VIVOS INC - Quarter Report: 2009 March (Form 10-Q)

advancedmedical_10q-3312009.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(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, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER 0-53497

ADVANCED MEDICAL ISOTOPE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	80-0138937
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8131 W. Grandridge Blvd. Suite 101,

Kennewick WA 99336

(Address of principal executive offices, Zip Code)

(509) 736-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of registrant’s common stock outstanding, as of April 30, 2009 was 50,341,680.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		1
Balance Sheets as of March 31, 2009 and December 31, 2008		1
Statements of Operations for the three months ended March 31, 2009		2
Statements of Shareholders’ Equity (Deficit) for the period ended March 31,2009		3
Statements of Cash Flows for the three months ended March 31, 2009 and the three months ended March 31, 2008		4-5
Notes to Condensed Consolidated Financial Statement		6-14
Item 2. Management’s Discussion and Analysis or Plan of Operation		14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		24
Item 4. Controls and Procedures		25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults Upon Senior Securities		27
Item 4. Submission of Matters to a Vote of Security Holders		27
Item 5. Other Information		27
Item 6. Exhibits		27

SIGNATURES		28

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Advanced Medical Isotope Corporation

(A Development Stage Company)

Balance Sheets

		March 31,			December 31,
		2009			2008
		(unaudited)
ASSETS

Current Assets:
	Cash and cash equivalents	$	221,170		$	86,631
	Accounts receivable		12,600			35,747
	Prepaid expenses		4,042			3,000
	Prepaid expenses paid with stock, current portion		73,969			140,579
	Inventory		888			7,100
Total current assets			312,669			273,057

	Fixed assets, net of accumulated depreciation		2,138,366			2,272,784

Other assets:
	License fees, net of amortization		20,833			27,083
	Patents		25,192			24,594
	Prepaid expenses paid with stock, long-term portion		87,500			96,875
	Deposits		180,406			155,406

	Total other assets		313,931			303,958
Total assets		$	2,764,966			2,849,799

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
	Accounts payable	$	491,447		$	580,258
	Accrued interest payable		35,418			188,956
	Payroll liabilities payable		5,900			9,098
	Preferred stock redeemable as common		-			3,182,405
	Loans from shareholder		204,335			194,599
	Convertible notes payable		447,322			257,481
	Current portion of capital lease obligations		2,097,934			2,138,853
	Total current liabilities		3,282,356			6,551,650

Long term liabilities:
	Capital lease obligations, net of current portion		-			-
	Total liabilities		3,282,356			6,551,650

Shareholders’ Equity (Deficit):
	Preferred stock, $.001 par value; 100,000 authorized;
	0 and 95,000 shares issued and outstanding, respectively		-			95
	Common stock, $.001 par value; 100,000,000 shares authorized;
	49,691,124 and 36,778,612 shares issued and outstanding,
	respectively		49,691			36,779
	Subscriptions receivable		-
	Paid in capital		14,078,230			9,546,087
	Accumulated deficit prior to the development stage		(2,884,043	)		(2,884,043	)
	Deficit accumulated during the development stage		(11,761,268	)		(10,400,769	)

	Total shareholders’ equity (deficit)		(517,390	)		(3,701,851	)

	Total liabilities and shareholders’ equity (deficit)	$	2,764,966	)	$	2,849,799	)

The accompanying notes are an integral part of these financial statements

Advanced Medical Isotope Corporation
(A Development Stage Company)
Statements of Operations
(unaudited)

							From inception of
							development stage
	Three months ended						on January 1, 2006
	March 31,						through March 31,
	2009			2008			2009

Revenues	$	60,975		$	32,335		$	459,272
Cost of goods sold		21,836			17,537			233,134
Gross profit		39,139			14,798			226,138

Operating expenses
Sales and marketing expenses		165			7,698			51,898
Start up costs		-			-			62,510
Depreciation and amortization		140,668			320,302			3,129,681
Impairment expense		-			-			903,535
Professional fees		169,687			252,433			2,637,831
Stock options granted		87,236			638,628			2,031,075
Payroll expenses		100,129			140,924			871,915
General and administrative
expenses		112,939			106,753			860,689
Total operating expenses		610,824			1,466,738			10,549,134
Operating loss		(571,685	)		(1,451,940	)		(10,322,996	)

Non-operating income (expense):
Interest expense		(181,870	)		(16,076	)		(733,828	)
Investment loss		-			-			(28,500	)
Loss on settlement of debt		(606,944	)		-			(675,944	)
Non-operating income (expense), net		(788,814	)		(16,076	)		(1,438,272	)

Loss before Income Taxes		(1,360,499	)		(1,468,016	)		(11,761,268	)

Income Tax Provision		-			-			-

Net loss	$	(1,360,499	)	$	(1,468,016	)	$	(11,761,268	)

Loss per common share	$	(0.03	)	$	(0.04	)

Weighted average common shares
outstanding		39,334,865			33,025,124






The accompanying notes are an integral part of these financial statements.

Advanced Medical Isotope Corporation
(A Development Stage Company)
Statement of Changes in Shareholders’ Equity (Deficit) (unaudited)


															Accumulated			Deficit
															Deficit			Accumulated
	Series A Preferred														Prior to			During
	Stock						Common Stock				Paid in		Subscriptions		Development			Development
	Shares			Amount			Shares		Amount		Capital		Receivable		Stage			Stage			Total

Balances at December 31,
2008		95,000		$	95			36,778,612	$	36,779	$	9,546,087	$	-	$	(2,884,043	)	$	(10,400,769	)	$	(3,701,851	)

Common stock issued for:
Debt settlement January
2009 ($.27 per share)		-			-			190,000		190		51,110		-		-			-			51,300
Services February 2009
($.42 per share)		-			-			80,000		80		33,520		-		-			-			33,600
Debt settlement March
2009 ($.35 per share)		-			-			150,000		150		52,350		-		-			-			52,500
Debt settlement March
2009 ($.35 per share)		-			-			33,333		33		11,633		-		-			-			11,666
Services March 2009
($.35 per share)		-			-			25,000		25		8,725		-		-			-			8,750
Loan fee March 2009		-			-
($.28 per share)								40,000		40		10,992		-		-			-			11,032
Cash March 2009
($.27 per share)		-			-			37,037		37		9,963		-		-			-			10,000
Cash March 2009
($.15 per share)		-			-			1,500,000		1,500		223,500		-		-			-			225,000
Convert 95,000 convertible
preferred shares ($.351
per share)		(95,000	)		(95	)		10,857,142		10,857		3,800,095		-		-			-			(3,810,857	)
Debt settlement January
2009 through issuance
of 500,000, 3 year, stock
options exercisable at
$.50 per share		-			-			-		-		228,654		-		-			-			228,654
Intrinsic value of convertible
debt issued March 2009		-			-			-		-		14,365		-		-			-			14,365
Vesting of stock options
March 2009		-			-			-		-		87,236		-		-			-			87,236
Net loss		-			-			-		-		-		-		-			(1,360,499	)		(1,360,499	)
Balances at March 31,
2009 (unaudited)		-		$	-			49,691,124	$	49,691	$	14,078,230	$	-	$	(2,884,043	)	$	(11,761,268	)	$	(517,390	)





The accompanying notes are an integral part of these financial statements.

