<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 MARCH 31, 1997 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 May 19, 1997, the Registrant had outstanding 33,629,903 shares of its
common stock, par value $.001.
<PAGE>
AMDL, INC.
(A Development Stage Company)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION................................................... 3
ITEM 1. FINANCIAL STATEMENTS.................................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL POSITION............................ 3
Statement regarding financial information........................ 3
Balance Sheets as of March 31, 1997 and December 31, 1996........ 6
Statements of Operations for the three months ended March 31,
1997 and 1996 and for the period from inception (July 10, 1987)
to March 31, 1997................................................ 7
Statements of Cash Flows for the three months ended March 31,
1997 and 1996 and for the period from inception (July 10, 1987)
to March 31, 1997................................................ 8
Notes to the Financial Statements................................ 9
PART II OTHER INFORMATION...................................................... 10
</TABLE>
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<PAGE>
PART I - FINANCIAL INFORMATION
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,
1996, as filed with the Securities and Exchange Commission.
The Financial Statements are included after Item 2.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL POSITION
Preliminary Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company's actual results may differ
materially from the results projected in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed below.
General
Since inception, the Company has been in the development stage and has devoted
its resources to research and development, obtaining regulatory approval and the
commercialization of its proposed diagnostics for cancer and other diseases. The
Company has incurred losses since inception and expects to incur a significant
operating loss during the fiscal year ending December 31, 1997. The Company will
require substantial additional funding for continuing research and development,
obtaining regulatory approval and for commercialization of its products.
Liquidity and Capital Resources
The Company has generated no revenues from sales of products and its only income
has come from the sale of licenses, royalties and options to purchase marketing
rights. Operations have been funded principally through private placements 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,
undertakes clinical trials and other actions necessary to obtain regulatory
approvals and engages in marketing and sales activities. The Company also
expects to incur substantial administrative and commercialization expenditures
in the future, the availability of funding for such expenditures is presently
unknown. From December 31, 1996, to March 31, 1997, the Company's cash, cash
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<PAGE>
equivalents and short-term investments decreased to approximately $2,731,251.
The Company is also hopeful of obtaining revenues from diagnostic product sales,
but there is no commitment by any person for purchase of any of the Company's
products. In the absence of significant sales and profits, the Company may seek
to raise additional funds to meet its working capital requirements principally
through the additional sales of its securities. However, 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. The Company can make no prediction as to when, if ever, it will be
profitable.
The Company believes its present cash, cash equivalents and short-term
investment balances to be sufficient for the next twelve months of operations,
assuming the Company is able to extend forbearance of collection efforts on its
outstanding indebtedness. However, certain scheduled activities will be
curtailed unless additional working capital is obtained. ICD, L.L.C., ("ICD")
AMDL's joint venture with Briana-Bio-Tech Inc., is responsible for marketing
DR-70(TM) worldwide with the exception of the United States and Canada. The
Company's efforts during the next twelve months will be dedicated principally to
providing assistance to ICD in connection with international market development
for DR-70(TM), international market development for the Company's other
diagnostic products, development and commercialization of new products and
obtaining the required regulatory approvals. There can be no assurance as to the
success of these efforts. ICD has entered into nine exclusive distribution
agreements for marketing of the test kits in the countries of Argentina-Chile,
Brazil, China, Indonesia, Poland, Mexico, the Philippines, Taiwan and Malaysia
respectively. During the first quarter of 1997, ICD terminated the distribution
agreement for Brazil. 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 once regulatory approval is obtained in each respective
country. 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 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.
During the next six months, the Company anticipates incurring approximately
$35,000 in expenditures for the purchase of additional equipment. Currently, the
Company does not anticipate any significant changes in the number of employees.
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 also
seek to add employees to further its efforts to commercialize its products.
At March 31, 1997, the Company was indebted for $590,202 for accrued salaries
payable to five persons who are officers and other employees and former
employees. The Company has made payment arrangements with four persons who are
current or former employees who are owed an aggregate of $461,333 at March 31,
1997. 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 to $2,000. All amounts must be paid no later than February 28, 2001.
