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EX-32.2 - 110630 ASNB FORM 10-Q_EXHIBIT 32.2 - AdvanSource Biomaterials Corpasnbform10q_ex32-2.htm
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EX-31.1 - 110630 ASNB FORM 10-Q_EXHIBIT 31.1 - AdvanSource Biomaterials Corpasnbform10q_ex31-1.htm
EX-32.1 - 110630 ASNB FORM 10-Q_EXHIBIT 32.1 - AdvanSource Biomaterials Corpasnbform10q_ex32-1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2011                                                                                                                                          
 
or
 
o 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: 0-28034 
 

AdvanSource Biomaterials Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
04-3186647
(I.R.S. Employer Identification No.)
 
 
229 Andover Street, Wilmington, Massachusetts
(Address of principal executive offices)
 
 
01887
(Zip Code)

 
(978) 657-0075
(Registrant’s telephone number, including area code)
 

(Former name, former address and former fiscal year, if changed since last report)
 


 
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 x  No q
 
 
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 qNo x
 
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.  (Check one):
 
q  Large Accelerated Filer                                                                                                q  Accelerated Filer
 
q  Non-accelerated Filer                                                                                                x  Smaller reporting company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes q  No x
 
As of August 12, 2011, there were 21,350,055 of the registrant’s Common Stock outstanding.
 

 
 

 

ADVANSOURCE BIOMATERIALS CORPORATION

TABLE OF CONTENTS




   
Page
PART I.
FINANCIAL INFORMATION
 
     
Item 1.
Condensed Consolidated Financial Statements (unaudited)
 
 
Condensed Consolidated Balance Sheets at June 30, 2011 and March 31, 2011
3
 
Condensed Consolidated Statements of Operations for the three months ended
   June 30, 2011 and 2010
 
4
 
Condensed Consolidated Statements of Cash Flows for the three months ended
   June 30, 2011 and 2010
 
5
 
Notes to Condensed Consolidated Financial Statements
6-11
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12-17
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
18
Item 4.
Controls and Procedures
18
     
PART II.
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
19
Item 1A.
Risk Factors
19
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
19
Item 3.
Defaults Upon Senior Securities
19
Item 4.
(Removed and Reserved)
19
Item 5.
Other Information
19
Item 6.
Exhibits
19
 
Signatures
20


 

 

 
-2-

 

PART I.                      FINANCIAL INFORMATION
ITEM 1.                      FINANCIAL STATEMENTS
 


AdvanSource Biomaterials Corporation
 
Condensed Consolidated Balance Sheets
 
(Unaudited - in thousands, except share and per share amounts)
 
             
   
June 30,
2011
   
March 31,
2011
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 162     $ 477  
Accounts receivable-trade, net of allowance of $5
   as of June 30, 2011 and March 31, 2011
    116       69  
Accounts receivable-other
    92       84  
Inventories, net
    420       400  
Prepaid expenses and other current assets
    33       67  
Total current assets
    823       1,097  
Property, plant and equipment, net
    2,633       2,700  
Deferred financing costs
    9       -  
Total assets
  $ 3,465     $ 3,797  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable
  $ 224     $ 192  
Accrued expenses
    254       203  
Deferred revenue
    177       41  
Total current liabilities
    655       436  
                 
Commitments and contingencies
               
                 
Stockholders' equity:
               
Preferred stock; $.001 par value; 5,000,000 shares authorized;
   500,000 shares issued and none outstanding as of
   June 30, 2011 and March 31, 2011
    -       -  
Common stock; $.001 par value; 50,000,000 shares authorized; 21,426,747
shares issued and 21,350,055 shares outstanding as of June 30, 2011 and
March 31, 2011
    21       21  
Additional paid-in capital
    37,939       37,928  
Accumulated deficit
    (35,120 )     (34,558 )
      2,840       3,391  
Less: treasury stock, 76,692 shares at cost at June 30, 2011 and March 31, 2011
    (30 )     (30 )
Total stockholders' equity
    2,810       3,361  
Total liabilities and stockholders' equity
  $ 3,465     $ 3,797  


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

 
-3-

 


 


AdvanSource Biomaterials Corporation
 
Condensed Consolidated Statements of Operations
 
(Unaudited - in thousands, except per share amounts)
 
             
   
For the Three Months Ended June 30,
 
   
2011
   
2010
 
Revenues:
           
Product sales
  $ 194     $ 402  
License, royalty and development fees
    121       101  
      315       503  
Cost of sales
    199       365  
Gross profit
    116       138  
Operating expenses:
               
Research, development and regulatory
    166       177  
Selling, general and administrative
    497       603  
Impairment of long-lived assets
    15       -  
      678       780  
Loss from operations
    (562 )     (642 )
Net loss
  $ (562 )   $ (642 )
                 
Net loss per common share, basic and diluted
  $ (0.03 )   $ (0.03 )
Shares used in computing net loss per common share, basic and diluted
    21,350       21,202  



 

 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 

 
-4-

 



 


AdvanSource Biomaterials Corporation
 
Condensed Consolidated Statements of Cash Flows
 
(Unaudited - in thousands)
 
