##### 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, 2009.
 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 100
Tustin, California
    
    92780-7039(Address of principal executive offices)
    
    (Zip Code)
 
 Registrants telephone number, including area code: (714) 505-4460
 þ o
 o o
  Large accelerated filer o
Accelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller Reporting company þ  o þ
 th




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##### 



AMDL, INC.
INDEX TO FORM 10-Q
 PagePart I Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets at March 31, 2009
(Unaudited) and December 31, 2008 (Audited)
    
    
    1Unaudited Condensed Consolidated Statements of Operations and
Comprehensive Loss for the three months ended March 31, 2009
and 2008
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 2009 and 2008
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 4.
    
    Controls and Procedures
    
    
    38Part II Other InformationItem 1
    
    Legal Proceedings
    
    
    40Item 1A.
    
    Risk Factors
    
    
    40Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 3.
    
    Defaults upon Senior Securities
    
    
    46Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    46Item 5.
    
    Other Information
    
    
    46Item 6.
    
    Exhibits
    
    
    46SignaturesExhibit Index:EX-31.1
    
    
    
    xxEX-31.2
    
    
    
    xxEX-32.1
    
    
    
    xxEX-32.2
    
    
    
    xxEX-31.1EX-31.2EX-32.1EX-32.2
  i




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 AMDL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudted)
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,290,229
    
    
    $
    2,287,283Accounts receivable, net
    
    
    10,081,366
    
    
    
    13,575,534Inventories
    
    
    2,133,160
    
    
    
    1,563,991Prepaid expenses and other current assets
    
    
    1,837,870
    
    
    
    1,006,960Current assets of discontinued operations
    
    
    1,372,309
    
    
    
    1,435,021Total current assets
    
    
    18,714,934
    
    
    
    19,868,789Property and equipment, net
    
    
    11,910,852
    
    
    
    11,709,508Intangible assets, net
    
    
    5,184,491
    
    
    
    5,311,568Other assets
    
    
    4,212,911
    
    
    
    4,072,432Non-current assets of discontinued operations
    
    
    1,780,046
    
    
    
    1,789,934Total assets
    
    $
    41,803,234
    
    
    $
    42,752,231LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,770,114
    
    
    $
    1,675,539Accrued salaries and wages
    
    
    990,601
    
    
    
    822,201Income taxes payable
    
    
    91,751
    
    
    
    472,860Deferred revenue
    
    
    43,824
    
    
    
    87,538Current portion of notes payable
    
    
    2,666,009
    
    
    
    2,662,610Current liabilities of discontinued operations
    
    
    930,719
    
    
    
    1,151,515Total current liabilities
    
    
    6,493,018
    
    
    
    6,872,263Other long-term liabilities
    
    
    362,138
    
    
    
    353,811Notes payable, net of current portion and debt discount
    
    
    874,147
    
    
    
    581,305Total liabilities
    
    
    7,729,303
    
    
    
    7,807,379Commitments 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; 17,383,574 and 16,006,074 shares
issued at March 31, 2009 and December 31, 2008,
respectively; 15,931,906 and 15,826,074 shares
outstanding at March 31, 2009 and December 31,
2008, respectively
    
    
    15,932
    
    
    
    15,826Additional paid-in capital
    
    
    68,859,186
    
    
    
    68,192,411Accumulated other comprehensive income
    
    
    2,485,883
    
    
    
    2,443,452Accumulated deficit
    
    
    (37,287,070
    )
    
    
    (35,706,837
    )Total stockholders equity
    
    
    34,073,931
    
    
    
    34,944,852Total liabilities and stockholders equity
    
    $
    41,803,234
    
    
    $
    42,752,231
  1




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##### Table of Contents



AMDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Net revenues
    
    $
    2,711,737
    
    
    $
    2,941,193Cost of sales
    
    
    1,585,573
    
    
    
    1,517,541Gross profit
    
    
    1,126,164
    
    
    
    1,423,652Operating expenses:Research and development
    
    
    92,684
    
    
    
    8,695Selling, general and administrative
    
    
    2,590,769
    
    
    
    2,797,9472,683,453
    
    
    
    2,806,642Loss from operations
    
    
    (1,557,289
    )
    
    
    (1,382,990
    )Other expense:Interest expense
    
    
    (234,217
    )
    
    
    (84,521
    )Other expense, net
    
    
    (36,109
    )
    
    
    (61,964
    )Total other expense, net
    
    
    (270,326
    )
    
