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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-QSB

(Mark One)

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[x] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | 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.




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


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

2492 Walnut Avenue, Suite 100, Tustin, California 92780




(Address of principal executive offices)


(714) 505-4460

(Issuers telephone number)


Not Applicable

---

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


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes
[X]   No [   ]

As of November 10, 2003 the Company had 18,711,763 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 SHEET           
|                               |                                                                                               | STATEMENTS OF OPERATIONS
|                               |                                                                                               | STATEMENTS OF CASH FLOWS
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Controls and Procedures                                                              
|PART II - OTHER INFORMATION   
|                               | Item 1. Legal Proceedings                                                                    
|                               | Item 2. Changes in Securities and Use of Proceeds                                            
|                               | Item 3. Defaults Upon Senior Securities                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other Information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|EXHIBIT INDEX                 
|EXHIBIT 31.1                  
|EXHIBIT 31.2                  
|EXHIBIT 32.1                  
|EXHIBIT 32.2                  



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|                                                                                                          |  |      |    | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                          |  | PAGE
|                                                                                                          |  |     
|PART
I - FINANCIAL INFORMATION                                                                            |  |      | 2  | 
|Item 1. Financial Statements                                                                              |  |      |    | 
|Balance Sheet at September 30, 2003 (unaudited)                                                           |  |      | 2  | 
|Unaudited Statements of Operations for the three and
nine month periods ended September 30, 2003 and 2002 |  |      | 3  | 
|Unaudited Statements of Cash Flows for the
nine month periods ended September 30, 2003 and 2002           |  |      | 4  | 
|Notes to Financial Statements                                                                             |  |      | 5  | 
|Item 2. Managements Discussion and Analysis                                                              |  |      | 12 | 
|Item 3. Controls and Procedures                                                                           |  |      | 17 | 
|PART II - OTHER INFORMATION                                                                               |  |      | 18 | 
|Item 1. Legal Proceedings                                                                                 |  |      | 18 | 
|Item 2. Changes in Securities and Use of Proceeds                                                         |  |      | 18 | 
|Item 3. Defaults Upon Senior Securities                                                                   |  |      | 19 | 
|Item 4. Submission of Matters to a Vote of Security Holders                                               |  |      | 19 | 
|Item 5. Other Information                                                                                 |  |      | 20 | 
|Item 6. Exhibits and Reports on Form 8-K                                                                  |  |      | 20 | 

1



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##### Table of Contents






PART I - FINANCIAL INFORMATION




Item 1. Financial Statements

AMDL, INC.




BALANCE SHEET
(Unaudited)

|                                     |                                           |                                                                                                                              |           |             |        |               |  | 
|------------------------------------ | ----------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | --------- | ----------- | ------ | ------------- |  | 
|                                     |                                           |                                                                                                                              |           |             |        | September 30,
|                                     |                                           |                                                                                                                              |           |             |        | 2003         
|                                     |                                           |                                                                                                                              |           |             |        |              
|ASSETS                               |                                           |                                                                                                                              |           |            
|Current assets:                      |                                           |                                                                                                                              |           |            
|                                     | Cash and cash equivalents                 |                                                                                                                              | $         | 1,274,396   |       
|                                     | Inventories                               |                                                                                                                              |           | 64,521      |       
|                                     | Prepaid expenses and other current assets |                                                                                                                              |           | 39,835      |       
|                                     |                                           |                                                                                                                              |           |             |       
|Total current assets                 |                                           |                                                                                                                              | 1,378,752 |            
|                                    
|Intellectual property, net           |                                           |                                                                                                                              | 1,783,333 |            
|Fixed assets, net                    |                                           |                                                                                                                              | 24,079    |            
|Other assets                         |                                           |                                                                                                                              | 5,757     |            
|                                     |                                           |                                                                                                                              |           |             |       
|                                     |                                           | $                                                                                                                            | 3,191,921 |            
|                                     |                                           |                                                                                                                              |           |             |       
|LIABILITIES AND STOCKHOLDERS EQUITY |                                           |                                                                                                                              |           |            
|Current liabilities:                 |                                           |                                                                                                                              |           |            
|                                     | Accounts payable and accrued expenses     |                                                                                                                              | $         | 307,212     |       
|                                     | Accrued payroll and related expenses      |                                                                                                                              |           | 93,589      |       
|                                     |                                           |                                                                                                                              |           |             |       
|Total current liabilities            |                                           |                                                                                                                              | 400,801   |            
|                                     |                                           |                                                                                                                              |           |             |       
|Commitments and contingencies        |                                           |                                                                                                                              |           |            
|Stockholders 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; 16,156,255 shares issued and
outstanding at September 30, 2003 |           |             | 16,156 |              
|                                     | Additional paid in capital                |                                                                                                                              |           | 25,877,996  |       
|                                     | Prepaid consulting                        |                                                                                                                              |           | (117,028    | )     
|                                     | Accumulated deficit                       |                                                                                                                              |           | (22,986,004 | )     
|                                     |                                           |                                                                                                                              |           |             |       
|Total stockholders equity           |                                           |                                                                                                                              | 2,791,120 |            
|                                     |                                           |                                                                                                                              |           |             |       
|                                     |                                           | $                                                                                                                            | 3,191,921 |            
|                                     |                                           |                                                                                                                              |           |             |       

See accompanying notes to financial statements.

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AMDL, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |           |            |  
|----------------------------------- | -------------------------- | -------- | ---------- | ------------------ | -------- | ----------------- | --------- | ------- | -------- | ---- | ---------- | --------- | ---------- | - | ---------- | --------- | ---------- | -
|                                    |                            |          |            | Three Months Ended |          | Nine Months Ended
|                                    |                            |          |            | September 30,      |          | September 30,    
|                                    |                            |          |            |                    |          |                  
|                                    |                            |          |            | 2003               |          | 2002              |           | 2003    |          | 2002
|                                    |                            |          |            |                    |          |                   |           |         |          |     
|Revenues                            |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Product sales              |          | $          | 73,764             |          |                   | $         | 20,748  |          |      | $          | 198,968   |            |   | $          | 94,554    |           
|Cost of sales                       |                            |          | 32,816     |                    |          |                   | 10,144    |         |          |      | 90,363     |           |            |   | 44,209     |          
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Gross profit                        |                            |          | 40,948     |                    |          |                   | 10,604    |         |          |      | 108,605    |           |            |   | 50,345     |          
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Operating expenses                  |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Research and development   |          |            | 149,532            |          |                   |           | 69,247  |          |      |            | 482,152   |            |   |            | 310,005   |           
|                                    | General and administrative |          |            | 564,761            |          |                   |           | 483,501 |          |      |            | 1,474,714 |            |   |            | 2,807,476 |           
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            |          | 714,293    |                    |          |                   | 552,748   |         |          |      | 1,956,866  |           |            |   | 3,117,481  |          
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|Loss from operations                |                            |          | (673,345   | )                  |          |                   | (542,144  | )       |          |      | (1,848,261 | )         |            |   | (3,067,136 | )        
|Other income (expense)              |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    | Interest income            |          |            | 189                |          |                   |           | 4,081   |          |      |            | 718       |            |   |            | 20,801    |           
|                                    | Interest expense           |          |            | (145,801           | )        |                   |           |        |          |      |            | (480,467  | )          |   |            |          |           
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          
|                                    |                            | Net loss |            | $                  | (818,957 | )                 |           | $       | (538,063 | )    |            | $         | (2,328,010 | ) |            | $         | (3,046,335 | )
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |           |           
|Basic and diluted loss
per share    |                            | $        | (0.06      | )                  |          | $                 | (0.06     | )       |          | $    | (0.21      | )         |            | $ | (0.36      | )        
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |           |           
|Weighted average shares
outstanding |                            |          | 13,695,714 |                    |          |                   | 8,744,862 |         |          |      | 10,858,296 |           |            |   | 8,480,802  |          
|                                    |                            |          |            |                    |          |                   |           |         |          |      |            |           |            |   |            |          

See accompanying notes to financial statements.

