<PAGE>
CONFORMED
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 JUNE 30, 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 August 1, 1997, the Registrant had outstanding 33,729,903 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
Preliminary Note Regarding Forward Looking Financial Statements..... 3
Balance Sheets as of June 30, 1997 and December 31, 1996............ 6
Statements of Operations for the three months and six months
ended June 30, 1997 and 1996 and for the period from inception
(July 10, 1987) to June 30, 1997.................................... 7
Statements of Cash Flows for the six months
ended June 30, 1997 and 1996 and for the period
from inception (July 10, 1987) to June 30, 1997..................... 8
Notes to the Financial Statements................................... 9
PART II OTHER INFORMATION......................................................... 10
</TABLE>
2
<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 approvals and for commercialization of its
products.
LIQUIDITY AND CAPITAL RESOURCES
The Company has received only minimal revenues from sales of products and the
balance of its 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 June 30,
1997, the Company's cash, cash equivalents and short-term investments decreased
to $2,332,978. The Company is also hopeful of obtaining significant 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.
3
<PAGE>
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 accrued payroll and
related expenses. 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., a Canadian company and significant
shareholder, is responsible for marketing DR-70/TM/ worldwide with the exception
of the United States and Canada. The Company's diagnostic test kit, DR-70/TM/,
was designed to permit physicians to detect the early presence of the disease
through an analysis of non-invasive blood serum samples, in advance of clinical
symptoms, when early treatment should result in a higher probability of patient
recovery. The DR-70/TM/ test kit would also be an effective resource for a
physician to confirm the clinical symptoms of lung cancer.
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. During the first quarter of 1997, ICD
terminated the distribution agreement for Brazil. Subsequent to the second
quarter of 1997, ICD terminated the distribution agreement of Mexico. 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 June 30, 1997, the Company was indebted for $584,203 for accrued salaries
payable to five persons who are officers and other employees and former
employees. The Company has made payment arrangements with four of these persons
who are current or former employees who are owed an aggregate of $455,333 at
June 30, 1997. The Company has agreed to pay each of these persons their
proportionate share of five percent 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.
4
<PAGE>
RESULTS OF OPERATIONS
Reference is made to the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 1996 for a detailed discussion and analysis of the
Company's financial condition and results of operations for the periods covered
by that report.
Revenues
- --------
During the quarter ended June 30, 1997, the Company received minimal revenue
from the sales of accessories. No previous sales had been recorded by the
Company.
Research and Development and General and Administrative Expenses
- ----------------------------------------------------------------
Research and development expenses for the quarter ended June 30, 1997 were 2.6%
lower than the previous quarter and 32.5% higher than the prior year quarter.
On a year-to-date basis, research and development expenses were 28.8% higher
compared with the first six months of the prior year. Expense categories
reflecting increases over the equivalent period in the prior year include the
research and development portion of payroll and rent.
General and administrative expenses for the quarter ended June 30, 1997 were
11.0% lower than the previous quarter and 7.2% higher than the prior year
quarter. On a year-to-date basis, general and administrative expenses were 21.6%
higher compared with the first six months of the prior year. Expense categories
reflecting increases over the equivalent period in the prior year included
legal, other professional fees and the general and administrative portion of
payroll and rent. The increase in legal expenses was due primarily to the
litigation instituted by the Company against Roger L. Lallone, Ph.D., a former
consultant, and Dr. Edward L. Stephen, a former Vice President, 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 increase in other
professional fees was due primarily to fees paid to directors and consultants.
Payroll increases were due to increases for some existing personnel and an
increase in staff. The rent increased as a result of a new facilities lease that
commenced December 1996.
During the six month period ended June 30, 1997, the Company realized interest
income of $68,609 compared to $25,136 of interest income and $43,138 of other
income for the equivalent period in the prior year.
In the absence of significant sales, the Company anticipates a net loss for the
quarter ending September 30, 1997 of approximately $500,000.