    
    (146,485
    )Loss before provision for income taxes and discontinued operations
    
    
    (1,827,615
    )
    
    
    (1,529,475
    )Provision for income taxes
    
    
    110,502
    
    
    
    149,062Loss before discontinued operations
    
    
    (1,938,117
    )
    
    
    (1,678,537
    )Income from discontinued operations, net
    
    
    247,026
    
    
    
    206,341Net loss
    
    
    (1,691,091
    )
    
    
    (1,472,196
    )Other comprehensive income:Foreign currency translation gain
    
    
    42,431
    
    
    
    783,432Comprehensive loss
    
    $
    (1,648,660
    )
    
    $
    (688,764
    )Basic and diluted income (loss) per common share:Loss before discontinued operations
    
    $
    (0.12
    )
    
    $
    (0.11
    )Income from discontinued operations
    
    
    0.01
    
    
    
    0.01Net loss
    
    $
    (0.11
    )
    
    $
    (0.10
    )Weighted average common shares outstanding  basic and diluted
    
    
    15,851,815
    
    
    
    15,130,345
  2




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##### Table of Contents



AMDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,691,091
    )
    
    $
    (1,472,196
    )Less: income from discontinued operations
    
    
    247,026
    
    
    
    206,341(1,938,117
    )
    
    
    (1,678,537
    )Adjustments to reconcile net loss before discontinued operations to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    352,441
    
    
    
    304,645Accretion of debt discount and amortization of debt issuance costs
    
    
    69,965
    
    
    
    Fair market value of options granted to employees and directors for
services
    
    
    157,155
    
    
    
    105,542Fair market value of common stock, warrants and options expensed for
services
    
    
    105,925
    
    
    
    527,425Fair value adjustment to warrants accounted for as liabilities
    
    
    35,558
    
    
    
    Provision for bad debts
    
    
    202,817
    
    
    
    69,764Changes in operating assets and liabilities:Accounts receivable
    
    
    3,307,879
    
    
    
    (904,282
    )Related party account with Jade Capital
    
    
    
    
    
    
    (614,301
    )Inventories
    
    
    (567,218
    )
    
    
    90,440Prepaid expenses and other assets
    
    
    (831,172
    )
    
    
    (98,333
    )Accounts payable, accrued expenses and accrued salaries and wages
    
    
    269,767
    
    
    
    294,522Income taxes payable
    
    
    (381,648
    )
    
    
    17,984Deferred revenue
    
    
    (43,817
    )
    
    
    (41,807
    )Net cash provided by (used in) operating activities of continuing
operations
    
    
    739,535
    
    
    
    (1,926,938
    )Net cash provided by operating activities of discontinued operations
    
    
    101,457
    
    
    
    114,872Net cash provided by (used in) operating activities
    
    
    840,992
    
    
    
    (1,812,066
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (407,156
    )
    
    
    (299,652
    )Return of amounts advanced on note receivable
    
    
    
    
    
    
    13,936Net cash used in investing activities of continuing operations
    
    
    (407,156
    )
    
    
    (285,716
    )Net cash used in investing activities of discontinued operations
    
    
    
    
    
    
    (4,181
    )Net cash used in investing activities
    
    
    (407,156
    )
    
    
    (289,897
    )Cash flows from financing activities:Proceeds from issuance of Senior Notes, net of cash issuance costs of
$113,400
    
    
    566,600
    
    
    
    Payments on notes payable
    
    
    
    
    
    
    (1,393,595
    )Proceeds from issuance of common stock, net of cash offering costs of
$123,875
    
    
    
    
    
    
    876,129Proceeds from the exercise of warrants
    
    
    
    
    
    
    6,983Net cash provided by (used in) financing activities
    
    
    566,600
    
    
    
    (510,483
    )Effect of exchange rates on cash and cash equivalents
    
    
    2,510
    
    
    
    24,816Net change in cash and cash equivalents
    
    
    1,002,946
    
    
    
    (2,587,630
    )Cash and cash equivalents, beginning of period
    
    
    2,287,283
    
    
    
    6,157,493Cash and cash equivalents, end of period
    
    $
    3,290,229
    
    
    $
    3,569,863
  3




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 NOTE 1  MANAGEMENTS REPRESENTATION
   NOTE 2  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  ®
  Discontinued Operations and Assets Held for Sale
 Accounting for the Impairment or Disposal of
Long-lived Assets
  Three months ended March 31,2009
    
