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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 1934For the quarterly period ended March 31, 2004o
    
    TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
    
    
    
    to
 Commission File Number 0-27689 AMDL, Inc.  Delaware
    
    33-0413161(State or other jurisdiction
of incorporation or organization)
    
    (IRS Employer
Identification No.)
 2492 Walnut Avenue, Suite 100, Tustin, California 92780   (714) 505-4460   Not Applicable   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 o As of May 13, 2004 the Company had 21,830,248 shares of its $.001 par
value common stock issued and outstanding.




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PAGEPART I  FINANCIAL INFORMATION
    
    
    2Item 1. Financial StatementsBalance Sheet at March 31, 2004 (unaudited)
    
    
    2Unaudited Statements of Operations for the three
month periods ended March 31, 2004 and 2003
    
    
    3Unaudited Statements of Cash Flows for the three
month periods ended March 31, 2004 and 2003
    
    
    4Notes to Condensed Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis
    
    
    13PART II OTHER INFORMATION
    
    
    17EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  1




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PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements AMDL, INC. 
 BALANCE SHEET March 31,2004(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,183,166Accounts receivable
    
    
    112,763Inventories
    
    
    67,462Prepaid expenses and other current assets
    
    
    18,729Total current assets
    
    
    3,382,120Intellectual property, net
    
    
    1,733,333Equipment, net
    
    
    19,085Other assets
    
    
    5,757$
    5,140,295LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    220,733Accrued payroll and related expenses
    
    
    95,414Total current liabilities
    
    
    316,147Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value; 10,000,000 shares
authorized; no shares issued and outstanding
    
    
    Common stock, $0.001 par value; 50,000,000 shares
authorized; 21,830,248 shares issued and
outstanding
    
    
    21,830Additional paid in capital
    
    
    29,118,130Prepaid consulting
    
    
    (219,866
    )Accumulated deficit
    
    
    (24,095,946
    )Total stockholders equity
    
    
    4,824,148$
    5,140,295
 See accompanying notes to condensed financial statements. 2




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AMDL, INC. 
 STATEMENTS OF OPERATIONS (Unaudited)
 Three Months EndedMarch 31,2004
    
    2003Net Revenues
    
    $
    124,503
    
    
    $
    66,036Cost of sales
    
    
    56,399
    
    
    
    27,148Gross profit
    
    
    68,104
    
    
    
    38,888Operating expensesResearch and development
    
    
    82,875
    
    
    
    108,506General and administrative
    
    
    554,134
    
    
    
    501,889637,009
    
    
    
    610,395Loss from operations
    
    
    (568,905
    )
    
    
    (571,507
    )Other incomeInterest income
    
    
    4,649
    
    
    
    474Net loss
    
    $
    (564,256
    )
    
    $
    (571,033
    )Basic and diluted loss
per share
    
    $
    (0.03
    )
    
    $
    (0.06
    )Weighted average shares
outstanding
    
    
    21,300,144
    
    
    
    9,159,433
 See accompanying notes to condensed financial statements. 3




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AMDL, INC. 
 STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months EndedMarch 31,2004
    
    2003Cash flows from operating activitiesNet loss
    
    $
    (564,256
    )
    
    $
    (571,033
    )Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    27,497
    
    
    
    27,497Fair market value of common stock issued for services
    
    
    27,483
    
    
    
    27,766Fair market value of options issued for services
    
    
    17,000
    
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    40,204
    
    
    
    50,067Inventories
    
    
    1,363
    
    
    
    9,230Prepaid expenses and other current assets
    
    
    11,503
    
    
    
    8,200Accounts payable and accrued expenses
    
    
    (39,909
    )
    
    
    123,351Accrued payroll and related expenses
    
    
    3,518
    
    
    
    409Net cash used in operating activities
    
    
    (475,597
    )
    
    
    (324,513
    )Cash flows from financing activitiesProceeds from issuance of common stock,
net of offering costs of $295,766 in 2004 and $2,620 in 2003
    
    
    1,830,074
    
    
    
    17,380Proceeds from exercise of options
    
    
    119,803
    
    
    
    Proceeds from loans
    
    
    
    
    
    
    65,000Net cash provided by financing activities
    
    
    1,949,877
    
    
    
    82,380Net change in cash and cash equivalents
    
    
    1,474,280
    
    
    
    (242,133
    )Cash and cash equivalents at beginning of period
    
    
    1,708,886
    
    
    
    347,752Cash and cash equivalents at end of period
    
    $
    3,183,166
    
    
    $
    105,619Supplemental disclosure of cash flow informationCash paid during the period forInterest
    
    $
    
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    
 See accompanying notes to condensed financial statements. 4