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AMDL, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |            |         |         |         | 
|------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ------- | ----------------- | ---------- | ---------- | ------- | ------- | ------- | 
|                                                 |                                                                                                    |                                                               |                                           |                                           |         | Nine Months Ended
|                                                 |                                                                                                    |                                                               |                                           |                                           |         | September 30,    
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                  
|                                                 |                                                                                                    |                                                               |                                           |                                           |         | 2003              |            | 2002      
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|Cash flows from operating activities             |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|                                                 | Net loss                                                                                           |                                                               | $                                         | (2,328,010                                | )       |                   | $          | (3,046,335 | )      
|                                                 | Adjustments to reconcile net loss to net cash used in operating activities                         |                                                               |                                           |                                           |         |                   |            |            |        
|                                                 |                                                                                                    | Depreciation and amortization                                 |                                           |                                           | 82,491  |                   |            |            | 81,596  |        
|                                                 |                                                                                                    | Fair market value of common stock issued for services         |                                           |                                           | 159,364 |                   |            |            | 604,987 |        
|                                                 |                                                                                                    | Fair market value of warrants and options issued for services |                                           |                                           |        |                   |            |            | 7,400   |        
|                                                 |                                                                                                    | Non-cash interest expense recognized                          |                                           |                                           | 479,318 |                   |            |            |        |        
|                                                 |                                                                                                    | Changes in operating assets and liabilities                   |                                           |                                           |         |                   |            |            |         |        
|                                                 |                                                                                                    |                                                               | Accounts receivable                       |                                           |         | 88,390            |            |            |         | (7,896  | )      
|                                                 |                                                                                                    |                                                               | Inventories                               |                                           |         | 18,453            |            |            |         | (23,498 | )      
|                                                 |                                                                                                    |                                                               | Prepaid expenses and other current assets |                                           |         | (20,308           | )          |            |         | 394     |        
|                                                 |                                                                                                    |                                                               | Accounts payable and accrued expenses     |                                           |         | 162,525           |            |            |         | (4,147  | )      
|                                                 |                                                                                                    |                                                               | Accrued payroll and related expenses      |                                           |         | 7,041             |            |            |         | (9,620  | )      
|                                                 |                                                                                                    |                                                               | Customer deposits                         |                                           |         | (12,350           | )          |            |         |        |        
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|Net cash used in operating activities            |                                                                                                    |                                                               | (1,363,086                                | )                                         |         |                   | (2,397,119 | )         
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|Cash flows from investing activities             |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|                                                 | Purchases of equipment                                                                             |                                                               |                                           |                                          |         |                   |            | (25,664    | )      
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |            |        
|Cash flows from financing activities             |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|                                                 | Proceeds from issuance of common stock,
net of offering costs of $122,511 in 2003                  |                                                               |                                           | 562,489                                   |         |                   |            |           |        
|                                                 | Proceeds from issuance of convertible notes,
net of offering costs of $263,295 in 2003             |                                                               |                                           | 1,162,702                                 |         |                   |            |           |        
|                                                 | Proceeds from exercise of warrants and options,
net of costs of $69,805 in 2003 and $4,451 in 2002 |                                                               |                                           | 564,539                                   |         |                   |            | 253,949    |        
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|                                                 |                                                                                                    |                                                               |                                           | Net cash provided by financing activities |         |                   | 2,289,730  |            |         |         | 253,949 | 
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|Net change in cash                               |                                                                                                    |                                                               | 926,644                                   |                                           |         |                   | (2,168,834 | )         
|Cash at beginning of period                      |                                                                                                    |                                                               | 347,752                                   |                                           |         |                   | 2,929,833  |           
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |           
|Cash at end of period                            |                                                                                                    | $                                                             | 1,274,396                                 |                                           |         | $                 | 760,999    |           
|                                                 |                                                                                                    |                                                               |                                           |                                           |         |                   |            |            |        
|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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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 and nine months ended September 30, 2003 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2003. 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, 2002 included in the Companys Annual Report on
Form 10-KSB/A.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

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

The Companys near and long-term operating strategies focus on exploiting the
technologies currently owned by the Company. The Company has submitted its
DR-70® product for FDA approval, which if successful, will allow the Company
to sell this product in the United States. The Company believes that FDA
approval would increase sales of the DR-70® product worldwide. In addition,
the Company is attempting to license its combination immunogene therapy
technology by entering into a strategic relationship with a larger company.
The impact on the results of operations or the outcome of these activities
cannot be determined at this time.

Financial Condition

Since the beginning of the year the Company has conducted a number of private
placement offerings and is continuing the current offering of units of common
shares and warrants. Through September 30, 2003 the Company generated
aggregate net proceeds of $2,289,730 from these offerings, which proceeds
increased liquidity and enabled the Company to complete the DR-70®
application to the FDA (See Note 3). Between October 1, 2003 and November 10,
2003, the Company received additional net proceeds of approximately $1,074,000
from the exercise of warrants and the issuance of shares for cash (See Note 6).

The Company has an accumulated deficit of $22,986,044 as of September 30, 2003,
continues to generate low levels of sales from its DR-70® product, and has
incurred significant continuing losses from operations through September 30,
2003. However, the Company believes that its cash position of $2,005,256 at
November 10, 2003 is sufficient to fund its operations and working capital
requirements through at least December 31, 2004.

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.

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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. FIN 44 is effective
July 1, 2000, but certain provisions cover specific events that occur after
either December 15, 1998, or January 12, 2000. The adoption of FIN 44 did not
have a material effect on the financial statements.