Advanced Medical Isotope Corporation
(A Development Stage Company)
Statements of Cash Flow
(unaudited)

							From inception of
							development stage on
	Three months ended			Three months ended			January 1, 2006 through
	March 31, 2009			March 31, 2008			March 31, 2009
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(1,360,499	)	$	(1,468,016	)	$	(11,761,268	)

Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation of fixed assets		134,418			9,562			444,987
Amortization of licenses and intangible assets		6,250			310,740			2,707,007
Amortization of convertible debt discount		115,238			-			154,436
Amortization of prepaid expenses paid with stock		75,985			87,075			609,782
Impairment of intangible assets		-			-			903,535
Common stock issued for services		33,600			-			1,777,312
Stock options issued for services		87,236			638,628			1,167,105
Stock issued for repairs and maintenance		-			-			7,875
Loss on settlement of debt		606,944			-			606,944
Loss on conversion of shareholder loan		-			-			40,000
Changes in operating assets and liabilities:
Accounts receivable		23,147			7,275			(12,600	)
Inventory		6,212			15,975			(888	)
Prepaid expenses		(1,042	)		(28,750	)		(4,042	)
Deposits		(25,000	)		-			(180,408	)
Accounts payable		144,789			26,420			651,808
Payroll liabilities		(3,198	)		(36,579	)		5,900
Stock based consulting fees payable		(30,850	)		66,048			181,794
Accrued interest rolled into notes payable		-			-			142,375
Accrued interest		18,090			-			207,046
Net cash used by operating activities		(168,680	)		(371,622	)		(2,351,300	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired from investment		-			-			310,000
Cash used to acquire equipment		-			(1,203,427	)		(2,583,353	)
Cash used to acquire patents		(598	)		-			(25,192	)
Cash used to acquire intangible assets		-			-			(658,750	)
Net cash used in investing activities		(598	)		(1,203,427	)		(2,957,295	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from bank line of credit		-			-			219,908
Payments on line of credit		-			(20,000	)		(219,908	)
Proceeds from Washington Trust debt		-			-			199,908
Payments on Washington Trust debt		(8,364	)		-			(13,673	)
Proceeds from capital lease		-			1,197,611			2,445,156
Principal payments on capital lease		(40,919	)		(44,492	)		(347,222	)
Proceeds from convertible note		100,000			-			775,000
Proceeds from officers related party debt		22,800			-			70,800
Payments on officers related party debt		(4,700	)		-			(52,700	)
Proceeds received from shareholder loan		-			-			80,000
Proceeds from cash sales of common shares		235,000			655,280			2,044,996
Proceeds from exercise of options and warrants		-			72,500			125,000
Proceeds from subscription shares payable		-			-			202,500
Net cash provided by financing activities		303,817			1,860,899			5,529,765


The accompanying notes are an integral part of these financial statements.

Advanced Medical Isotope Corporation
(A Development Stage Company)
Statements of Cash Flow (continued)
(unaudited)

Statements of Cash Flow (unaudited) - continued

Net increase in cash and cash equivalents		134,539		285,850		221,170
Cash and cash equivalents, beginning of period		86,631		54,508		-
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	221,170	$	340,358	$	221,170


Supplemental disclosures of cash flow information:
Cash paid for interest	$	48,542	$	16,076	$	92,816
Cash paid for income taxes	$	-	$	-	$	-

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 1: BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of the Company have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures required by accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations of the Company for the period presented. The results of operations for the three months ended March 31, 2009, are not necessarily indicative of the results that may be expected for any future period or the fiscal year ending December 31, 2009.

Reclassification

Certain expenses for the period ended March 31, 2008 were reclassified to conform with the expenses for the period ended March 31, 2009. Certain liabilities at December 31, 2008 were reclassified to conform with the liabilities at March 31, 2009.

NOTE 2: GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has suffered recurring losses and used significant cash in support of its operating activities and the Company’s cash position is not sufficient to support the Company’s operations. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate we will continue to require funding from investors for working capital as well as business expansion during this fiscal year and we can provide no assurance that additional investor funds will be available on terms acceptable to us. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable time. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which we operate.

We anticipate a requirement of $3 million in funds over the next twelve months to maintain current operation activities. In addition we anticipate a requirement of approximately $7 million in funds over the next twelve months due to the anticipation of adding additional staff in the future assuming we are successful in selling our medical isotopes and/or the start of development by us on future manufacturing sites or other projects. Currently we have $221,170 cash on hand which means there will be an anticipated shortfall of nearly the full $10 million requirement in additional funds over the next twelve months. There are currently commitments to vendors for products and services purchased, plus, the employment agreements of the CFO and other employees of the company and our current lease commitments that will necessitate liquidation of the Company if we are unable to raise additional capital. The current level of cash is not enough to cover the fixed and variable obligations of the Company.

Assuming we are successful in our sales/development effort we believe that we will be able to raise additional funds through the sale of our stock to either current or new shareholders. There is no guarantee that we will be able to raise additional funds or to do so at an advantageous price.

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 2: GOING CONCERN - continued

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. The Company plans to seek additional funding to maintain its operations through debt and equity financing and to improve operating performance through a focus on strategic products and increased efficiencies in business processes and improvements to the cost structure. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3: FIXED ASSETS

Fixed assets consist of the following at March 31, 2009 and December 31, 2008:

	March 31, 2009			December 31, 2008
Production equipment	$	2,113,218			2,113,218
Building		446,772			446,772
Leasehold improvements		3,235			3,235
Office equipment		20,128			20,128
		2,583,353			2,583,353
Less accumulated depreciation		(444,987	)		(310,569	)
	$	2,138,366			2,272,784

Accumulated depreciation related to fixed assets is as follows:

	March 31, 2009		December 31, 2008
Production equipment	$	358,420		252,759
Building		82,060		54,707
Office equipment		3,760		2,543
Leasehold improvements		747		560
	$	444,987	$	310,569

Depreciation expense for the above fixed assets for the three months ended March 31, 2009 and the three months ended March 31, 2008, respectively, was $134,418 and $9,562.