   
For The Three Months Ended June 30,
 
   
2011
   
2010
 
Cash flows from operating activities:
           
Net loss
  $ (562 )   $ (642 )
Adjustments to reconcile net loss to net cash flows used in operating activities:
         
Depreciation
    52       63  
Impairment of long-lived assets
    15       -  
Stock-based compensation
    11       29  
Changes in assets and liabilities:
               
Accounts receivable-trade
    (47 )     38  
Accounts receivable-other
    (8 )     39  
Inventories
    (20 )     24  
Prepaid expenses and other current assets
    34       (84 )
Accounts payable
    32       (113 )
Accrued expenses
    51       35  
Deferred revenue
    136       (10 )
Net cash flows used in operating activities
    (306 )     (621 )
Cash flows from investing activities:
               
Purchases of property, plant and equipment
    -       (2 )
Increase in deferred financing costs
    (9 )     -  
Net cash flows used in investing activities
    (9 )     (2 )
Net change in cash and cash equivalents
    (315 )     (623 )
Cash and cash equivalents at beginning of period
    477       3,055  
Cash and cash equivalents at end of period
  $ 162     $ 2,432  



 

 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

 

 
-5-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  
Description of Business
 
 
AdvanSource Biomaterials Corporation (“AdvanSource” or the “Company”), develops advanced polymer materials which provide critical characteristics in the design and development of medical devices.  The Company’s biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states.  The Company’s business model leverages its proprietary materials science technology and manufacturing expertise in order to expand product sales and royalty and license fee income.
 
The Company’s technology, notably products such as ChronoFlex®, HydroMed™, and HydroThane™, which have been developed to overcome a wide range of design and functional challenges such as the need for dimensional stability, ease of manufacture and demanding physical properties to overcoming environmental stress cracking and providing heightened lubricity for ease of insertion.  The Company’s new product extensions customize proprietary polymers for specific customer applications in a wide range of device categories.
 
The Company’s corporate, development and manufacturing operations are located in Wilmington, Massachusetts.
 
Liquidity and Going Concern
 
The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.  The Company has experienced negative operating margins and negative cash flows from operations and expects to continue to incur net losses in the foreseeable future.  During the three months ended June 30, 2011, the Company incurred a net loss of $562,000, and used cash from operating activities of $306,000.  The Company anticipates incurring losses at least through fiscal 2012 as it continues its efforts to grow revenues, expand selling and marketing activities, expand into new sales territories, and expand research and development activities to promote new product introductions and enhancements to existing products.  As of June 30, 2011, the Company had an accumulated deficit of $35,120,000 and cash and cash equivalents of $162,000.
 
On November 24, 2010, the NYSE Amex suspended trading in the Company’s common stock and filed Form 25 on December 6, 2010 notifying the Securities and Exchange Commission of their decision to delist the Company because the Company was not in compliance with Section 1003(a)(iii) of the NYSE Amex Company Guide with stockholders’ equity of less than $6,000,000 and losses from continuing operations and net losses in its five most recent fiscal years.  On November 24, 2010, the Company’s common stock was quoted on the OTCQB tier of The OTC Markets under the ticker symbol “ASNB.”  Although the Company’s common stock is quoted on the OTCQB, the delisting of its common stock from the NYSE Amex could substantially limit the liquidity of the Company’s common stock and impair the Company’s ability to raise capital.
 
During the fourth quarter of fiscal 2011, management evaluated its human resources needs, specifically focusing on production related positions, and eliminated certain positions no longer considered necessary so as to improve production efficiencies.  Management has also instituted more efficient production techniques and more stringent oversight into material purchases.
 
On July 7, 2011, the Company entered into a Commercial Real Estate Promissory Note in the principal amount of $800,000 (the “Note”) with Axiom Partners, LP as the lender (the “Lender”).  The Note has a two-year term and bears interest at the rate of 15% per annum.  The Note provides for the monthly interest payments on the last calendar day of each month commencing on August 31, 2011.  A balloon payment of the principal balance of $800,000, plus any accrued and unpaid interest, is due upon the maturity of the Note on July 8, 2013.  The Note is secured by the Company’s land and building pursuant to the terms and conditions of the Note and a mortgage in favor of the Lender (the “Mortgage”).  Other than the security interest represented by the Note, the Company-owned facility is unencumbered by any other mortgages or other obligations.
 

 
-6-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


In June 2011, the Company entered into a long-term license and consulting agreement (the “Agreements”) with a major international developer and manufacturer of medical devices.  In June 2011, the Company received an initial payment of $150,000 (the “Initial Payment”) upon the execution of the Agreements.  In July 2011, the Company received a subsequent payment of $250,000 (the “Subsequent Payment”) upon the transfer of certain technology and know-how.  The Agreements also provide for additional payments upon the achievement of certain milestones.  Until the requirements for recognition of revenue are achieved, the Initial and Subsequent Payments, and any future payments, will be deferred.  The Initial Payment in the amount of $150,000 is included as deferred revenue in the Company’s unaudited condensed consolidated balance sheet as of June 30, 2011.
 
