##### Table of Contents



U. S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the Fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 1-16695
 AMDL, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    33-0413161(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification No.)2492 Walnut Avenue, Suite 100
Tustin, California 92780-7039(Address of principal executive offices)
    
    (714) 505-4460(Registrants telephone number, including
area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which
registeredCommon Stock, $.001 par value
    
    AMEX
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $.001 par value
 (Title of class)
 o þ
 o þ
 þ o
 o
  Large accelerated filer: o
    
    Accelerated filer: o
    
    Non-accelerated filer: o
    
    Smaller reporting company: þ(Do not check if a smaller reporting company)
 o þ
  Documents Incorporated by Reference




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##### 



TABLE OF CONTENTS
 PagePart IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    19Item 2.
    
    Properties
    
    
    25Item 3.
    
    Legal Proceedings
    
    
    25Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26Part IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    27Item 6.
    
    Selected Financial Data
    
    
    32Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 8.
    
    Financial Statements
    
    
    45Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    82Item 9A.
    
    Controls and Procedures
    
    
    82Part IIIItem 10.
    
    Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16 (a) of the Exchange Act
    
    
    84Item 11.
    
    Executive Compensation
    
    
    86Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    89Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    91Item 14.
    
    Principal Accountant Fees and Services
    
    
    91Part IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    92SIGNATURES
    
    
    
    
    96EXHIBIT 10.43EXHIBIT 10.44EXHIBIT 10.45EXHIBIT 10.46EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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##### Table of Contents



PART I
 
 Item 1. Business
  ®
    ® ® ® ® ® U.S. ® U.S. . ®
 2




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##### Table of Contents



http://www.sec.gov http://www.amdlcorporate.com
 Acquisition of Jade Pharmaceutical Inc.
  ® ®
 Business Combinations,
 AMDL and JPI Products and Regulatory Approval
  
  3




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##### Table of Contents



DR-70 ® Cancer Diagnostic Test Kit
 ® ® ® ®
 ® ® ®
 ®
 ® ® ® ® ® ®
 ® ® ® ® ®
 4




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##### Table of Contents



® ® ® ® ®
 ® ® German Journal of Obstetrics and Gynecology ®
 ® ®  ® ® ® ®
 ® ® ® ® ® ® ®
 ® ®
 5




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##### Table of Contents



® ® ® ® ®
 ®
 ® ®
 ® ® ®
 DR-70® Research and Development
 ® ®
 DR-70® Competition
 ® ®
 ® ®
 6




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##### Table of Contents



DR-70® Development Strategy
  ® ® ® ® ® ®
  
    
    obtain USFDA and SFDA clearance and international approvals for our
DR-70® product;
    
    expand JPIs business through new distribution channels, including, but not limited
to the JPGreen Clinics;
    
    distribute greater quantities of DR-70® kits in approved markets;
    
    develop DR-70® distribution channels in new markets;
    
    pursue one or more strategic partners to license and develop our combination
immunogene therapy technology;
    
    in-license North American drugs for manufacture and sales in China and Asia;
JPI has signed a memorandum of understanding with Bio-Health Technology Inc. (BTI) to
act as their sole manufacturer of PROVIN-C. In February of 2008, JPI assisted BTI in
setting up their representative office in Beijing. JPI will submit an application to
the SFDA for approval to market PROVIN-C which we hope will be completed by the end of
2009, although there can be no assurance that such application will be approved at that
time, if at all; and
    
    fully utilize our Chinese Good Manufacturing Practices (GMP) recognition
manufacturing facilities to foster worldwide sales of existing and to-be developed
products.
 ®
 
    
    the product candidate did not demonstrate acceptable clinical trial results
even though it demonstrated positive preclinical trial results;
    
    the product candidate was not effective in treating a specified condition or
illness;
 7




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##### Table of Contents




    
    the product candidate had harmful side effects on humans;
    
    the necessary regulatory bodies, such as the USFDA, did not approve the product
candidate for an intended use;
    
    the product candidate was not economical for us to manufacture and
commercialize; and
    
    the product candidate is not cost effective in light of existing therapeutics.
 ®
 Sales and Marketing
 ®
  U.S. based DR-70® Manufacturing
 ®
 ®
  8




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##### Table of Contents



AMDLs Patents
 ® ®
      Regulation
 ®
  9




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##### Table of Contents



DR-70 ®
 ® ® ® ®
 ® ® ®
 ® ® ® ® ® ®
 ® ® ® ® ®
 10




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##### Table of Contents



® ® ® ® ® ® ® ® ® ® ® ®
 ® ® German Journal of Obstetrics and Gynecology ®
 ® ®  ® ® ® ®
 11




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##### Table of Contents



AMDLs Combination Immunogene Therapy
   12




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##### Table of Contents



AMDLs Pylori-Probe
  AMDLs OEM Products
    JADE PHARMACEUTICAL INC.
 Overview of JPIs Business
  13




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##### Table of Contents



JJB and YYB Product Lines
        14




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##### Table of Contents



;
  Sales $Product
    
    (rounded)Domperidone Tablet
    
    $
    5,230,300Human Placental Histosolution (GOODNAK)
    
    
    3,706,400Diavitamin, Calcium Hydrogen Phosphate and Lysine Tablets
    
    
    1,420,500Levofloxacin Lactate and Sodium Chloride Injection (concentration)
    
    
    570,800Glucose Injectible Solution (250 ml Bottle)
    
    
    480,140GuYanLin Tablet
    
    
    470,49050% Glucose Injectible Solution (20 mls Amp)
    
    
    416,980Glucose Injectible Solution (500 ml Bottle)
    
    
    295,700Human Placental Histosolution
    
    
    241,350Compound Benzoic Acid and Camphor Solution I
    
    
    193,250Total
    
    $
    13,025,910
  JPIs 2008/2009 New Product Developments
 ®
 
    
    Epinastine Tablets (allergy product)
    
    Pidotimod Tablets (an anti-aging product)
    
    Creatine Phosphate Sodium Injections (a heart medication)
    
    EO-H (an herbal treatment to improve bone density)
 15




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
    
    TouJin NiangShi (an herbal liver cancer treatment)
    
    Drotaverrine Hydrochloric (a chemotherapy therapeutic product)
    
    Diammonium Glycyrrhizinate (a chemotherapy therapeutic
product)
  JPIs China Business Strategy
 General
 ®
 JPIs Distribution Agreements
  Northern:
    
    Liaoning and Heilongjiang ProvincesSouthern:
    
    Hunnan, Zehejiang and Fujian ProvincesWestern:
    
    Shanxi, Xinjiang and Gansu ProvincesCentral:
    
    Henan, Sichuan and Guizhou Provinces
    JPGreen Health and Beauty Clinics
  16




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JPIs Sales, Marketing and Distribution Activities
      JPIs Manufacturing
   17




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JPIs Research and Development
   JPIs Competition
   China Credit Facilities
  Chinese Pharmaceutical Regulations
  18




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##### Table of Contents



® ® ®
 
 Item 1A. Risk Factors
 Cautionary Statement under the Private Securities Litigation Reform Act of 1995:
 This Form 10-K and the documents incorporated by reference herein contain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which include
information relating to future events, future financial performance, strategies, expectations,
competitive environment, regulation and availability of resources. From time to time, we also
provide forward-looking statements in other materials we release to the public as well as verbal
forward-looking statements. These forward-looking statements include, without limitation,
statements regarding: regulatory approval for our products; market demand for our products and
competition; our dependence on licensees and distributors; impact of technological changes on our
products; results of operations or liquidity; statements concerning projections, predictions,
expectations, estimates or forecasts as to our business, financial and operational results and
future economic performance; and statements of managements goals and objectives and other similar
expressions. Such statements give our current expectations or forecasts of future events; they do
not relate strictly to historical or current facts. Words such as may, will, should,
could, would, predicts, potential, continue, expects, anticipates, future,
intends, plans, believes, estimates expressions, as well as statements in
future tense, identify forward-looking statements.
 We cannot guarantee that any forward-looking statement will be realized, although we believe
we have been prudent in our plans and assumptions. Achievement of future results is subject to
risks, uncertainties and potentially inaccurate assumptions. Many events beyond our control may
determine whether results we anticipate will be achieved. Should known or unknown risks or
uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could
differ materially from past results and those anticipated, estimated or projected. You should bear
this in mind as you consider forward-looking statements.
 We undertake no obligation to publicly update or revise forward-looking statements, whether as
a result of new information, future events or otherwise. You are advised, however, to consult any
further disclosures we make on related subjects in our Form 10-Q and 8-K reports to the SEC. Also
note that we provide the following cautionary discussion of risks, uncertainties and possibly
inaccurate assumptions relevant to our business. These factors individually or in the aggregate,
we think could cause our actual results to differ materially from expected and historical results.
You should understand that it is not possible to predict or identify all such factors.
Consequently, you should not consider the following to be a complete discussion of all potential
risks or uncertainties.
 19




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Limited product development activities; our product development efforts may not result in
commercial products.
 ® ®
 
    
    the product candidate did not demonstrate acceptable clinical trial results
even though it demonstrated positive preclinical trial results;
    
    the product candidate was not effective in treating a specified condition or
illness;
    
    the product candidate had harmful side effects on humans;
    
    the necessary regulatory bodies, such as the USFDA or SFDA, did not approve our
product candidate for an intended use;
    
    the product candidate was not economical for us to manufacture and
commercialize; and
    
    the product candidate is not cost effective in light of existing therapeutics.
  ®
 Our operations in China involve significant risk.
     20




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We may not be able to continue to operate our business if we are unable to attract additional
operating capital.
 ® ®
  ® ®
 Our independent registered public accounting firm has included a going concern paragraph in their
report on our financial statements.
  Our current products cannot be sold in certain countries if we do not obtain and maintain
regulatory approval.
  21




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USFDA approval for marketing DR-70 ® is not assured.
 ® ®
 Our future prospects will be negatively impacted if we are unsuccessful in pending litigation over
the combination immunogene therapy technology.
  The value of intangible assets may not be equal to their carrying values.
   22