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AMDL, INC. 
 NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
 For the Periods Ended March 31, 2004 and 2003 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. In
the opinion of management, all adjustments (consisting primarily of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2004 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2004. It is suggested that the financial statements be read in conjunction
with the audited financial statements and notes for the year ended December 31,
2003 included in the Companys Annual Report on Form 10-KSB. NOTE 2  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AMDL, Inc.s predecessor was incorporated May 13, 1988 and the Company
reorganized as a Delaware corporation on June 7, 1989. Since inception, the Company has primarily been 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 multiple 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. Revenue Recognition Product revenue is recognized upon passage of title to customers, typically
upon shipment of product. Any provision for discounts and estimated returns
are accounted for in the period the related revenue is recorded. Advertising The Company expenses the cost of advertising when incurred as a component of
general and administrative expenses. No advertising costs were incurred for
the three months ended March 31, 2004 or 2003. Research and Development Internal research and development costs are expensed as incurred. Third party
research and development costs are expensed when the contracted work has been
performed or as milestone results have been achieved. Cash Equivalents The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents. 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. 5




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 Equipment Equipment is stated at cost. Depreciation is computed using the straight-line
method over useful lives of three to ten years. Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred. The cost and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations. Intangible Assets The Company has expended funds for patents that are in various stages of the
filing approval process. During the three months ended March 31, 2004 and
2003, the Company expended approximately $5,178 and $8,611, respectively, on
patents. The Company elected to expense these expenditures immediately due to
their uncertain realizability. In August 2001, the Company acquired intellectual property rights and an
assignment of a US patent application for combination immunogene therapy
technology for $2,000,000 (see Note 5). The technology was purchased from Dr.
Lung-Ji Chang, who developed it while at the University of Alberta, Edmonton,
Canada. The $2,000,000 acquisition price is being amortized over the expected
useful life of the technology, which the Company has currently determined to be
20 years, based upon an estimate of three years to perfect the patent plus 17
years of patent life. The Company recorded amortization expense of $25,000 for
each of the three month periods ended March 31, 2004 and 2003. Impairment of Long-Lived Assets The Companys management assesses the recoverability of its long-lived assets
by determining whether the depreciation and amortization of long-lived assets
over their remaining lives can be recovered through projected undiscounted
future cash flows. The amount of long-lived asset impairment is measured based
on fair value and is charged to operations in the period in which long-lived
asset impairment is determined by management. Based on its analysis, the
Company believes that no impairment of the carrying value of its long-lived
assets existed at March 31, 2004. There can be no assurance, however, that
market conditions will allow us to realize the value of our technologies and
prevent future long-lived asset impairment. 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, 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,
although the Company is in the process of seeking regulatory approval. The
Company has received regulatory approval from various foreign governments to
sell its products and is in the process of obtaining regulatory approval in
other foreign markets. There can be no assurance that the Company will
maintain the regulatory approvals required to market its products or that they
will not be withdrawn. In May 2002, the Company began the FDA process under Section 510(k) of the
Food, Drug and Cosmetic Act for approval of its intent to market DR-70® as an
aid in monitoring patients with colorectal cancer. The Company conducted
clinical trials comparing its DR-70® to the currently accepted assay, CEA, and
submitted the results to the FDA in September 2003. In January 2004, the FDA
responded to the Companys submission. The FDA 6




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 identified deficiencies in the
application and advised the Companys consultant, Diagnostic Oncology CRO,
Inc. (DOCRO) that based upon the data submitted to date, the FDA determined
that the DR-70® kit was not substantially equivalent to any other device which
has gone through the 510(k) approval process (e.g. CEA). The FDA further
advised that if the Company had data which it believes shows that the DR-70®
kit has substantial equivalence, the Company can submit such additional
information for the FDAs consideration. The Company intends to submit
additional data to the FDA to demonstrate that the existing test data supports
substantial equivalence to CEA. This submission to the FDA has not yet been
made. At this time, the Company cannot predict (i) the length of time it will
take for the FDA to review the submission, (ii) whether 510(k) premarket
notification will be available for its DR-70® test kit, or (iii) if available,
whether such approval will be ultimately obtained. The Company is subject to the risk of failure in maintaining its existing
regulatory approvals, in obtaining other regulatory approval, as well as the
delays until 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. Accounting for Stock-Based Compensation The Company accounts for stock-based compensation issued to employees using the
intrinsic value based method as prescribed by APB Opinion No. 25 Accounting
for Stock Issued to Employees (APB 25). Under the intrinsic value based
method, compensation is the excess, if any, of the fair value of the stock at
the grant date or other measurement date over the amount an employee must pay
to acquire the stock. Compensation, if any, is recognized over the applicable
service period, which is usually the vesting period. In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123). This standard, if fully adopted,
changes the method of accounting for employee stock-based compensation plans to
the fair value based method. For stock options and warrants, fair value is
determined using an option pricing model that takes into account the stock
price at the grant date, the exercise price, the expected life of the option or
warrant and the annual rate of quarterly dividends. Compensation expense, if
any, is recognized over the applicable service period, which is usually the
vesting period. In March 2000, the FASB issued FASB Interpretation No. 44 (FIN 44),
Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of APB Opinion 25. FIN 44 clarifies the application of APB 25
for (a) the definition of employee for purposes of applying APB 25, (b) the
criteria for determining whether a plan qualifies as a non-compensatory plan,
(c) the accounting consequence for various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. The adoption of the accounting methodology of SFAS 123 is optional and the
Company has elected to continue accounting for stock-based compensation issued
to employees using APB 25, as amended by FIN 44; however, pro forma
disclosures, as if the Company adopted the cost recognition requirements under
SFAS 123, are required to be presented (see below). For stock-based
compensation issued to non-employees, the Company values these grants at fair
value as defined in SFAS 123, FIN 44 and EITF 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Services. At March 31, 2004, the Company had three stock-based employee compensation
plans, which are described more fully in Note 4. The Company accounts for
these plans under the recognition and measurement principles of APB 25, and
related interpretations. No stock-based employee compensation cost is
reflected in the statements of operations, as all options granted under those
plans had exercise prices equal to the market value of the underlying common
stock on the date of grant. The following table illustrates the effect on net
loss and loss per share if the Company had applied the fair value recognition
provisions of SFAS 123 to stock-based employee compensation. 7




