<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  FORM 10-QSB

(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 OR

[___] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE TRANSITION PERIOD FROM               TO 
                                             -------------    -------------

      COMMISSION FILE NUMBER 33-23786-LA


                                  AMDL, INC.
                                  ----------
       (Exact name of small business issuer as specified in its charter)


         DELAWARE                                           87-0188822
---------------------------------                           ----------
  (State or other jurisdiction                           (I.R.S. Employer
of incorporation or organization)                       Identification No.)


  14272 FRANKLIN AVE., SUITE 106
  TUSTIN, CALIFORNIA                                        92780-7017
----------------------------------------                    ---------- 
(Address of principal executive offices)                    (Zip Code)

 
         (714) 505-4460
------------------------------------------------
(Issuer's telephone number, including area code)

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

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes  X   No
    ---     --- 


APPLICABLE ONLY TO CORPORATE ISSUERS:

As of November 11, 1996, the Registrant had outstanding 33,529,903 shares of its
common stock, par value $.001.
<PAGE>
 
Item 1.  FINANCIAL STATEMENTS

     The financial statements included herein have been prepared by AMDL, INC.
(the "Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain information normally included in
the financial statements prepared in accordance with generally accepted
accounting principles has been omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate to make the
information presented not misleading.  It is suggested that the financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 1995, as filed with the Securities and Exchange
Commission.

The Financial Statements are included after Item 2.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

     Since inception, the Company has been in the development stage and has
devoted its resources to research and development of its proposed cancer
monitoring and other products.  To date, the Company has not received any
revenues from the sale of any products.  The Company has incurred losses since
inception and expects to incur a significant operating loss during 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company's cash expenditures have exceeded its income.
Operations have been funded principally through sales of its equity securities,
and income received from the sale of licenses, royalties and options to acquire
marketing rights.  The Company expects to incur continued losses in the near-
term as it continues development of its test kit systems and undertakes clinical
trials and other actions necessary to obtain regulatory approvals.  The Company
also expects to incur substantial administrative and commercialization
expenditures in the future.  From December 31, 1995, to September 30, 1996, the
Company's cash and cash equivalents increased to approximately $3,945,174 as a
result of sales of the Company's securities.  The Company is also hopeful of
obtaining revenues from product sales, but there is no commitment by any person
for purchase of any of these products.  The Company plans to finance its cash
needs principally through additional financings.  However, it is not known
whether the Company will be able to obtain additional funding.  The Company has
no firm commitments for other capital.  The Company can make no prediction as to
when, if ever, it will be profitable.

     The Company believes that its present cash and cash equivalents will be
sufficient for the next year of operations, subject to the Company's ability to
extend forbearance of collection efforts on its outstanding indebtedness.  The
Company's efforts during the next year will be dedicated principally to
providing assistance to ICD in connection with international market development,
domestic and international clinical testing programs, manufacturing of the DR-70
test kits and planning for commercialization of other products.  ICD has entered
into nine exclusive distribution agreements for marketing of the test kits in
the countries of Argentina-Chile, Brazil, China, Indonesia, Mexico, the
Philippines, Poland, Taiwan and Malaysia, respectively.  In order to retain
exclusivity, the distributors in these respective countries will be required to
make minimum purchases of the Company's test kits from ICD.  However, there is
no firm commitment by any distributor to purchase any kits.  Inasmuch as the
kits constitute a new product, regulatory approvals have not been finalized, and
the distributors, in some instances, are not experienced in the sale of this
type of test, no assurance can be given of any revenues from these distribution

                                      -2-
<PAGE>
 
arrangements.  The Company intends for ICD to expand its marketing efforts to
other countries. There can be no assurance as to the success of these efforts.

     The Company anticipates incurring approximately $150,000 for additional
equipment to be used in the U.S. during the next twelve months.  The Company
does not anticipate any significant changes in the number of employees, but this
again is dependent upon financing.  The Company may not be able to retain its
present employees if additional financing is not obtained.  If such financing is
obtained, the Company may seek to add employees to further its efforts to
commercialize its products.

