SecProbe.io

CORRESP
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corresp

Daniel K. Donahue

(949) 623-3518

ddonahue@prestongates.com

November 1, 2005

VIA
FACSIMILE & FEDERAL EXPRESS

(202) 772-9218

Mr. Gary Todd

Reviewing Accountant

Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 6010

Washington, DC 20549

    Re:

    AMDL, Inc.

    (SEC File No. 0-27689)

Dear Mr. Todd:

     On behalf of our client, AMDL, Inc. (“AMDL”), we are submitting this letter and enclosures in
response to your letter of October 20, 2005. Courtesy copies of this letter and the enclosures are
also being delivered to Eduardo Aleman, of the Division of Corporation Finance, for his information
in connection with AMDL’s pending Registration Statement on Form S-3 filed on October 12, 2005 (SEC
File No. 333-128954). Upon the resolution of the comments in your October 20th letter, AMDL will
edgarize and file appropriate amendments to the periodic reports described below.

     On behalf of AMDL, set forth below are its responses to your comments set forth in your
October 20th letter, in the order in which those comments were provided.

2004 Annual Report on Form 10-KSB (“2004 Form 10-KSB”)

     1. In connection with the preparation of its audited financial statements as of and for the
year ended December 31, 2004, AMDL reviewed its immunogene therapy technology (“CIT technology”)
under SFAS 144. Based on AMDL’s review, and after consultation with AMDL’s auditors, management of
AMDL determined that events and circumstances that existed as of December 31, 2004 did not indicate
that the carrying amount of the CIT technology may not be recoverable. The factors considered by
AMDL and the basis of its belief concerning SFAS 144 impairment are set forth below. Our
discussion has been organized around the bullet points (reproduced below in bold) set forth in
comment no. 1 of your October 20th letter.

Mr. Gary Todd

November 1, 2005

Page 2

    •

    Explain to us, in detail, why the technology is not impaired under SFAS [144]. Show
us how you performed impairment testing under that guidance. Also, identify and
thoroughly describe the bases for the significant assumptions underlying that
testing. Your response should clearly demonstrate that your methods and assumptions
are appropriate under GAAP.

Pursuant to Paragraph 8 of SFAS 144, “a long-lived asset (asset group) shall be tested
for recoverability whenever events or changes in circumstances indicate that its
carrying amount may not be recoverable.” AMDL reviewed the examples included in
subparagraphs (a) through (f) of Paragraph 8 for events or changes in circumstances and
also considered other factors that could indicate the need for an impairment review.
The factors AMDL considered as possible indicators of the need for an impairment review
included the following: (i) market projections for cancer technologies; (ii) significant
under-performance relative to expected historical or projected future operating results;
(iii) ability to obtain patents, including continuation patents, on the technology; (iv)
significant changes in the strategic business objectives and utilization of the long
lived assets; (v) significant negative industry or economic trends, including legal
factors; and (vi) the potential for strategic partnerships for the development of our
patented technology.

With respect to these factors, AMDL considered the following as of December 31, 2004:

    (i)

    Because the CIT technology is unique and in the early stages of
development, no realistic projected cash flow that would be directly associated
with the use of the CIT technology was available or could be produced. Therefore,
AMDL reviewed and relied on various industry articles and publications projecting
the market for cancer technologies.

    (ii)

    Since the CIT technology had yet to become the subject of revenue
producing operations, nor had AMDL expected revenues by December 31, 2004, it could
not be deemed to be significantly underperforming.

    (iii)

    AMDL obtained a patent on the CIT technology in May 2004 and a
continuation application was also filed in that year. We have enclosed pages 7 and
13 to the 2004 Form 10-KSB marked to show our proposed disclosure of the filing of
the continuation patent application.

    (iv)

    The business objective of attracting a strategic partner, the merits of
that objective and the likelihood of its success had not changed since 2002.

Mr. Gary Todd

November 1, 2005

Page 3

    (v)

    In regard to negative trends, including legal factors, AMDL
thoughtfully considered the AcuVector litigation, which is disclosed on page 2 of
the company’s 2004 Form 10-KSB. There had been no activity or change in the
AcuVector lawsuit since its initiation in 2002, and AMDL believed that the lawsuit
was without merit. In addition, AMDL was aware that Dr. Chang was in settlement
discussions with the University of Alberta on the other claim, the nature of which
suggested an outcome of the AcuVector claim favorable to AMDL.

    (vi)

    Until the patent referred to in (iii) above was issued, it was
difficult to enter into significant discussions with a strategic partner. ADML
only came into a position to attract a partner and conduct more detailed
negotiations when the patent issued.