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 For the Three Months Ended March 31,2004
    
    2003Net loss as reported
    
    $
    (564,256
    )
    
    $
    (571,033
    )Deduct: Total stock-based employee
compensation under fair value based method
for all awards, net of related tax effects
    
    
    (931,600
    )
    
    
    Pro forma net loss
    
    $
    (1,495,856
    )
    
    $
    (571,033
    )Basic and diluted loss per share  as reported
    
    $
    (0.03
    )
    
    $
    (0.06
    )Basic and diluted loss per share  pro forma
    
    $
    (0.07
    )
    
    $
    (0.06
    )
 See Note 6 for stock option activity subsequent to March 31, 2004. Basic and Diluted Loss Per Share The Company has adopted Statement of Financial Accounting Standards No. 128,
Earnings Per Share (SFAS 128). SFAS 128 changes the methodology of
calculating earnings per common share. The adoption of SFAS 128 has not
materially impacted the Companys financial position or results of operations. Basic earnings (loss) per common share is computed based on the weighted
average number of shares outstanding for the period. Diluted earnings (loss)
per share is computed by dividing net income (loss) by the weighted average
shares outstanding assuming all dilutive potential common shares were issued.
Basic and diluted loss per share are the same as the effect of stock options
and warrants on loss per share are anti-dilutive and thus not included in the
diluted loss per share calculation. However, the impact under the treasury
stock method of dilutive stock options and warrants would have been incremental
shares of 1,085,219 and 4,671 for the three months ended March 31, 2004 and
2003, respectively. Income Taxes The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. Under SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
that such assets will not be recovered. 8




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates made by management are, among others, provisions for
doubtful accounts, realizability of long-lived assets, useful lives of
intangibles and valuation of deferred tax assets. Actual results could differ
from those estimates. Comprehensive Income Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting
Comprehensive Income, establishes standards for reporting and display of
comprehensive income and its components in a full set of general-
purpose financial statements. SFAS 130 has not impacted the Companys
financial position or results of operations as the Company has no items of
comprehensive income. Segments of an Enterprise and Related Information During the three months ended March 31, 2004, approximately 8.5% of our sales
were to customers in foreign countries. Of the foreign sales, approximately
77.9% were to customers in Korea and 22.1% were to customers in Taiwan. During
the three months ended March 31, 2003, approximately 19.2% of our sales were to
customers in foreign countries. Of the foreign sales, approximately 97.4% were
to customers in Taiwan and 2.6% were to customers in the United Kingdom. All
of the Companys assets are held in the United States and all transactions are
denominated in U.S. dollars. Concentration of Risk One customer accounted for approximately 99.3% of accounts receivable as of
March 31, 2004 and the same customer accounted for approximately 97.3% of
accounts receivable as of March 31, 2003. The same customer accounted for
90.0% of sales for the three months ended March 31, 2004 and 74.6% of sales for
the three months ended March 31, 2003. The loss of this customer in the future
could significantly affect the Companys operating results. From time to time, the Company maintains credit balances at certain
institutions in excess of the FDIC limit. As of March 31, 2004, the Company
had approximately $3,084,000 in excess of this limit. Recent Accounting Pronouncements In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an interpretation of Accounting
Research Bulletin 51, Consolidated Financial Statements, to improve financial
reporting of special purpose and other entities. In accordance with the
interpretation, business enterprises that represent the primary beneficiary of
another entity by retaining a controlling financial interest in that entitys
assets, liabilities, and results of operations must consolidate the entity in
their financial statements. Prior to the issuance of FIN 46, consolidation
generally occurred when an enterprise controlled another entity through voting
interests. FIN 46 is effective immediately for all new variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN
46 must be applied for the first interim or annual period beginning after June
15, 2003. Adoption of FIN 46 did not have an impact on the Companys financial
statements as it has no variable interest entities. In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148 (SFAS 148), Accounting for Stock-Based Compensation  Transition and
Disclosure  an amendment of FASB Statement No. 123. SFAS 148 amends SFAS 123
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method
of accounting for stock-based employee compensation and the effect of
the method 9




