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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

|                                                  |  |                                                  
|------------------------------------------------- |  | -------------------------------------------------
|(Mark One)                                        |  |                                                  
|                                                 
|[x]                                               |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
|                                                  |  | OF THE SECURITIES EXCHANGE ACT OF 1934           
|                                                 
|For the quarterly period ended September 30, 2002
|                                                 
|[   ]                                             |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|                                                  |  | OF THE SECURITIES EXCHANGE ACT OF 1934           

For the transition period from _______________ to _______________

Commission File Number 0-27689

AMDL, Inc.

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(Exact name of small business issuer as specified in its charter)


|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 33-0413161                       
|                                                               |  |                                  
|(State or other jurisdiction
of incorporation or organization) |  | (IRS Employer
Identification No.)

2492 Walnut Avenue, Suite 100, Tustin, California 92780

---

(Address of principal executive offices)


(714) 505-4460

---

(Issuers telephone number)


Not Applicable

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


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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

As of November 12, 2002 the Company had 8,749,990 shares of its $.001 par
value common stock issued and outstanding.





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TABLE OF CONTENTS



|                               |                                                                                               |                               |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ----------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | BALANCE SHEETS               
|                               |                                                                                               | STATEMENTS OF OPERATIONS     
|                               |                                                                                               | STATEMENTS OF CASH FLOWS     
|                               |                                                                                               | NOTES TO FINANCIAL STATEMENTS
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 1. Legal Proceedings.                                                                   
|                               | Item 2. Changes in 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 and Reports on Form 8-K.                                                    
|SIGNATURES                    
|                               | CERTIFICATIONS                                                                               
|                               | CERTIFICATIONS                                                                               
|EXHIBIT INDEX                 
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



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|                                                                                                          |  |      |    | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                          |  | PAGE
|                                                                                                          |  |     
|PART I  FINANCIAL INFORMATION                                                                            |  |      | 2  | 
|Item 1. Financial Statements                                                                              |  |      |    | 
|Balance Sheets at September 30, 2002 (unaudited) and
December 31, 2001 (audited)                          |  |      | 2  | 
|Unaudited Statements of Operations for the three and
nine month periods ended September 30, 2002 and 2001 |  |      | 3  | 
|Unaudited Statements of Cash Flows for the
nine month periods ended September 30, 2002 and 2001           |  |      | 4  | 
|Notes to Condensed Consolidated Financial Statements                                                      |  |      | 5  | 
|Item 2. Managements Discussion and Analysis                                                              |  |      | 8  | 
|Item 3. Controls and Procedures                                                                           |  |      | 9  | 
|PART II  OTHER INFORMATION                                                                               |  |      | 10 | 

1



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




AMDL, INC.

