<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 OR
[___] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM TO
------------- -------------
COMMISSION FILE NUMBER 33-23786-LA
AMDL, INC.
----------
(Exact name of small business issuer as specified in its charter)
DELAWARE 87-0188822
- --------------------------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14272 FRANKLIN AVE., SUITE 106
TUSTIN, CALIFORNIA 92780-7017
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(714) 505-4460
- ------------------------------------------------
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of November 11, 1996, the Registrant had outstanding 33,529,903 shares of its
common stock, par value $.001.
<PAGE>
Item 1. FINANCIAL STATEMENTS
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 generally accepted
accounting principles has been omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that the financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 1995, as filed with the Securities and Exchange
Commission.
The Financial Statements are included after Item 2.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Since inception, the Company has been in the development stage and has
devoted its resources to research and development of its proposed cancer
monitoring and other products. To date, the Company has not received any
revenues from the sale of any products. The Company has incurred losses since
inception and expects to incur a significant operating loss during 1996.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's cash expenditures have exceeded its income.
Operations have been funded principally through sales of its equity securities,
and income received from the sale of licenses, royalties and options to acquire
marketing rights. The Company expects to incur continued losses in the near-
term as it continues development of its test kit systems and undertakes clinical
trials and other actions necessary to obtain regulatory approvals. The Company
also expects to incur substantial administrative and commercialization
expenditures in the future. From December 31, 1995, to September 30, 1996, the
Company's cash and cash equivalents increased to approximately $3,945,174 as a
result of sales of the Company's securities. The Company is also hopeful of
obtaining revenues from product sales, but there is no commitment by any person
for purchase of any of these products. The Company plans to finance its cash
needs principally through additional financings. However, it is not known
whether the Company will be able to obtain additional funding. The Company has
no firm commitments for other capital. The Company can make no prediction as to
when, if ever, it will be profitable.
The Company believes that its present cash and cash equivalents will be
sufficient for the next year of operations, subject to the Company's ability to
extend forbearance of collection efforts on its outstanding indebtedness. The
Company's efforts during the next year will be dedicated principally to
providing assistance to ICD in connection with international market development,
domestic and international clinical testing programs, manufacturing of the DR-70
test kits and planning for commercialization of other products. ICD has entered
into nine exclusive distribution agreements for marketing of the test kits in
the countries of Argentina-Chile, Brazil, China, Indonesia, Mexico, the
Philippines, Poland, Taiwan and Malaysia, respectively. In order to retain
exclusivity, the distributors in these respective countries will be required to
make minimum purchases of the Company's test kits from ICD. However, there is
no firm commitment by any distributor to purchase any kits. Inasmuch as the
kits constitute a new product, regulatory approvals have not been finalized, and
the distributors, in some instances, are not experienced in the sale of this
type of test, no assurance can be given of any revenues from these distribution
-2-
<PAGE>
arrangements. The Company intends for ICD to expand its marketing efforts to
other countries. There can be no assurance as to the success of these efforts.
The Company anticipates incurring approximately $150,000 for additional
equipment to be used in the U.S. during the next twelve months. The Company
does not anticipate any significant changes in the number of employees, but this
again is dependent upon financing. The Company may not be able to retain its
present employees if additional financing is not obtained. If such financing is
obtained, the Company may seek to add employees to further its efforts to
commercialize its products.
On September 30, 1996, the Company had total notes payable outstanding of
$25,000. At September 30, 1996, the Company also had aggregate accrued
salaries payable to officers and other employees and former employees of
$982,518. The Company has made payment arrangements with six persons who are
current or former employees who were owed an aggregate of $621,089 at September
30, 1996. The Company has agreed to pay each of these persons their
proportionate share of 5% of sales revenues, if any, of the Company, but not
less than $500 per month per person. In addition, if a person currently employed
by the Company is terminated under certain circumstances the minimum monthly
payment would be increased. All amounts must be paid no later than February 28,
2001. The Company has had various communications with the other employees and
officer concerning possible alternative arrangements. There can be no assurance
as to the success of these efforts.
In February, 1995, the Company and a subsidiary of Briana formed ICD.
Briana is obligated to pay a $1,000,000 marketing rights fee to the Company in
connection with this venture. As of September 30, 1996, the Company has
received $367,254 of this fee from Briana. The Company and Briana are
considering various possibilities regarding payment of the balance of this
marketing rights fee. The Company does not believe that Briana has the present
ability to pay the balance owed.