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 used on reported results. The transition guidance and annual
disclosure provisions of SFAS 148 are effective for financial statements issued
for fiscal years ending after December 15, 2002. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. The Company has applied
the disclosure provisions in SFAS 148 in its financial statements. In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
It also clarifies that a guarantor is required to recognize, at the inception
of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of FIN 45 are applicable on a prospective basis to guarantees issued
or modified after December 31, 2002. The disclosure requirements in FIN 45 are
effective for financial statements of interim or annual periods ending after
December 15, 2002. The Companys adoption of FIN 45 in 2003 did not have a
material impact on its financial position or results of operations (see Note
5). In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150 (SFAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS 150 establishes
standards for the classification and measurement of certain financial
instruments with characteristics of both liabilities and equity. SFAS 150 also
includes required disclosures for financial instruments within its scope. For
the Company, SFAS 150 was effective for instruments entered into or modified
after May 31, 2003 and otherwise will be effective as of January 1, 2004,
except for mandatorily redeemable financial instruments. For certain
mandatorily redeemable financial instruments, SFAS 150 will be effective for
the Company on January 1, 2005. The Company currently does not have any
financial instruments that are within the scope of SFAS 150. Reclassifications Certain reclassifications were made to 2003 balances in order to conform to
the 2004 presentation. NOTE 3  STOCK ISSUANCES Cash Financing Activities On January 8, 2004, the Company closed an offering to accredited investors only
of an aggregate of 2,657,300 shares of common stock at $0.80 per share and
warrants to purchase 1,328,650 shares of common stock at an exercise price of
$1.46 per share, exercisable on or after April 7, 2004 and expiring December
31, 2006. This offering was part of the 3,000,000 share offering approved by
the stockholders on August 21, 2003, which permitted the Company to sell shares
at a discount of 25% from the current market price. In connection with this
offering, the Company utilized the services of Gestibroker Consulting and
Financial Management S.A., a Swiss corporation, and paid total cash
compensation of 13% of funds raised and issued warrants to purchase 259,730
common shares at an exercise price of $1.46 per share, expiring December 31,
2006. The Company registered with the Securities and Exchange Commission on Form S-3
the shares of the Companys common stock issued in connection with the shares
issued to the investors and the shares issuable upon exercise of the related
warrants, including those issued to the placement agent, which registration
statement became effective on February 11, 2004. See Note 6 for financing activity subsequent to March 31, 2004. Non-Cash Financing Activities On March 15, 2004, the board of directors authorized the issuance of 300,000
shares of common stock to Boston 10




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 Financial Partners, Inc., a consultant for
financial advisory services to be provided from March 18, 2004 through July 31,
2004, and the Company issued the shares on March 19, 2004. The shares were
valued at $247,350 based upon the trading price of the common stock on such
date. Of this amount, $27,483 was charged to general and administrative
expense in the three months ended March 31, 2004 and the balance will be
charged to general and administrative expense in the period the services are
provided. There was no underwriter involved in this issuance. NOTE 4  STOCK OPTIONS Effective June 30, 1999, the Company adopted the 1999 Stock Option Plan (the
1999 Plan). The shareholders of the Company approved the 1999 Plan on June
28, 2000. Under the 1999 Plan, incentive stock options and nonqualified
options may be granted to officers, employees and consultants of the Company
for the purchase of up to 2,000,000 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 plan shall not be
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.
The 1999 Plan terminates on June 30, 2009. Under the terms of the 1999 Plan,
prior to 2004, the Company granted all available options to purchase shares of
the Companys common stock under both incentive stock option agreements and
non-qualified stock option agreements. All options granted have an exercise
price equal to the fair market value at the date of grant, vest upon grant and
expire five years from the date of grant. Pursuant to SFAS 123, total
compensation expense recognized for options issued to consultants during
December 2003 was $2,950. The Company had 78,370 options available for grant
under the 1999 Plan at March 31, 2003 and no options available at March 31,
2004. During the three months ended March 31, 2004, employees and former employees
exercised options to purchase 100,000 shares of our common stock for total
consideration of $68,000. As of March 31, 2004, 1,900,000 options at an
average exercise price of $2.00 per share are outstanding 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. Under the terms of the 2002 Plan, the
Company granted no options to purchase shares of the Companys common stock
under incentive stock option agreements or under non-qualified stock option
agreements during either of the three month periods ended March 31, 2004 or
2003. All options granted have an exercise price equal to the fair market
value at the date of grant, vest upon grant and expire five years from the
date of grant. Pursuant to SFAS 123, total compensation expense recognized
for options issued to consultants during 2003 and 2002 was $0 and $7,400,
respectively. The Company had no options available for grant under the 2002
Plan at December 31, 2003. During the three months ended March 31, 2004,
employees exercised options to purchase 61,185 shares of our common stock for
total consideration of $51,803. As of March 31, 2004, 938,815 options at an
average exercise price of $0.64 per share are outstanding under the 2002 Plan. On February 23, 2004, the board of directors adopted the 2004 Stock Option Plan
(the 2004 Plan). The 2004 Plan is subject to approval by the shareholders of
the Company. The Company intends to submit the 2004 Plan for shareholder
approval at the next annual meeting. Under the 2004 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
2,400,000 shares of the Companys common stock. The exercise price per share
under the incentive stock option plan shall generally 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 generally not exceed 10 years from the date of grant. Under the
terms of the 2004 Plan, on February 23, 2004, 251,300 options were granted
under 11




