<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 MARCH 31, 1998 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 92780-7039
--------------------------------- ----------
(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 June 30, 1998, the Registrant had outstanding 33,754,903 shares of its
common stock, par value $.001.
<PAGE>
AMDL, INC.
(A Development Stage Company)
TABLE OF CONTENTS
Page No.
--------
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 March 31, 1998 and December 31, 1997 6
Statements of Operations for the three months ended
March 31, 1998 and 1997 and for the period from inception
(July 10, 1987) to March 31, 1998........................ 7
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 and for the period
from inception (July 10, 1987) to March 31, 1998......... 8
Notes to the Financial Statements........................ 9
PART II OTHER INFORMATION........................................ 10
-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. These financial statements should 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, 1997, 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
In February 1998, the Board adopted a resolution authorizing the Company to make
a $7,500 investment in a newly formed entity, Sino-American Medical, Inc.
("SAM"), a Delaware corporation. The resolution also authorized certain AMDL
personnel and a related party to accept executive positions with SAM and
utilize a small portion of their employment schedule at AMDL for SAM related
activities in exchange for the favorably priced investment terms. SAM
reimburses the Company for incidental expenses such as telephone and postage.
Douglas C. MacLellan, a Director of the Company accepted the position of
Chairman of the Board and Secretary of SAM. The other Company personnel include
That. T. Ngo, Ph.D., the Company's President and Chief Executive Officer and
Director, Harry Berk, Vice President, Chief Financial Officer, Secretary and
Treasurer and Thomas V. Tilton, Director of Corporate Development. Dr. Ngo
accepted the position of Director, President and CEO of SAM. Harry Berk
accepted the position of Treasurer and Thomas V. Tilton accepted the position of
Vice President of SAM. SAM was created to participate in a joint venture in
China leading to the privatization of a Chinese pharmaceutical firm. It was the
AMDL Board's position that AMDL did not have the financial resources to pursue
the SAM opportunity and that the nominal investment in SAM and permission to
permit certain AMDL personnel to engage in limited SAM activities was in the
best interests of AMDL and that the terms of the SAM transaction were fair and
reasonable. AMDL made the $7,500 investment in SAM in April 1998.
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.
For the three month period ended March 31, 1998, the Company received $42,603
from sales of products. Historically, the Company's income has come from the
sale of licenses, royalties and options to purchase marketing rights. The
Company has incurred losses since inception and expects to incur a significant
operating loss for the fiscal year ending December 31, 1998. The Company will
-3-
<PAGE>
require substantial additional funding for continuing research and development,
obtaining regulatory approval and for commercialization of its products. There
can be no assurances that the Company will be able to obtain such funding when
needed or at all, or if available, what the terms thereof will be.
Liquidity and Capital Resources
The Company has generated only minimal revenues from sales of products and
historically 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 requires significant funding for the continued development of its test
kit systems, clinical trials and other actions necessary to obtain regulatory
approvals and to engage in continued marketing and sales activities. The amount
of expenditures required to maintain operations and to continue product
development far exceeds existing cash. The availability of sources of cash for
such expenditures is presently unknown. From December 31, 1997 to March 31,
1998, the Company's cash, cash equivalents and short-term investments decreased
to $980,523 as a result of working capital requirements. The Company is also
hopeful of obtaining additional revenues from 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 needs 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 that its present cash and cash equivalents balances to be
sufficient only for operations through the third quarter of 1998, assuming the
Company is able to extend forbearance of collection efforts on its outstanding
indebtedness. However, certain scheduled activities will be curtailed after the
second quarter unless additional operating capital is obtained. The Company is
continuing its efforts to raise capital to finance continuing operations,
provide assistance to ICD in connection with international market development
for DR-70, accelerate international and domestic market development for the
Company's other products, develop and commercialize new products and obtain the
required regulatory approvals. There can be no assurance as to the success of
these efforts, or, if successful, what the cost or terms thereof will be.