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 4: INTANGIBLE ASSETS


Intangible assets consist of the following at March 31, 2009 and December 31, 2008:

	March 31, 2009			December 31, 2008
Intellectual property	$	-		$	250,750
Contracts and agreements		-			213,000
Customer lists		-			195,000
License Fee		75,000			2,972,625
Patents		25,192			24,594
		100,192			3,655,969
Less accumulated amortization		(54,167	)		(2,700,757	)
Less Impairment Expense		-			(903,535	)
Intangible assets net of accumulated amortization	$	46,025		$	51,677


Amortization expense for the above intangible assets for the three months ended March 31, 2009 and the three months ended March 31, 2008, respectively, was $6,250 and $310,740.

NOTE 5: RELATED PARTY TRANSACTIONS

Indebtedness from related parties

The Company had a $200,000 revolving line of credit with Washington Trust Bank that was to expire in September 2009. The Company had $199,908 in borrowings under the line of credit as of October 28, 2008 at which time it was paid off and replaced with a loan from two of the major shareholders. The loan calls for $4,066 monthly payments, including 8% interest, beginning November 30, 2008, with a balloon payment for the balance at October 31, 2009. There is no security held as collateral for this loan. As of March 31, 2009, the balance was $186,235 and all payments were current on this shareholder loan.

During the first three months of 2009 the Company received a total of $22,800 from a shareholder and officer in the form of a loan and the Company repaid $4,700 of this loan, leaving a balance of $18,100 as of March 31, 2009. All of the $18,100 balance was repaid in April 2009. There was no interest obligation on this loan to the Company.

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 5: RELATED PARTY TRANSACTIONS - continued

Rent expenses

The Company began renting office and warehouse space, known as the Production Facility, effective August 1, 2007, located in Kennewick, Washington from a shareholder holding less that 5% of the total shares outstanding. The lease agreement calls for monthly rental payments starting at $3,500, increasing every August 1st until they become $4,762 as of August 1, 2011. During the three months ended March 31, 2009 and the three months ended March 31, 2008 the Company incurred rent expenses for this facility totaling $11,340 and $10,500 respectively. In addition, the lease agreement called for the issuance of $187,500 in common stock valued at $.40 per share for a total of 416,667 shares. The company recognized the issuance of all 416,667 shares in 2007 and will amortize the $187,500 value of that stock over the sixty month term of the lease. For the three months ended March 31, 2009 and the three months ended March 31, 2008 the Company amortized $9,375 and $9,375, respectively, of this stock issuance and recognized it as rent expense.

Additionally, in June 2008, the Company entered into a twelve month lease for its corporate offices with three four month options to renew, but in no event will the lease extend beyond May 31, 2010. The lease agreement calls for monthly rental payments of $5,061 per month. During the three months ended March 31, 2009 and the three months ended March 31, 2008 the Company incurred rent expenses for this facility totaling $15,184 and $0, respectively.

Future minimum rental payments required under the Company’s current rental agreements in excess of one year as of March 31, 2009, are as follows:

	Production		Corporate
	Facility		Offices		Total
Twelve months ended March 31, 2010	$	47,779	$	60,736	$	108,515
Twelve months ended March 31, 2010		51,602		10,123		61,725
Twelve months ended March 31, 2012		55,730		-		55,730
Twelve months ended March 31, 2013		19,047		-		19,047

Total	$	174,158	$	70,859	$	245,017

Rental expense for the three months ended March 31, 2009 and the three months ended March 31, 2008 consisted of the following:

	Three Months ended March 31, 2009		Three Months ended March 31, 2008
Office and warehouse lease effective August 1, 2007
Monthly rental payments	$	11,340	$	10,500
Rental expense in the form of stock issuance		9,375		9,375
Corporate office		15,184		-
Total Rental Expense	$	35,899	$	19,875

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 6: PREPAID EXPENSES PAID WITH STOCK

The Company has issued stock to companies for various service agreements extending beyond March 31, 2009; however all of which are expected to expire sometime within the next twelve months. Additionally, the Company issued stock for prepaid rent which will expire annually through July 2012 at the rate of $37,500 per year. Prepaid Expenses are expected to mature as follows:

For the twelve month period ending March 31, 2010	$	73,969
For the twelve month period ending March 31, 2011		37,500
For the twelve month period ending March 31, 2012		37,500
For the twelve month period ending March 31, 2013		12,500
	$	161,469

NOTE 7: INCOME TAXES

At March 31, 2009, the Company has net operating loss carry forwards available to offset future taxable income if any of approximately $10,600,000, which will begin to expire in 2028. The utilization of the net operating loss carry forwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized. The Tax Reform Act of 1986 significantly limits the annual amount that can be utilized for certain of these carry forwards as a result of the changes in ownership.

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – and interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company is subject to provisions of FIN 48 as of January 1, 2007, and has analyzed filing positions in all of the Federal and state jurisdictions where it is required to file income tax returns. Upon review of the Company’s historical tax filings and consultation with its tax advisors, the Company believes that it has taken tax positions in preceding years that could potentially result in reductions to its cumulative net operating loss carry-forwards of approximately $1,395,015. The Company is subject to audit by the IRS and the State of Delaware for the prior three years.

The Company, as a matter of policy, would record any interest and penalties associated with taxes as a component of income tax expenses.

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 8: STOCKHOLDERS’ EQUITY

Common stock sale

In March 2009 the Company issued 37,037 shares for cash of $10,000 at $.27 per share.

In March 2009 the Company issued 1,500,000 shares for cash of $225,000 at $.15 per share. The Company granted 750,000 warrants in conjunction with this transaction. The warrants have an exercise price of $0.15 and a two year life.

Preferred stock

The Company issued 95,000 shares of preferred stock in September, 2006 to Utek Corporation for the Company’s purchase of technology from Utek. A board member of the Company acquired the 95,000 shares of the Company’s Series A Preferred Stock from Utek in February 2009. In March 2009 the board member converted the 95,000 shares of the Company’s Series A Preferred Stock and the related accrued interest into 10,857,142 shares of the Company’s common stock. The value of the transaction totaled $3,810,857 based on common stock’s average closing price for the ten trading days before the date of conversion of $0.351 per share. The Company’s Preferred Stock Redeemable as Common liability was reduced by $3,182,405, accrued interest was reduced by $171,628, preferred stock was reduced by $95, and a loss on settlement of debt of $456,823 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

Common stock issued for services and debt settlement

During January 2009, the Company issued 190,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $51,300 based on the quoted market price of stock on the transaction date, or $.27 per share. The company’s accounts payable was reduced by $52,500 and a gain on settlement of debt of $1,200 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

During February 2009, the Company issued 80,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $33,600 based on the quoted market price of stock on the transaction date, or $.42 per share. Stock-based compensation expense of $33,600 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

During March 2009, the Company issued 150,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $52,500 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s account payable was reduced by $50,000 and loss on settlement of debt of $2,500 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

During March 2009, the Company issued 33,333 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $11,667 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s accounts payable was reduced by $12,000 and gain on settlement of debt of $333 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

During March 2009, the Company issued 25,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $8,750 based on the quoted market price of stock on the transaction date, or $.35 per share. Stock-based compensation expense of $8,750 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 8: STOCKHOLDERS’ EQUITY – continued

Common stock issued for convertible debt

In March 2009, the Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum. The Note matures in March of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.30 per share. The value of the $100,000 debt plus the $0.35 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $74,603 toward the debt and $11,032 to the shares and $14,365 to the beneficial conversion feature. The $11,032 value of the shares and the $14,365 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $1,058 has been recognized in the accompanying financial statements for the three months ending March 31, 2009.