     On September 30, 1996, the Company had total notes payable outstanding of
$25,000.  At September  30, 1996, the Company also had aggregate accrued
salaries payable to officers and other employees and former employees of
$982,518. The Company has made payment arrangements with six persons who are
current or former employees who were owed an aggregate of $621,089 at September
30, 1996. The Company has agreed to pay each of these persons their
proportionate share of 5% of sales revenues, if any, of the Company, but not 
less than $500 per month per person. In addition, if a person currently employed
by the Company is terminated under certain circumstances the minimum monthly
payment would be increased. All amounts must be paid no later than February 28,
2001. The Company has had various communications with the other employees and
officer concerning possible alternative arrangements. There can be no assurance
as to the success of these efforts.

     In February, 1995, the Company and a subsidiary of Briana formed ICD.
Briana is obligated to pay a $1,000,000 marketing rights fee to the Company in
connection with this venture.  As of September 30, 1996, the Company has
received $367,254 of this fee from Briana.  The Company and Briana are
considering various possibilities regarding payment of the balance of this
marketing rights fee.  The Company does not believe that Briana has the present
ability to pay the balance owed.

     During the quarter ended September 30, 1996, the Company received
$1,900,000 from the sale of 4,000,000 shares of common stock and warrants to
purchase 2,000,000 additional shares of common stock at $0.70 per share.  The
warrants expire November 1996.  In addition the Company received $697,500 from
the exercise of warrants for 1,125,000 shares of common stock.  The warrants
were issued during the first two quarters of 1996.  The Company issued 13,384
shares of common stock to extinguish an amount of $11,932 due a public relations
firm for services provided in 1994.  The Company also issued 47,333 shares of
common stock and warrants to purchase an additional 47,333 shares of common
stock at $0.25 per share to an officer and director.  The shares and warrants
were issued in connection with the conversion of convertible notes payable of
$10,000 and related accrued interest of $1,833.  The warrants expire November
1998.


                                      -3-
<PAGE>
 
     The table below sets forth the Company's securities transactions made 
pursuant to Securities and Exchange Commission Regulation S during the nine 
month period ended September 30, 1996.
<TABLE>
<CAPTION>
 
              Number of                    Warrant        Warrant
              Shares of       Number of    Exercise      Expiration         Cash         Holding
  Date       Common Stock    Warrants(1)    Price           Date          Proceeds      Period(2)
-------      ------------    -----------   --------      ----------      ----------     ---------
PURCHASER:   Euro-American GMBH
<S>          <C>             <C>           <C>           <C>             <C>            <C>
01/16/96        500,000          250,000   $   0.70        03/31/96      $  175,000      6 months
01/25/96        500,000          250,000       0.70        09/15/96         175,000      6 months
02/26/96        500,000          250,000       0.70        09/15/96         175,000      6 months
03/06/96        250,000          125,000       0.70        11/26/96         100,000      6 months
04/04/96        750,000          375,000       0.70        11/26/96         300,000      6 months
04/29/96      1,000,000          500,000       0.70        11/26/96         350,000      6 months
05/23/96      1,000,000          500,000       0.70        10/31/96         350,000      6 months
06/04/96      1,000,000          500,000       0.70        10/31/96         350,000      6 months
07/12/96      4,000,000        2,000,000       1.22        11/26/96       1,900,000     12 months
08/05/96        250,000          warrant   exercise                         155,000      6 months
08/05/96        250,000          warrant   exercise                         155,000      6 months
08/05/96        125,000          warrant   exercise                          77,500      6 months
08/05/96        500,000          warrant   exercise                         310,000      6 months
</TABLE> 
<TABLE>
<CAPTION> 
PURCHASER:  Lake Forest Partners, L.P.
<S>          <C>             <C>           <C>             <C>           <C>            <C>
03/15/96     500,000         250,000       $   0.70        09/15/96      $  175,000      6 months
</TABLE>

(1) Each warrant is exercisable for one share of common stock.

