Interim Report on AMDL

 

 

 

SUMMARY

 

We have two opening comments. The first is that we have been stating unequivocally for over two years that DR-70^® would eventually be approved by the Food and Drug Administration...and it finally was.

 

While we believe that the company probably followed a somewhat convoluted and circuitous path in its effort to achieve the approval, we have to congratulate management on finally achieving that long sought after goal. The question now is how rapidly the company can capitalize on its hard fought victory.

 

Secondly, market conditions aside, the lack of reaction by Wall Street to both the company’s recently released guidance and the DR-70^® approval with its inherent potential to dramatically increase revenues and profitability in both the United States and China, has resulted in AMDL being one of the most under priced stocks that we have seen in sometime.

 

While we recognize that liquidity still remains somewhat of a problem, it is not by any means insurmountable and is unduly punishing the stock price. It is for that reason that we are maintaining our current target price of $23 on the shares, at least until we review the company’s second quarter results. (Please see the Opinion section at the end of this report.)

 

Since we did not explicitly review the first quarter and have to wait until about August 15 to dive into the second quarter results, the purpose of this interim review is to point a number of factors that should have already played into the share price and haven’t and how we see things as we wait for the second quarter results.

 

COMPANY OVERVIEW

 

Headquartered in Tustin, California, AMDL’s mission is to develop and commercialize cost effective products for the monitoring, detection and treatment of cancerous tumors in humans. Its product lines include pharmaceutical products for treating disease, a diagnostic test for diagnosing disease and nutraceuticals for promoting wellness.

 

Tests, such as those under development by AMDL, can influence a therapeutic decision; thereby assisting physicians in determining which therapy will be most beneficial to a patient, and then allowing them to monitor the patient’s progress.

 

AMDL develops, manufactures, markets and sells various immunodiagnostic kits for the detection of cancer and other diseases. Its products may be used by hospital, clinical, research and forensic laboratories and doctor's offices to obtain precise and rapid identification of certain types of cancer and other diseases.

 

Recently approved by the FDA for use in monitoring colon cancer in the United States, the DR-70^® test kit can be used to assist in the detection of at least 13 different types of cancer, including lung (small and non-small cell), stomach, breast, rectal colon and liver. AMDL has received approvals to import and market DR-70^® in Canada (for lung cancer), Australia and the United Kingdom. It has also received certification for EN ISO 13485, within the medical and diagnostic device industry.

 

Segment Summary

 

The Company had three reportable segments. In China there are two segments, (i) wholesale distribution to distributors, hospitals, clinics and similar institutional entities (“China-Wholesale”); and (ii) wholesale sales to operators of Jade Healthy Supermarkets which sell to consumers directly (“China-Direct Distribution”). In the United States there is only one segment, sales to distributors and institutional entities (“Corporate”). The Company evaluates performance based on sales, gross profit and net income (loss).

 

Although the U.S. business segment has been minimal, now that DR-70^® has been approved, we look for it to grow rapidly after the selection and implementation of a distribution channel and or partner(s) for DR-70^®.

 

RECENT EVENTS

 

DR-70^®

 

At the beginning of July, the FDA granted AMDL clearance to market DR-70^® as a safe and effective blood test for monitoring patients who have been previously diagnosed with colorectal cancer (CRC).

 

According to Kalorama Research, the world market for in vitro diagnostic tests for cancer is growing at nearly 11% annually and could reach nearly $8 billion by the end of 2012. FDA clearance to market was based upon data showing DR-70® has the ability to monitor the progression of colorectal cancer post-surgery in patients who are biopsy confirmed with this disease. Post-surgery testing with DR-70® enables cancer patients to determine if their treatment is effective and whether or not their colorectal cancer is out of remission.

 

CRC is the third most common cancer worldwide and the second leading cause of cancer deaths (irrespective of gender) in the United States according to the National Cancer Institute. It is estimated there will be approximately 150,000 new cases diagnosed in the US in 2008, roughly 51,000 deaths due to the disease, and almost half of all patients thought to be "cured" will develop a recurrence of CRC within 5 years — usually due to undetected metastases.

