<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-27689
AMDL, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 87-0188822
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2492 Walnut Avenue, Suite 100, Tustin, California 92780
(Address of principal executive offices)
(714) 505-4460
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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
As of May 12, 2000 the Company had 1,651,124 shares of its $.001 par value
common stock issued and outstanding.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. Financial Statements PAGE
<S> <C>
Balance Sheets at March 31, 2000 (unaudited) and December 31, 1999 2
Unaudited Statements of Operations for the three month
periods ended March 31, 2000 and 1999 and cumulative
from July 10, 1987 (date of inception) to March 31, 2000 3
Unaudited Statements of Cash Flows for the
three month periods ended March 31, 2000 and 1999 and cumulative
from July 10, 1987 (date of inception) to March 31, 2000 4
Notes to Unaudited Financial Statements 6
</TABLE>
1
<PAGE> 3
AMDL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------ --------------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 19,703 $ 75,867
Accounts receivable, net of allowance for doubtful
accounts of $8,759 and $4,000 at March 31, 2000
and December 31, 1999, respectively 18,342 15,401
Other current assets 3,376 9,007
------------------ --------------------
Total current assets 41,421 100,275
Other assets 5,758 5,758
------------------ --------------------
$ 47,179 $ 106,033
================== ====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 25,000 $ 25,000
Accounts payable and accrued expenses 324,815 325,845
Accrued payroll and related expenses 167,904 124,318
Customer deposits 5,800 5,800
------------------ ---------------------
Total current liabilities 523,519 480,963
------------------ ---------------------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares
authorized; 330 shares issued and outstanding: - -
Common stock, $0.001 par value; 50,000,000 shares
authorized; 1,651,124 shares issued and outstanding
at March 31, 2000 and December 31, 1999.
1,651 1,651
Additional paid in capital 13,348,308 13,144,252
Deficit accumulated during development stage (13,826,299) (13,520,833)
------------------ ---------------------
Total stockholders' deficit (476,340) (374,930)
------------------ ---------------------
$ 47,179 $ 106,033
================== =====================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 4
AMDL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 10, 1987
(DATE OF INCEPTION)
THREE MONTHS ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 2000
------------------ ----------------- ---------------
<S> <C> <C> <C>
Revenues $ 2,585 $ 14,226 $ 282,891
Cost of sales 2,006 12,763 204,360
---------------- --------------- ---------------
Gross profit (loss) 579 1,463 78,531
---------------- --------------- ---------------
Operating expenses:
Research and development 66,732 59,954 6,954,903
General and administrative 238,076 221,557 8,820,236
---------------- --------------- ---------------
304,808 281,511 15,775,139
---------------- --------------- ---------------
Loss from operations (304,229) (280,048) (15,696,608)
---------------- --------------- ---------------
Other income (expense):
Interest expense (1,765) (1,460) (596,618)
Interest income 528 439 258,061
Other - - 1,708,936
---------------- --------------- ---------------
(1,237) (1,021) 1,370,379
----------------- ---------------- ---------------
Net loss before extraordinary item (305,466) (281,069) (14,326,229)
----------------- ---------------- ----------------
Extraordinary item:
Gain on forgiveness of debt - - 499,930
---------------- --------------- ---------------
Net income (loss) $ (305,466) $ (281,069) $ (13,826,299)
================= =============== ===============
Basic and diluted income (loss)
per share $ (0.19) $ (1.37)
================ ===============
Weighted average shares
outstanding 1,651,124 205,139
================ ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 5
AMDL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 10, 1987
(DATE OF INCEPTION)
THREE MONTHS ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 2000
----------------- ---------------- ----------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (305,466) $ (281,069) $ (13,826,299)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization - - 497,743
Amortization of deferred interest - - 312,000
Common stock issued for services - - 312,541
Warrants and options issued for
services 69,056 - 826,926
Equity loss in investment in SAM - - 7,500
Gain on forgiveness of debt - - (499,930)
Changes in operating assets and
liabilities:
Accounts receivable, net (2,941) 4,433 (18,342)
Prepaid expenses 5,757 - -
Other current assets (126) - (3,376)
Other assets - - (5,758)
Accounts payable and accrued expenses (1,030) 63,750 265,402
Accrued payroll and related expenses 43,586 21,547 1,033,262
Customer deposit - - 5,800
--------------- --------------- -----------
Net cash used in operating activities (191,164) (191,339) (11,092,531)
--------------- ---------------- ------------
Cash flows from investing activities:
Purchase of equipment - - (225,930)
Expenditures for patents - - (154,682)
Investment in SAM - - (7,500)
--------------- --------------- ------------
Net cash used in investing activities - - (388,112)
--------------- --------------- -----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 6
<TABLE>
<CAPTION>
JULY 10, 1987
(DATE OF INCEPTION)
THREE MONTHS ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 2000
----------------- ---------------- -------------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of common stock $ - 135,000 $ 11,365,840
Proceeds from issuance of preferred stock,
net of offering costs of $30,000 135,000 - 135,000
Borrowings (repayments) under notes
payable, net - - 59,115
Repayments under capital lease
obligation - - (116,676)
Net effect of merger with CVI - - 57,067
---------------- --------------- ------------------
Net cash provided by financing activities 135,000 135,000 11,500,346
---------------- --------------- ------------------
Net change in cash (56,164) (56,339) 19,703
Cash at beginning of period 75,867 74,566 -
---------------- --------------- ------------------
Cash at end of period $ 19,703 $ 18,227 $ 19,703
================ =============== ==================
</TABLE>
See footnotes for supplemental disclosures of non-cash investing and financing
activities.
