##### Table of Contents



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 June 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

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(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 August 9, 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
|PART II  OTHER INFORMATION   
|SIGNATURES                    
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



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##### Table of Contents



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

|                                      |                                                                                                                                                                          |   |             |             |              |   |           |             |  
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ----------- | ----------- | ------------ | - | --------- | ----------- | -
|                                      |                                                                                                                                                                          |   | June 30,    |             | December 31,
|                                      |                                                                                                                                                                          |   | 2002        |             | 2001        
|                                      |                                                                                                                                                                          |   |             |             |             
|                                      |                                                                                                                                                                          |   | (Unaudited) |             | (Audited)   
|Current assets:                       |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                      | Cash and cash equivalents                                                                                                                                                |   | $           | 1,347,188   |              |   | $         | 2,929,833   |  
|                                      | Accounts receivable                                                                                                                                                      |   |             | 22,404      |              |   |           | 10,287      |  
|                                      | Inventories                                                                                                                                                              |   |             | 99,227      |              |   |           | 79,466      |  
|                                      | Prepaid expenses                                                                                                                                                         |   |             | 3,604       |              |   |           | 27,727      |  
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|Total current assets                  |                                                                                                                                                                          |   | 1,472,423   |             |              |   | 3,047,313 |            
|Intellectual property, net            |                                                                                                                                                                          |   | 1,908,333   |             |              |   | 1,958,333 |            
|Fixed assets, net                     |                                                                                                                                                                          |   | 36,564      |             |              |   | 15,000    |            
|Other assets                          |                                                                                                                                                                          |   | 5,758       |             |              |   | 5,758     |            
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                      |                                                                                                                                                                          | $ | 3,423,078   |             |              | $ | 5,026,404 |            
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                     
|LIABILITIES AND STOCKHOLDERS DEFICIT
|Current liabilities:                  |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                      | Accounts payable and accrued expenses                                                                                                                                    |   | $           | 201,676     |              |   | $         | 126,416     |  
|                                      | Accrued payroll and related expenses                                                                                                                                     |   |             | 73,529      |              |   |           | 85,778      |  
|                                      | Customer deposits                                                                                                                                                        |   |             | 5,800       |              |   |           | 5,800       |  
|                                      | Notes payable                                                                                                                                                            |   |             | 25,000      |              |   |           | 25,000      |  
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|Total current liabilities             |                                                                                                                                                                          |   | 306,005     |             |              |   | 242,994   |            
|Commitments and contingencies         |                                                                                                                                                                          |   |             |             |              |   |           |            
|Stockholders equity:                 |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                      | Common stock, $0.001 par value; 50,000,000 shares
authorized; 8,716,657 and 8,076,657 shares issued
and outstanding at June 30, 2002 and December 31,
2001, respectively |   |             | 8,716       |              |   |           | 8,077       |  
|                                      | Additional paid in capital                                                                                                                                               |   |             | 22,672,496  |              |   |           | 21,831,200  |  
|                                      | Accumulated deficit                                                                                                                                                      |   |             | (19,564,139 | )            |   |           | (17,055,867 | )
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|Total stockholders equity            |                                                                                                                                                                          |   | 3,117,073   |             |              |   | 4,783,410 |            
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            
|                                      |                                                                                                                                                                          | $ | 3,423,078   |             |              | $ | 5,026,404 |            
|                                      |                                                                                                                                                                          |   |             |             |              |   |           |            

See accompanying notes to financial statements.

