##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   AMDL, Inc.
  Delaware
    
    33-0413161(State or other jurisdiction
of incorporation or organization)
    
    (IRS Employer
Identification No.)
 
  (714) 505-4460
 
   o x
  x o




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##### 



PAGEPART I  FINANCIAL INFORMATION
    
    
    2Item 1. Financial StatementsBalance Sheet at June 30, 2006 (unaudited)
    
    
    2Unaudited Statements of Operations for the three
and six months ended June 30, 2006 and 2005
    
    
    3Unaudited Statements of Cash Flows for the six
months ended June 30, 2006 and 2005
    
    
    4Notes to Condensed Financial Statements (unaudited)
    
    
    5Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    15Item 3. Controls and Procedures
    
    
    19PART II  OTHER INFORMATION
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  1




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 AMDL, INC.
 
 BALANCE SHEET
  June 30,2006(Unaudited)Current assets:Cash and cash equivalents
    
    $
    1,863,492Inventories
    
    
    78,167Prepaid consulting
    
    
    377,032Other prepaid expenses
    
    
    352,667Total current assets
    
    
    2,671,358Intellectual property, net
    
    
    1,508,333Equipment, net
    
    
    15,789Other assets
    
    
    5,757$
    4,201,237LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    302,080Accrued payroll and related expenses
    
    
    109,280Total current liabilities
    
    
    411,360Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value; 10,000,000
shares authorized; no shares issued and
outstanding
    
    
    Common stock, $0.001 par value; 50,000,000 shares
authorized; 33,487,096 shares issued and
outstanding
    
    
    33,487Additional paid in capital
    
    
    34,029,092Accumulated deficit
    
    
    (30,272,702
    )Total stockholders equity
    
    
    3,789,877$
    4,201,237
  2




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AMDL, INC.
 
 STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net revenues
    
    $
    17,725
    
    
    $
    16,550
    
    
    $
    33,100
    
    
    $
    39,425Cost of sales
    
    
    6,717
    
    
    
    2,589
    
    
    
    12,489
    
    
    
    7,417Gross profit
    
    
    11,008
    
    
    
    13,961
    
    
    
    20,611
    
    
    
    32,008Operating expenses:Research and development
    
    
    71,597
    
    
    
    77,174
    
    
    
    119,245
    
    
    
    158,618General and administrative
    
    
    639,183
    
    
    
    551,813
    
    
    
    1,521,053
    
    
    
    1,052,770710,780
    
    
    
    628,987
    
    
    
    1,640,298
    
    
    
    1,211,388Loss from operations
    
    
    (699,772
    )
    
    
    (615,026
    )
    
    
    (1,619,687
    )
    
    
    (1,179,380
    )Other income:Interest income
    
    
    6,698
    
    
    
    8,450
    
    
    
    14,700
    
    
    
    17,826Net loss
    
    $
    (693,074
    )
    
    $
    (606,576
    )
    
    $
    (1,604,987
    )
    
    $
    (1,161,554
    )Basic and diluted loss
per share
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.05
    )
    
    $
    (0.05
    )Weighted average common
shares outstanding,
basic and diluted
    
    
    32,951,138
    
    
    
    23,763,225
    
    
    
    30,315,429
    
    
    
    23,632,086
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AMDL, INC.
 
 STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (1,604,987
    )
    
    $
    (1,161,554
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    54,325
    
    
    
    53,520Fair market value of options granted to employees for services
    
    
    240,300
    
    
    
    Fair market value of common stock and warrants issued for services
    
    
    292,857
    
    
    
    90,850Changes in operating assets and liabilities:Inventories
    
    
    504
    
    
    
    (17,378
    )Prepaid expenses
    
    
    (228,996
    )
    
    
    31,422Accounts payable and accrued expenses
    
    
    204,745
    
    
    
    (11,869
    )Accrued payroll and related expenses
    
    
    9,284
    
    
    
    20,465Net cash used in operating activities
    
    
    (1,031,968
    )
    
    
    (994,544
    )Cash flows used in investing activities:Purchase of equipment
    
    
    (2,797
    )
    
    
    (9,179
    )Cash flows from financing activities:Proceeds from issuance of common stock,
net of offering costs of $354,571 in 2006
    
    
    1,457,924
    
    
    
    Proceeds from exercise of warrants
    
    
    42,241Net cash provided by financing activities
    
    
    1,500,165Net change in cash and cash equivalents
    
    
    465,400
    
    
    
    (1,003,723
    )Cash and cash equivalents at beginning of period
    
    
    1,398,092
    
    
    
    2,605,537Cash and cash equivalents at end of period
    
    $
    1,863,492
    
    
    $
    1,601,814Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    
 
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AMDL, INC.
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 NOTE 1  MANAGEMENTS REPRESENTATION
   NOTE 2  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  ®
 Going Concern
 ® ®
 ®
  5




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
  Revenue Recognition
  Advertising
  Research and Development
  Cash Equivalents
  Inventories
  Equipment
   6




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 Intangible Assets
   Impairment of Long-Lived Assets
 Accounting for the
Impairment or Disposal of Long-Lived Assets
 
    
    significant under performance relative to expected historical or projected future operating results;
    
    market projections for cancer research technology;
    
    its ability to obtain patents, including continuation patents, on technology;
    
    significant changes in its strategic business objectives and utilization of the assets;
    
    significant negative industry or economic trends, including legal factors; and
    
    potential for strategic partnerships for the development of its patented technology.
  Issuance of Stock for Non-Cash Consideration
  7