 

The approval of DR-70® marks the first clearance to market the FDA has granted for any monitoring product for CRC since January 14, 1982 when Carcinoembryonic Antigen, or what is commonly known as the CEA test, was approved. Until now, the CEA test has been the only accepted method approved in the U.S. DR-70® offers a new test that can monitor CRC tumors post-surgery.

 

JPI has submitted an application to the SFDA (Chinese version of our FDA) for approval to market the DR-70^® test kit in China. The SFDA has begun the approval process with the DR-70^® test kit undergoing standard product review by the Beijing Institute of Medical Device Quality Supervision and Inspection Center. Under the latest SFDA guidelines, approval requires prior approval by the U.S. FDA. Now that the FDA has spoken favorably, it is likely that JPI will seek to obtain approval for DR-70^® as expediently as possible.

 

Human Papilloma Virus (HPV)

 

On April 3, 2008 AMDL announced that it has entered into an exclusive sublicense agreement with MyGene International for the MyGene MYHPV Chip^® Kit, a diagnostic product for in-vitro genotype testing in women with the Human Papilloma Virus (HPV). The agreement between MGI and AMDL is an exclusive sublicense to use the patents, trademark, and technology in manufacturing, promoting, marketing, distributing, and selling the MYHPV Chip^® Kit in the countries of China (including Hong Kong), Taiwan, Singapore, Malaysia, Thailand, Cambodia, and Vietnam. MGI owns an exclusive worldwide license (excluding Korea) for the MYHPV Chip^® Kit.

 

HPV is the most common sexually transmitted infection. Globally there are approximately 330 million women presently infected with HPV, with 70% of existing infections in Asian populations. The virus infects the skin and mucous membranes. There are more than 30 important HPV types that can infect the genital areas of men and women.

 

Most people who become infected with certain types of HPV do not even know they have it. Cervical cancer is third leading cancer in women and the second leading cause of cancer deaths in women worldwide. It is well known that certain HPV types are the primary cause of cervical cancer. If HPV infection is detected early, cervical cancer could be prevented. Early diagnosis of HPV infection, which could lead to cervical cancer, is recommended for every woman.

 

According to recent clinical trial assessments in Medical News Today (medicalnewstoday.com), the global market for HPV testing is projected to be $250 million in 2008 with the total available market valued at $1 billion.

 

Studies are underway evaluating the use of HPV tests as a primary screen for cervical cancer in women, replacing PAP testing. Preventive Oncology International notes that worldwide cervical cancer remains the second most common malignancy in both incidence and mortality, it is the greatest cause of death from cancer in women in the developing world yet HPV screening is lowest there (see Figure 1). Forty percent of the world’s cervical cancer occurs in India and China alone. In developing countries, most of the limited medical funding is spent on disease treatment instead of prevention.

 

 

 

Fortunately, the GAVI Alliance (formerly known as the Global Alliance for Vaccines and Immunization) — a partnership of national governments, the World Health Organization, the World Bank, the Bill and Melinda Gates Foundation, the vaccine industry, public health institutions, and nongovernmental organizations — provides technical assistance and financial support for screening and vaccines in countries with a gross national income of less than $1,000 per capita, as well as in China, India, and Indonesia.

 

This pro-active funding is an important way to get in front of the growing crisis. In PRC China alone, at an extremely conservative estimate of 1,000,000 (there are approximately 455,960,489 women between 15 and 64 years old, 2007 CIA Factbook) with HPV screening at a cost of approximately $50 (price quoted in Forbes Magazine, 1/28/08) there is a $50,000,000 million USD annual market potential for a product that actually saves lives, saves human suffering, and saves precious medical financial resources. MyGene International, an international biotech company, estimates HPV testing in PRC China to grow from approximately 16 million tests in 2009 to over 25 million by 2025.

 

Recent advances in vaccines are also proving valuable in the struggle to prevent HPV and possibility of cervical cancer. 2006 saw the launch of Gardasil from Merck and Co., the first vaccine protecting against HPV (human papilloma virus) and the development of cervical cancer. Another HPV vaccine, Cervarix, from Glaxo-Smith Kline, was launched in 2007.