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 incentive stock option agreements to employees, and 1,143,700 options
were granted under non-qualified stock option agreements 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 5
years. In accordance with SFAS 123, the Company recognized $17,000 of non-cash
consulting expense related to the options issued to the consultant in 2004. As
of March 31, 2004, 1,395,000 options at an average exercise price of $1.23 per
share are outstanding under the 2004 Plan.. See Note 6 for stock option activity subsequent to March 31, 2004. NOTE 5  CONTINGENCIES Litigation On February 22, 2002, AcuVector Group, Inc. (AcuVector) filed a Statement of
Claim in the Court of Queens Bench of Alberta, Judicial District of Edmonton
relating to the Companys combination immunogene therapy technology acquired
from Dr. Chang in August 2001. The claim alleges damages of $CDN 20 million
and seeks injunctive relief against Dr. Chang for, among other things, breach
of contract and breach of fiduciary duty, and against us for interference with
the alleged relationship between Dr. Chang and AcuVector. The claim for
injunctive relief seeks to establish that the AcuVector license agreement with
Dr. Chang is still in effect. The Company performed extensive due diligence to
determine that AcuVector had no interest in the technology when the Company
acquired it. The Company is confident that AcuVectors claims are without
merit and that the Company will receive a favorable judgment. As the final
outcome is not determinable, no accrual or loss relating to this action is
reflected in the accompanying financial statements. If AcuVector is
successful, the Company may be liable for substantial damages, its rights to
the intellectual property will be adversely affected, and its future prospects
for licensing the technology will be significantly impaired. The Company is also defending a companion case filed in the same court by the
Governors of the University of Alberta filed against the Company and Dr. Chang
in August 2003. The University of Alberta claims, among other things, that Dr.
Chang failed to remit the payment of the Universitys portion of the monies
paid by the Company to
Dr. Chang for the combination immunogene technology purchased by us from Dr.
Chang in 2001. In addition to other claims against Dr. Chang relating to other
technologies developed by him while at the University, the University also
claims that the Company conspired with Dr. Chang and interfered with the
Universitys contractual relations under certain agreements with Dr. Chang,
thereby damaging the University in an amount which is unknown to the University
at this time. The University has not claimed that the Company is not the owner
of the combination immunogene therapy technology, just that the University has
an equitable interest therein or the revenues therefrom. If the University is
successful in these claims, the Company may be liable for substantial damages,
its rights to the technology will be adversely affected, and its future
prospects for exploiting or licensing the combination immunogene therapy
technology will be significantly impaired. In the ordinary course of business, there are other potential claims and
lawsuits brought by or against the Company. In the opinion of management, the
ultimate outcome of these matters will not materially affect the Companys
operations or financial position or are covered by insurance. NOTE 6  SUBSEQUENT EVENTS Under the terms of the 2004 Plan, on April 16, 2004, 5,000 options were
granted under an incentive stock option agreement to one employee. These
options are exercisable at an exercise price of $.97 per share, the fair
market value on the date of grant, vested immediately and expire 5 years after
the date of issuance. In May 2004, the Company engaged HC Wainwright, Inc. (the Placement Agent),
an NASD member broker-dealer to conduct an offering of up to $3,655,000 of
units, each unit consisting of one share of common stock and a warrant to
purchase one additional share of common stock. The Company has agreed to pay the Placement Agent a 10% cash
commission, a 3% non-accountable expense allowance and to issue to
the Placement Agent warrants to purchase a number of shares of common
stock equal to 10% of the shares of common stock included in the
units. No units have been sold as of the date hereof. 12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Total assets increased to $5,140,295 at March 31, 2004 from $3,746,582 at
December 31, 2003. The increase is a result of cash received from the sale of
common stock and the exercise of options, which was partially offset by funds
used in operating activities. Our total outstanding current liabilities decreased to $316,147 at March 31,
2004 as compared to $352,538 at December 31, 2003. The decrease resulted from
the decrease in general accounts payable. From December 31, 2003 to March 31, 2004, our cash and cash equivalents
increased by $1,474,280, primarily as a result of cash received from the sale
of common stock and the exercise of options. As of May 5, 2004, cash is being
depleted at the rate of approximately $150,000 per month exclusive of the
additional costs related to the application for approval of DR-70® by the FDA,
estimated at an aggregate of $175,000. As of May 5, 2004, our cash on hand was
approximately $2,918,000. The amount of cash on hand is sufficient to meet our
operating expenses at the current rate through late 2005. There are significant uncertainties which negatively affect our operations.
These are principally related to (i) the absence of a distribution network for
our DR-70® kits, (ii) the early stage of development of our Combination
Immunogene Therapy (CIT) technology and the need to enter a strategic
relationship with a larger company capable of completing the development of any
ultimate product and the subsequent marketing of such product, and (iii) the
absence of any commitments or firm orders from our distributors. Moreover,
there is no assurance as to when, if ever, we will be able to conduct our
operations on a profitable basis. Our limited sales to date for DR-70®, the
lack of any purchase requirements in the existing distribution agreements, and
absence of FDA approval make it impossible to identify any trends in our
business prospects. There is no assurance we will be able to generate
sufficient revenues or sell any equity securities to generate sufficient funds
when needed, or whether such funds, if available, will be obtained on terms
satisfactory to us. In addition, the filing of the AcuVector and University of
Alberta lawsuits may have an effect on our ability to license the CIT
technology. The Company does not expect to incur any material capital expenditures until
sales volume increases substantially. Any required future capital expenditures
for manufacturing equipment will be funded out of future revenues or additional
equity. The Company does not have any long term or contingent obligations
which must be satisfied. Critical Accounting Policies Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We base our
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. We believe the following critical accounting policies, among others, affect
our more significant judgments and estimates used in the preparation of our
financial statements: Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. The allowance for doubtful accounts is based on specific
identification of customer accounts and our best estimate of the likelihood of
potential loss, taking into account such factors as the financial condition
and payment history of major customers. We evaluate the collectibility of our
receivables at least quarterly. If the financial condition of our customers
were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required. The differences could be
material and could significantly impact cash flows from operating activities. Inventory. We write down our inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand,
future pricing and market conditions. If actual future demand, future pricing
or market conditions are less 13