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or
in Conjunction with Selling Goods or Services, Accounting Recognition
for Certain Transactions Involving Equity Instruments Granted to Other than Employees.
 Risks and Uncertainties
 â
 ® ® ® ® ® ® ® ®
  Accounting for Stock-Based Compensation
 Accounting for Stock Issued to Employees
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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 Accounting for Stock Based Compensation, , Accounting for
Stock-Based Compensation  Transaction and Disclosure 
 Share Based Payments
    2006
    
    
    2005Dividend yield
    
    
    
    %
    
    
    
    %Expected volatility
    
    
    108
    %
    
    
    83
    %Risk-free interest rate
    
    
    4.76
    %
    
    
    3.12
    %Expected lives
    
    1.0 year
    
    1.0 year
  9




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
    For the Three Months Ended
    
    
    For the Six Months EndedJune 30, 2005
    
    
    June 30, 2005Net Loss as reported
    
    $
    (606,576
    )
    
    $
    (1,161,554
    )Deduct: Total stock-based employee compensation
under fair value based method for all awards,
net of related tax effects
    
    
    
    
    
    
    (72,000
    )Proforma net loss
    
    $
    (606,576
    )
    
    $
    (1,233,554
    )Basic and diluted loss per share   as reported
    
    $
    (0.03
    )
    
    $
    (0.05
    )Basic and diluted loss per share  pro forma
    
    $
    (0.03
    )
    
    $
    (0.05
    )
  Weighted AverageNumber
    
    
    
    
    
    
    Exercise Price PerOf Shares
    
    
    Price Per Share
    
    
    ShareOptions outstanding at December 31, 2005
    
    
    4,083,185
    
    
    
    
    
    
    $
    1.40Granted
    
    
    890,000
    
    
    $
    0.57
    
    
    $
    0.57Options outstanding at June 30, 2006
    
    
    4,973,185
    
    
    
    
    
    
    $
    1.25
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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted-
    
    
    
    
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    Aggregate
    
    
    Number of
    
    
    Average
    
    
    AggregateRange of
    
    
    Number
    
    
    Contractual
    
    
    Exercise
    
    
    Intrinsic
    
    
    Shares
    
    
    Exercise
    
    
    IntrinsicExercise Prices
    
    
    of Shares Outstanding
    
    
    Life (years)
    
    
    Price
    
    
    Value
    
    
    Exercisable
    
    
    Price
    
    
    Value$0.48
    
    $
    0.57
    
    
    
    1,585,000
    
    
    
    3.10
    
    
    $
    0.53
    
    
    $
    189,350
    
    
    
    1,585,000
    
    
    $
    0.53
    
    
    $
    189,350$0.83
    
    $
    0.97
    
    
    
    775,000
    
    
    
    3.16
    
    
    $
    0.89
    
    
    
    
    
    
    
    775,000
    
    
    $
    0.89
    
    
    
    $1.10
    
    $
    1.23
    
    
    
    1,911,185
    
    
    
    2.65
    
    
    $
    1.19
    
    
    
    
    
    
    
    1,911,185
    
    
    $
    1.19
    
    
    
    $2.25
    
    $
    2.39
    
    
    
    227,000
    
    
    
    0.60
    
    
    $
    2.28
    
    
    
    
    
    
    
    227,000
    
    
    $
    2.28
    
    
    
    $4.00
    
    
    
    
    
    
    475,000
    
    
    
    0.17
    
    
    $
    4.00
    
    
    
    
    
    
    
    475,000
    
    
    $
    4.00
    
    
    
    4,973,185
    
    
    
    
    
    
    $
    1.25
    
    
    $
    189,350
    
    
    
    4,973,185
    
    
    $
    1.25
    
    
    $
    189,350
  Basic and Diluted Loss Per Share
  Income Taxes
 Accounting for Income Taxes
 Use of Estimates
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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
 Comprehensive Income
 Reporting Comprehensive Income
 Segments of an Enterprise and Related Information
  Concentration of Risk
  Recent Accounting Pronouncements
 Accounting Changes and Error Corrections. Accounting
Changes Reporting Accounting Changes in Interim Financial Statements
 NOTE 3  FINANCING ACTIVITIES
    12




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
       NOTE 4  COMMITMENTS AND CONTINGENCIES
 Litigation
  13




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AMDL, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 For the Three and Six Months Ended June 30, 2006 and 2005
    Indemnities and Guarantees
  14




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Item 2. Managements Discussion and Analysis or Plan of Operation
 Liquidity and Capital Resources
   ® ®
 ®
 ® ®
    15




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Critical Accounting Policies
   Allowance for Doubtful Accounts
 Inventory
 Sales Allowances.
 Valuation of Intangibles
 16




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Deferred Taxes
 Litigation Accounting for
Contingencies
 Stock-Based Compensation Expense. Share-Based Payment, Accounting for
Stock-Based Compensation
  Results of Operations
 Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005
 Net Revenues ®
 17




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® ® ®
 ® ®
 Research and Development. ®
 General and Administrative Expenses
 Net Loss and Loss from Operations.
 Results of Operations
 Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005
 Net Revenues ®
 ® ® ®
 ® ®
 Research and Development. ®
 General and Administrative Expenses
 18




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Net Loss and Loss from Operations.
 Assets and Liabilities
   Forward Looking Statements
  
 Item 3. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  19




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PART II  OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 2. Unregistered Sales of Equity Securities Use of Proceeds
    th
   20




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Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
  Item 5. Other Information
  Item 6. Exhibits
     21
    Table of Contents   EXHIBIT INDEX
 Exhibit
    
    Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a(/15d-14(a) Certification of Chief Financial Officer32.1
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. §1350 of Chief Financial Officer
 22