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 September 30, 2003 the Company had two stock-based employee compensation
plans, which are described more fully in Note 5. The Company accounts for
those plans under the recognition and measurement principles of APB 25, and
related interpretations. No stock based employee compensation cost is
reflected in the statement 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
income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS 123, to stock-based employee compensation.

|                                                                                                                   |  |                            |          |                           |  |      |          |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | ------------------------- |  | ---- | -------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                   |  | For The Three Months Ended |          | For The Nine Months Ended
|                                                                                                                   |  | September 30,              |          | September 30,            
|                                                                                                                   |  |                            |          |                          
|                                                                                                                   |  | 2003                       |          | 2002                      |  | 2003 |          | 2002
|                                                                                                                   |  |                            |          |                           |  |      |          |     
|Net loss as reported                                                                                               |  | $                          | (818,957 | )                         |  | $    | (538,063 | )    |  | $ | (2,328,010 | ) |  | $ | (3,046,335 | )
|Deduct: Total stock-based employee
compensation under fair value method
for all awards, net of related tax effects |  |                            |         |                           |  |      | (316,050 | )    |  |   |           |   |  |   | (806,960   | )
|                                                                                                                   |  |                            |          |                           |  |      |          |      |  |   |            |   |  |   |            |  
|Pro forma net loss                                                                                                 |  | $                          | (818,957 | )                         |  | $    | (854,113 | )    |  | $ | (2,328,010 | ) |  | $ | (3,853,295 | )
|                                                                                                                   |  |                            |          |                           |  |      |          |      |  |   |            |   |  |   |            |  
|Basic
and diluted loss per share 
as reported                                                                     |  | $                          | (0.06    | )                         |  | $    | (0.06    | )    |  | $ | (0.21      | ) |  | $ | (0.36      | )
|                                                                                                                   |  |                            |          |                           |  |      |          |      |  |   |            |   |  |   |            |  
|Basic
and diluted loss per share 
pro forma                                                                       |  | $                          | (0.06    | )                         |  | $    | (0.10    | )    |  | $ | (0.21      | ) |  | $ | (0.45      | )
|                                                                                                                   |  |                            |          |                           |  |      |          |      |  |   |            |   |  |   |            |  

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Risks and Uncertainties

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

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

The current level of revenues from the sale of DR-70® kits to our
distributors and one OEM product are not sufficient to finance current
operations. Accordingly, our business and operations are substantially
dependent on our ability to raise additional working capital to pay ongoing
general and administrative expenses of our business. There are no definitive
commitments to provide the required capital. Additional financing may not be
available to us when needed or, if available, may not be obtained on
commercially reasonable terms. In addition, any equity financing may involve
substantial dilution to our shareholders.

Revenue Recognition

Product sales 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 sales are recorded.
Licensing revenue is recognized as earned over the term of each respective
agreement.

Segments of an Enterprise and Related Information

During the three months ended September 30, 2003, approximately 22.4% of our
total sales were to customers in foreign countries. Customers in Korea
accounted for 100% of foreign sales. During the three months ended September
30, 2002, approximately 2.0% of our sales were to customers in foreign
countries. Customers in the United Kingdom accounted for 100% of foreign
sales. During the nine months ended September 30, 2003, approximately 17.1%
of our total sales were to customers in foreign countries. Customers in Korea
accounted for approximately 10.6% of total sales and 61.9% of foreign sales.
Customers in Taiwan accounted for approximately 6.2% of total sales and 36.4%
of foreign sales. During the nine months ended September 30, 2002,
approximately 27.8% of our sales were to customers in foreign countries.
Customers in Taiwan accounted for approximately 26.2% of total sales and 94.0%
of foreign sales. The Company currently operates in one segment.

Basic and Diluted Loss Per Share

The Company computes earnings per share pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share (SFAS 128). 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. As of September 30, 2003 the Company has
2,676,630 options and 2,662,096 warrants outstanding to purchase shares of
common stock. However, the impact under the treasury stock method of dilutive stock options and warrants
would have been incremental shares of 1,582,339 for the nine months ended
September 30, 2003.

Reclassifications

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

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NOTE 3  STOCK ISSUANCES

Cash Financing Activities

On October 23, 2002, the board of directors authorized a Regulation S offering
of up to 1,575,000 shares of common stock (Regulation S Offering) at a price
of 70% of the current market price at the time of sale, subject to a floor
price of no less than $.35 per share, the payment of commissions of 10% of the
sales price in cash, non-accountable expenses of 3% of the sales price, and
warrants to purchase shares equal to 10% of the shares sold in the Regulation
S Offering. The Company also authorized a companion offering in the United
States under Regulation D (Regulation D Offering) under the same terms and
conditions as the Regulation S Offering. On February 24, 2003, 50,000 shares
were sold in the Regulation D Offering at a price of $0.40 per share,
generating net proceeds of $17,380, net of issuance costs of $2,620. PCNA,
S.A., a Swiss corporation, acted as the placement agent in connection with
this offering. In addition to the cash compensation, the placement agent
received common stock purchase warrants for 5,000 shares during the nine
months ended September 30, 2003.

On March 21, 2003, the board of directors authorized the sale of units
consisting of unsecured convertible notes and warrants to purchase common
stock, at or above the market price of the common stock to accredited and
non-U.S. investors only, in a private placement. Under the terms of the
offering, investors received one unit for each $1,000 invested. Each unit
generally consisted of a $1,000 principal amount 5% convertible promissory
note due June 30, 2003, generally convertible into 2,598 shares of the
Companys common stock plus a warrant to purchase 2,598 shares of the
Companys common stock at an exercise price of $0.385 each, expiring on
December 31, 2005. The notes were generally automatically converted into
common shares upon the approval of the listing of the shares issuable on
conversion of the notes by the American Stock Exchange. The Company raised
$1,321,000 in gross proceeds from the initial sale of the units. During the
period ended September 30, 2003 the Company received approximately $610,000 in
gross proceeds from investors upon the exercise of the warrants included in
the units to purchase 1,565,838 shares of common stock. The Company received
a further amount of approximately $698,000 in gross proceeds from investors
upon the exercise of other warrants included in the units for 1,803,821 shares
of common stock during the period October 1, 2003 to November 10, 2003. The
Company paid a cash commission of 10% of the proceeds of warrant exercises to
the placement agents. In addition, during the period ended September 30, 2003
the Company received approximately $24,000 from the placement agents upon the
exercise of warrants for 61,492 shares of common stock, and a further amount
of approximately $120,000 from the placement agents upon the exercise of
warrants to purchase 308,987 shares of common stock during the period October
1, 2003 to November 10, 2003, on which no commissions were paid. Included in
the actual number of warrants issued to each investor was a 5% bonus of
warrants to purchase an aggregate of 170,234 shares, which bonus warrants the
Company was contractually obligated to issue because the registration
statement for the shares issued on conversion of the notes and issuable upon
exercise of the warrants did not become effective prior to July 1, 2003.

On June 18, 2003, approximately $878,000 of the convertible notes were
converted into 2,265,655 shares of our common stock, including 10,424 shares
in respect of the approximately $4,000 of interest earned on the notes.
Between July 8, 2003 and September 29, 2003, the remaining $443,000 of
convertible notes were converted into an aggregate of 1,149,948 shares of our
common stock.

