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EX-32 - EXHIBIT 32 - ALLIED DEFENSE GROUP INCc16736exv32.htm
EX-31.1 - EXHIBIT 31.1 - ALLIED DEFENSE GROUP INCc16736exv31w1.htm
EX-31.2 - EXHIBIT 31.2 - ALLIED DEFENSE GROUP INCc16736exv31w2.htm
Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
Commission File Number: 1-11376
The Allied Defense Group, Inc.
(Exact name of Registrant as specified in its charter)
     
Delaware   04-2281015
(State or other jurisdiction of   (I.R.S. Employer Number)
incorporation or organization)    
120 E. Baltimore Street, Suite 2100
Baltimore, MD 21202

(Address of principal executive offices, including zip code)
(410) 385-8155
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company þ
        (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes þ No o
The number of shares of registrant’s Common Stock outstanding as of April 30, 2011 was 8,235,195.
 
 

 

 


 

THE ALLIED DEFENSE GROUP, INC.
INDEX
         
    PAGE  
    NUMBER  
       
 
       
       
 
       
    2  
 
       
    3  
 
       
    4  
 
       
    5  
 
       
    6  
 
       
    13  
 
       
    17  
 
       
    17  
 
       
       
 
       
    17  
 
       
    18  
 
       
    18  
 
       
    18  
 
       
    18  
 
       
    18  
 
       
    18  
 
       
    19  
 
       
 Exhibit 31.1
 Exhibit 31.2
 Exhibit 32

 

 


Table of Contents

The Allied Defense Group, Inc.
CONSOLIDATED STATEMENTS OF NET ASSETS (Liquidation Basis)
(Unaudited)
(Thousands of Dollars, except per share and share data)
                 
    March 31,     December 31,  
    2011     2010  
ASSETS
               
Cash and cash equivalents
  $ 728     $ 14,462  
Short-term investments
    31,936       18,801  
Prepaid and other current assets
    503       606  
Notes receivable
    875       875  
Property and Equipment, net
          2  
Funds held in escrow
    15,008       15,003  
 
           
 
               
TOTAL ASSETS
    49,050       49,749  
 
           
 
               
LIABILITIES
               
Estimated net costs to be incurred during liquidation
    2,872       3,564  
Accounts payable
    133       68  
Accrued liabilities
    352       399  
Income taxes payable
          2  
Other liabilities
    87       87  
 
           
 
               
TOTAL LIABILITIES
    3,444       4,120  
 
           
 
               
NET ASSETS IN LIQUIDATION
  $ 45,606     $ 45,629  
 
           
 
               
NUMBER OF SHARES OUTSTANDING
    8,235,195       8,235,195  
NET ASSETS IN LIQUIDATION PER SHARE
  $ 5.54     $ 5.54  
 
           
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Table of Contents

The Allied Defense Group, Inc.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (Liquidation Basis)
(Unaudited)
(Thousands of Dollars)
         
    Three Months  
    Ended  
    March 31,  
    2011  
 
       
Net assets on liquidation basis as of December 31, 2010
  $ 45,629  
 
       
Changes in fair value of net assets in liquidation — December 31, 2010 to March 31, 2011
       
Adjust net assets to fair value
    (213 )
Adjust estimated costs to be incurred during liquidation
    190  
 
     
 
       
Net assets on liquidation basis as of March 31, 2011
  $ 45,606  
 
     
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Table of Contents

The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Going Concern Basis)
(Unaudited)
(Thousands of Dollars, except per share and share data)
         
    Three Months Ended  
    March 31, 2010  
 
       
Revenue
  $  
 
     
 
       
Cost and expenses
       
Selling and administrative — corporate expenses
    1,691  
 
     
 
       
Operating loss
    (1,691 )
 
     
 
       
Other income (expenses)
       
Net interest income
    19  
Net loss on fair value of senior notes and warrants
    (249 )
Other-net
    (12 )
 
     
 
    (242 )
 
     
 
       
Loss from continuing operations before income taxes
    (1,933 )
 
       
Income tax expense
    1  
 
     
 
       
Loss from continuing operations
    (1,934 )
 
     
 
       
Income (loss) from discontinued operations, net of tax
       
Loss from discontinued operations
    (3,221 )
 
     
 
    (3,221 )
 
     
 
       
NET LOSS
  $ (5,155 )
 
     
 
       
Earnings (Loss) per share — basic and diluted:
       
 
       
Net loss from continuing operations
  $ (0.24 )
Net loss from discontinued operations
    (0.39 )
 
     
Total loss per share — basic and diluted
  $ (0.63 )
 
     
 
       
Weighted average number of common shares:
       
 
       
Basic and Diluted
    8,175,364  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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Table of Contents

The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Going Concern Basis)
(Unaudited)
(Thousands of Dollars)
         
    Three Months Ended  
    March 31, 2010  
 
       
Cash flows from operating activities
       
Net loss
  $ (5,155 )
Less: Discontinued operations, net of tax
    3,221  
 
     
Loss from continuing operations
    (1,934 )
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities, net of divestitures:
       
Depreciation and amortization
    4  
Net loss related to fair value of warrants
    249  
Common stock and stock option awards
    85  
Deferred director stock awards
    22  
(Increase) decrease in operating assets and increase (decrease) in liabilities, net of effects from discontinued businesses:
       
Prepaid and other current assets
    100  
Accounts payable, accrued liabilities and other current liabilities
    (352 )
Deferred compensation
    1  
Income taxes
    (112 )
 
     
Net cash used in operating activities — continuing operations
    (1,937 )
 
       
Net cash used in operating activities — discontinued operations
    (5,843 )
 