Common stock options

Options granted to non-employees, accounted for under the fair value method

During February 2009, the Company granted three consultants options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $.50 per share. The options are fully vested and expire February 5, 2012. The quoted market price of the common stock at the time of issuance of the options was $.49 per share. The Company valued the options in accordance with SFAS 123(R). The fair value of the options totaled $228,654 using the Black-Scholes option pricing model. The Company’s accounts payable was reduced by $79,500 and a loss on settlement of debt of $149,154 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate		1.37	%
Dividend yield		0.00	%
Volatility factor		211.2	%
Weighted average expected life	3 years

The following schedule summarizes the changes in the Company’s stock option plan:

						Weighted				Weighted
	Options Outstanding					Average				Average
	Number			Exercise		Remaining		Aggregate		Exercise
	Of			Price		Contractual		Intrinsic		Price
	Shares			Per Share		Life		Value		Per Share

Balance at December 31, 2008		5,609,021		$	0.15-1.05	1.52 years		$	424,138	$	0.75
Options granted		1,250,000			0.15-0.50	2.34 years			150,000		0.29
Options exercised		-			-		-		-		-
Options expired		(2,389,986	)		1.05		-		-		1.05
Balance at March 31, 2009		4,469,035		$	0.15-1.05	2.32 years		$	574,138	$	0.46
Exercisable at December 31, 2008		5,609,021		$	0.15-1.05	1.52 years		$	424,138	$	0.75
Exercisable at March 31, 2009		4,469,035		$	0.15-1.05	3.86 years		$	574,138	$	0.46

Advanced Medical Isotope Corporation

Notes to Consolidated Financial Statements

For the three months ended March 31, 2009 and the year ended December 31, 2008

NOTE 9: SUPPLEMENTAL CASH FLOW INFORMATION

During the three months ended March 31, 2008, the Company had the following non-cash investing and financing activities:

Decreased Common Stock Subscriptions Payable by $185,688 and increased common stock by $826 and increased paid in capital by $184,862.

During the three months ended March 31, 2009, the Company had the following non-cash investing and financing activities:

Decreased trade accounts payable by $114,500 and increased paid in capital by $115,093 and increased common stock by $373 and decreased loss on settlement of debt by $966.

Decreased Accrued Interest Payable by $171,628 and decreased Preferred Stock Redeemable by $3,182,405 and decreased Preferred Stock by $95 and increased Paid In Capital by $3,800,095 and increased Common Stock by $10,857 and increased loss on settlement of debt by $456,824.

NOTE 10: SUBSEQUENT EVENTS

In April 2009 the Company received $50,000 in exchange for a one year convertible note at ten percent interest. The note and the interest can be converted into stock at $.40 at election of note holder. The note holder also received 20,000 shares of common stock for entering into this transaction.

In April 2009 the Company sold 55,556 shares of its common stock at $.27 per share.

In April 2009 the Company sold 525,000 shares of its common stock at $.20 per share plus an equal amount of one year warrants, exercisable at $0.40.

In April 2009 the Company purchased a cyclotron for $235,000 to establish a second production facility at a site yet to be determined.

In April 2009 the Company issued 50,000 shares of its common stock valued at $0.31 per share on the date of issuance, in exchange for rent.

In May 2009 the Company named a new member to the Company’s Board of Directors and issued that member 200,000, three year, options to purchase the Company’s common stock at an exercise price of $0.26 per share.

Item 2. Management’s Discussion and Analysis or Plan of Operation.

Except for statements of historical fact, certain information described in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “would” or similar words. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other “forward-looking” information. Advanced Medical Isotope Corporation believes that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able accurately to predict or control. Further, we urge you to be cautious of the forward-looking statements which are contained in this Form 10-K because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. The factors listed below in the section captioned “Risk Factors” within Item 1A, “Description of Business,” as well as other cautionary language in this Form 10-K, describe such risks, uncertainties and events that may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. The occurrence of any of the events described as risk factors could have a material adverse effect on our business, results of operations and financial position.

Organizational History

Advanced Medical Isotope Corporation (the “Company”) was incorporated under the laws of Delaware on December 23, 1994 as Savage Mountain Sports Corporation (“SMSC”) for the purpose of acquiring or investing in businesses which were developing and marketing active sports products, equipment, and apparel. In April 2000, Earth Sports Products, Inc (“ESP”), a corporation registered in Washington, merged with SMSC. In April 2000, HHH Entertainment, Inc (“HHH”), a Nevada corporation, merged with SMSC. As of the date of merger, HHH was the only stockholder of SMSC.

The Company has had limited activity since inception and was considered dormant from the period May 1, 2000 through December 31, 2005. On September 6, 2006, the Company changed its name to Advanced Medical Isotope Corporation. The Company began planned principal operations in August 2007, but has not generated significant revenue. The Company plans to wholesale medical isotopes as well as to develop, produce and market medical isotopes.

On September 27, 2006, the Company acquired the assets of Neu-Hope Technologies, Inc (“NHTI”), a Florida corporation and a subsidiary of UTEK Corporation (“UTEK”), a Delaware Corporation, and $310,000 from UTEK for 100,000 shares of Series A Preferred Stock. 95,000 shares of Series Preferred Stock were issued to UTEK and 5,000 shares were issued to Aware Capital Corporation. At any time after September 27, 2007, UTEK’s 100,000 Series A Preferred Stock shares can be converted to our Common Stock in the amount of $3,350,000. The number of Common Stock shares shall be calculated based on the previous 10-day average closing price on the day of conversion. As of the end of trading on December 31, 2008, the 10-day average closing price was $0.422. In December 2007, 5,000 shares of the Company’s Series A preferred stock were converted to 299,642 shares of common stock at $.559 per share by Aware Capital Corporation. UTEK can then receive 7,541,469 shares of our Common Stock for its 95,000 shares of Series A Preferred Stock.

In March 2009 one of the members of the Board of Directors converted 95,000 shares of the Company’s Series A Preferred Stock into 10,857,142 shares of the Company’s common stock. The board member acquired the Company’s Series A Preferred Stock from UTEK in February 2009. The Series A Preferred Stock conversion was based on the Company’s common stock’s average closing price for the ten trading days before the date of conversion.