2



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AMDL, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |         |            |  
|----------------------------------- | -------------------------- | -------- | ---------- | ------------------ | ---------- | ---------------- | --------- | ------- | -------- | ---- | ---------- | --------- | ---------- | - | ---------- | ------- | ---------- | -
|                                    |                            |          |            | Three Months Ended |            | Six Months Ended
|                                    |                            |          |            | June 30,           |            | June 30,        
|                                    |                            |          |            |                    |            |                 
|                                    |                            |          |            | 2002               |            | 2001             |           | 2002    |          | 2001
|                                    |                            |          |            |                    |            |                  |           |         |          |     
|Revenues:                           |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    | Product sales              |          | $          | 43,062             |            |                  | $         | 52,359  |          |      | $          | 73,807    |            |   | $          | 96,589  |           
|                                    | Licensing                  |          |            |                   |            |                  |           | 15,517  |          |      |            |          |            |   |            | 31,034  |           
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    |                            |          | 43,062     |                    |            |                  | 67,876    |         |          |      | 73,807     |           |            |   | 127,623    |        
|Cost of sales                       |                            |          | 18,772     |                    |            |                  | 24,159    |         |          |      | 34,066     |           |            |   | 38,623     |        
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|Gross profit                        |                            |          | 24,290     |                    |            |                  | 43,717    |         |          |      | 39,741     |           |            |   | 89,000     |        
|Operating expenses:                 |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    | Research and development   |          |            | 91,361             |            |                  |           | 39,935  |          |      |            | 240,758   |            |   |            | 62,063  |           
|                                    | Non-cash consulting        |          |            | 317,690            |            |                  |           | 728,110 |          |      |            | 587,987   |            |   |            | 869,623 |           
|                                    | General and administrative |          |            | 752,498            |            |                  |           | 259,702 |          |      |            | 1,735,988 |            |   |            | 619,943 |           
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    |                            |          | 1,161,549  |                    |            |                  | 1,027,747 |         |          |      | 2,564,733  |           |            |   | 1,551,629  |        
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|Loss from operations                |                            |          | (1,137,259 | )                  |            |                  | (984,030  | )       |          |      | (2,524,992 | )         |            |   | (1,462,629 | )      
|Other income:                       |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    | Interest income            |          |            | 6,249              |            |                  |           | 40,087  |          |      |            | 16,720    |            |   |            | 58,719  |           
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|                                    |                            | Net loss |            | $                  | (1,131,010 | )                |           | $       | (943,943 | )    |            | $         | (2,508,272 | ) |            | $       | (1,403,910 | )
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|Basic and diluted loss
per share    |                            | $        | (0.13      | )                  |            | $                | (0.14     | )       |          | $    | (0.30      | )         |            | $ | (0.23      | )      
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        
|Weighted average shares
outstanding |                            |          | 8,549,752  |                    |            |                  | 6,650,395 |         |          |      | 8,346,740  |           |            |   | 6,003,470  |        
|                                    |                            |          |            |                    |            |                  |           |         |          |      |            |           |            |   |            |        

See accompanying notes to financial statements.

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AMDL, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |            |         |         |           |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------------- | ----------------------------------------- | ------- | ---------------- | ---------- | ---------- | ------- | ------- | --------- | -
|                                                  |                                                                                   |                                                               |                                       |                                           |         | Six Months Ended
|                                                  |                                                                                   |                                                               |                                       |                                           |         | June 30,        
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                 
|                                                  |                                                                                   |                                                               |                                       |                                           |         | 2002             |            | 2001      
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|Cash flows from operating activities:             |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  | Net loss                                                                          |                                                               | $                                     | (2,508,272                                | )       |                  | $          | (1,403,910 | )      
|                                                  | Adjustments to reconcile net loss to net cash used in operating
activities:       |                                                               |                                       |                                           |         |                  |            |            |        
|                                                  |                                                                                   | Depreciation and amortization                                 |                                       |                                           | 54,100  |                  |            |            | 689     |        
|                                                  |                                                                                   | Fair market value of common stock issued for services         |                                       |                                           | 587,987 |                  |            |            | 859,310 |        
|                                                  |                                                                                   | Fair market value of warrants and options issued for services |                                       |                                           |        |                  |            |            | 10,313  |        
|                                                  |                                                                                   | Changes in operating assets and liabilities:                  |                                       |                                           |         |                  |            |            |         |        
|                                                  |                                                                                   |                                                               | Accounts receivable, net              |                                           |         | (12,118          | )          |            |         | (5,117  | )        
|                                                  |                                                                                   |                                                               | Prepaid expenses                      |                                           |         | 24,123           |            |            |         |        |          
|                                                  |                                                                                   |                                                               | Inventories                           |                                           |         | (19,761          | )          |            |         | 2,486   |          
|                                                  |                                                                                   |                                                               | Accounts payable and accrued expenses |                                           |         | 75,260           |            |            |         | (92,013 | )        
|                                                  |                                                                                   |                                                               | Accrued payroll and related expenses  |                                           |         | (12,249          | )          |            |         | (9,155  | )        
|                                                  |                                                                                   |                                                               | Deferred revenue                      |                                           |         |                 |            |            |         | (31,034 | )        
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash used in operating activities     |         |                  | (1,810,930 | )          |         |         | (668,431  | )
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|Cash flows from investing activities:             |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  | Purchases of equipment                                                            |                                                               |                                       | (25,664                                   | )       |                  |            | (13,945    | )      
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash used in investing activities     |         |                  | (25,664    | )          |         |         | (13,945   | )
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|Cash flows from financing activities:             |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  | Proceeds from exercise of warrants and options,
net of costs of $4,451 in 2002    |                                                               |                                       | 253,949                                   |         |                  |            |           |        
|                                                  | Proceeds from issuance of common stock,
net of offering costs of $530,366 in 2001 |                                                               |                                       |                                          |         |                  |            | 5,188,634  |        
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|                                                  |                                                                                   |                                                               |                                       | Net cash provided by financing activities |         |                  | 253,949    |            |         |         | 5,188,634 |  
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|Net change in cash                                |                                                                                   |                                                               | (1,582,645                            | )                                         |         |                  | 4,506,258  |           
|Cash at beginning of period                       |                                                                                   |                                                               | 2,929,833                             |                                           |         |                  | 1,241,360  |           
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |           
|Cash at end of period                             |                                                                                   | $                                                             | 1,347,188                             |                                           |         | $                | 5,747,618  |           
|                                                  |                                                                                   |                                                               |                                       |                                           |         |                  |            |            |        
|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 June 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