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 favorable than those projected by management, additional inventory write-downs
may be required and the differences could be material. Such differences might
significantly impact cash flows from operating activities. Sales Allowances.A portion of our business is to sell products to
distributors who resell the products to the end customers. In certain
instances, these distributors obtain discounts based on the contractual terms
of these arrangements. Sales discounts are usually based upon the volume of
purchases or by reference to a specific price in the related distribution
agreement. We recognize the amount of these discounts at the time the sale is
recognized. Additionally, sales returns allowances are estimated based on
historical return data, and recorded at the time of sale. If the quality or
efficacy of our products deteriorates or market conditions otherwise change,
actual discounts and returns could be significantly higher than estimated,
resulting in potentially material differences in cash flows from operating
activities. Valuation of Intangibles. From time to time, we acquire intangible assets
that are beneficial to our product development processes. We periodically
evaluate the carrying value of intangibles, including the related amortization
periods. In evaluating acquired intangible assets, we determine whether there
has been an impairment by comparing the anticipated undiscounted cash flows
from the operation and eventual disposition of the product line with its
carrying value. If the undiscounted cash flows are less than the carrying
value, the amount of the impairment, if any, will be determined by comparing
the carrying value of each intangible asset with its fair value. Fair value
is generally based on either a discounted cash flows analysis or market
analysis. Future operating income is based on various assumptions, including
regulatory approvals, patents being granted, and the type and nature of
competing products. If regulatory approvals or patents are not obtained or
are substantially delayed, or other competing technologies are developed and
obtain general market acceptance, or market conditions otherwise change, our
intangibles may have a substantially reduced value, which could be material.
As this asset represents the largest asset on our balance sheet, any
substantial deterioration of value would significantly impact our reported
financial position and our reported operating results. Deferred Taxes. We record a valuation allowance to reduce the deferred tax
assets to the amount that is more likely than not to be realized. We have
considered estimated future taxable income and ongoing tax planning strategies
in assessing the amount needed for the valuation allowance. Based on these
estimates, all of our deferred tax assets have been reserved. If actual
results differ favorably from those estimates used, we may be able to realize
all or part of our net deferred tax assets. Such realization could positively
impact our operating results and cash flows from operating activities. Litigation. We account for litigation losses in accordance with Statement of
Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies.
Under SFAS No. 5, loss contingency provisions are recorded for probable losses
at managements best estimate of a loss, or when a best estimate cannot be
made, a minimum loss contingency amount is recorded. These estimates are
often initially developed substantially earlier than the ultimate loss is
known, and the estimates are refined each accounting period, as additional
information is known. Accordingly, we are often initially unable to develop a
best estimate of loss; therefore, the minimum amount, which could be zero, is
recorded. As information becomes known, either the minimum loss amount is
increased or a best estimate can be made, resulting in additional loss
provisions. Occasionally, a best estimate amount is changed to a lower amount
when events result in an expectation of a more favorable outcome than
previously expected. Due to the nature of current litigation matters, the
factors that could lead to changes in loss reserves might change quickly and
the range of actual losses could be significant, which could materially impact
our results of operations and cash flows from operating activities. Results of Operations Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003 Net Revenue. During the three months ended March 31, 2004, the Company
generated $124,503 from product sales compared to revenues from product sales
for the three months ended March 31, 2003 of $66,036, an increase of $58,467 or
88.5%. The increase is due to increased orders for Ketone strips, our
principal OEM product. Revenues from sales of OEM products for the three
months ended March 31, 2004 were $112,789 compared to $52,589 for the prior
year period, an increase of $60,200, or 114.5%. Ketone strips comprised 99.3%
of our OEM sales, and 90.0% of our total sales in the three months ended March
31, 2004. All sales of OEM products were to domestic customers in both the
current year and prior year periods. Revenues from sales of DR-70® for the
three months ended March 31, 2004 were $11,714 compared to $13,447 for the
three months ended March 31, 2003, a decrease of $1,733, or 12.9%. Domestic
customers accounted for $1,089, or 9.3%, and foreign customers accounted for
$10,625, or 90.7%, of the 14




