ADVANCED MEDICAL INSTITUTE INC. - FORM 10-K

Attached files

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EX-31.2 - ADVANCED MEDICAL INSTITUTE INC.	v166069_ex31-2.htm
EX-32.1 - ADVANCED MEDICAL INSTITUTE INC.	v166069_ex32-1.htm
EX-31.1 - ADVANCED MEDICAL INSTITUTE INC.	v166069_ex31-1.htm
EX-32.2 - ADVANCED MEDICAL INSTITUTE INC.	v166069_ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ________________

Commission file number 000-29531

ADVANCED MEDICAL INSTITUTE INC.

(Exact name of registrant as specified in its charter)

NEVADA		88-0409144
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Level 4, 80 William Street East Sydney, NSW Australia		2011
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (61) 2-9640-5253

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

$0.001 Common Stock

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (§ 232.405 of this chapter) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 ¨

Accelerated Filer ¨

Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)

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 aggregate market value of the voting stock held by non-affiliates of the Registrant as of December 31, 2008 was $2,954,521.

The number of shares outstanding of the registrant’s common stock at $.001 par value as of November 13, 2009 was 53,507,450.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ADVANCED MEDICAL INSTITUTE INC.

Annual Report on Form 10-K for the Year Ended June 30, 2009

Part I		Page

Item 1. Description of Business		3

Item 1A. Risk Factors		8

Item 1B. Unresolved Staff Comments		17

Item 2. Properties		17

Item 3. Legal Proceedings		19

Item 4. Submission of Matters to Vote of Security Holders		19

Part II		Page

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		20

Item 6. Selected Financial Data		20

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 7A. Quantitative and Qualitative Disclosures about Market Risk		31

Item 8. Financial Statements and Supplementary Data		F-1

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		31

Item 9A(T). Controls and Procedures		32

Item 9B. Other Information		33

Part III		Page

Item 10. Directors, Executive Officers and Corporate Governance		33

Item 11. Executive Compensation		36

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		38

Item 13. Certain Relationships and Related Transactions, and Director Independence		39

Item 14. Principal Accounting Fees and Services		39

Part IV		Page

Item 15. Exhibits, Financial Statement Schedules		40

Signatures		41

PART I

This report contains certain forward-looking statements and information relating to Advanced Medical Institute, Inc. (“AMI” or the “Company”)) that are based on the beliefs and assumptions made by AMI's management, as well as on information currently available to the management. When used in this document, the words "anticipate", "believe", "estimate", and "expect" and similar expressions, are intended to identify forward-looking statements. Such statements reflect the current views of AMI with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are discussed in this report under the caption "Risk Factors" in Item 1A. AMI does not intend to update these forward-looking statements.

Item 1.

Description of Business.

History

We were originally incorporated under the name of Hawksdale Financial Visions, Inc. on December 6, 1996 under the laws of the State of Nevada. We were involved in the business of timeshares, but became dormant on March 31, 1997, and until January 28, 2005, we were a “blank check” company with nominal assets. On October 15, 2004, we changed our name to “Advanced Medical Institute Inc.”

On March 21, 2005, we completed a Share Exchange Agreement with Advanced Medical Institute Pty Limited, a privately owned Australian company (“AMI Australia”), whereby AMI Australia became our wholly owned subsidiary.

On November 17, 2005 we entered a Share Exchange Agreement with PE Patent Holdco Pty Limited, a privately owned Australian company (“PE Patent Holdco”), whereby PE Patent Holdco became our wholly-owned subsidiary.

On September 8, 2006, we entered a Share Exchange Agreement with Worldwide PE Patent Holdco Pty Limited (ACN 117 157 727), a privately owned Australian company (“Worldwide PE”), whereby Worldwide PE became our wholly owned subsidiary.

Business Overview

AMI is a service provider company, which arranges for patients with sexual dysfunction and prostate problems in Australia, New Zealand and the United Kingdom to be provided with medical services, pharmaceuticals and associated clinical support services.

For the year ended June 30, 2009, AMI’s revenues were approximately $53.4 million.

Principal Products and Services

AMI provides a variety of treatment programs to its customers, via its call center and clinics, for the treatment of sexual dysfunction and prostate problems. A patient is diagnosed by telephone or in person at a clinic, in either case, by a licensed physician, who sends a prescription directly to a compounding pharmacy under contract with AMI to prepare the formulation. The prescription is delivered to the patient, or the patient may pick up the prescription at the clinic. The patient pays for treatments for a specified treatment period, during which the formulations may be varied to best suit the patient’s needs.

Our physicians prescribe varying combinations or dosages of medications for erectile dysfunction (predominantly phentalomine, apomorphine or a combination of them), premature ejaculation (predominantly clomipramine) and prostate problems (mixture of medicinal herbs). Our compound formulations have not been subject to any clinical trial, but may lawfully be prescribed on an individual prescription (“off-label”) basis in each country in which we operate.

The effectiveness of AMI’s treatment programs depend highly on the delivery system. These include:

(a) injections, nasal spray, lozenges, tablets and gels for the treatment of erectile dysfunction;

(b) injections, nasal spray, lozenges and gels for the treatment of premature ejaculation;

(d) an oral elixir for the treatment of prostate problems.

New Products and Services

Since 2003, AMI’s subsidiary, Intelligent Medical Technologies Pty Limited (“IMT”) has been developing an ultrasonic nebulizer which will deliver drugs to the lungs. The group’s intention is to use this delivery system to administer its compound formulations. In order to utilize this delivery system IMT needs to obtain regulatory approval of the nebulizer as a medical device. IMT has been working on this process for the last four years, however IMT has not yet completed such process.

Sales and Marketing

For the year ended June 30, 2009, the Company spent $22.4 million on advertising, including commercials (radio, television and newspapers) and billboards. We maintain a website, http://www.amiaustralia.com.au/, where a potential patient can submit medical history and information concerning the problem for which treatment is sought, prefatory to being contacted by AMI.

AMI’s erectile dysfunction treatment programs predominantly focus on men aged 40 and over, whereas AMI’s premature ejaculation treatment programs are targeted at men aged 18 and over.

Distribution

AMI currently operates a centralized call center and 20 clinics throughout Australia and New Zealand. AMI has recently established two clinics in the United Kingdom to service UK patients. AMI’s products and services are only available by prescription and are sold on an “off-label” basis. AMI Australia’s treatment programs are generally available in the same manner through its medical clinics and its over-the-phone sales and marketing program.

Intellectual Property

The Company’s intellectual property consists of an Australian innovation patent for AMI’s premature ejaculation treatment programs (Australian Innovation Patent No 2005100183, which is due to expire on July 9, 2012), an Australian standard patent application (Australian standard patent application No. 2004222783), a New Zealand patent for its premature ejaculation treatment programs (New Zealand patent 544484), an Indian patent for its premature ejaculation treatment programs (patent 00283/KOL-NP/2006) and patent applications for its premature ejaculation treatment programs in most industrialized countries. The innovation patent, titled “Treatment of Premature Ejaculation” relates to various methods of treatment delivery via nasal (mucosal) inhalation and topical application of certain formulations which are used in AMI’s treatment programs for premature ejaculation. The patents and associated formulations are integral to AMI’s premature ejaculation treatment programs. AMI’s nasal spray erectile dysfunction treatment programs are not patent protected. This technology was developed by AMI and its founder, Dr Jack Vaisman.

AMI’s wholly-owned subsidiary, IMT, was granted the exclusive worldwide right and license from Sheiman Ultrasonic Research Foundation Pty Limited to exploit and sub-license certain inventions, patents and other intellectual property in relation to certain ultrasonic nebulizer technology (including Australian Patent No’s 693064 and 753817, European Patent No’s 0 705 145 and 1 071 479 and US Patent No’s 5,908,158 and 6,379,616) within the field of the treatment of sexual dysfunction in men and women (including impotence, premature ejaculation and the treatment of female sexual arousal disorders). The patents relating to the initial concepts underpinning the technology expire in October 2013, with the remaining patents relating to extensions of the device expiring around 2023.

IMT applied for seven provisional worldwide patents in July 2005 and February 2006. In September 2006, IMT filed an international (PCT) patent application relating to its Nebuliser device based on aspects of these provisional applications. The international examination of the PCT application was successful, resulting in a clear International Preliminary Report on Patentability. This PCT application has now entered the National Phase in the following jurisdictions: Australia, Canada, China, Europe, India, Japan, New Zealand and the United States, and these national phase patent applications are currently awaiting examination in the respective patent offices. Further, several Australian design applications, and a United States design patent application have been made for IMT’s device, the subject of the international (PCT) patent application. The Australian Design applications are now registered, and the United States Design patent application is currently under examination.

AMI applied for a broad based provisional patent relating to the technology underpinning its topical gels on July 29, 2008. This application has yet to be examined and is at an early stage.

Research and Development

AMI is continuously researching and developing new methods of treatment in relation to the treatment of sexual dysfunction in men and women, including impotence, premature ejaculation, reduced male libido and female sexual arousal disorders.

AMI’s Chief Executive Officer, Dr Jack Vaisman, spends 25-35% of his time each year researching treatment methods. In addition, the Company has engaged Dr Jim Rowe (a leading Australian chemist) to assist the Company to research treatment options, and the Company has also engaged various other personnel and consultants to assist the Company in its research programs, either on a part time or project specific basis, including research assistants, patent attorneys and legal advisors.

Competition

We compete with rival treatments such as Viagra, Cialis and Levitra in the erectile dysfunction field. AMI does not currently have any major competitors in the premature ejaculation market in Australia and New Zealand (its competitors are individual doctors providing other pharmaceutical treatments on an individual prescription or “off-label” basis, as well as individual doctors and psychologists providing counseling services to patients).

