##### Table of Contents



U. S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission File Number: 001-16695
 AMDL, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware
    
    33-0413161(State of Incorporation)
    
    (I.R.S. employer identification no.)2492 Walnut Avenue, Suite 100Tustin, California
    
    92780-7039(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (714) 505-4460
 
 þ 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




---



##### 



AMDL, INC.
INDEX TO FORM 10-Q
 PagePart I Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheets at March 31, 2008 (Unaudited) and December 31, 2007 (Audited)
    
    
    1Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
for the three months ended March 31, 2008 and March 31, 2007
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2008 and March 31, 2007
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34Part II Other InformationItem 1 Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 3. Defaults upon Senior Securities
    
    
    41Item 4. Submission of Matters to a Vote of Security Holders
    
    
    41Item 5. Other Information
    
    
    41Item 6. Exhibits
    
    
    42Signatures
    
    
    43Exhibit Index
    
    
    44EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  i




---



##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 AMDL, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,569,863
    
    
    $
    6,157,493Accounts receivable, net
    
    
    3,969,825
    
    
    
    2,954,902Inventories
    
    
    916,586
    
    
    
    921,135Prepaid consulting
    
    
    955,012
    
    
    
    872,688Related party receivable
    
    
    562,677
    
    
    
    Prepaid expenses and other current assets
    
    
    1,393,989
    
    
    
    1,248,637Total current assets
    
    
    11,367,952
    
    
    
    12,154,855Property and equipment, net
    
    
    11,923,196
    
    
    
    11,672,462Intangible assets, net
    
    
    5,650,676
    
    
    
    5,615,312Other assets
    
    
    3,825,653
    
    
    
    3,424,549Total assets
    
    $
    32,767,477
    
    
    $
    32,867,178LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,986,668
    
    
    $
    1,676,347Related party payable
    
    
    
    
    
    
    62,621Deferred revenue
    
    
    213,608
    
    
    
    246,758Notes payable
    
    
    3,936,044
    
    
    
    5,159,939Total current liabilities
    
    
    6,136,320
    
    
    
    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;
15,581,516 and 15,079,528 shares issued
at March 31, 2008 and December 31, 2007,
respectively; 15,481,516 and 14,979,528
shares outstanding at March 31, 2008 and
December 31, 2007, respectively
    
    
    15,482
    
    
    
    14,980Additional paid-in capital
    
    
    63,122,907
    
    
    
    61,525,001Accumulated other comprehensive income
    
    
    1,851,861
    
    
    
    1,068,429Accumulated deficit
    
    
    (38,359,093
    )
    
    
    (36,886,897
    )Total stockholders equity
    
    
    26,631,157
    
    
    
    25,721,513Total liabilities and stockholders equity
    
    $
    32,767,477
    
    
    $
    32,867,178
  1




---



##### Table of Contents



AMDL, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 (Unaudited)
 Three Months Ended March 31,2008
    
    
    2007Net revenues
    
    $
    3,587,746
    
    
    $
    1,424,179Cost of sales
    
    
    1,816,730
    
    
    
    697,310Gross profit
    
    
    1,771,016
    
    
    
    726,869Operating expenses:Research and development
    
    
    8,695
    
    
    
    11,776Selling, general and administrative
    
    
    2,868,180
    
    
    
    1,995,6352,876,875
    
    
    
    2,007,411Loss from operations
    
    
    (1,105,859
    )
    
    
    (1,280,542
    )Other income (expense):Interest and other income (expense), net
    
    
    (62,625
    )
    
    
    3,837Interest expense
    
    
    (103,056
    )
    
    
    (90,857
    )Total other income (expense), net
    
    
    (165,681
    )
    
    
    (87,020
    )Loss before provision for income taxes
    
    
    (1,271,540
    )
    
    
    (1,367,562
    )Provision for income taxes
    
    
    200,656
    
    
    
    17,844Net loss
    
    
    (1,472,196
    )
    
    
    (1,385,406
    )Other comprehensive loss:Foreign currency translation gain
    
    
    783,432
    
    
    
    16,603Comprehensive gain
    
    $
    (688,764
    )
    
    $
    (1,368,803
    )Basic and diluted loss per common share
    
    $
    (0.10
    )
    
    $
    (0.14
    )Weighted average common shares outstanding  basic and diluted
    
    
    15,130,345
    
    
    