    2008Revenue
    
    $
    594,839
    
    
    $
    646,553Income before income taxes
    
    $
    277,743
    
    
    $
    257,935
 4




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
   March 31,
    
    
    December 31,2009
    
    
    2008Current assets:Accounts receivable, net
    
    $
    892,229
    
    
    $
    930,769Inventories
    
    
    476,839
    
    
    
    423,842Other current assets
    
    
    3,241
    
    
    
    80,410$
    1,372,309
    
    
    $
    1,435,021Long-lived assets:Property and equipment
    
    $
    1,733,179
    
    
    $
    1,742,739Other
    
    
    46,867
    
    
    
    47,195$
    1,780,046
    
    
    $
    1,789,934Current liabilities:Accounts payable and accrued liabilities
    
    $
    463,979
    
    
    $
    685,360Debt
    
    
    466,740
    
    
    
    466,155$
    930,719
    
    
    $
    1,151,515
 Going Concern
  th
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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
       Principles of Consolidation
  6




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Use of Estimates
  Revenue Recognition
 Revenue Recognition in Financial Statements
 Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendors Products)
  How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net
Presentation)
 Deferred Revenue
   7




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Accounting for Shipping and Handling Revenue, Fees and Costs
 Accounting for Shipping and Handling Fees and Costs.
 Impairment 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 GMP certifications.
  Derivative Financial Instruments
 Accounting for Derivative Instruments and
Hedging Activities
 Risks and Uncertainties
 Manufacturing and Distribution Operations in China
  8




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
   Regulatory Environment
      9




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  
    
    Compile technical file and prepare clinical protocol;
    
    Clinical trial preparation and design;
    
    Clinical trial supervision and monitoring;
    
    When appropriate, apply for SFDA approval.
  Concentrations of Credit Risk
 Cash
  Customers
    Basic and Diluted Income (Loss) Per Share
  10




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Earnings Per
Share
   Supplemental Cash Flow Information
 Three months ended March 31,2009
    
    
    2008Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    57,000
    
    
    $
    102,000Cash paid during the period for taxes
    
    $
    492,000
    
    
    $
    74,000Supplemental disclosure of non-cash activities:Warrants issued in connection with Senior Notes, included in debt
issuance costs and debt discount
    
    $
    472,736
    
    
    $
    Reclassification of amounts recorded to additional paid-in capital to
warrant liability, including $110,858 recorded to retained earnings
upon implementation of EITF 07-5, representing the change in value of
the warrants from date of issuance to January 1, 2009
    
    $
    209,166
    
    
    $
    Reclassification of warrant liability to additional paid-in capital
upon expiration of share adjustment terms
    
    $
    133,866
    
    
    $
    Fair value of warrants issued for services, included in prepaid expense
    
    $
    17,500
    
    
    $
    
 Recent Accounting Pronouncements
 Fair Value Measurements Effective Date of FASB Statement No. 157
 11




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Accounting for Collaborative
Arrangements,
 Business Combinations Business Combinations.
 Noncontrolling Interests in Consolidated Financial
Statements  An Amendment of ARB No. 51
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles
  Determining Whether an Instrument (or an
Embedded Feature) Is Indexed to an Entitys Own Stock
 12




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  Interim Disclosures about
Fair Value of Financial Instruments
 NOTE 3  INVENTORIES
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)Raw materials
    
    $
    1,246,383
    
    
    $
    719,389Work-in-process
    
    
    14,457
    
    
    
    11,808Finished goods
    
    
    872,320
    
    
    
    832,794$
    2,133,160
    
    
    $
    1,563,991
 NOTE 4  PREPAID EXPENSES, OTHER CURRENT ASSETS, AND OTHER ASSETS
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)Material deposits
    
    $
    1,292,376
    
    
    $
    627,390Due from officers and directors
    
    
    10,093
    
    
    
    9,693Current deferred tax asset
    
    
    92,915
    
    
    
    92,798Other
    
    
    442,486
    
    
    
    277,079$
    1,837,870
    
    
    $
    1,006,960
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)Deposits, primarily product licenses
    
    $
    3,004,040
    
    
    $
    3,000,354Debt issuance costs (Note 7)
    
    
    1,043,190
    
    
    
    906,408Convertible Debt derivative
    
    
    125,000
    
    
    
    125,000Refundable deposits
    
    
    40,681
    
    
    
    40,670$
    4,212,911
    
    
    $
    4,072,432
  13




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 NOTE 5  INTANGIBLE ASSETS
  Effect ofGross
    
    
    
    
    