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If our intellectual property positions are challenged, invalidated or circumvented, or if we fail
to prevail in future intellectual property litigation, our business could be adversely affected.
  We face substantial competition, and others may discover, develop, acquire or commercialize
products before or more successfully than we do.
  We have limited sales of DR-70 ® and are reliant on our distributors for sales of our
products.
 ® ® ® ® ® ® ®
 JPI is reliant on its distributors for sales of its products.
  We are subject to risks associated with our foreign distributors.
 ® ®
 We do not intend to pay dividends on our common stock in the foreseeable future.
  23




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If we fail to comply with the rules under the Sarbanes-Oxley Act related to accounting controls and
procedures or if material weaknesses or other deficiencies are discovered in our internal
accounting procedures, our stock price could decline significantly.
     Loss of our listing on the American Stock Exchange could adversely affect the marketability and
price of our shares.
  Our stock price is volatile, which could adversely affect your investment.
  
    
    clinical trial results;
    
    product development announcements by us or our competitors;
    
    regulatory matters;
    
    announcements in the scientific and research community;
 24




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##### Table of Contents




    
    intellectual property and legal matters;
    
    broader industry and market trends unrelated to our performance;
    
    economic markets in Asia; and
    
    competition in local Chinese markets where we sell JPIs product.
  We have limited product liability insurance.
  Employees
  
 Item 2. Properties
   
 Item 3. Legal Proceedings
  25




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Item 4. Submission of Matters to a Vote of Security Holders
    26




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   
    
    clinical trial results;
    
    product development announcements by us or our competitors;
    
    regulatory matters;
    
    announcements in the scientific and research community;
    
    intellectual property and legal matters;
    
    broader industry and market trends unrelated to our performance; and
    
    economic markets in Asia.
    Quarter Ended
    
    High
    
    LowMarch 31, 2006*
    
    $
    3.90
    
    
    $
    1.35June 30, 2006*
    
    $
    4.45
    
    
    $
    2.25September 30, 2006*
    
    $
    3.15
    
    
    $
    1.90December 31, 2006
    
    $
    5.12
    
    
    $
    2.44
 Quarter Ended
    
    High
    
    LowMarch 31, 2007
    
    $
    4.00
    
    
    $
    2.54June 30, 2007
    
    $
    4.20
    
    
    $
    2.90September 30, 2007
    
    $
    3.48
    
    
    $
    2.41December 31, 2007
    
    $
    4.64
    
    
    $
    3.24
 
 *
    
    Adjusted for a one-for-five reverse split effected September 28, 2006. 27




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Record Holders.
 Dividend Policy.
 Securities Authorized for Issuance Under Equity Compensation Plans.
 Trust Agreement ® ®
 Purchases of Securities by the Company
  Recent Sales of Securities
 Cash Financing Activities
   August 2005 Offering
  28




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April 2006 Offering
    December 2006 Offering
    April 2007 Offering
  29




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##### Table of Contents



December 2007 Offering
     Non-Cash Financing Activities
    30




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31




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Item 6. Selected Financial Data
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the
following discussion together with the financial data contained
in the consolidated financial statements and the related notes included elsewhere in this Annual
Report on Form 10-K . This discussion contains forward-looking statements that are based on
managements current expectations, estimates and projections about our business and operations.
Our actual results may differ materially from those currently anticipated and expressed in such
forward-looking statements as a result of a number of factors, including those we discuss under
Risk Factors and elsewhere in this Annual Report on Form 10-K .
 Acquisition of Jade Pharmaceutical Inc.
   32




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The Current Chinese Economic and Market Environment
   
    
    China is experiencing growth rate of 8  10% per year as measured by the gross
domestic product;
    
    Chinas pharmaceutical market is estimated at $100 billion as reported by the IMS
HealthAccess and is growing at a rate of 20% annually;
    
    The Chinese demand for over the counter pharmaceutical market is growing at a rate of
approximately 30% per year.
   
    
    Gain access to the fastest growing pharmaceutical and consumer market in the world,
China.
    
    Platform to in-license North American drugs for manufacture and sale in China and
through out Asia;
    
    Expand DR-70® and combined immunogene therapy technologies clinical trials,
sales, and marketing into China and Asia; and
    
    Create new opportunities for cancer related product development in China.
 33




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##### Table of Contents



JPIs Research and Development
   
    
    Most products manufactured by JPI are acquired through the purchase of the product
licenses. As part of the acquisition process, approval for manufacture by the SFDA must be
received prior to payment.
    
    Research and development costs regarding DR-70® has decreased due to the reduction in
the use of outside consultants and utilization of in-house personnel.
 ® ® ®
 Liquidity and Capital Resources
   ®
    34




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##### Table of Contents



® ®
   Critical Accounting Policies
   Allowance for Doubtful Accounts
 Inventories
 35




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##### Table of Contents



Sales Allowances.
 Valuation of Intangible Assets Accounting for the Impairment or Disposal of Long-Lived Assets
 
    
    significant under performance relative to expected historical or projected future
operating results;
    
    market projections for cancer research technology;
    
    its ability to obtain patents, including continuation patents, on technology;
    
    significant changes in its strategic business objectives and utilization of the assets;
    
    significant negative industry or economic trends, including legal factors;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in
China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
  Revenue Recognition.
 Revenue Recognition in Financial Statements
 Wholesale Sales.
 36




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##### Table of Contents



Direct Distribution.
  How Taxes Collected
from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross Versus Net Presentation)
 Deferred Taxes
 Litigation Accounting for
Contingencies
 Stock-Based Compensation Expense.
 37




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##### Table of Contents



Accounting for Equity
Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling
Goods or Services, Accounting Recognition for Certain Transactions
Involving Equity Instruments Granted to Other than Employees.
  Accounting for Stock
Issued to Employees,
 Share-Based Payment
  Results of Operations
 Year Ended December 31, 2007 Compared to Years Ended December 31, 2006 and 2005
  Net Revenues.
 Corporate
 ®
 ® ® ®
 38




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##### Table of Contents



® ® .
 China-Wholesale
   
    
    Human Placental Histosolution (Goodnak)
    
    Levofloxacin Lactate and Sodium Chloride Injection
    
    50% NACL G.S.
    
    Metronidazole Injection
    
    Levofloxacin Hydrochloride Injection
    
    Ondansetron Hydrochloride Injection
    
    Domperidone Tablet.
   Percent ofTotalChina-WholesaleName
    
    SalesDomperidone Tablets
    
    
    34.81
    %Human Placental Histosolution (Goodnak)
    
    
    24.67
    %Diavitamin, Calcium Hydrogen Phosphate and Lysine Tablets
    
    
    9.46
    %Levofloxacin Lactate and Sodium Chloride Injection
    
    
    5.91
    %GS (5% and 10%)
    
    
    4.69
    %79.54
    %
 China-Direct Distribution
  Gross Profit.
 Corporate
 ® ®
 39




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##### Table of Contents



China-Wholesale
    China-Direct Distribution
  Research and Development.
 Corporate
 ® ®
 China-Wholesale and China-Direct Distribution
  Selling, General and Administrative Expenses. ,
  40




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##### Table of Contents



Corporate
   Year Ended December 31,2007
    
    2006
    
    2005Investor relations (including value of warrants/options)
    
    $
    2,184,293
    
    
    $
    1,697,722
    
    
    $
    571,654Salary and wages (including value of options)
    
    $
    2,417,310
    
    
    $
    903,957
    
    
    $
    779,077Directors fees (including value of options)
    
    $
    909,359
    
    
    $
    2,313,740
    
    
    $
    198,000Consulting fees
    
    $
    258,584
    
    
    $
    22,050
    
    
    $
    21,705Accounting and other professional fees
    
    $
    456,088
    
    
    $
    167,859
    
    
    $
    57,554Legal
    
    $
    322,585
    
    
    $
    167,105
    
    
    $
    116,201
 China-Wholesale
   Geographic Location  ChinaSoutheastern
    
    
    24
    %Eastern
    
    
    15
    %Central
    
    
    40
    %Northeastern
    
    
    20
    %Southwestern
    
    
    1
    %
  China-Direct Distribution
  41




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##### Table of Contents



Interest Income and Expense.
 Corporate.
   China-Wholesale
  Loss from Operations and Net Loss.
  Assets and liquidity
       42




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##### Table of Contents



Going Concern
  ® ®
 ®
       43




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##### Table of Contents



Forward Looking Statements
 ®
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Exchange Risk
    44




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##### Table of Contents



Item 8. Financial Statements
 AMDL, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page NumberReport of Independent Registered Public Accounting Firm
    
    
    46Consolidated Balance Sheets at December 31, 2006 and 2007
    
    
    47Consolidated Statements of Operations and Comprehensive Loss
for the years ended December 31, 2005, 2006 and 2007
    
    
    48Consolidated Statements of Stockholders Equity for the
years ended December 31, 2005, 2006, and 2007
    
    
    49Consolidated Statements of Cash Flows for the years
ended December 31, 2005, 2006 and 2007
    
    
    50Notes to Consolidated Financial Statements
    
    
    51
 45




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Share-Based Payment
   
 46




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##### Table of Contents



AMDL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2006
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,584,973
    
    
    $
    6,157,493Accounts receivable, net
    
    
    1,541,877
    
    
    
    2,954,902Inventories
    
    
    740,658
    
    
    
    921,135Prepaid consulting
    
    
    647,627
    
    
    
    872,688Prepaid expenses and other current assets
    
    
    62,267
    
    
    
    1,248,637Total current assets
    
    
    4,577,402
    
    
    
    12,154,855Property and equipment, net
    
    
    9,129,904
    
    
    
    11,672,462Intangible assets, net
    
    
    3,881,872
    
    
    
    5,615,312Other assets
    
    
    1,651,435
    
    
    
    3,424,549Total assets
    
    $
    19,240,613
    
    
    $
    32,867,178LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,910,154
    
    
    $
    1,679,636Income taxes payable
    
    
    
    
    
    
    59,332Deferred revenue
    
    
    
    
    
    
    246,758Current portion of notes payable
    
    
    3,060,662
    
    
    
    5,159,939Total current liabilities
    
    
    4,970,816
    
    
    
    7,145,665Notes payable, net of current portion
    
    
    1,606,641
    
    
    
    Total liabilities
    
    
    6,577,457
    
    
    
    7,145,665Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value;
25,000,000 shares authorized; none issued
and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000
shares authorized; 10,195,697 and 15,079,528
shares issued at December 31, 2006 and 2007,
respectively; 10,095,697 and 14,979,528
shares outstanding at December 31, 2006 and
2007, respectively
    