The ability to attract additional capital investments in the future will depend on many factors, including the availability of credit, rate of revenue growth, the expansion of selling and marketing and research and development activities, and the timing of new product introductions and enhancements to existing products.  Any potential future sale of equity or debt securities may result in dilution to the Company’s stockholders, and there can be no assurances that additional public or private financing will be available in amounts or on terms acceptable to the Company, or at all.  If the Company were required to raise additional financing, but was unable to obtain such financing, the Company might be required to delay, reduce the scope of, or eliminate one or more aspects of its operations or business development activities.  Management believes that as of June 30, 2011, the Company’s cash position, the July 7, 2011 Note financing transaction previously described, and cash flows from its fiscal 2012 operations will be sufficient to fund the Company’s working capital and research and development activities through at least fiscal 2012.
 
2.  
Interim Financial Statements and Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).  In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for the periods presented.  The results of operations and cash flows for the three months ended June 30, 2011 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year.  The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements, included in our Annual Report on Form 10-K as of and for the year ended March 31, 2011 filed with the Securities and Exchange Commission (the “SEC”).
 
The unaudited condensed consolidated balance sheet at March 31, 2011 has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
 
Significant accounting policies are described in Note C to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K as of March 31, 2011.
 
In April 2010, the Financial Accounting Standards Board (“FASB”) issued an amendment to the current revenue recognition guidance which provides additional guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions.  Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive.  The amendment is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010.  The adoption of this FASB amendment did not have an impact on the Company’s financial position or results of operations for the three months ended June 30, 2011.
 

 
-7-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


On April 1, 2011, the Company adopted the provisions of the Accounting Standards Update (“ASU”) 2009-13 on a prospective basis pertaining to the accounting for revenue arrangements with multiple deliverables.  The ASU provides an alternative method for establishing fair value of a deliverable when vendor specific objective evidence cannot be determined.  The guidance provides for the determination of the best estimate of selling price to separate deliverables and allows the allocation of arrangement consideration using this relative selling price model.  The guidance supersedes the prior multiple element revenue arrangement accounting rules that are currently used by the Company.  The adoption of this ASU did not have an impact on the Company’s financial position or results of operations for the three months ended June 30, 2011.
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an ongoing basis, that affect the amounts reported in the Company's unaudited condensed consolidated financial statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources.  Actual results could differ from those estimates and judgments.  In particular, significant estimates and judgments include those related to revenue recognition, allowance for doubtful accounts, inventory reserves, useful lives and valuation of property and equipment.
 
3.  
Stock-Based Compensation
 
AdvanSource’s 1996 Employee, Director and Consultants Stock Option Plan (the “1996 Plan”) was approved by AdvanSource’s Board of Directors and Stockholders in March 1996.  A total of 7,000,000 shares were reserved for issuance under the 1996 Plan.  Under the terms of the 1996 Plan the exercise price of Incentive Stock Options issued under the 1996 Plan must be equal to the fair market value of the common stock at the date of grant.  In the event that Non Qualified Options are granted under the 1996 Plan, the exercise price may be less than the fair market value of the common stock at the time of the grant (but not less than par value).  In October 2003, the Company’s shareholders approved the AdvanSource 2003 Stock Option Plan (the “2003 Plan”), which authorizes the issuance of 3,000,000 shares of common stock with terms similar to the 1996 Plan.  In January 2006, the Company filed Form S-8 with the Securities and Exchange Commission registering an additional 489,920 total shares of common stock in the 1996 Plan and 2003 Plan.  Total shares of common stock registered under the 1996 Plan and 2003 Plan (collectively, the “Plans”) are 10,489,920.  Substantially all of the stock options granted pursuant to the 1996 Plan provide for the acceleration of vesting of the shares of Common Stock subject to such options in connection with certain changes in control of the Company.  A similar provision is not included in the 2003 Plan.  Normally, options granted expire ten years from the grant date.
 
Activity under the Plans for the three months ended June 30, 2011 is as follows:

   
Options Outstanding
   
Weighted Average Exercise Price per Share
   
Weighted Average Remaining Contractual Term in Years
   
Aggregate Intrinsic Value
(in thousands)
 
Options outstanding as of April 1, 2011
    2,623,937     $ 1.09              
Granted
    -       -    
 
       
Exercised
    -       -              
Cancelled or foreited
    (202,750 )   $ 0.84              
Options outstanding as of June 30, 2011
    2,421,187     $ 1.11       6.45     $ -  
Options exercisable as of June 30, 2011
    1,949,873     $ 1.31       5.89     $ -  
Options vested or expected to vest as of June 30, 2011
    2,421,187     $ 1.11       6.45     $ -  



 
-8-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The Company’s unaudited condensed consolidated statements of operations include stock-based compensation expense related to the Company’s stock option plans for employee and non-employee director awards in the amount of $11,000 and $29,000 for the three months ended June 30, 2011 and 2010, respectively.  There was no income tax benefit related to these costs.  As of June 30, 2011, the total amount of unrecognized stock-based compensation expense was approximately $73,000 which will be recognized over a weighted average period of 1.81 years.
 