During the quarter ended September 30, 1996, the Company received
$1,900,000 from the sale of 4,000,000 shares of common stock and warrants to
purchase 2,000,000 additional shares of common stock at $0.70 per share. The
warrants expire November 1996. In addition the Company received $697,500 from
the exercise of warrants for 1,125,000 shares of common stock. The warrants
were issued during the first two quarters of 1996. The Company issued 13,384
shares of common stock to extinguish an amount of $11,932 due a public relations
firm for services provided in 1994. The Company also issued 47,333 shares of
common stock and warrants to purchase an additional 47,333 shares of common
stock at $0.25 per share to an officer and director. The shares and warrants
were issued in connection with the conversion of convertible notes payable of
$10,000 and related accrued interest of $1,833. The warrants expire November
1998.
-3-
<PAGE>
The table below sets forth the Company's securities transactions made
pursuant to Securities and Exchange Commission Regulation S during the nine
month period ended September 30, 1996.
<TABLE>
<CAPTION>
Number of Warrant Warrant
Shares of Number of Exercise Expiration Cash Holding
Date Common Stock Warrants(1) Price Date Proceeds Period(2)
- ------- ------------ ----------- -------- ---------- ---------- ---------
PURCHASER: Euro-American GMBH
<S> <C> <C> <C> <C> <C> <C>
01/16/96 500,000 250,000 $ 0.70 03/31/96 $ 175,000 6 months
01/25/96 500,000 250,000 0.70 09/15/96 175,000 6 months
02/26/96 500,000 250,000 0.70 09/15/96 175,000 6 months
03/06/96 250,000 125,000 0.70 11/26/96 100,000 6 months
04/04/96 750,000 375,000 0.70 11/26/96 300,000 6 months
04/29/96 1,000,000 500,000 0.70 11/26/96 350,000 6 months
05/23/96 1,000,000 500,000 0.70 10/31/96 350,000 6 months
06/04/96 1,000,000 500,000 0.70 10/31/96 350,000 6 months
07/12/96 4,000,000 2,000,000 1.22 11/26/96 1,900,000 12 months
08/05/96 250,000 warrant exercise 155,000 6 months
08/05/96 250,000 warrant exercise 155,000 6 months
08/05/96 125,000 warrant exercise 77,500 6 months
08/05/96 500,000 warrant exercise 310,000 6 months
</TABLE>
<TABLE>
<CAPTION>
PURCHASER: Lake Forest Partners, L.P.
<S> <C> <C> <C> <C> <C> <C>
03/15/96 500,000 250,000 $ 0.70 09/15/96 $ 175,000 6 months
</TABLE>
(1) Each warrant is exercisable for one share of common stock.
(2) Refers to the minimum period from the date of issuance before transfers may
be made to a U.S. person as that term is defined in Regulation S.
Results of Operations
Nine Month Period Ended September 30, 1996 Compared to Nine Month Period
------------------------------------------------------------------------
Ended September 30, 1995
-------------------------
During the nine month period ended September 30, 1996, the Company
received no revenue from product sales. The Company received partial payment of
ICD marketing rights fees of $43,138 from Briana which was recorded as other
income. Total expenses for the nine month period ended September 30, 1996, were
$1,238,931, resulting in a net loss of $1,195,803. Expense categories
reflecting increases over the equivalent period in the prior year included legal
fees, laboratory and research expenses and administrative payroll. During the
nine month period ended September 30, 1995, the Company incurred expenses of
$830,400 and a net reduction of other income of $50,003 for a loss of $880,403.
Accordingly, the Company's loss for the nine month period ended September
30, 1996, was $1,195,803, compared to a loss of $880,403 for the nine month
period ended September 30, 1995.