AMI’s delivery methods have the following advantages over the oral delivery methods of its competitors:

Elimination of gastric and hepatic drug degradation by avoiding metabolism and gastro-internal tract;

Faster entrance into the bloodstream; and

Fewer side effects due to the potential reduced dosage of the drug.

Competition is intense in the erectile dysfunction segment of our business and includes many competitors that have greater revenue, more customers and higher levels of brand recognition than the Company. The Company has smaller competitors in the premature ejaculation segment of our business that have similar business models to the Company’s business. The efficacy, safety, patients’ and customers’ ease of use and cost effectiveness of our products are important factors for success in our principal businesses. Many of our competitors have substantially greater financial and other resources, larger research and development staff and more experience in the regulatory approval process. Moreover, potential competitors have or may have intellectual property or other rights that conflict with patents, license agreements and other intellectual property rights covering our technologies.

Significant Subsidiaries of the Company and AMI Australia

The Company’s subsidiaries are AMI Australia, AMI International Pty Limited and AMI Management Services Pty Limited.

AMI Australia’s subsidiaries are Advanced Medical Institute Pty Limited, PE Patent Holdco, Worldwide PE, Advanced Medical Institute (NZ) Limited, IMT and AMI Clinic Limited.

On June 30, 2009, AMI discontinued operations of AMI China.

AMI International Pty Limited was established to hold the Group’s shareholdings in the Chinese company established to conduct operations in that jurisdiction.

AMI Management Services Pty Limited provides treasury and management services to AMI Australia and its subsidiaries.

Advanced Medical Institute (NZ) Limited conducts the group’s business in New Zealand.

AMI Clinic Limited conducts the group’s business in UK.

Ai Te Wei (Beijing) Medicine Consulting Company conducts the group’s business in China.

During September 2006, AMI commenced a not-for-profit division of the Company, AMI-SCI, which provides treatment options to men who have sustained a spinal cord injury. Details regarding this unit’s services and operations are located at rocketlaunch.com.au.

Employees

As of June 30, 2009, AMI had a total staff of approximately 256 people, of which 184 are full-time and 72 are part-time, working in the areas of sales and marketing, customer support, product development and back office functions. None of the Company’s employees or staff are members of a union or labor organization.

Governmental Regulation

The core government regulations affecting the business relate to pharmaceutical prescription related regulations, doctor related regulations and advertising related regulations. As set out above, each of our treatments is provided on an individual prescription (“off-label”) basis. Our treatments are not available from retail pharmacies on an over the counter basis and our treatments are not marketed under a brand name. It is illegal to mass produce our medications, and our medications must be prepared in a regulated facility to a specified standard.

Telephone consultation by doctors is legal in Australia and the United Kingdom but is illegal in other markets. Telephone consultation is a core component of our business.

Our advertisements and marketing is direct to consumers and therefore required to comply with consumer based legislation. This legislation prohibits false and misleading statements from being made in our advertising (amongst other things). Government regulation also restricts the manner in which our advertising may be undertaken due to our treatments containing prescription based medications.

Reports to Security Holders

Annual reports. We deliver annual reports containing audited financial statements to security holders.

Periodic reports and other information. We file annual and quarterly reports, current reports, proxy statements, and information statements with the SEC.

Availability of Filings. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports and proxy and information statements and other information regarding issuers that file electronically with the SEC.

Item 1A.

Risk Factors.

In addition to the other information in this Annual Report, the following factors should be considered carefully in evaluating the Company’s business and prospects. THE FOLLOWING MATTERS MAY HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR PROSPECTS, FINANCIAL OR OTHERWISE, OF THE COMPANY. REFERENCE TO THIS CAUTIONARY STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT OR STATEMENTS. We are subject to, among others, the following risks:

Risks Related to our Business

Our business may be adversely affected by competition in the market for the treatment of sexual dysfunction.

Our business is operating in a competitive market in the erectile dysfunction (“ED”) segment, and our competitors have significantly greater resources. It is likely that new competitors will emerge in the short to medium term which may have an adverse impact on our business.

While we do not have any significant current known competitors to our premature ejaculation (“PE”) business in Australia, New Zealand or the United Kingdom it is likely that competitors will emerge in the short to medium term which may have an adverse impact on our business. There are various PE treatments under development internationally which may enter the Australian market in the short to medium term and which could impact on our ability to expand our PE business internationally.

An inability to respond quickly and effectively to new trends could adversely impact our competitive position.

Any failure to maintain the level of our technological capabilities or to respond effectively to technological changes could adversely affect our ability to retain existing business and secure new business. We will need to constantly seek out new products and develop new solutions to maintain in our portfolio. If we are unable to keep current with new trends, our competitors’ services, technologies or products may render us noncompetitive and our services and products obsolete.

Potential impact of current litigation

We may be adversely affected as a result of current matters in litigation due to legal costs being incurred or judgments being given against us.

We may be subject to adverse publicity, costs orders and damages if we lose the legal actions we are currently involved in.

Increases in staffing costs could adversely affect our business.

Our business is labor intensive and we are highly dependent on the provision of services by highly qualified personnel. These resources are scarce and we may face competition for these services which could result in increased expenses for the business. These labor expenses constitute a significant component of our overall cost of doing business and increases in these expenses may adversely impact our business.

Increases in advertising expenses and/or decreases in the effectiveness of our advertising could result in higher expenses with no corresponding increase in revenue.

Our current business model is significantly reliant upon advertising and changes to the costs associated with that advertising or a decrease in the effectiveness of that advertising could have a significant adverse impact on the revenue and/or profitability of our business.

Increases in cost for pharmaceutical compounds and other chemicals could adversely affect our business.

We arrange for patients to be provided with medications. Significant increases in the price of medications or other chemicals used to make the medications could increase the overall expense of doing business and reduce its profitability.

We are subject to risks associated with joint ventures and third party agreements.

Development of IMT’s technology is also dependent on contractual arrangements with various consultants. In addition, AMI Australia has third party contractor agreements with its doctors and compounding pharmacies. We may incur significant costs if issues or disputes arise in relation to those arrangements and joint ventures and our future operation, growth and expansion is dependent on the success of those arrangements.

We may be subject to product liability claims which could negatively impact our profitability.

We arrange for our patients to be treated with pharmaceutical products, which involve risks such as product contamination or spoilage, product tampering and other adulteration of pharmaceutical products. We may be subject to liability if the consumption of any of our products causes injury, illness or death. A significant product liability judgment against us may negatively impact our profitability for a period of time depending on product availability, competitive reaction and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, any negative publicity surrounding such assertion that products provided through our treatment programs caused illness or injury could adversely affect our reputation with existing and potential customers and including irreparable harm to our corporate and brand image.

We have limited business liability insurance coverage.

We have limited business liability insurance coverage for our operations. Any loss due to business disruption, litigation or natural disaster may exceed or may be excluded from the insurance coverage we have and could result in substantial expenses and a diversion of resources. We do not have liability insurance to cover any operations outside of Australia, New Zealand or the United Kingdom and likely would need to put such insurance in place in the event that we commence operations outside these geographic areas.

We have and may in the future experience negative results from our plans for expansion.

We may, in the future, acquire new Australian clinic facilities and may expand our business beyond Australia, New Zealand, China and the United Kingdom. Entering into any expansion transaction entails many risks, any of which could have a negative impact on our business, including: (a) diversion of management’s attention from other business concerns; (b) failure to integrate the acquired company with our existing business; (c) additional operating expenses not offset by additional revenue; and (d) dilution of our stock as a result of issuing equity securities. Any expansion globally also entails additional risks relating to operating our business in environments with different legal and regulatory systems and business customs than those in Australia, New Zealand and the United Kingdom, incurring additional costs in locating and retaining those professionals with expertise in these area. There is also the likelihood that significant start up costs will be incurred and that it may take time to achieve successful market penetration in new markets. We may discover that global operations are less profitable than existing operations and that losses may be incurred. There is a risk that our operations in those and other international areas will continue to be unprofitable.

We may be unable to implement our acquisition or expansion strategy and as a result, we may be less successful in the future.

We may not be able to identify and acquire companies meeting our acquisition criteria on terms acceptable to us. Additionally, financing, if needed, to complete acquisitions may not always be available on satisfactory terms. Further, our acquisition strategy presents a number of risks to us, including adverse effects on our earnings after each acquisition, diversion of management’s attention from our core business, failure to retain key acquired personnel and other risks from unanticipated events or liabilities arising after each acquisition. Some or all of these risks could have a material adverse effect on our business, financial condition and results of operations.

We may be adversely affected should certain patents expire or if our intellectual property becomes widely available.

We are currently exploiting or planning to exploit patented technology in our existing businesses and intend to continue to exploit such technology if we expand further internationally. Our ability to do business in a similar manner may be adversely affected by the expiration of those patents and if our competitors utilize such technology to compete with our businesses.

Some of our patent applications have yet to be approved by the relevant regulatory body. The inability to obtain patent protection for our technology or misappropriation of our intellectual property could adversely affect our competitive position.

Our success depends on our medication formulations and internally developed know-how, and related intellectual properties. Management regards this intellectual property as proprietary and has and will continue to attempt to protect such intellectual property by seeking patents, copyrights or trademarks (as appropriate), and by invoking trade secret laws and entering into confidentiality and nondisclosure agreements with third parties. Despite these precautions, it may be possible for a third party to obtain, misappropriate and use our services or intellectual property.

We may need to resort to litigation in the future to enforce or to protect our intellectual property rights. In addition, our intellectual property and patents may be claimed to conflict with or infringe upon the patent, trademark or other proprietary rights of third parties. If this occurred, we would need to defend ourselves against such challenges, and such defenses could result in substantial costs and the diversion of resources which could materially harm our business.