In connection with its fundraising efforts, the Company utilized the services
of two placement agents, PCNA, S.A., a Swiss corporation, and Gestibroker
Consulting and Financial Management S.A., a Swiss corporation, and paid a
total cash compensation of 13% of funds raised plus issued warrants to
purchase common shares equal to 10% of the aggregate number of shares of
common stock issued or issuable on conversion of the promissory notes. In
addition, the Company entered into an investment advisory agreement with First
London Finance, Ltd, a British Virgin Islands company. Under the terms of the
investment advisory agreement, the Company issued 400,000 shares of common
stock as a success fee for the offering. The Company was also required to
issue to First London Finance an additional 100,000 shares of common stock if
$750,000 in gross proceeds were received from the exercise of the
warrants included in the units within the 90-day period beginning on August 1,
2003 and ending on October 29, 2003. The additional 100,000 shares were
earned by First London Finance, Ltd. as of October 17, 2003 and were issued on
October 29, 2003.

The Company incurred approximately $413,000 of issuance costs related to
issuance of the units. Of these costs approximately $244,000 was paid in cash
to placement agents and other service providers, and the remaining $169,000 was
based on (i) the estimated fair market value of the 400,000 shares of common
stock granted to First London

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Finance, (ii) warrants to purchase 340,479 shares
of common stock at an exercise price generally of $0.385 per share expiring
December 31, 2005 issued to placement agents (valued based on the Black-Scholes
model under SFAS 123), and (iii) warrants to purchase 200,000 shares of common
stock at an exercise price of $0.385 per share expiring May 31, 2005 issued to
two investors. The Company recognized approximately $268,000 of these issuance
costs as interest expense based on the original amortization period of the
notes ($240,000 in the second quarter and $28,000 in the third quarter), and
transferred approximately $145,000 to additional paid-in capital, representing
the unamortized debt issuance costs associated with the converted notes, as
certain of the issuances were converted prior to their maturity dates. Through
September 30, 2003, the Company incurred approximately $70,000 of issuance
costs related to the exercise of warrants consisting of cash paid to placement
agents and other service providers which was charged to additional paid-in
capital. From October 1, 2003 through November 10, 2003, the Company incurred
an additional $193,000 of issuance costs, of which $70,000 was paid in cash to
the placement agents and $123,000 was the value of the 100,000 shares of common
stock issued to First London Finance, based on the estimated fair market value
of the shares on the date the milestone was achieved. The Company will charge
the full amount of $193,000 to additional paid-in capital in the fourth
quarter. .

In connection with the warrants, the Company recorded a debt discount of
approximately $142,000 (valued based on the Black-Scholes model under SFAS 123
and allocated on a relative fair value basis under APB 14), which was amortized
from the dates of purchase through the maturity dates of the convertible notes,
generally June 30, 2003, or the date of mandatory conversion, whichever
occurred first. The Company amortized approximately $101,000 of the debt
discount to interest expense ($90,000 in the second quarter and $11,000 in the
third quarter) and transferred approximately $41,000 of the debt discount to
additional paid-in capital for notes converted prior to their maturity dates,
representing the unamortized debt discount associated with the converted notes.

On July 17, 2003 the board of directors authorized a Regulation S offering of
up to 1,100,000 shares of common stock (Regulation S Offering No. 2) at a
price of $0.70 per share, or $770,000 of 5% convertible notes, convertible into
common shares at $0.70 per share, and the payment of commissions of 10% of the
sales price in cash, non-accountable expenses of 3% of the sales price, plus
shares of common stock equal to 10% of the shares sold in Regulation S Offering
No. 2. Under the terms of the offering, the notes automatically converted to
common shares on the attainment of certain market share prices, but no later
than August 31, 2004. On August 13, 2003, the Company received gross proceeds
of $105,000 from one investor in respect of the issuance of a convertible note
of equal amount. On August 27, 2003, the convertible note automatically
converted into 150,000 shares of common stock. Due to the fact that the
conversion price of the note payable was less than the fair market value of the
underlying common stock on the date of issuance, the company recorded imputed
interest expense of $105,000 which is included in interest expense in the
accompanying statements of operations. On September 9, 2003, the Company
received an additional subscription representing gross proceeds of $665,000
under Regulation S Offering No. 2. The Company and the investor agreed that
the terms of the offering with respect to such investor would be amended so as
to treat the investment as a direct subscription of 950,000 shares of common
stock rather than a convertible note. The Company has undertaken, by November
30, 2003, to file a registration statement with the Securities and Exchange
Commission on Form S-3 to register 1,210,000 shares of the Companys common
stock consisting of (i) the 150,000 common shares issued upon conversion of the
notes, (ii) the 950,000 common shares issued directly upon subscription and
(iii) the 110,000 common shares issued to the placement agent.

In connection with Regulation S Offering No. 2, the Company utilized the
services of Gestibroker Consulting and Financial Management S.A., as placement
agent, and paid total cash compensation of 13% of funds raised plus issued
110,000 common shares to Gestibroker. The Company incurred approximately
$43,000 of issuance costs related to issuance of the convertible notes on
August 13, 2003. Of these costs approximately $19,000 was paid in cash to the
placement agent (see above) and other service providers, and the remaining
$24,000 was based on the estimated fair market value of the 15,000 shares of
common stock granted to the placement agent (see above). The Company
recognized approximately $2,000 of these issuance costs as interest expense
based on the original amortization period of the note, and transferred
approximately $41,000 to additional paid-in capital, representing the
unamortized debt issuance costs associated with the converted notes, as the
note was converted prior to their maturity dates. On September 9, 2003, the Company incurred approximately $291,000 of
issuance costs related to issuance of the common shares. Of these costs
approximately $120,000 was paid in cash to the placement agent and other
service providers, and the remaining $171,000 was based on the estimated fair
market value of the 95,000 shares of common stock paid to the placement agent
as part of its fee. The Company charged the full amount of these issuance
costs to additional paid-in capital, since the investment was treated as a
purchase of shares of common stock.

On August 21, 2003, the stockholders of the Company authorized the issuance of
3,000,000 shares of common stock at a discount of up to 25% below the current
market price at the time of issuance. On September 24, 2003, the board of

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directors authorized a Regulation S offering for the sale of units consisting
of up to 3,000,000 shares of common stock at a discount of up to 25% below the
current market price at the time of issuance and 1,500,000 warrants to purchase
common stock (Regulation S Offering No. 3), to accredited and non-U.S.
investors only, in a private placement. Under the terms of Regulation S
Offering No. 3, investors receive warrants to purchase a number of shares of
common stock equal to one-half (1/2) of the total number of shares purchased in
the offering. The warrants are exercisable at $1.58 per share, equal to 110%
of the average closing price of the Companys common stock, as reported by the
American Stock Exchange, for the ten (10) consecutive trading days immediately
prior to and including October 31, 2003. Each warrant will become exercisable
beginning ninety (90) days after the effective date of a registration statement
covering the resale of the shares issuable upon exercise of the warrants, and
will remain exercisable until December 31, 2005. See Note 6 for funds received
subsequent to September 30, 2003.