    10,095,697
  2




---



##### Table of Contents



AMDL, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
 Three Months Ended March 31,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (1,472,196
    )
    
    $
    (1,385,406
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    349,754
    
    
    
    183,625Fair market value of options granted to employees and directors for
services
    
    
    105,542
    
    
    
    Fair market value of common stock, warrants and options expensed for
services
    
    
    527,425
    
    
    
    697,168Changes in operating assets and liabilities, net of effects of acquisition:Accounts receivable
    
    
    (881,183
    )
    
    
    255,471Related party account with Jade Capital
    
    
    (614,301
    )
    
    
    Inventories
    
    
    36,782
    
    
    
    102,515Prepaid consulting, expenses and other assets
    
    
    (96,798
    )
    
    
    (923,806
    )Accounts payable and accrued expenses
    
    
    274,716
    
    
    
    (64,097
    )Customer deposits
    
    
    
    
    
    
    10,835Deferred revenue
    
    
    (41,807
    )
    
    
    Net cash used in operating activities
    
    
    (1,812,066
    )
    
    
    (1,123,695
    )Cash flows from investing activities:Deposits for acquisition of plant assets
    
    
    (278,719
    )
    
    
    Purchase of property and equipment
    
    
    (25,114
    )
    
    
    (9,306
    )Return of advance
    
    
    13,936
    
    
    
    Net cash used in investing activities
    
    
    (289,897
    )
    
    
    (9,306
    )Cash flows from financing activities:Payments on notes payable
    
    
    (1,393,595
    )
    
    
    Proceeds from issuance of common stock, net of cash offering costs of $123,875
    
    
    876,129
    
    
    
    Proceeds from the exercise of warrants
    
    
    6,983
    
    
    
    Net cash used in financing activities
    
    
    (510,483
    )
    
    
    Effect of exchange rates on cash and cash equivalents
    
    
    24,816
    
    
    
    16,603Net change in cash and cash equivalents
    
    
    (2,587,630
    )
    
    
    (1,116,398
    )Cash and cash equivalents, beginning of period
    
    
    6,157,493
    
    
    
    1,584,973Cash and cash equivalents, end of period
    
    $
    3,569,863
    
    
    $
    468,575Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    102,000
    
    
    $
    90,719Cash paid during the period for taxes
    
    $
    74,000
    
    
    $
    800Supplemental disclosure of non-cash activities:Value of common stock recorded as prepaid consulting
    
    $
    505,500
    
    
    $
    1,076,100
  3




---



##### Table of Contents



AMDL, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 NOTE 1  MANAGEMENTS REPRESENTATION
  Share-Based Payment
 NOTE 2  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business and Basis of Presentation
  ®
   ® ® ® ® ® U.S. ® U.S. . ®
  Going Concern
 ® ®
 4




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 ®
   Principles of Consolidation
  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)
 5




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 Wholesale Sales
 Revenue
Recognition in Financial Statements
 Direct Distribution
     Accounting for Shipping and Handling Revenue, Fees and Costs
 Accounting for Shipping and Handling Fees and Costs.
 Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 6




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  
    
    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.
  Risks and Uncertainties
 Manufacturing and Distribution Operations in China
     7




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
   Regulatory Environment
 ®
 ® ® ® ® ® ® ® ®
 ® ® ® ®
 8




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  ® ®
 ® ® ®
  Basic and Diluted Loss Per Share
  Use of Estimates
  Concentrations of Credit Risk
 Cash
  Customers
  9




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
   Other
  Recent Accounting Pronouncements
 Fair Value Measurements Effective Date of FASB Statement No. 157
 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
 10




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  NOTE 3  INVENTORIES
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Audited)Raw materials
    
    $
    529,783
    
    
    $
    620,128Work-in-process
    
    
    7,505
    
    
    
    17,331Finished goods
    
    
    379,298
    
    
    
    283,676$
    916,586
    
    
    $
    921,135
 NOTE 4  PREPAID EXPENSES, OTHER CURRENT ASSETS, AND OTHER ASSETS
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Audited)Material deposits
    
    $
    867,687
    
    
    $
    617,661Receivable from Jiekang
    
    
    427,564
    
    
    
    498,726Due from officers and directors
    
    
    12,797
    
    
    