Our products may infringe upon the intellectual property rights of others, which could cause damages that may increase our costs and negatively affect our profitability.

Third parties may in the future assert against us misappropriation claims or claims that we have infringed a patent, copyright, trademark or other proprietary right belonging to them. Any claim, even if not meritorious, could result in the expenditure of significant financial and managerial resources and could negatively affect our profitability.

Our ongoing research and development activities are, and the production and marketing of our pharmaceutical products and services and medical devices derived therefrom will be, subject to regulation by numerous governmental authorities in Australia and elsewhere, principally the Therapeutics Goods Administration, or “TGA” and the functional equivalent bodies in the United States, Europe, Asia and elsewhere.

Under our current business model, our medical formulations are able to be provided through a compounding pharmacy in Australia on an individual prescription basis. We may need to make variations to our business model to commence operations in certain jurisdictions outside Australia, New Zealand and the United Kingdom and there may be other jurisdictions where we would need to fully comply with clinical trial requirements.

Our nebulizer medical device is currently undergoing an extensive regulatory approval process mandated by the TGA prior to marketing and use in Australia and, to the extent that our nebulizer is marketed internationally, it will likely have to go through additional regulatory approval by foreign regulatory agencies. This review process can take considerable time and require substantial expense. We must obtain regulatory approval from the respective agencies in countries outside of Australia. We can make no guarantees that such approvals will be granted.

Delays in obtaining regulatory approvals would adversely affect the development and commercialization of our nebulizer device. We cannot be certain that we will be able to obtain the clearances and approvals necessary for manufacturing and marketing our nebulizer device.

We may have future capital needs for which we will need to access additional financing. Additional financing could dilute our current stockholders’ equity interests.

We currently anticipate that our available funds and resources, including sales, will be sufficient to meet our anticipated needs for working capital and capital expenditures for the next twelve months within Australia and New Zealand. We also anticipate that we have sufficient funds to continue to operate in the United Kingdom on the present scale, however there is a risk that our budgets may be incorrect and that such finance may prove inadequate or that we may decide to expand more quickly and into other markets and that we may need to raise additional funds in the future in order to fund more research and development and more rapid expansion and to develop new or enhanced products.

If additional funds are raised through the issuance of equity or debt securities, our current stockholders may experience dilution and any such securities may have rights, preferences or privileges senior to those of the rights of our common stock.

There can be no assurance that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or not available on acceptable terms, we may not be able to fund our expansion, promote our brand name as we desire, take advantage of unanticipated acquisition opportunities, develop or enhance products or respond to competitive pressures. Any such inability could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to retain our key management or contractors.

We are highly dependent on the services of Dr. Jacov (Jack) Vaisman, Mr. Dilip Shrestha and Mr. Forhad (Tony) Khan, as well as the other principal members of our management and scientific staff and the services of Doyle Corporate Pty Limited and its principal Mr. Richard Doyle. The loss of one or more of such persons could substantially impair ongoing operations. Our success depends in large part upon our ability to attract and retain highly qualified personnel. We compete in our hiring efforts with other pharmaceutical and medical treatment companies and we may have to pay higher salaries to attract and retain personnel.

Much of our intellectual property has been devised and developed by Dr. Vaisman and the loss or impairment of his services could significantly affect our ability to fully exploit our intellectual property or affect our ability to develop new intellectual property.

Risks related to our common stock

Our stock price is highly volatile.

Our stock price has fluctuated significantly. There is a significant risk that the market price of our common stock could decrease in the future in response to any of the following factors, some of which are beyond our control:

variations in our quarterly operating results;

general economic slowdowns;

changes in market valuations of similar companies;

sales of large blocks of our common stock;

announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and

fluctuations in stock market prices and volumes, which are particularly common among highly volatile securities of internationally-based companies.

Our common stock is subject to the “penny stock” rules.

Our common stock is subject to the United States Securities and Exchange Commission’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

Due to the fact that we have net tangible assets of USD5,000,000 or less and our common stock has a market price per share of less than USD5.00, transactions in our common stock may be subject to the “penny stock” rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors:

must make a special written suitability determination for the purchaser;

must receive the purchaser’s written agreement to a transaction prior to sale;

must provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

must obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

If our common stock becomes subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

Efforts to comply with recently enacted changes in securities laws and regulations have required substantial financial and personnel resources and we still may fail to comply.

As directed by the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on our internal controls over financial reporting in their annual reports on Form 10-K. In addition, the public accounting firm auditing our financial statements must attest to and report on management’s assessment of the effectiveness of our internal controls over financial reporting.

The formal process of evaluating our internal controls over financial reporting, which has required the devotion of substantial financial and personnel resources, is not complete. Given the status of our efforts, coupled with the fact that guidance from regulatory authorities in the area of internal controls continues to evolve, uncertainty exists regarding our ability to comply by applicable deadlines.

Risks associated with doing business in Australia and other foreign countries

We are subject to the risks associated with doing business in Australia and Asia.

As most of our current operations are conducted in Australia, New Zealand and Asia we are subject to special considerations and significant risks not typically associated with companies operating in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. Our results may be adversely affected by changes in the political and social conditions in Australia, New Zealand and Asia, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

We are subject to risks associated with the domicile, place of incorporation and place of residence of AMI Australia and our directors and officers.

AMI Australia is incorporated in Australia. All of our executive officers and directors are non-residents of the United States. Therefore, it may be more difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws in an Australian court against us or any of those persons or to effect service of process upon these persons in the United States than it would be if these persons were resident in the United States.

Additionally, it may be difficult for an investor, or any other person or entity, to enforce civil liabilities under U.S. federal securities laws in original actions instituted in Australia. It may be difficult to enforce a judgment in the United States against us and most of our officers and directors or to assert U.S. securities laws claims in Australia or serve process on most of our officers and directors.

We may experience an impact of the United States Foreign Corrupt Practices Act on our Business.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Compliance with the Foreign Corrupt Practices Act could adversely impact our competitive position and failure to comply could subject us to penalties and other adverse consequences. We have attempted to implement safeguards to prevent and discourage non-compliant conduct by our employees and agents. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse affect on our business, financial condition and results of operations.

We may experience an impact due to Australian, New Zealand or United Kingdom regulation of the pharmaceutical and/or medical services industry.

We may suffer an adverse impact to our business if the manner in which our services are provided is required to change due to changes in the relevant regulatory regimes applicable to those services. This could render our current business model unlawful or render it uneconomic, adversely impacting our profitability and prospects. The Australian government is in the process of undertaking a review of the impotency industry in Australia and a committee of the Australian federal parliament is scheduled to release a report containing recommendations relating to the ongoing regulation of this industry in November or December 2009. This report may recommend changes to the current regulation of this industry and the Company’s business.

We may experience a risk of revenue reduction due to a saturation of the Australian Market.

Australia is a country with a population of approximately 22 million people. There are a limited number of people who are candidates for our treatments. We are subject to increased risks or over saturation of market share as we continue to treat more patients in the Australian market.

Effects of international sales.

We intend to market our current and future services internationally. A number of risks are inherent in international transactions. In order for us to market our services in the U.S., Europe, Canada, Asia and certain other foreign jurisdictions, we may have to obtain required regulatory approvals or clearances and otherwise comply with extensive regulations regarding safety, manufacturing processes and quality and advertising rules and regulations. There can be no assurance that we will be able to obtain or maintain regulatory approvals or clearances in such countries or that it will not be required to incur significant costs in obtaining or maintaining its foreign regulatory approvals or clearances.

Fluctuations in currency exchange rates may adversely affect the demand for our services by increasing the price of our services in the currency of the countries in which the services are marketed.

Our consolidated financial statements are presented in Australian and U.S. dollars. Fluctuations in the rates of exchange between U.S. dollar and other foreign currencies may negatively impact our financial condition and results of operations. As we expand our presence into international markets, we expect the percentage of both our revenues and expenditures denominated in non-Australian dollars to increase. For the foreseeable future, we expect our expenditures to be predominantly denominated in Australian dollars, resulting primarily from our activities in Australia, and expect capital expenditures to be denominated in Australian dollars. Our expansion into the United Kingdom will also expose us to currency fluctuations relating to UK Pounds.

We are subject to a risk that our current patent applications may not be granted.

We have pending certain patents relating to the treatment of premature ejaculation. We can make no guarantee that these patents will be granted and, if the patents are rejected, the intellectual property underlying these patents will then reside within the public domain and we would not have any patent protection from competition using its intellectual property. While the Company believes that formulation secrets not contained in the patent applications will create a barrier to entry, there can be no guarantee that such a barrier will prove sufficient. In the event that such competition was to arise, it could adversely affect our market share, pricing power, profitability and prospects as a going concern.

We are subject to risks associated with our method of patient consultation. We may experience risks due to dispensing medication through prescriptions written by our doctors after our over-the-phone consultations.

We retain doctors to consult with patients over the phone and to write prescriptions on the basis of these telephone consultations. Telephone diagnosis and prescription is widely considered, in many countries including Australia, appropriate for some ailments but not for others. Telephone diagnosis and prescription written as a result of such consultation may be deemed unsuitable either in general or for those treatments that we provide and as a result, we have assumed this risk in its current business model. If over-the-phone diagnosis and prescriptions were prohibited, we could be subject to a substantial increase in costs due to the need for full-time physicians at each clinic and, further, could result in lost sales as a result of potential customers being unable or unwilling to see a doctor in person. Furthermore, such a requirement could significantly impair our future profitability and prospects as a going concern.

Our current business model may not be profitable in international markets.