Based on the foregoing, among other factors referred to below, AMDL concluded that there
were no events or circumstances as of December 31, 2004 indicating that the carrying
amount of the CIT technology may not be recoverable. We have enclosed pages 13 and F-8
to the 2004 Form 10-KSB marked to show our proposed revisions to the MDA and financial
statement note disclosure on this issue.

    •

    Describe the work you have performed on completing the technology since
acquisition and reconcile the status of that work to that anticipated when you
first acquired the technology. Describe the reasons for any delays and tell us why
any delays have not rendered the technology impaired. Please be detailed and
specific.

The CIT technology was complete when AMDL started investigating the CIT technology, but
no patents had issued. The CIT technology was based on a family of patent applications
filed as early as 1997. In fact, as a result of AMDL’s investigation, and prior to the
acquisition of the CIT technology, Dr. Chang was required to file a new patent
application on the CIT technology that was eventually acquired by AMDL, although it
related back to the original filings. The application for the patent that issued,
Patent No. 6,730,512 (“‘512 Patent”), was filed on April 4, 2001 and acquired by AMDL on
August 31, 2001. The ‘512 Patent issued on May 4, 2004, and until that time there was
(i) some doubt as to what claims would issue, and (ii) less likelihood that any large
pharmaceutical company (“Big Pharma”) would license the technology without the patent
having been issued as to the specified claims. The ‘512 Patent issued as to eight
claims and the remaining claims were dropped. AMDL filed a continuation patent
application, Application No. 10/785,577 (the “577 Application”), with respect to those
claims. The ‘577 Application has not yet resulted in a patent, and is still being
reviewed by the US Patent and Trademark Office (“USPTO”). According to the USPTO
website, the ‘577 Application is in

Mr. Gary Todd

November 1, 2005

Page 4

good standing. Currently, examinations take place 18 to 24 months after filing and thus
the ‘577 Application is about ready for review. Given that the ‘512 Patent issued in
May of 2004, and the ‘577 Application is yet to be reviewed, it is respectfully
submitted that the time frames involved alone suggest that is somewhat premature to
expect revenues to be generated from the CIT technology. There was nothing
unanticipated as the patents and the patent processes proceeded in the usual course
along the way.

    •

    Describe your plans, including timing, for generating cash flows from the
technology. If the anticipated timing has changed from that established when the
technology was first acquired, tell us how and why.

It has never been the strategy of AMDL to invest in a series of clinical trials to
establish the efficacy of the CIT technology. Rather, the strategy, from the beginning,
has been to obtain patents on the CIT technology and partner with a large pharmaceutical
company to demonstrate its usefulness in the development of a vaccine for several types
of cancer by enhancing the body’s immune system. The CIT technology is intended to
build the body’s immune system and destroy cancer cells. Preliminary tests were
conducted by Dr. Chang in Canada indicating that the CIT technology could be effective
in treating skin and brain cancer. After acquiring the CIT technology, AMDL engaged Dr.
Chang, the inventor, to conduct an animal study to demonstrate that the CIT technology
might have applicability in the treatment of breast cancer. Dr. Chang conducted an
animal study at University of Florida at a cost of $60,000 and the results were
promising. This study, coupled with the trials in Canada and the patent, formed the
basis of the “package” used to attempt to attract a Big Pharma partner. The cost of
further studies or clinical trials is perceived to be prohibitive for a company the size
of AMDL. It was always envisioned that any clinical trials and other studies beyond
what was done in Canada would be done by a Big Pharma partner who had partnered with
AMDL.

    •

    Tell us what you expect it will cost to bring the technology to revenue
generating status and tell us how and when you expect to raise necessary funding.
Describe any changes in the expected costs from those anticipated when you first
acquired the technology.

As was anticipated at the time of acquisition of the CIT technology, AMDL does not
anticipate expending any significant funds on furthering the technology other than the
normal patent and legal fees incurred to prosecute the pending patent application.

    •

    Describe the status of your efforts to enter into strategic alliances or
otherwise locate partners to develop the immunogene therapy technology intellectual
property. If these efforts have not developed as anticipated at

Mr. Gary Todd

November 1, 2005

Page 5

acquisition, describe the reasons for any delays and tell us why any delays have not
rendered the technology impaired.