 

According to Visiongain report “World Market for Cancer Vaccines 2007-2012” these two vaccines are  predicted to generate sales of more than $4 billion by 2012, which could see them becoming top selling vaccines on a global level.

 

Because of the infection rate, many public health experts recommend mandatory HPV vaccination and screenings (George Washington University Report, 12/07). Condoms do not provide comprehensive protection against HPV. Both men and women are carriers of HPV. It is reasonable that those at risk in both sexes should get regular screenings and/or vaccines.

 

HPV Screening Tests: Extremely Important Tool As a primary tool, HPV screening has evolved beyond the Pap smear test (developed in 1941) into a more efficient and precise scientific endeavor in the last decade. As stated in a recent Forbes Magazine health report (“The Cancer That Shouldn't Be” 1/28/08), it borders on the scandalous that cervical cancer, among the few cancers that are preventable, kills 310,000 women a year worldwide.

 

In 2007, 11,150 women in the U.S. were diagnosed with it. Half of them had not had a recent Pap test. Another third did get tested but got false negatives from the 65-year-old Papanicolaou (Pap test) biopsy. The Pap test is valuable; having cut the rate of cervical cancer by 70%, but it is archaic. It calls on a lab technician or machine to peer at a daub of cervical cells under a microscope to spot the abnormal precancerous ones. This approach yields false negatives between 13% and 45% of the time.”

 

Furthermore in China, Qiao Youlin, Director for the Department of Cancer Epidemiology at the Chinese Academy of Medical Sciences in Beijing, said, “In developing countries, most of the limited medical funding is spent on disease treatment instead of prevention…as a result, developing countries account for 80 per cent of the total number of the world's cases of cervical cancer.”

 

Pap smear test results in developing countries are often unreliable, with poor techniques of obtaining the samples and analyzing them. Unlike Pap smears with lab intensive microscopic evaluations and lab analysis, new biotech companies are developing more efficient and precise HPV testing kits. At the forefront of HPV detection test kits are companies such as MyGene, German diagnostic tools firm Qiagen, and Digene Biotech of Gaithersburg, Maryland (recently acquired by Qiagen).

MYHPV Chip^® Kit (see Figure 2) was approved as a diagnostic reagent for in-vitro testing for HPV by the KFDA (Korean Food and Drug Administration). The test can diagnose HPV infection and each genotype of HPV at the same time. Features of the highly portable MYHPV Chip^® Kit include:

 

• Pre-Diagnosis of cervical cancer

• Diagnosis of HPV Infection and the Genotype of HPV Infection

• Diagnosis for low copy of HPV Infection

• Diagnosis of Multiple HPV Infection

• Simple and Easy Sample Collecting

•  Accurate and prompt Results

• Identifying total 24 types of HPV Infections (16 high-risk, 8 low-risk)

 

 

  Figure 2

 

 

Medical News Today reported that the global market for HPV testing is projected to be $250 million in 2008, with the total available market valued at $1 billion. There are more than 10 million HPV tests being performed annually in the United States alone, with only 28% market penetration.

 

The 2007 CIA Factbook indicated that in China there are approximately 455 million women between the ages of 15 and 64 years old. In China alone, at an extremely conservative estimate of 1 million possible patients, with HPV screening at a cost of approximately $50, there is a $50 million annual market potential for HPV testing in China. Estimates indicate that HPV testing in China could grow from approximately 16 million tests in 2009 to over 25 million by 2025.

 

Company Objectives

 

AMDL has delineated the following objectives for the coming year:

• Obtain FDA and SFDA clearance and international approvals for our DR-70^® product. This has been done for the United States FDA!

• Expand JPI’s business through new distribution channels, including the JPGreen Clinics.

• Distribute greater quantities of DR-70^® kits in approved markets.Develop DR-70^® distribution channels in new markets.

• Pursue one or more strategic partners to license and develop our combination immunogene therapy technology.

• License North American drugs for manufacture and sales in China and Asia; JPI has signed a memorandum of understanding with Bio-Health Technology Inc. (“BTI”) to act as their sole manufacturer of PROVIN-C.  In February of 2008, JPI assisted BTI in setting up their representative office in Beijing.  JPI will submit an application to the SFDA for approval to market PROVIN-C which we hope will be completed by the end of 2009, although there can be no assurance that such application will be approved at that time, if at all.