In connection with its fundraising efforts, the Company is utilizing the
services of Gestibroker Consulting and Financial Management S.A. and agreed to
pay a total cash compensation of 13% of funds raised in Regulation S Offering
No. 3 plus issue warrants to purchase common shares equal to 10% of the
aggregate number of shares of common stock issued in Regulation S Offering No.
3.

Non-Cash Financing Activities

On October 23, 2002, the board of directors authorized the issuance of 50,000
shares of common stock per month to International Consulting Partners, a
consultant for financial consulting services to be rendered thereafter on a
month to month basis. On January 31, 2003, the Company issued an aggregate of
99,999 shares of common stock (33,333 shares per month for the three months
ended January 31, 2003) for consulting services to the same consultant
pursuant to the prior authorization. Of these shares, 66,666 shares, valued
at $30,600 based upon the trading price of the common stock on the dates
earned, were charged to consulting expense in 2002 as if issued on December
31, 2002. The remaining 33,333 shares were valued at $16,433, based upon the
trading price of the common stock on January 31, 2003, and charged to
consulting expense. An additional 33,333 shares were issued to the same
consultant for services performed in February 2003, valued at $11,333, based
upon the trading price of the common stock on February 28, 2003, and charged
to consulting expense.

On March 23, 2003 the board of directors authorized the issuance of up to
500,000 shares of common stock to First London Finance under an advisory
agreement in connection with the unit offering described above. On June 18,
2003, the Company issued 400,000 of the shares to First London Finance and
valued 200,000 of the shares at $57,800 on May 21, 2003, the date the first
200,000 shares were earned, and valued 200,000 of the shares at $95,200 on
June 17, 2003, the date the additional 200,000 shares were earned. The value
of these shares was included in debt issuance costs for the nine months ended
September 30, 2003.

On June 11, 2003, the board of directors authorized the issuance of 150,000
shares of common stock to International Consulting Group Ltd., a consultant
for financial advisory services for a six-month period ending November 2003,
and the Company issued the shares on July 2, 2003. The shares were valued at
$66,300 based upon the trading price of the common stock on June 11, 2003, the
date the shares were earned, and recorded to stockholders equity as if issued
on June 11, 2003. The $66,300 will be recorded to general and administrative
expense over the term of the agreement. For the nine months ended September
30, 2003, the Company recorded $40,435 of expense and the unamortized balance
of $25,865 as of September 30, 2003 has been recorded as a prepaid consulting
expense and classified as an offset to stockholders equity, the full amount
of which will be expensed in the fourth quarter of 2003.

On September 15, 2003, the board of directors authorized the issuance of
130,000 shares of common stock to Boston Financial Partners, Inc., a
consultant for financial advisory services, and the Company issued the shares
on September 29, 2003.. The shares were valued at $182,375 based upon the
trading price of the common stock on September 16, 2003, the date of signing of the agreement. The services were
performed during the two-month period of September and October 2003, and
accordingly, the $182,375 will be recorded to general and administrative
expense over such period. For the period ended September 30, 2003, the
Company recorded $91,162 of general and administrative expense and the
unamortized balance of $91,163 as of September 30, 2003 has been recorded as a
prepaid consulting expense and classified as an offset to stockholders equity
which will be expensed in the fourth quarter of 2003.

NOTE 4  STOCK OPTIONS

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. All
options granted have an exercise price

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equal to the fair market value at the
date of grant, vested upon grant and expire in five years. No options were
granted during the three and nine months ended September 30, 2003 and no
further options are available for grant under the 1999 Plan.

On January 25, 2002, the board of directors adopted the 2002 Stock Option Plan
(the 2002 Plan). The shareholders of the Company approved the 2002 Plan on
May 10, 2002. Under the 2002 Plan, incentive stock options and nonqualified
options may be granted to officers, employees, directors and independent
contractors of the Company for the purchase of up to 1,000,000 shares of the
Companys common stock. The exercise price per share under the incentive
stock option plan shall not be less than 100% of the fair market value per
share on the date of grant. The exercise price per share under the
non-qualified stock option shall be not less than 85% of the fair market value
per share on the date of grant. Expiration dates for the grants may not
exceed 10 years from the date of grant. No options were granted during the
three and nine months ended September 30, 2003 and 245,000 options remain
available for grant under the 2002 Plan as of September 30, 2003.

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 seeks substantial damages and
injunctive relief against Dr. Chang for, among other things, breach of contract
and breach of fiduciary duty, and against the Company for interference with the
alleged relationship between Dr. Chang and AcuVector. The claim for injunctive
relief in the Canadian case seeks to establish that the AcuVector license
agreement with Dr. Chang is still in effect. The Company has 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 these actions 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 the Companys future prospects for licensing the technology will
be significantly impaired.

In the ordinary course of business, there are 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

From October 1, 2003 to November 10, 2003, the Company received approximately
$698,000 in gross proceeds from investors on the exercise of warrants for
1,803,821 shares of common stock in the Regulation S and Regulation D
Offerings. The Company paid a cash commission of 10% of the proceeds of these
warrant exercises to the placement agents. In addition, from October 1, 2003
to November 10, 2003, the Company received approximately $120,000 from the
placement agents on the exercise of warrants for 308,987 shares of common
stock, on which no commissions were paid.

On October 24, 2003 the Company received $375,000 in gross proceeds from the
initial sale of the units in Regulation S Offering No. 3. The Company issued
342,700 common shares and issued a warrant to purchase
171,350 additional common shares. The Company paid $48,750 in fees to its
placement agent in respect of the proceeds received and will issue to the
placement agent a warrant to purchase 34,270 shares of common stock at $1.58.

On October 29, 2003 the Company issued 100,000 shares of common stock to First
London Finance, Ltd. pursuant to the advisory agreement described in Note 3
above.

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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 from $2,434,303 at December 31, 2002 to $3,191,921 at
September 30, 2003. The increase is primarily attributable to receipt of
$2,289,730 net cash proceeds from our private placement offerings and
collection of net accounts receivable of $88,390, which increase was offset by
cash used for research and development and other operational activities,
including $482,152 for research studies, and other operating expenses,
including compensation and related costs of $553,631, consulting fees of
$145,728 and legal fees of $129,292. Where the Company can pay for services
(e.g. financial consulting and investor relations services) using shares of its
common stock, the Company takes advantage of these opportunities to conserve
cash.

Since September 2003, we have received an additional $1,074,000 in net cash
proceeds from private placement offerings. The Company is continuing its
current Regulation S Offering No. 3.

Our total outstanding current liabilities increased to $400,801 at September
30, 2003 as compared to $243,585 at December 31, 2002. The increase resulted
from accrued expenses related to the offerings and negotiated deferred payment
terms for $52,000 due to directors and $54,000 due to a trade creditor.

As of November 10, 2003, cash is being depleted at the rate of approximately
$140,000 per month, excluding clinical trial costs and other non-recurring
costs estimated to aggregate approximately $75,000. The amount of cash on hand
is sufficient to meet our operating expenses through at least December 31,
2004. Without a significant change in sales, our only source of significant
additional funds to meet future operating expenses is the sale of the Companys
securities.