The patent process took a long time and it was not unreasonable to believe that until
our patent issued that a partner would not be attracted. Notwithstanding the AcuVector
claim, AMDL made a number of solicitations to Big Pharma partners in 2003 and 2004
before the patent had issued, but received no significant interest. One solicitation
was made by Marvin Rosenthale, Ph.D., a member of the board of AMDL, to a number of
pharmaceutical companies with whom he had contacts and prior experience with a similar
matter. Gary Dreher, President of AMDL, also mailed information on the CIT technology
to several major pharmaceutical companies in April 2004, many of whom attended a
conference on biotechnology licensing. The conference was directed at attendees who
were looking for new technologies in the cancer and related fields.

The AcuVector lawsuit has had an impact on AMDL’s ability to successfully exploit the
CIT technology with a Big Pharma partner. It appears that AcuVector’s strategy is to
make it more difficult for AMDL to attract a Big Pharma partner, even though AcuVector
has no funds available to it and has consciously not advanced the case in Canada.
AcuVector is hoping that AMDL will make a settlement offer. As stated in prior filings,
AMDL believes AcuVector’s case is without merit. Until the AcuVector lawsuit is
resolved, management believes that the AcuVector lawsuit could delay the timing of
successful exploitation of the CIT technology, but does not believe it diminishes the
value significantly as the life of the patent is approximately 16 more years.

    •

    On page 12 you disclose that your monthly cash burn rate is approximately
$180,000 per month and that you expect your available resources to be sufficient
through March 2006. Describe the extent to which the $180,000 includes work
necessary to generate cash flows from and to recover the carrying amount of the
immunogene therapy technology intellectual property.

The $180,000 excludes any expenditures related to further development or attempts to
license the CIT technology, and further assumes that there are no significant
expenditures on the CIT technology other than the legal fees incurred in furtherance of
the patent prosecution process. We have enclosed page 12 to the 2004 Form 10-KSB marked
to show our proposed disclosure of this matter.

    •

    Describe the status of the patent application. If receipt of any patent has
been delayed from that anticipated when you first acquired the technology, identify
and describe the reasons.

Mr. Gary Todd

November 1, 2005

Page 6

See discussion above. No delays have been incurred which are not normal for the patent
process generally.

    •

    Tell us why you believe the assigned useful life is reasonable and provide
support for your conclusions.

The original useful life that was assigned is 20 years based upon the three additional
years it might take to achieve a patent, plus 17 years of the patent. AMDL believes
that due the early stage of the CIT’s technology development and the unique nature of
the technology that there is no reason to believe that useful life has changed.

Form 8-K dated August 29, 2005 (“August Form 8-K”)

     2. We are attaching page 2 to the August Form 8-K marked to show our proposed disclosure
regarding the penalty clauses which apply if the registration statement is not timely declared
effective. A copy of the form of Securities Purchase Agreement is enclosed in the package being
delivered via Federal Express. Pursuant to Section 6.8 and the definitions in Section 6.1 thereof,
liquidated damages are payable in additional warrants only and are capped at 6% of the warrant
shares issuable upon exercise of the warrants granted in the offering. The specific circumstances
are as follows:

    •

    if the Registration Statement is (was) not filed within 60 days of the closing,
or by October 15, 2005. This condition was met.

    •

    if the Registration Statement is not declared effective by the SEC within 120
days of the closing, or December 14, 2005, or within 5 business days of either (i)
notification of non-review by the SEC or (ii) notification that AMDL may request
acceleration of the effectiveness of the Registration Statement, if either of these
dates are earlier. These dates have not yet occurred.

    •

    if the Registration Statement ceases to be effective and is not subsequently
declared effective within a reasonable time based on the circumstances. No such
event has occurred.

Should any of these circumstances occur, the liquidated damages would be payable in the form of
additional warrants equal to 1.5% of the warrant shares (as defined) for each 30 day period
(prorated) until the event is cured. Since there are 1,581,796 warrant shares, the liquidated
damages would amount to 23,727 additional warrants for each 30-day period, with a maximum of 94,908
additional warrants. The additional warrants would be identical in nature to the warrants in the
offering and thus exercisable at $0.49 if part of the first closing or $0.44 if part of the second
closing. No cash is payable as liquidated damages or any other penalty.

Mr. Gary Todd

November 1, 2005

Page 7

     AMDL has endeavored to fully respond to the staff’s comments set forth in its October 20th
letter. Other than the proposed changes discussed herein and reflected by the attached enclosures,
AMDL does not expect to make further revisions to its 2004 Form 10-KSB or the August Form 8-K.

     On behalf of AMDL, please be advised that AMDL acknowledges that:

     • AMDL is responsible for the ad