-4-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,945,174 $ 726,406
------------- ------------
TOTAL CURRENT ASSETS 3,945,174 726,406
------------- ------------
TOTAL ASSETS $ 3,945,174 $ 726,406
============= ============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 25,000 $ 281,500
Due to related party 65,977 43,646
Accounts payable and accrued expenses 165,369 250,753
Accrued payroll 982,518 955,610
Accrued interest 15,707 97,808
Current portion of capital lease obligation 27,316 33,145
------------- ------------
TOTAL CURRENT LIABILITIES 1,281,887 1,662,462
------------- ------------
LONG-TERM DEBT
Capital lease obligation, net of current portion - 20,902
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, 10,000,000 shares authorized, no shares issued
or outstanding at September 30, 1996, and December 31, 1995. - -
Common stock, $0.001 par value 50,000,000 shares authorized,
33,529,903 and 22,208,281 shares issued and outstanding at
September 30, 1996, and December 31, 1995, respectively. 33,530 22,208
Common stock subscribed - 500,000 shares. 300,000 300,000
Additional paid-in capital 11,450,469 6,645,743
Deficit accumulated during the development stage (9,120,712) (7,924,909)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 2,663,287 (956,958)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 3,945,174 $ 726,406
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months For the Nine Months Ended On July 10, 1987
Ended September 30 September 30 through Sept. 30
------------------------- ------------------------- ----------------
1996 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES 459,435 286,975 1,238,941 830,400 10,772,250
OTHER INCOME - - 43,138 (50,003) 1,651,538
=========== ========== =========== =========== ================
NET LOSS $ (459,435) $ (286,975) $(1,195,803) $ (880,403) $ (9,120,712)
=========== ========== =========== =========== ================
EARNINGS (LOSS)
PER SHARE (Note 1) $ (0.01) $ (0.01) $ (0.04) $ (0.05) $ (0.61)
----------- ----------- ----------- ----------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
-6-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months For the Nine Months Ended On July 10, 1987
Ended September 30 September 30 through Sept. 30
------------------------ ------------------------- ----------------
1996 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss) $ (459,435) $ (286,975) $(1,195,803) $ (880,403) $ (9,120,712)
Adjustments to reconcile net
income (loss) to net cash
used in operating activities:
Stock subscribed - - - - 300,000
Depreciation and amortization - 19,571 - 58,713 799,288
Stock and warrants issued for
services and accrued interest 13,756 - - - 853,371
Change in operating assets
liabilities
Increase (decrease) in amount
due related party 21,833 24,115 22,341 (5,569) 65,987
Increase (decrease) in
accrued payroll 3,614 16,500 26,908 74,500 982,518
Increase (decrease) in other
accrued liabilities (77,026) 7,329 (82,101) 24,654 15,707
Increase (decrease) in
accounts payable and
accrued expenses (5,680) (4,954) (9,347) (94,508) 226,172
----------- ----------- ----------- ----------- ----------------
Net Cash Provided (Used) in
Operating Activities (502,938) (224,414) (1,238,002) (822,613) (5,877,669)
----------- ----------- ----------- ----------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment - - - - (215,930)
Expenditures for patents in
process - - - - (154,682)
Net Cash Provided (Used) in
Investing Activities $ - $ - $ - $ - $ (370,612)
----------- ----------- ----------- ----------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
-7-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months For the Nine Months Ended On July 10, 1987
Ended September 30 September 30 through Sept. 30
------------------------- ------------------------- ----------------
1996 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment yearly capital
lease obligations $ (8,438) $ - $ (26,731) $ - $ (89,360)
Proceeds from notes payable 10,000 - 10,000 110,000 446,000
Repayment of notes payable (209,000) (8,939) (256,500) (34,617) (411,000)
Proceeds from issuances
of common stock 2,597,500 32,517 4,730,001 1,110,517 10,190,748
Net effect of merger with CVI - - - - 57,067
----------- ----------- ----------- ----------- ----------------
Net Cash Provided (Used) in
Financing Activities 2,390,062 23,578 4,456,770 1,185,900 10,193,455
----------- ----------- ----------- ----------- ----------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 1,887,124 (200,836) 3,218,768 363,287 3,945,174
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 2,058,050 594,705 726,406 30,582 -
----------- ----------- ----------- ----------- ----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 3,945,174 $ 393,869 $ 3,945,174 $ 393,869 $ 3,945,174
=========== =========== =========== =========== ================
NON-CASH FINANCING
ACTIVITIES:
Common stock and warrants
issued for services $ - $ - $ - $ - $ 497,382
Debt converted to equity 10,000 - 72,281 - 733,194
Equipment purchased under
capital lease - - - - 117,454
CASH PAID FOR:
Interest $ - $ - $ - $ - $ 95,530
Income Taxes - - - - -
</TABLE>
The accompanying notes are an integral part of these financial statements
-8-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1995 and September 30, 1996
NOTE 1 - MANAGEMENT OPINION
In the opinion of management, the consolidated financial statements
reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position and
results of operations as of and for the periods presented.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization and Nature of Business
AMDL, INC. (formerly Advanced Medical Diagnostic, Ltd.) (the
"Company") was incorporated June 7, 1989, in the state of
Delaware. The Company is a development-stage company committed to
the development of an accurate, dependable, low-cost broad-based
detection technology for cancer and other diseases.