BALANCE SHEETS

ASSETS

|                                      |                                                                                                                                                                               |   |               |             |              |   |           |             |  
|------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | ----------- | ------------ | - | --------- | ----------- | -
|                                      |                                                                                                                                                                               |   | September 30, |             | December 31,
|                                      |                                                                                                                                                                               |   | 2002          |             | 2001        
|                                      |                                                                                                                                                                               |   |               |             |             
|                                      |                                                                                                                                                                               |   | (Unaudited)   |             | (Audited)   
|Current assets:                       |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                      | Cash and cash equivalents                                                                                                                                                     |   | $             | 760,999     |              |   | $         | 2,929,833   |  
|                                      | Accounts receivable                                                                                                                                                           |   |               | 18,183      |              |   |           | 10,287      |  
|                                      | Inventories                                                                                                                                                                   |   |               | 102,964     |              |   |           | 79,466      |  
|                                      | Prepaid expenses                                                                                                                                                              |   |               | 27,333      |              |   |           | 27,727      |  
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|Total current assets                  |                                                                                                                                                                               |   | 909,479       |             |              |   | 3,047,313 |            
|                                     
|Intellectual property, net            |                                                                                                                                                                               |   | 1,883,333     |             |              |   | 1,958,333 |            
|Fixed assets, net                     |                                                                                                                                                                               |   | 34,067        |             |              |   | 15,000    |            
|Other assets                          |                                                                                                                                                                               |   | 5,758         |             |              |   | 5,758     |            
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                      |                                                                                                                                                                               | $ | 2,832,637     |             |              | $ | 5,026,404 |            
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                     
|LIABILITIES AND STOCKHOLDERS DEFICIT
|Current liabilities:                  |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                      | Accounts payable and accrued expenses                                                                                                                                         |   | $             | 122,269     |              |   | $         | 126,416     |  
|                                      | Accrued payroll and related expenses                                                                                                                                          |   |               | 76,158      |              |   |           | 85,778      |  
|                                      | Customer deposits                                                                                                                                                             |   |               | 5,800       |              |   |           | 5,800       |  
|                                      | Notes payable                                                                                                                                                                 |   |               | 25,000      |              |   |           | 25,000      |  
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|Total current liabilities             |                                                                                                                                                                               |   | 229,227       |             |              |   | 242,994   |            
|                                     
|Commitments
and contingencies         |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                     
|Stockholders equity:                 |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                      | Common stock, $0.001 par value; 50,000,000 shares
authorized; 8,749,990 and 8,076,657 shares issued
and outstanding at September 30, 2002 and
December 31, 2001, respectively |   |               | 8,750       |              |   |           | 8,077       |  
|                                      | Additional paid in capital                                                                                                                                                    |   |               | 22,696,862  |              |   |           | 21,831,200  |  
|                                      | Accumulated deficit                                                                                                                                                           |   |               | (20,102,202 | )            |   |           | (17,055,867 | )
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|Total stockholders equity            |                                                                                                                                                                               |   | 2,603,410     |             |              |   | 4,783,410 |            
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            
|                                      |                                                                                                                                                                               | $ | 2,832,637     |             |              | $ | 5,026,404 |            
|                                      |                                                                                                                                                                               |   |               |             |              |   |           |            

See accompanying notes to financial statements.

2



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##### Table of Contents






AMDL, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |           |            |  
|----------------------------------- | -------------------------- | -------- | --------- | ------------------ | -------- | ----------------- | --------- | ------- | -------- | ---- | ---------- | --------- | ---------- | - | ---------- | --------- | ---------- | -
|                                    |                            |          |           | Three Months Ended |          | Nine Months Ended
|                                    |                            |          |           | September 30,      |          | September 30,    
|                                    |                            |          |           |                    |          |                  
|                                    |                            |          |           | 2002               |          | 2001              |           | 2002    |          | 2001
|                                    |                            |          |           |                    |          |                   |           |         |          |     
|Revenues:                           |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Product sales              |          | $         | 20,748             |          |                   | $         | 30,515  |          |      | $          | 94,554    |            |   | $          | 127,102   |           
|                                    | Licensing                  |          |           |                   |          |                   |           | 15,517  |          |      |            |          |            |   |            | 46,552    |           
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            |          | 20,748    |                    |          |                   | 46,032    |         |          |      | 94,554     |           |            |   | 173,654    |          
|Cost of sales                       |                            |          | 10,144    |                    |          |                   | 12,728    |         |          |      | 44,209     |           |            |   | 51,351     |          
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Gross profit                        |                            |          | 10,604    |                    |          |                   | 33,304    |         |          |      | 50,345     |           |            |   | 122,303    |          
|Operating expenses:                 |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Research and development   |          |           | 69,247             |          |                   |           | 49,140  |          |      |            | 310,005   |            |   |            | 111,203   |           
|                                    | Non-cash consulting        |          |           | 24,400             |          |                   |           |        |          |      |            | 612,387   |            |   |            | 859,310   |           
|                                    | General and administrative |          |           | 459,101            |          |                   |           | 535,225 |          |      |            | 2,195,089 |            |   |            | 1,165,481 |           
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            |          | 552,748   |                    |          |                   | 584,365   |         |          |      | 3,117,481  |           |            |   | 2,135,994  |          
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Loss from operations                |                            |          | (542,144  | )                  |          |                   | (551,061  | )       |          |      | (3,067,136 | )         |            |   | (2,013,691 | )        
|Other income:                       |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Other income               |          |           |                   |          |                   |           | 200,000 |          |      |            |          |            |   |            | 200,000   |           
|                                    | Interest income            |          |           | 4,081              |          |                   |           | 50,802  |          |      |            | 20,801    |            |   |            | 109,523   |           
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            |          | 4,081     |                    |          |                   | 250,802   |         |          |      | 20,801     |           |            |   | 309,523    |          
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            | Net loss |           | $                  | (538,063 | )                 |           | $       | (300,259 | )    |            | $         | (3,046,335 | ) |            | $         | (1,704,168 | )
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Basic and diluted loss
per share    |                            | $        | (0.06     | )                  |          | $                 | (0.04     | )       |          | $    | (0.36      | )         |            | $ | (0.25      | )        
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Weighted average shares
outstanding |                            |          | 8,744,862 |                    |          |                   | 8,034,911 |         |          |      | 8,480,802  |           |            |   | 6,688,058  |          
|                                    |                            |          |           |                    |          |                   |           |         |          |      |            |           |            |   |            |          