(2) Refers to the minimum period from the date of issuance before transfers may 
    be made to a U.S. person as that term is defined in Regulation S.

Results of Operations

       Nine Month Period Ended September 30, 1996 Compared to Nine Month Period
       ------------------------------------------------------------------------
       Ended September  30, 1995
       -------------------------

       During the nine month period ended September 30, 1996, the Company
received no revenue from product sales.  The Company received partial payment of
ICD marketing rights fees of $43,138 from Briana which was recorded as other
income.  Total expenses for the nine month period ended September 30, 1996, were
$1,238,931, resulting in a net loss of $1,195,803.  Expense categories
reflecting increases over the equivalent period in the prior year included legal
fees, laboratory and research expenses and administrative payroll.   During the
nine month period ended September 30, 1995, the Company incurred expenses of
$830,400 and a net reduction of other income of $50,003 for a loss of $880,403.

     Accordingly, the Company's loss for the nine month period ended September
30, 1996, was $1,195,803, compared to a loss of $880,403 for the nine month
period ended September 30, 1995.

                                      -4-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                          Consolidated Balance Sheets
                                  (Unaudited)

                                    ASSETS
                                    ------
<TABLE>
<CAPTION>
                                                                     September 30,   December 31,
                                                                         1996            1995
                                                                     -------------   ------------
<S>                                                                  <C>             <C>
CURRENT ASSETS
 Cash and cash equivalents                                           $   3,945,174   $    726,406
                                                                     -------------   ------------
     TOTAL CURRENT ASSETS                                                3,945,174        726,406
                                                                     -------------   ------------
     TOTAL ASSETS                                                    $   3,945,174   $    726,406
                                                                     =============   ============
</TABLE>
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                ----------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                  <C>             <C> 
CURRENT LIABILITIES
 Notes payable                                                       $      25,000   $    281,500
 Due to related party                                                       65,977         43,646
 Accounts payable and accrued expenses                                     165,369        250,753
 Accrued payroll                                                           982,518        955,610
 Accrued interest                                                           15,707         97,808
 Current portion of capital lease obligation                                27,316         33,145
                                                                     -------------   ------------
     TOTAL CURRENT LIABILITIES                                           1,281,887      1,662,462
                                                                     -------------   ------------ 
LONG-TERM DEBT
 Capital lease obligation, net of current portion                               -          20,902
                                                                     -------------   ------------
STOCKHOLDERS' EQUITY (DEFICIT):
 Preferred stock, 10,000,000 shares authorized, no shares issued
  or outstanding at September 30, 1996, and December 31, 1995.                  -              -
 Common stock, $0.001 par value 50,000,000 shares authorized,
  33,529,903 and 22,208,281 shares issued and outstanding at
  September 30, 1996, and December 31, 1995, respectively.                  33,530         22,208
 Common stock subscribed - 500,000 shares.                                 300,000        300,000
 Additional paid-in capital                                             11,450,469      6,645,743
 Deficit accumulated during the development stage                       (9,120,712)    (7,924,909)
                                                                     -------------   ------------
     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                2,663,287       (956,958)
                                                                     -------------   ------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)            $   3,945,174   $    726,406
                                                                     =============   ============
</TABLE>
   The accompanying notes are an integral part of these financial statements
                                      -5-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                           Statements of Operations
                                  (Unaudited)
<TABLE>
<CAPTION>
 
