##### 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
 For the quarterly period ended March 31, 2007
 o
    
    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
 (714) 505-4460
 Not Applicable
  o þ
  þ o




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##### 



PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Unaudited Condensed Consolidated Balance Sheet at March 31, 2007
    
    
    3Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended
March 31, 2007 and 2006
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    22Item 3A. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults Upon Senior Securities
    
    
    30Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    30SIGNATURES
    
    
    31EXHIBIT
INDEX
    
    
    32EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 AMDL, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 March 31,2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    468,575Accounts receivable, net
    
    
    1,276,464Inventories
    
    
    638,143Prepaid consulting
    
    
    1,026,560Other prepaid expenses and current assets
    
    
    1,072,467Total current assets
    
    
    4,482,209Property and equipment, net
    
    
    8,955,995Intangible assets, net
    
    
    3,805,010Other assets
    
    
    1,640,600Total assets
    
    $
    18,883,814LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    2,922,158Current portion of notes payable
    
    
    3,060,662Total current liabilities
    
    
    5,982,820Notes payable, net of current portion
    
    
    1,606,641Total liabilities
    
    
    7,589,461Stockholders equity:Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued and outstanding
    
    
    Common stock, $0.001 par value; 100,000,000 shares authorized; 10,195,697 shares issued and
10,095,697 shares outstanding
    
    
    10,096Additional paid-in capital
    
    
    47,209,931Accumulated other comprehensive loss
    
    
    (5,125
    )Accumulated deficit
    
    
    (35,920,549
    )Total stockholders equity
    
    
    (11,294,353
    )$
    18,883,814
 
 3




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AMDL, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
 LOSS
 (Unaudited)
 Three Months EndedMarch 31,2007
    
    
    2006Net revenues
    
    $
    1,424,179
    
    
    $
    15,375Cost of sales
    
    
    697,310
    
    
    
    5,772Gross profit
    
    
    726,869
    
    
    
    9,603Operating expenses:Research and development
    
    
    11,776
    
    
    
    47,648General and administrative
    
    
    1,995,635
    
    
    
    881,8702,007,411
    
    
    
    929,518Loss from operations
    
    
    (1,280,542
    )
    
    
    (919,915
    )Other income (expense):Interest income
    
    
    3,837
    
    
    
    8,002Interest expense
    
    
    (90,857
    )
    
    
    Total other income (expense), net
    
    
    (87,020
    )
    
    
    8,002Loss before provision for income taxes
    
    
    (1,367,562
    )
    
    
    (911,913
    )Provision for income taxes
    
    
    17,844
    
    
    
    Net loss
    
    
    (1,385,406
    )
    
    
    (911,913
    )Other comprehensive loss:Foreign currency translation gain
    
    
    16,603
    
    
    
    Comprehensive loss
    
    $
    (1,368,803
    )
    
    $
    (911,913
    )Basic and diluted loss per common share
    
    $
    (0.14
    )
    
    $
    (0.16
    )Weighted average common shares outstanding  basic and diluted
    
    
    10,095,697
    
    
    
    5,541,505
 
 4




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AMDL, INC
 
 CONDENSED STATEMENTS OF CASH FLOWS
 THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 (Unaudited)
 March 31, 2007
    
    
    March 31, 2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,385,406
    )
    
    $
    (911,913
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    179,828
    
    
    
    27,091Loss on disposal of equipment
    
    
    3,797
    
    
    
    Fair market value of common stock, warrants
and options issued to consultants for services
    
    
    697,168
    
    
    
    142,857Fair market value of options granted to employees
and directors for services
    
    
    
    
    
    
    240,300Changes in
operating assets and liabilities:Accounts receivable
    
    
    255,471
    
    
    
    Inventories
    
    
    102,515
    
    
    
    (5,889
    )Prepaid expenses and other current assets
    
    
    (923,806
    )
    
    
    (108,066
    )Accounts payable and accrued expenses
    
    
    (64,097
    )
    
    
    71,433Customer deposits
    
    
    10,835
    
    
    
    9,450Net cash used in operating activities
    
    
    (1,123,695
    )
    
    
    (534,737
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (9,306
    )
    
    
    (1,812
    )Net cash used in investing activities
    
    
    (9,306
    )
    
    
    (1,812
    )Effect of exchange rates on cash and cash equivalents
    
    
    16,603
    
    
    
    Net decrease in cash
    
    
    (1,116,398
    )
    
    
    (536,549
    )Cash, beginning of the period
    
    
    1,584,973
    
    
    
    1,398,092Cash, end of the period
    
    $
    468,575
    
    
    $
    861,543SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest
    
    $
    90,719
    
    
    $
    Cash paid during the period for income taxes
    
    $
    800
    
    
    $
    SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:Value of shares agreed to be issued for prepaid consulting services
    