See accompanying notes to financial statements.

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AMDL, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |            |         |          |            |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------------- | ----------------------------------------- | ------- | ----------------- | ---------- | ---------- | ------- | -------- | ---------- | -
|                                                  |                                                                                   |                                                               |                                       |                                           |         | Nine Months Ended
|                                                  |                                                                                   |                                                               |                                       |                                           |         | September 30,    
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  
|                                                  |                                                                                   |                                                               |                                       |                                           |         | 2002              |            | 2001      
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Cash flows from operating activities:             |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  | Net loss                                                                          |                                                               | $                                     | (3,046,335                                | )       |                   | $          | (1,704,168 | )      
|                                                  | Adjustments to reconcile net loss to net cash used in operating
activities:       |                                                               |                                       |                                           |         |                   |            |            |        
|                                                  |                                                                                   | Depreciation and amortization                                 |                                       |                                           | 81,596  |                   |            |            | 1,689   |         
|                                                  |                                                                                   | Fair market value of common stock issued for services         |                                       |                                           | 604,987 |                   |            |            | 859,310 |         
|                                                  |                                                                                   | Fair market value of warrants and options issued for services |                                       |                                           | 7,400   |                   |            |            | 40,769  |         
|                                                  |                                                                                   | Changes in operating assets and liabilities:                  |                                       |                                           |         |                   |            |            |         |         
|                                                  |                                                                                   |                                                               | Accounts receivable, net              |                                           |         | (7,896            | )          |            |         | 13,150   |           
|                                                  |                                                                                   |                                                               | Prepaid expenses                      |                                           |         | 394               |            |            |         |         |           
|                                                  |                                                                                   |                                                               | Inventories                           |                                           |         | (23,498           | )          |            |         | (8,090   | )         
|                                                  |                                                                                   |                                                               | Accounts payable and accrued expenses |                                           |         | (4,147            | )          |            |         | (167,311 | )         
|                                                  |                                                                                   |                                                               | Accrued payroll and related expenses  |                                           |         | (9,620            | )          |            |         | 12,881   |           
|                                                  |                                                                                   |                                                               | Customer deposits                     |                                           |         |                  |            |            |         | 44,460   |           
|                                                  |                                                                                   |                                                               | Deferred revenue                      |                                           |         |                  |            |            |         | (46,552  | )         
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash used in operating activities     |         |                   | (2,397,119 | )          |         |          | (953,862   | )
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Cash flows used in investing activities:          |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  | Purchase of intellectual property                                                 |                                                               |                                       |                                          |         |                   |            | (2,000,000 | )      
|                                                  | Purchases of equipment                                                            |                                                               |                                       | (25,664                                   | )       |                   |            | (17,690    | )      
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash used in investing activities     |         |                   | (25,664    | )          |         |          | (2,017,690 | )
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Cash flows from financing activities:             |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  | Proceeds from exercise of warrants and options,
net of costs of $4,451 in 2002    |                                                               |                                       | 253,949                                   |         |                   |            |           |        
|                                                  | Cash received from stock subscription receivable                                  |                                                               |                                       |                                          |         |                   |            | 2,000,000  |        
|                                                  | Proceeds from issuance of common stock,
net of offering costs of $530,366 in 2001 |                                                               |                                       |                                          |         |                   |            | 3,194,754  |        
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash provided by financing activities |         |                   | 253,949    |            |         |          | 5,194,754  |  
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Net change in cash                                |                                                                                   |                                                               | (2,168,834                            | )                                         |         |                   | 2,223,202  |           
|Cash at beginning of period                       |                                                                                   |                                                               | 2,929,833                             |                                           |         |                   | 1,241,360  |           
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Cash at end of period                             |                                                                                   | $                                                             | 760,999                               |                                           |         | $                 | 3,464,562  |           
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|Supplemental disclosure of cash flow information: |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  | Cash paid during the period for                                                   |                                                               |                                       |                                           |         |                   |            |            |        
|                                                  |                                                                                   | Interest                                                      |                                       | $                                         |        |                   |            | $          |        |         
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           
|                                                  |                                                                                   | Income taxes                                                  |                                       | $                                         |        |                   |            | $          |        |         
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                   |            |           