 
                                                                                       From Inception
                        For the Three Months           For the Nine Months Ended      On July 10, 1987 
                         Ended September 30                  September 30             through Sept. 30
                       -------------------------       -------------------------      ----------------
                           1996          1995             1996          1995                1996   
                       -----------   -----------       -----------   -----------      ----------------
<S>                    <C>           <C>               <C>           <C>              <C> 
REVENUES               $        -    $        -        $        -    $        -       $             -
EXPENSES                   459,435       286,975         1,238,941       830,400            10,772,250
OTHER INCOME                    -             -             43,138       (50,003)            1,651,538
                       ===========    ==========       ===========   ===========      ================
NET LOSS               $  (459,435)  $  (286,975)      $(1,195,803)  $  (880,403)     $     (9,120,712)
                       ===========    ==========       ===========   ===========      ================
EARNINGS (LOSS)
  PER SHARE (Note 1)   $     (0.01)  $     (0.01)      $     (0.04)  $     (0.05)     $          (0.61)
                       -----------   -----------       -----------   -----------      ---------------- 
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                      -6-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                           Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                From Inception
                                 For the Three Months           For the Nine Months Ended      On July 10, 1987 
                                  Ended September 30                  September 30             through Sept. 30
                                ------------------------        -------------------------      ----------------
                                    1996          1995             1996          1995                1996   
                                -----------   -----------       -----------   -----------      ----------------
<S>                             <C>           <C>               <C>           <C>              <C>  
CASH FLOWS FROM OPERATING
 ACTIVITIES:
Net Income (Loss)               $  (459,435)  $  (286,975)      $(1,195,803)  $  (880,403)     $     (9,120,712)
Adjustments to reconcile net
  income (loss) to net cash
  used in operating activities:
  Stock subscribed                       -             -                 -             -                300,000
  Depreciation and amortization          -         19,571                -         58,713               799,288
  Stock and warrants issued for
  services and accrued interest      13,756            -                 -             -                853,371
 
Change in operating assets
  liabilities
 
Increase (decrease) in amount
  due related party                  21,833        24,115            22,341        (5,569)               65,987
Increase (decrease) in
 accrued payroll                      3,614        16,500            26,908        74,500               982,518
Increase (decrease) in other
  accrued liabilities               (77,026)        7,329           (82,101)       24,654                15,707
Increase (decrease) in
  accounts payable and
  accrued expenses                   (5,680)       (4,954)           (9,347)      (94,508)              226,172
                                -----------   -----------       -----------   -----------      ---------------- 
  Net Cash Provided (Used) in
    Operating Activities           (502,938)     (224,414)       (1,238,002)     (822,613)           (5,877,669)
                                -----------   -----------       -----------   -----------      ---------------- 
CASH FLOWS FROM INVESTING
  ACTIVITIES:
 
Purchase of equipment                    -             -                 -             -               (215,930)
Expenditures for patents in
  process                                -             -                 -             -               (154,682)
 
  Net Cash Provided (Used) in
   Investing Activities         $        -    $        -        $        -    $        -       $       (370,612)
                                -----------   -----------       -----------   -----------      ----------------

</TABLE>


   The accompanying notes are an integral part of these financial statements
                                      -7-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                     Statements of Cash Flows (Continued)
                                  (Unaudited)
<TABLE>
<CAPTION>
 
                                                                                                  From Inception
                                    For the Three Months          For the Nine Months Ended      On July 10, 1987 
                                     Ended September 30                 September 30             through Sept. 30
                                  -------------------------       -------------------------      ----------------
                                      1996          1995             1996          1995                1996   
                                  -----------   -----------       -----------   -----------      ----------------
<S>                               <C>           <C>               <C>           <C>              <C>  
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment yearly capital
  lease obligations               $    (8,438)  $        -        $   (26,731)  $        -       $        (89,360)
Proceeds from notes payable            10,000            -             10,000       110,000               446,000
Repayment of notes payable           (209,000)       (8,939)         (256,500)      (34,617)             (411,000)
Proceeds from issuances
  of common stock                   2,597,500        32,517         4,730,001     1,110,517            10,190,748
Net effect of merger with CVI              -             -                 -             -                 57,067
                                  -----------   -----------       -----------   -----------      ----------------
  Net Cash Provided (Used) in
    Financing Activities            2,390,062        23,578         4,456,770     1,185,900            10,193,455
                                  -----------   -----------       -----------   -----------      ----------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS           1,887,124      (200,836)        3,218,768       363,287             3,945,174
 