4.  
Related Party Transactions
 
On January 1, 2007, the Company entered into a consulting agreement with Michael L. Barretti, a member of its Board of Directors, for an annualized fee of $50,000.  During the three months ended June 30, 2010, the Company recognized $13,000 of expense related to services incurred under this agreement, which was recorded as selling, general and administrative expense.  In April 2010, the Company and Mr. Barretti mutually agreed to terminate the consulting agreement as of December 31, 2010.  A payment of approximately $37,000, representing the prorated consulting fee for the remaining nine (9) months through December 31, 2010, was paid to Mr. Barretti in April 2010.  Mr. Barretti continues as a director of the Company.
 
5.  
Inventories
 
Inventories, net, are stated at the lower of cost (first in, first out) or market and consist of the following:

(in thousands)
 
June 30,
2011
   
March 31,
2011
 
Raw materials, net
  $ 226     $ 199  
Work in progress
    2       12  
Finished goods, net
    192       189  
Total inventories, net
  $ 420     $ 400  
 
6.  
Property, Plant and Equipment
 
Property, plant and equipment consists of the following:

(in thousands)
 
June 30,
2011
   
March 31,
2011
 
Land
  $ 500     $ 500  
Building
    2,705       2,705  
Machinery, equipment and tooling
    1,235       1,275  
Furniture, fixtures and office equipment
    285       285  
      4,725       4,765  
Less:  accumulated depreciation
    (2,092 )     (2,065 )
    $ 2,633     $ 2,700  
 
For the three months ended June 30, 2011 and 2010, depreciation expense was $52,000 and $63,000, respectively.
 
As a result of the Company’s evaluation of the recoverability of our property and equipment, the Company recorded an impairment for a single group of production equipment existed as of June 30, 2011 and March 31, 2011.  Accordingly, the Company recorded an impairment charge of $15,000 and $103,000 for the three months ended June 30, 2011 and fiscal year ended March 31, 2011, respectively.
 

 
-9-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


7.  
Earnings Per Share
 
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.  Diluted earnings (loss) per share are based upon the weighted-average shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period.  Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method.  In addition, the numerator is adjusted for any changes in income or loss that would result from the assumed conversion of potential shares.  At June 30, 2011 and 2010, potentially dilutive shares of 2,640,485 and 2,587,610, respectively, were excluded from the loss per share calculations because their effect would be antidilutive.  Shares deemed to be antidilutive include stock options and warrants.
 
8.  
Stockholders’ Equity
 
Common Stock and Warrants
 
At June 30, 2011 and March 31, 2011, there were warrants to purchase 219,298 shares of common stock outstanding at an exercise price of $0.874 per share, which are exercisable until March 31, 2015.
 
The Company issued no shares of common stock or warrants during the three months ended June 30, 2011 and 2010.
 
9.  
Income Taxes
 
The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled.  The Company evaluates the realizability of our deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.  A valuation allowance has been recorded to offset all deferred tax assets due to uncertainty of realizing the tax benefits of the underlying operating loss and tax credit carry forwards over their carry forward periods.  The Company had no significant deferred tax liabilities as of June 30, 2011 and March 31, 2011.
 
The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions.  The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.  The Company evaluates this tax position on a quarterly basis.  The Company also accrues for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense.  As of June 30, 2011 and March 31, 2011, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.
 
10.  
Contingencies
 
 
The Company is not a party to any legal proceedings, other than ordinary routine litigation incidental to its business, which the Company believes will not have a material affect on its financial position or results of operations.
 

 
-10-

 
ADVANSOURCE BIOMATERIALS CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


11.  
Concentrations of Credit Risk and Major Customers
 
For the three months ended June 30, 2011, two (2) customers represented 59% of the Company’s total revenues.  For the three months ended June 30, 2010, two (2) customer represented 72% of the Company’s total revenues.
 
As of June 30, 2011, the Company had accounts receivable-trade, net of $76,000, or 66%, due from two (2) customers.  As of March 31, 2011, the Company had accounts receivable-trade, net of $44,000, or 64%, due from three (3) customers.
 
As of June 30, 2011, the Company had $92,000 due from three (3) customers related to receivables on royalties, license and annual usage fees.  As of March 31, 2011, the Company had $84,000 due from two (2) customer related to receivables on royalties, license and annual usage fees.  These amounts are classified as accounts receivable-other in the accompanying condensed balance sheets.
 
Because of the concentration of the Company’s credit risk and customers, the Company’s results are susceptible to significant fluctuation from period-to-period, and we caution investors that past results may not be indicative of future performance.
 
12.  
Cornova
 
The Company partnered with CorNova, Inc. (“CorNova”), a privately-held, development stage company, which is developing medical devices for cardiovascular applications.  As a result of several dilutive financings by CorNova, the Company’s ownership interest decreased, accordingly, the Company began using the cost method of accounting during fiscal 2009.  As of June 30, 2011, the Company’s ownership interest in CorNova was 2%.  The Company has no additional obligation to contribute assets or additional common stock nor to assume any liabilities or to fund any losses that CorNova may incur.
 

13.  
Subsequent Events
 
The Company evaluated all events or transactions that occurred after the balance sheet date through the date when the Company issued these consolidated financial statements.  During this period, other than the events discussed below, the Company did not have any other material recognizable subsequent events.
 