    9,764Other
    
    
    85,941
    
    
    
    122,486$
    1,393,989
    
    
    $
    1,248,637
   March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Audited)Deposits, primarily product licenses and acquisition of plant assets
    
    $
    3,198,474
    
    
    $
    2,827,526Refundable deposits
    
    
    45,025
    
    
    
    22,900Advances
    
    $
    582,154
    
    
    $
    574,123$
    3,825,653
    
    
    $
    3,424,549
  11




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 NOTE 5  INTANGIBLE ASSETS
  Effect of
    
    
    
    
    
    
    Amort-Foreign
    
    
    
    
    
    
    izationCurrency
    
    
    
    
    
    
    PeriodGross
    
    
    Accumulated
    
    
    Trans-
    
    
    
    
    
    
    (inValue
    
    
    Amortization
    
    
    lation
    
    
    Net
    
    
    years)Assets subject to
amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (666,666
    )
    
    $
    
    
    
    $
    1,333,334
    
    
    
    20Production rights
    
    
    1,916,622
    
    
    
    (163,736
    )
    
    
    109,066
    
    
    
    1,861,952
    
    
    
    10Land use rights
    
    
    1,405,829
    
    
    
    (60,977
    )
    
    
    168,341
    
    
    
    1,513,193
    
    
    
    33Non-compete agreements
    
    
    324,415
    
    
    
    (108,067
    )
    
    
    26,860
    
    
    
    243,208
    
    
    
    5Customer relationships
    
    
    214,328
    
    
    
    (51,435
    )
    
    
    22,203
    
    
    
    185,096
    
    
    
    7Trade name and logo
    
    
    530,829
    
    
    
    (82,720
    )
    
    
    65,784
    
    
    
    513,893
    
    
    
    10$
    6,392,023
    
    
    $
    (1,133,601
    )
    
    $
    392,254
    
    
    $
    5,650,676
  Effect of
    
    
    
    
    
    
    Amort-Foreign
    
    
    
    
    
    
    izationCurrency
    
    
    
    
    
    
    PeriodGross
    
    
    Accumulated
    
    
    Trans-
    
    
    
    
    
    
    (inValue
    
    
    Amortization
    
    
    lation
    
    
    Net
    
    
    years)Assets subject to
amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (641,667
    )
    
    $
    
    
    
    $
    1,358,333
    
    
    
    20Production rights
    
    
    1,916,622
    
    
    
    (113,985
    )
    
    
    38,725
    
    
    
    1,841,362
    
    
    
    10Land use rights
    
    
    1,405,829
    
    
    
    (49,304
    )
    
    
    111,644
    
    
    
    1,468,169
    
    
    
    33Non-compete agreements
    
    
    324,415
    
    
    
    (90,269
    )
    
    
    17,488
    
    
    
    251,634
    
    
    
    5Customer relationships
    
    
    214,328
    
    
    
    (42,960
    )
    
    
    15,153
    
    
    
    186,521
    
    
    
    7Trade name and logo
    
    
    530,829
    
    
    
    (67,888
    )
    
    
    46,352
    
    
    
    509,292
    
    
    
    10$
    6,392,023
    
    
    $
    (1,006,073
    )
    
    $
    229,362
    
    
    $
    5,615,312
  12




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
   NOTE 6  INCOME TAXES
     NOTE 7  NOTES PAYABLE
    13




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  NOTE 8  COMMITMENTS AND CONTINGENCIES
 Litigation
     Suspension of Product Sales
   Licensing Agreements
  14




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  ®
  Indemnities and Guarantees
  Contingent Share Issuance
 ®
 ®
 15




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 NOTE 9  STOCK OPTIONS
   Summary of Assumptions and Activity
  Expected volatility
    
    
    248
    %Expected term
    
    5 yearsRisk-free interest rate
    
    
    2.48
    %Dividend yield
    
    
    
    %
   WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    ContractualOptions
    
    
    Price
    
    
    Life (Years)Outstanding and expect to vest, December 31, 2007
    
    
    2,093,236
    
    
    $
    3.97Granted
    
    
    850,000
    
    
    
    3.45Outstanding and expected to vest, March 31, 2008
    
    
    2,943,236
    
    
    $
    3.82
    
    
    