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD              2,058,050       594,705           726,406        30,582                    -
                                  -----------   -----------       -----------   -----------      ----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD                  $ 3,945,174   $   393,869       $ 3,945,174   $   393,869      $      3,945,174
                                  ===========   ===========       ===========   ===========      ================ 
NON-CASH FINANCING
 ACTIVITIES:
 Common stock and warrants
  issued for services             $        -    $        -        $        -    $        -       $        497,382
Debt converted to equity               10,000            -             72,281            -                733,194
Equipment purchased under
 capital lease                             -             -                 -             -                117,454
CASH PAID FOR:
Interest                          $        -    $        -        $        -    $        -       $         95,530
Income Taxes                               -             -                 -             -                     -
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                      -8-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                       Notes to the Financial Statements
                   December 31, 1995 and September 30, 1996

NOTE 1 -  MANAGEMENT OPINION

          In the opinion of management, the consolidated financial statements
          reflect all adjustments (which include only normal recurring
          adjustments) necessary to present fairly the financial position and
          results of operations as of and for the periods presented.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.  Organization and Nature of Business

              AMDL, INC. (formerly Advanced Medical Diagnostic, Ltd.) (the
              "Company") was incorporated June 7, 1989, in the state of
              Delaware. The Company is a development-stage company committed to
              the development of an accurate, dependable, low-cost broad-based
              detection technology for cancer and other diseases.

              The Company has not generated any revenues from operations and has
              no assurance of future revenues. Additionally, the Company has
              moderate liquid assets. In order to finance the operations of the
              Company and further development, additional capital is required.
              There is no assurance that the Company will be able to obtain
              sufficient additional funds when needed, or that such funds, if
              available, will be obtainable on terms satisfactory to the
              Company.

              These circumstances raise substantial doubt about the Company's
              ability to continue as a going concern. The financial statements
              do not include any adjustments that might result from the outcome
              of this uncertainty.


              Management has taken action to address these matters. They
              include:

              -  Retention of experienced management personnel with particular
                 skills in the successful completion of cash generating
                 licensing agreements, etc.

              -  Attainment of technology to detect cancer and other diseases.

          b.  Loss per Share

              Loss per share was computed based on the weighted average number
              of shares outstanding for the period. The effect of stock options
              and warrants on loss per share is antidilutive and thus not
              included in the loss per share calculation.

                                      -9-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                       Notes to the Financial Statements
                   December 31, 1995 and September 30, 1996


          c.  Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less when purchased, to be cash
              equivalents.

NOTE 3 -  RELATED PARTY TRANSACTIONS
                                     1996
                                     ----

          During the first nine months of 1996, advances of approximately
          $65,500 were made on behalf of the Company by Briana Bio-Tech for
          expenses incurred in connection with pursuing regulatory approval and
          subsequent longitudinal studies.

NOTE 4 -  COMMITMENTS AND CONTINGENCIES

          a.  Employment Agreements
                                     1996
                                     ----

              In January 1996, the Company entered into a one year employment
              agreement with Harry Berk, Vice President. The agreement specifies
              an annual base salary of $80,000. Mr. Berk also received options
              to purchase up to 100,000 shares of the Company's common stock at
              the exercise price of $0.97 per share exercisable until December
              31, 1999. Options to purchase 25,000 shares vested upon execution
              of the agreement. The options to purchase the remaining 75,000
              shares will vest in quarterly installments of 18,750 each over one
              year. The agreement contains a severance provision. Mr. Berk shall
              be entitled to a severance payment equal to three months salary.
              The provisions also include for customary medical insurance,
              vacation, sick leave, nondisclosure and covenants not to compete.
              If the Company creates an executive bonus plan, Mr. Berk shall be
              entitled to participate in such a plan.