See accompanying notes to financial statements.
5
<PAGE> 7
AMDL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD JULY 10, 1987 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
NOTE 1 - MANAGEMENT'S REPRESENTATION
- ------------------------------------
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 audited financial statements and notes for the fiscal
year ended December 31, 1999 included in the Company's Annual Report on Form
10-KSB. The interim results are not necessarily indicative of the results for
the full year.
NOTE 2 - DEVELOPMENT STAGE
- --------------------------
The Company is in the development stage and has not generated significant
revenues from operations and has no assurance of any future revenues. The
Company will require substantial additional funding for continuing research and
development, obtaining regulatory approval, and for the commercialization of its
products.
Management has taken action to address these matters. They include:
- - Retention of experienced management personnel with particular skills in the
commercialization of similar products;
- - Attainment of technology to develop additional diagnostic products for
detecting cancer and other diseases; and
- - Raising additional funds through the sale of equity securities at terms
below market price quotations.
The Company's products, to the extent they may be deemed medical devices or
biologics, are governed by the Federal Food, Drug and Cosmetics Act and by the
regulations of state agencies and various foreign government agencies. The
Company's proposed diagnostic test systems for use with humans are subject to
certain clearance procedures administered by the above regulatory agencies.
There can be no assurance that the Company will receive the regulatory approvals
required to market its proposed products elsewhere or that the regulatory
authorities will review the product within the average period of time.
The Company hopes to obtain revenues from product sales, but there is no
commitment by any party for the 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.
These circumstances raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 - STOCK ISSUANCE
- -----------------------
The Company is authorized to issue 10,000,000 shares of preferred stock, of
which the Board has designated 11,000 shares as Series A Preferred Stock
("Preferred Stock"). On October 22, 1999 the board of directors approved a
private placement of the 11,000 shares of Series A Preferred Stock at a price of
$500 per share. Each share of the Preferred Stock is convertible at the option
of the shareholder into 250 shares of common stock and all shares of Preferred
Stock shall automatically convert at such time as the common stock is listed for
trading on the Nasdaq Small Cap Market or Nasdaq National Market System and a
registration statement covering the underlying common stock has been declared
effective by the SEC. The Preferred Stock will pay a dividend of 20 shares of
common stock twice per year. These shares of common stock will be considered
"restricted securities". The Preferred Stock is redeemable at the option of the
Company at any time upon thirty days written notice at a redemption price of
110% of the Liquidation Preference plus all accrued and unpaid dividends. The
Liquidation Preference of the Preferred Stock is $500 per share. During the
period ended March 31, 2000, the Company
6
<PAGE> 8
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
For the Period July 10, 1987 (Date of Inception)
Through March 31, 2000
raised $135,000 (net of issuance costs of $30,000) from outside investors and
issued 330 shares of preferred stock (including 30 shares issued to consultants
for finders' fees).
NOTE 4 - STOCK OPTIONS
- ----------------------
Effective June 30, 1999, the Company adopted its 1999 Stock Option Plan (the
"Plan"). Under the Plan, incentive stock options and nonqualified options may be
granted to officers and employees of the Company for the purchase of up to
750,000 shares of the Company's common stock. The exercise price per share under
the incentive stock option plan shall not be less than 110% of the fair market
value per share on the date of grant. The exercise price per share under the
non-qualified stock option plan shall not be less than 85% of the fair market
value per share on the date of grant. Expiration dates for the grants may not
exceed 10 years from the date of grant. The Plan terminates on June 30, 2009. On
January 17, 2000 the Board of Directors increased the total number of shares
issuable under the plan to 1,000,000. In the first quarter of 2000, the Company
granted options to its president to purchase 300,000 shares of the Company's
common stock and to its outside directors options to purchase an aggregate of
45,000 shares of the Company's common stock. All of these options have an
exercise price equal to the fair market value at the date of grant (estimated by
the Company to be $1.75 at January 17, 2000), vest immediately and expire five
years from the date of grant. Pursuant to SFAS 123, total compensation expense
to be recognized over the vesting period for options issued to directors is
$63,900, all of which was recognized as of March 31, 2000.