    
    ForeignCarrying
    
    
    Accumulated
    
    
    CurrencyValue
    
    
    Amortization
    
    
    Translation
    
    
    NetAssets subject to amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (766,667
    )
    
    $
    
    
    
    $
    1,233,333Production rights
    
    
    1,916,622
    
    
    
    (371,136
    )
    
    
    155,899
    
    
    
    1,701,385Land use rights
    
    
    1,354,765
    
    
    
    (111,009
    )
    
    
    211,862
    
    
    
    1,455,618Non-compete agreements
    
    
    324,415
    
    
    
    (182,308
    )
    
    
    32,750
    
    
    
    174,857Customer relationships
    
    
    214,328
    
    
    
    (86,788
    )
    
    
    26,796
    
    
    
    154,336Trade name and logo
    
    
    530,829
    
    
    
    (144,588
    )
    
    
    78,721
    
    
    
    464,962$
    6,340,959
    
    
    $
    (1,662,496
    )
    
    $
    506,028
    
    
    $
    5,184,491
  Effect ofGross
    
    
    
    
    
    
    ForeignCarrying
    
    
    Accumulated
    
    
    CurrencyValue
    
    
    Amortization
    
    
    Translation
    
    
    NetAssets subject to amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (741,667
    )
    
    $
    
    
    
    $
    1,258,333Production rights
    
    
    1,916,622
    
    
    
    (318,986
    )
    
    
    154,007
    
    
    
    1,751,643Land use rights
    
    
    1,354,765
    
    
    
    (99,094
    )
    
    
    209,839
    
    
    
    1,465,510Non-compete agreements
    
    
    324,415
    
    
    
    (163,652
    )
    
    
    32,483
    
    
    
    193,246Customer relationships
    
    
    214,328
    
    
    
    (77,904
    )
    
    
    26,569
    
    
    
    162,993Trade name and logo
    
    
    530,829
    
    
    
    (129,041
    )
    
    
    78,055
    
    
    
    479,843$
    6,340,959
    
    
    $
    (1,530,344
    )
    
    $
    500,953
    
    
    $
    5,311,568
   NOTE 6  INCOME TAXES
  14




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Accounting for Income Taxes
   NOTE 7  NOTES PAYABLE
  March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)Convertible Debt, net of unamortized discount, inclusive of
bonus interest, of $3,761,938 and $3,762,000 at March 31,
2009 and December 31, 2008, respectively
    
    $
    62
    
    
    $
    Senior Notes payable, net of unamortized discount of $883,353
and $496,195 at March 31, 2009 and December 31, 2008,
respectively
    
    
    874,147
    
    
    
    581,305Bank debt
    
    
    3,132,687
    
    
    
    3,128,7654,006,896
    
    
    
    3,710,070Less: Bank debt associated with discontinued operations of YYB
    
    
    466,740
    
    
    
    466,155Less: Current portion of long-term debt
    
    
    2,666,009
    
    
    
    2,662,610$
    874,147
    
    
    $
    581,305
 Convertible Debt
  Senior Notes Payable
   15




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  Accounting for Registration Payment Arrangements.
 Bank Debt
    16




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 Debt Repayment Obligations
  2009
    
    $
    2,665,9462010
    
    
    4,839,5002011
    
    
    680,000$
    8,185,446
 NOTE 8  EMPLOYMENT CONTRACT TERMINATION LIABILITY
 Accounting for Costs Associated
with Exit or Disposal Activities
 NOTE 9  COMMITMENTS AND CONTINGENCIES
 Litigation
   17




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
   Production License Acquisition Agreements
  Licensing Agreements
  Contingent Issuance of Shares  Acquisition of JPI
   Indemnities and Guarantees
  18




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  Tax Matters
  Change in Control Severance Plan
  NOTE 10  SHARE-BASED COMPENSATION
     19




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  Summary of Assumptions and Activity
   Expected volatility
    
    
    111
    %Expected term
    
    5 yearsRisk-free interest rate
    
    
    2.48
    %Dividend yield
    
    
    
    %
   WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    ContractualOptions
    
    
    Price
    
    
    Life (Years)Outstanding, December 31, 2008
    
    
    2,757,001
    
    
    $
    3.75Expired
    
    
    (245,000
    )
    
    
    6.15Outstanding, March 31, 2009
    
    
    2,512,001
    
    
    $
    3.52
    
    
    
    2.52Vested and Exercisable at March 31, 2009
    
    
    2,266,793
    
    
    $
    3.52
    
    
    