On July 7, 2011, the Company entered into a Commercial Real Estate Promissory Note in the principal amount of $800,000 (the “Note”) with Axiom Partners, LP as the lender (the “Lender”).  The Note has a two-year term and bears interest at the rate of 15% per annum.  The Note provides for the monthly interest payments on the last calendar day of each month commencing on August 31, 2011.  A balloon payment of the principal balance of $800,000, plus any accrued and unpaid interest, is due upon the maturity of the Note on July 8, 2013.  The Note is secured by the Company’s land and building pursuant to the terms and conditions of the Note and a mortgage in favor of the Lender (the “Mortgage”).
 


 
-11-

 

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Cautionary Note Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains certain  statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”).  These forward looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.
 
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements.  Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.
 
In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q.  For example, we may encounter competitive, technological, financial and business challenges making it more difficult than expected to continue to develop and market our products; the market may not accept our existing and future products; we may not be able to retain our customers; we may be unable to retain existing key management personnel; and there may be other material adverse changes in our operations or business.  Certain important factors affecting the forward-looking statements made herein also include, but are not limited to (i) continued downward pricing pressures in our targeted markets, (ii) the continued acquisition of our customers by certain of our competitors, and (iii) continued periods of net losses, which could require us to find additional sources of financing to fund operations, implement our financial and business strategies, meet anticipated capital expenditures and fund research and development costs.  In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditure or other budgets, which may in turn affect our financial position and results of operations.  For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof.  We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law.  For further information you are encouraged to review our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 and the risk factors discussed therein under Part I. Item 1A.
 
Overview
 
We develop advanced polymer materials which provide critical characteristics in the design and development of medical devices. Our biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states.  Our business model leverages our proprietary materials science technology and manufacturing expertise in order to expand our product sales and royalty and license fee income.
 
Our leading edge technology, notably products such as ChronoFlex®, HydroMed™, and HydroThane™, has been developed to overcome a wide range of design and functional challenges, from the need for dimensional stability, ease of manufacturability and demanding physical properties to overcoming environmental stress cracking and providing heightened lubricity for ease of insertion.  Our polymer product lines are compliant with measures applying to the processing of certain animal waste to protect against transmissible spongiform encephalopathies as set forth in European Council Decision 1999/534/EC.  Our new product extensions allow us to customize our proprietary polymers for specific customer applications in a wide range of device categories.
 

 
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History
 
We were founded in 1993 as a subsidiary of PolyMedica Corporation (“PolyMedica”).  In June 1996, PolyMedica distributed all of the shares of CardioTech International, Inc.’s (“CardioTech”) common stock, par value $0.01 per share, which PolyMedica owned, to PolyMedica stockholders of record.  Our materials science technology is principally based upon the ChronoFlexTM proprietary polymers which represent our core technology.
 
In July 1999, we acquired the assets of Tyndale-Plains-Hunter (“TPH”), a manufacturer of specialty hydrophilic polyurethanes.
 
In July 1999, Dermaphylyx International, Inc. (“Dermaphylyx”) was formed by certain of our affiliates to develop advanced wound healing products.  Dermaphylyx was merged with and into us, effective March 2004, as a wholly-owned subsidiary.  In June 2006, our Board of Directors decided to cease the operations of Dermaphylyx.  We considered the net assets of Dermaphylyx to be immaterial.
 
In April 2001, we acquired Catheter and Disposables Technology, Inc. (“CDT”).  CDT, which was located in Minnesota, was an original equipment manufacturer and supplier of private-label advanced disposable medical devices from concept to finished packaged and sterilized products, providing engineering services and contract manufacturing.  In the development of our business model, we reviewed the strategic fit of our various business operations and determined that CDT did not fit our strategic direction.  CDT was sold in March 2008.
 
In April 2003, we acquired Gish Biomedical, Inc. (“Gish”).  Gish was located in southern California and manufactured single use cardiopulmonary bypass products having a disposable component.  In the development of our business model, we reviewed the strategic fit of our various business operations and determined that Gish did not fit our strategic direction.  Gish was sold in July 2007.
 
In March 2004, we joined with Implant Sciences Corporation (“Implant”) to participate in the funding of CorNova.  CorNova was initially formed to develop a novel coronary drug eluting stent using the combined capabilities and technology of CorNova, Implant Sciences and CardioTech.  We currently have an 2% equity interest in the issued and outstanding common stock of CorNova, based on the assumed conversion of all outstanding CorNova preferred stock into common stock.  Although CorNova is expected to incur future operating losses, we have no obligation to fund CorNova.
 
At our 2007 Annual Meeting, our stockholders approved our reincorporation from Massachusetts to Delaware.  Our Articles of Charter Surrender in Massachusetts and Certificate of Incorporation and Certificate of Conversion in Delaware were effective as of October 26, 2007.
 
In June 2008, we reorganized our product line as part of our re-branding effort and launched a new website at www.advbiomaterials.com.  The information available on or through our website is not a part of this report on Form 10-K.  At our 2008 annual meeting of stockholders on October 15, 2008, our stockholders approved the change of our name from CardioTech International, Inc. to AdvanSource Biomaterials Corporation to better reflect our strategic plan.  Our Certificate of Amendment to our Certificate of Incorporation filed with the Secretary of State of the State of Delaware effecting this name change was effective October 15, 2008.
 