See accompanying notes to financial statements.

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AMDL, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

For the Periods Ended September 30, 2002 and 2001

NOTE 1  MANAGEMENTS REPRESENTATION

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 accounting principles
generally accepted in the United States of America 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
audited financial statements and notes for the fiscal year ended December 31,
2001 included in the Companys Annual Report on Form 10-KSB. The interim
results are not necessarily indicative of the results for the full year.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company is primarily engaged in the commercial development of, and the
obtaining of various governmental regulatory approvals for the marketing of
its proprietary diagnostic tumor-marker test kit
(DR-70®) to detect the
presence of lung and other types of cancer. The Companys product line also
includes a selection of diagnostic test kits for several types of cancer,
infectious diseases, endocrinology, diabetes, nephrology and allergy.

Inventories

Inventories, which consist primarily of raw materials and related materials,
are stated at the lower of cost or market with cost determined on a first-in,
first-out (FIFO) basis. The Company regularly monitors inventories for excess
or obsolete items and makes any valuation corrections when such adjustments
are needed.

Common Stock Issued for Services Rendered

The Company periodically issues common stock for services rendered. Common
stock issued is valued at the estimated fair market value, as determined by
management and the board of directors of the Company. Management and the
board of directors consider market price quotations, recent stock offering
prices and other factors in determining fair market value for purposes of
valuing the common stock.

Risks and Uncertainties

The Companys proprietary test kit is deemed a medical device or biologic, and
as such is governed by the Federal Food and Drug and Cosmetics Act and by the
regulations of state agencies and various foreign government agencies.
Currently, the Company is not permitted to sell DR-70® in the United States.
The Company has received regulatory approval from various foreign governments
to sell its products and is in the process of obtaining regulatory approval
within other foreign markets. There can be no assurance that the Company will
maintain the regulatory approvals required to market its products.

The Company is subject to the risk of failure in maintaining its current
regulatory approvals and in obtaining future regulatory approval, as well as
the timely receipt of such approval, if obtained. Therefore, the Company is
subject to substantial business risks and uncertainties inherent in such an
entity; including the potential of business failure.

The Companys revenue from product sales derived from its operations is small.
Accordingly, the Company believes that its current cash position of $760,999
at September 30, 2002 is sufficient to fund its operations and working
capital requirements through at least December 31, 2002.

5



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##### Table of Contents



AMDL, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

For the Periods Ended September 30, 2002 and 2001

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

Product sales revenue is recognized upon shipment of products to customers.
Licensing revenue is recognized ratably over the term of each respective
agreement.

Segments of an Enterprise and Related Information

During the three months ended September 30, 2002, approximately 2% of our
sales were to customers in foreign countries. Customers in the United Kingdom
accounted for approximately 2% of total sales, or 100% of foreign sales.
During the three months ended September 30, 2001, approximately 38% of our
sales were to customers in foreign countries. Customers in the United Kingdom
accounted for approximately 21% of total sales, or 55% of foreign sales, and
customers in Taiwan accounted for approximately 15% of total sales, or 39% of
foreign sales. During the nine months ended September 30, 2002, approximately
25% of our sales were to customers in foreign countries. Customers in Taiwan
accounted for approximately 24% of total sales, or 95% of foreign sales.
During the nine months ended September 30, 2001, approximately 52% of our
sales were to customers in foreign countries. Customers in Taiwan accounted
for approximately 31% of total sales, or 59% of foreign sales and customers in
the United Kingdom accounted for approximately 19% of total sales, or 36% of
foreign sales. The Company currently operates in one segment.