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, 1998, the Company was indebted for $577,527 for accrued salaries
payable to five persons who are officers and other employees and former
employees, four of whom agreed to payments equal to their proportionate share of
five percent of sales revenues, if any, of the Company, but not less than $500
per month per person.
Results of Operations
Reference is made to the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 1997 for a detailed discussion and analysis of the
Company's financial condition and results of operations for the periods covered
by that report. The net loss for the first quarter ended March 31, 1998
-4-
<PAGE>
was approximately $586,000 and the Company anticipates a net loss for the
quarter ending June 30, 1998 of approximately $500,000.
Revenues
- --------
During the quarter ended March 31, 1998, the Company received $42,603 in revenue
from the sales of cancer diagnostic kits and OEM products as compared to no
sales for first quarter 1997. No significant sales are expected for the second
quarter of 1998.
Research and Development and General and Administrative Expenses
- ----------------------------------------------------------------
Research and development expenses for the quarter ended March 31, 1998, were
37.9 percent higher than the prior year's first quarter. Expense categories
reflecting increases include the research and development expenses associated
with the additional clinical trial data required for the PyloriProbe application
resubmission to the U. S. Food and Drug Administration. Other research and
development expense categories reflecting increases include the research and
development portion of payroll and consulting expenses. Research and
development expense categories reflecting decreases include laboratory expenses
and the research and development portion of rent, reflecting the Company's
attempt to reduce these costs.
General and administrative expenses for the quarter ended March 31, 1998 were
2.1 percent higher than the prior year's first quarter. Expense categories
reflecting increases over the equivalent period in the prior year include the
general and administrative portion of payroll. Expense categories reflecting
decreases include legal and other professional expenses, reflecting the
Company's attempt to reduce costs of outside service providers.
During the three month period ended March 31, 1998, the Company realized
interest income of $15,939 compared to $36,086 of interest income for the
equivalent period in the prior year due to available funds for investments.
Interest income will significantly decline as short term investments are used in
operations.
-5-
<PAGE>
AMDL, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
March 31, Dec. 31,
1998 1997
(Unaudited)
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 980,523 $ 1,498,540
Accounts receivable 19,436 -
------------ ------------
Total current assets 999,959 1,498,540
OTHER ASSETS 7,863 7,863
------------ ------------
$ 1,007,822 $ 1,506,403
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES
Notes payable $ 25,000 $ 25,000
Accounts payable and accrued expenses 208,434 125,748
Accrued payroll and related expenses 688,867 674,669
Customer deposit 22,735 32,235
------------ ------------
Total current liabilities 945,036 857,652
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, 10,000,000 shares
authorized, no shares issued or
outstanding at March 31, 1998
and December 31, 1997 - -
Common stock, $0.001 par value,
50,000,000 shares authorized,
33,754,903 shares issued and
outstanding at March 31, 1998
and December 31, 1997 33,755 33,755
Additional paid-in capital 11,909,699 11,909,699
Deficit accumulated during
the development stage (11,880,668) (11,294,703)
------------ ------------
62,786 648,751
------------ ------------
$ 1,007,822 $ 1,506,403
============ ============
</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 on
July 10, 1987
For the Three Months Ended through
March 31, March 31,
---------- ---------- -------------
<S> <C> <C> <C>
NET SALES $ 42,603 $ - $ 85,039
COSTS OF SALES 34,158 - 57,197
---------- ---------- ------------
Gross Profit 8,445 - 27,842
---------- ---------- ------------
OPERATING EXPENSES:
Research and development 307,567 223,074 6,201,205
General and administrative 302,782 296,552 7,023,481
---------- ---------- ------------
610,349 519,626 13,224,686
---------- ---------- ------------
LOSS FROM OPERATIONS (601,904) (519,626) (13,196,844)
---------- ---------- ------------
OTHER INCOME (EXPENSE):
Interest expense - - (561,016)
Interest income 15,939 36,086 225,655
Other - - 1,651,536