    
    10,096
    
    
    
    14,980Additional paid-in capital
    
    
    47,209,931
    
    
    
    61,525,001Accumulated other comprehensive (loss) income
    
    
    (21,728
    )
    
    
    1,068,429Accumulated deficit
    
    
    (34,535,143
    )
    
    
    (36,886,897
    )Total stockholders equity
    
    
    12,663,156
    
    
    
    25,721,513Total liabilities and stockholders equity
    
    $
    19,240,613
    
    
    $
    32,867,178
  47




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##### Table of Contents



AMDL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 Year Ended December 31,2005
    
    
    2006
    
    
    2007Net revenues
    
    $
    67,565
    
    
    $
    2,103,936
    
    
    $
    15,009,100Cost of sales
    
    
    12,595
    
    
    
    1,170,443
    
    
    
    6,903,408Gross profit
    
    
    54,970
    
    
    
    933,493
    
    
    
    8,105,692Operating expenses:Research and development
    
    
    272,650
    
    
    
    395,964
    
    
    
    28,628Selling, general and administrative
    
    
    2,326,224
    
    
    
    6,311,310
    
    
    
    9,869,4832,598,874
    
    
    
    6,707,274
    
    
    
    9,898,111Loss from operations
    
    
    (2,543,904
    )
    
    
    (5,773,781
    )
    
    
    (1,792,419
    )Other income (expense):Other income (expense), net
    
    
    38,039
    
    
    
    27,033
    
    
    
    (18,856
    )Interest
expense net
    
    
    
    
    
    
    (90,433
    )
    
    
    (377,379
    )Total other income (expense), net
    
    
    38,039
    
    
    
    (63,400
    )
    
    
    (396,235
    )Loss before provision for income taxes
    
    
    (2,505,865
    )
    
    
    (5,837,181
    )
    
    
    (2,188,654
    )Provision for income taxes
    
    
    800
    
    
    
    30,247
    
    
    
    163,100Net loss
    
    
    (2,506,665
    )
    
    
    (5,867,428
    )
    
    
    (2,351,754
    )Other comprehensive loss (gain):Foreign currency translation (loss) gain
    
    
    
    
    
    
    (21,728
    )
    
    
    1,090,157Comprehensive loss
    
    $
    (2,506,665
    )
    
    $
    (5,889,156
    )
    
    $
    (1,261,597
    )Basic and diluted loss per common share
    
    $
    (0.50
    )
    
    $
    (0.82
    )
    
    $
    (0.20
    )Weighted average common shares outstanding
 basic and diluted
    
    
    5,002,886
    
    
    
    7,117,893
    
    
    
    11,718,586
  48




---



##### Table of Contents



AMDL, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 For The Years Ended December 31, 2005, 2006 and 2007
 Additional
    
    
    
    
    
    Accumulated
Other
    
    
    
    
    
    TotalCommon Stock
    
    Preferred Stock
    
    Paid-in
    
    Prepaid
    
    Comprehensive
    
    Accumulated
    
    StockholdersShares
    
    Amount
    
    Shares
    
    Amount
    
    Capital
    
    Consulting
    
    Income (Loss)
    
    Deficit
    
    EquityBalance, January 1, 2005
    
    
    4,700,178
    
    
    $
    4,700
    
    
    
    
    
    
    $
    
    
    
    $
    30,394,728
    
    
    $
    
    
    
    $
    
    
    
    $
    (26,161,050
    )
    
    $
    4,238,378Common stock issued for
cash, net of issuance
costs of $138,814
    
    
    632,718
    
    
    
    633
    
    
    
    
    
    
    
    
    
    
    
    867,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    868,186Common stock issued for
consulting services
    
    
    130,000
    
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    385,870
    
    
    
    (386,000
    )
    
    
    
    
    
    
    
    
    
    
    Estimated fair market
value of options and
warrants issued to
third parties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,500
    
    
    
    (20,500
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of prepaid
consulting costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384,611
    
    
    
    
    
    
    
    
    
    
    
    384,611Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,506,665
    )
    
    
    (2,506,665
    )Balance, December 31,
2005
    
    
    5,462,896
    
    
    
    5,463
    
    
    
    
    
    
    
    
    
    
    
    31,668,651
    
    
    
    (21,889
    )
    
    
    
    
    
    
    (28,667,715
    )
    
    
    2,984,510Reclassification of
prepaid consulting upon
adoption of SFAS No.
123(R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,889
    )
    
    
    21,889
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued for
cash, net of issuance
costs of $503,244
    
    
    1,347,351
    
    
    
    1,348
    
    
    
    
    
    
    
    
    
    
    
    2,570,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,572,051Common stock issued in
connection with JPI
Acquisition
    
    
    2,643,000
    
    
    
    2,643
    
    
    
    
    
    
    
    
    
    
    
    7,926,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,929,000Stock options issued in
connection with JPI
acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    595,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    595,000Common stock issued for
consulting services
    
    
    529,000
    
    
    
    529
    
    
    
    
    
    
    
    
    
    
    
    1,639,281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,639,810Estimated fair market
value of warrants and
common stock issued to
third parties for
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,155Stock-based employee
and director
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,397,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,397,700Exercise of warrants
and options
    
    
    113,450
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    305,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306,086Translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,728
    )
    
    
    
    
    
    
    (21,728
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,867,428
    )
    
    
    (5,867,428
    )Balance, December 31,
2006
    
    
    10,095,697
    
    
    
    10,096
    
    
    
    
    
    
    
    
    
    
    
    47,209,931
    
    
    
    
    
    
    
    (21,728
    )
    
    
    (34,535,143
    )
    
    
    12,663,156Common stock issued for
cash, net of issuance
costs of $1,543,780
    
    
    4,038,128
    
    
    
    4,038
    
    
    
    
    
    
    
    
    
    
    
    9,985,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,989,797Common stock issued for
consulting services
    
    
    690,000
    
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    2,333,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,333,850Estimated fair market
value of warrants and
options issued to third
parties for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,300Stock-based employee
and director
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,507,310
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,507,310Exercise of warrants
and options
    
    
    155,703
    
    
    
    156
    
    
    
    
    
    
    
    
    
    
    
    418,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418,697Translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,090,157
    
    
    
    
    
    
    
    1,090,157Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,351,754
    )
    
    
    (2,351,754
    )Balance, December 31,
2007
    
    
    14,979,528
    
    
    $
    14,980
    
    
    
    
    
    
    $
    
    
    
    $
    61,525,001
    
    
    $
    
    
    
    $
    1,068,429
    
    
    $
    (36,886,897
    )
    
    $
    25,721,513
  49




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##### Table of Contents



AMDL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2005
    
    
    2006
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (2,506,665
    )
    
    $
    (5,867,428
    )
    
    $
    (2,351,754
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    107,508
    
    
    
    310,372
    
    
    
    1,265,782Fair market value of options granted to employees
and directors for services
    
    
    
    
    
    
    2,397,700
    
    
    
    1,507,310Fair market value of common stock, warrants and
options expensed for services
    
    
    384,611
    
    
    
    1,120,338
    
    
    
    2,179,089Changes in operating assets and liabilities, net
of effects of acquisition:Accounts receivable
    
    
    
    
    
    
    (101,197
    )
    
    
    (986,262
    )Inventories
    
    
    (10,636
    )
    
    
    (111,364
    )
    
    
    (155,270
    )Prepaid consulting, expenses and other assets
    
    
    (71,470
    )
    
    
    40,844
    
    
    
    (1,600,348
    )Accounts payable and accrued expenses
    
    
    31,958
    
    
    
    272,450
    
    
    
    (281,061
    )Income taxes payable
    
    
    
    
    
    
    
    
    
    
    59,332Deferred revenue
    
    
    
    
    
    
    
    
    
    
    238,939Net cash used in operating activities
    
    
    (2,064,694
    )
    
    
    (1,938,285
    )
    
    
    (124,243
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (10,937
    )
    
    
    (2,797
    )
    
    
    (2,536,163
    )Purchase of product licenses
    
    
    
    
    
    
    (332,587
    )
    
    
    (2,561,773
    )Advances to
agent for retail operations
    
    
    
    
    
    
    
    
    
    
    (574,123
    )Cash paid for acquisition of JPI, net of cash acquired
    
    
    
    
    
    
    (395,756
    )
    
    
    Net cash used in investing activities
    
    
    (10,937
    )
    
    
    (731,140
    )
    
    
    (5,672,059
    )Cash flows from financing activities:Payments on notes payable
    
    
    
    
    
    
    (103
    )
    
    
    (135,215
    )Proceeds from issuance of common stock, net of cash
offering costs of $138,814, $503,244 and $1,543,780 in
2005, 2006, and 2007, respectively
    
    
    868,186
    
    
    
    2,572,051
    
    
    
    9,989,797Proceeds from the exercise of warrants and options
    
    
    
    
    
    
    306,086
    
    
    
    418,697Net cash provided by financing activities
    
    
    868,186
    
    
    
    2,878,034
    
    
    
    10,273,279Effect of exchange rates on cash and cash equivalents
    
    
    
    
    
    
    (21,728
    )
    
    
    95,543Net change in cash and cash equivalents
    
    
    (1,207,445
    )
    
    
    186,881
    
    
    
    4,572,520Cash and cash equivalents, beginning of year
    
    
    2,605,537
    
    
    
    1,398,092
    
    
    
    1,584,973Cash and cash equivalents, end of year
    
    $
    1,398,092
    
    
    $
    1,584,973
    
    
    $
    6,157,493Supplemental disclosure of cash flow information:Cash paid during the year for interest
    
    $
    
    
    
    $
    27,034
    
    
    $
    56,707Cash paid during the year for taxes
    
    $
    800
    
    
    $
    800
    
    
    $
    105,990
   50




---



##### Table of Contents



NOTE 1  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  ®
  Going Concern
 ® ®
 ®
   51




---



##### Table of Contents



Reverse Stock Split
  Principles of Consolidation
  Reclassifications
  Revenue Recognition
   How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross Versus Net Presentation)
 Wholesale Sales
 Revenue
Recognition in Financial Statements
 Direct Distribution
  52




---



##### Table of Contents



Accounting for Shipping and Handling Revenue, Fees and Costs
 Accounting for Shipping and Handling Fees and Costs.
 Other Comprehensive Income and Foreign Currency Translation
 Reporting Comprehensive Income
   Research and Development
  53