Reclassifications

Certain reclassifications were made to the prior period amounts, in order to
conform with current period presentation.

NOTE 3  STOCK ISSUANCES

On November 15, 2001, the Company authorized the issuance of 200,000 shares of
our common stock to a consultant for services rendered or to be rendered over
a six-month period. On each of December 15, 2001 and January 15, 2002 we
issued 33,333 shares pursuant to this agreement. These shares were valued at
$75,083 and $56,383, respectively, based upon the trading price of our common
stock on the date of issuance. On February 25, 2002, the Company issued the
remaining 133,334 shares to the consultant. The value of 33,333 of these
shares, or $92,082, was charged to consulting expense in February 2002, the
value of 33,333 shares, or $121,832, was charged to consulting expense in
March 2002, the value of 33,334 shares, or $83,585 was charged to consulting
expense in April 2002 and the value of 33,334 shares, or $58,085 was charged
to consulting expense in May 2002.

On January 22, 2002, the Company issued 25,000 shares of common stock to a
consultant for services rendered in connection with the raising of capital.
These shares were valued at $57,375, based upon the trading price of our
common stock on the date of issue. The value of the shares was initially
charged to equity as cost of funding and subsequently expensed as aborted
offering costs as of June 30, 2002.

On April 25, 2002, the Company issued 380,000 shares of common stock upon
exercise of an aggregate of 380,000 previously outstanding warrants and
options at $0.68 per share. The Company received gross proceeds of $258,400
and paid direct expenses of $4,451. The shares were registered on Form S-3
under the Securities Act of 1933, as amended.

On May 3, 2002, the Company issued 35,000 shares of common stock for
consulting services rendered in connection with the raising of capital. These
shares were valued at $81,812, based upon the trading price of our common
stock on the date of issue. The value of the shares was expensed as aborted
offering costs.