              On June 1, 1996, the Board of Directors approved a $222,000 annual
              base salary for Dr. That T. Ngo.


                                     -10-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                       Notes to the Financial Statements
                   December 31, 1995 and September 30, 1996

NOTE 5 -  CAPITAL TRANSACTIONS

          a.  Common Stock
                                     1996
                                     ----

              During the first quarter the Company received $800,000 cash
              proceeds from the sale of 2,250,000 shares of common stock and
              warrants to purchase 1,125,000 additional shares of common stock
              at $0.70 per share. Warrants for 250,000 shares of common stock
              expired March 31, 1996. Warrants for 750,000 shares of common
              stock expired September 15, 1996. Warrants for 125,000 shares of
              common stock expire November 26, 1996. The Company received $2,625
              cash proceeds from the exercise of warrants for 10,500 shares of
              common stock. The warrants were issued in 1995 to an investment
              banking firm.

              During the second quarter the Company received $1,350,000 cash
              proceeds from the sale of 3,750,000 shares of common stock and
              warrants to purchase 1,875,000 additional shares of common stock
              at $0.70 per share. Warrants for 1,000,000 shares of common stock
              expire October 31, 1996. Warrants for 875,000 shares of common
              stock expire November 26, 1996. The Company received $4,875 cash
              proceeds from the exercise of warrants for 19,500 shares of common
              stock. The warrants were issued in 1995 to an investment baking
              firm. The Company issued 16,779 shares of common stock to
              extinguish an amount of $15,000 due a director for consulting
              services provided in 1994. The Company issued 89,127 shares of
              common stock to cancel convertible notes payable of $20,000 and
              related accrued interest of $2,282.

              During the third quarter the Company received $1,900,000 from the
              sale of 4,000,000 shares of common stock and warrants to purchase
              2,000,000 additional shares of common stock at $0.70 per share.
              The warrants expire November 1996. In addition the Company
              received $697,500 from the exercise of warrants for 1,125,000
              shares of common stock. The warrants were issued during the first
              two quarters of 1996. The Company issued 13,384 shares of common
              stock to extinguish an amount of $11,932 due a public relations
              firm for services provided in 1994. The Company also issued 47,333
              shares of common stock and warrants to purchase an additional
              47,333 shares of common stock at $0.25 per share to an officer and
              director. The shares and warrants were issued in connection with
              the conversion of convertible notes payable of $10,000 and related
              accrued interest of $1,833. The warrants expire November 1998.

                                     -11-
<PAGE>
 
                                  AMDL, INC.
                         (A Development Stage Company)
                       Notes to the Financial Statements
                   December 31, 1995 and September 30, 1996


          b.  Stock Options and Warrants
                                     1996
                                     ----

              The Company issued warrants, as part of the sale of common stock,
              to purchase 1,125,000 additional shares of common stock at $0.70
              per share. Warrants for 250,000 shares of common stock expired
              March 31, 1996. Warrants for 750,000 shares of common stock
              expired September 15, 1996. Warrants for 125,000 shares of common
              stock expire November 26, 1996.

              During the second quarter the Company issued warrants, as part of
              the sale of common stock, to purchase 1,875,000 additional shares
              of common stock at $0.70 per share. Warrants for 1,000,000 shares
              of common stock expire October 31, 1996. Warrants for 875,000
              shares of common stock expire November 26, 1996.

              During the third quarter the Company issued warrants, as part of
              the sale of common stock to purchase 2,000,000 additional shares
              of common stock at $0.70 per share. The warrants expire November
              1996. The Company also issued warrants to purchase 47,333 shares
              of common stock at $0.25 per share to an officer and director. The
              warrants were issued in connection with the conversion of
              convertible notes payable of $10,000 and related accrued interest
              of $1,833. The warrants expire November 1998. The Company granted
              warrants to consultants to purchase 200,000 shares of common stock
              at $0.75 per share. The warrants expire September 1999.