---



##### Table of Contents



Cash Equivalents
  Inventories
  Property and Equipment
  Buildings and improvements
    
    
    5 to 30 yearsMachinery and equipment, including lab equipment
    
    
    5 to 15 yearsOffice equipment
    
    
    3 to 10 years
  Intangible Assets
  Intellectual Property
  Production Rights
  Land Use Rights
  54




---



##### Table of Contents



Non-Compete Agreements
  Customer Relationships
  Trade Name and Logo
  Advance of Funds
  Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 
    
    significant under performance relative to expected historical or projected future
operating results;
    
    market projections for cancer research technology;
    
    its ability to obtain patents, including continuation patents, on technology;
    
    significant changes in its strategic business objectives and utilization of the assets;
    
    significant negative industry or economic trends, including legal factors;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in
China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
  55




---



##### Table of Contents



Risks and Uncertainties
 Manufacturing and Distribution Operations in China
      Regulatory Environment
 ®
 ® ® ® ® ®
 56




---



##### Table of Contents



® ® ®
 ® ® ® ®
 ® ®
 ® ® ®
  Share-Based Compensation
  Accounting for Equity
Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling
Goods or Services, Accounting Recognition for Certain Transactions
Involving Equity Instruments Granted to Other than Employees.
 57




---



##### Table of Contents



Accounting for Stock
Issued to Employees,
 Share-Based Payment,
   Basic and Diluted Loss Per Share
  Income Taxes
 Accounting for Income Taxes.
   58




---



##### Table of Contents



Use of Estimates
  Fair Value of Financial Instruments
  Advertising Costs
  Concentrations of Credit Risk
 Cash
  Customers
    Recent Accounting Pronouncements
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109
 59




---



##### Table of Contents



Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations Business Combinations.
 Noncontrolling Interests in Consolidated Financial
StatementsAn Amendment of ARB No. 51
 Effective Date of FASB Statement No. 157
 NOTE 2  ACQUISITION OF JPI
   60




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##### Table of Contents



®
 ®
 Business Combinations
 Purchase consideration:Transaction costs, primarily legal and accounting
    
    $
    592,896Estimated fair value of common stock issued
    
    
    7,929,000Estimated fair value of options to purchase common stock
    
    
    595,000$
    9,116,896Allocation:Tangible assets acquired:Cash
    
    $
    197,140Accounts receivable
    
    
    1,440,680Inventories
    
    
    550,623Property and equipment
    
    
    9,268,300Land use rights
    
    
    1,405,829Prepayments, primarily product licenses
    
    
    1,292,531Identifiable intangible assets acquired:Non-compete agreements
    
    
    324,415Customer relationships
    
    
    214,328Trade name and logo
    
    
    530,829Total assets acquired
    
    
    15,224,675Liabilities assumed:Current liabilities
    
    
    (1,440,373
    )Current and long-term debt
    
    
    (4,667,406
    )Total liabilities assumed
    
    
    (6,107,779
    )$
    9,116,896
   61




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##### Table of Contents



For the Year
    
    
    For the YearEnded
    
    
    EndedDecember 31, 2005
    
    
    December 31, 2006Net revenues
    
    $
    6,985,504
    
    
    $
    7,186,238Net loss
    
    $
    (905,970
    )
    
    $
    (3,869,371
    )Basic and diluted loss per share
    
    $
    (0.12
    )
    
    $
    (0.43
    )Weighted average common shares outstanding  basic and diluted
    
    
    7,645,886
    
    
    
    9,080,230
 NOTE 3  INVENTORIES
  December 31,2006
    
    
    2007Raw materials
    
    $
    241,219
    
    
    $
    620,128Work-in-process
    
    
    9,892
    
    
    
    17,331Finished goods
    
    
    489,547
    
    
    
    283,676$
    740,658
    
    
    $
    921,135
 NOTE 4  PROPERTY AND EQUIPMENT
  December 31,2006
    
    
    2007Building and improvements
    
    $
    6,443,711
    
    
    $
    7,397,254Machinery and equipment
    
    
    2,018,097
    
    
    
    3,503,968Office equipment
    
    
    851,998
    
    
    
    164,467Lab equipment
    
    
    12,371
    
    
    
    12,371Construction in progress
    
    
    
    
    
    
    1,791,3189,326,177
    
    
    
    12,869,378Less accumulated depreciation
    
    
    (196,273
    )
    
    
    (1,196,916
    )$
    9,129,904
    
    
    $
    11,672,642
  62




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##### Table of Contents



NOTE 5  INTANGIBLE ASSETS
  Effect ofGross
    
    
    Adjustment
    
    
    Adjusted
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    AmortizationCarrying
    
    
    to Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Currency
    
    
    
    
    
    
    PeriodValue
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Translation
    
    
    Net
    
    
    (in years)Assets subject to
amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    
    
    
    $
    2,000,000
    
    
    $
    (641,667
    )
    
    $
    
    
    
    $
    1,358,333
    
    
    
    20Production rights
    
    
    1,916,622
    
    
    
    
    
    
    
    1,916,622
    
    
    
    (113,985
    )
    
    
    38,725
    
    
    
    1,841,362
    
    
    
    10Land use rights
    
    
    1,200,769
    
    
    
    205,060
    
    
    
    1,405,829
    
    
    
    (49,304
    )
    
    
    111,644
    
    
    
    1,468,169
    
    
    
    33Non-compete
agreements
    
    
    382,389
    
    
    
    (57,974
    )
    
    
    324,415
    
    
    
    (90,269
    )
    
    
    17,488
    
    
    
    251,364
    
    
    
    5Customer
relationships
    
    
    254,926
    
    
    
    (40,598
    )
    
    
    214,328
    
    
    
    (42,960
    )
    
    
    15,153
    
    
    
    186,251
    
    
    
    7Trade name and logo
    
    
    637,317
    
    
    
    (106,488
    )
    
    
    530,829
    
    
    
    (67,888
    )
    
    
    46,351
    
    
    
    509,292
    
    
    
    10$
    6,392,023
    
    
    $
    
    
    
    $
    6,392,023
    
    
    $
    (1,006,073
    )
    
    $
    229,362
    
    
    $
    5,615,312
   GrossCarrying
    
    
    AccumulatedValue
    
    
    Amortization
    
    
    NetAssets subject to
amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (541,667
    )
    
    $
    1,458,333Land use rights
    
    
    1,200,769
    
    
    
    (10,205
    )
    
    
    1,190,564Non-compete agreements
    
    
    382,389
    
    
    
    (19,120
    )
    
    
    363,269Customer relationships
    
    
    254,926
    
    
    
    (9,105
    )
    
    
    245,821Trade name and logo
    
    
    637,317
    
    
    
    (13,432
    )
    
    
    623,885$
    4,475,401
    
    
    $
    (593,529
    )
    
    $
    3,881,872
  Years Ending December 31,2008
    
    $
    503,7422009
    
    
    503,7422010
    
    
    503,7422011
    
    
    475,2502012
    
    
    433,711
   63




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NOTE 6  PREPAID EXPENSES, OTHER CURRENT ASSETS, AND OTHER ASSETS
  December 31,2006
    
    
    2007Deposit for
raw materials
    
    $
    
    
    
    $
    617,661Other receivables
    
    
    
    
    
    
    498,726Due from related parties
    
    
    14,510
    
    
    
    9,764Other
    
    
    47,757
    
    
    
    122,486$
    62,267
    
    
    $
    1,248,637
   December 31,2006
    
    
    2007Deposits, primarily product licenses
    
    $
    1,645,678
    
    
    $
    2,827,526Refundable deposits
    
    
    5,757
    
    
    
    22,900Advances for retail operations
    
    
    0
    
    
    
    574,123$
    1,651,435
    
    
    $
    3,424,549
  NOTE 7  INCOME TAXES
  Year Ended December 31,2005
    
    
    2006
    
    
    2007Provision (benefit) for income taxesFederal:Current
    
    $
    
    
    
    $
    
    
    
    $
    Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    State and local:Current
    
    
    1
    
    
    
    1
    
    
    
    1Deferred
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1Foreign:Current
    
    
    
    
    
    
    29
    
    
    
    167Deferred
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    29
    
    
    
    162Total provision for income taxes
    
    $
    1
    
    
    $
    30
    
    
    $
    163
 64




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##### Table of Contents



2005
    
    
    2006
    
    
    2007Loss before provision for income taxes
    
    $
    (2,506
    )
    
    $
    (5,867
    )
    
    $
    (2,189
    )Expected tax benefit at 34%
    
    
    (852
    )
    
    
    (1,995
    )
    
    
    (744
    )State taxes, net of federal benefit
    
    
    1
    
    
    
    1
    
    
    
    1Foreign earnings taxed at different rates
    
    
    
    
    
    
    (130
    )
    
    
    (1,639
    )Stock issuances
    
    
    
    
    
    
    358
    
    
    
    718Increase in valuation allowance
    
    
    714
    
    
    
    1,441
    
    
    
    1,609Other
    
    
    138
    
    
    
    355
    
    
    
    218Income tax provision
    
    $
    1
    
    
    $
    30
    
    
    $
    163
    December 31,2005
    
    
    2006
    
    
    2007Net operating loss carryforwards
    
    $
    10,174
    
    
    $
    10,060
    
    
    $
    11,685Granting of stock option and warrants
    
    
    1,756
    
    
    
    1,876
    
    
    
    1,752Tax credits carryforwards
    
    
    
    
    
    
    255
    
    
    
    206Other temporary differences
    
    
    
    
    
    
    4
    
    
    
    0Net deferred tax asset
    
    
    11,930
    
    
    
    12,195
    
    
    
    13,648Depreciation
    
    
    
    
    
    
    (158
    )
    
    
    (193
    )Valuation allowance
    
    
    (11,930
    )
    
    
    (12,037
    )
    
    
    (13,450
    )Net deferred tax asset
    
    $
    
    
    
    $
    
    
    
    $
    0
  65




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##### Table of Contents



Unrecognized Tax Benefits:Balance, January 1, 2007
    
    $
    Increases (decreases) for tax positions taken during a prior period
    
    
    Increases (decreases) for tax positions taken during the current period
    
    
    123Decreases relating to settlements
    
    
    Decreases resulting from the expiration of the statute of limitations
    
    
    Balance, December 31, 2007
    
    $
    123
    66




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Value Added Tax Payable
  NOTE 8  NOTES PAYABLE
   67