We have limited experience in operating outside of Australia and New Zealand, and failure to achieve our overseas expansion strategy may have an adverse effect on our business growth in the future. Our future growth depends, to a considerable extent, on our ability to expand our customer base in both the domestic and overseas markets. We have limited experience with foreign regulatory environments and market practices, and cannot guarantee that we will be able to penetrate any overseas market. In connection with our initial efforts to expand overseas, we may encounter many obstacles, including cultural and linguistic differences, difficulties in keeping abreast of market, business and technical developments in foreign jurisdictions, and political and social disturbances. Failure in the development of overseas markets may have an adverse effect on our business growth in the future.

We may not achieve the widespread brand recognition necessary to succeed outside of Australia.

We believe it is imperative to our long term success that we obtain significant market share for our services before other competitors enter the market. Therefore, we must quickly establish recognition of our brand. This will require us to must make substantial expenditures on product development, strategic relationships and marketing initiatives in new markets. In addition, we must devote significant resources to ensure that our customers are provided with a high quality product and a high level of customer service. Many of our potential competitors may have substantially greater financial, marketing and other resources and potentially greater access to content and distribution channels than us. We cannot be certain that we will have sufficient resources to achieve the early and widespread brand recognition we believe necessary to realize commercial acceptance of our services.

Regulations in international markets relating to advertising could adversely affect our business.

Our business model is dependent upon advertising and marketing. Our current model may not be able to be enacted internationally due to regulatory requirements in the relevant jurisdictions. In certain countries (including Australia), advertisers, advertising agencies and companies that engage in advertising activities are liable for the accuracy of the content of advertisements and they have to ensure that the advertised products, activities and services are in full compliance with applicable law. We do not plan to do business in countries in which the advertising of our services and/or pharmaceuticals in the manner we advertise in Australia would be illegal. If we are found to be in breach of advertising law requirements, we could be subject to liability and penalties under the respected laws of such country. These penalties may include fines, confiscation of profits, order to cease the dissemination of the advertisement and orders to publish an advertisement correcting the misleading information. Any such action by any relevant regulatory body, whether or not it is ultimately successful, could distract management attention and have a material adverse effect on our business and financial condition or results of operations.

Regulations in international markets relating to pharmaceuticals could adversely affect our business.

Our business model is dependant upon the distribution of pharmaceutical prescriptions. Our current model may not be enacted internationally. In certain countries, we may be subject to state or national laws governing the distribution and compounding of pharmaceuticals. We may be required to expend substantial unforeseen resources to comply with such regulations. Failure to comply with such regulations could cause a significant disruption in our business domestically and internationally as it could distract management attention and have a material adverse effect on our business and financial condition or results of operations.

Inability to hire experienced and capable employees or executives in non-Australian markets could adversely affect our business in such markets.

We rely heavily on the performance of our officers and key employees in Australia. Any international expansion will be dependent on our ability to retain and motivate qualified personnel in those markets, especially in management. If we do not succeed in attracting new qualified employees, our business could suffer significantly. Competition for qualified personnel is intense in certain markets, and we may be unable identify, attract, hire, train, assimilate, or retain a sufficient number of highly skilled managerial, marketing and technical personnel necessary to implement our business plan outside of Australia.

Item 1B.

Unresolved Staff Comments.

Not applicable.

Item 2.

Properties.

As of June 30, 2009, AMI had leasehold interests in 19 Australian properties and one New Zealand property, being the 20 clinics used to operate the business in New Zealand and Australia. There are no encumbrances over AMI’s interest in these properties. All of these properties are rented and none of these properties are owned. AMI’s principal executive office is located at Level 4, Terrace Tower, 80 William Street, East Sydney,New South Wales, Australia. AMI’s principal executive office houses AMI’s corporate head office, its centralized call center and some of AMI’s licensed doctors, nursing staff and sales and administration staff.

AMI’s clinics and sales offices are located at:

New South Wales

AMI Direct, East Sydney, Sydney, New South Wales

Bondi Junction, Sydney, New South Wales

Dubbo, Regional New South Wales

Hurstville, Sydney, New South Wales

Newcastle, Regional New South Wales

Parramatta, Sydney, New South Wales

Sydney City, Sydney, New South Wales

Wollongong, Regional New South Wales

Queensland

Bundall, Gold Coast, Queensland

Cairns, Regional Queensland

Kallangur, Queensland

Townsville, Regional Queensland

Upper Mt Gravatt, South Brisbane, Queensland

South Australia

Adelaide, South Australia

Victoria

St Kilda, Melbourne, Victoria

Mitcham, Melbourne, Victoria

Dandenong, Melbourne, Victoria

Western Australia

Perth, Western Australia (2 clinics)

New Zealand

Auckland, North Island, New Zealand

United Kingdom

London, England

Twickenham, England

In addition, the Company presently utilizes office space of our registered agent representative in the State of Nevada at 6767 Tropicana Avenue, Suite 207, Las Vegas, Nevada 89103 as our US registered office.

Item 3.

Legal Proceedings.

As of June 30, 2009, there was no litigation pending or threatened by or against the Company or any of its direct or indirect subsidiaries other than AMI Australia. AMI Australia currently is involved in the following litigation and administrative matters:

On October 25, 2006, Bade Medical Institute Pty Limited, Mr. David Wade, Mr. Buddy Beani and others (collectively “Bade”) applied for Trade Mark No. 114322021 in respect of the words “AMI Nasal Spray.” AMI Australia lodged an objection to the registration of that application with IP Australia on June 21, 2007 and that application was subsequently refused. On December 13, 2007, AMI Australia commenced proceedings in the Federal Court of Australia Sydney Registry against Bade alleging Bade was infringing upon AMI Australia’s trademarks and other intellectual property rights. On December 19, 2007, Bade consented to orders that Bade transfer ownership of certain domain names and telephone numbers to AMI Australia and consented to orders that Bade would not use certain names which contained the word AMI. Bade appear to have ceased operation since the orders were obtained and has transferred the required names to AMI Australia. AMI subsequently applied for final orders and damages against Bade and final hearing of this matter concluded on September 2, 2009. The court has indicated that judgment will be released shortly.

On June 12, 2009, AMI Australia obtained an interlocutory injunction from the Supreme Court of New South Wales preventing Fairfax Media Publications Limited (“Fairfax”) from publishing information which AMI Australia alleges was disclosed to Fairfax in breach of a duty of confidence owed to AMI Australia. Final hearing of this matter commenced on October 26, 2009 but was unable to be concluded by October 28, 2009, the final scheduled date for the hearing of the matter. Final hearing of the matter is now scheduled for February 24 and 25, 2010 and AMI Australia’s interlocutory injunction has been extended until that date.

Item 4.

Submission of Matters to Vote of Security Holders.

Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Common Stock is listed on the OTC Bulletin Board under the symbol “AVMD.OB”. The following sets forth, for the periods indicated, the high and low bid price for our Common Stock as reported for the prior two fiscal years. The quotations set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

Quarter Ending:	High		Low

September 30, 2007	$	0.20	$	0.10
December 31, 2007	$	0.40	$	0.10
March 31, 2008	$	0.39	$	0.15
June 30, 2008	$	0.35	$	0.15

September 30, 2008	$	0.35	$	0.17
December 31, 2008	$	0.17	$	0.07
March 31, 2009	$	0.07	$	0.02
June 30, 2009	$	0.19	$	0.04

As of November 11, 2009 there were 328 shareholders of record of our common stock.

We have not paid any stock dividends or cash dividends to date and have no plans to pay any stock or cash dividends in the immediate future.

We do not have any equity compensation plans.

Item 6.

Selected Financial Data.

Not applicable.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Special Note on Forward-Looking Statements. Some of the statements contained in this annual report on Form 10-K that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this annual report Form 10-K, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;

Our ability to raise capital when needed and on acceptable terms and conditions;

The intensity of competition; and

General economic conditions.

All written and oral forward-looking statements made in connection with this annual report on Form 10-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources, and we cannot assure you of the accuracy or completeness of the data included in this report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements. See “Risk Factors” for a more detailed discussion of uncertainties and risks that may have an impact on future results.

Overview

Overall, the Company was disappointed with its financial and operating performance in the year ended June 30, 2009.

On the positive side, total gross revenue in the year ended June 30, 2009 was $53,351,946 compared to $51,847,992 in the year ended June 30, 2008, an increase of $1,503,954 or 2.9%.

Revenue in the Company’s premature ejaculation (“PE”) treatment programs has increased by $5,766,406 or 24.0% to $29,800,571 and revenue in the Company’s erectile dysfunction (“ED”) treatment programs has decreased by $3,711,921 or 15.3% to $20,590,812 in the year ended June 30, 2009, compared to the year ended June 30, 2008.

The Company also generated $955,353 in revenue from its prostate programs in the year ended June 30, 2009, compared to $3,566,629 in the year ended June 30, 2008, a decrease of 73.2%.

Revenue in our Australian operations was $41,801,703 in the year ended June 30, 2009, compared to $50,572,311 during the year ended June 30, 2008, a decrease of $8,770,608 or 17.3%. This decrease was primarily attributable to an increase in the average program length and the depreciation in the Australian dollar against the US dollar during the 12 months. Revenue in Australian dollars was A$58,370,389 in the year ended June 30, 2009, compared to A$57,603,350 in the year ended June 30, 2008, an increase of $767,039 or 1.3%.

Revenue in our UK operations was $10,575,461 in the year ended June 30, 2009 compared to $Nil during the year ended June 30, 2008. Our UK operation started its business activities in September 2008.