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 lung and other types of cancer, and its proprietary
test kit (Pylori Probe) designed to detect antibodies to Helicobacter pylori
(H. pylori), a bacterium associated with chronic gastritis and ulcers which,
if left untreated, may lead to stomach 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

Both of the Companys lines of proprietary test kits are deemed medical
devices or biologics, and as such are 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.
However, the Company believes that its current cash position of $1,347,188 at
June 30, 2002 is sufficient to fund its operations and working capital
requirements through at least December 31, 2002.

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AMDL, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

For the Periods Ended June 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 June 30, 2002, approximately 25% of our sales
were to customers in foreign countries. Customers in Taiwan accounted for
approximately 25% of total sales, or 100% of foreign sales. During the three
months ended June 30, 2001, approximately 38% of our sales were to customers
in foreign countries. Customers in Taiwan accounted for approximately 13% of
total sales, or 34% of foreign sales and customers in the United Kingdom
accounted for approximately 22% of total sales, or 59% of foreign sales.
During the six months ended June 30, 2002, approximately 31% of our sales were
to customers in foreign countries. Customers in Taiwan accounted for
approximately 30% of total sales, or 96% of foreign sales. During the six
months ended June 30, 2001, approximately 55% of our sales were to customers
in foreign countries. Customers in Taiwan accounted for approximately 36% of
total sales, or 65% of foreign sales and customers in the United Kingdom
accounted for approximately 18% of total sales, or 33% 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 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.

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
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. The remaining 33,333 shares will be expensed
in the same manner, when earned.

NOTE 4  STOCK OPTIONS

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AMDL, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

For the Periods Ended June 30, 2002 and 2001

The 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. 241,000
options were granted under the 1999 Plan during the six months ended June 30,
2002 to employees and directors. 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. No stock option expense was recognized in the statement
of operations during the six months ended June 30, 2002.

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 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 2002 Plan terminates on January 24, 2012.

NOTE 5  SUBSEQUENT EVENTS

Subsequent to June 30, 2002, the Company issued 33,333 shares of common stock
to a consultant for services rendered in July 2002 which were valued at
$17,000, based upon the trading price of our common stock on that date, and
charged to consulting expense. (see Note 3)

No options were granted under the 2002 Plan during the six months ended June
30, 2002; however, options to purchase 755,000 shares were granted primarily
to employees and directors under the 2002 Plan on July 24, 2002.

7



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Total assets decreased from $5,026,404 at December 31, 2001 to $3,423,078 at
June 30, 2002. The decrease is a result of cash used for research and
development and operations and funding activities.

From December 31, 2001 to June 30, 2002, our cash and cash equivalents
decreased by $1,582,645 as a result of (i) expenditures for research and
development, including $89,871 for research studies, (ii) operations,
including investor relations costs of $401,476, (iii) legal fees of $214,108
and (iv) aborted offering costs of $126,373. As of August 1, 2002, cash is
being depleted at the rate of approximately $210,000 per month.

As of August 1, 2002, the Company entered into an Advisory Agreement with
Joseph Gunnar & Co., LLC (JGUN) to provide investment banking and related
services to the Company. The Company pays JGUN $10,000 per month for its
services plus JGUN will receive additional compensation for raising capital or
effecting a merger or other similar corporate transactions. The Company is
seeking to raise up to $1,500,000 through JGUN prior to October 31, 2002. The
net proceeds will be principally applied to the efforts to obtain FDA approval
to market DR-70® in the United States and general corporate needs. Through
June 30, 2002 the Company has expended a total of $154,100 in costs related to
prior funding activities. There is no assurance that the Company will be
successful in these efforts. 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 administrative
employees; however, we may seek to add one or more additional marketing or
manufacturing employees to further our efforts to distribute and manufacture
our products.

Results of Operations

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001.