The Company conducted the acquisition in order to obtain cash and NHTI’s technology. UTEK provides its clients with externally developed technologies from universities, university incubators, federal labs, medical centers, and corporate research laboratories worldwide. To effectuate a technology transfer, such as our purchase of NHTI, UTEK creates a newly formed company to acquire a new technology from a university, medical center, corporation or federal research laboratory and then sell this newly formed company to a client, such as Advanced Medical Isotope Corporation for securities or cash.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Organizational History - continued

The assets acquired by the Company were recorded at the value which the preferred stock can be converted into common stock, $3,350,000, as follows:

	As of September 27, 2006
Cash	$	310,000
License fee		3,040,000
Net assets acquired	$	3,350,000

The Company did not have any relationship with UTEK before the acquisition of Neu Hope Technologies. UTEK is a public corporation. It is our understanding that Dr. Clifford M. Gross, PhD, Chairman and Chief Executive Officer, Ms. Carole R. Wright, Chief Financial Officer and Mr. Douglas Schaedler, Chief Operating Officer, make the investment decisions on behalf of UTEK.

UTEK, a publicly-held corporation, also entered into a technology transfer agreement with Manakoa Services Corporation. Manakoa Services Corporation has recently changed its name to TeslaVision Corporation. Mr. Katzaroff is an officer and a director of TeslaVision Corporation. TeslaVision Corporation is not a shell company but is not current in its reporting. Other than Mr. Katzaroff’s service as an officer of both corporations, there is no relationship between TeslaVision Corporation and Advanced Medical Isotope Corporation.

On June 13, 2007, the Company acquired the assets of the life sciences business segment of Isonics Corporation (Isonics), a California corporation. Isonics is a non-related business of the Company and neither company owns stock in the other. The Company acquired the assets in exchange for $850,000 cash payment for the purpose of combining the assets into our business of marketing medical isotopes. The assets acquired consist of intellectual property, agreements with third party companies for purchase and marketing of isotopes, customer lists, and equipment located in Buffalo, New York. Intellectual property, agreements with third parties and customer lists are stated at the Companies estimation of fair market value at the time of acquisition. None of the acquired assets hold any ongoing liabilities or contractual obligations that would result in additional cash transactions required by the Company.

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has a limited amount of revenue which has accumulated deficits since inception. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.

General Description

We are engaged in the production and distribution of medical isotopes and medical isotope technologies that are changing the practice of medicine and ushering in a new era of improved patient care. Isotopes are a form of chemical element with the same atomic number as another element but with a different atomic mass. Medical isotopes are used in molecular imaging, therapy, and nuclear medicine to diagnose, manage and treat diseases.

Currently, more than 15 million nuclear medicine procedures are performed each year in the U.S. Approximately one-third of all patients admitted to U.S. hospitals undergo at least one medical procedure that employs the use of medical isotopes.

We employ innovative production methods to offer a wide range of reliable, domestically produced medical isotopes as well as in vivo delivery systems to aid medical practitioners and medical researchers in the timely diagnosis and effective treatment of diseases such as cancer, heart disease, neurological disorders, and many other medical conditions.

Our objective is to empower physicians, medical researchers, and ultimately, patients, by providing them with essential medical isotopes that, until now, have not been practical or economical to produce, in an effort to detect, manage, and cure human disease, and improve the lives of patients.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Products

We currently offer the following products

Stable Isotopes:

We currently offer worldwide distribution of O-18 enriched water and a wide range of other stable isotopes. Our product line includes stable isotopes of the following elements: Antimony, Barium, Cadmium, Calcium, Cerium, Chromium, Copper, Dysprosium, Erbium, Europium, Gadolinium, Gallium, Germanium, Hafnium, Indium, Iron, Krypton, Lanthanum, Lead, Lutetium, Magnesium, Mercury, Molybdenum, Neodymium, Nickel, Osmium, Palladium, Platinum, Potassium, Rhenium, Rubidium, Ruthenium, Samarium, Selenium, Silicon, Silver, Strontium, Sulphur, Tellurium, Thallium, Tin, Titanium, Tungsten, Vanadium, Xenon, Ytterbium, Zinc, and Zirconium.

Many of our products are used in connection with Positron Emission Tomography (“PET”). In cancer, changes in biochemistry occur before tumor mass forms. As a result, PET can often identify the presence of disease earlier than a test which looks for a tumor mass. Isotopes identified by PET include radiopharmaceutical Fluorodeoxyglucose (“FDG”), a sugar compound that is labeled with radioactive fluoride.

Radio Pharmaceuticals:

F-18 FDG: We currently offer regional distribution of F-18 FDG from our Kennewick, WA production facility. Other regional production facilities are planned throughout the U.S. and abroad, including Los Angeles, Oahu, Idaho and Montana.

Indium-111: We plan to offer Indium Chloride and Indium Oxine during the first six months of 2009.

Radio Chemicals:

F-18: We currently offer regional distribution of F-18 from our Kennewick, WA production facility. Other regional production facilities are planned throughout the U.S. and abroad. This is the primary PET imaging isotope. It is used for medical and diagnostic purposes, such as cancer detection, heart imaging, and brain imaging.

Iodine-124: This is a radiotracer primarily used in PET imaging and to create images of human thyroid. Other treatment uses include apoptosis, cancer biotherapy, glioma, heart disease, mediastinal micrometastases, and thyroid cancer.

Indium-111: We currently offer In-111 Chloride bulk solution for U.S. distribution. This radio chemical is used for infection imaging, cancer treatments, and tracer studies.

Strontium-82: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers

Germanium-68: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction.

Actinium-225: Used for advanced research in therapy of leukemia and other cancers. It holds great promise for treating HIV/AIDS.

Generators:

Strontium-82/Rubidium-82 generators: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers.

Germanium-68/Gallium-68 generators: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction.

Actinium-225/Bismuth-213 generators: Actinium-225 is the parent of Bismuth-213, an isotope which has been used in animal trials to kill human HIV virus. Bismuth-213 has been used in human clinical trials for the treatment of Acute Myelogenous Leukemia (AML).

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Products - continued

Within the next three years, we intend to offer the following isotopes:

Carbon-11: Used in cancer diagnosis/staging. Radiotracer in PET scans to study normal/abnormal brain functions related to various drug addictions and is also used to evaluate disease such as Alzheimer’s, epilepsy, Parkinson’s and heart disease.

Cobalt-57: Used for gamma camera calibration. Also used as radiotracer in research and a source for X-ray fluorescence spectroscopy.

Copper-64: PET scanning, planar imaging, SPECT imaging, dosimetry studies, cerebral and myocardial blood flow. This isotope is used in stem cell research, and cancer treatments.