There are significant uncertainties that negatively affect our operations.
These are principally related to (i) the lack of US FDA approval and absence of
any strong 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 into 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 in Taiwan and Hong Kong, Australia and Korea. In addition,
the lack of a market for our PyloriProbe product due to changes in
technology and the presence of improved competitive products in the United
States has led us to conclude that our investment in this product and any
inventory on hand will have no further realizable value domestically.
Moreover, there is no assurance as to when, if ever, we will be able to conduct
our operations on a profitable basis. The Companys limited sales to date and
the lack of any purchase requirements in the existing distribution agreements,
makes it impossible to identify any trends in our business prospects.

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 that
must be satisfied.

Additionally, in order to ensure that sufficient funds are available to pay
ongoing general and administrative expenses, the Company is currently seeking
to raise additional funds through the potential sale of additional securities
in a private placement offering. The potential impact of either an adverse
determination in the action brought by AcuVector Group, Inc., poor results in
ongoing German trials or an adverse response from the FDA could materially
impact the Companys ability to obtain the additional working capital. There
is no assurance the Company will be able to generate sufficient revenues or
obtain sufficient funds when needed, or whether such funds, if available, will
be obtained on terms satisfactory to the Company. In addition, the filing of
the AcuVector lawsuit may have an effect on our ability to license the CIT
technology.

As reported in our financial statements and in the report of our auditors for
the year ended December 31, 2002, there was a substantial doubt as to our
ability to continue as a going concern. The financial statements did not
include any adjustments related to recoverability and classification of assets
and liabilities that might result should we be unable to continue as a going
concern. As described in this section, the Company has taken several steps
through November 10, 2003 and significantly increased cash on hand to reduce
this risk in the future.

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Critical Accounting Policies

Our Unaudited 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 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 one of the largest assets 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

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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 September 30, 2003 Compared to Three Months Ended September
30, 2002

Net Revenue. During the three months ended September 30, 2003, the Company
generated $73,764 from product sales compared to revenues from product sales
for the three months ended September 30, 2002 of $20,748, an increase of
$53,016, or 255.5%. The increase is primarily due to increased orders for
Ketone strips, our principal OEM product. Revenues from sales of OEM products
for the three months ended September 30, 2003 were $56,831 compared to $19,640
for the prior year period, an increase of $37,191, or 189.4%. Ketone strips
comprised 98.6% of our OEM sales, and 76.0% of our total sales in the three
months ended September 30, 2003. 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 September 30, 2003 were $16,933 compared
to $1,108 for the three months ended September 30, 2002, an increase of
$15,825, or 1,428.3%. Domestic customers accounted for $383, or 2.3%, and
foreign customers accounted for $16,550, or 97.7%, of the DR-70® revenues in
the three months ended September 30, 2003. Of the DR-70® revenues in the
three months ended September 30, 2002, $692 was from domestic customers and
$416 was from foreign customers.

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.

Gross Profit. Gross profit on product sales increased by $30,344, or 286.1%,
to $40,948 for the three months ended September 30, 2003, compared to $10,604
for the period ended September 30, 2002. The increase in gross profit was due
to an increase in both OEM and DR-70® product sales. The Companys gross
profit percentage was 55.5% for the three months ended September 30, 2003 as
compared to 51.1% for the prior year period. The increase 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 the DR-70® sales in the three months ended September 30, 2003
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
September 30, 2003. 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 September 30, 2003. Pricing of our products and gross
profit on OEM product sales could change due to competitive forces and sales of
DR-70® could be negatively impacted by either further delay in receipt of FDA
approval or poor market acceptance of the Companys product.

Research and Development.Research and development expenses for the three
months ended September 30, 2003 were $149,532 as compared to $69,247 for the
three months ended September 30, 2002. The increase of $80,285 was a result of
(i) the continuation of the clinical trials related to our DR-70® product, at
a total cost of $131,782 during the three months ended September 30, 2003,
compared to clinical study costs of $19,782 in the prior year
period; offset by (ii) a decrease in the services provided by our principal
research consultant and other costs in the amount of $31,715 due to the general
attempt to reduce cash outlays and reduced needs during the period.

General and Administrative Expenses. General and administrative expenses for
the three months ended September 30, 2003, increased by $81,260 from $483,501
for the three months ended September 30, 2002 to $564,761 for the three months
ended September 30, 2003, primarily as a result of an increase in consulting
expenses of $58,208; an

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increase in stock exchange fees of $22,500; an increase
in shareholder services of $44,106, primarily due to the costs associated with
our annual meeting in August 2003; offset by a decrease in payroll, taxes and
benefits of $36,520 for the three months ended September 30, 2003 as compared
to the same period for 2002. The significant components of general and
administrative expenses for the three months ended September 30, 2003 primarily
consist of payroll, taxes and benefits; consulting expenses; and professional
fees, including legal, audit and patent expenses.

Interest Income and Expense. Interest income for the three months ended
September 30, 2003 was $189, as compared to $4,081 for the three months ended
September 30, 2002. The decrease of $3,892, or 95.4%, is due to the lower
average cash balance maintained by the Company during 2003 and the lower rate
of interest earned thereon. Interest expense for the three months ended
September 30, 2003 consists of non-cash amortization of debt discount
associated with the warrants issued as part of the units in our June 2003
private placement offering in the amount of approximately $11,000, non-cash
amortization of issuance costs in the amount of approximately $30,000 and a
charge for the beneficial conversion of a convertible note into shares of
common stock in the amount of $105,000. There was no interest expense in 2002.

Net Loss and Loss from Operations.As a result of the above, in the three
months ended September 30, 2003, the Companys net loss was $818,957 or $(0.06)
per share compared to a net loss of $538,063 or $(0.06) per share for the same
period in the prior year.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September
30, 2002

Net Revenue. During the nine months ended September 30, 2003, the Company
generated $198,968 from product sales compared to revenues from product sales
for the nine months ended September 30, 2002 of $94,554, an increase of
$104,414 or 110.4%. The increase is primarily due to increased orders for
Ketone strips, our principal OEM product. Revenues from sales of OEM products
for the nine months ended September 30, 2003 were $163,850 compared to $65,120
for the prior year period, an increase of $98,730 or 151.8%. Ketone strips
comprised 96.0% of our OEM sales, and 79.0% of our total sales in the nine
months ended September 30, 2003. 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 nine months ended September 30, 2003 were $35,118 compared
to $29,434 for the nine months ended September 30, 2002, an increase of $5,684
or 19.1%. Of the DR-70® revenues in the nine months ended September 30,
2003, $1,149 was from domestic customers and $33,969 was from foreign
customers. Of the DR-70® revenues in the nine months ended September 30,
2002, $3,102 was from domestic customers and $26,332 was from foreign
customers.

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.

Gross Profit. Gross profit on product sales increased by $58,260 or 115.7% to
$108,605 for the nine months ended September 30, 2003, compared to $50,345 for
the period ended September 30, 2002. The increase in gross profit was
principally due to an increase in OEM product sales. The Companys gross
profit percentage was 54.6% for the nine months ended September 30, 2003 as
compared to 53.2% for the prior year period. The slight increase is due to the
relative changes in product mix.