NOTE 6 -  SUBSEQUENT EVENTS

          Subsequent to September 30, 1996, the following transactions occurred.

          a.  Employment Agreements

              In October 1996, the Company entered into a two year employment
              agreement with Dr. That T. Ngo, President and Chief Executive
              Officer. The agreement specifies an annual base salary of
              $222,000. Dr. Ngo also received options to purchase up to
              1,500,000 shares of the Company's common stock at the exercise
              price of $0.657 per share exercisable until September 2001.
              Options to purchase 750,000 shares vested upon execution of the
              agreement. The options to purchase the remaining 750,000 shares
              will vest in quarterly installments of 90,000 each over the next
              seven calendar quarters and 120,000 in the eighth calendar
              quarter. The agreement contains a severance provision. Dr. Ngo
              shall be entitled to a severance payment equal to six months
              salary. The employment agreement also includes provisions

                                     -12-
<PAGE>
 
              for customary medical insurance, vacation, sick leave,
              nondisclosure and covenants not to compete. If the Company creates
              an executive bonus plan, Dr. Ngo shall be entitled to participate
              in such plan.

              In October 1996, the Company entered into a two year employment
              agreement with Dr. Ronald J. Moore, Vice President of Operations.
              The agreement specifies an annual base salary of $80,000. Dr.
              Moore also received options to purchase up to 100,000 shares of
              the Company's common stock at the exercise price of $0.563 per
              share exercisable until September 2001. The options will vest in
              installments of 12,500 each at the end of each of the following
              eight calendar quarters. The agreement contains a severance
              provision. Dr. Moore shall be entitled to a severance payment
              equal to two months salary. The employment agreement also includes
              provisions for customary medical insurance, vacation, sick leave,
              nondisclosure and covenants not to compete. If the Company creates
              an executive bonus plan, Dr. Moore shall be entitled to
              participate in such plan.

          b.  Commitments and Contingencies

              In October 1996, the Company executed a new three year real estate
              lease for 8,277 square feet of office, laboratory and
              manufacturing space at its present facility in Tustin, California.
              The lease commences December 1, 1996, and ends November 30, 1999.
              The base rent plus applicable common area charges are estimated to
              be $9,200 per month.

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

         As reported in the Company's Report on Form 10-KSB for the year ended
         December 31, 1995, the Company instituted litigation in February 1996
         against Roger L. Lallone and Edward L. Stephen and their corporate
         affiliates for misappropriation of trade secrets, breach of contract,
         conversion and violation of the Lanham Act. The action was filed in the
         U.S. District Court for the Central District of California (Case No.
         SACV 96-37). Defendant Lallone filed an Answer denying generally the
         material allegations of the Company's Complaint. In addition, he
         asserted counterclaims against the Company for breach of contract,
         fraud and trade secret misappropriation, pursuant to which he is
         seeking compensatory damages and punitive damages against the Company.
         The Company has denied the material allegation of Defendant Lallone's
         Counterclaim. The Company intends to vigorously defend itself against
         the Counterclaim of Defendant Lallone. Defendant Stephen filed a motion
         to compel arbitration and to stay the court proceedings. In May 1996,
         the Court denied this Motion. In June 1996 Defendant Stephen filed an
         Answer denying generally the material allegations of the Company's
         Complaint. In addition, he asserted counterclaims against the Company
         for breach of contract claiming damages of $110,000, and for
         interference with prospective economic advantage claiming damages in
         excess of $100,000. He also claims punitive damages in an amount to be
         determined. The Company intends to vigorously defend itself against the
         counterclaims of Defendant Stephen.

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<PAGE>
 
                                  SIGNATURES



     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                         AMDL, INC.

November 11, 1996
                                    By:  /s/ HARRY R. BERK
                                         ------------------------
                                         Chief Accounting Officer


November 11, 1996
                                    By:  /s/ THAT T. NGO
                                         -------------------------
                                         President


                                     -14-