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NOTE 9  COMMITMENTS AND CONTINGENCIES
 Operating Leases
    Litigation
       Suspension of Product Sales
  68




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Change in Control Severance Plan
     Consulting Agreements
  Employment Agreements
   Licensing Agreements
  69




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®
  Indemnities and Guarantees
  Tax Matters
  NOTE 10  STOCK OPTIONS
   70




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Summary of Assumptions and Activity
  2005
    
    2006
    
    2007Expected volatility
    
    
    83
    %
    
    
    276
    %
    
    
    353
    %Expected term
    
    1 year
    
    4 years
    
    5 yearsRisk-free interest rate
    
    
    3.12
    %
    
    
    4.71
    %
    
    
    4.92
    %Dividend yield
    
    
    
    %
    
    
    
    %
    
    
    
    %
  71




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2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding and
exercisable,
beginning of year
    
    
    863,637
    
    
    $
    7.30
    
    
    
    816,637
    
    
    $
    7.00
    
    
    
    2,062,637
    
    
    $
    3.97Granted
    
    
    60,000
    
    
    
    4.15
    
    
    
    1,348,000
    
    
    
    3.31
    
    
    
    437,000
    
    
    
    4.06Expired/forfeited
    
    
    (107,000
    )
    
    
    7.65
    
    
    
    (95,000
    )
    
    
    20.00
    
    
    
    (293,401
    )
    
    
    5.01Exercised
    
    
    
    
    
    
    
    
    
    
    (7,000
    )
    
    
    2.40
    
    
    
    (113,000
    )
    
    
    2.40Outstanding and
exercisable, end of
year
    
    
    816,637
    
    
    $
    7.00
    
    
    
    2,062,637
    
    
    $
    3.97
    
    
    
    2,093,236
    
    
    $
    3.97
   Options Outstanding and ExercisableWeightedAverage
    
    
    WeightedNumber
    
    
    Remaining
    
    
    AverageRange of
    
    of Shares
    
    
    Contractual
    
    
    ExerciseExercise Price
    
    Outstanding
    
    
    Life (Years)
    
    
    Price$2.85 - $3.70
    
    
    1,148,001
    
    
    
    2.79
    
    
    $
    3.24$4.06 - $5.50
    
    
    680,238
    
    
    
    3.34
    
    
    $
    4.34$6.15
    
    
    265,000
    
    
    
    1.15
    
    
    $
    6.152,093,236
    
    
    
    2.76
    
    
    $
    3.97
 72




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Pro Forma Presentation
  For the YearEndedDecember 31, 2005Net loss as reported
    
    $
    (2,506,665
    )Deduct: Total stock-based compensation under the fair
value based method for all awards, net of related tax
effects
    
    
    (72,000
    )Pro forma net loss
    
    $
    (2,578,665
    )Basic and diluted net loss per share  as reported
    
    $
    (0.50
    )Basic and diluted net loss per share  pro forma
    
    $
    (0.52
    )
 NOTE 11  STOCK WARRANTS
        73




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74




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2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseWarrants
    
    
    Price
    
    
    Warrants
    
    
    Price
    
    
    Warrants
    
    
    PriceOutstanding and
exercisable,
beginning of year
    
    
    963,379
    
    
    $
    5.95
    
    
    
    1,323,010
    
    
    $
    5.00
    
    
    
    2,627,992
    
    
    $
    4.22Issued
    
    
    399,631
    
    
    
    2.40
    
    
    
    1,493,652
    
    
    
    3.48
    
    
    
    2,447,878
    
    
    
    4.20Expired/forfeited
    
    
    (40,000
    )
    
    
    1.95
    
    
    
    (82,220
    )
    
    
    4.91
    
    
    
    (504,499
    )
    
    
    6.38Exercised
    
    
    
    
    
    
    
    
    
    
    (106,450
    )
    
    
    2.72
    
    
    
    (42,703
    )
    
    
    3.45Outstanding and
exercisable, end of
year
    
    
    1,323,010
    
    
    $
    5.00
    
    
    
    2,627,992
    
    
    $
    4.22
    
    
    
    4,528,668
    
    
    $
    3.98Weighted average
fair value of
warrants issued
    
    
    
    
    
    $
    1.05
    
    
    
    
    
    
    $
    2.61
    
    
    
    
    
    
    $
    3.37
  WeightedAverageNumber of
    
    RemainingWarrant
    
    ContractualExercise Price
    
    Shares
    
    Life (Years)$ 5.85
    
    
    353,488
    
    
    
    1.00$ 5.51
    
    
    367,137
    
    
    
    2.00$ 4.74
    
    
    1,204,506
    
    
    
    4.00$ 4.52
    
    
    25,000
    
    
    
    0.96$ 3.68
    
    
    1,205,632
    
    
    
    2.78$ 2.78
    
    
    1,012,495
    
    
    
    1.27$ 2.45
    
    
    233,826
    
    
    
    0.63$ 2.20
    
    
    126,584
    
    
    
    0.664,528,668
  NOTE 12  STOCKHOLDERS EQUITY
 Preferred Stock
  Common Stock
  Cash Financing Activities
  75




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August 2005 Offering
    April 2006 Offering
    December 2006 Offering
  76




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April 2007 Offering
    December 2007 Offering
     77




---



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Non-Cash Financing Activities
           78




---



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NOTE 13  SEGMENT REPORTING
 Disclosures about Segments of an Enterprise and Related
Information.
  79




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##### Table of Contents



China-Wholesale
    
    China-Direct
    
    Corporate
    
    TotalNet revenue
    
    $
    14,813,299
    
    
    $
    80,000
    
    
    $
    115,801
    
    
    $
    15,009,100Gross profit
    
    $
    7,929,280
    
    
    $
    80,000
    
    
    $
    96,412
    
    
    $
    8,105,692Depreciation
    
    $
    821,109
    
    
    $
    
    
    
    $
    7,400
    
    
    $
    828,509Amortization
    
    $
    337,273
    
    
    $
    
    
    
    $
    100,000
    
    
    $
    437,273Interest expense
    
    $
    373,508
    
    
    $
    
    
    
    $
    3,871
    
    
    $
    377,379Net income (loss)
    
    $
    5,039,496
    
    
    $
    80,000
    
    
    $
    (7,471,250
    )
    
    $
    (2,351,754
    )Identifiable assets
    
    $
    24,287,399
    
    
    $
    574,123
    
    
    $
    8,005,656
    
    
    $
    32,867,178Capital expenditures
    
    $
    2,536,163
    
    
    $
    
    
    
    $
    
    
    
    $
    2,536,163
  China-Wholesale
    
    Corporate
    
    TotalNet revenue
    
    $
    2,032,881
    
    
    $
    71,055
    
    
    $
    2,103,936Gross profit
    
    $
    891,677
    
    
    $
    41,816
    
    
    $
    933,493Depreciation
    
    $
    149,910
    
    
    $
    8,600
    
    
    $
    158,510Amortization
    
    $
    51,862
    
    
    $
    100,000
    
    
    $
    151,862Interest expense
    
    $
    90,433
    
    
    $
    
    
    
    $
    90,433Net income (loss)
    
    $
    435,814
    
    
    $
    (6,303,242
    )
    
    $
    (5,867,428
    )Identifiable assets
    
    $
    15,791,809
    
    
    $
    3,448,804
    
    
    $
    19,240,613Capital expenditures
    
    $
    
    
    
    $
    2,797
    
    
    $
    2,797
  NOTE 14  RELATED PARTY TRANSACTIONS
 ®
  NOTE 15  SUBSEQUENT EVENTS
 Issuance of Securities
   License
Agreement with Mygene
 MGI
    The
MyGene HPV Test Kit
  

Pre-Diagnosis of cervical cancer;

Diagnosis of HPV infection and the
genotype of HPV infection;

Diagnosis for low copy of HPV infection;

Diagnosis of multiple HPV infections;

Simple and easy sample collecting;

Accurate and prompt results; and

Identifying total 24 types of HPV
infections
 Regulatory
Approval of the MyGene HPV Test Kit
  80




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Bank Loans
  Escrowed Shares
  Employment Agreement
   Executive Management Severance Pay Plan
   81




---



##### Table of Contents



Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
 
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition or disposition of our assets that could have a material effect on the financial
statements.
 Managements Report on Internal Control Over Financial Reporting
 Internal ControlIntegrated Framework
 1.
    
    The Company did not maintain effective controls to ensure there is adequate analysis,
documentation, reconciliation, and review of accounting records and supporting data,
especially as it relates to subsidiary accounting records. This control deficiency contributed
to the individual material weaknesses described below:
 a)
    
    Shortage of qualified financial reporting personnel with sufficient depth, skills and
experience to apply accounting principles generally accepted in the United States of
America (GAAP).
 82




---



##### Table of Contents



b)
    
    The Company did not maintain effective controls to ensure there is adequate analysis,
documentation, reconciliation, and review of accounting records and supporting data.
 In summary with respect to the control deficiencies in a) and b) above could result in a
material misstatement of the aforementioned accounts or disclosures that would result in a
material misstatement to the Companys interim or annual consolidated financial statements that
would not be prevented or detected. Accordingly, management has determined that each of the
control deficiencies described in a) and b) above constitutes a material weakness.
 Remediation of Material Weakness
  1.
    
    authorized the addition of additional staff members and outside
consultants with appropriate levels of experience and accounting expertise to the
finance department and information technology department to ensure that there is
sufficient depth and experience to implement and monitor the appropriate level of
control procedures related to all of our US and China locations.2.
    
    taken steps to unify the financial reporting of all of our China
entities and are in the initial planning phase of upgrading, where possible,
certain of our information technology systems impacting financial reporting. We
are currently planning further integration of information technology policy and
procedures and evaluating them as they impact all our subsidiaries to provide
accurate and complete financial reporting information.3.
    
    hired an accounting manager for our Chinese operating entities who is
familiar with recording transactions in conformity with accounting principles
generally accepted in the United States of America and who reports to the Chief Financial
Officer. Management will monitor the progress of the accounting manager who will
manage the process of instituting additional procedures for future accounting
periods that will cause transactions in China to be reported in a timely manner and
according to the appropriate accounting principles.4.
    
    purchased and are instituting a company wide accounting software system
that will increase the efficiency of information transfer between JJB, YYB, JPI and
AMDL. The implementation process will begin in April of 2008 in the United States
and will roll out to China by mid-year.
  Inherent Limitations Over Internal Controls
  83




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  Item 9B. Other Items.
  