     
 
       
Net cash used in operating activities
    (7,780 )
 
     
 
       
Cash flows from investing activities
       
Net cash used in investing activities — discontinued operations
    (299 )
 
     
 
       
Net cash used in investing activities
    (299 )
 
     
 
       
Cash flows from financing activities
       
Increase from short-term borrowing
    1,068  
 
       
Net cash provided by financing activities — continuing operations
    1,068  
 
       
Net cash provided by financing activities — discontinued operations
    3,988  
 
     
 
       
Net cash provided by financing activities
    5,056  
 
     
 
       
Effects of exchange rate on cash
    (5 )
 
     
 
       
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (3,028 )
 
       
Cash and cash equivalents at beginning of period
    3,475  
 
     
Cash and cash equivalents at end of period
  $ 447  
 
     
 
       
Supplemental Disclosures of Cash Flow information
       
Cash paid during the period for
       
Interest
  $ 1  
Taxes
  $ 112  
The accompanying notes are an integral part of these unaudited condensed consolidated statements.

 

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Table of Contents

The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
NOTE 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Business Operations
The Allied Defense Group Inc. (“Allied” or the “Company”), a Delaware corporation, previously conducted a multinational defense business focused on the manufacture and sale of ammunition and ammunition related products for use by the U.S. and foreign governments. Allied’s business was conducted by its two wholly owned subsidiaries: MECAR sprl, formerly Mecar S.A. (“Mecar”), and ADG Sub USA, Inc., formerly Mecar USA, Inc. (“Mecar USA”).
Plan of Dissolution and Liquidation
On June 24, 2010, the Company signed a definitive purchase and sale agreement (the “Agreement”) with Chemring Group PLC (“Chemring”) pursuant to which Chemring agreed to acquire substantially all of the assets of the Company for $59,560 in cash and the assumption of certain liabilities. On September 1, 2010, the Company completed the asset sale to Chemring contemplated by the Agreement. Pursuant to the Agreement, Chemring acquired all of the capital stock of Mecar for approximately $45,810 in cash, and separately Chemring acquired substantially all of the assets of Mecar USA for $13,750 in cash and the assumption by Chemring of certain specified liabilities of Mecar USA. A portion of the purchase price was paid through the repayment of certain intercompany indebtedness owed to the Company that would otherwise have been cancelled at closing. $15,000 of the proceeds from the sale was deposited into escrow to secure the Company’s indemnification obligations under the Agreement. The $15,000 of cash plus earned interest income remains in escrow as of March 31, 2011.
In conjunction with the Agreement, the Board of Directors of the Company unanimously approved the dissolution of the Company pursuant to a Plan of Complete Liquidation and Dissolution (“Plan of Dissolution”). The Company’s stockholders approved the Plan of Dissolution on September 30, 2010. In response to concerns of certain of the Company’s stockholders, the Company has agreed to delay the filing of a certificate of dissolution with the Delaware Secretary of State so that the stockholders may continue to transfer the Company’s common stock while the Company resolves the matters relating to the U.S. Department of Justice (“DOJ”) subpoena. The Company will delay the filing of a certificate of dissolution with the Delaware Secretary of State until the earlier of August 31, 2011 or a resolution of all matters concerning the DOJ.
On September 2, 2010, the Company received a staff determination letter (the “Staff Determination”) from NYSE Amex LLC (the “Exchange”). The Staff Determination stated that the Exchange determined that the Company no longer complies with the requirements for continued listing set forth in NYSE Amex LLC Company Guide Section 1003(c)(i) as a result of the sale of substantially all of the Company’s assets. On September 20, 2010, the Company announced that trading of shares of the Company’s common stock had been transferred from the NYSE Amex to the OTCQB™ Marketplace effective Monday, September 20, 2010. The Company’s trading symbol is now ADGI.
Basis of Presentation
Liquidation Basis of Accounting
With the authorization of the Plan of Dissolution, the Company adopted the liquidation basis of accounting effective as the close of business on September 30, 2010. The liquidation basis of accounting will continue to be used by the Company until such time that the plan is terminated.
Under the liquidation basis of accounting, the carrying amounts of assets as of the close of business on September 30, 2010, the date of the authorization of the Plan of Dissolution by the Company, were adjusted to their estimated net realizable values and liabilities, including the estimated costs associated with implementing the Plan of Dissolution, were stated at their estimated settlement amounts. Such value estimates were updated by the Company as of December 31, 2010 and March 31, 2011. The majority of net assets in liquidation at December 31, 2010 and March 31, 2011 were highly liquid and did not require adjustment as their estimated net realizable value approximates their current book value.

 