As set out above, the Company’s Australian revenue increased slightly during the year ended June 30, 2009, with a substantial increase in revenue in its premature ejaculation market segment and a substantial decrease in its erectile dysfunction and prostate market segments. The decrease in the Company’s prostate market segment is due to AMI Australia substantially decreasing its focus and advertising on that market segment. At the same time, the Company achieved more than $10.5 million in revenue in the United Kingdom from a standing start.

Less positively, the Company incurred substantial losses during the year ended June 30, 2009. Fortunately, more than half of these losses were due to non-cash amortization and impairment charges which have not affected the cash position of the Company. In addition, a further significant portion of these losses are due to translation of the Company’s results from Australian dollars to US dollars. Notwithstanding these non-cash related impacts, management was disappointed with the performance of the Company during 2009.

Cost of revenue increased to $12,957,681 in the year ended June 30, 2009 compared to $11,597,159 in the year ended June 30, 2008. This increase is primarily attributable to an increase in the medication cost incurred by AMI Australia and the Company’s UK operation as well as start up costs associated with the Company’s UK operations. As a percentage of revenue, cost of revenue was 24.3% in the year ended June 30, 2009 compared to 22.4% in the year ended June 30, 2008.

Gross profit was $40,394,265 in the year ended June 30, 2009 compared to $40,250,833 in the year ended June 30, 2008. As a percentage of revenue, gross profit decreased to 75.7% in the year ended June 30, 2009 from 77.6% in the year ended June 30, 2008. Once again, the 1.9% decrease in the gross profit percentage is primarily attributable to the high percentage of cost of revenue in our UK operation

Selling, general and administrative expenses were $46,616,853 in the year ended June 30, 2009 compared to $36,801,510 in the year ended June 30, 2008. As a percentage of revenue, selling, general and administrative expenses increased to 87.4% in the year ended June 30, 2009 from 71.0% in the year ended June 30, 2008. The increase in the year ended June 30, 2009 is primarily attributable to the establishment of the Company’s UK operations as well as the expenditure on ineffective advertising in Australia in January and February 2009.

Net income (loss) before income tax was ($12,105,376) in the year ended June 30, 2009 compared to $2,252,458 in the year ended June 30, 2008. The decrease is primarily attributable to the impairment on patents that were held by Worldwide PE Patent Holdco Pty Limited amounting to $5,279,462 (a non-cash item), the increase in selling, general and administrative expenses and the establishment of the UK operation.

Net income (loss) was ($9,344,989) in the year ended June 30, 2009 compared to $994,779 in the year ended June 30, 2008. This decrease is mainly attributable to the impairment on the patent and formulation rights owned by Worldwide PE Patent Holdco Pty Limited, the increase in selling, general and administrative expenses and the establishment of the UK operations.

The Company was disappointed with the operating performance of its Australian operations and has taken steps to address unnecessary expenditures. The Company believes that the operating performance of its Australian operations since the end of the financial year has substantially improved.

The Company expended substantial funds during 2009 in endeavouring to establish its operations in the United Kingdom. The Company is pleased to have generated substantial revenue from its United Kingdom operations in its initial year of operations and is hopeful that it will generate a profit from those operations during 2010.

As of June 30, 2009, the Company had total liabilities of $29,668,233 and a positive net worth of $18,110,615. As of June 30, 2008, the Company had total liabilities of $21,887,563 and a positive net worth of $33,474,159.

As at June 30, 2009 our total current assets were $26,670,960, our total current liabilities were $25,222,649 and our net current assets were $1,448,311.

The Company’s aggregate cash balances as at June 30, 2009 were $295,245, a substantial decrease on last year. The core reason for this decrease is the substantial expenditure incurred by the Company in establishing its UK operations. The Company also substantially increased its third party borrowings in order to undertake this expansion.

Economic conditions were difficult for the Company over the past 12 months. This is partly due to the global financial crisis but is also due to some ineffective advertising earlier this year as well as the costs associated with establishing the Company’s UK operations.

Management has taken steps to address operating performance and the business has improved since July 2009. As a result of these changes in operating performance, we forecast that we will be able to generate sufficient funds from our business in order to fund our operations in the ordinary course during the next 12 months.

The Company intends to focus its activities over the next 12 months on its profitable Australian operations as well as its new United Kingdom operations.

The core factors for the Company’s success over the next 12 months will be to ensure that the Company’s new United Kingdom operations are successfully established as well as ensuring that its core Australian operations continue to operate profitably.

Critical Accounting Policies

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America. The following are descriptions of the more significant policies:

Basis of Accounting

The accompanying financial statements are prepared on an accrual basis.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, AMI Australia Holdings Pty Limited, AMI Management Services Pty Limited (“AMI MS”) and AMI International Pty Limited (“AMI International”) and their direct and indirect wholly-owned subsidiaries: Advanced Medical Institute Pty Ltd, PE Patent Holdco Pty Limited (“PE”), Advanced Medical Institute (NZ) Limited (“AMI NZ”), Intelligent Medical Technologies Pty Ltd (“IMT”), Ai Te Wei (Beijing) Medicine Consulting Company, AMI Japan Kabushiki Gaisya (75% owned) and AMI Clinic Limited (“AMI UK”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Revenue Recognition

Sales are reported as deferred income when the sales contracts are executed and the term of the contract exceeds three months. Up to three months of medication is delivered to the patient upon the signing of a contract. Generally the terms of the treatment contracts are up to one year, but they can be for longer periods of time. The deferred income arising from the contracts that exceed three months is then amortized, on a straight line basis, into income during the approximated composite remaining medication delivery period. This approximated composite is an estimate that may vary from period to period.

Income Tax

Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. The income tax rates imposed by the taxing authorities vary. Taxable income may vary from pre-tax income for financial accounting purposes. There is no expected relationship between the provision for income taxes and income before income taxes because the countries have different taxation rules, which vary not only to nominal rates but also in terms of available deductions, credits and other benefits. Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Company’s assets and liabilities using the applicable tax rates in effect at year end as prescribed by SFAS 109 (ASC 740) “Accounting for Income Taxes.”

Inventories

Inventories are valued at the lower of cost (determined on a first-in first-out basis) or market value. Management compares the cost of inventories with the market value and allowance is made for writing down our inventories to market value, if lower. As of June 30, 2009 and 2008 inventory mainly consisted of raw materials.

Property and Equipment

Equipment placed in service is depreciated over the estimated useful lives of the assets using the diminishing value depreciation method.

Property and equipment are carried at the lesser of cost and written down value. Expenditures for maintenance and repairs are expenses as incurred and expenditures for major renewals and betterments are capitalized. Assets retired or sold are removed from the property accounts, with gains or losses on disposal included in income.

Exchange Gain (Loss)

During the year ended June 30, 2009 and 2008, the transactions of AMI Australia were denominated in foreign currency and were recorded in Australian Dollars (AUD) at the rates of exchange in effect when the transactions occur. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.

Foreign Currency

As of June 30, 2009, the accounts of AMI Australia and its subsidiaries were maintained and its financial statements were expressed in the local currency for the jurisdiction in which the entity operated. Such financial statements were translated into the functional currency in Australian Dollars (AUD) and thereafter to reporting currency in U.S. Dollars (USD) in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52 (ASC 830), “Foreign Currency Translation,” with the AUD as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders’ equity (deficit) is translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130 (ASC 220), “Reporting Comprehensive Income” as a component of shareholders’ equity (deficit).

Research and Development Costs

Research and development costs are charged against income from ordinary activities before income tax as incurred.

Intangible assets

The Company applies the criteria specified in SFAS No. 141 (ASC 805), “Business Combinations” to determine whether an intangible asset should be recognized separately from goodwill. Intangible assets acquired through business acquisitions are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Per SFAS 142 (ASC 350), intangible assets with definite lives are amortized over their estimated useful life and reviewed for impairment in accordance with SFAS No. 144 (ASC 360), “Accounting for the Impairment or Disposal of Long-lived Assets.” Intangible assets, such as purchased technology, trademark, customer list, user base and non-compete agreements, arising from the acquisitions of subsidiaries and variable interest entities are recognized and measured at fair value upon acquisition. Intangible assets are amortized over their estimated useful lives from one to ten years. The Company reviews the amortization methods and estimated useful lives of intangible assets at least annually or when events or changes in circumstances indicate that it might be impaired. The recoverability of an intangible asset to be held and used is evaluated by comparing the carrying amount of the intangible asset to its future net undiscounted cash flows. If the intangible asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the intangible asset exceeds the fair value of the intangible asset, calculated using a discounted future cash flow analysis. The Company uses estimates and judgments in its impairment tests, and if different estimates or judgments had been utilized, the timing or the amount of the impairment charges could be different.

Goodwill, trademarks, patents and other intangible assets determined to have indefinite useful lives are not amortized. We test such trademarks and other intangible assets with indefinite useful lives for impairment annually, or more frequently if events or circumstances indicate that an asset might be impaired. Goodwill, trademarks, patents and other intangible assets determined to have definite lives are amortized over their estimated useful lives or the life of the trademark, patent and other intangible asset, whichever is less.

Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144 (ASC 360), “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (“SFAS 131”) (ASC 280), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. SFAS 131 (ASC 280) has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128) (ASC 260), “Earnings per share.” SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Currency Conversion

As of June 30, 2009 and 2008, the accounts of AMI Australia were maintained, and its financial statements were expressed, in Australian Dollars (AUD). Such financial statements were translated into US Dollars (USD) in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52 (ASC 830), “Foreign Currency Translation,” with the AUD as the functional currency. According to the Statement, all assets and liabilities were translated at the exchange rate (AUD1 = USD0.80480) as of June 30, 2009, stockholder’s equity are translated at the historical rates and income statement items are translated at the weighted-average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130 (ASC 220), “Reporting Comprehensive Income.”