Technology and Intellectual Property
 
Our unique materials science strengths are embodied in our family of proprietary polymers.  We manufacture and sell our custom polymers under the trade names ChronoFilm, ChronoFlex, ChronoThane, ChronoPrene, ChronoSil, HydroThane, and PolyBlend.  The ChronoFlex family of polymers has the potential to be marketed beyond our existing customer base.  Our goal is to fulfill the market’s need for advanced materials science capabilities, thereby enabling customers to improve devices that utilize polymers.  Our chemists continue to develop the ChronoFlex family of medical-grade polymers.  Conventional polymers are susceptible to degradation resulting in catastrophic failure of long-term implantable devices such as pacemaker leads.  ChronoFlex and ChronoThane polymers are designed to overcome such degradation and reduce the incidents of infections associated with invasive devices.
 
Key characteristics of our polymers are i) optional use as lubricious coatings for smooth insertion of a device into the body, ii) antimicrobial properties that are part of the polymer itself, and iii) mechanical properties, such as hardness and elasticity sufficient to meet engineering requirements.  We believe our technology has wide application in increasing biocompatibility, drug delivery, infection control and expanding the utility of complex devices in the hospital and clinical environment.
 

 
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We also manufacture and sell our proprietary HydroThane polymers to medical device manufacturers that are evaluating HydroThane for use in their products.  HydroThane is a thermoplastic, water-absorbing, polyurethane elastomer possessing properties which we believe make it well suited for the complex requirements of a variety of catheters.  In addition to its physical properties, we believe HydroThane exhibits an inherent degree of bacterial resistance, clot resistance and biocompatibility.  When hydrated, HydroThane has elastic properties similar to living tissue.
 
We also manufacture specialty hydrophilic polyurethanes that are primarily sold to customers as part of exclusive arrangements.  Specifically, one customer is supplied tailored, patented hydrophilic polyurethanes in exchange for a multi-year, royalty-bearing exclusive supply contract which generates royalty income for the Company.
 
ChronoFilm is a registered trademark of PolyMedica.  ChronoFlex is our registered trademark.  ChronoThane, ChronoPrene, ChronoSil, HydroThane, and PolyBlend are our tradenames.  CardioPass is our trademark.
 
We own or license four (4) patents relating to our vascular graft manufacturing and polymer technology and products.  While we believe our patents secure our exclusivity with respect to certain of our technologies, there can be no assurance that any patents issued would not afford us adequate protection against competitors which sell similar inventions or devices, nor can there be any assurance that our patents will not be infringed upon or designed around by others.  However, we intend to vigorously enforce all patents issued to us.
 
In October 2009, we filed for a U.S. patent on ChronoSil, our silicone-urethane copolymer product, and methods for making ChronoSil.  ChronoSil can have many physical properties which are usually associated with polyurethanes, but also the feel and characteristics of silicones.
 
In August 2010, the U.S. Patent and Trademark Office issued us a U.S. patent on our proprietary antimicrobial formulation for ChronoFlex.  Current technology in the marketplace uses antibiotic drugs.  The antimicrobial component of our polymers have been designed to be non-leaching as a result of the polymerization process.
 
In addition, PolyMedica has granted us an exclusive, perpetual, worldwide, royalty-free license for the use of one polyurethane patent and related technology in the field consisting of the development, manufacture and sale of implantable medical devices and biodurable polymer material to third parties for the use in medical applications (the “Implantable Device and Materials Field”).  PolyMedica also owns, jointly with Thermedics, Inc., an unrelated company that manufactures medical grade polyurethane, the ChronoFlex polyurethane patents relating to the ChronoFlex technology.  PolyMedica has granted us a non-exclusive, perpetual, worldwide, royalty-free sublicense of these patents for use in the Implantable Devices and Materials Field.
 
Critical Accounting Policies
 
Our critical accounting policies are summarized in Note C to our consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.  However, certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our financial statements.  In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates.  Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate.  Actual results may differ significantly from the estimates contained in our unaudited condensed consolidated financial statements.  Other than the adoption of Accounting Standards Update (“ASU”) 2009-13, “Multi-Deliverable Revenue Arrangements,” and ASU 2010-17, “Milestone Method of Revenue Recognition,” there has been no change to our critical accounting policies during the fiscal quarter ended June 30, 2011.
 

 
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Results of Operations
 
Three Months Ended June 30, 2011 vs. June 30, 2010
 
Revenues
 
Total revenues for the three months ended June 30, 2011 were $315,000 as compared with $503,000 for the comparable prior year period, a decrease of $188,000, or 37.4%.
 
Product sales of our biomaterials for the three months ended June 30, 2011 were $194,000 as compared with $402,000 for the comparable prior year period, a decrease of $208,000, or 51.7%.  During the three months ended June 30, 2010, we realized an increase in demand for polymer products from two (2) of our major customers.  During the three months ended June 30, 2011, we did not realize this same level of demand from these two (2) customers.  Although management believes these two significant customers will begin ordering at increased levels during fiscal 2012, there can be no assurance that such increases in the level of orders will occur.
 