Iodine-123: Used in brain, thyroid, kidney, and myocardial imaging, cerebral blood flow (ideal for imaging) and neurological disease (Alzheimer's).

Molybdenum-99 / Technitium 99: It is the favored choice among medical professionals because its chemical properties allow it to be bonded to many different chemical materials, thus allowing use for a wide variety of diagnoses.

Thallium-201: Used in clinical cardiology, heart imaging, myocardial perfusion studies and cellular dosimetry.

Manufacturing

The cornerstone equipment selected for our production center is a proton linear accelerator. Our proton linear accelerator is designed to replace large and demanding cyclotron systems for the production of positron emitting isotopes. Large amounts of fluorine-18, carbon-11, nitrogen-13, and oxygen-15 can be produced for synthesis into compounds used in oncology, cardiology, neurology, and molecular imaging. The radio-labeled glucose analog, FDG, can be synthesized and distributed for use in Positron Emission Tomography.

Based on our experience in the industry, it is our belief that no other accelerator in North America has sufficient flexibility to produce the full spectrum of PET imaging radioisotopes, as well as other high-demand isotopes, both short and long lived, for diagnostic and therapeutic applications.

We are also engaged in a number of collaborative efforts with U.S. national laboratories and universities, along with several international teaming partners. These collaborative effort projects include complementary isotope manufacturing technologies as well as isotope devices. We have entered into agreements to produce isotopes at Idaho State University, the University of Missouri at Columbia, the State University of New York at Buffalo, and the University of Utah. These regional university centers will allow us to become a local supplier for the short-lived isotopes like Fluorine 18 as well as being a domestic supplier of several other isotopes in demand by the medical community.

In November 2007, we entered into an agreement with the Idaho Accelerator Center (IAC), located on the campus of Idaho State University in Pocatello, ID, to create a regional medical isotope production center. The IAC will investigate the production of a variety of isotopes at IAC facilities and we will proceed with conceptual planning for production facility development. We intend to use the IAC to develop and manufacture medical isotopes.

In January 2008, we entered into a five-year agreement with Central Pharmaceutical Services, Inc. (“CRS”) for the joint production and marketing of Indium-111, an isotope used in specialized diagnostic imaging applications. CRS is an advanced biomedical research and development facility established by the State University of New York at Buffalo. By labeling In-111 to antibodies and peptides that transport it to specific parts of the body, physicians can image colorectal cancer, prostate cancer, and neuro-endocrine tumors. In-111 can also be used to radiolabel white blood cells, platelets and red blood cells for diagnostic purposes. The comprehensive agreement with CRS is designed to enable us to complement production capacity of a variety of high-value medical isotopes with our Kennewick, Wash. facility. Several other radio-chemicals are also under consideration for production in the near future at the Buffalo, N.Y. facility. The agreement with CRS allows for the initial product to be Indium-111, a radioisotope produced from the stable isotope cadmium-112. CRS will provide irradiation facilities as well as production expertise and chemical syntheses.

In May 2008, we entered into a research agreement with the University of Utah related to the use of brachytherapy seeds for cancer treatments. Pursuant to the research agreement, we will pay total project costs that will not exceed $45,150. We hope to work with the University of Utah to develop and manufacture cancer treatments using brachytherapy seeds.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Manufacturing - continued

In June 2008, we entered into a research agreement with the University of Missouri related to the production of radio isotopes. Pursuant to the research agreement, we will pay total project costs that will not exceed $75,000. We also entered into an option agreement in June 2008 with the University of Missouri. The option agreement gives us a one-year option to enter into a licensing agreement to utilize certain intellectual property held by the University of Missouri for the production of medical, research, and industrial radioisotopes. If the University of Missouri’s intellectual property functions as early analysis have indicated, this production facility could be a manufacturing source of critical health care radio isotopes.

Customers

Our customers include a broad range of hospitals, universities, research centers and national laboratories, in addition to academic and government institutions. These customers are located in essentially all major U.S. and international markets. In July 2008, we began production of F-18 in our production facilities in Kennewick, Washington. Sales of F-18 for the quarter ended March 31, 2009 totaled approximately 87% of total revenue.

The company is also working with United Pharmacy Partners Inc (UPPI). UPPI has a network of approximately 120 nuclear pharmacies within the United States. We have entered into an affiliation agreement with UPPI to provide to the UPPI network preferred prices and special terms and conditions for certain products that we anticipate to manufacture or re-sell during 2009 and 2010.

Competitors

The suppliers of radioisotopes for diagnosis, treatment, and research for a wide variety of diseases, in particular cancer, vary in size and product offerings. Competition is limited because there are many complications and regulatory hurdles, including licensing, government approvals and capital outlays associated with starting an isotope company. Many current competitors are international companies.

Further, competition is limited as some competitors are closing their facilities or limiting their production. In November 2007, Canadian supplier MDS Nordion was forced to shut down its radioisotope production facility. At one time, the U.S. government was supposed to be the source of medical isotopes, but over the course of the last two decades, it has either closed or failed to adequately fund its production facilities.

About 90% of all the non PET radioisotopes used in the United States are imported from two companies. Approximately half of these were imported directly from the now-defunct MDS Nordion plant and the other half supplied by Covidien (formerly Mallinkrodt). The remaining 10% that are produced in the United States are manufactured in a fragmented, piecemeal manner with companies producing a single isotope instead of a wide variety.

Employees

As of March 31, 2009, we had six full time employees. At any given time, we utilize eight to ten contract employees to assist with the company operations. We do not have a collective bargaining agreement with any of our employees and we believe our relations with our employees are good.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Research and Development / Intellectual Property

The Company has made through acquisitions the following investments in patent licenses and intellectual property during 2007:

●

$75,000 for a patent license fee, good for the life of the patent, for the production of Actinium 225;

	●	$3,040,000 of preferred stock issuance for a patent license, good for the life of the patent, of a Neutron Generator; and

	●	$658,750 for the purchase of a company in order to acquire the rights of intellectual property related to the process for the production of isotopes, customer lists, contracts and agreements with third party companies, and certain equipment. The amortization of these items is computed using the straight-line method over the following estimated useful lives:

Intellectual property	3 years
Contracts and agreements	3 years
Customer lists	2 years

In January 2007 AMIC received a license for United States Patent 6,680,993. The patent concerns methods and processes directed to the preparation of Actinium-225 and daughters having high radiochemical and radionuclidic purity. These isotopes may be used for the preparation of therapeutic radiopharmaceuticals such as those containing monoclonal antibodies, proteins, peptides, antisense, statin, natural products and hormones. Additionally, the alpha-emitting radionuclide Actinium-225 and its daughters may be used for both therapeutic and diagnostic purposes.

Results of Operations

The following table sets forth information from our statements of operations for the three months ended March 31, 2009 and 2008.