7
<PAGE> 9
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 raising of working capital. For the three months ended March 31, 2000,
the Company generated $2,585 in revenues from the sale of its 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, including an operating loss of $305,466 for the three months ended
March 31, 2000. From July 10, 1987 (inception) through March 31, 2000 the
Company has had a cumulative loss of $13,826,299. The Company is has commenced
manufacturing of and has received orders for its products. The Company is
currently negotiating for the distribution of its products in several Asian,
South American, Central American and European countries. Additionally, the
Company intends to begin marketing of its DR-70(TM) cancer detection kits in the
U.S. under "research use" labeling.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires significant funding for continued operations,
development of its test kits, 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, which was $19,703 at
March 31, 2000.
From December 31, 1999 to March 31, 2000, the Company's cash and cash
equivalents decreased $56,164. In addition, total outstanding indebtedness of
the Company, including accounts payable, was $523,519 at March 31, 2000. As of
May 1, 2000, cash is being depleted at the rate of approximately $87,000 per
month. The Company is hopeful of obtaining additional revenues from product
sales, but there is no commitment by any person for the purchase of any of the
Company's products. In the absence of significant sales and profits, the Company
shall seek to raise additional funds to meet its working capital needs
principally through the sales of its securities. The Company has started a $5.5
million private placement of shares of its Series A Preferred Stock. To date,
the Company has received $135,000 from the sale of its Series A Preferred Stock
in this offering. The Company believes that it needs to raise at lease
$1,000,000 from its private placement of Series A Preferred Stock in order to
fund its operations for the rest of the calendar year 2000. In the event the
Company is unable to raise $1,000,000 from the private placement, the Company
will be required to raise money from other sources, on whatever terms are
available at the time. 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 available on terms satisfactory to the Company.
The Company can make no prediction as to when, if ever, it will be able to
conduct its operations on a profitable basis. The report of the Company's
independent accountants for the fiscal year ended December 31, 1999 states that
due to recurring losses from operations, the absence of significant operating
revenues and the Company's limited capital resources, there is substantial doubt
about the Company's ability to continue as a going concern.
Although 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. The loss of the Company's key employees
could have a material adverse effect upon the operations of the Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999.
During the three months ended March 31, 2000, the Company generated
revenues of $2,585 from product sales compared to revenues for the three months
ended March 31, 1999 of $14,226. The decrease in revenues during the three
months ended March 31, 2000 is the result of the Company's decision to curtail
its marketing efforts and to focus its efforts on the raising of working
capital. Total operating expenses for the three months ended March 31, 2000 were
$304,808 compared to total operating expenses for the three months ended March
31, 1999 of $281,511. The increase resulted primarily from non-cash charges
relating to issuance of stock options during the three months ended March 31,
2000 that were not incurred during the three months ended March 31, 1999. In the
three months ended March 31, 2000, the Company's net loss was $305,466, compared
to a loss of $281,069 for the prior year period.
Total assets have decreased $58,854 from $106,033 at December 31, 1999 to
$47,179 at March 31, 2000 mainly from the use of cash to maintain minimal
operations. Total liabilities have increased $42,556 from $480,963 at December
31, 1999 to $523,519 at March 31, 2000 resulting from accrued payroll due to the
lack of funds.
8
<PAGE> 10
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements made by the Company involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially from
the forward looking statements include, but are not limited to, risks associated
with lack of significant operating history, demand for the Company's products,
international business operations, dependence on licensees, governmental
regulations, technological changes, intense competition and dependence on
management. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The Company's management disclaims
any obligation to forward-looking statements contained herein to reflect any
change in the Company's expectation with regard thereto or any change in events,
conditions, circumstances or assumptions underlying such statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes in Securities.
In February 2000, the Company commenced a private placement of shares of
its Series A Preferred Stock. To date, the Company has sold 300 shares of its
Series A Preferred Stock for gross proceeds of $150,000. The Company has also
paid finders' fees of $15,000 in cash and 30 shares of Series A Preferred Stock.
Each share of Series A Preferred Stock is convertible at any time at the option
of the holder, into 250 shares of Common Stock.
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.
None
9
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMDL, Inc.
Dated: May 12, 2000 By: /s/GARY L. DREHER
-----------------------
GARY L. DREHER,
President
10
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
_______ ___________
<S> <C>
27 FINANCIAL DATA SCHEDULE
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,703
<SECURITIES> 0
<RECEIVABLES> 27,101
<ALLOWANCES> 8,759
<INVENTORY> 3,376
<CURRENT-ASSETS> 41,421
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 47,179
<CURRENT-LIABILITIES> 523,519
<BONDS> 0
0
0
<COMMON> 1,651
<OTHER-SE> (477,990)
<TOTAL-LIABILITY-AND-EQUITY> 47,179
<SALES> 2,585
<TOTAL-REVENUES> 2,585
<CGS> 2,006
<TOTAL-COSTS> 2,006
<OTHER-EXPENSES> 304,229
<LOSS-PROVISION> 4,759
<INTEREST-EXPENSE> 1,765
<INCOME-PRETAX> (305,466)
<INCOME-TAX> 0
<INCOME-CONTINUING> (305,466)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (305,466)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