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 DR-70® revenues in the three months ended March 31, 2004. Domestic customers
accounted for $766, or 5.7%, and foreign customers accounted for $12,681, or
94.3%, of the DR-70® revenues in the three months ended March 31, 2003. The continued low level of DR-70® sales is disappointing to management of the
Company. Our current distributors advise that market acceptance of our DR-70®
kits has been slower than originally anticipated, in part due to the fact that
the DR-70® kit has not yet received FDA approval. In addition, the Company has
not concluded any material new distribution agreements this year as new
potential distributors have experienced similar delays and face similar market
acceptance issues because of the lack of FDA approval. During the balance of 2004, we expect sales of OEM products to be at or above
the same level as experienced in the three months ended March 31, 2004.
Assuming FDA approval of DR-70® in 2004, we expect sales of DR-70® to increase
by the end of 2004, but any such increase in sales is not expected to impact
significantly our operating results for 2004. The statement concerning future
sales is a forward-looking statement that involves certain risks and
uncertainties which could result in a fluctuation of sales below those achieved
for the three months ended March 31, 2004. Sales could be negatively impacted
by potential competing products and overall market acceptance of the Companys
products. Gross Profit. Gross profit on product sales increased by $29,216 or 75.1% to
$68,104 for the three months ended March 31, 2004, compared to $38,888 for the
period ended March 31, 2003. The increase in gross profit was due to an
increase in OEM product sales offset by a slight decrease in DR-70® sales. The
Companys gross profit percentage was 54.7% for the three months ended March
31, 2004 as compared to 58.9% for the prior year period. The decrease is due
to the relative changes in product mix, improved margins in OEM product sales,
variations in manufacturing costs based on low volume production quantities and
the fact that some of the DR-70® sales in the three months ended March 31, 2004
were made at special pricing for clinical studies. Assuming the product sales mix remains the same, management anticipates future
gross profit margins to remain at the levels of the three months ended March
31, 2004. The statement concerning future gross profit margins is a
forward-looking statement that involves certain risks and uncertainties which
could result in a fluctuation of gross margins below those achieved for the
three months ended March 31, 2004. Although the Company believes it provides
high-quality products, pricing and gross profit could be negatively impacted by
potential competing products and overall market acceptance of the Companys
products. Research and Development.Research and development expenses for the three
months ended March 31, 2004 were $82,875 as compared to $108,506 for the three
months ended March 31, 2003. The decrease of $25,631 was primarily a result of
a reduction in the costs of clinical trials and our outside clinical research
organization offset by an increase in the services provided by our principal
research consultant in preparing additional data for submission to the FDA. General and Administrative Expenses. General and administrative expenses
increased by $52,245 to $554,134 for the three months ended March 31, 2004 as
compared to the $501,889 reported for the three months ended March, 2003 due
mainly to increases in: (i) aggregate legal, accounting and consulting services
of $24,000; (ii) stock exchange listing fees of approximately $26,000; and
(iii) travel costs of $9,000 offset by (iv) an overall decrease of
approximately $13,000 in payroll and other compensation costs due to the
reduction in the number of employees. The significant components of general
and administrative expenses for the three months ended March 31, 2004 primarily
consist of payroll, taxes and benefits; consulting expenses, including
financial consulting, investor relations and public relations; and professional
fees, including legal, audit and patent expenses. Interest Income.Interest income for the three months ended March 31, 2004 was
$4,649, as compared to $474 for the three months ended March 31, 2003. The
increase of $4,175, or 880%, is due to the significantly higher average cash
balance maintained by the Company during 2004. Net Loss and Loss from Operations.As a result of the above, in the three
months ended March 31, 2004, the Companys net loss was $564,256 or $(0.03) per
share compared to a net loss of $571,033 or $(0.06) per share for the same
period in the prior year. The reduction in the loss per share was materially
affected by the 230% increase in the weighted average number of common shares
outstanding. 15