    $
    1,076,100
    
    
    $
    
  5




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AMDL, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 NOTE 1  MANAGEMENTS REPRESENTATION
   NOTE 2  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AMDL, Inc.
  Acquisition of JPI
    6




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 Business
Combinations,
  Fair ValuePurchase consideration:Transaction costs, primarily legal and accounting
    
    $
    592,896Estimated fair value of common stock issued
    
    
    7,929,000Estimated fair value of options to purchase common stock
    
    
    595,000$
    9,116,896Allocation:Tangible assets acquired:Cash
    
    $
    197,140Accounts receivable
    
    
    1,440,680Inventories
    
    
    550,623Property and equipment
    
    
    9,268,300Land use rights
    
    
    1,200,769Prepayments, primarily product licenses
    
    
    1,292,531Identifiable intangible assets acquired:Non-compete agreements
    
    
    382,389Customer relationships
    
    
    254,926Trade name and logo
    
    
    637,317Total assets acquired
    
    
    15,224,675Liabilities assumed:Current liabilities
    
    
    (1,440,373
    )Current and long-term debt
    
    
    (4,667,406
    )Total liabilities assumed
    
    
    (6,107,779
    )$
    9,116,896
   For the Three MonthsEndedMarch 31, 2006Net revenues
    
    $
    1,226,496Net loss
    
    $
    (615,367
    )Basic and diluted loss per share
    
    $
    (0.07
    )Weighted average common shares outstanding  basic and diluted
    
    
    8,284,505
 Going Concern
 ®
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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 ®
 ®
       Reverse Stock Split
  Principles of Consolidation
  Revenue Recognition
 Revenue Recognition in Financial Statements
 8




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
  How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross Versus Net Presentation)
 Accounting for Shipping and Handling Revenue, Fees and Costs
 Accounting for Shipping and Handling Fees and Costs.
 Other Comprehensive Income and Foreign Currency Translation
 Reporting Comprehensive Income
   Research and Development
  Cash Equivalents
  Inventories
  9




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 Property and Equipment
  Office equipment
    
    3 to 10 yearsBuildings and improvements
    
    5 to 30 yearsMachinery and equipment, including lab equipment
    
    5 to 15 years
  Intangible Assets
  Intellectual Property
  Land Use Rights
  Non-Compete Agreements
  Customer Relationships
  Trade Name and Logo
  10




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 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;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
   Accounting for Stock-Based Compensation
  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.
 11




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
   Share-Based Payment Accounting for Stock Issued to Employees,
  Accounting For Stock-Based
Compensation
 Summary of Assumptions and Activity
  2007
    
    2006Dividend yield
    
    
    N/A
    
    
    
    Expected volatility
    
    
    N/A
    
    
    
    108
    %Risk-free interest rate
    
    
    N/A
    
    
    
    4.76
    %Expected term
    
    
    N/A
    
    
    1.0 year
 12




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
   Weighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Exercise
    
    
    Term
    
    
    Intrinsicof Shares
    
    
    Price
    
    
    (Years)
    
    
    ValueOptions outstanding at January 1, 2007
    
    
    1,562,637
    
    
    $
    4.35
    
    
    
    3.35Granted
    
    
    
    
    
    $
    Expired/forfeited
    
    
    (35,400
    )
    
    $
    11.25Exercised
    
    
    
    
    
    $
    Options outstanding and exercisable
at March 31, 2007
    
    
    1,527,237
    
    
    $
    4.50
    
    
    
    3.15
    
    
    $
    276,401
    Basic and Diluted Loss Per Share
  Income Taxes
 Accounting for Income Taxes.
 13




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
  Value Added Tax Payable
  Use of Estimates
  Risks and Uncertainties
     14




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 Operations in China
    Concentration of Risk
  Customers
    Fair Value of Financial Instruments
 Disclosures About Fair Value of
Financial Instruments,
 Recent Accounting Pronouncements
  15




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
  Fair Value Measurements
 NOTE 3  SEGMENT REPORTING
 Disclosures about Segments of an Enterprise and Related
Information.
  China
    
    U.S.
    
