ADMT 10-K & 10-Q changes, risk factors and insider trading

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 placeworkplace 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 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.

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,OF PROPERTY AND EQUIPMENT AND ENVIRONMENTAL CONTAMINATION.

There is substantial doubt that the funding plans will be successful and therefore the conditions discussed above have not been alleviated. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for one year from July 14,7, 2025,2026, the date the Consolidated Financial Statements were available to be issued.

We are highly dependent upon certain customers to generate our revenues. For fiscal years ended March 31, 20252026 and March 31, 20242025 two customers accounted for 48%46% and 44%48% respectively, of our net revenue. All customer purchases are made through purchase ordersorders, and we do not have any long-term contracts with customers. The complete loss of, or significant reduction in business from, or a material adverse change in the financial condition of, any of such customers will cause a material and adverse change in our revenues and operating results.

Our executive officer and director, Mr. DiMino, together with members of the DiMino family,family and entities affiliated with them may be deemed to beneficially own, in the aggregate, approximately 38% of our outstanding common stock. The interests of our current officer and director shareholder may differ from the interests of our other shareholders. As a result, the current officer and director 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:

As of March 31, 2024,2026, our common stock was exempt from the definition of a Penny Stock under SEC under Rule 240.3a51-1 because it meets one of the following tests: 1) A price of over $5 per share, 2) the issuer has Average Revenue of at least $6 million for the last 3 years, or 3) the issuer has Net Tangible Assets in excess of $2 million if the issuer has been in continuous operations for at least 3 years or $5 million if less than 3 years. Should we not meet one of the aforementioned requirements in the future, our common stock would be subject to penny stock rules. Penny stock rules, may discourage broker-dealers from effecting transactions in our common stock or affect their ability to sell our securities. coTradingTrading volume of OTCQB 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 SEC 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 SEC 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 SEC. 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.

ADM extends credit terms to our customers based on their credit worthiness. As such, we record accounts receivable at the time of shipment, when our right to the consideration becomes unconditional. Accounts receivable from our customers are typically due within 30 days of invoicing. An allowance for credit loss is provided based on a periodic analysis of individual account balances, including an evaluation of days outstanding, payment history, recent payment trends, and our assessment of our customers' creditworthiness.

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). 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 describedabove-described items, are reasonable.

In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance affects entities holding financial assets and net investments in leases that are not measured at fair value through net income. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model, which requires organizations to measure all expected credit losses for financial instruments over their contractual life at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted this standard effective April 1, 2024. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023‑09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance enhances the transparency of income tax disclosures by requiring disaggregated information about a reporting entity’s effective tax rate reconciliation and the jurisdictions in which income taxes are paid. The Company adopted this guidance effective April 1, 2024. The Company has applied the provisions of this ASU prospectively, and the adoption has resulted in expanded disclosures in Note 11 to the consolidated financial statements.

The Company is currently evaluating the impact of other recently issued accounting pronouncements that are not yet effective but does not expect them to have a material impact on its consolidated financial statements upon adoption.

We are a technology-based developer and manufacturer of diversified lines of products and services in the following areas: electronics for non-invasive medical and other applications; research, development, regulatory and engineering services; and,and environmentally safe chemical products for industrial, cosmetic and topical uses.

Revenues increased $231,704$149,972 or 8%5% from the prior year, which resulted from increases of $13,544$311,916 in the electronic segment, $232,469$72,876 in the engineeringchemical segment offset by a decrease of $14,309$234,820 in the chemicalengineering segment.

Loss from operations for the year ended March 31, 2026 was $98,874. Loss from operations for the year ended March 31, 2025 was $123,056. Loss from operations for the year ended March 31, 2024 was $877,222.$121,556. This was a result of an increase in sales of $149,972 offset by decrease in gross profit due to increased salesmaterial costs coupled with a decreaseincrease of operating expenses year over year, mainly due to a decrease in selling, general and administrative costs of $391,134$2,859 and an increase in research and development of $59,628.$27,696.

At March 31, 2025,2026, we had cash and cash equivalents of $382,969$255,730 as compared to $537,041$382,969 at March 31, 2024.2025. The decrease of $154,072$127,239 was primarily the result of cash providedused in operations in the amount of $9,978$124,059 and financing activities of $61,700, offset by cash used in investing activities of $225,750.$3,180. We expect to have enough cash to fund operations for the next twelve months.

The Company applied for loan forgiveness of both PPP loans. On September 7, 2021, the Company received approval from the SBA for $361,275 of PPP loan forgiveness. On December 21, 2021, the Company received approval from the Bank for $332,542. This amount was recorded as Forgiveness of Paycheck Protection loan in the accompanying Consolidated Statements of Operations for the year ended March 31, 2022.

The unforgiven portion of the first PPP loan is $19,725, which was converted to a term loan payable in equal installments of principal plus interest at 1% with a maturity date of May 15, 2025. No collateral or personal guarantees are required for the loan. At March 31, 2025,2026, the outstanding balance is $896.$-0-.