On May 10, 2002, the Company authorized the issuance of 66,666 shares of
common stock to a consultant for services to be rendered over the two-month
period ending July 15, 2002. The Company issued 33,333 shares to the
6Table of ContentsAMDL, INC.NOTES TO FINANCIAL STATEMENTS
(Unaudited)For the Periods Ended September 30, 2002 and 2001NOTE 3  STOCK ISSUANCES
(continued)consultant for services through June 15, 2002. These shares were valued at
$36,833, based upon the trading price of our common stock on that date, and
charged to consulting expense. On July 17, 2002, the Company issued 33,333
shares of common stock to the consultant for services rendered through July
15, 2002 which were valued at $17,000, based upon the trading price of our
common stock on that date, and charged to consulting expense.NOTE 4  STOCK OPTIONSThe Company has a 1999 Stock Option Plan (the 1999 Plan). Under the 1999
Plan, incentive stock options and nonqualified options may be granted to
officers, employees, directors and independent contractors of the Company for
the purchase of up to 2,000,000 shares of the Companys common stock. All
options granted have an exercise price equal to the fair market value at the
date of grant, vested upon grant and expire in five years. 241,000 options
were granted under the 1999 Plan during the nine months ended September 30,
2002 to employees and directors. No stock option expense was recognized in
the statement of operations in respect of the 1999 Plan during the nine months
ended September 30, 2002. No further options are available for grant under
the 1999 Plan.On January 25, 2002, the board of directors adopted the 2002 Stock Option Plan
(the 2002 Plan). The shareholders of the Company approved the 2002 Plan on
May 10, 2002. Under the 2002 Plan, incentive stock options and nonqualified
options may be granted to officers, employees, directors and independent
contractors of the Company for the purchase of up to 1,000,000 shares of the
Companys common stock. The exercise price per share under the incentive stock
option plan shall not be less than 100% of the fair market value per share on
the date of grant. The exercise price per share under the non-qualified stock
option shall be not less than 85% of the fair market value per share on the
date of grant. Expiration dates for the grants may not exceed 10 years from
the date of grant. On July 24, 2002, 755,000 options were granted under the
2002 Plan to employees, directors and a consultant; these options have an
exercise price equal to the fair market value on the date of grant, vested
immediately and expire in 10 years. In accordance with SFAS 123, the Company
recognized $7,400 of non-cash consulting expense related to the options issued
to the consultant.NOTE 5  SUBSEQUENT EVENTSOn October 23, 2002, the board of directors authorized a proposed Regulation S
offering of up to 1,575,000 shares of common stock (Regulation S Offering)
at a price of 70% of the current market price at the time of sale, subject to
a floor price of no less than $.35 per share, the payment of commissions of
10% of the sales price in cash, non-accountable expenses of 3% of the sales
price, and warrants equal to 10% of the shares sold in the Regulation S
Offering. As of November 12, 2002, no shares have been sold in the Regulation
S Offering.Also on October 23, 2002, the board of directors authorized the issuance of
50,000 shares of common stock per month to a consultant for investor relations
consulting services to be rendered thereafter on a month to month basis. As
of November 12, 2002, no services have been rendered by the consultant and no
shares have been issued.On October 24, 2002, the board of directors authorized the issuance of 40,000
shares of common stock to a consultant for financial and investor relations
consulting services in Europe. The consulting agreement provides for the
shares to be held in escrow for a period of one year with delivery contingent
on the Companys satisfaction with the services. As of November 12, 2002, the
consulting agreement has not been consummated and no shares have been issued.7Table of Contents
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of OperationsLiquidity and Capital ResourcesTotal assets decreased from $5,026,404 at December 31, 2001 to $2,832,637 at
September 30, 2002. The decrease is a result of cash used for research and
development and losses incurred in operations.From December 31, 2001 to September 30, 2002, our cash and cash equivalents
decreased by $2,168,834 as a result of (i) expenditures for research and
development, including $109,653 for research studies, (ii) operations,
including investor relations costs of $401,476, (iii) legal fees of $253,095
and (iv) aborted offering costs of $130,584. As of November 1, 2002, cash is
being depleted at the rate of approximately $160,000 per month, excluding
scheduled clinical trials costs of $70,000 through December 31, 2002.The Company is currently conducting an offering in Europe under Regulation S
(Regulation S Offering) for the offer and sale of up to 1,575,000 shares of
common stock at 70% of the current market price, subject to a floor price of
$.35 per share. No shares have been sold as of November 12, 2002 in the
Regulation S Offering. There is no assurance that the Company will be
successful in the Regulation S Offering or will receive any net proceeds from
the Regulation S Offering or any other future equity offering. In addition,
we expect to receive some additional cash from product sales, although no
definitive orders or commitments have been received in any significant
quantity. There is no assurance as to when, if ever, we will be able to
conduct our operations on a profitable basis.We do not anticipate any significant changes in the number of employees.Critical Accounting PoliciesThe Companys Unaudited Consolidated Financial Statements have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its
estimates including but not limited to, those related to (i) the allowance for
doubtful accounts receivable, (ii) allowance for inventories, (iii) sales
allowances, (iv) useful life or impairment of goodwill and other intangibles,
(v) deferred tax asset valuation allowances and (vi) litigation settlements
accrual. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.Results of OperationsThree Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001.During the three months ended September 30, 2002, the Company generated
$20,748 from product sales compared to revenues from product sales for the
three months ended September 30, 2001 of $30,515. The continued low level of
sales is disappointing to management of the Company. The new distributor in
Taiwan and Hong Kong and the distributors in the United have performed
substantially below their own projections. In addition, the Company has not
concluded any material new distribution agreements this year. In the three
months ended September 30, 2001, we recorded $200,000 of other income related
to a non-refundable deposit of $200,000 from Chinese Universal Technologies
(CUT). We also recorded licensing revenues of $15,517 related to the
terminated agreement with the former distributor. The Companys gross profit
on product sales was 51.1% for the three months ended September 30, 2002 as
compared to 58.3% for the prior year period. Research and development
expenses for the three months ended September 30, 2002 were $69,247 as
compared to $49,140 for the three months ended September 30, 2001. The
increase of $20,107 was primarily a result of research studies costing
$19,782. General and administrative expenses, excluding non-cash amounts of
$24,400 for the three months ended September 30, 2002, decreased by $76,124
from $535,225 for the three months ended September 30, 2001 to $459,101 for