    2.37
   20




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 NOTE 11  FINANCING ACTIVITIES
 Cash Financing Activities
  December 2007 Offering
   Convertible Debt
  Senior Notes  Warrants
  Non-Cash Financing Activities
   21




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
  Accounting for Equity Instruments that are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services
    Warrants
  WeightedAverageExerciseWarrants
    
    
    PriceOutstanding, December 31, 2008
    
    
    5,252,699
    
    
    $
    3.38Issued
    
    
    598,400
    
    
    
    1.13Outstanding, March 31, 2009
    
    
    5,851,099
    
    
    $
    3.15
 22




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##### Table of Contents



AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 NOTE 12  SEGMENT REPORTING
   China
    
    Corporate
    
    TotalNet revenue
    
    $
    2,688,667
    
    
    $
    23,070
    
    
    $
    2,711,737Gross profit
    
    $
    1,111,169
    
    
    $
    14,995
    
    
    $
    1,126,164Depreciation
    
    $
    206,387
    
    
    $
    13,901
    
    
    $
    220,288Amortization
    
    $
    107,153
    
    
    $
    25,000
    
    
    $
    132,153Interest expense
    
    $
    55,702
    
    
    $
    178,515
    
    
    $
    234,217Income (loss) before discontinued operations
    
    $
    398,564
    
    
    $
    (2,336,681
    )
    
    $
    (1,938,117
    )Identifiable assets of continuing operations
    
    $
    35,579,385
    
    
    $
    3,071,494
    
    
    $
    38,650,879Capital expenditures
    
    $
    300,719
    
    
    $
    106,437
    
    
    $
    407,156
  China
    
    Corporate
    
    TotalNet revenue
    
    $
    2,932,973
    
    
    $
    8,220
    
    
    $
    2,941,193Gross profit
    
    $
    1,422,229
    
    
    $
    1,423
    
    
    $
    1,423,652Depreciation
    
    $
    174,787
    
    
    $
    2,328
    
    
    $
    177,115Amortization
    
    $
    102,530
    
    
    $
    25,000
    
    
    $
    127,530Interest expense
    
    $
    83,616
    
    
    $
    905
    
    
    $
    84,521Income (loss) before discontinued operations
    
    $
    739,049
    
    
    $
    (2,417,586
    )
    
    $
    (1,678,537
    )Capital expenditures
    
    $
    297,346
    
    
    $
    2,306
    
    
    $
    299,652
   23




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AMDL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2009 and 2008
 NOTE 13  RELATED PARTY TRANSACTIONS
  NOTE 14  SUBSEQUENT EVENTS
   24




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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, 2008. 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, 2008. 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.
 Overview
 The Company
  25




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##### Table of Contents



IV Diagnostics
 DR-70 Test Kit
  License Agreement with MyGene International, Inc.
  The MyHPV Chip 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
    
    identification of a total of 24 types of HPV infections.
 Regulatory Approval of the MyHPV Chip Kit
  Research and Development
    26




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##### Table of Contents



China-based Integrated Pharmaceuticals
  Discontinued Operations and Assets Held for Sale
   March 31,
    
    
    December 31,2009
    
    
    2008Current assets:Accounts receivable, net
    
    $
    892,229
    
    
    $
    930,769Inventories
    
    
    476,839
    
    
    
    423,842Other current assets
    
    
    3,241
    
    
    
    80,410$
    1,372,309
    
    
    $
    1,435,021Long-lived assets:Property and equipment
    
    $
    1,733,179
    
    
    $
    1,742,739Other
    
    
    46,867
    
    
    
    47,195$
    1,780,046
    
    
    $
    1,789,934Current liabilities:Accounts payable and accrued liabilities
    
    $
    463,979
    
    
    $
    685,360Debt
    
    
    466,740
    
    
    
    466,155$
    930,719
    
    
    $
    1,151,515
 Operations of JJB
  Facilities
   27




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##### Table of Contents



Marketing and Distribution
    New Beauty Formulations of the HPE-Based Anti-Aging Product
  
    
    Hydrating Firming Cream (Dry-Mix skin)
    
    Hydrating Firming Cream (Oily skin)
    
    Renergie Hydrating Cleanser
    
    Intense Hydrating Cleanser
    
    Visable Renewing Hydrating Softener
    
    Smoothing Renewing Eye Moisturizer
   Distribution Channels for Beauty Product Lines
   28




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##### Table of Contents



The Current Chinese Economic and Market Environment
  Research and Development
   Cancer Therapeutics
  29