 PART III
 
 Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance;
Compliance with Section 16 (a) of the Exchange Act.
  Name
    
    Age
    
    Year First Elected
    
    Position(s)William M. Thompson III, M.D.
    
    
    81
    
    
    
    1989
    
    
    Chairman of the Board of DirectorsGary L. Dreher
    
    
    62
    
    
    
    1999
    
    
    President, Chief Executive
Officer, and DirectorDouglas C. MacLellan
    
    
    52
    
    
    
    1992
    
    
    DirectorEdward R. Arquilla, M.D., Ph.D.
    
    
    86
    
    
    
    1997
    
    
    DirectorMinghui Jia
    
    
    48
    
    
    
    2006
    
    
    Director
   84




---



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Communications with Directors
  85




---



##### Table of Contents



Board of Directors Meetings
  Audit Committee
  Executive Officers
  Section 16(a) Beneficial Ownership Reporting Compliance
   Code of Ethics for Financial Professionals
 http://www.amdl.com
 
 Item 11. Executive Compensation
 All OtherOption
    
    
    CompensationName and Position
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    Awards (1)
    
    
    ($)
    
    
    TotalGary L. Dreher,
President and CEO
    
    
    2007
    
    
    $
    457,896
    
    
    $
    90,000
    
    
    $
    607,160
    
    
    $
    88,582
    (4)
    
    $
    1,243,6382006
    
    
    $
    400,000
    
    
    $
    10,000
    
    
    $
    725,000
    
    
    $
    19,119
    (2)
    
    $
    1,170,786Akio Ariura Chief
Financial Officer (3)
    
    
    2007
    
    
    $
    176,666
    
    
    $
    15,000
    
    
    $
    176,500
    
    
    $
    12,944
    
    
    $
    381,1102006
    
    
    $
    59,971
    
    
    
    
    
    
    $
    128,800
    
    
    
    
    
    
    $
    188,771
 
 (1)
    
    The value of option awards included in this column represents the compensation costs
recognized by the Company in fiscal year 2006 and 2007 for option awards made in 2006 and
2007 and in prior fiscal years calculated pursuant to SFAS No. 123(R). The values included
within this column have not been, and may never be realized. The options might never be
exercised and the value received by the executive officer or the Chief Financial Officer,
if any, will depend on the share price on the exercise date. The assumptions used by the
Company with respect to the valuation of the option awards are set forth in the Notes to
our Consolidated Financial Statements, which are included in our Form 10-K. There were no
forfeitures during the year.
 86




---



##### Table of Contents



(2)
    
    Mr. Drehers perquisites and other personal benefits include certain amounts for life
insurance, car allowance and membership dues.(3)
    
    Mr. Ariura joined us as Chief Financial Officer on August 16, 2006. The 2006 amounts
above reflect the compensation he earned from August 16, 2006 through December 31, 2006.
Mr. Ariura was appointed as Secretary effective as of June 26, 2007.(4)
    
    Includes $42,700 from the exercise of certain options.
 Employment Agreements
    87




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year End
 Option AwardsNumber of
    
    
    Number ofSecurities
    
    
    Securities
    
    
    Equity Incentive PlanUnderlying
    
    
    Underlying
    
    
    Awards: Number ofUnexercised
    
    
    Unexercised
    
    
    Securities Underlying
    
    
    OptionOptions (#)
    
    
    Options (#)
    
    
    Unexercised
    
    
    Exercise
    
    
    Option ExpirationName of Person
    
    Exercisable
    
    
    Unexercisable
    
    
    Unearned Options (#)
    
    
    Price ($/Sh)
    
    
    DateGary L. Dreher, President
    
    
    60,000
    
    
    
    0
    
    
    
    0
    
    
    
    2.85
    
    
    
    2/27/11and CEO
    
    
    200,000
    
    
    
    0
    
    
    
    0
    
    
    
    3.70
    
    
    
    10/08/11172,000
    
    
    
    0
    
    
    
    0
    
    
    
    4.06
    
    
    
    5/31/1260,000
    
    
    
    0
    
    
    
    0
    
    
    
    2.85
    
    
    
    2/27/1150,000
    
    
    
    0
    
    
    
    0
    
    
    
    4.65
    
    
    
    10/06/09140,000
    
    
    
    0
    
    
    
    0
    
    
    
    6.15
    
    
    
    2/23/0949,000
    
    
    
    0
    
    
    
    0
    
    
    
    5.50
    
    
    
    12/19/08Akio Ariura
    
    
    40,000
    
    
    
    0
    
    
    
    0
    
    
    
    3.70
    
    
    
    10/8/11Chief Financial Officer
    
    
    50,000
    
    
    
    0
    
    
    
    0
    
    
    
    4.06
    
    
    
    5/31/12
 Change in Control Severance Pay Plan
     88




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##### Table of Contents



Director Compensation
 NonqualifiedFees earned
    
    
    
    
    
    deferredor paid in
    
    Option
    
    compensation
    
    All otherName of Person
    
    cash ($)
    
    Awards (1)
    
    earnings
    
    compensation
    
    TotalWilliam M. Thompson III
    
    $
    94,500
    
    
    $
    176,500
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    271,000Gary L. Dreher
    
    $
    0
    
    
    $
    0
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    0Douglas C. MacLellan
    
    $
    180,000
    
    
    $
    317,700
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    497,700Edward R. Arquilla
    
    $
    48,000
    
    
    $
    70,600
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    118,600Minghui Jia
    
    $
    0
    
    
    $
    0
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    0
 
 (1)
    
    The value of option awards included in this column represents the compensation costs
recognized by us in fiscal year 2007 for option awards made in 2007 and in prior fiscal
years calculated pursuant to SFAS No. 123(R). The values included within this column have
not been, and may never be realized. The options might never be exercised and the value
received by the director, if any, will depend on the share price on the exercise date. The
assumptions used by us with respect to the valuation of the option awards are set forth in
the Notes to our Consolidated Financial Statements, which are included in this Form 10-K.  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 Equity Compensation Plan Information
 Number ofsecuritiesremainingavailable forfuture issuanceNumber of
    
    Weighted-
    
    under equitysecurities to be
    
    average
    
    compensationissued upon
    
    exercise price
    
    plansexercise of
    
    of outstanding
    
    (excludingoutstanding
    
    options,
    
    securitiesoptions, warrants
    
    warrants and
    
    reflected inand rights
    
    rights
    
    column (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equity Compensation
plans approved by
security holders
    
    
    1,593,239
    
    
    
    4.29
    
    
    
    129,251Equity
compensations plans
not approved by
security holders
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    1,593,239
    
    
    
    4.29
    
    
    
    129,251
 89




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##### Table of Contents



Stock Ownership of Certain Beneficial Owners and Management
  PercentageName and Address (1)
    
    Number of Shares
    
    OwnedGary L. Dreher
    
    
    1,331,000
    (2)
    
    
    7.8
    %Akio Ariura
    
    
    140,000
    (3)
    
    
    0.9
    %William M. Thompson III, M.D. 

408 Town Square Lane 

Huntington Beach, CA 92648
    
    
    239,000
    (4)
    
    
    1.5
    %Douglas C. MacLellan 

8324 Delgany Avenue 

Playa del Rey, CA 90293
    
    
    485,000
    (5)
    
    
    3.0
    %Edward R. Arquilla, M.D., Ph.D. 

Department of Pathology 

University of California  Irvine 

Irvine, CA 92697
    
    
    109,000
    (6)
    
    
    0.7
    %Minghui Jia 

Room 1502

15/F Wing on House 

71 Des Voeux Road 

Central Hong Kong
    
    
    1,842,672
    (7)
    
    
    11.5
    %Fang Zheng

Room 1502

15/F Wing on House

71 Des Voeux Road

Central Hong Kong
    
    
    1,842,672
    (8)
    
    
    11.5
    %Jade Capital Group 

Room 1502

15/F Wing on House 

71 Des Voeux Road 

Central Hong Kong
    
    
    972,672
    (9)
    
    
    6.5
    %All Directors and Officers 

as a group (7 persons)
    
    
    5,016,772
    
    
    
    27.4
    %
 
 *
    
    Less than 0.1%.(1)
    
    Unless otherwise indicated, address is 2492 Walnut Avenue, Suite 100, Tustin,
California, 92780.(2)
    
    Includes 60,000 shares of common stock issuable upon the exercise of options at $2.85
per share, 50,000 shares of common stock issuable upon the exercise of options at $4.65 per
share, per share, 49,000 shares of common stock issuable upon the exercise of options at
$5.50 per share, 140,000 shares of common stock issuable upon the exercise of options at
$6.15 per share, 60,000 shares of common stock issuable upon the exercise of options at
$4.15 per share, 372,000 shares of common stock issuable upon the exercise of options at
$3.70 per share and 300,000 shares of common stock issuable upon the exercise of options at
$3.45 per share.Also includes 400,000 shares of common stock in voting trust for Chinese
Universal Technologies Co. Ltd. of which Mr. Dreher serves as a voting co-trustee. Mr.
Dreher disclaims beneficial ownership of these 400,000 shares.(3)
    
    Includes 50,000 shares of common stock issuable at $3.45 per share, 40,000 shares of common stock issuable on exercise of options at $3.70 per
share and 50,000 shares of common stock issuable on exercise of options at $4.06. 90




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##### Table of Contents



(4)
    
    Includes 30,000 shares of common stock issuable upon the exercise of options at $2.85
per share, 50,000 shares of common stock issuable on exercise of options at $3.45 per share, 11,000 shares of common stock issuable upon the exercise of options at $4.65 per
share, 8,000 shares of common stock issuable upon the exercise of options at $5.50 per
share, 40,000 shares of common stock issuable upon the exercise of options at $6.15 per
share, 50,000 shares of common stock issuable upon the exercise of options at $3.70 per
share and 50,000 shares of common stock issuable upon the exercise of options at $4.06 per
share.(5)
    