The following table sets forth, for the periods indicated, certain operating information expressed as a percentage of revenue:

Result of operations:

	Year ended June 30,
	2009			2008
Revenue		100	%		100	%
Cost of Revenue		24.3	%		22.4	%
Gross Profit		75.7	%		77.6	%
Selling General and administrative expenses		87.4	%		71.0	%
Impairment loss		9.9	%		-
Other income and expenses		(0.4	)%		(0.2	)%
Discontinued operation		(0.7	)%		(2.1	)%
Income before income tax		(22.7	)%		4.3	%
Income tax expenses		(5.2	)%		2.4	%
Net Income		(17.5	)%		1.9	%

Liquidity and Capital Resources

As of June 30, 2009, we had total liabilities of $29,668,233, including unearned revenue of $8,003,468, and we had a positive net worth of $18,110,615. As of June 30, 2008, we had total liabilities of $21,887,563 including unearned revenue of $6,922,800 and a positive net worth of $33,474,159. As at June 30, 2009 our total current assets were $26,670,960, our total current liabilities were $25,222,649 and our net current assets were $1,448,311.

Our aggregate cash balances as at June 30, 2009 were $295,245. While economic conditions have been difficult over the past 12 months, management has taken steps to address operating performance, and the business has improved since July 2009. As a result of these changes in operating performance, we forecast that we will be able to generate sufficient funds from our business in order to fund our operations in the ordinary course during the next 12 months. In September 2008 management expanded our business into the United Kingdom.

In the event that we continue to expand our business, we may need to raise debt or equity funding in order to undertake such expansion. However, there can be no assurance that we can or will obtain sufficient funds from operations or from additional financings on terms acceptable to us. If we are unable to obtain sufficient additional financing, we may not be able to expand our operations as considered or we could be required to reduce spending and operations.

The Company borrowed A$3 million from ANZ Nominees Limited in its capacity as custodian of the Professional Pensions PST in September 2006. The outstanding balance of this loan was fully repaid in December 2008 using funds from the St George facility discussed below.

The Company borrowed A$2.4 million from St George Bank Limited in December 2008 comprising a A$1.9 million term facility and a A$500,000 overdraft facility. The loan is secured by a first ranking security interest in all of AMI Australia’s assets and undertakings (including its existing equity interests in PE Patent Holdco Pty Limited, Intelligent Medical Technologies Pty Limited and Advanced Medical Institute (NZ) Limited). The term facility is a commercial bill acceptance/discount facility whereby the Company regularly discounts bills with the bank at the prevailing interest rate plus a margin of 1.65%. The average all-up cost of this facility during the period was 5.12%. On each rollover the interest rate is reset. The loan is due for repayment in December 2011, however the Company is required to make principal repayments of A$50,000 per month during each month of the term. As at June 30, 2009, the total outstanding under the facility was A$2,177,056.99.

The Company borrowed a further A$1 million from Secare Health Centre Pty Limited (“Secare”) in December 2008. Secare is controlled by the company’s chief executive officer and founder, Jack Vaisman and the Company has subsequently borrowed a further A$3,581,489 from Secare. The loan is secured by a second ranking security interest in all of AMI Australia’s assets and undertakings (including its existing equity interests in PE Patent Holdco Pty Limited, Intelligent Medical Technologies Pty Limited and Advanced Medical Institute (NZ) Limited). The loan attracts an interest cost of 10% per annum. No repayment of this loan has been made up to June 30, 2009. The loan is due for repayment in December 2011.

The loans referred to above were provided to repay the ANZ facility, to fund expansion into the United Kingdom and to meet operational expenses.

YEAR ENDED JUNE 30, 2009 COMPARED TO YEAR ENDED JUNE 30, 2008

REVENUE. Revenue was $53,351,946 in the year ended June 30, 2009 compared to $51,847,992 in the year ended June 30, 2008, an increase of $1,503,954 or 2.9%. The increase in revenue in the twelve-month period is primarily attributable to (1) expansion of the business into the United Kingdom; (2) increased advertising campaigns in the premature ejaculation segment; (3) increased brand name recognition; and (4) effectiveness of our products.

We recognize all expenses on the date they are incurred regardless of whether they relate to recognized or unearned revenue whereas unearned revenue (which is generated by current expenses) is unable to be recognized in the current period.

By contrast, our unearned revenue increased by $1,080,668 to $8,003,468 for the year ended June 30, 2009, compared to the year ended June 30, 2008. The increase in unearned revenue in the twelve-month period is primarily attributed to the increase in weighted average program length of treatment programs during the year ended June 20, 2009.

Revenue in AMI Australia’s premature ejaculation (“PE”) treatment programs has increased by $5,766,406 or 24.0% to $29,800,571, and revenue in AMI Australia’s erectile dysfunction (“ED”) treatment programs has decreased by $3,711,921 or 15.3% to $20,590,812 in the year ended June 30, 2009, compared to the year ended June 30, 2008. AMI Australia also generated $955,353 in revenue from its prostate programs in the year ended June 30, 2009, compared to $3,566,629 in the year ended June 30, 2008, a decrease of 73.2%. This decrease is due to AMI Australia substantially decreasing its focus and advertising in this market segment.

Revenue in our Australian operations was $41,801,703 in the year ended June 30, 2009 compared to $50,572,311 during the year ended June 30, 2008, a decrease of $8,770,608 or 17.3%. The decrease in revenue is primarily attributable to the increase in average program length (higher unearned revenue) and the depreciation in the Australian dollar against the US dollar from the average rate of A$:US$ 1:0.89646 for the year ended June 30, 2008 to A$:US$ 1:0.74803 for the year ended June 30, 2009. Revenue including unearned revenue in Australian dollars was A$58,370,389 in the year ended June 30, 2009, compared to A$57,603,350 in the year ended June 30, 2008, an increase of $767,039 or 1.3%. We attribute this increase to the following factors: (1) increased advertising campaigns in the premature ejaculation segment; (2) increased brand name recognition; and (3) effectiveness of our products.

Revenue in our UK operations was $10,575,461 in the year ended June 30, 2009 compared to $Nil during the year ended June 30, 2008. Our UK operation started its business activities in September 2008.

COST OF REVENUE. Cost of revenue increased to $12,957,681 in the year ended June 30, 2009 compared to $11,597,159 in the year ended June 30, 2008. This increase is primarily attributable to an increase in the medication cost incurred by AMI Australia and AMI’s UK operation as well as start up costs associated with AMI’s UK operations. As a percentage of revenue, cost of revenue was 24.3% in the year ended June 30, 2009 compared to 22.4% in the year ended June 30, 2008. The increase in the cost of revenue percentage by 1.90% is primarily attributable to the establishment of the UK operations. The Company’s UK operations started its business activities in September 2008. The initial stage of UK operation led to a high percentage of cost of revenue due to the operation being a start up business.

GROSS PROFIT. Gross profit was $40,394,265 in the year ended June 30, 2009 compared to $40,250,833 in the year ended June 30, 2008. As a percentage of revenue, gross profit decreased to 75.7% in the year ended June 30, 2009 from 77.6% in the year ended June 30, 2008. The 1.9% decrease in the gross profit percentage is primarily attributable to the high percentage of cost of revenue in our UK operation

Gross profit in our Australian operations was $32,142,990 in the year ended June 30, 2009 compared to $39,067,551 in the year ended June 30, 2008. This decrease in primarily attributable to the increase in average program length (higher unearned revenue) and the depreciation in the Australian dollar against the US dollar from the average rate of A$:US$ 1:0.89646 for the year ended June 30, 2008 to A$:US$ 1:0.74803 for the year ended June 30, 2009. Gross profit including unearned revenue in Australian dollars was A$45,458,188 in the year ended June 30, 2009, compared to A$44,769,804 in the year ended June 30, 2008, an increase of A$688,384 or 1.5%. This increase is mainly attributable to an increase in revenue.

Gross profit in our UK operations was $7,586,441 in the year ended June 30, 2009 compared to a gross profit of $Nil in the year ended June 30, 2008. Our UK operation started its business activities in September 2008.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $46,616,853 in the year ended June 30, 2009 compared to $36,801,510 in the year ended June 30, 2008. As a percentage of revenue, selling, general and administrative expenses increased to 87.4% in the year ended June 30, 2009 from 71.0% in the year ended June 30, 2008. The increase in the year ended June 30, 2009 is primarily attributable to the establishment of UK operations as well as the expenditure on ineffective advertising in Australia in January and February 2009, which expenditure has now been ceased. The Company’s UK operations started its business activities in September 2008. The initial stage of UK operations led to a high percentage of selling, general and administrative expenses compared to revenue due to the operation being a start up business.

OTHER INCOME AND EXPENSES. Other income and expenses were $(197,219) in the year ended June 30, 2009 compared to $(113,391) in the year ended June 30, 2008. As a percentage of revenues other income and expenses increased to (0.4)% in the year ended June 30, 2009 from (0.2)% in the year ended June 30, 2008. The percentage change is not material.

NET (LOSS) INCOME BEFORE INCOME TAX AND INCOME TAX EXPENSES. Net income before income tax was ($12,105,376) in the year ended June 30, 2009 compared to $2,252,458 in the year ended June 30, 2008. The decrease is primarily attributable to the impairment on patents that were held by Worldwide PE Patent Holdco Pty Limited amounting to $5,279,462, the increase in selling, general and administrative expenses and the establishment of the UK operation.

Net (loss) income before income tax in our Australian operations was ($9,101,273) in the year ended June 30, 2009 compared to $4,312,262 in the year ended June 30, 2008. This decrease is mainly attributable to an impairment on the patent and formulation rights owned by Worldwide PE Patent Holdco amounting to $5,279,462, and an increase in advertising expenses in Australia.