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##### Table of Contents



Critical Accounting Policies and Estimates
   Allowance for Doubtful Accounts.
 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 GMP certifications.
  30




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##### Table of Contents



Revenue Recognition. Revenue Recognition in Financial Statements
 Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors
Products)
 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.
 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.
 31




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Share-Based Payment
 Derivative Financial Instruments. Accounting for
Derivative Instruments and Hedging Activities
 32




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Results of Operations
 Quarter Ended March 31, 2009 Compared to Quarter Ended March 31, 2008
 Net Revenues.
 Corporate
       China
   Three months ended March 31,2009
    
    2008Domperidone Tablet
    
    
    64
    %
    
    
    47
    %HPE Solutions
    
    
    
    
    
    
    38
    %Levofloxacin Lactate Injection
    
    
    12
    %
    
    
    6
    %GS Solution
    
    
    8
    %
    
    
    2
    %GNS Solution
    
    
    5
    %
    
    
    3
    %NaCl Solution
    
    
    5
    %
    
    
    2
    %Compound Benzoic Acid and Camphor Solution
    
    
    4
    %
    
    
    Other
    
    
    2
    %
    
    
    2
    %
 33




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##### Table of Contents



Gross Profit.
 Corporate
  China
    Research and Development.
    
    
    Additional expenditures for research and development is needed in China for SFDA approval
of DR-70 test kit and the need for clinical trials in China for SFDA approval of DR-70 test
kit;
    
    The need for research and development for an updated version of the DR-70 test kit in the
US, clinical trials for such tests and funds for ultimate USFDA approval; and
    
    Research and development for the HPE-based cosmetic product.
 Selling, General and Administrative Expenses. ,
 34




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##### Table of Contents



Corporate
   Three months ended March 31,2009
    
    2008Investor relations (including value of warrants/options)
    
    $
    313,769
    
    
    $
    532,507Salary and wages (including value of options)
    
    $
    647,944
    
    
    $
    887,933Directors fees (including value of options)
    
    $
    96,377
    
    
    $
    206,025Consulting fees
    
    $
    62,585
    
    
    $
    48,307Accounting and other professional fees
    
    $
    326,428
    
    
    $
    273,618Legal
    
    $
    206,224
    
    
    $
    174,049
 China
  Interest Expense.
 Corporate
  China
  Loss before discontinued operations.
 35




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##### Table of Contents



Results of Discontinued Operations
  2009
    
    2008Revenue
    
    $
    594,839
    
    
    $
    646,553Income before income taxes
    
    $
    277,743
    
    
    $
    257,935
  Liquidity and Capital Resources
  Operating activities
  Investing activities.
 Financing activities.
 Future Capital Needs
  36




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##### Table of Contents



China Credit Facilities
   Going Concern
   37




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures.
  38




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Changes in Internal Control Over Financial Reporting.
  39




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##### Table of Contents



AMDL, INC.
PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    
 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 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.
 40




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##### Table of Contents



Our operations in China involve significant risk.
     We may not be able to continue to operate our business if we are unable to attract additional
operating capital.
  41




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##### Table of Contents



Our independent registered public accounting firm has included a going concern paragraph in their
report on our consolidated financial statements.
  Adverse conditions in the global economy and disruption in financial markets could impair our
revenues and results of operations.
  Our current products cannot be sold in certain countries if we do not obtain and maintain
regulatory approval.
  42




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##### Table of Contents



Our future prospects will be negatively impacted if we are unsuccessful in pending litigation over
the CIT technology.
  The value of intangible assets may not be equal to their carrying values.
    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.
  43




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##### Table of Contents



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 the DR-70 test kit 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.
  If we fail to comply with the rules under the Sarbanes-Oxley Act related to accounting controls
and procedures or if the material weaknesses or other deficiencies in our internal accounting
procedures are not remediated, our stock price could decline significantly.
   44




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##### 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.
  Our stock price and financing may be adversely affected by outstanding warrants and convertible
securities.
  45




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##### Table of Contents



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
  
 ITEM 6. EXHIBITS
  46




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##### Table of Contents



AMDL, INC.
SIGNATURES
  AMDL, INC.
(Registrant)Date: May 15, 2009
    By:
    /s/ Douglas C. MacLellanDouglas C. MacLellan, President andChief Executive Officer (Principal Executive Officer)Date: May 15, 2009
    By:
    /s/ Akio AriuraAkio Ariura, Chief Operating Officer, ChiefFinancial Officer and Secretary (Principal
Financial Officer and Principal Accounting Officer) 47




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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.)
 48