Research and Development.Research and development expenses for the nine
months ended September 30, 2003 were $482,152 as compared to $310,005 for the
nine months ended September 30, 2002. The increase of $172,147 was a result of
(i) the resumption of the clinical trials and acquisition of cancer samples
primarily related to our DR-70® product, at a total cost of $417,824 during
the nine months ended September 30, 2003, compared to clinical
study costs of $109,653 in the prior year period; offset by (ii) a decrease in
the services provided by our principal research consultant in the amount of
$125,953 due to the general attempt to reduce cash outlays and reduced needs
during the period.

General and Administrative Expenses. General and administrative expenses for
the nine months ended September 30, 2003, decreased by $1,332,762 from
$2,807,476 for the nine months ended September 30, 2002 to $1,474,714 for the
nine months ended September 30, 2003, primarily as a result of a decrease in
consulting expenses of $791,785; the fact that there were no aborted offering
costs as compared to $297,499 of such costs for the prior year; a decrease in
stock exchange fees of $41,500; a decrease in legal costs of $150,125; and a
decrease in payroll, taxes and benefits of

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$79,990 for the nine months ended
September 30, 2003 as compared to same period in 2003 . The significant
components of general and administrative expenses for the nine months ended
September 30, 2003 primarily consist of payroll, taxes and benefits; consulting
expenses; and professional fees, including legal, audit and patent expenses.

Interest Income and Expense. Interest income for the nine months ended
September 30, 2003 was $718, as compared to $20,801 for the nine months ended
September 30, 2002. The decrease of $20,083, or 96.6%, is due to the lower
average cash balance maintained by the Company during 2003 and lower interest
rates earned. Interest expense for the three months ended September 30, 2003
consists of non-cash amortization of debt discount associated with the warrants
issued as part of the units in our private placement offering in the amount of
approximately $101,000, non-cash amortization of issuance costs in the amount
of approximately $270,000, a charge for the beneficial conversion of a
convertible note into shares of common stock in the amount of $105,000 and
interest paid in shares of common stock in the amount of approximately $4,000.
There was no interest expense in 2002.

Net Loss and Loss from Operations.As a result of the above, in the nine
months ended September 30, 2003, the Companys net loss was $2,328,010 or
$(0.21) per share compared to a net loss of $3,046,335 or $(0.36) per share for
the same period in the prior year.

Assets and Liabilities

At September 30, 2003, the Company had total assets of $3,191,921 compared to
total assets of $2,434,303 at December 31, 2002. Cash was $1,274,396 as of
September 30, 2003, an increase of $926,644 (266.5%) from the $347,752 cash on
hand as of December 31, 2002. Cash used in operations was $1,363,086 and cash
provided by financing activities from the sale of common stock and units and
the exercise of convertible notes was $2,289,730, net of cash costs of
$455,611.

Accounts receivable was nil at September 30, 2003, a decrease of $88,390
(100.0%) from the $88,390 at December 31, 2002 due principally to a single
large order for OEM products in 2002 which was shipped just prior to year end
and collected during the nine months ended September 30, 2003. Inventories
decreased $18,453 (22.2%), to $64,521, from the $82,974 at December 31, 2002.
The decrease in inventories is attributable to use of materials for clinical
trials.

Net fixed assets totaled $24,079 at September 30, 2003 compared to $31,570 at
December 31, 2002, a decrease of $7,491 (23.7%). The decrease is fully
attributable to depreciation and amortization for the nine months ended
September 30, 2003.

Total liabilities at September 30, 2003 were $ 400,801, an increase of $157,216
from the $243,585 at December 31, 2002. Accounts payable and accrued
liabilities were $307,212 at September 30, 2003, an increase of $162,524
(221.8%) from the $144,688 at December 31, 2002. The increase is primarily due
to accrued expenses related to the offering and the negotiated deferred payment
terms for $52,000 due to directors and $54,000 due to a trade creditor. Accrued
payroll totaled $93,589 at September 30, 2003, an increase of $7,041 compared
to $86,548 at December 31, 2002 primarily as a result of the deferral of
payment of a portion of management compensation.

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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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 a date
(the Evaluation Date) within 90 days before the filing date of this quarterly
report, that as of the Evaluation Date, the Companys disclosure controls and
procedures were effective and designed to ensure that material information
relating to the Company would be made known to them by others.

Changes in Internal Controls

There have been no significant changes in the Companys internal controls or in
other factors that could significantly affect those controls subsequent to the
Evaluation Date.

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PART II - OTHER INFORMATION




Item 1. Legal Proceedings

Inapplicable.




Item 2. Changes in Securities and Use of Proceeds

October 23, 2002, the board of directors authorized the issuance of 50,000
shares of common stock per month to International Consulting Partners, a
consultant, for further financial consulting services to be rendered thereafter
on a month to month basis. On January 31, 2003, the Company issued an
aggregate of 99,999 shares of common stock (33,333 shares per month for the
three months ended January 31, 2003) for consulting services to the same
consultant pursuant to the prior authorization. The 66,666 shares for services
rendered in 2002 were valued at $30,600, and the 33,333 for services rendered
in 2003 were valued at $16,433 based upon the trading price of the common stock
on the dates earned, and these amounts were charged to consulting expense.
This consulting arrangement was extended for one additional month and 33,333
shares were issued for services rendered in February 2003 and valued at $11,333
based upon the trading price of the common stock on the date earned, and this
amount was charged to consulting expense. The common stock was issued pursuant
to Section 4(2) of the Securities Act. There was no underwriter involved in
this issuance.

Also on October 23, 2002, the board of directors authorized a proposed
Regulation S offering of up to 1,575,000 shares of common stock (Regulation S
Offering) at a price of 70% of the current market price at the time of sale,
subject to a floor price of no less than $.35 per share, the payment of
commissions of 10% of the sales price in cash, non-accountable expenses of 3%
of the sales price, and warrants equal to 10% of the shares sold in the
Regulation S Offering. The Company also authorized a companion offering in
the United States under Regulation D (Regulation D Offering) under the same
terms and conditions as the Regulation S Offering. On February 24, 2003,
50,000 shares were sold in the Regulation D Offering at a price of $0.40 per
share, generating net proceeds of $17,400, net of issuance costs of $2,600.
PCNA, S.A., a Swiss corporation, acted as our placement agent in connection
with this offering. In addition to the cash compensation, the placement agent
received common stock purchase warrants for 5,000 shares.