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Table of Contents

The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
Consolidated Statements of Net Assets in Liquidation and Changes in Net Assets in Liquidation are the principal financial statements presented under the liquidation basis of accounting. The valuations of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances associated with carrying out the Plan of Dissolution based on the assumptions set forth below. The actual values and costs associated with carrying out the Plan of Dissolution are expected to differ from the amounts shown herein because of the inherent uncertainty and will be greater than or less than the amounts recorded. Such differences may be material. In particular, the estimates of the Company’s costs will vary with the length of time it operates under the Plan of Dissolution. Accordingly, it is not possible to predict the aggregate amount or timing of future distributions to stockholders, as long as the plan is in effect, and no assurance can be given that the amount of liquidating distributions to be received will equal or exceed the estimate of net assets in liquidation presented in the accompanying Statement of Net Assets in Liquidation.
The estimated net costs to be incurred during liquidation were $2,872 as of March 31, 2011. The $2,872 in net remaining costs consists of $227 in compensation for former employees and remaining directors; $867 for compliance and other office costs, including resident filing fees and costs to settle remaining leases; $307 for insurance; $1,231 in fees for professional service providers including legal representation relating to the DOJ subpoena; income tax payments not to exceed $350 for the repatriation of cash balances held in foreign countries; and $20 of other subsidiary income taxes; offset by $130 estimated to be received on our cash and short-term investment balances during liquidation. Such estimates are based on assumptions regarding the Company’s ability to settle outstanding obligations to creditors, resolve outstanding litigation, settle remaining leases and the ultimate timing of distributions to its stockholders, but does not include any settlement amounts, fines or penalties, if any, that the Company might incur as a result of the DOJ subpoena or any other legal proceedings. These estimates will be adjusted from time to time as projections and assumptions change.
Going Concern Basis of Accounting
For all periods preceding the authorization of the Plan of Dissolution, the Company’s financial statements are also presented on the going concern basis of accounting. Such financial statements reflect the historical results of operations and changes in cash for the period from January 1, 2010 to March 31, 2010.
NOTE 2 — PRINCIPLES OF CONSOLIDATION
As of March 31, 2011, the consolidated financial statements of the Company include the accounts of Allied and its wholly-owned subsidiaries, which are as follows:
   
ARC Europe, a Belgian company,
 
   
Allied Research BV (“BV”), a Dutch company,
 
   
Allied Research Cooperative (“Coop”) and,
 
   
ADG Sub USA, Inc. (“Mecar USA”)
On September 1, 2010, Chemring acquired the assets of Mecar USA and the stock of Mecar, a wholly owned subsidiary of ARC Europe. As a result of the acquisition, the Net Income (Loss) for Mecar and Mecar USA has been reclassified to Net income (loss) from discontinued operations on the Statement of Operations for the period from January 1, 2010 to March 31, 2010.

 

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The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
NOTE 3 — DISCONTINUED OPERATIONS
Mecar and Mecar USA
On June 24, 2010, the Company signed a definitive purchase and sale agreement with Chemring Group PLC pursuant to which Chemring agreed to acquire substantially all of the assets of the Company for $59,560 in cash and the assumption of certain liabilities. On September 1, 2010, the Company completed the asset sale to Chemring contemplated by the Agreement. Pursuant to the Agreement, Chemring acquired all of the capital stock of Mecar for approximately $45,810 in cash, and separately Chemring acquired substantially all of the assets of Mecar USA for $13,750 in cash and the assumption by Chemring of certain specified liabilities of Mecar USA. A portion of the purchase price was paid through the repayment of certain intercompany indebtedness owed to the Company that would otherwise have been cancelled at closing. $15,000 of the proceeds from the sale was deposited into escrow to secure the Company’s indemnification obligations under the Agreement. Such amounts are included in Funds held in escrow on the Statement of Net Assets (Liquidation Basis).
The following summarizes the results of discontinued operations for the three months ended March 31, 2010 for Mecar and Mecar USA:
                         
    Three Months Ended  
    March 31, 2010  
    Mecar     Mecar USA     Total  
 
                       
Revenue
  $ 14,216     $ 5,953     $ 20,169  
Income (loss) before taxes
    (3,807 )     595       (3,212 )
Income (loss), net of tax
    (3,807 )     586       (3,221 )
NS Microwave Systems, Inc. (NSM)
On August 7, 2009, the Company entered into a Purchase Agreement to sell NSM for $400 in cash and a promissory note in the amount of $1,325 at closing. The note is due 24 months after closing and is subject to a reduction based on certain terms as defined in the Purchase Agreement. On December 31, 2009 and again on June 30, 2010, the Company wrote-off $250, for a total write-off of $500, against the receivable as it was unlikely that one of the Purchase Agreement conditions would be met. As of March 31, 2011, the outstanding amount of the note receivable was $825. The note bears interest at a rate of one-year London Interbank Offered Rate plus 5% subject to a maximum interest cap of 8%.
NOTE 4 — SHORT-TERM INVESTMENTS
Cash in excess of funds required for immediate use by the Company have been invested with the primary goal to preserve capital. As such, the funds are invested in short-term, high-quality, fixed-income securities and are accounted for at fair value. As of March 31, 2011 and December 31, 2010, the fair value of these investments was $31,875 and $18,801 respectively, and was included in short-term investments on the Balance Sheet. An unrealized loss of $183 was recorded for the three months ending March 31, 2011.
NOTE 5 — WARRANTS
On March 6, 2006, in conjunction with the issuance of convertible notes, the Company issued detachable warrants to the purchasers exercisable for an aggregate of 226,800 shares of Allied common stock. At December 31, 2010, the Company determined the fair value of the warrants was $0. No warrants were exercised during the three months ended March 31, 2011. All warrants expired on March 9, 2011.

 

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Table of Contents

The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
NOTE 6 — FAIR VALUE MEASUREMENTS
The Company values its assets and liabilities using the methods of fair-value as described in ASC 820, Fair Value Measurements and Disclosures. In accordance with ASC 820, the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company generally applies the income approach to determine fair value. This method uses valuation techniques to convert future amounts to a single present amount. The measurement is based on the value indicated by current market expectations about those future amounts.
ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to active markets for identical assets and liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). We classify fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows:
Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and amounts derived from valuation models where all significant inputs are observable in active markets.
Level 3 — Unobservable inputs that reflect management’s assumptions.
For disclosure purposes, assets and liabilities are classified in their entirety in the fair value hierarchy level based on the lowest level of input that is significant to the overall fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels.
The Company believes the fair value of its financial instruments consisting of cash, cash equivalents, and short-term investments, adjusted to recognize unrealized gains and losses, approximate their carrying values due to the relatively short maturity of these instruments.
NOTE 7 — EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share excludes potential common shares and is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. The computation of diluted earnings (loss) per share excludes the effects of stock options, warrants and restricted stock (unvested stock awards), if such effect is anti-dilutive. For the three months ended March 31, 2010, the Company has excluded warrants, unvested stock awards and stock options from the calculation of loss per share from continuing operations, discontinued operations, and total loss since their effect would be anti-dilutive. Consequently, the basic and diluted weighted average number of common shares is equal to 8,175,364. The table below shows the calculation of basic and diluted earnings (loss) per share for the three months ended March 31, 2010:
         