• Fully utilize our Chinese Good Manufacturing Practices (“GMP”) recognition manufacturing facilities to foster worldwide sales of existing and to-be developed products.

 

OVERVIEW OF JPI’s BUSINESS

 

JPI is currently the major engine for AMDL in terms of both revenue and profit. The division manufactures and distributes its products through two wholly-owned Chinese subsidiaries, JJB and YYB.  Historically, JJB has primarily been a manufacturer and distributor of large and small volume injectable fluids as well as other products for external use, while YYB primarily manufacturers tablets, capsules and other over-the-counter pharmaceutical products.  Sales of JPI’s products are approximated to be 40% over-the-counter and 60% to hospitals and other institutional customers.

 

JJB’s facilities in Shangrao, Jilin Province, China are located on approximately 24 acres of land housing its 250,000 square foot manufacturing facility.  YYB is located in Tuman City, Jilin Province, China, and operates a 150,000 square foot facility on approximately 3.45 acres of land there.

 

The management of JJB was notified by the Chinese Military Department of its intent to annex part of JJB’s plant located near a military installation. The proposed area to be annexed contains the facilities that are used to manufacture large and small volume parenteral solutions, i.e. those administered by injection, infusion or implantation.  Although the military’s interest appears to be waning, management has lodged claims against surrendering the plant to the Chinese Military Department but has not received a response as of yet. If such annexation were to occur, the expectation is that JJB will be compensated fairly for the facility, although JJB will have to spend significant time and resources finding another location and restarting those operations a fresh.  In addition, a new location will likely need to obtain GMP certification. Management has indicated that, based upon oral communications with the Chinese military authorities in Shangrao, it is unlikely that any decision will be made by them before early 2009.

 

JJB’s GMP certification has expired for the small volume parenteral solutions injection plant currently manufacturing Goodnak, and JJB has ceased operations at this facility while modifications are made to the facility to bring operations in compliance.  The cost of these modifications is estimated at approximately $1,000,000 and JBB expects to resume operations at that location by the end of August 2008. Management has indicated that there are currently sufficient inventories of JJB’s small volume injectatable solutions to last well into October 2008.

 

Both JJB and YYB utilize the services of more than 200 small suppliers.  No raw materials are imported for their pharmaceutical manufacturing operations and no finished products are currently exported out of China.  All raw materials are stored at the facilities and neither JJB nor YYB has experienced any difficulty in obtaining raw materials for their manufacturing operations. JJB has 57 production licenses for large volume injection fluids, small volume injection fluids, tablets and tinctures and related products.

 

JJB’s primary products in the large volume injectable category are:

 

• Glucose injection
• Glucose and Sodium Chloride injection
• Sodium Chloride injection
• Metroniadazole injection
• Metroniadazole and Glucose injection
• Destran 40 Glucose injection
• Heartleaf Houttuynia Herb Extracts injection

 

JJB’s facility has the capability to produce up to 18 million bottles of large volume injection fluids annually. JJB’s primary products in the small volume injectable category are: 

 

• Human Placental Extracts injection
• Heartleaf Houttuynia Herb Extracts injection
• Chrondroitin Sulfate injection
• Amikacin Sulfate injection
• Muscle injection; Glucose injection
• Ribavirin injection
• Gentamycin Sulfate injection

 

JJB’s facility has the ability to produce 70 million bottles of small volume injection fluids annually. JJB’s primary products in the tablet category are:

 

• Metroniadazole tablets
• Domperidone tablets
• Piracetam tablets
• Inosine tablets
• Oryzanol tablets
• Compound Benzoic Acid tablets
• Camphor Solution tablets

 

JJB’s facility has the ability to produce 1.5 billion tablets annually.  JJB has licenses for tinctures and the principal product is compound Benzoic Acid. JJB has no significant licensing, royalty or other similar agreements or labor contracts other than standard individual employments contracts with all of JJB’s employees, which is customary in China. During the first half of 2008, JJB expects to also manufacture and distribute the following:

 

• Omeprazole sodium injectible solutions
• Balolloxacin tablets
• Prulifloxacin tablets
• Lomefloxacin Aspartate injectible solutions
• Roxethromycin tablets

 

YYB has 86 product licenses.  The following is a list of YYB’s principal products:

 

• Gu Yian Ling Pian
• Diaitamin Calcium Hydrogen Phosphate and Lysine tablets
• Compound Gentian and Sodium Bicarbonate tablets
• Compound Paracetamol and Amantadine Hydrochloride capsules
• Bear Bile tablets; Promethazine and Bile tablets
• Compound Declofenac Sodium and Chlorphenamine Maleate tablets
• Paracetamol Caffeine
• Artificial Cow bezoar and Chlorphenamine Maleate tablets
• Paracetamol Caffeine; Artificial Cow-bezoar and Chlorphenamine Maleate capsules
• Trivitamin and Calcium Gluconate Calcium Hydrogen Phosphate chewable tablets
• Calcium Hydrogen Phosphate chewable tablets
• Fenbufen capsules
• Nan Bao capsules
• Rhizoma Gastrodiane capsules
• Bererine Hydrochloride tablets

 

YYB’s plant facility was renovated and new manufacturing facilities were completed in July 2005.  YYB’s facilities have the capacity to produce more than an aggregate of one billion tablets and capsules per year.

 

Currently, although both JJB and YYB have approximately 140 product licenses, only eight products significantly contribute to JPI’s sales.  For the year ended December 31, 2007, the top selling JPI products (unaudited) were as follows. Note that approximately 40% were over-the-counter sales and 60% were sales to distributors.

 

JJB is expected to release the following products in 2008:

• Epinastine Tablets                                 Allergy                   Third quarter 2008
• Creatine Phosphate Sodium Injectible     Heart/Angina           Third quarter 2008
• Doxtaxel                                              Cancer                    Third quarter 2008

   

JPGreen Health and Beauty Clinics

 

In order to capitalize on the Chinese interest in anti-aging products, nutritional supplements and cosmetic products, in July 2007, JPI began direct distribution of similar products through retail outlets owned and managed by others known as “Jade Healthy Supermarkets.” They are essentially small retail stores operated by others who sell JPI’s products at retail to consumers.

 

As a result of this experience, JPI has refocused these activities to concentrate on sales to beauty clinics who could offer anti-aging clinical treatments to its clients.  These clinics are now called “JPGreen Health and Beauty Clinics.”

 

In 2007, JPI developed a cooperative relationship to take over the management of eight existing beauty product store locations and re-brand them as JPGreen Health and Beauty Clinics. Then in the first half of 2008, numerous existing beauty and spa businesses indicated their interest in being either converted to JPGreen Clinics and or become exclusive GP Green product sellers, without JPI’s involvement in direct ownership and or management. Based upon this lower cost strategy, JPI dissolved its cooperative relationship with the eight stores in favor of accelerating direct store sales activities.

 

 

Both JJB and YYB are developing educational programs for hospitals, doctors, clinics and distributors with respect to JJB and YYB’s product lines.  These educational programs are intended to improve sales and promotion of JJB and YYB’s products. 

 

Both JJB and YYB sell to hospitals, retail stores and distributors who act as agents.  One primary distributor has 29 retail outlets throughout the China.  In addition, JJB and YYB have a dedicated sales team that manages its own direct sales force and sells to retail outlets all over China.

 

Competition

 

JJB and YYB compete with different companies in different therapeutic categories.  For example, with regard to large and small volume injection fluids, JJB primarily competes with Jiangxi Zhuhu Pharmaceutical Company, located in Jiangxi Province, and Jiangxi Pharmaceutical Company, located in Jiangxi Province.

 

The manufacture of large and small volume injection fluids, small volume injection fluids, tablets and tinctures and related product include generics, over-the-counter and supplement pharmacy products.  There are at least 70 companies in China approved by the SFDA to manufacture large and small volume injection fluids.