The Company has not generated any revenues from operations and has
no assurance of future revenues. Additionally, the Company has
moderate liquid assets. In order to finance the operations of the
Company and further development, additional capital is required.
There is no assurance that the Company will be able to obtain
sufficient additional funds when needed, or that such funds, if
available, will be obtainable on terms satisfactory to the
Company.
These circumstances raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty.
Management has taken action to address these matters. They
include:
- Retention of experienced management personnel with particular
skills in the successful completion of cash generating
licensing agreements, etc.
- Attainment of technology to detect cancer and other diseases.
b. Loss per Share
Loss per share was computed based on the weighted average number
of shares outstanding for the period. The effect of stock options
and warrants on loss per share is antidilutive and thus not
included in the loss per share calculation.
-9-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1995 and September 30, 1996
c. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased, to be cash
equivalents.
NOTE 3 - RELATED PARTY TRANSACTIONS
1996
----
During the first nine months of 1996, advances of approximately
$65,500 were made on behalf of the Company by Briana Bio-Tech for
expenses incurred in connection with pursuing regulatory approval and
subsequent longitudinal studies.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a. Employment Agreements
1996
----
In January 1996, the Company entered into a one year employment
agreement with Harry Berk, Vice President. The agreement specifies
an annual base salary of $80,000. Mr. Berk also received options
to purchase up to 100,000 shares of the Company's common stock at
the exercise price of $0.97 per share exercisable until December
31, 1999. Options to purchase 25,000 shares vested upon execution
of the agreement. The options to purchase the remaining 75,000
shares will vest in quarterly installments of 18,750 each over one
year. The agreement contains a severance provision. Mr. Berk shall
be entitled to a severance payment equal to three months salary.
The provisions also include for customary medical insurance,
vacation, sick leave, nondisclosure and covenants not to compete.
If the Company creates an executive bonus plan, Mr. Berk shall be
entitled to participate in such a plan.
On June 1, 1996, the Board of Directors approved a $222,000 annual
base salary for Dr. That T. Ngo.
-10-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1995 and September 30, 1996
NOTE 5 - CAPITAL TRANSACTIONS
a. Common Stock
1996
----
During the first quarter the Company received $800,000 cash
proceeds from the sale of 2,250,000 shares of common stock and
warrants to purchase 1,125,000 additional shares of common stock
at $0.70 per share. Warrants for 250,000 shares of common stock
expired March 31, 1996. Warrants for 750,000 shares of common
stock expired September 15, 1996. Warrants for 125,000 shares of
common stock expire November 26, 1996. The Company received $2,625
cash proceeds from the exercise of warrants for 10,500 shares of
common stock. The warrants were issued in 1995 to an investment
banking firm.
During the second quarter the Company received $1,350,000 cash
proceeds from the sale of 3,750,000 shares of common stock and
warrants to purchase 1,875,000 additional shares of common stock
at $0.70 per share. Warrants for 1,000,000 shares of common stock
expire October 31, 1996. Warrants for 875,000 shares of common
stock expire November 26, 1996. The Company received $4,875 cash
proceeds from the exercise of warrants for 19,500 shares of common
stock. The warrants were issued in 1995 to an investment baking
firm. The Company issued 16,779 shares of common stock to
extinguish an amount of $15,000 due a director for consulting
services provided in 1994. The Company issued 89,127 shares of
common stock to cancel convertible notes payable of $20,000 and
related accrued interest of $2,282.
During the third quarter the Company received $1,900,000 from the
sale of 4,000,000 shares of common stock and warrants to purchase
2,000,000 additional shares of common stock at $0.70 per share.
The warrants expire November 1996. In addition the Company
received $697,500 from the exercise of warrants for 1,125,000
shares of common stock. The warrants were issued during the first
two quarters of 1996. The Company issued 13,384 shares of common
stock to extinguish an amount of $11,932 due a public relations
firm for services provided in 1994. The Company also issued 47,333
shares of common stock and warrants to purchase an additional
47,333 shares of common stock at $0.25 per share to an officer and
director. The shares and warrants were issued in connection with
the conversion of convertible notes payable of $10,000 and related
accrued interest of $1,833. The warrants expire November 1998.
-11-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1995 and September 30, 1996
b. Stock Options and Warrants
1996
----
The Company issued warrants, as part of the sale of common stock,
to purchase 1,125,000 additional shares of common stock at $0.70
per share. Warrants for 250,000 shares of common stock expired
March 31, 1996. Warrants for 750,000 shares of common stock
expired September 15, 1996. Warrants for 125,000 shares of common
stock expire November 26, 1996.