    Three Months Ended  
    March 31, 2010  
 
       
Net loss from continuing operations
  $ (1,934 )
Net loss from discontinued operations, net of tax
    (3,221 )
 
     
Total loss
  $ (5,155 )
 
     
 
       
Number of shares:
       
Weighted average shares outstanding, basic and diluted
    8,175,364  
 
       
Basic and diluted net loss per share from continuing operations
  $ (0.24 )
Basic and diluted net loss per share from discontinued operations
    (0.39 )
 
     
Basic and diluted net loss per share from total earnings
  $ (0.63 )
 
     

 

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Table of Contents

The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
NOTE 8 — OTHER — NET
Other income (expense) included in the Company’s consolidated statements of operations for the three months ended March 31, 2010:
         
    Three Months Ended  
    March 31, 2010  
Net currency transaction losses
  $ (5 )
Miscellaneous — net
    17  
 
     
 
  $ 12  
 
     
NOTE 9 — SHARE- BASED COMPENSATION
Under the going concern basis of accounting, total share-based compensation was $107 (including outside directors compensation of $89) for the three months ended March 31, 2010. The share-based compensation expense for the period includes costs associated with stock options, restricted stock grants, and the compensatory element of the Employee Stock Purchase Plan.
In conjunction with the Company’s signing a definitive Merger Agreement on January 18, 2010, all equity compensation plans were suspended pending the Company’s merger. As such, no new equity awards have been made. With the June 24, 2010 signing of the definitive Sale Agreement, the original Merger Agreement was terminated. The Company’s equity compensation plans are no longer suspended, although no new issuances have been made since June 24, 2010. As of March 31, 2011 and December 31, 2011, there are no outstanding options.
NOTE 10 — INDUSTRY SEGMENTS
Prior to September 2010, the Company operated within two operating segments: Mecar and Mecar USA. In September 2010, the Company completed the divesture of Mecar and Mecar USA. As a result, Allied no longer has operating segments. The Company’s continuing operations include only those expenses incurred to support the Company’s corporate headquarters and its non-operating European subsidiaries.
NOTE 11 — PROVISION FOR TAXES
The Company regularly reviews the recoverability of its deferred tax assets and establishes a valuation allowance as deemed appropriate. Realization of deferred tax assets is dependent upon generation of sufficient income by the Company in the jurisdictions in which it has operations and, in some cases, by specific location. Because the Company experienced losses in previous years and continued losses in the current year, management recorded a full valuation allowance against the Company’s net deferred tax asset as of March 31, 2011.
As of March 31, 2011 and December 31, 2010, the Company had no unrecognized tax liabilities or benefits, nor did it have any that would have an effect on the effective tax rate. Income taxes are provided based on the liability method for financial reporting purposes. For the three months ended March 31, 2011, there was no interest or penalties recorded.
In Belgium, the Company is still open to examination by the Belgian tax authorities from 2007 forward. In the United States, the Company is still open to examination from 2007 forward, although carryforward tax attributes that were generated prior to 2007 may still be adjusted upon examination by the U.S. tax authorities if they either have been or will be utilized.
Currently, the Company has significant net deferred tax assets that have a full valuation allowance in accordance with ASC 740 Accounting for Income Taxes. As of December 31, 2010, the Company provided for U.S. tax on foreign earnings of approximately $25,475 that is expected to be repatriated. As of March 31, 2011, $13,757 had been successfully repatriated. In anticipation of the repatriation, the NOL carryforwards are no longer included in the deferred tax assets. Income taxes related to repatriation of cash held in foreign countries is not expected to exceed $350 as included in the estimated costs for liquidation. As of March 31, 2010, the fair value of net deferred tax assets is zero due to full valuation allowance.

 