Net cash used byin operating activities was $709,889$124,059 for the fiscal year ended March 31, 2024.2026. Cash used during the year ended March 31, 20242026 was primarily due to a net loss of $877,222 coupled with$100,374, a reduction in reductiondecrease in net operating liabilities of $335,634,$219,545, and payments of operating lease liabilities of $106,872, partially offset by non-cash adjustments including amortization of right-of-use asset of $91,932, write-off of inventories of $33,945,$17,012, $209,809bad debt of loan$14,917, impairment,an $151,000unrealized increasegain inon otherinvestments assets,of depreciation and$89,250, amortization of $5,305$6,818, and non-casha interestnet expensedecrease in operating assets of $22,362.$129,381 primarily driven by a reduction in inventories of $136,237 and collections on accounts receivable of $12,723.

For the fiscal yearsyear ended March 31, 20252026, andthere 2024,was no cash used in investing activities. For the fiscal year ended March 31, 2025, net cash used in investing activities was $225,750 and $14,515, respectively.$225,750.

For the fiscal year ended March 31, 2025,2026, net cash providedused byin financing activities was $61,700,$3,180, due to advancesproceeds from the line of credit of $27,420, offset by repayments on the line of credit of $62,183,$29,704, off-set by payments toward the line of credit of $74,552,and payments on the PPP loan of $5,380, and an increase in due to stockholder of $79,449.$896.

For the fiscal year ended March 31, 2024,2025, net cash provided by financing activities was $257,715,$61,700, due to advancesproceeds from the line of credit of $62,183, offset by repayments on the line of credit of $381,891, off-set by payments toward the line of credit of $105,170,$74,552, payments on the PPP loan of $5,380, and aan decreaseincrease in due to stockholderemployee of $13,626.$79,449.

The following discussion of our operations and financial condition should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

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 ADMADM. Sonotron Medical Systems, Inc. (“SMI”), a former wholly owned subsidiary of ADM, had been inactive for several years and itswas subsidiarydissolved Sonotron.during the fiscal year ended March 31, 2026, with no material impact on the Company's operations, financial position, or results of operations.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED DECEMBERJUNE 31,30, 20252026 AS COMPARED TO DECEMBERJUNE 31,30, 2024.2025.

Revenues for the three months ended DecemberJune 31,30, 2025,2026 increaseddecreased by $53,578$107,420, or 11.0%, compared to the same period in 2024. The increase was driven by a $14,980 rise in the2025. Chemical segment andrevenue adecreased $96,460by increase$9,200 into the$325,860, Electronics segment,segment partiallyrevenue offsetdecreased by a$41,692 $57,862to $472,990, and Engineering segment revenue decreased by $56,528 to $67,405. The decline in theElectronics and Engineering segment.revenue was the primary driver of the overall decrease.

OperatingGross incomeprofit for the ninethree months ended DecemberJune 31,30, 2025,2026 decreased by $1,808$86,243, or 17.4%, compared to the priorsame year.period Thisin was2025, primarilyand duegross profit margin declined to a46% $64,250from increase49%. inGross margin declined across all three segments, with the Electronicslargest segment offset by decreases of $19,876declines in the Chemical segmentsegment, to 30% from 39%, and $46,182 in the Engineering segment.segment, to 51% from 62%.

OtherOperating incomeexpenses for the ninethree months ended DecemberJune 31,30, 2025,2026 increased by $118,110,$43,646, primarilyor due12.1%, compared to anthe unrealizedsame gainperiod in investments2025, driven by increases of $120,250, an increase of $2,755$30,447 in interestthe expenseChemical segment and $30,616 in the Electronics segment, partially offset by a reduction$15,904 ofdecrease interestin incomethe ofEngineering $4,895.segment.

LossIncome before benefitprovision fromfor income taxes for the three months ended DecemberJune 31,30, 2025,2026 decreased by $122,321.$293,770, or 89.3%, compared to the same period in 2025.

We are highly dependent upon certain customers. During the three months ended DecemberJune 31,30, 2025,2026, two customers accounted for 44% of our net revenue. Net revenues from foreign customers for the three months ended DecemberJune 31,30, 20252026 was $106,533$107,131 or 13%.12.4%.

At DecemberJune 31,30, 2025,2026, we had cash and cash equivalents of $298,733$222,619 as compared to $382,969$255,730 at March 31, 2025.2026, a decrease of $33,111. The $84,236 decrease was primarily theattributable resultto ofnet cash used in operations during the nine-month period in the amount of $82,815, cash provided by investing of $-0- and cash used in financingoperating activities of $1,421.$32,959, as increases in accounts receivable and inventories outpaced the increase in accounts payable. Our cash will continue to be used for increased marketing costs, and increased production labor costs all in an attempt to increase our revenue, as well as increased expenditures for our internal R&D. We expect to have enough cash to fund operations for the next twelve months.

Based on current expectations, we believe that our existing cash and cash equivalents of $298,733$222,619 as of DecemberJune 31,30, 2025,2026, and other potential sources of cash will be sufficient to meet our cash requirements. Our ability to meet these requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

There were no Investinginvesting activities during the ninethree months ended DecemberJune 31,30, 2025.2026.

For the ninethree months ended DecemberJune 31,30, 2025,2026, net cash used byin financing activities was $1,421$152, dueas compared to net borrowingcash andprovided paymentsby infinancing activities of $1,621 for the linethree ofmonths creditended ofJune $15030, coupled repayments on the PPP loan of $(896).2025.