During the second quarter the Company issued warrants, as part of
the sale of common stock, to purchase 1,875,000 additional shares
of common stock at $0.70 per share. Warrants for 1,000,000 shares
of common stock expire October 31, 1996. Warrants for 875,000
shares of common stock expire November 26, 1996.
During the third quarter the Company issued warrants, as part of
the sale of common stock to purchase 2,000,000 additional shares
of common stock at $0.70 per share. The warrants expire November
1996. The Company also issued warrants to purchase 47,333 shares
of common stock at $0.25 per share to an officer and director. The
warrants were issued in connection with the conversion of
convertible notes payable of $10,000 and related accrued interest
of $1,833. The warrants expire November 1998. The Company granted
warrants to consultants to purchase 200,000 shares of common stock
at $0.75 per share. The warrants expire September 1999.
NOTE 6 - SUBSEQUENT EVENTS
Subsequent to September 30, 1996, the following transactions occurred.
a. Employment Agreements
In October 1996, the Company entered into a two year employment
agreement with Dr. That T. Ngo, President and Chief Executive
Officer. The agreement specifies an annual base salary of
$222,000. Dr. Ngo also received options to purchase up to
1,500,000 shares of the Company's common stock at the exercise
price of $0.657 per share exercisable until September 2001.
Options to purchase 750,000 shares vested upon execution of the
agreement. The options to purchase the remaining 750,000 shares
will vest in quarterly installments of 90,000 each over the next
seven calendar quarters and 120,000 in the eighth calendar
quarter. The agreement contains a severance provision. Dr. Ngo
shall be entitled to a severance payment equal to six months
salary. The employment agreement also includes provisions
-12-
<PAGE>
for customary medical insurance, vacation, sick leave,
nondisclosure and covenants not to compete. If the Company creates
an executive bonus plan, Dr. Ngo shall be entitled to participate
in such plan.
In October 1996, the Company entered into a two year employment
agreement with Dr. Ronald J. Moore, Vice President of Operations.
The agreement specifies an annual base salary of $80,000. Dr.
Moore also received options to purchase up to 100,000 shares of
the Company's common stock at the exercise price of $0.563 per
share exercisable until September 2001. The options will vest in
installments of 12,500 each at the end of each of the following
eight calendar quarters. The agreement contains a severance
provision. Dr. Moore shall be entitled to a severance payment
equal to two months salary. The employment agreement also includes
provisions for customary medical insurance, vacation, sick leave,
nondisclosure and covenants not to compete. If the Company creates
an executive bonus plan, Dr. Moore shall be entitled to
participate in such plan.
b. Commitments and Contingencies
In October 1996, the Company executed a new three year real estate
lease for 8,277 square feet of office, laboratory and
manufacturing space at its present facility in Tustin, California.
The lease commences December 1, 1996, and ends November 30, 1999.
The base rent plus applicable common area charges are estimated to
be $9,200 per month.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
As reported in the Company's Report on Form 10-KSB for the year ended
December 31, 1995, the Company instituted litigation in February 1996
against Roger L. Lallone and Edward L. Stephen and their corporate
affiliates for misappropriation of trade secrets, breach of contract,
conversion and violation of the Lanham Act. The action was filed in the
U.S. District Court for the Central District of California (Case No.
SACV 96-37). Defendant Lallone filed an Answer denying generally the
material allegations of the Company's Complaint. In addition, he
asserted counterclaims against the Company for breach of contract,
fraud and trade secret misappropriation, pursuant to which he is
seeking compensatory damages and punitive damages against the Company.
The Company has denied the material allegation of Defendant Lallone's
Counterclaim. The Company intends to vigorously defend itself against
the Counterclaim of Defendant Lallone. Defendant Stephen filed a motion
to compel arbitration and to stay the court proceedings. In May 1996,
the Court denied this Motion. In June 1996 Defendant Stephen filed an
Answer denying generally the material allegations of the Company's
Complaint. In addition, he asserted counterclaims against the Company
for breach of contract claiming damages of $110,000, and for
interference with prospective economic advantage claiming damages in
excess of $100,000. He also claims punitive damages in an amount to be
determined. The Company intends to vigorously defend itself against the
counterclaims of Defendant Stephen.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMDL, INC.
November 11, 1996
By: /s/ HARRY R. BERK
------------------------
Chief Accounting Officer
November 11, 1996
By: /s/ THAT T. NGO
-------------------------
President
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
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