License, royalty and development fees for the three months ended June 30, 2011 were $121,000 as compared with $101,000 for the comparable prior year period, an increase of $20,000 or 19.8%.  We have agreements to license our proprietary biomaterial technology to medical device manufacturers and develop biomaterials for incorporation into medical devices under development by our customers.  Royalties are earned when these manufacturers sell medical devices which use our biomaterials.  The increase in license, royalty and development fees during the three months ended June 30, 2011 is primarily a result of certain new supply agreements which provide for annual usage fees and royalties from customers who have introduced new medical devices using our advanced polymer materials.
 
In June 2011, we entered into a long-term license and consulting agreement (the “Agreements”) with a major international developer and manufacturer of medical devices and received an initial payment of $150,000 (the “Initial Payment”) upon the execution of the Agreements.  The Agreements also provide for additional payments upon the achievement of certain milestones.  Until the requirements for recognition of revenues are achieved, the Initial Payment and future payments will be deferred.  The Initial Payment in the amount of $150,000 is included as deferred revenue in our unaudited condensed consolidated balance sheet as of June 30, 2011.
 
Gross Profit
 
Gross profit on total revenues for the three months ended June 30, 2011 was $116,000, or 36.8% of total revenues, compared with $138,000, or 27.4% of total revenues, for the comparable prior year period.  The decrease in gross profit dollars is primarily due to lack of absorption of fixed overhead costs incurred in the production of polymer products and a decrease in product sales.  The increase in gross profit as a percentage of total revenues is primarily due to the positive effect of the restructuring of our manufacturing cost structure during the fourth quarter of fiscal 2011 and first quarter of fiscal 2012 which lowered our manufacturing overhead costs.  The key strategic initiatives that led to the improvements in our manufacturing overhead included the elimination of certain production management personnel considered as non-essential and reduction of outside consultants utilized by our quality control department.
 
Gross profit on product sales for the three months ended June 30, 2011 was a loss of ($5,000), or (2.6%) of product sales, compared with a gross profit of $37,000, or 9.2% of product sales, for the comparable prior year period.  The decrease in gross profit dollars and gross profit as a percentage of product sales is primarily due to the decrease in product sales.  The decrease, however, is offset in part by the improvement in our manufacturing cost structure during the three months ended June 30, 2011.  Management believes that with future growth in product sales, our gross profit on product sales should benefit in future periods as a result of the strategic initiatives employed to improve our manufacturing overhead costs.
 

 
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Research, Development and Regulatory Expenses
 
Research and development expenses for the three months ended June 30, 2011 were $166,000 as compared with $177,000 for the comparable prior year period, a decrease of $11,000 or 6.2%.  Our research and development efforts are focused on developing new applications for our biomaterials.  Research and development expenditures consisted primarily of the salaries of full time employees and related expenses, and are expensed as incurred.  The decrease in research and development costs is primarily a result of decreased of use outside laboratory testing services which was required to evaluate a specific raw material that is expected to be used in connection with the manufacture of our finished polymer products.  We continue to maintain a relatively stable research and development budget, which management believes meets the needs of our customers and internal development needs.
 
Selling, General and Administrative Expenses
 
Selling, general and administrative expenses for the three months ended June 30, 2011 were $497,000 as compared with $603,000 for the comparable prior year period, a decrease of $106,000 or 17.6%.  The decrease is primarily due to the elimination of two administrative positions, reduction in use of consultants and continued cost containment efforts.
 
Impairment of Long-Lived Assets
 
As a result of our evaluation of the recoverability of our property and equipment, we determined an impairment for a single group of production equipment existed as of June 30, 2011.  Accordingly, we recorded an impairment charge of $15,000 for the three months ended June 30, 2011.
 
Liquidity and Capital Resources
 
As of June 30, 2011, we had cash and cash equivalents of $162,000, a decrease of $315,000 when compared with a balance of $477,000 as of March 31, 2011.
 
During the three months ended June 30, 2011, we had net cash outflows of $306,000 from operating activities as compared with net cash outflows of $621,000 for the comparable prior year period.  The net cash outflows used in operating activities during the three months ended June 30, 2011 is primarily a result of the net loss, and increase in accounts receivable-trade and inventories.  These cash outflows were offset by cash received and recorded as deferred revenues, the decrease in prepaid expenses, and the increases in accounts payable and accrued expenses.  In addition, net cash outflows was offset by non-cash items related to depreciation, impairment of long-lived assets and stock-based compensation expenses.
 
During the three months ended June 30, 2011, we had net cash outflows of $9,000 from investing activities as compared to net cash outflows of $2,000 from investing activities for the comparable prior year period.
 
Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.  We have experienced negative operating margins and negative cash flows from operations and expect to continue to incur net losses in the foreseeable future.  For the three months ended June 30, 2011, we incurred a net loss of $562,000 and used cash from operating activities of $306,000.  During the fiscal year ended March 31, 2011, we incurred a net loss of $3,185,000 and used cash from operating activities of $2,592,000.  We anticipate incurring losses at least through fiscal 2012 as we continue our attempt to grow revenues, expand selling and marketing activities, expand into new sales territories, and expand research and development activities to promote new product introductions and enhancements to existing products.  As of June 30, 2011, we had an accumulated deficit of $35,120,000 and cash and cash equivalents of $162,000.
 