    Includes 36,000 shares of common stock issuable upon the exercise of options at $2.85
per share, 200,000 shares of common stock issuable on exercise of options at $3.45 per share, 11,000 shares of common stock issuable upon the exercise of options at $4.65 per
share, 8,000 shares of common
stock issuable upon the exercise of options at $5.50 per share, 20,000 shares of common
stock issuable upon the exercise of options at $6.15 per share,120,000 shares of common
stock issuable upon the exercise of options at $3.70 per share and 90.000 shares of common
stock issuable upon the exercise of options at $4.06 per share..(6)
    
    Includes 20,000 shares of common stock issuable upon the exercise of options at $2.85
per share, 10,000 shares of common stock issuable on exercise of options at $3.45 per share, 11,000 shares of common stock issuable upon the exercise of options at $4.65 per
share, 8,000 shares of common stock issuable upon the exercise of options at $5.50 per
share, 20,000 shares of common stock issuable upon the exercise of options at $6.15 per
share, 20,000 shares of common stock issuable upon the exercise of options at $3.70 per
share and 20,000 shares of common stock issuable upon the exercise of options at $4.06 per
share..(7)
    
    Includes 972,672 shares held in the name of Jade Capital Group Limited of which Mr. Jia
is a director and principal stockholder and options to purchase 220,000 shares of common
stock exercisable at $2.95 per share and options to purchase 50,000 shares of common stock at $3.45 per share.(8)
    
    Includes 972,672 shares held in the name of Jade Capital Group Limited of which Mr.
Zheng is a director and principal stockholder and options to purchase 220,000 shares of
common stock exercisable at $2.95 per share and options to purchase 50,000 shares of common stock at $3.45 per share.(9)
    
    Includes 100,000 shares held in escrow held by a third party for the issuance by the
SFDA of a permit or the equivalent regulatory approval for the Company to sell and
distribute DR-70® in the PRC. The Board of Directors on March 28, 2008, extended
the required approval date to March 28, 2009. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  2007
    
    
    2006Services ProvidedAudit Fees
    
    $
    345,000
    
    
    $
    225,000Audit Related Fees
    
    
    27,000
    
    
    
    35,000Tax Fees
    
    
    
    
    
    
    All Other FeesTotal
    
    $
    372,000
    
    
    $
    260,000
   91




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##### Table of Contents



S-3).
 Audit Committee Pre-Approval Policies and Procedures
  
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
     ExhibitNumber
    
    Description:3.1
    
    Certificate of Incorporation of Registrant. (Incorporated by reference to
the Companys Report on Form 10-KSB for the year ended December 31, 1989.)3.2
    
    Bylaws of the Company. (Incorporated by reference to the Companys Report
on Form 10-KSB for the year ended December 31, 1991.)3.3
    
    Certificate of Amendment of Certificate of Incorporation. (Incorporated by
reference to the Companys Report on Form 10-QSB for the period ended
September 30, 1998.)3.4
    
    Certificate of Amendment of Certificate of Incorporation filed with the
Delaware Secretary of State on September 8, 2006. (Incorporated by
reference to the Companys definitive Proxy Statement dated July 14, 2006.)3.5
    
    Specimen of Common Stock Certificate. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1999.)3.6
    
    Certificate of Designations. (Incorporated by reference to the Companys
Report on Form 10-KSB for the year ended December 31, 1999.)9.1
    
    Voting Trust Agreement by and between Jeanne Lai and Gary L. Dreher, as
Co-Trustees, and Chinese Universal Technologies Co., Ltd. (Incorporated by
reference to the Companys Report on Form 8-K dated December 26, 2000.)10.1
    
    Amendments to License Agreement between the Company and AMDL Canada, Inc.,
dated September 20, 1989, June 16, 1990 and July 5, 1990. (Incorporated by
reference to the Companys Report on Form 10-KSB for the year ended December
31, 1990.)
 92




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##### Table of Contents



ExhibitNumber
    
    Description:10.2
    
    The Companys 1992 Stock Option Plan. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1991.)10.3
    
    Operating Agreement of ICD, L.L.C. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1993.)10.4
    
    Letter Agreement between the Company and BrianaBio-Tech, Inc. and AMDL
Canada, Inc., dated February 7, 1995 (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1993.)10.5
    
    The Companys Stock Bonus Plan (Incorporated by reference to the Companys
Report on Form 10-KSB for the year ended December 31, 1995.)10.6
    
    Employment Agreement between the Company and Gary L. Dreher dated
January 15, 1998 (Incorporated by reference to the Companys Report on Form
10-KSB for the year ended December 31, 1997.)10.7
    
    Salary Continuation Agreement between the Company and That T. Ngo, Ph.D.,
dated May 21, 1998 (Incorporated by reference to the Companys Report on
Form 10-QSB for the period ended June 30, 1998.)10.8
    
    Salary Continuation Agreement between the Company and Thomas V. Tilton dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.9
    
    Salary Continuation Agreement between the Company and Harry Berk dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.1
    
    Salary Continuation Agreement between the Company and Gary L. Dreher dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.11
    
    Agreement between the Company and William M. Thompson, M.D., dated May 21,
1998 (Incorporated by reference to the Companys Report on Form 10-QSB for
the period ended June 30, 1998.)10.12
    
    Amendment No. 1 to Employment Agreement with That T. Ngo, Ph.D., dated
July 1, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.13
    
    Agreement Relating to Salary deferral between the Company and Thomas V.
Tilton dated July 1, 1998 (Incorporated by reference to the Companys Report
on Form 10-QSB for the period ended June 30, 1998.)10.14
    
    Agreement Relating to Salary deferral between the Company and Harry Berk
dated July 1, 1998 (Incorporated by reference to the Companys Report on
Form 10-QSB for the period ended June 30, 1998.)10.15
    
    Securities Purchase Agreement between the Company and the Purchasers listed
on the Purchaser Signature Pages attached thereto, dated February 17, 1999.
(Incorporated by reference to the Companys Registration Statement on Form
10-SB dated October 15, 1999.)10.16
    
    The Companys 1999 Stock Option Plan (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)
 93




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##### Table of Contents



ExhibitNumber
    
    Description:10.17
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
William M. Thompson, III, M.D., dated July 1, 1999 (Incorporated by
reference to the Companys Registration Statement on Form 10-SB dated
October 15, 1999.)10.18
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Harry Berk dated July 1, 1999 (Incorporated by reference to the Companys
Registration Statement on Form 10-SB dated October 15, 1999.)10.19
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Edward Arquilla, M.D., dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.20
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Thomas V. Tilton dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.21
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Donald Rounds, dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.22
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
That T. Ngo, Ph.D., dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.23
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Gary L. Dreher dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.24
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Douglas C. MacLellan dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.25
    
    Employment Agreement of Gary L. Dreher dated November 23, 1999 (Incorporated
by reference to the Companys Report on Form 10-KSB for the year ended
December 31, 1999.)10.26
    
    Consulting Agreement with That T. Ngo dated October 1, 1999 (Incorporated by
reference to the Companys Report on Form 10-KSB for the year ended December
31, 1999.)10.27
    
    Securities Purchase Agreement between the Company and the Purchasers listed
on the Purchaser Signature Pages attached thereto dated February 9, 2000
(Incorporated by reference to the Companys Report on Form 10-KSB for the
year ended December 31, 1999.)10.28
    
    Securities Purchase Agreement dated as of December 14, 2000 executed
December 19, 2000 (Incorporated by reference to the Companys Report on Form
8-K dated December 26, 2000.)10.29
    
    Secured Promissory Note dated December 14, 2000, effective December 19, 2000
(Incorporated by reference to the Companys Report on Form 8-K dated
December 26, 2000.)10.30
    
    Security and Pledge Agreement dated as of December 14, 2000, executed
December 19, 2000 (Incorporated by reference to the Companys Report on Form
8-K dated December 26, 2000.)10.31
    
    Voting Trust Agreement dated as of December 14, 2000, executed December 19,
2000. (Incorporated by reference to the Companys Report on Form 8-K dated
December 26, 2000.)10.32
    
    Exclusive Distribution Agreement dated December 14, 2000, effective
December 19, 2000. (Incorporated by reference to the Companys Report on
Form 8-K dated December 26, 2000.)
 94




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##### Table of Contents



ExhibitNumber
    
    Description:10.33
    
    Technology Transfer Agreement effective July 30, 2001 between the Company
and Lung-Ji Chang, Ph.D. (Incorporated by reference from the Companys
Report on Form 8-K dated August 31, 2001.)10.34
    
    Executive Management Change in Control Severance Plan. (Incorporated by
reference from the Companys Report on Form 10-KSB for the year ended
December 31, 2001.)10.35
    
    The Companys 2002 Stock Option Plan. (Incorporated by reference from the
Companys Report on Form 10-KSB for the year ended December 31, 2002.)10.36
    
    The Companys 2004 Stock Option Plan. (Incorporated by reference from the
Companys Report on Form 10-KSB for the year ended December 31, 2004.)10.37
    
    Employment Agreement of Gary L. Dreher dated January 31, 2005.
(Incorporated by reference from the Companys Form 8-K filed February 1,
2005.)10.38
    
    Letter of Intent with Jade Capital Group Ltd. dated November 21, 2005.
(Incorporated by reference from the Companys Form 8-K filed November 22,
2005.)10.39
    
    Stock Purchase and Sale Agreement between the Company and Jade Capital Group
Limited dated May 12, 2006 and First Amendment to Purchase and Sale
Agreement dated June 30, 2006. (Incorporated by reference from the
Companys definitive Proxy Statement dated July 14, 2006.)10.40
    
    2006 Equity Incentive Plan. (Incorporated by reference from the Companys
definitive Proxy Statement dated July 14, 2006.)10.41
    
    Escrow Agreement between the Company and Jade Capital Group Limited (dated
as of the closing on September 28, 2006. (Incorporated by reference from
the Companys definitive Proxy Statement dated July 14, 2006.)10.42
    
    Opinion of Amaroq Capital, LLC dated May 9, 2006. (Incorporated by
reference from the Companys definitive Proxy Statement dated July 14,
2006.)10.43
    
    Amendment No. 1 to Escrow Agreement dated August 10, 2007. (Filed herewith.)10.44
    