On March 21, 2003, the board of directors authorized the sale of units
consisting of unsecured convertible notes and warrants to purchase common
stock, at or above the market price of the common stock to accredited and
non-U.S. investors only in a private placement. The Company raised $1,321,000
in gross proceeds from this offering and the Company is hopeful that an
additional amount of up to $1.6 million in gross proceeds from the exercise of
the warrants will be received. Under the terms of the offering, investors
received one unit for each $1,000 invested. Each unit generally consisted of
a 5% convertible promissory note due June 30, 2003, in the principal amount of
$1,000, generally convertible into 2,598 shares of the Companys common stock
plus a warrant to purchase 2,598 shares of the Companys common stock at an
exercise price of $0.385 each, expiring on December 31, 2005. The notes were
generally automatically converted into common shares upon the approval of the
listing of the shares issuable on conversion of the notes by the American
Stock Exchange. On June 18, 2003 approximately $878,000 of the convertible
notes were converted into 2,265,655 shares of our common stock, including
10,424 shares in respect of the interest earned on the notes. On July 8,
2003, another $340,000 of convertible notes were converted into 881,823 shares
of our common stock and on September 29, 2003, the remaining $103,000 of
convertible notes were converted into 268,125 shares of our common stock.

The Company registered with the Securities and Exchange Commission on Form S-3
the shares of the Companys common stock issued upon conversion of the notes
and issuable upon exercise of the warrants, which registration statement
became effective on July 31, 2003. The Company was contractually required to
issue 5% additional warrants to each investor entitling them to purchase an
aggregate of 170,234 shares of common stock at an exercise price of generally
$0.385 each, expiring on December 31, 2005, because the registration statement
was not declared effective prior to July 1, 2003.

In connection with its fundraising efforts, the Company utilized the services
of two placement agents, PCNA, S.A., a Swiss corporation and Gestibroker
Consulting and Financial Management S.A., a Swiss corporation and paid a total
cash compensation of 13% of funds raised plus issued warrants to purchase
common shares equal to 10% of the aggregate number of shares of common stock
issued or issuable on conversion of the promissory notes, totaling 340,479
warrants at an exercise price of generally $0.385 per share, expiring December
31, 2005. In addition, the

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Company issued warrants to purchase 200,000 shares of common stock at an
exercise price of $0.385 per share expiring May 31, 2005 to two investors.
The common stock was issued pursuant to Section 4(2) of the Securities Act.

On March 23, 2003 the board of directors authorized the issuance of up to
500,000 shares of common stock to First London Finance, Ltd, a British Virgin
Islands company, for advisory services in connection with the offering. Under
the terms of the investment advisory agreement, the Company was required to
issue 400,000 shares of common stock as a success fee for the unit offering.
On June 18, 2003, the Company issued 400,000 of the shares to First London
Finance and valued 200,000 of the shares at $57,800 on May 21, 2003, the date
the first 200,000 shares were earned, and 200,000 shares at $95,200 on June
17, 2003, the date an additional 200,000 shares were earned. The Company was
required to issue to First London Finance an additional 100,000 shares of
common stock if $750,000 in gross proceeds was received from the exercise of
the warrants included in the units within the 90-day period beginning on
August 1, 2003 and ending on October 29, 2003. These 100,000 shares were
issued on October 29, 2003 and valued at $123,250 based upon the trading price
of our stock on October 17, 2003, the date the shares were earned. The common
stock issued to First London Finance was issued pursuant to Section 4(2) of
the Securities Act.

On June 11, 2003, the board of directors authorized the issuance of 150,000
shares of common stock to International Consulting Group Ltd., a consultant
for financial advisory services, and the Company issued the shares on July 2,
2003. The shares were valued at $66,300 based upon the trading price of the
common stock on June 11, 2003, the date the shares were earned, and were
charged to consulting expense in the period as if issued on June 11, 2003.
The common stock was issued pursuant to Section 4(2) of the Securities Act.
There was no underwriter involved in this issuance.

On September 15, 2003, the board of directors authorized the issuance of
130,000 shares of common stock to Boston Financial Partners, Inc., a consultant
for financial advisory services, issued the shares on September 29, 2003. The
shares were valued at $182,375 based upon the trading price of the common stock
on September 16, 2003, the date of signing of the agreement. The services were
performed during the two-month period of September and October 2003, and
accordingly, the $182,375 will be recorded to general and administrative
expense over such period. For the period ended September 30, 2003, the Company
recorded $91,163 of general and administrative expense and the unamortized
balance of $91,162 as of September 30, 2003 has been recorded as a prepaid
consulting expense and classified as an offset to stockholders equity which
will be expensed in fourth quarter 2003. 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 August 21, 2003, 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:

|                               |  |            |           |             |  |                 |        | 
|------------------------------ |  | ---------- | --------- | ----------- |  | --------------- | ------ | 
|                               |  |            |           |             |  | Shares Withheld
|Nominee/Director               |  | Shares for |           | from Voting
|                               |  |            |           |            
|Gary L. Dreher                 |  |            | 5,508,558 |             |  |                 | 4,103  | 
|Douglas C. MacLellan           |  |            | 5,481,819 |             |  |                 | 30,842 | 
|William M. Thompson, III, M.D. |  |            | 5,508,558 |             |  |                 | 4,103  | 
|Edward R. Arquilla, M.D.       |  |            | 5,508,558 |             |  |                 | 4,103  | 
|Marvin E. Rosenthale           |  |            | 5,508,558 |             |  |                 | 4,103  | 

The stockholders authorized the issuance of up to 3,000,000 shares of common
stock at a discount of 25% below current market prices by a vote of 5,471,885
shares in favor, 39,918 shares against and 10,804 shares abstained from voting.

The stockholders ratified the appointment of Corbin & Company as the Companys
independent accountants by a vote of 5,471,885 shares in favor, 33,918 shares
against and 10,804 shares abstained from voting.

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Item 5. Other Information

Inapplicable.




Item 6. Exhibits and Reports on Form 8-K

a) Exhibits

|     |  |                                                                                                                                                  
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002                                               
|     |  |                                                                                                                                                  
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002                                               
|     |  |                                                                                                                                                  
|32.1 |  | Certification of Chief Executive Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. §1350
|     |  |                                                                                                                                                  
|32.2 |  | Certification of Chief Financial Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. §1350

b) Reports on Form 8-K



| |                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On July 2, 2003, the Company filed a Form 8-K to report the
completion of the unit offering of 5% convertible notes and warrants 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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SIGNATURES

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

|                         |  |            |  |                                          
|------------------------ |  | ---------- |  | -----------------------------------------
|                         |  | AMDL, Inc.
|                         |  |           
|Dated: November 13, 2003 |  | By:        |  | /s/ Gary L. Dreher                       
|                         |  |            |  |                                          
|                         |  |            |  | GARY L. DREHER, President                
|                         |  |            |  |                                          
|Dated: November 13, 2003 |  | By:        |  | /s/ Arthur S. Rosten                     
|                         |  |            |  |                                          
|                         |  |            |  | ARTHUR S. ROSTEN, Chief Financial Officer

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EXHIBIT INDEX

|        |  |                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                  
|No.     |  | Description                                                                                                                                      
|        |  |                                                                                                                                                  
|31.1    |  | Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002                                               
|        |  |                                                                                                                                                  
|31.2    |  | Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002                                               
|        |  |                                                                                                                                                  
|32.1    |  | Certification of Chief Executive Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. §1350
|        |  |                                                                                                                                                  
|32.2    |  | Certification of Chief Financial Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. §1350