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The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
The Company may undergo, or may already have undergone, an “ownership change” within the meaning of Section 382 of the Internal Revenue Code, which could affect the Company’s ability to offset gains realized in the asset sale against net operating losses and foreign tax credit carryovers. If it is determined that an ownership change has occurred, this could significantly increase the tax expense incurred from the sale transactions.
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Except as set forth under the heading “Legal Proceedings” in this Note 12, there are no material pending legal proceedings to which Allied or any of its subsidiaries is a party.
The Company entered into employment agreements with certain management personnel at the Company’s subsidiaries and with certain domestic management personnel. These agreements provided for severance payments in the event of termination under certain conditions. In September 2010, the Company paid $1,650 in complete satisfaction of its severance obligations to the Company’s management personnel. Employment agreements with employees at Mecar and Mecar USA were assigned as part of the sale transactions.
The Company leases domestic office space for the former corporate offices under an operating lease which expires in early 2013. During the quarter ended March 31, 2011, the Company entered into a sublease which will offset a portion of the lease expense during the remainder of the lease.
Legal Proceedings
DOJ Subpoena
On January 19, 2010, the Company received a subpoena and communications from the U.S. Department of Justice (“DOJ”) requesting the Company produce documents relating to its dealings with foreign governments. The subpoena stated that it was issued in connection with an ongoing criminal investigation. On the same day, the Company also became aware through a press release issued by the DOJ that an employee of Mecar USA had been indicted by the DOJ for allegedly engaging in schemes to bribe foreign government officials to obtain business. The unsealed indictment of this employee and the DOJ’s press release indicate that the alleged criminal conduct was on behalf of a Decatur, Georgia company which is unrelated to the Company or Mecar USA. Mecar USA’s employment agreement with the employee provided that the employee not actively engage in any other employment, occupation or consulting activity that conflicts with the interests of the Company. In light of the employee’s apparent breach of his employment agreement, Mecar USA terminated his employment on January 20, 2010.
According to the DOJ’s press release, the former employee was arrested on January 19, 2010, along with twenty-one other individuals, after a large-scale undercover operation that targeted foreign bribery in the military and law enforcement products industry. The indictments of the twenty-two individuals allege that the defendants conspired to violate the Foreign Corrupt Practices Act (“FCPA”), conspired to engage in money laundering and engaged in substantive violations of the FCPA.
Subsequently, the Company received notice from the DOJ that indicated that it would request additional documents and expand its review beyond matters relating to the indicted former employee of Mecar USA. The Company understood that the DOJ’s expanded review was in connection with an industry-wide review. The Company has also received inquiries from the SEC regarding this matter.
The Company is cooperating with the DOJ and SEC and complying with the DOJ’s subpoena and SEC’s request for information. The Company’s ongoing compliance with these matters is being overseen by the Company’s Board of Directors. The Board of Directors is being assisted in these matters by independent outside counsel. The Company cannot predict the outcome of these matters or the impact, if any, that they may have on our plan to return the net proceeds of the Chemring sale to our stockholders.

 

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The Allied Defense Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Thousands of Dollars)
Litigation Relating to Consulting Agreement
On April 19, 2010, a lawsuit was filed against the Company by Sterling Investors Group Limited in the Circuit Court for Fairfax County, Virginia alleging breach of contract and seeking damages in the amount of $640. The Company has settled this matter by making a payment of $30.
Litigation Initiated by Former Employee
A former executive employee of the Company has instituted a lawsuit in the Circuit Court for Fairfax County, Virginia against the Company and others alleging fraud, constructive fraud, breach of contract, unjust encroachment, tortuous interference with business expectancy and civil conspiracy, all relating to the former executive employee’s change of control severance agreement. The former executive employee seeks damages in excess of $6.0 million. The Company believes this lawsuit is without merit and is vigorously defending it.
Litigation Relating to Consulting Agreement (MECAR)
A former consultant to MECAR has initiated a lawsuit in Belgium against MECAR and the Company for unpaid consulting fees in excess of $0.75 million. The Company believes that any liability with respect to this matter will be borne by MECAR and not the Company.
Indemnification provisions
The Company has sold its SeaSpace, Titan, the VSK Group, GMS and NSM subsidiaries in separate transactions starting with the first transaction closing in 2007. In each transaction, the Company agreed to indemnify the purchaser for periods subsequent to closing for losses arising from breaches of representations, warranties and covenants. Indemnification periods varied based on the particular representation, warranty or covenant covered, the vast majority of which have all expired. As of March 31, 2011, the only remaining indemnification obligations relate to representations and warranties concerning taxes, environmental matters, breaches of title, breaches of authorization and fraud. For SeaSpace, Titan, the VSK Group, GMS and NSM, these indemnification provisions have been capped at $1,000, $950, $6,806 (€5,000), $5,200 and $863, respectively. At March 31, 2011, no amount has been accrued related to these indemnifications as a liability is not deemed probable.
On June 24, 2010, the Company signed a definitive purchase and sale agreement with Chemring Group PLC pursuant to which Chemring agreed to acquire substantially all of the assets of the Company for $59,560 in cash and the assumption of certain liabilities. The purchase and sale agreement contains certain indemnification provisions pursuant to which the Company may be required to indemnify the buyer for a period subsequent to the completion of the sale for any and all losses directly or indirectly based upon, related to, arising out of or in connection with Mecar’s completed contracts, Mecar USA liabilities retained by the Company and any failure by the Company to satisfy all transaction related expenses. The Company’s indemnification liability is limited to, and capped at, the escrowed amount of $15,000 plus the accumulated interest. The Company’s indemnification obligations expire upon the earlier of (i) June 30, 2015 or (ii) the Company’s entry into either a court or administrative order or a Chemring-approved settlement agreement, in either case, finally resolving the matters relating to the DOJ’s subpoena. In the absence of such final resolution, in certain circumstances, up to 50% of the escrowed funds may be released as early as June 24, 2013. At March 31, 2011, no amount has been accrued related to this indemnification as a liability is not deemed probable.

 