 

JJB competes with numerous companies for distribution of JJB’s tablets as these are common over the counter pharmaceuticals.  YYB completes primarily with twenty other companies similar to YYB who are licensed to sell herbal extracts throughout China and Asia.  It shares the same markets in China as American Oriental Bioengineering, Tiens Biotech Group and China Medical Technologies, along with a number of other companies.

 

FINANCIALS

 

Summary

 

For the first quarter of 2008, AMDL reported sales of approximately $3.58 million (unaudited) for the as compared to $1.4 million for the first quarter of 2007. It should be noted that first quarter sales are typically the lowest of the year due to Chinese holidays and general industry trends.

 

 

Gross profit for the three months ended March 31, 2008 increased 144% to $1,771,016, compared to $726,869 for the same period in 2007. JPI contributed $1,769,593 to the gross profit for the three months ended March 31, 2008, compared to $715,299 for the same period in 2007.

 

The consolidated net loss for the three months ended March 31, 2008 was $1,472,196 or ($0.10) per share, compared to a consolidated net loss of $1,385,406 or ($0.14) per share for the same period in 2007.

 

We are happy to see that AMDL for the first time has provided guidance going forward for 2008. According to the company’s latest statement, it has targeted net sales for 2008 to increase at least 100% percent over FY2007 anticipating a number in the range of $30 to $38.7 million, with gross margins of 48% to 52% or $14.4 to $21.2 million.

 

The FY2008 R&D and SG&A expenses are expected to total approximately $6.8 to $8.7 million, which includes stock-based (common shares, warrants and options) compensation expenses. Net income after taxes is expected to be between $9.5 and $12.2 million including any foreign currency adjustments.

 

The company has also said that at a minimum it plans to double sales annually over the next three years, thereby establishing JPI as one of the top 10 pharmaceutical companies in China, while at the same time introducing other key products such as DR-70® and MyHPV® to the marketplace."

 

Significant enhancements in AMDL’s China operations and other previously announced business opportunities have created a financial platform for AMDL to improve its sales and earnings profile during the second half of FY2008. This projected growth is driven by the following business trends and initiatives:

 

Historically, the China pharmaceutical industry and JPI's business have experienced strong sales during the 2nd, 3rd and 4th quarters, with the Q3 and Q4 quarters experiencing the greatest gains. AMDL anticipates sales through these distribution channels could yield up to $38 million for FY08 with an overall increase in sales during Q2, Q3 & Q4 FY08.

 

Because of its expanded distribution network the Company expects to increase annual gross sales in China by at least 100%, to approximately $30 - 38 million in FY08, while continuing to grow sales at a rate of 100% over the next 3 years.

 

Figure 3

 

AMDL vs. Peers in the United States

Company	Market Cap	YTD Price    Performance
ADL  AMDL, Inc.	47.2M	-26.1%
ABT  Abbott Laboratories	87.9B	+1.4%
BAX  Baxter International Inc.	42.7B	+17.1%
BEC  Beckman Coulter, Inc.	4.4B	-4.0%
BIO  Bio-Rad Laboratories, Inc.	2.3B	-18.2%

 

 

  

Figure 4

 

2008 Guidance

   

 

 

 

 

Figure 5

 

AMDL Peer Group Comparison & Valuation Analysis     07-25-08

 

 

 

	ADL	AOB	BIO	TBV	Industry
Market Cap:	47.19M	732.94M	2.30B	75.61M	78.58M
Employ­ees:	320	3,898	6,400	1,405	156
Qtrly Rev Growth (yoy):	151.90%	50.70%	30.90%	-21.00%	14.60%
Revenue (ttm):	17.17M	173.53M	1.56B	51.48M	37.89M
Gross Margin (ttm):	53.28%	68.98%	53.75%	68.67%	56.66%
EBITDA (ttm):	-185.83K	62.45M	230.40M	24.19M	-1.20M
Oper Margins (ttm)	-9.42%	32.44%	9.85%	40.91%	-10.46%
Net Income (ttm):	-2.44M	46.27M	92.49M	15.68M	-2.09M
EPS (ttm):	-0.188	0.623	3.383	0.220	N/A
P/E (ttm):	N/A	15.04	25.16	4.82	24.52
PEG (5 yr expected):	N/A	0.29	0.94	N/A	1.43
P/S (ttm):	2.75	4.14	1.47	1.51	2.55

FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

(Unaudited)

 

	Three  Months  Ended  March 31,
	2008		2007
Net revenues	$3,587,746	$1,424,179
Cost of sales	1,816,730	697,310
Gross profit	1,771,016	726,869
Operating expenses:
Research and development	8,695	11,776
Selling, general and administrative	2,868,180	1,995,635
	2,876,875	2,007,411
Loss from operations	(1,105,859)	(1,280,542)
Other income (expense):
Interest and other income (expense), net	(62,625)	3,837
Interest expense	(103,056)	(90,857)
Total other income (expense), net	(165,681)	(87,020)
Loss before provision for income taxes	(1,271,540)	(1,367,562)
Provision for income taxes	200,656	17,844
Net loss	(1,472,196)	(1,385,406)
Other comprehensive loss:
Foreign currency translation gain	783,432	16,603
Comprehensive loss	$ (688,764)	$ (1,368,803)
Basic and diluted loss per common share	$ (0.10)	$ (0.14)
Weighted average common shares outstanding — basic and diluted	15,130,345	10,095,697

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

	Three  Months  Ended  March 31,
	2008	2007
Cash flows from operating activities:
Net loss	$(1,472,196)	$(1,385,406)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	349,754	183,625
Fair market value of options granted to employees and directors for services	105,542	—
Fair market value of common stock, warrants and options expensed for services	527,425	697,168
Changes in operating assets and liabilities, net of effects of acquisition:
Accounts receivable	(881,183)	255,471
Related party account with Jade Capital	(614,301)	—
Inventories	36,782	102,515
Prepaid consulting, expenses and other assets	(96,798)	(923,806)
Accounts payable and accrued expenses	274,716	(64,097)
Customer deposits	—	10,835
Deferred revenue	(41,807)	—
Net cash used in operating activities	(1,812,066)	(1,123,695)
Cash flows from investing activities:
Deposits for acquisition of plant assets	(278,719)	—
Purchase of property and equipment	(25,114)	(9,306)
Return of amounts advanced on note receivable	13,936	—
Net cash used in investing activities	(289,897)	(9,306)
Cash flows from financing activities:
Payments on notes payable	(1,393,595)	—
Proceeds from issuance of common stock, net of cash offering costs of $123,875	876,129	—
Proceeds from the exercise of warrants	6,983	—
Net cash used in financing activities	(510,483)	—
Effect of exchange rates on cash and cash equivalents	24,816	16,603
Net change in cash and cash equivalents	(2,587,630)	(1,116,398)
Cash and cash equivalents, beginning of period	6,157,493	1,584,973
Cash and cash equivalents, end of period	$ 3,569,863	$ 468,575
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$ 102,000	$  90,719
Cash paid during the period for taxes	$ 74,000	$  800
Supplemental disclosure of non-cash activities:
Value of common stock recorded as prepaid consulting	$ 505,500	$ 1,076,100

 

 

AMDL, Inc.

2492 Walnut Avenue

Suite 100

Tustin, CA 92780

 

Gary L. Dreher, President and CEO

 

http://www.amdl.com

 

                  

Market Capitalization: (as of 3/31/08)                             $44 million

Weighted Average Shares Outstanding: (as of 3/31/08)   15,130,345

                                     

 

Disclaimer

 

This disclaimer is an integral part of our service. Please read it before investing in any security on which we report. Opinions are solely those of the staff of The Rudd Report and are subject to change without notice. Our reports are for information only and we do not offer securities or solicit the offer of securities of any company. Our reports are to inform the public and not to promote any company or its securities. We do not inform any company in advance of the nature or conclusions of our reports nor can a company change what we write. In the case of AMDL we received a fee for coverage up through December 31, 2008 in the amount of $18,000. Our reports contain factual statements and opinions. We derive these factual statements from sources that we believe are accurate. However, we do not represent that the facts presented are accurate or complete. Furthermore, the information contained in this report may become inaccurate because of the passage of time and should therefore be read for historical information only.