During the three months ended June 30, 2002, the Company generated $43,062
from product sales compared to revenues from product sales for the three
months ended June 30, 2001 of $52,359. 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 are still experiencing
initial market acceptance issues, including the effects of delayed government
participation and/or approval. In addition, the Company has not concluded any
material new distribution agreements this year. In the three months ended
June 30, 2001, 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 56.4% for the three months ended June 30, 2002 compared
to 53.8% for the prior year period. Research and development expenses for the
three months ended June 30, 2002 were $91,361 as compared to $39,935 for the
three months ended June 30, 2001. The increase of $51,426 was primarily a
result of research studies costing $12,982 and the increased cost of services
provided by our principal consultant in the amount of $36,214. General and
administrative expenses, excluding non-cash amounts of $317,690 in the three
months ended June 30, 2002, increased by $492,796 from $259,702 for the three
months ended June 30, 2001 to $752,498 for the three months ended June 30,
2002 primarily as a result of increases of: (i) compensation costs of $84,740;
(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) stock exchange fees of $81,500. As a result of the above, in the three
months ended June 30, 2002, the Companys net loss was $1,131,010 or $(0.13)
per share compared to a net loss of $943,943 or $(0.14) per share for the same
period in the prior year.

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001.

During the six months ended June 30, 2002, the
Company generated $73,807 from
product sales compared to revenues from product sales for the six months ended
June 30, 2001 of $96,589. 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 are still experiencing initial market acceptance issues,
including the effects of delayed

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government participation and/or approval. In addition, the Company has not concluded any material new distribution
agreements this year. In the six months ended June 30, 2001, we also recorded
licensing revenues of $31,034 related to the terminated agreement with the
former distributor. The Companys gross profit on product sales was 53.8% for
the six months ended June 30, 2002 compared to 60.0% for the prior year
period. The decrease in gross profit is the result of lower sales of
DR-70®
and higher sales of OEM products in the first half of the current year over
the prior year. Research and development expenses for the six months ended
June 30, 2002 were $240,758 as compared to $62,063 for the six months ended
June 30, 2001. The increase of $178,695 was primarily a result of research
studies costing $89,871 and the increased cost of services provided by our
principal consultant in the amount of $86,714. General and administrative
expenses, excluding non-cash amounts of $587,987 in the six months ended June
30, 2002, increased by $1,116,045 from $619,943 for the six months ended June
30, 2001 to $1,735,988 for the six months ended June 30, 2002 primarily as a
result of increases of: (i) legal fees of $124,629; (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 $274,498. As a result of the above, in the
six months ended June 30, 2002, the Companys net loss was $2,508,273 or
$(0.30) per share compared to a net loss of $1,403,910 or $(0.23) per share
for the same period in the prior year.

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.

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

Inapplicable. (see 6b below)

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 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.

Item 3. Defaults Upon Senior Securities.

Inapplicable.

Item 4. Submission of Matters to a Vote of Security Holders.

At the annual meeting of stockholders of the Company, held May 10, 2002, the
stockholders elected five directors of the Company to serve for one year terms
or until their successors are duly elected and qualify as follows:

|                              |  |           |           |                |  |  |       | 
|----------------------------- |  | --------- | --------- | -------------- |  |  | ----- | 
|Nominee/Director              |  | Votes for |           | Votes withheld
|                              |  |           |           |               
|Gary L. Dreher                |  |           | 4,395,676 |                |  |  | 9,222 | 
|Douglas C. MacLellan          |  |           | 4,395,711 |                |  |  | 9,187 | 
|William M. Thompson III, M.D. |  |           | 4,395,711 |                |  |  | 9,187 | 
|Edward R. Arquilla, M.D.      |  |           | 4,395,711 |                |  |  | 9,187 | 
|Marvin E. Rosenthale          |  |           | 4,395,711 |                |  |  | 9,187 | 

The stockholders also approved the adoption of the 2002 Stock Option Plan by a
vote of 2,924,788 shares in favor, 29,604 shares opposed and 451,098 shares
abstained from voting.

Item 5. Other Information.

Inapplicable.

Item 6. Exhibits and Reports on Form 8-K.



| | a) |  | Exhibits
| | -- |  | --------

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|     |  |                                                                    
|---- |  | -------------------------------------------------------------------
|99.1 |  | Certification Pursuant to 18 U.S.C. §135 of Chief Executive Officer
|99.2 |  | Certification Pursuant to 18 U.S.C. §135 of Chief Financial Officer



| | b) |  | Reports on Form 8-K                                                                                                                                                                                                                                                    
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | On April 26, 2002, the Company filed a Form 8-K to report the
courts ruling on the motion by AcuVector Group, Inc. that the
United States District Court in California did not have
jurisdiction over the matter. The ruling in no way decided the
case on its merits.




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: August 9, 2002 | By:                       | /s/ Gary L. Dreher
|                      |                          
|                      | GARY L. DREHER,
President

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