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The Allied Defense Group, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2011
(Thousands of Dollars)
(Unaudited)
ITEM 2.  
MANGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Allied Defense Group, Inc. (“Allied” or the “Company”) previously conducted a multinational defense business focused on the manufacture and sale of ammunition and ammunition related products for use by the U.S. and foreign governments. Allied’s business was conducted by two wholly-owned subsidiaries: MECAR sprl, formerly MECAR S.A. (“Mecar”), and ADG Sub USA, Inc., formerly MECAR USA, Inc. (“Mecar USA”).
On June 24, 2010, the Company signed a definitive purchase and sale agreement (the “Agreement”) with Chemring Group PLC (“Chemring”) pursuant to which Chemring agreed to acquire substantially all of the assets of the Company for $59.6 million in cash and the assumption of certain liabilities. On September 1, 2010, the Company completed the asset sale to Chemring contemplated by the Agreement. Chemring acquired all of the capital stock of Mecar for $45.8 million in cash, and separately Chemring acquired substantially all of the assets of Mecar USA for $13.8 million in cash and the assumption by Chemring of certain specified liabilities of Mecar USA. A portion of the purchase price was paid through the repayment of certain intercompany indebtedness owed to the Company that would otherwise have been cancelled at closing. $15 million of the proceeds from the sale was deposited into escrow to secure the Company’s indemnification obligations under the Agreement.
In conjunction with the Agreement, the Board of Directors of the Company unanimously approved the dissolution of the Company pursuant to a Plan of Complete Liquidation and Dissolution (“Plan of Dissolution”). The Company’s stockholders approved the Plan of Dissolution on September 30, 2010. In response to concerns of certain of the Company’s stockholders, the Company has agreed to delay the filing of a certificate of dissolution with the Delaware Secretary of State so that the stockholders may continue to transfer the Company’s common stock while the Company attempts to resolve the matters relating to the U.S. Department of Justice (“DOJ”) subpoena as described below. The Company will delay the filing of a certificate of dissolution with the Delaware Secretary of State until the earlier of August 31, 2011 or a resolution of all matters concerning the DOJ.
On September 2, 2010, the Company received a staff determination letter (the “Staff Determination”) from NYSE Amex LLC (the “Exchange”). The Staff Determination stated that the Exchange determined that the Company no longer complied with the requirements for continued listing set forth in NYSE Amex LLC Company Guide Section 1003(c)(i) as a result of the sale of substantially all of the Company’s assets. On September 20, 2010, the Company announced that trading of shares of the Company’s common stock had been transferred from the NYSE Amex to the OTCQB™ Marketplace. The Company’s trading symbol is now ADGI.
In connection with the adoption of the Plan of Dissolution and the anticipated liquidation of the Company, we adopted the liquidation basis of accounting effective close of business on September 30, 2010, whereby assets are valued at their estimated net realizable cash values and liabilities are stated at their estimated settlement amounts. Uncertainties as to the ultimate amount of our liabilities make it impractical to predict the aggregate net value that may ultimately be distributable to stockholders. Under the liquidation basis of accounting, we accrue for the remaining costs to be incurred during liquidation, including compensation for remaining directors, consultants, insurance costs, costs to settle remaining leases, fees for professional service providers, income taxes, and miscellaneous other costs, partially offset by estimated future interest earnings. Such net costs were estimated to be $2.9 million as of March 31, 2011. Our estimates are based on assumptions regarding our ability to settle outstanding obligations to trade creditors, settle remaining leases and the ultimate timing of distributions to our stockholders, but do not include any settlement amounts, fines or penalties, if any, that we might incur as a result of the DOJ subpoena or any other legal proceedings.

 

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The Allied Defense Group, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2011
(Thousands of Dollars)
(Unaudited)
The Company received a subpoena from the DOJ on January 19, 2010 requesting that the Company produce documents relating to its dealings with foreign governments. The DOJ initially limited its request of documents to those relating to an indicted former employee of Mecar USA. The DOJ has subsequently advised the Company that it is conducting an industry-wide review, and therefore the DOJ’s investigation of the Company will be expanded and ongoing. The Company has also received inquiries from the Securities and Exchange Commission (“SEC”) as to this matter. We cannot predict the settlement amounts, fines or penalties, if any, that we might incur as a result of the foregoing. As a result, it is unlikely that any distributions to our stockholders will be made until the matters relating to the DOJ subpoena have been resolved. The period of time required to resolve these matters is uncertain but is expected to take in excess of one year. Furthermore, under the Agreement, the Company has agreed to indemnify Chemring and certain of its related parties from any losses, fines or penalties arising out of, among other things, the completed contracts of Mecar and Mecar USA. We have agreed to escrow $15 million of the cash consideration paid to the Company in the sale to secure our indemnification obligations under the Agreement. These escrowed funds will not be available to the Company for distribution to our stockholders, or otherwise, until released to the Company pursuant to the terms of the Agreement.
Prior to September 2010, the Company operated within two operating segments: Mecar and Mecar USA. Allied, the parent company, provided oversight and corporate services to its subsidiaries and had no operating activities. With the completion of the September 2010 sale, Allied no longer has operating segments. The Company is being managed by its two directors who are also serving as the Company’s Chief Executive Officer and Chief Financial Officer. The Company no longer has any full-time employees. Allied no longer conducts any active business operations and is winding-up its affairs and preparing to dissolve in accordance with the Plan of Dissolution as set forth above.
Net Assets in Liquidation
Net assets in liquidation at March 31, 2011 are $45,606 compared to $45,629 at December 31, 2010. The change in net assets in liquidation is due to: (i) adjustments of assets to fair value and (ii) adjustments to estimated costs to be incurred during liquidation. The net assets in liquidation per share remained unchanged during the quarter at $5.54.
We expect to use all of our net assets to complete our Plan of Dissolution, which includes settling existing claims against the Company, including existing litigation and other current liabilities and accrued expenses, and making cash liquidating distributions to our shareholders. Capital resources available for liquidating distributions to shareholders may vary if we incur greater than estimated operating expenses associated with executing the Plan of Dissolution, actual settlement costs for existing claims against the Company vary from estimates, or if there are existing, but unknown claims made against us in the future.
Changes in Net Assets in Liquidation During the Quarter Ended March 31, 2011
The change in net assets on liquidation during the quarter ended March 31, 2011 is the net effect of valuation changes to the net assets and changes in the estimated net costs to be incurred during liquidation. Adjusting net assets to fair market value reduced the net assets on liquidation by $213. The estimated costs to be incurred during liquidation were reduced during the quarter by $190, which increased the net assets on liquidation. The net effect was a reduction of $23 during the quarter.
The adjustment of assets to fair value consists primarily of adjustments of short term investments to fair market value. The unrealized loss associated with the short term investments is due to the Company’s purchase of financial instruments with interest rates above market and therefore are purchased at a premium to their maturity value with an initial unrealized loss. The unrealized loss will be absorbed against the interest income received as the instruments mature.