---------- ---------- ------------
15,939 36,086 1,316,175
---------- ---------- ------------
NET LOSS $ (585,965) $ (483,540) $(11,880,669)
========== ========== ============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.02) $ (0.01)
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 33,754,903 33,531,027
========== ==========
</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
Three Three (July 10, 1987)
Months Ended Months Ended to
March 31, March 31, March 31,
1998 1997 1998
------------ ------------ --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (585,965) $ (483,540) $ (11,880,668)
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 - - 312,541
Warrants issued for services - - 661,529
Increase in accounts receivable (19,436) - (19,436)
Increase in other assets - - (7,863)
Decrease in inventory - (17,339) -
Increase (decrease) in accounts payable and accrued expenses 82,686 (74,612) 233,889
Increase (decrease) in accrued payroll and related expenses 14,198 (214,053) 688,867
Increase (decrease) in customer deposit (9,500) - 22,735
---------- ------------ -------------
Net cash used in operating activities (518,017) (789,544) (8,879,118)
---------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment - - (225,930)
Expenditures for patents - - (154,682)
---------- ------------ -------------
Net cash used in investing activities - - (380,612)
---------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under notes payable, net - - 59,115
Repayments under capital lease obligation - (8,865) (116,676)
Proceeds from issuance of common stock - 25,000 10,240,747
Net effect of merger with CVI - - 57,067
---------- ------------ -------------
Net cash provided by financing activities - 16,135 10,240,253
---------- ------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (518,017) (773,409) 980,523
CASH AND CASH EQUIVALENTS, beginning of period 1,498,540 3,504,660 -
---------- ------------ -------------
CASH AND CASH EQUIVALENTS, end of period $ 980,523 $ 2,731,251 $ 980,523
========== ============ =============
</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
March 31, 1998
(Unaudited)
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, 1997, 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 March
31, 1998:
Shares Weighted Average
(000) Exercise Price
------ ----------------
Outstanding, December 31, 1997 4,650 $ 0.824
Granted 300 0.138
Exercised - -
Expired/Forfeited (57) (0.802)
----- -------
Outstanding, March 31, 1998 4,893 $ 0.782
===== =======
Exercisable at March 31, 1998 4,404 $ 0.820
===== =======
The following is a status of the warrants outstanding at March 31,
1998:
Shares Weighted Average
(000) Exercise Price
------ ----------------
Outstanding, December 31, 1997 1,889 $ 0.836
Granted - -
Exercised - -
Expired/Forfeited - -
------ -------
Outstanding, March 31, 1998 1,889 $ 0.836
====== =======
All of the warrants are exercisable at March 31, 1998.
-9-
<PAGE>
NOTE 3 - REVENUE RECOGNITION
Revenue is recognized upon shipment of products to customers.
NOTE 4 - BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted 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.
NOTE 5 - INVESTMENT IN NEWLY FORMED ENTITY
The Board of Directors authorized the Company to make a $7,500
investment in a newly formed entity. This investment was made in
April 1998.
NOTE 6 - RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements
at March 31, 1997 in order to conform to classifications used in the
current quarter.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.
------------------
Inapplicable.
Item 2 Changes in Securities and Use of Proceeds.
------------------------------------------
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 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.
June 30, 1998 By: /s/ Harry Berk
------------------------
Chief Accounting Officer
June 30, 1998 By: /s/ That T. Ngo
------------------------
President
-11-
<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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 980,523
<SECURITIES> 0
<RECEIVABLES> 19,436
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 999,959
<PP&E> 7,863
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,007,822
<CURRENT-LIABILITIES> 945,036
<BONDS> 0
0
0
<COMMON> 33,755
<OTHER-SE> 29,031
<TOTAL-LIABILITY-AND-EQUITY> 1,007,822
<SALES> 42,603
<TOTAL-REVENUES> 42,603
<CGS> 34,158
<TOTAL-COSTS> 34,158
<OTHER-EXPENSES> 610,349
<LOSS-PROVISION> 601,904
<INTEREST-EXPENSE> (15,939)
<INCOME-PRETAX> (585,965)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (585,965)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