the three months ended September 30, 2002 as a result of a general reduction
in overhead. As a result of the above, in the three months ended September
30, 2002, the Companys net loss was $538,063 or $(0.06) per share compared to
a net loss of $300,259 or $(0.04) per share for the same period in the prior
year.8Table of ContentsNine Months Ended September 30, 2002 Compared to Nine Months Ended September
30, 2001.During the nine months ended September 30, 2002, the Company generated $94,554
from product sales compared to revenues from product sales for the nine months
ended September 30, 2001 of $127,102. The continued low level of sales is
disappointing to management of the Company. The new distributor in Taiwan and
Hong Kong and the distributors in the United Kingdom have performed
substantially below their own projections. In addition, the Company has not
concluded any material new distribution agreements this year. In the nine
months ended September 30, 2001, we recorded $200,000 of other income related
to a non-refundable deposit of $200,000 from CUT. We also recorded licensing
revenues of $46,552 related to the terminated agreement with the former
distributor. The Companys gross profit on product sales was 53.2% for the
nine months ended September 30, 2002 as compared to 59.6% for the prior year
period. The decrease in gross profit percentage is the result of lower sales of
DR-70®
and higher sales of OEM products in the first nine months of the current year
over the prior year. Research and development expenses for the nine months
ended September 30, 2002 were $310,005 as compared to $111,203 for the nine
months ended September 30, 2001. The increase of $198,802 was primarily a
result of research studies costing $109,653 and the increased cost of services
provided by our principal consultant in the amount of $72,381. General and
administrative expenses (excluding non-cash amounts of $612,387 and $859,310
in the nine months ended September 30, 2002 and 2001, respectively) increased
by $1,029,608 from $1,165,481 to $2,195,089 for the nine months ended
September 30, 2002, primarily as a result of increases of: (i) legal fees of
$98,143; (ii) the write-off of aborted offering costs of $158,311 (excluding
non-cash compensation for services of $139,188) related to fundraising
activities; and (iii) investor relations and consulting costs of $467,056
(excluding non-cash compensation for services of $473,199). As a result of
the above, in the nine months ended September 30, 2002, the Companys net loss
was $3,046,335 or $(0.36) per share compared to a net loss of $1,704,168 or
$(0.25) per share for the same period in the prior year.Forward Looking StatementsThis Form 10-QSB contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements made by the Company involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from the forward looking statements include, but are not limited
to, risks associated with lack of significant operating history, demand for
the Companys products, international business operations, dependence on
licensees, governmental regulations, technological changes, intense
competition and dependence on management. Given these uncertainties, readers
are cautioned not to place undue reliance on such forward-looking statements.
The Companys management disclaims any obligation to forward-looking
statements contained herein to reflect any change in the Companys expectation
with regard thereto or any change in events, conditions, circumstances or
assumptions underlying such statements.
Item 3. Controls and ProceduresEvaluation of Disclosure Controls and Procedures.The Companys chief executive officer and chief financial officer carried out
an evaluation of the effectiveness and operation of the Companys disclosure
controls and procedures. They have concluded after evaluating the
effectiveness of the Companys disclosure controls and procedures as of a date
(the Evaluation Date) within 90 days before the filing date of this
quarterly report, that as of the Evaluation Date, the Companys disclosure
controls and procedures were effective and designed to ensure that material
information relating to the Company would be made known to them by others.Changes in Internal Controls.There have been no significant changes in the Companys internal controls or
in other factors that could significantly affect those controls subsequent to
the Evaluation Date.9Table of Contents
PART II  OTHER INFORMATION
Item 1. Legal Proceedings.Inapplicable.
Item 2. Changes in Securities and Use of Proceeds.On November 15, 2001, the Company authorized the issuance of 200,000 shares of
our common stock to a consultant for services rendered or to be rendered over
a six-month period. On each of December 15, 2001 and January 15, 2002 we
issued 33,333 shares pursuant to this agreement. These shares were valued at
$75,083 and $56,383, respectively, based upon the closing price of our common
stock on the date of issue. On February 25, 2002, the Company issued the
remaining 133,334 shares to the consultant. The value of 33,333 of these
shares, or $92,082, was charged to consulting expense in February 2002, the
value of 33,333 shares, or $121,832, was charged to consulting expense in
March 2002, the value of 33,334 shares, or $83,585 was charged to consulting
expense in April 2002 and the value of 33,334 shares, or $58,085 was charged
to consulting expense in May 2002. These shares of common stock were issued
pursuant to Section 4(2) of the Securities Act. There was no underwriter
involved in this issuance.On January 22, 2002, the Company issued 25,000 shares of common stock to a
consultant for services rendered in connection with a plan to raise additional
capital. These shares were valued at $57,375, based upon the trading price of
our common stock on the date of issue. The shares were initially charged to
equity as cost of funding and subsequently expensed as aborted offering costs
as of June 30, 2002. The shares of common stock were issued pursuant to
Section 4(2) of the Securities Act. There was no underwriter involved in this
issuance.On April 25, 2002, the Company issued 380,000 shares of common stock upon
exercise of an aggregate of 380,000 previously outstanding warrants and
options at $0.68 per share. The Company received gross proceeds of $258,400
and paid direct expenses of $4,451. The shares were registered on Form S-3
under the Securities Act of 1933, as amended.On May 3, 2002, the Company issued 35,000 shares of common stock for
consulting services rendered in connection with a plan to raise additional
capital. These shares were valued at $81,812, based upon the trading price of
our common stock on the date of issue. The value of the shares was expensed
as aborted offering costs. The common stock was issued pursuant to Section
4(2) of the Securities Act. There was no underwriter involved in this
issuance.On May 10, 2002, the Company authorized the issuance of 66,666 shares of
common stock to a consultant for services to be rendered over the two-month
period ending July 15, 2002. The Company issued 33,333 shares to the
consultant for services through June 15, 2002. These shares were valued at
$36,833, based upon the trading price of our common stock on that date, and
charged to consulting expense. On July 17, 2002, the Company issued 33,333
shares of common stock to the consultant for services rendered through July
15, 2002 which were valued at $17,000, based upon the trading price of our
common stock on that date, and charged to consulting expense. The common
stock was issued pursuant to Section 4(2) of the Securities Act. There was no
underwriter involved in this issuance
Item 3. Defaults Upon Senior Securities.Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.Inapplicable.
Item 5. Other Information.Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.