    3.21Vested and Exercisable at March 31, 2008
    
    
    2,128,656
    
    
    $
    3.96
    
    
    
    2.56
 16




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
   NOTE 10  STOCKHOLDERS EQUITY
 Cash Financing Activities
   April 2007 Offering
    17




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
  December 2007 Offering
     Non-Cash Financing Activities
    18




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
         Warrants
  19




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
 NOTE 11  SEGMENT REPORTING
 Disclosures about Segments of an Enterprise and Related
Information.
   China-Wholesale
    
    China-Direct
    
    Corporate
    
    TotalNet revenue
    
    $
    3,537,718
    
    
    $
    41,808
    
    
    $
    8,220
    
    
    $
    3,587,746Gross profit
    
    $
    1,727,785
    
    
    $
    41,808
    
    
    $
    1,423
    
    
    $
    1,771,016Depreciation
    
    $
    219,896
    
    
    $
    
    
    
    $
    2,328
    
    
    $
    222,224Amortization
    
    $
    102,530
    
    
    $
    
    
    
    $
    25,000
    
    
    $
    127,530Interest expense
    
    $
    102,151
    
    
    $
    
    
    
    $
    905
    
    
    $
    103,056Net income (loss)
    
    $
    903,582
    
    
    $
    41,808
    
    
    $
    (2,417,586
    )
    
    $
    (1,472,196
    )Identifiable assets
    
    $
    27,532,334
    
    
    $
    582,153
    
    
    $
    4,652,990
    
    
    $
    32,767,477Capital expenditures
    
    $
    22,808
    
    
    $
    
    
    
    $
    2,306
    
    
    $
    25,114
 20




---



##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2008 and 2007
   China-Wholesale
    
    Corporate
    
    TotalNet revenue
    
    $
    1,410,029
    
    
    $
    14,150
    
    
    $
    1,424,179Gross profit
    
    $
    715,299
    
    
    $
    11,570
    
    
    $
    726,869Depreciation
    
    $
    104,947
    
    
    $
    1,816
    
    
    $
    106,763Amortization
    
    $
    51,862
    
    
    $
    25,000
    
    
    $
    76,862Interest expense
    
    $
    90,857
    
    
    $
    
    
    
    $
    90,857Net income (loss)
    
    $
    124,337
    
    
    $
    (1,509,743
    )
    
    $
    (1,385,406
    )Capital expenditures
    
    $
    9,306
    
    
    $
    
    
    
    $
    9,306
  NOTE 12  RELATED PARTY TRANSACTIONS
  NOTE 13  SUBSEQUENT EVENTS
  
 21




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Our management intends for this discussion and analysis to provide the reader with information
that will assist in understanding our financial statements, the changes in certain key items in
those financial statements from period to period, and the primary factors that accounted for those
changes, as well as how certain accounting principles affect our financial statements. The
following discussion and analysis should be read in conjunction with our financial statements and
notes thereto included in this report on Form 10-Q and in our Annual Report on Form 10-K for the
year ended December 31, 2007, as amended on Form 10-K/A. Operating results are not necessarily
indicative of results that may occur in future periods.
 This report includes various forward-looking statements that are subject to risks and
uncertainties, many of which are beyond our control. Our actual results could differ materially
from those anticipated in these forward looking statements as a result of various factors,
including, but not limited to, risks associated with doing business in China and internationally,
demand for our products, governmental regulation and required licensing of our products and
manufacturing operations, dependence on distributors, foreign currency fluctuation, technological
changes, intense competition and dependence on management and those risks set forth below under
Part II  Item 1A Risk Factors and set forth in Part I  Item 1A Risk Factors in our Annual
Report on Form 10-K for the year ended December 31, 2007, as amended on Form 10-K/A.
Forward-looking statements discuss matters that are not historical facts and include, but are not
limited to, discussions regarding our operating strategy, sales and marketing strategy, regulatory
strategy, industry, economic conditions, financial condition, liquidity and capital resources and
results of operations. Such statements include, but are not limited to, statements preceded by,
followed by or that otherwise include the words believes, expects, anticipates, intends,
estimates, projects, can, could, may, will, would, or similar expressions. For those
statements, we claim the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. You should not unduly rely on these
forward-looking statements, which speak only as of the date on which they were made. They give our
expectations regarding the future, but are not guarantees. We undertake no obligation to update
publicly or revise any forward-looking statements, whether because of new information, future
events or otherwise, unless required by law.
 Acquisition of Jade Pharmaceuticals Inc.
       22