The Company has had various communications with the other employee concerning
possible alternative arrangements. There can be no assurance as to the success
of these efforts.
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<PAGE>
Results of Operations
Three Month Period Ended March 31, 1997 Compared to Three Month Period Ended
----------------------------------------------------------------------------
March 31, 1996
--------------
During the three month period ended March 31, 1997, the Company received no
revenue from product sales. Total operating expenses for the three month period
ended March 31, 1997, were $519,626 and interest income was $36,086 resulting in
a net loss of $483,540. Expense categories reflecting increases over the
equivalent period in the prior year included legal and professional fees and
rent. The increase in legal and professional expenses was due primarily to the
litigation instituted by the Company against Roger L. Lallone, Ph.D. and Dr.
Edward L. Stephen in February 1996 and the preparation and negotiation of a
settlement agreement with Robert R. Guerrero, Ph.D., a former Vice President and
Director. The rent increased as a result of a revised facilities lease that
commenced December 1996. During the three month period ended March 31, 1996, the
Company incurred total operating expenses of $391,520 and other income was
$43,551 for a net loss of $347,969. Accordingly, the Company's net loss for the
three month period ended March 31, 1997, was $483,540, compared to a net loss of
$347,969 for the three month period ended March 31, 1996. In the absence of
significant sales, the Company anticipates a net loss for the quarter ending
June 30, 1997, of approximately $500,000.
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<PAGE>
AMDL, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, Dec. 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 269,383 $ 1,072,249
Short-term investments 2,461,868 2,432,411
Inventory 17,339 --
------------ ------------
TOTAL CURRENT ASSETS 2,748,590 3,504,660
------------ ------------
OTHER ASSETS 7,863 7,863
------------ ------------
TOTAL ASSETS $ 2,756,453 $ 3,512,523
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Notes payable $ 25,000 $ 25,000
Accounts payable and accrued expenses 118,124 192,736
Accrued payroll and related expenses 710,026 924,079
Capital lease obligation 9,803 18,668
------------ ------------
TOTAL CURRENT LIABILITIES 862,953 1,160,483
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized, no shares issued
or outstanding at March 31, 1997, and December 31, 1996 -- --
Common stock, $0.001 par value 50,000,000 shares authorized,
33,629,903 and 33,529,903 shares issued and outstanding at
March 31, 1997, and December 31, 1996, respectively 33,630 33,530
Additional paid-in capital 11,890,699 11,865,799
Deficit accumulated during the development stage (10,030,829) (9,547,289)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,893,500 2,352,040
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,756,453 $ 3,512,523
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMDL, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended On July 10, 1987
March 31 through March 31
----------------------------- ----------------
1997 1996 1997
<S> <C> <C> <C>
REVENUES: $ -- $ -- $ --
------------ ------------- ----------------
OPERATING EXPENSES:
Research and development 223,074 219,404 5,209,898
General and administrative 296,552 172,116 6,035,321
------------ ------------- ----------------
519,626 391,520 11,245,219
------------ ------------- ----------------
LOSS FROM OPERATIONS 519,626 391,520 11,245,219
------------ ------------- ----------------
OTHER INCOME (EXPENSE):
Interest expense -- 413 (561,016)
Interest income 36,086 -- 123,870
Other -- 43,138 1,651,536
------------ ------------- ----------------
36,086 43,551 1,214,390
------------ ------------- ----------------
NET LOSS $ (483,540) $ (347,969) $(10,030,829)
============ ============= ================
NET LOSS PER SHARE $ (0.01) $ (0.02)
============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING 33,531,027 23,325,831
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
-7-
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND MARCH 31, 1996,
--------------------------------------------------------------------
AND THE PERIOD FROM INCEPTION (JULY 10, 1987) TO MARCH 31, 1997
---------------------------------------------------------------
<TABLE>
<CAPTION>
Inception
Three Three (July 10, 1987)
Months Ended Months Ended To
March 31, March 31, March 31,
1997 1996 1997
