)
              Price
      ($)
              Price
      ($)
              DateAndre
      DiMino
              1,300,000
              -
              -
              0.29
              N/A
              8/30/2011
 
 
 DIRECTORS'
COMPENSATION
 
 The
Company does not pay fees to its directors, nor does it reimburse its directors
for expenses incurred.
 
 ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 
 The
following table sets forth information regarding ownership of shares of
Company's common stock, as of June 30, 2008, 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 June 19, 2007. 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
53,939,537 shares of Common Stock outstanding as of June30, 2008.
  20
 
 Number
      of SharesName
      and Address
              
              Beneficially
      Owned
              
              
              PercentageAndre'
      DiMino
              
              
              19,880,883
              (1)
              
              
              35.8
              %c/o
      ADM Tronics Unlimited, Inc.224-S
      Pegasus Ave.Northvale,
      NJ 07647Vincent
      DiMino
              
              
              7,187,928
              (2)
              
              
              13.2
              %c/o
      ADM Tronics Unlimited, Inc.224-S
      Pegasus Ave.Northvale,
      NJ 07647David
      Saloff
              
              
              300,000
              (3)
              
              
              0.5
              %c/o
      ADM Tronics Unlimited, Inc.224-S
      Pegasus Ave.Northvale,
      NJ 07647Eugene
      Stricker
              
              
              4,188,700
              (4)
              
              
              7.9
              %c/o
      Fifth Avenue Venture Capital Partners42
      Barrett RoadLawrence,
      NY 11559All
      Executive Officers and Directorsas
      a group (three persons)
              
              
              22,268,811
              (5)
              
              
              39.5
              %
  (1)
Includes 8,991,223 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; 1,300,000 shares which may be acquired
by Andre' Dimino upon the exercise of options; 960 shares owned by Jenny DiMino,
the spouse of Andre’ DiMino; 300,000 shares which may be acquired By Jenny
DiMino, upon the exercise of options; and 4,188,700 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;
500,000 shares which may be acquired by Vincent DiMino upon the exercise of
options; 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)
Represents shares that may be acquired by David Saloff upon the exercise of
options.
 
 (4) Mr.
Andre’ 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)
Reference is made to Footnote Nos. 1 and 2.
  21
 
 ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 From time
to time prior to 2000, 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, 2008 was approximately
$67,000.
 
 TRANSACTIONS
WITH IVIVI
 
 Andre' Di
Mino, the Company's President, Chief Executive Officer and Chief Financial
Officer, owns approximately 1.7% of the outstanding common stock of Ivivi and
serves as Vice Chairman and Co-Chief Executive Officer of Ivivi. During fiscal
2008, ADM and Ivivi have engaged in the transactions set forth
below:
 
 AMOUNTS
OWED TO/FROM THE COMPANY.
 
 As of
March 31, 2008, ADM was holding on deposit approximately $242,000 from Ivivi,
for sales orders Ivivi placed with the Company. As of March 31, 2007, Ivivi owed
approximately $37,000 to ADM in accounts receivable for sales the Company made
to Ivivi pursuant to the manufacturing agreement.
 
 
 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 entities with
management services and allocates portions of its real property facilities for
use by such entities 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 entities pay ADM for such
services on a monthly basis pursuant to an allocation determined by ADM and such
entities based on a portion of its applicable costs plus any invoices it
receives from third parties specific to each such entity. ADM's subsidiaries and
Ivivi 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 entity on a monthly basis, and the subsidiaries and Ivivi are required
to reimburse the Company for their respective portions of the lease costs, real
property taxes and related costs.
 
 Ivivi had
approximately $198,000 and $243,000 in management services provided to it by ADM
pursuant to the management services agreement during the fiscal years ended
March 31, 2008 and 2007, respectively.
 
 INFORMATION
TECHNOLOGY SERVICE AGREEMENT
 
 ADM entered into an
information technology (“IT”) service agreement with Ivivi, in which Ivivi,in conjunction with its outside IT professionals, will service ADM’s IT
needs on an as needed basis.Ivivi
will invoice ADM monthly for any time it spends in providing such services to
ADM. The rate that Ivivi will charge ADM will be determined at date of invoice.
Such invoices that Ivivi issues ADM, with respect to such services, will be due
within 30 days. IT services include, but are not limited to: Computer hardware
and software related issues, network administration, e-mail hosting and
administration, telephone and cabling installations and
maintenance.
 
 
 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 entities. For each product that ADM manufactures for each
entity, the entity 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 entity 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 entities' products. Under the
terms of the agreement, if the Company is unable to perform its obligations to
either entity under the manufacturing agreement or is otherwise in breach of any
provision of the manufacturing agreement, such entity has the right, without
penalty, to engage third parties to manufacture some or all of its products. In
addition, if the entity elects to utilize a third-party manufacturer to
supplement the manufacturing being completed by ADM, such entity 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."
 
 Pursuant
to the manufacturing agreement, sales and manufacturing charges to Ivivi during
the years ended March 31, 2008 and 2007 were approximately $907,000 and $76,000,
respectively.
  22
 
 ITEM 13.
EXHIBITS
 
 ExhibitNo.
              Description3.1
              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
    10.9.1
              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,
      1993.10.5
              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
      for 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, 2005.10.9
              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.
  23
  10.15
              Information
      Technology Services Agreement, dated February 1, 2008, by and between the
      Company and Ivivi Technologies, Inc. is incorporated by reference to the
      Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
      2008.14.1
              Code
      of Ethics is incorporated by reference to the Company's Annual Report on
      Form 10-KSB for 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
  2002.99.1
              Audited
      financial statements of Ivivi Technologies, Inc. included pursuant to Rule
      3-09.
 
 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 years ended March 31, 2008 and 2007, and for
the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-QSB for the fiscal years ended March 31, 2008 and 2007, were
$90,158 and $150,926, respectively.
 
 AUDIT-RELATED
FEES
 
 The
aggregate fees billed for each of the fiscal years ended March 31, 2008 and 2007
for assurance and related services by Raich that are reasonably related to the
performance of the audit or review of the Company's financial statements were
$1,038 and $2,244, respectively.
 
 TAX
FEES
 
 The
aggregate fees billed for each of the fiscal years ended March 31, 2008 and 2007
for professional services rendered by Raich for tax compliance were $4,263 and
$38,267, respectively.
 
 ALL OTHER
FEES
 
 The
aggregate fees billed in each of the fiscal years ended March 31, 2008 and March
31, 2007 for products and services provided by Raich were $0 and $77,555
respectively.
 
 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.
  24
  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 30th day of
June, 2008.
 
 ADM
      TRONICS UNLIMITED, INC.By:
              /s/
      Andre' DiMinoAndre'
      Di MinoChief
      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'
      DiMino
              Chief
      Executive Officer (Principal
              June
      30, 2008Andre'
      DiMino
              Executive
      Officer, PrincipalFinancial
      Officer and PrincipalAccounting
      Officer) and Director/s/
              Vincent
      DiMino
              Director
              June
      30, 2008Vincent
      DiMino/s/
              David
      Saloff
              Director
              June
      30, 2008David
      Saloff






25