5
<PAGE>
AMDL, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
June 30, Dec. 31,
1997 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 141,119 $1,072,249
Short-term investments 2,191,859 2,432,411
---------- ----------
TOTAL CURRENT ASSETS 2,332,978 3,504,660
---------- ----------
OTHER ASSETS 7,863 7,863
---------- ----------
TOTAL ASSETS $2,340,841 $3,512,523
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Notes payable $ 25,000 $ 25,000
Accounts payable and accrued expenses 133,450 192,736
Accrued payroll and related expenses 706,401 924,079
Capital lease obligation 717 18,668
----------- -----------
TOTAL CURRENT LIABILITIES 865,568 1,160,483
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized, no shares issued
or outstanding at June 30, 1997 and December 31, 1996 - -
Common stock, $0.001 par value, 50,000,000 shares authorized,
33,729,903 and 33,529,903 shares issued and outstanding at
June 30, 1997 and December 31, 1996, respectively 33,730 33,530
Additional paid-in capital 11,907,599 11,865,799
Deficit accumulated during the development stage (10,466,056) (9,547,289)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,475,273 2,352,040
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,340,841 $ 3,512,523
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
AMDL, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Six Months Ended on July 10, 1987
June 30, June 30, through June 30,
----------- ----------- ----------- ---------- ----------------
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
NET SALES $ 31,036 - $ 31,036 $ - $ 31,036
COSTS OF SALES 17,339 - 17,339 - 17,339
----------- ---------- ---------- ---------- -------------
Gross Profit 13,697 - 13,697 - 13,697
----------- ---------- ---------- ---------- -------------
OPERATING EXPENSES
Research and
development 217,463 164,195 411,543 319,579 5,398,367
General and
administrative 263,984 246,292 589,530 485,063 6,328,299
----------- ---------- ---------- ---------- -------------
481,447 410,487 1,001,073 804,642 11,726,666
----------- ---------- ---------- ---------- -------------
LOSS FROM
OPERATIONS 467,750 410,487 987,376 804,642 11,712,969
----------- ---------- ---------- ---------- -------------
OTHER INCOME
(EXPENSE):
Interest expense - - - - (561,016)
Interest income 32,523 22,088 68,609 25,136 156,393
Other - - - 43,138 1,651,536
----------- ---------- ---------- ---------- -------------
32,523 22,088 68,609 68,274 1,246,913
----------- ---------- ---------- ---------- -------------
NET LOSS $ (435,227) (388,399) (918,767) (736,368) $ (10,466,056)
=========== ========== ========== ========== =============
NET LOSS PER SHARE
(0.01) (0.01) (0.03) (0.03)
=========== ========== ========== ==========
WEIGHTED AVERAGE
SHARES
OUTSTANDING 33,641,860 26,628,874 33,587,362 24,993,872
=========== ========== ========== ==========
</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)
<TABLE>
<CAPTION>
Inception
Six Six (July 10, 1987)
Months Ended Months Ended to
June 30, June 30, June 30,
1997 1996 1997
----------- ------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (918,767) $ (736,368) $(10,466,056)
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 17,000 - 310,416
Warrants issued for services - - 661,529
Decrease in due from related party - 508 -
Increase in other assets - - (7,863)
Increase (decrease) in accounts payable and accrued expenses (59,286) (22,498) 158,905
------------ ------------ ------------
Increase (decrease) in accrued payroll and related expenses (217,678) 23,294 706,401
------------ ------------ ------------
Net cash used in operating activities (1,178,731) (735,064) (7,527,380)
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments, net 240,552 - (2,191,859)
Purchases of equipment - - (225,930)
Expenditures for patents - - (154,682)
------------ ------------ ------------
Net cash provided by (used in) investing activities 240,552 - (2,572,471)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under notes payable, net - (47,500) 59,115
Repayments under capital lease obligation (17,951) (18,293) (115,959)
Proceeds from issuance of common stock 25,000 2,132,501 10,240,747
Net effect of merger with CVI - - 57,067
------------ ------------ ------------
Net cash provided by financing activities 7,049 2,066,708 10,240,970
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (931,130) 1,331,644 141,119
CASH AND CASH EQUIVALENTS, beginning of period 1,072,249 726,406 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 141,119 $ 2,058,050 $ 141,119
============ ============ ============
</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
June 30, 1997
NOTE 1 - MANAGEMENT OPINION
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.
NOTE 2 - STOCK BASED COMPENSATION PLANS
The following is a status of the stock options outstanding at June 30,
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, June 30, 1997 (unaudited) 5,595 $0.896
===== ======
Exercisable at June 30, 1997 4,990 $0.929
===== ======
</TABLE>
The following is a status of the warrants outstanding at June 30, 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 (320) 0.248
----- ------
Outstanding, June 30, 1997 (unaudited) 2,006 $0.814
===== ======
</TABLE>
All of the warrants are exercisable at June 30, 1997.
9
<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.
During the quarter ended June 30, 1997, the Company issued 100,000
shares of common stock as part of compensation paid to a consulting
firm. The Company recorded $17,000 of general and administrative
expense representing the fair market value of the shares on the date of
the consulting agreement.
NOTE 4 - REVENUE RECOGNITION
Revenue is recognized upon shipment of products to customers.
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.
------------------
On June 20, 1997, John Tkachuk resigned as a member of AMDL Inc.'s Board
of Directors. The vacancy has not been filled by the Board of Directors.
Item 6 Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
---------
Inapplicable.
(b) Reports of Form 8-K.
--------------------
Inapplicable.
10
<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.
August 4, 1997 By: /s/ HARRY R. BERK
------------------------
Chief Accounting Officer
August 4, 1997 By: /s/ THAT T. NGO
------------------------
President
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM FROM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 141,119
<SECURITIES> 2,191,859
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,332,978
<PP&E> 7,863
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,340,841
<CURRENT-LIABILITIES> 865,568
<BONDS> 0
0
0
<COMMON> 33,730
<OTHER-SE> 1,441,543
<TOTAL-LIABILITY-AND-EQUITY> 2,340,841
<SALES> 31,036
<TOTAL-REVENUES> 31,036
<CGS> 17,339
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,001,073
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (68,609)
<INCOME-PRETAX> (918,767)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (918,767)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