    Amendment No 2 to Escrow Agreement dated March 11, 2007. (Filed herewith.)10.45
    
    Employment Agreement of Gary L. Dreher dated March 31, 2008. (Filed herewith).10.46
    
    Change in Control Severance Pay Plan. (Filed herewith.)21.1
    
    Subsidiaries of the small business issuer Jade Pharmaceutical Inc., a
British Virgin Islands corporation.23.1
    
    Consent of KMJ |  Corbin & Company LLP. (Filied herewith.)24.1
    
    Power of Attorney. (Included on signature page.)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (Filed herewith.)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (Filed herewith.)32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
 95




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##### Table of Contents



SIGNATURES
  AMDL, INC.By:
    /s/  Gary L. DreherGary L. Dreher, Chief Executor Officer POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Gary L. Dreher

GARY L. DREHER
    
    President, Chief
Executive Officer,
Secretary, and Director
(Principal Executive
Officer)
    
    March 31, 2008/s/ Akio Ariura

AKIO ARIURA
    
    Chief Financial Officer
(Principal Financial
Officer and Principal
Accounting Officer)
    
    March 31, 2008/s/ Douglas C. MacLellan
    
    Director
    
    March 31, 2008DOUGLAS C. MACLELLAN/s/ Edward R. Arquilla
    
    Director
    
    March 31, 2008EDWARD R. ARQUILLA/s/ Minghui Jia
    
    Director
    
    March 31, 2008MINGHUI JIA/s/ William M. Thompson, III
    
    Director
    
    March 31, 2008WILLIAM M. THOMPSON III
 96




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description:3.1
    
    Certificate of Incorporation of Registrant. (Incorporated by reference to
the Companys Report on Form 10-KSB for the year ended December 31, 1989.)3.2
    
    Bylaws of the Company. (Incorporated by reference to the Companys Report
on Form 10-KSB for the year ended December 31, 1991.)3.3
    
    Certificate of Amendment of Certificate of Incorporation. (Incorporated by
reference to the Companys Report on Form 10-QSB for the period ended
September 30, 1998.)3.4
    
    Certificate of Amendment of Certificate of Incorporation filed with the
Delaware Secretary of State on September 8, 2006. (Incorporated by
reference to the Companys definitive Proxy Statement dated July 14, 2006.)3.5
    
    Specimen of Common Stock Certificate. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1999.)3.6
    
    Certificate of Designations. (Incorporated by reference to the Companys
Report on Form 10-KSB for the year ended December 31, 1999.)9.1
    
    Voting Trust Agreement by and between Jeanne Lai and Gary L. Dreher, as
Co-Trustees, and Chinese Universal Technologies Co., Ltd. (Incorporated by
reference to the Companys Report on Form 8-K dated December 26, 2000.)10.1
    
    Amendments to License Agreement between the Company and AMDL Canada, Inc.,
dated September 20, 1989, June 16, 1990 and July 5, 1990. (Incorporated by
reference to the Companys Report on Form 10-KSB for the year ended December
31, 1990.)




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##### Table of Contents



ExhibitNumber
    
    Description:10.2
    
    The Companys 1992 Stock Option Plan. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1991.)10.3
    
    Operating Agreement of ICD, L.L.C. (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1993.)10.4
    
    Letter Agreement between the Company and BrianaBio-Tech, Inc. and AMDL
Canada, Inc., dated February 7, 1995 (Incorporated by reference to the
Companys Report on Form 10-KSB for the year ended December 31, 1993.)10.5
    
    The Companys Stock Bonus Plan (Incorporated by reference to the Companys
Report on Form 10-KSB for the year ended December 31, 1995.)10.6
    
    Employment Agreement between the Company and Gary L. Dreher dated
January 15, 1998 (Incorporated by reference to the Companys Report on Form
10-KSB for the year ended December 31, 1997.)10.7
    
    Salary Continuation Agreement between the Company and That T. Ngo, Ph.D.,
dated May 21, 1998 (Incorporated by reference to the Companys Report on
Form 10-QSB for the period ended June 30, 1998.)10.8
    
    Salary Continuation Agreement between the Company and Thomas V. Tilton dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.9
    
    Salary Continuation Agreement between the Company and Harry Berk dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.1
    
    Salary Continuation Agreement between the Company and Gary L. Dreher dated
May 21, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.11
    
    Agreement between the Company and William M. Thompson, M.D., dated May 21,
1998 (Incorporated by reference to the Companys Report on Form 10-QSB for
the period ended June 30, 1998.)10.12
    
    Amendment No. 1 to Employment Agreement with That T. Ngo, Ph.D., dated
July 1, 1998 (Incorporated by reference to the Companys Report on Form
10-QSB for the period ended June 30, 1998.)10.13
    
    Agreement Relating to Salary deferral between the Company and Thomas V.
Tilton dated July 1, 1998 (Incorporated by reference to the Companys Report
on Form 10-QSB for the period ended June 30, 1998.)10.14
    
    Agreement Relating to Salary deferral between the Company and Harry Berk
dated July 1, 1998 (Incorporated by reference to the Companys Report on
Form 10-QSB for the period ended June 30, 1998.)10.15
    
    Securities Purchase Agreement between the Company and the Purchasers listed
on the Purchaser Signature Pages attached thereto, dated February 17, 1999.
(Incorporated by reference to the Companys Registration Statement on Form
10-SB dated October 15, 1999.)10.16
    
    The Companys 1999 Stock Option Plan (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)




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##### Table of Contents



ExhibitNumber
    
    Description:10.17
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
William M. Thompson, III, M.D., dated July 1, 1999 (Incorporated by
reference to the Companys Registration Statement on Form 10-SB dated
October 15, 1999.)10.18
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Harry Berk dated July 1, 1999 (Incorporated by reference to the Companys
Registration Statement on Form 10-SB dated October 15, 1999.)10.19
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Edward Arquilla, M.D., dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.20
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Thomas V. Tilton dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.21
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Donald Rounds, dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.22
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
That T. Ngo, Ph.D., dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.23
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Gary L. Dreher dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.24
    
    Agreement Regarding Cancellation of Indebtedness between the Company and
Douglas C. MacLellan dated July 1, 1999 (Incorporated by reference to the
Companys Registration Statement on Form 10-SB dated October 15, 1999.)10.25
    
    Employment Agreement of Gary L. Dreher dated November 23, 1999 (Incorporated
by reference to the Companys Report on Form 10-KSB for the year ended
December 31, 1999.)10.26
    
    Consulting Agreement with That T. Ngo dated October 1, 1999 (Incorporated by
reference to the Companys Report on Form 10-KSB for the year ended December
31, 1999.)10.27
    
    Securities Purchase Agreement between the Company and the Purchasers listed
on the Purchaser Signature Pages attached thereto dated February 9, 2000
(Incorporated by reference to the Companys Report on Form 10-KSB for the
year ended December 31, 1999.)10.28
    
    Securities Purchase Agreement dated as of December 14, 2000 executed
December 19, 2000 (Incorporated by reference to the Companys Report on Form
8-K dated December 26, 2000.)10.29
    
    Secured Promissory Note dated December 14, 2000, effective December 19, 2000
(Incorporated by reference to the Companys Report on Form 8-K dated
December 26, 2000.)10.30
    
    Security and Pledge Agreement dated as of December 14, 2000, executed
December 19, 2000 (Incorporated by reference to the Companys Report on Form
8-K dated December 26, 2000.)10.31
    
    Voting Trust Agreement dated as of December 14, 2000, executed December 19,
2000. (Incorporated by reference to the Companys Report on Form 8-K dated
December 26, 2000.)10.32
    
    Exclusive Distribution Agreement dated December 14, 2000, effective
December 19, 2000. (Incorporated by reference to the Companys Report on
Form 8-K dated December 26, 2000.)




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##### Table of Contents



ExhibitNumber
    
    Description:10.33
    
    Technology Transfer Agreement effective July 30, 2001 between the Company
and Lung-Ji Chang, Ph.D. (Incorporated by reference from the Companys
Report on Form 8-K dated August 31, 2001.)10.34
    
    Executive Management Change in Control Severance Plan. (Incorporated by
reference from the Companys Report on Form 10-KSB for the year ended
December 31, 2001.)10.35
    
    The Companys 2002 Stock Option Plan. (Incorporated by reference from the
Companys Report on Form 10-KSB for the year ended December 31, 2002.)10.36
    
    The Companys 2004 Stock Option Plan. (Incorporated by reference from the
Companys Report on Form 10-KSB for the year ended December 31, 2004.)10.37
    
    Employment Agreement of Gary L. Dreher dated January 31, 2005.
(Incorporated by reference from the Companys Form 8-K filed February 1,
2005.)10.38
    
    Letter of Intent with Jade Capital Group Ltd. dated November 21, 2005.
(Incorporated by reference from the Companys Form 8-K filed November 22,
2005.)10.39
    
    Stock Purchase and Sale Agreement between the Company and Jade Capital Group
Limited dated May 12, 2006 and First Amendment to Purchase and Sale
Agreement dated June 30, 2006. (Incorporated by reference from the
Companys definitive Proxy Statement dated July 14, 2006.)10.40
    
    2006 Equity Incentive Plan. (Incorporated by reference from the Companys
definitive Proxy Statement dated July 14, 2006.)10.41
    
    Escrow Agreement between the Company and Jade Capital Group Limited (dated
as of the closing on September 28, 2006. (Incorporated by reference from
the Companys definitive Proxy Statement dated July 14, 2006.)10.42
    
    Opinion of Amaroq Capital, LLC dated May 9, 2006. (Incorporated by
reference from the Companys definitive Proxy Statement dated July 14,
2006.)10.43
    
    Amendment No. 1 to Escrow Agreement dated August 10, 2007. (Filed herewith.)10.44
    
    Amendment No 2 to Escrow Agreement dated March 11, 2007. (Filed herewith.)10.45
    
    Employment Agreement of Gary L.
Dreher dated March 31, 2008. (Filed herewith).10.46
    
    Change in Control Severance Pay Plan. (Filed herewith.)21.1
    
    Subsidiaries of the small business issuer Jade Pharmaceutical Inc., a
British Virgin Islands corporation.23.1
    
    Consent of KMJ | Corbin & Company LLP. (Filed herewith.)24.1
    
    Power of Attorney. (Included on signature page.)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (Filed herewith.)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (Filed herewith.)32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)