Net loss before income tax in our UK operations was ($2,017,595) in the year ended June 30, 2009 compared to a net loss $Nil in the year ended June 30, 2008. Our UK operation started its business activities in September 2008.

Income tax expenses (benefit) were ($2,760,387) in the year ended June 30, 2009 compared to $1,257,679 in the year ended June 30, 2008. This decrease is attributable to the decreasing profitability of the Company’s business. As a percentage of gross income, income tax expense decreased from 2.4% to (5.2)% which is attributable to the increase in selling, general and administrative expenses and the establishment of the UK operations.

NET INCOME (LOSS). Net income was ($9,344,989) in the year ended June 30, 2009 compared to $994,779 in the year ended June 30, 2008. This decrease is mainly attributable to the impairment on the patent and formulation rights owned by Worldwide PE Patent Holdco Pty Limited, the increase in selling, general and administrative expenses and the establishment of the UK operations.

Net (loss) income in our Australian operations was ($6,340,886) in the year ended June 30, 2009 compared to $3,054,583 in the year ended June 30, 2008. This decrease is mainly attributable to the impairment on the patent and formulation rights owned by Worldwide PE Patent Holdco and the increase in selling, general and administrative expenses.

Net loss in our UK operations was ($2,017,595) in the year ended June 30, 2009 compared to $Nil in the year ended June 30, 2008. Our UK operation started its business activities in September 2008.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8.

Financial Statements and Supplementary Data.

Our consolidated financial statements and the notes thereto begin on page F-1 of this Annual Report.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A(T).

Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Annual Report (“Evaluation Date”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Managements Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP).

As of June 30, 2009, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving controls over financial reporting that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were : (1) lack of a functioning audit committee and lack of majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures, and, (2) inadequate segregation of duties consistent with control objectives. The aforementioned material weaknesses were identified by the Company’s Chief Financial Officer in connection with the audit of our financial statements as of June 30, 2009 and communicated to our management.

Management believes that the material weaknesses set forth in items (1) and (2) above did not have an effect on the Company’s financial results. However, management believes that although its disclosure controls and procedures are effective, the lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors could result in ineffective oversight in the establishment and monitoring of required internal controls and procedures. Management’s goals are to have a functional audit committee and a majority of outside directors on the Company’s board of directors when funds are available.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

No change in our internal control over financial reporting (as defined in Rules 13a-15 or 15d-15 under the 1934 Act) occurred during the quarter ended June 30, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Set forth below are the names of the directors, executive officers and key employees of the Company as of November 13, 2009.

Name	Age	Position

Jacov (Jack) Vaisman	62	Chief Executive Officer, President and Director

Dilip Shrestha	31	Chief Financial Officer

Forhad (Tony) Khan	46	Executive Vice President, Secretary and Director

Anatoly Fanshil	57	Director

Spiro Baramilis	51	Director

Executive officers of the Company are appointed at the discretion of the Board of Directors with no fixed term. There are no family relationships between or among any of the executive officers or directors of the Company.

There are no agreements or understandings for any officer or director of the Company to resign at the request of another person and none of the officers or directors is acting on behalf of or will act at the direction of any other person.

DR. JACOV (JACK) VAISMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR – Dr. Vaisman has served as the Company’s Chief Executive Officer, President and as a Director since March 21, 2005. Dr. Vaisman is a pioneer in the sexual dysfunction business in Australia. Since 2001, he has served as the managing director and chief executive officer of AMI Australia. He is responsible for the overall management and strategic direction of AMI Australia's impotency operations with the support of AMI Australia's chief operations officer, Tony Khan, and AMI's chief financial officer, Dilip Shrestha. Dr. Vaisman is also currently a consultant to and shareholder in Yayasan On Clinic, which operates a similar business in Indonesia. From 1993 through 2001, Dr Vaisman was the founder and director of On Clinic International in Australia, a predecessor of AMI Australia. The holder of a Bachelor of Medicine, a Master of Gynecology and a PhD in Medical Science, Dr Vaisman has more than 35 years of experience and expertise in the field of sexual health care provision and was recently granted an innovation patent in the field of premature ejaculation treatment by the Australian patent office.

DILIP SHRESTHA, CHIEF FINANCIAL OFFICER – Mr. Shrestha was appointed as the Company’s Chief Financial Officer on April 7, 2005. Mr. Shrestha has also served as the chief financial officer of AMI Australia since July 1, 2005. From 2001 to July 1, 2005, Mr. Shrestha was the Financial Controller of AMI Australia. Prior to that he was an Assistant Accountant with Australian Momentum Health Pty Ltd, one of two medical establishments leading in providing impotency treatment in Australia and a predecessor company to AMI Australia, a position he held from 1999 until 2001. Mr. Shrestha holds a Bachelor of Business Accounting, Master of E-Commerce and a Graduate Diploma of Information System and E-Commerce, and is a fully qualified certified practicing accountant in Australia.

FORHAD (TONY) KHAN, EXECUTIVE VICE PRESIDENT, SECRETARY AND DIRECTOR- – Mr. Khan has served as the Company’s Executive Vice President since July 30, 2005, he has been the Company’s Secretary and a Director since March 21, 2005. Mr. Khan has also served as chief operating officer of AMI Australia since July 1, 2005. From 2001 to July 1, 2005, Mr. Khan was the General Manager of AMI Australia. Prior to joining AMI Australia, Mr. Khan was the Director and sole operator of Australian Momentum Health (“AMH”), one of two medical establishments leading in providing impotency treatment in Australia. Mr. Khan was Sales Manager and then Operations Manager for On Clinic International prior to establishing AMH. Mr. Khan holds a Masters degree in Commerce and Accounting and has been involved in the industry for over 10 years.

ANATOLY FANSHIL, DIRECTOR - From 1994 through the present, Mr. Fanshil has held the position of director of Australian Overseas Shipping Services Pty Limited. From 1991 to 1994, Mr. Fanshil was an engineering service manager for Australian Ocean Lines. From 1972 through 1991, Mr. Fanshil was employed by the Black Sea Shipping Company as an electrical engineer and also had oversight over the entire company for the repairs of various ships anchored in the seaports of Finland, Greece, Italy and Germany. Mr. Fanshil holds a degree in electrical engineering.

SPIRO BARAMILIS, DIRECTOR - From 1992 through 2004, Mr. Baramilis has been the owner and Managing Director of Australian International Marine Services Pty Limited, a company which provides supplies to marine vessels. From 1981 through 1992, Mr. Baramilis was employed by Nautilus Trading PTY LTD (and its predecessor company, Baramilis Marine PTY LTD), a company that supplies vessels with provisions and technical supplies. Mr. Baramilis attended Sydney Technical College and was educated in the field of mechanical engineering.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the executive officers and directors of the Company and every person who is directly or indirectly the beneficial owner of more than 10% of any class of security of the Company to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such persons also are required to furnish our company with copies of all Section 16(a) forms they file. Based solely on our review of copies of such forms received by us, we believe that during the fiscal year ended June 30, 2009, all of the executive officers and directors of the Company and every person who is directly or indirectly the beneficial owner of more than 10% of any class of security of the Company complied with the filing requirements of Section 16(a) of the Exchange Act, except Anatoly Fanshil who did not timely file four Form 4s disclosing seven reportable transactions.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer. The Code was filed as an exhibit to our Annual Report on Form 10-KSB for the year ended June 30, 2005. A written copy of the Code will be provided upon request at no charge by writing to our Chief Financial Officer, Level 1, 204-218 Botany Road, Alexandria, NSW, Australia and a copy is also available for free on our Internet website (http://www.avmd.com.au).

Corporate Governance

The Board of Directors has an Audit Committee, Compensation Committee and a Nominating and Corporate Governance Committee.

There have been no changes to the procedures by which the stockholders of the Company may recommend nominees to the Board of Directors since the filing of the Company’s Definitive Proxy Statement on July 30, 2008 for its Annual Meeting of Stockholders, which was held on August 19, 2008.

Audit Committee

The Board of Directors has adopted an Audit Committee Charter. The Board of Directors had appointed each of Anatoly Fanshil and Spiro Baramilis to the Audit Committee. Spiro Baramilis meets the independence requirements and standards currently established by the SEC. An internal review by the Board of Directors has determined that Anatoly Fanshil does not meet the independence requirements established by the SEC, however he currently serves as a member of the Audit Committee because the Board of Directors has deemed it in the best interest of the Company. In addition, the Board of Directors has not yet designated a member to serve on the Audit Committee as an “audit committee financial expert” within the meaning of the rules and regulations of the SEC because they have not found a qualified independent individual who meets the requirements for the position. The Company is currently in the process of meeting with independent persons who have the qualifications to serve as a director and on the Audit Committee as the “audit committee financial expert” for the Audit Committee.

The Audit Committee assists the Board by overseeing the performance of the independent auditors and the quality and integrity of our internal accounting, auditing and financial reporting practices. The Audit Committee is responsible for retaining (subject to stockholder ratification) and, as necessary, terminating, the independent auditors, annually reviews the qualifications, performance and independence of the independent auditors and the audit plan, fees and audit results, and pre-approves audit and non-audit services to be performed by the auditors and related fees.

Compensation Committee

At a board of directors meeting on April 30, 2005, the Board of Directors approved a Compensation Committee and adopted a Compensation Committee Charter. At the meeting no director was elected to serve on the Compensation Committee and as a result all compensation decisions are currently made by unanimous consent of all independent directors of the Company.

The Compensation Committee’s charter states that it is the responsibility of the Compensation Committee to make recommendations to the Board of Directors with respect to all forms of compensation paid to our executive officers and to such other officers as directed by the Board and any other compensation matters as from time to time directed by the Board.