 

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The Allied Defense Group, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2011
(Thousands of Dollars)
(Unaudited)
Our estimate of $2,872 in net remaining costs to be incurred during liquidation consists of $227 in compensation for remaining employees and directors; $867 for compliance and other office costs, including resident filing fees and costs to settle remaining leases; $307 for insurance; $1,231 in fees for professional service providers including legal representation relating to the DOJ subpoena; and $350 in income taxes related to the repatriation of foreign monies; and $20 of other subsidiary income taxes; offset by interest income of $130 estimated to be received on our cash and short-term investment balances during liquidation. Our estimates are based on the assumption that liquidation will occur no later than December 31, 2012. As reported in the table below, during the quarter we reduced the estimated net costs to be incurred during liquidation by $502 as we incurred various expenses, net of income received. We reduced the estimated net costs an additional $190 due to changes in estimates, primarily the recognition of the sublease on the former company headquarters.
                                 
    December 31,     Changes in     (Costs Incurred)     March 31,  
    2010     Estimates     Income Received     2011  
Estimated net costs to be incurred during liquidation
                               
Compensation for remaining employees and directors
  $ 398     $ (30 )   $ (141 )   $ 227  
Compliance and other office costs
    1,230       (180 )     (183 )     867  
Insurance Fees
    351             (44 )     307  
Professional Fees
    1,385             (154 )     1,231  
Income Taxes
    350       20             370  
Less: interest income on cash and investment balances
    (150 )           20       (130 )
 
                       
Total net costs to be incurred during liquidation
  $ 3,564     $ (190 )   $ (502 )   $ 2,872  
 
                       
Critical Accounting Policies
The Company’s discussion and analysis of its financial condition, results of operations and cash flows are based upon the Company’s unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, and expenses, and related disclosure of contingent assets and liabilities. The Company re-evaluates its estimates on an on-going basis. The Company’s estimates and judgments are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates or judgments under different assumptions or conditions.
The Company believes the following are its critical accounting policies which affect its more significant judgments and estimates used in the preparation of its unaudited condensed consolidated financial statements:
   
Estimates of the potential liability associated with litigation and government investigations
 
   
Valuation of deferred income taxes and income tax reserves.
 
   
Estimation of expenses incurred and interest income received during liquidation.
A complete discussion of these policies is contained in our Form 10-K filed on March 17, 2011 with the Securities and Exchange Commission for the year ended December 31, 2010. There were no significant changes to the critical accounting policies discussed in the Company’s 10-K filed for December 31, 2010.
Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates and projections about the Company. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Commitments and Contingencies
DOJ Subpoena
On January 19, 2010, the Company received a subpoena and communications from the U.S. Department of Justice (“DOJ”) requesting the Company produce documents relating to its dealings with foreign governments. The subpoena stated that it was issued in connection with an ongoing criminal investigation. See Part II-Item 1 (OTHER INFORMATION — Legal Proceedings) for additional information regarding the DOJ matter.

 

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The Allied Defense Group, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2011
(Thousands of Dollars)
(Unaudited)
Employee Severance Payments
The Company entered into employment agreements with certain management personnel at the Company’s subsidiaries and with certain domestic management personnel. These agreements provided for severance payments in the event of termination under certain conditions. In September 2010, the Company paid $1,650 in satisfaction of its severance obligations to the Company’s management personnel. Employment agreements with employees at Mecar and Mecar USA were assigned as part of the sale transactions.
Leases
The Company leases domestic office space under an operating lease which expires in early 2013. The lease also includes escalation provisions for taxes and operating costs. The Company was able to sublease the office space for 2011 and 2012 to offset a portion of the rental obligation owed by the Company.
Litigation Initiated by Former Employee
A former executive employee of the Company has instituted a lawsuit in the Circuit Court for Fairfax County, Virginia against the Company and others alleging fraud, constructive fraud, breach of contract, unjust encroachment, tortuous interference with business expectancy and civil conspiracy, all relating to the former executive employee’s change of control severance agreement. The former executive employee seeks damages in excess of $6.0 million. The Company believes this lawsuit is without merit and is vigorously defending it.
Litigation Relating to Consulting Agreement (MECAR)
A former consultant to MECAR has initiated a lawsuit in Belgium against MECAR and the Company for unpaid consulting fees in excess of $0.75 million. The Company believes that any liability with respect to this matter will be borne by MECAR and not the Company.
Indemnification provisions
The Company has sold its SeaSpace, Titan, the VSK Group, GMS and NSM subsidiaries in separate transactions starting with the first transaction closing in 2007. In each transaction, the Company agreed to indemnify the purchaser for periods subsequent to closing for losses arising from breaches of representations, warranties and covenants. Indemnification periods varied based on the particular representation, warranty or covenant covered, the vast majority of which have all expired. As of March 31, 2011, the only remaining indemnification obligations relate to representations and warranties concerning taxes, environmental matters, breaches of title, breaches of authorization and fraud. For SeaSpace, Titan, the VSK Group, GMS and NSM, these indemnification provisions have been capped at $1,000, $950, $6,806 (€5,000), $5,200 and $863, respectively. At March 31, 2011, no amount has been accrued related to these indemnifications as a liability is not deemed probable.
On June 24, 2010, the Company signed a definitive purchase and sale agreement with Chemring Group PLC pursuant to which Chemring agreed to acquire substantially all of the assets of the Company for $59,560 in cash and the assumption of certain liabilities. The purchase and sale agreement contains certain indemnification provisions pursuant to which the Company may be required to indemnify the buyer for a period subsequent to the completion of the sale for any and all losses directly or indirectly based upon, related to, arising out of or in connection with Mecar’s completed contracts, Mecar USA liabilities retained by the Company and any failure by the Company to satisfy all transaction related expenses. The Company’s indemnification liability is limited to, and capped at, the escrowed amount of $15,000 plus the accumulated interest. The Company’s indemnification obligations expire upon the earlier of (i) June 30, 2015 and (ii) the Company’s entry into either a court or administrative order or a Chemring-approved settlement agreement, in either case, finally resolving the matters relating to the DOJ’s subpoena. In the absence of such final resolution, in certain circumstances, up to 50% of the escrowed funds may be released as early as June 24, 2013. At March 31, 2011, no amount has been accrued related to this indemnification as a liability is not deemed probable.