---



##### Table of Contents



s
 Memorandum of Understanding with Zhejiang Huadu Hongying Beauty Hairdressing Co., Ltd
  Letter of Intent to purchase Guangzhou Lazon Pharmacy Co., Ltd.
  License Agreement with Mygene
 MGI
 23




---



##### Table of Contents



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 a total of 24 types of HPV infections
 Regulatory Approval of the MyGene HPV Test Kit
  Current 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 forecasted to become the worlds fifth largest by
2010 and the largest by 2050 as reported by PriceWaterhouseCoopers ; and
    
    The growing demand in China for over the counter pharmaceutical products.
  24




---



##### Table of Contents




    
    gain access to what we believe to be 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®, combination immunogene therapy (CIT) technologies and HPV test kits
in clinical trials, sales, and marketing into China and Asia; and
    
    create new opportunities for cancer related product development in China.
 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® have decreased due to the
reduction in the use of outside consultants and utilization of in-house personnel.
  Liquidity and Capital Resources
      25




---



##### Table of Contents



Going Concern
  26




---



##### Table of Contents



Critical Accounting Policies
   Allowance for Doubtful Accounts
 27




---



##### Table of Contents



Inventories
 Sales Allowances
 Valuation of Intangible 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.
  28




---



##### Table of Contents



Revenue Recognition
  Wholesale Sales
 Direct Distribution
  VAT Taxes.
 Deferred Taxes
 Litigation
 29




---



##### Table of Contents



Stock-Based Compensation Expense
     Results of Operations
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Net Revenues
 Corporate
 .
  30




---



##### 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
    
    
    38.97
    %Human Placental Histosolution (Goodnak)
    
    
    31.15
    %Diavitamin, Calcium Hydrogen Phosphate and Lysine Tablets
    
    
    12.17
    %Levofloxacin Lactate and Sodium Chloride Injection
    
    
    5.37
    %GNS
    
    
    2.70
    %90.36
    %
 31




---



##### Table of Contents



China-Direct Distribution
  Gross Profit.
 Corporate
  China-Wholesale
    China-Direct Distribution
  Research and Development.
 Corporate
 .
 China-Wholesale and China-Direct Distribution
   32




---



##### Table of Contents



Selling, General and Administrative Expenses.
  Corporate
  China-Wholesale
   Geographic Location  ChinaSoutheastern
    
    
    24
    %Eastern
    
    
    15
    %Central
    
    
    40
    %Northeastern
    
    
    20
    %Southwestern
    
    
    1
    %
  China-Direct Distribution
  Other Income and Expense.
 Corporate.
  33




---



##### Table of Contents



China-Wholesale
  Loss from Operations and Net Loss.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures.
  34




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
    
    We entered in to a transaction which advanced funds to a related party without preparing legal documentation to evidence amounts advanced.
    
    We corrected this issue after March 31, 2008, by documenting the advance with a promissory note.
  AMDL, INC.
 
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
     35




---



##### Table of Contents



ITEM 1A. RISK FACTORS
  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.
  36




---



##### Table of Contents



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.
  37




---



##### Table of Contents



Our current products cannot be sold in certain countries if we do not obtain and maintain
regulatory approval.
  USFDA approval for marketing DR-70® is not assured.
  Our future prospects will be negatively impacted if we are unsuccessful in pending litigation over
our CIT technology.
  The value of intangible assets may not be equal to their carrying values.
   38




---



##### Table of Contents



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.
  39




---



##### Table of Contents



We do not intend to pay dividends on our common stock in the foreseeable future.
  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.
  40




---



##### Table of Contents



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;
    
    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.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  41




---



##### Table of Contents



ITEM 6. EXHIBITS
  42




---



##### Table of Contents



AMDL, INC.
 
 SIGNATURES
  AMDL, INC.
(Registrant)Date: May 15, 2008
    By:
    /s/ Gary L. DreherGary L. Dreher, President andChief Executive OfficerDate: May 15, 2008
    By:
    /s/ Akio AriuraAkio Ariura, Chief Financial Officer andSecretary (Principal Financial Officer) 43




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description: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.)
 44