	Three Months Ended March 31, 2009			Three Months Ended March 31, 2008
Revenues	$	60,975			$	32,335
Cost of goods sold		21,836				17,537
Gross profit		39,139				14,798
Operating expenses		610,824				1,466,738
Operating loss		(571,685	)			(1,451,940	)
Non-operating expenses		(606,944	)			-
Interest expense		(181,870	)			(16,076	)
Net income (loss)	$	(1,360,499	)		$	(1,468,016	)

Details related to Revenues and Cost of Goods Sold for the three months ended March 31, 2009 and 2008.

		Three Months Ended March 31, 2009		Three Months Ended March 31, 2008
Revenues
Stable Isotopes		$	7,875		$	32,335
	F-18		53,100			-
Total Revenue		$	60,975		$	32,335

Cost of Goods Sold
Stable Isotopes		$	6,500		$	17,537
	F-18		15,336			-
Total Cost of Goods Sold		$	21,836		$	17,537

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Revenue

Revenue was $60,975 for the three months ended March 31, 2009 and $32,335 for the three months ended March 31, 2008. During 2007 we began our stable isotope marketing program which was acquired through the purchase of the Life Science division of Isonics, Inc. During the three months ended March 31, 2008, we continued the stable isotope marketing program generating all of the $32,335 revenues for that period compared to $7,875 of the three months ended March 31, 2009 revenues attributable to stable isotopes. In July 2008 we established our linear accelerator production center and began the production and marketing of F-18 in August 2008, accounting for $53,100 of the total three months ended March 31, 2009 revenues.

Cost of Goods Sold

Cost of Goods Sold for the three months ended March 31, 2009 was $21,836. Cost of goods sold for the three months ended March 31, 2008 was $17,537. The cost of goods sold of $17,537 for the three months ended March 31, 2008, 54.2% of revenues, was our cost of the stable isotopes included in revenues. The $21,836 cost of goods sold for the three months ended March 31, 2009 consists of $6,500, 82.5% of associated revenues for stable isotopes and $15,336, 28.9% of associated revenues, was our costs for the F-18 production (consisting mostly of supplies). The reason for the increase in the cost of goods sold percentage from the three months ended March 31, 2008 (54.2%) to the three months ended March 31, 2009 (82.5%) for stable isotopes was due to a reduction in sales price for stable isotopes we were able to obtain. We have worked with our supplier in an attempt to reduce our costs for stable isotopes in an effort to keep the cost of goods sold in line with available pricing for the product.

Operating Expenses

Operating expenses for the three months ended March 31, 2009 and 2008 was $610,824 and $1,466,738 respectively. The decrease in operating expenses from 2008 to 2009 can be attributed largely to amortization of licenses and intangible assets ($6,250 for the three months ended March 31, 2009 versus $310,740 for the three months ended March 31, 2008), professional fees ($169,687 for the three months ended March 31, 2009 versus $252,433 for the three months ended March 31, 2008), stock options granted ($87,236 for the three months ended March 31, 2009 versus $638,628 for the three months ended March 31, 2008) and payroll expense ($100,129 for the three months ended March 31, 2009 versus $140,924 for the three months ended March 31, 2008) and an increase in depreciation ($134,418 for the three months ended March 31, 2009 versus $9,562 for the three months ended March 31, 2008).

	Three Months Ended March 31, 2009		Three Months Ended March 31, 2008
Depreciation and amortization expense	$	140,668	$	320,302

Professional fees		169,687		252,433
Stock options granted		87,236		638,628
Payroll expenses		100,129		140,924
General and administrative expenses		112,939		106,753
Sales and marketing expense		165		7,698
	$	610,824	$	1,466,738

Non-Operating Expense

Non operating expense for the three months ended March 31, 2009 and 2008 was $788,814 and $16,076, respectively. The increase in non-operating loss is due to an increase in interest expense ($181,870 for the three months ended March 31, 2009 versus $16,076 for the three months ended March 31, 2008), and loss on settlement of debt ($606,944 for the three months ended March 31, 2009 versus $0 for the three months ended March 31, 2008).

Net Loss

Our net loss for the three months ended March 31, 2009 and 2008 was $1,360,499, and $1,468,016, respectively.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Liquidity and Capital Resources

At March 31, 2009, we had negative working capital of $2,969,687, as compared to $6,278,593 at December 31, 2008. During the three months ended March 31, 2009 we experienced negative cash flow from operations of $168,680, and we expended $598 for investing activities while adding $303,817 from financing activities. As of March 31, 2009, we had $0 commitments for capital expenditures.

We have generated material operating losses since inception. We have incurred a net loss of $11,761,268 from January 1, 2006 (inception) through March 31, 2009, including a net loss of $1,360,499 for the three months ended March 31, 2009. We expect to continue to experience net operating losses. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate raising additional capital within the next twelve months from investors for working capital as well as business expansion and we can provide no assurance that additional investor funds will be available on terms acceptable to us. If we are unable to obtain additional financing to meet our working capital requirements, we may have to curtail our business.

Based on the current cash run rate, approximately $1,000,000 will be needed to fund operations for an additional year. As disclosed in the risk factors, we are presently taking steps to raise additional funds to continue operations for the next 12 months and beyond. We will need to raise an additional $10,000,000 in the next year to develop three isotope manufacturing centers and complete our aggressive growth plans. We may, however, choose to modify our growth and operating plans to the extent of available funding, if any.

The recent economic events, including the substantial decline in global capital markets, as well as the lack of liquidity in the capital markets, could impact our ability to obtain financing and our ability to execute our business plan. Although market conditions have deteriorated, we believe healthcare institutions will continue to purchase the medical solutions that we distribute. As a development stage company with modest sales from our inception, we are unable to determine the effect of the recent economic crises on our sales.

Contractual Obligations (payments due by period)

Contractual Obligation	Total Payments Due		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Capital Lease Obligation		2,097,934		354,400		1,208,609		534,925
Production center lease		174,158		47,779		126,379
Corporate office lease		70,859		60,736		10,123
License agreement with Regents of the University of California		385,000		25,000		120,000		180,000	60,000 each year

The capital lease obligations represent two lease agreements for $1,875,000 and $631,000, secured by equipment and personal guarantee of two of the major shareholders we obtained during September 2007. The purpose of the lease agreements is to acquire a Pulsar 10.5 PET Isotope Production System for a contracted amount of $1,875,000 plus ancillary equipment and facility for $631,000.

For the three months ended March 31, 2009 and the year ended December 31, 2008, we had no long term liability reported on the financial statements due to the Company being out of compliance with the terms of the debt and therefore being subjected to the possibility of the entire loan being called due. The long term liability is related to two capital lease obligations we obtained in September 2007 that are secured by equipment and the personal guarantee of the two major shareholders. The lease allowed the company to acquire a Pulsar 7 PET Isotope Production System and ancillary equipment.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

Critical Accounting Policies

The Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. However, the following policies could be deemed to be critical within the SEC definition.

Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fixed Assets

Fixed assets are carried at the lower of cost or net realizable value. Production equipment with a cost of $2,500 or greater and other fixed assets with a cost of $1,500 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.

Depreciation is computed using the straight-line method over the following estimated useful lives. Leasehold improvements and capital lease assets are amortized over the shorter of the life of the lease or the estimated life of the asset.

Management of the Company periodically reviews the net carrying value of all of its equipment on an asset by asset basis. These reviews consider the net realizable value of each asset, as measured in accordance with the preceding paragraph, to determine whether impairment in value has occurred, and the need for any asset impairment write-down. Although management has made its best estimate of the factors that affect the carrying value based on current conditions, it is reasonably possible that changes could occur which could adversely affect management’s estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

License Fees

License fees are stated at cost, less accumulated amortization. Amortization of license fees is computed using the straight-line method over the estimated economic useful life of the assets. The Company periodically reviews the carrying values of patents in accordance with SFAS No. 144 and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.

Intangible Assets

Intangible assets resulted from the purchase, for cash, from Isonics Corporation, the rights to intellectual property related to the production of isotopes, customer lists, contracts and agreements with third party companies, and certain equipment. The Company allocated the purchase price to each of the assets based upon the Companies believe of the long term value of each of those assets and comparison to replacement cost, where that information was available. Intangible assets are stated at cost, less accumulated amortization. Amortization of intangible assets is computed using the straight-line method over the estimated economic useful life of the assets. The Company periodically reviews the carrying values of intangible assets in accordance with SFAS No. 144 and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.

Revenue Recognition

The Company applies the provision of SEC Staff Accounting Board (“SAB”) No. 104, Revenue Recognition. SAB No. 104, which supersedes SAB No. 101, Revenue Recognition in Financial Statements, provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB No. 104 outlines the basic criteria that must be met to recognize revenue and provides guidance for the disclosure of revenue recognition policies. The Company recognized revenue related to product sales when (i) persuasive evidence of the arrangement exists, (ii) shipment has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

The Company recognizes revenue once an order has been received and shipped to the customer. Prepayments, if any, received from customers prior to the time products are shipped are recorded as deferred revenue. In these cases, when the related products are shipped, the amount recorded as deferred revenue is recognized as revenue. The Company does not accrue for sales returns and other allowances as it has not experienced any returns or other allowances.

Research and Development Costs

Research and developments costs, including salaries, research materials, administrative expenses and contractor fees, are charged to operations as incurred. The cost of equipment used in research and development activities which has alternative uses is capitalized as part of fixed assets and not treated as an expense in the period acquired. Depreciation of capitalized equipment used to perform research and development is classified as research and development expense in the year computed.

Fair value of financial instruments

The carrying amounts of cash, receivables and accrued liabilities approximate fair value due to the short-term maturity of the instruments.

Stock-based compensation

Effective January 1, 2006, the Company adopted SFAS No. 123 (Revised 2004), Share-Based Payment, which requires that compensation related to all stock-based awards, including stock options, be recognized in the financial statements based on their estimated grant-date fair value. The Company has estimated expected forfeitures, as required by SFAS No. 123R, and is recognizing compensation expense only for those awards expected to vest. All compensation is recognized by the time the award vests.

Recently Issued Accounting Pronouncements

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” This FSP provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and is applied prospectively. We do not believe that the implementation of this standard will have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”. This FSP amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments” to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim and annual reporting periods ending after June 15, 2009. We do not believe that the implementation of this standard will have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”. This FSP amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments in the financial statements. The most significant change the FSP brings is a revision to the amount of other-than-temporary loss of a debt security recorded in earnings. FSP FAS 115-2 and FAS 124-2 are effective for interim and annual reporting periods ending after June 15, 2009. We do not believe that the implementation of this standard will have a material impact on our financial statements.

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued

In November of 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may be required in fiscal 2015 to prepare financial statements in accordance with IFRS. However, the SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. We are currently assessing the impact that this potential change would have on our consolidated financial statements, and we will continue to monitor the development of the potential implementation of IFRS.

In March 2009, FASB unanimously voted for the FASB “Accounting Standards Codification” (the “Codification”) to be effective beginning on July 1, 2009. Other than resolving certain minor inconsistencies in current United States Generally Accepted Accounting Principles (“GAAP”), the Codification is not supposed to change GAAP, but is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics. Once approved, the Codification will be the single source of authoritative U.S. GAAP. All guidance included in the Codification will be considered authoritative at that time, even guidance that comes from what is currently deemed to be a non-authoritative section of a standard. Once the Codification becomes effective, all non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force (“EITF”), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by us to have a material impact on our present or future financial statements.

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

N/A.

Item 4T. Controls and Procedures.

(a) Disclosure Controls and Procedures

Our principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting. Based upon management’s knowledge of our operations and accounting functions, management’s assessment concerning the effectiveness of our internal controls and disclosure controls and procedures is that those are not effective to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and accumulated and communicated to our senior management, including our CEO, to allow timely decisions regarding required disclosures.

Our known material weaknesses include:

Resources: As of March 31, 2009 we had one full-time employee in general management and no full-time employees with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to insure that all transactions are accounted for accurately and in a timely manner.

Written Policies & Procedures: We need to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity transactions, and prepare, review and submit SEC filings in a timely manner.

Audit Committee: We do not have, and are not required, to have an audit committee. An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures.

Given the existence of these material weaknesses, management believes that other, non-identified material weaknesses may have existed and continue to exist. These material weaknesses will be remedied as described below.

Management is committed to improving its internal controls and will (1) perform an assessment of its internal control using the COSO framework or other framework as deemed appropriate, (2) continue to use third party specialists to address shortfalls in staffing and to assist us with accounting and finance responsibilities, (3) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (4) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (5) may consider appointing an audit committee comprised of independent board members in the future.

This annual report does not include an attestation report by our registered public accounting firm regarding our internal controls over financial reporting.

(b) Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

Item 1A. Risk Factors.

There have been no material changes from the disclosure provided in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Common stock sale

In March 2009 the Company issued 37,037 shares for cash of $10,000 at $.27 per share.

Preferred stock

Common stock issued for services and debt settlement

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - continued

Common stock issued for services and debt settlement - continued

Common stock issued for convertible debt

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

(a)	Exhibits

	Number	Description
	31.1	CEO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002
	31.2	CFO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002
	32.1	CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 hereunto duly authorized.

	ADVANCED MEDICAL ISOTOPE CORPORATION

Date: May 20, 2009	By:	/s/ James C. Katzaroff
	Name:	James C. Katzaroff
	Title:	Chairman and Chief Executive Officer