| |    |  |                     |  |                                                                     
| | -- |  | ------------------- |  | --------------------------------------------------------------------
| | a) |  | Exhibits            |  |                                                                     
|
| |    |  | 99.1                |  | Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer
| |    |  | 99.2                |  | Certification Pursuant to 18 U.S.C. §1350 of
Chief Financial Officer
|
| | b) |  | Reports on Form 8-K

10



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None




SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                         |  |                                  
|------------------------ |  | ---------------------------------
|                         |  | AMDL, Inc.                       
|                        
|                        
|Dated: November 12, 2002 |  | By: /s/ Gary L. Dreher           
|                         |  |                                  
|                         |  | GARY L. DREHER,
        President

11



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##### Table of Contents






CERTIFICATIONS

I, Gary L. Dreher, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of AMDL, Inc.                                                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 12, 2002

|                                                               
|---------------------------------------------------------------
|/s/ Gary L. Dreher     

Gary L. Dreher
Chief Executive Officer

12



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##### Table of Contents






CERTIFICATIONS

I, Arthur S. Rosten, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of AMDL, Inc.                                                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 12, 2002

|                                                              
|--------------------------------------------------------------
|/s/ Arthur S. Rosten

Arthur S. Rosten
Chief Financial Officer

13



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##### Table of Contents






EXHIBIT INDEX

| |    |  |                     |  |                                                                     
| | -- |  | ------------------- |  | --------------------------------------------------------------------
| | a) |  | Exhibits            |  |                                                                     
|
| |    |  | 99.1                |  | Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer
| |    |  | 99.2                |  | Certification Pursuant to 18 U.S.C. §1350 of
Chief Financial Officer
|
| | b) |  | Reports on Form 8-K

14