------------ ------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (483,540) $ (347,969) $(10,030,829)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization - - 497,288
Amortization of deferred interest - - 312,000
Common stock subscribed - - 300,000
Stock issued for services - - 293,416
Warrants issued for services - - 661,529
Increase in due from related party - (21,315) -
Increase in other assets - - (7,863)
Increase in inventory (17,339) - (17,339)
Increase (decrease) in accounts payable and accrued expenses (74,612) 4,372 143,579
Increase (decrease) in accrued payroll and related expenses (214,053) 1,316 710,026
----------- ----------- ------------
Net cash used in operating activities (789,544) (363,596) (7,138,193)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments, net (29,457) - (2,461,868)
Purchases of equipment - - (225,930)
Expenditures for patents - - (154,682)
----------- ----------- ------------
Net cash used in investing activities (29,457) - (2,842,480)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under notes payable, net - (22,000) 59,115
Repayments under capital lease obligation (8,865) (10,060) (106,873)
Proceeds from issuance of common stock 25,000 802,626 10,240,747
Net effect of merger with CVI - - 57,067
----------- ----------- ------------
Net cash provided by financing activities 16,135 770,566 10,250,056
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (802,866) 406,970 269,383
CASH AND CASH EQUIVALENTS, beginning of period 1,072,249 726,406 -
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, end of period $ 269,383 $ 1,133,376 $ 269,383
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMDL, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1997
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 - STOCK BASED COMPENSATION PLANS
The following is a status of the stock options outstanding at
March 31, 1997.
<TABLE>
<CAPTION>
Shares Weighted Average
(000) Exercise Price
------ --------------
<S> <C> <C>
Outstanding, December 31, 1996 5,610 $0.915
Granted 100 0.440
Exercised - -
Expired/Forfeited (115) 1.446
------ ------
Outstanding, March 31, 1997(unaudited) 5,595 $0.896
====== ======
Exercisable at March 31, 1997 4,862 $0.937
====== ======
</TABLE>
The following is a status of the warrants outstanding at March 31, 1997.
<TABLE>
<CAPTION>
Shares Weighted Average
(000) Exercise Price
------ --------------
<S> <C> <C>
Outstanding, December 31, 1996 2,426 $0.741
Granted - -
Exercised (100) 0.250
Expired/Forfeited (266) 0.344
------ ------
Outstanding, March 31, 1997(unaudited) 2,060 $0.816
====== ======
</TABLE>
All of the warrants are exercisable at March 31, 1997.
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<PAGE>
NOTE 3 - COMMON STOCK ISSUED
During the quarter ended March 31, 1997, the Company received $25,000
cash proceeds from the exercise of 100,000 warrants.
NOTE 4 - INVENTORIES
Inventories are priced at the lower of cost (FIFO) or market.
NOTE 5 - NET LOSS PER SHARE
Net loss per share is calculated using the weighted average number of
shares outstanding for the period. Common equivalent shares are
excluded from the computation as their effect is antidilutive.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.
------------------
Inapplicable.
Item 2 Changes in Securities.
----------------------
Inapplicable.
Item 3 Defaults Upon Senior Securities.
--------------------------------
Inapplicable.
Item 4 Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Inapplicable.
Item 5 Other Information.
------------------
Inapplicable.
Item 6 Exhibits and Reports of Form 8-K.
---------------------------------
(a) Exhibits.
---------
27 Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
Inapplicable.
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<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.
May 27, 1997
By: /s/ Harry R. Berk
-----------------
Chief Accounting Officer
May 27, 1997
By: /s/ That T. Ngo
---------------
President
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<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 269,383
<SECURITIES> 2,461,868
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 17,339
<CURRENT-ASSETS> 2,748,590
<PP&E> 7,863
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,756,453
<CURRENT-LIABILITIES> 862,953
<BONDS> 0
0
0
<COMMON> 33,630
<OTHER-SE> 1,859,870
<TOTAL-LIABILITY-AND-EQUITY> 2,756,453
<SALES> 36,086
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 519,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (483,540)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