At June 30, 2011, we (i) continued to own our facility in Wilmington, Massachusetts, having a net book value of approximately $2,446,000, and encumbered only by an $800,000 mortgage;  and (ii) have no other corporate debt.
 

 
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On July 7, 2011, the Company entered into a Commercial Real Estate Promissory Note in the principal amount of $800,000 (the “Note”) with Axiom Partners, LP as the lender (the “Lender”).  The Note has a two-year term and bears interest at the rate of 15% per annum.  The Note provides for the monthly interest payments on the last calendar day of each month commencing on August 31, 2011.  A balloon payment of the principal balance of $800,000, plus any accrued and unpaid interest, is due upon the maturity of the Note on July 8, 2013.  The Note is secured by the Company’s land and building pursuant to the terms and conditions of the Note and a mortgage in favor of the Lender.
 
The ability to attract additional capital investments in the future will depend on many factors, including the availability of credit, rate of revenue growth, the expansion of selling and marketing and research and development activities, and the timing of new product introductions and enhancements to existing products.  Management believes that as of June 30, 2011 our cash position, the July 7, 2011 Note financing transaction previously described, and cash flows from our fiscal 2012 operations will be sufficient to fund our working capital and research and development activities through at least fiscal 2012.
 
In June 2011, we entered into a long-term license and consulting agreement (the “Agreements”) with a major international developer and manufacturer of medical devices.  In June 2011, we received an initial payment of $150,000 (the “Initial Payment”) upon the execution of the Agreements.  In July 2011, we received a subsequent payment of $250,000 (the “Subsequent Payment”) upon the transfer of certain technology and know-how.  The Agreements also provide for additional payments upon the achievement of certain milestones.  Until the requirements for recognition of revenue are achieved, the Initial and Subsequent Payments, and any future payments, will be deferred.  The Initial Payment in the amount of $150,000 is included as deferred revenue in our unaudited condensed consolidated balance sheet as of June 30, 2011.
 
Any potential future sale of equity or debt securities may result in dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, or at all.  On November 24, 2010, the NYSE Amex suspended trading in our common stock and filed Form 25 on December 6, 2010 notifying the Securities and Exchange Commission of their decision to delist us because we were not in compliance with Section 1003(a)(iii) of the NYSE Amex Company Guide with stockholders’ equity of less than $6,000,000 and losses from continuing operations and net losses in its five most recent fiscal years.  On November 24, 2010, our common stock was quoted on the OTCQB tier of The OTC Markets under the ticker symbol “ASNB.”  Although our common stock is quoted on the OTCQB, the delisting of our common stock from the NYSE Amex could substantially limit our common stock’s liquidity and impair our ability to raise capital.  If we are required to raise additional financing, but are unable to obtain such financing, we may be required to delay, reduce the scope of, or eliminate one or more aspects of our operations or business development activities.
 
Off-Balance Sheet Arrangements
 
As of June 30, 2011, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
 

 
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Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
 
Not required pursuant to Item 305(e) of Regulation S-K.
 
Item 4.
Controls and Procedures
 
The certificates of the Company’s principal executive officer and principal financial and accounting officer attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q include, in paragraph 4 of such certifications, information concerning the Company’s disclosure controls and procedures, and internal control over financial reporting.  Such certifications should be read in conjunction with the information contained in this Item 4 for a more complete understanding of the matters covered by such certifications.
 
Disclosure Controls and Procedures
 
The Company’s management, with the participation of the Company’s chief executive officer and acting chief financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2011.  The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions to be made regarding required disclosure.  It should be noted that any system of controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met and that management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on the evaluation of the Company’s disclosure controls and procedures as of June 30, 2011, the Company’s chief executive officer and acting chief financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes to the Company’s internal control over financial reporting during the quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 

 
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PART II.                      OTHER INFORMATION

 
Item 1.
Legal Proceedings
 
We are not a party to any other legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material affect on our financial position or results of operations.
 
Item 1A.
Risk Factors
 
There have not been any material changes from the risk factors previously disclosed under Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2011.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.
Defaults Upon Senior Securities
 
None.
 
Item 4.
(Removed and Reserved)
 

 
Item 5.
Other Information
 
None.
 
Item 6.
Exhibits
 
Exhibit No.
 
31.1  
Certification of Principal Executive Officer pursuant to Section 3.02 of the Sarbanes-Oxley Act of 2002.
 
31.2  
Certification of Principal Financial and Accounting Officer pursuant to Section 3.02 of the Sarbanes-Oxley Act of 2002.
 
32.1  
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
32.2  
Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 

 
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SIGNATURES
 
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.
 
AdvanSource Biomaterials Corporation
 
By:  /s/ Michael F. Adams                                                               
Michael F. Adams
President & Chief Executive Officer
(Principal Executive Officer)
 
By:  /s/ David Volpe 
David Volpe
Acting Chief Financial Officer
(Principal Financial and Accounting Officer)

 
Dated:  August 15, 2011
 

 

 

 

 
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