    TotalNet revenue
    
    $
    1,410,029
    
    
    $
    14,150
    
    
    $
    1,424,179Gross profit
    
    $
    715,299
    
    
    $
    11,570
    
    
    $
    726,869Depreciation
    
    $
    101,150
    
    
    $
    1,816
    
    
    $
    102,966Amortization
    
    $
    51,862
    
    
    $
    25,000
    
    
    $
    76,862Interest expense
    
    $
    90,857
    
    
    $
    
    
    
    $
    90,857Net income (loss)
    
    $
    124,337
    
    
    $
    (1,509,743
    )
    
    $
    (1,385,406
    )Identifiable assets
    
    $
    15,937,820
    
    
    $
    2,945,994
    
    
    $
    18,883,814Capital expenditures
    
    $
    9,306
    
    
    $
    
    
    
    $
    9,306
 NOTE 4  INTANGIBLE ASSETS
  Weighted-AverageGross
    
    
    
    
    
    
    
    
    
    
    AmortizationCarrying
    
    
    Accumulated
    
    
    
    
    
    
    PeriodValue
    
    
    Amortization
    
    
    Net
    
    
    (in years)Assets subject to amortization:Intellectual property
    
    $
    2,000,000
    
    
    $
    (566,667
    )
    
    $
    1,433,333
    
    
    
    20Land use rights
    
    
    1,200,769
    
    
    
    (20,410
    )
    
    
    1,180,359
    
    
    
    33Non-compete agreements
    
    
    382,389
    
    
    
    (38,240
    )
    
    
    344,149
    
    
    
    5Customer relationships
    
    
    254,926
    
    
    
    (18,210
    )
    
    
    236,716
    
    
    
    7Trade name and logo
    
    
    637,317
    
    
    
    (26,864
    )
    
    
    610,453
    
    
    
    10$
    4,475,401
    
    
    $
    (670,391
    )
    
    $
    3,805,010
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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 NOTE 5  OTHER ASSETS
  Prepayments for product licenses
    
    $
    1,634,843Other
    
    
    5,757$
    1,640,600
  NOTE 6  ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  Shares agreed to be issued for prepaid services
    
    $
    1,098,598Accounts payable
    
    
    894,633Deposits
    
    
    107,134Value added tax
    
    
    376,093Income taxes payable
    
    
    17,085Accrued payroll and related expenses
    
    
    172,382Other accrued liabilities
    
    
    256,234$
    2,922,159
 NOTE 7  FINANCING ACTIVITIES
      17




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
      NOTE 8  NOTES PAYABLE
   Years Ending December 31,2007
    
    $
    3,060,6622008
    
    
    1,606,6414,667,303Less current portion
    
    
    (3,060,662
    )$
    1,606,641
   18




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 NOTE 9  COMMITMENTS AND CONTINGENCIES
 Operating Leases
   Litigation
      Suspension of Product Sales
   19




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
 Consulting Agreements
   
    
    commission of 2% on the amount of goods or services sold to the distributor if total
sales delivered to the distributor exceeds $63,000 in any single month;
    
    additional commission of 1% if total sales delivered to the distributor exceeds $189,000 in any single month;
    
    Special bonus of 2% on total amount of goods delivered exceeds $251,000 in any single month; and
    
    An additional allowance progressively increased with the number of distributors successfully solicited.
  Licensing Agreements
  Indemnities and Guarantees
  NOTE 10  SUBSEQUENT EVENTS
   20




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AMDL, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2007 and 2006
      21




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Item 2.
Managements Discussion and Analysis or Plan of Operation.
 Forward Looking Statements
  Overview
    Acquisition of Jade Pharmaceuticals Inc.
      22




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The Current Economic and Market Environment
  
    
    Gain access to the fastest growing pharmaceutical and consumer market in the world, China;
    
    Platform to in-license North American drugs for manufacture and sale in China and Asia;
    
    Expand DR-70(R) and CIT clinical trials, sales, and marketing into China and Asia;
    
    Create new opportunities in cancer related product development in China.
 Research and Development
    Liquidity and Capital Resources
    23




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Critical Accounting Policies
   Allowance for Doubtful Accounts
 Inventories
 Sales Allowances.
 24




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Valuation of Intangible 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;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
  Revenue Recognition. Revenue Recognition in Financial Statements
 Deferred Taxes
 Litigation Accounting for
Contingencies
 25




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Stock-Based Compensation.
 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.
  Share-Based Payment Accounting for Stock Issued to Employees
  Accounting for Stock-Based
Compensation
 Results of Operations
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
  26




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Net Revenues
 AMDL-U.S
   .
 JPI-China
   Gross Profit.
 AMDL-U.S.
 ®
 JPI-China
   Research and Development.
 AMDL-U.S.
 27




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JPI-China
  General and Administrative Expenses
 AMDL-U.S.
   JPI-China
  Net Loss.
 
 Item 3A.
Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  28




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PART II  OTHER INFORMATION
 
 Item 1.
Legal Proceedings.
  
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
      29




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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.
 (a)
    
    Exhibits31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Certification Pursuant to 18 U.S.C. § 1350 of Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. § 1350 of Chief Financial Officer
 30




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SIGNATURES
  AMDL, Inc.Dated: May 21, 2007
    
    By:
    
    /s/ Gary L. DreherGARY L. DREHER, Chief Executive Officer
 31




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Exhibit No.
    
    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
 32