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AMDL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited) For the Periods Ended March 31, 2004 and 2003 Assets and Liabilities At March 31, 2004, the Company had total assets of $5,140,295 compared to total
assets of $3,746,582 at December 31, 2003. Cash and cash equivalents was
$3,183,166 as of March 31, 2004, an increase of $1,474,280 (86.3%) from the
$1,708,886 cash on hand as of December 31, 2003. Cash used in operations was
$475,597 and cash provided by financing activities from the sale of common
stock and option exercises was $1,949,877, net of expenses of $295,766. As of
May 5, 2004, our cash on hand is approximately $2,918,000. Accounts receivable was $112,763 at March 31, 2004, a decrease of $40,204
(26.3%) from the $152,967 at December 31, 2003 due principally to a single
large order for OEM products in 2003 which was shipped just prior to year end
and collected during the three months ended March 31, 2004 offset by a similar,
but smaller, order shipped in March 2004. Inventories decreased $1,363 (2.0%),
to $67,462, from the $68,825 at December 31, 2003. The decrease in inventories
is not significant. Net equipment totaled $19,085 at March 31, 2004 compared to $21,582 at December
31, 2003, a decrease of $2,497 (11.6%). The decrease is fully attributable to
depreciation and amortization for the three months ended March 31, 2004. Total liabilities at March 31, 2004 were $316,147, a decrease of $36,391
(10.3%) from the $352,538 at December 31, 2003. Accounts payable and accrued
expenses were $220,733 at March 31, 2004, a decrease of $39,909 (15.3%) from
the $260,642 at December 31, 2003. The decrease is primarily due to the
payment of previously deferred director fees. Accrued payroll and related
expenses totaled $95,414 at March 31, 2004, an increase of $3,518 compared to
$91,896 at December 31, 2003 and is related to an increase in net accrued
vacation earned during the three months ended March 31, 2004. Forward Looking Statements This 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 Procedures Evaluation 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 March
31, 2004, that as of such 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 during
the three months ended March 31, 2004. 16




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PART II  OTHER INFORMATION Item 1. Legal Proceedings Inapplicable. Item 2. Changes in Securities and Use of Proceeds On January 8, 2004, the Company closed an offering to accredited investors only
of an aggregate of 2,657,300 shares of common stock at $0.80 per share and
warrants to purchase 1,328,650 shares of common stock at an exercise price of
$1.46 per share, exercisable on or after April 7, 2004 and expiring December
31, 2006. This offering was part of the 3,000,000 share offering approved by
the stockholders on August 21, 2003, which permitted the Company to sell shares
at a discount of 25% from the current market price. In connection with this
offering, the Company utilized the services of Gestibroker Consulting and
Financial Management S.A., a Swiss corporation, as its placement agent and paid
them total cash compensation of 13% of funds raised and issued warrants to
purchase 259,730 common shares at an exercise price of $1.46 per share,
expiring December 31, 2006. On March 15, 2004, the board of directors authorized the issuance of 300,000
shares of common stock to Boston Financial Partners, Inc., a consultant for
financial advisory services to be provided from March 18, 2004 through July 31,
2004, and the Company issued the shares on March 19, 2004. The shares were
valued at $247,350 based upon the trading price of the common stock on such
date. Of this amount, $27,483 was charged to general and administrative
expense in the three months ended March 31, 2004 and the balance will be
charged to general and administrative expense in the period the services are
provided. 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)
    
    Exhibits31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Financial Officer
 b)
    
    Reports on Form 8-KOn January 9, 2004, the Company filed a Form 8-K to report the
completion of the private placement of 2,657,300 shares of our common
stock and warrants to purchase 1,328,650 shares of our common stock and
the Companys agreement to file a Form S-3 registration statement with
regard to the securities sold in that offering.
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On January 29, 2004, the Company filed a Form 8-K to report that the
United States Food and Drug Administration (FDA) had identified
deficiencies in the Companys application under Section 510(k) of the
Federal Food, Drug and Cosmetic Act (FDA Act) for its DR-70® kit as an
aid in monitoring patients with colorectal cancer and that it determined
that the DR-70® kit was not substantially equivalent to any other device
which has gone through the 510(k) approval process. The FDA advised that
if the Company had data which it believes shows that the DR-70® kit has
substantial equivalence, such data could be submitted and the Company
indicated that with the assistance of its consultant, DOCRO, the data
would be marshaled and submitted to the FDA.
 18




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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: May 13, 2004
    
    By:
    
    /s/ Gary L. Dreher

GARY L. DREHER, PresidentDated: May 13, 2004
    
    By:
    
    /s/ Arthur S. Rosten

ARTHUR S. ROSTEN, Chief Financial Officer
 19




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EXHIBIT INDEX ExhibitNo.
    
    Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Financial Officer
 20