 

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ITEM 3.  
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for a smaller reporting company.
ITEM 4.  
CONTROLS AND PROCEDURES
1. Evaluation of disclosure controls and procedures
Overview
As a result of the sale of Mecar and Mecar USA and the adoption by the stockholders of the Plan of Dissolution, the Company terminated all employees. During the third quarter of 2010, the Company reduced its accounting staff to one (1) person who left the Company in November 2010. The Company’s Officers/Board of Directors continue to oversee and review the Company’s system of financial reporting.
Disclosure Controls and Procedures
Subject to the provisions set forth in the Overview section above, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by the report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of March 31, 2011.
Changes in Internal Control Over Financial Reporting
Subject to the provisions set forth in the Overview section above, there were no changes in the Company’s internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.  
Legal Proceedings
DOJ Subpoena
On January 19, 2010, the Company received a subpoena and communications from the U.S. Department of Justice (“DOJ”) requesting the Company produce documents relating to its dealings with foreign governments. The subpoena stated that it was issued in connection with an ongoing criminal investigation. On the same day, the Company also became aware through a press release issued by the DOJ that an employee of Mecar USA had been indicted by the DOJ for allegedly engaging in schemes to bribe foreign government officials to obtain and retain business. The unsealed indictment of this employee and the DOJ’s press release indicate that the alleged criminal conduct was on behalf of a Decatur, Georgia company which is unrelated to the Company or Mecar USA. Mecar USA’s employment agreement with the employee provided that the employee not actively engage in any other employment, occupation or consulting activity that conflicts with the interests of the Company. In light of the employee’s breach of his employment agreement, Mecar USA terminated his employment on January 20, 2010.
According to the DOJ’s press release, the former employee was arrested on January 19, 2010, along with twenty-one other individuals, after an undercover operation that targeted foreign bribery in the military, and small arms and ammunition industries. The indictments of the twenty-two individuals allege that the defendants conspired to violate the Foreign Corrupt Practices Act (“FCPA”), conspired to engage in money laundering and engaged in substantive violations of the FCPA.
Subsequently, the Company received notice from the DOJ that indicated that it would request additional documents and expand its review beyond matters relating to the indicted former employee of Mecar USA. The Company understood that the DOJ’s expanded review was in connection with an industry-wide review. The Company has also received inquiries from the SEC regarding this matter.
The Company is cooperating with the DOJ and SEC and complying with the DOJ’s subpoena and SEC’s request for information. The Company’s ongoing compliance with these matters is being overseen by the Company’s Board of Directors. The Board of Directors is being assisted in these matters by independent outside counsel. The Company cannot predict the outcome of these matters or the impact, if any, that they may have on our plan to return the net proceeds of the Chemring sale to our stockholders.

 

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Litigation Relating to Consulting Agreement
On April 19, 2010, a lawsuit was filed against the Company by Sterling Investors Group Limited in the Circuit Court for Fairfax County, Virginia alleging breach of contract and seeking damages in the amount of $640. The Company has settled this matter by making a payment of $30.
Litigation Initiated by Former Employee
A former executive employee of the Company has instituted a lawsuit in the Circuit Court for Fairfax County, Virginia against the Company and others alleging fraud, constructive fraud, breach of contract, unjust encroachment, tortuous interference with business expectancy and civil conspiracy, all relating to the former executive employee’s change of control severance agreement. The former executive employee seeks damages in excess of $6.0 million. The Company believes this lawsuit is without merit and is vigorously defending it.
Litigation Relating to Consulting Agreement (MECAR)
A former consultant to MECAR has initiated a lawsuit in Belgium against MECAR and the Company for unpaid consulting fees in excess of $0.75 million. The Company believes that any liability with respect to this matter will be borne by MECAR and not the Company.
Item 1A.  
Risk Factors
Not required for a smaller reporting company.
Item 2.  
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.  
Defaults Upon Senior Securities
None.
Item 4.  
(Reserved)
Item 5.  
Other Information
None
Item 6.  
Exhibits
     
Exhibit No.   Description of Exhibits
   
 
*31.1  
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
 
*31.2  
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
 
  *32  
Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
     
*  
Filed herewith.

 

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SIGNATURE
Pursuant to the requirements 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.
         
  THE ALLIED DEFENSE GROUP, INC.
 
 
  /s/ Charles S. Ream    
Date: May 9, 2011  Charles S. Ream   
  Director and Chief Financial Officer   

 

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