Nominating and Corporate Governance Committee

At a board of directors meeting on April 30, 2005, the Board of Directors approved a Nominating and Corporate Governance Committee, adopted a Nominating and Corporate Governance Committee Charter. At the meeting no director was elected to serve on the Nominating Committee and as a result all director nominees are currently made by unanimous consent of all independent directors of the Company.

The Board of Directors accepts director nominations made by stockholders. The Board of Directors may consider those factors it deems appropriate in evaluating director nominees, including judgment, skill, diversity, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skill relative to other Board members, and specialized knowledge or experience. Depending upon the current needs of the Board, certain factors may be weighed more or less heavily. In considering candidates for the Board, they evaluate the entirety of each candidate’s credentials and do not have any specific minimum qualifications that must be met by a nominee. They will consider candidates from any reasonable source, including current Board members, stockholders, professional search firms or other persons. They will not evaluate candidates differently based on who has made the recommendation.

Item 11.

Executive Compensation.

The following table sets forth the compensation paid or accrued by us to our Chief Executive Officer and President and Chief Operating Officer and each of our other officers whose compensation exceeded $100,000 for each of the Company’s last three completed fiscal years.

Summary Compensation Table

Name & Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Jack Vaisman, Chief Executive Officer	2009	$	287,915		N/A		N/A-		N/A		N/A—		N/A	$	126,949	$	414,864

	2008	$	361,853		N/A		N/A-		N/A		N/A—		N/A	$	129,268	$	491,121

	2007	$	226,966		N/A		N/A		N/A		N/A		N/A		95,615	$	322,581
Dilip Shrestha, Chief Financial Officer	2009	$	189,884		N/A		N/A		N/A		N/A		N/A		38,335	$	228,219

	2008	$	210,629		N/A		N/A		N/A		N/A		N/A		50,460	$	261,089

	2007	$	126,054		N/A		N/A		N/A		N/A		N/A		9,862	$	135,916
Tony Khan, Executive Vice President	2009	$	189,884		N/A		N/A		N/A		N/A		N/A		33,099	$	222,983

	2008	$	240,221		N/A		N/A		N/A		N/A		N/A		34,693	$	274,914

	2007	$	160,737		N/A		N/A		N/A		N/A		N/A		9,971	$	170,708

Outstanding Equity Awards at Fiscal Year-End

There were no grants of options to purchase our common stock to the named executive officers at June 30, 2009.

Director Compensation

None of the directors have received compensation for their respective services rendered to the Company for the year ended June 30, 2009.

Employee Benefit Plans

The Company has no employee benefit plans.

Employee contracts and termination of Employment and Change-in-Control

As of November 13, 2009, none of our officers and/or directors received any compensation for their respective services rendered to the Company, nor have they received such compensation in the past. However, compensation to officers is paid pursuant to employment contracts with our wholly-owned subsidiary, AMI Australia Holdings Pty Limited (“AMI Australia”). We have not adopted any retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our directors, officers and/or employees. None of our executive officers or directors owned any securities exercisable for or convertible into our Common Stock as of November 13, 2009.

On August 29, 2005, AMI Australia executed an employment agreement with Dr. Jacov (Jack) Vaisman, the Company’s Chief Executive Officer and President and AMI Australia’s Chief Executive Officer. The employment agreement is effective as of July 1, 2005 and continues in perpetuity unless earlier terminated in accordance with the terms of the employment agreement. The Board of Directors of the Company approved the employment agreement by unanimous written consent on August 29, 2005. Pursuant to his employment agreement, Dr. Vaisman is entitled to receive an annual base salary of AU$350,000, approximately US$340,480, subject to increases as shall be determined by the Company’s board of directors and management of AMI Australia. In addition, the annual salary of Dr. Vaisman shall be supplemented by a bonus based on the Company achieving certain profit targets during prescribed periods. In addition to these base and bonus salary components, AMI Australia will also contribute retirement benefits (superannuation) for Dr. Vaisman in accordance with Australian legal requirements.

On June 21, 2005, AMI Australia executed employment agreements with Forhad (Tony) Khan, the Company’s Executive Vice President and Secretary and AMI Australia’s Chief Operating Officer, and Dilip Shrestha, the Company’s and AMI Australia’s Chief Financial Officer. Each of these employment agreements is effective as of July 1, 2005 and continues in perpetuity unless earlier terminated in accordance with the terms of the respective employment agreements. The Board of Directors of the Company approved the employment agreements by unanimous written consent on July 30, 2005.

Pursuant to his employment agreement, Mr. Khan is entitled to receive an annual base salary of AU$250,000, approximately US$233,472, subject to increases as shall be determined by the Company’s board of directors and management of AMI Australia. In addition, the annual salary of Mr. Khan shall be supplemented by a bonus based on the Company achieving certain profit targets during prescribed periods. In addition to these base and bonus salary components, AMI Australia will also contribute retirement benefits (superannuation) for Mr. Khan in accordance with Australian legal requirements.

Pursuant to his employment agreement, Mr. Shrestha is entitled to receive an annual base salary of AU$250,000, approximately US$233,472, subject to increases as shall be determined by the Company’s board of directors and management of AMI Australia. In addition, the annual salary of Mr. Shrestha shall be supplemented by a bonus based on the Company achieving certain profit targets during prescribed periods. In addition to these base and bonus salary components, AMI Australia will also contribute retirement benefits (superannuation) for Mr. Shrestha in accordance with Australian legal requirements.

There were no agreements in place for payments to any officers in the event of a change-in-control of the Company.

Compensation Committee Interlocks and Insider Participation

Spiro Baramilis, as an independent director of the Company, performed the functions of the Company’s Compensation Committee during the fiscal year ended June 30, 2009. No member of the Compensation Committee has a relationship that would constitute an interlocking relationship with executive officers or directors of the Company or another entity.

Compensation Committee Report (1)

The members of the Board have reviewed and discussed the discussion and analysis of the Company’s compensation which appears above with management, and, based on such review and discussion, the members of the Board recommended to the Company’s Board of Directors that the above disclosure be included in this Annual Report on Form 10-K.

Jacov (Jack) Vaisman

Dilip Shrestha

Forhad (Tony) Khan

Anatoly Fanshil

Spiro Baramilis

(1) The material in the above Compensation Committee reports is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, or the Securities Exchange Act of 1934, whether made before or after the date of this Form 10-K and irrespective of any general incorporation language in such filing.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth as of November 13, 2009 the number of shares of our Common Stock beneficially owned by (i) each person who is known by us to be the beneficial owner of more than five percent of the Company’s Common Stock; (ii) each director and nominee for election to the Board of Directors; (iii) each of the named executive officers in the Summary Compensation Table; and (iv) all directors and executive officers as a group. Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated.

Name and Address of Beneficial Owner	Shares Beneficially Owned (1)			Percent of Class

Jacov (Jack) Vaisman Unit 131 18-34 Waverley Street Bondi Junction NSW 2022 Australia		10,250,000			19.16	%

Forhad (Tony) Khan Suite 4, Level 1 26/3 Wolesly Grove Zetland NSW 2017 Australia		250,000			*

Dilip Shrestha 18/30 Mary Street Lidcambe NSW 2141 Australia		0			*

Anatoly Fanshil 22/2 Ocean Street Bondi Junction NSW 2026 Australia		517,000			*

Spiro Baramilis 12 Merton Street Kogarah Bay NSW 2217 Australia		0			*

Geissler Holdings Limited 1 Raffles Place #21-01 OUB Centre Singapore 048616		8,850,000	(2)		16.54	%

RRD Investments Pty Limited 65 Prospect Road Summer Hills, NSW 2130 Australia		3,400,000	(3)		6.35	%

All Directors and Officers (5 people)		11,017,000			20.59	%

_______

* Less than one percent.

(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to the shares shown. Except as indicated by footnote and subject to community property laws where applicable, to our knowledge, the stockholders named in the table have sole voting and investment power with respect to all common stock shares shown as beneficially owned by them. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days upon the exercise of options, warrants or convertible securities (in any case, the “Currently Exercisable Options”). Each beneficial owner’s percentage ownership is determined by assuming that the Currently Exercisable Options that are held by such person (but not those held by any other person) have been exercised and converted. The persons named in the table have sole voting and investment power with respect to all shares of common stock.

(2) Information obtained from Schedule 13D filed with the SEC on September 14, 2006.

(3) Information obtained from Schedule 13D filed with the SEC on September 14, 2006.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

The Company borrowed A$1.0 million from Secare Health Centre Pty Limited (“Secare”) in November 2008. Secare is controlled by the company’s chief executive officer and founder, Jack Vaisman. The Company subsequently borrowed a further A$3,881,489 from Secare. The loan is secured by a second ranking security interest in all of AMI Australia’s assets and undertakings (including its existing equity interests in PE Patent Holdco Pty Limited, Intelligent Medical Technologies Pty Limited and Advanced Medical Institute (NZ) Limited). The loan attracts an interest cost of 10% per annum. No repayment of this loan has been made up to June 30, 2009. The loan is due for repayment in December 2011.

There were no other related party transactions exceeding $120,000 during the year ended June 30, 2008 and 2009.

Spiro Baramilis meets the independence requirements and standards currently established by the SEC.

Item 14.

Principal Accounting Fees and Services.

The firm of Kabani & Company, Inc. has served as our independent auditors since March 29, 2006 when it replaced Lichter, Yu & Associates. The Board of Directors has appointed Kabani & Company, Inc. to continue as our independent auditors for the fiscal year ending June 30, 2010.

AUDIT FEES FOR FISCAL YEAR ENDED JUNE 30, 2009

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and the review or audit of the interim statements. The total fees billed for Kabani & Company, Inc. for the fiscal year ended June 30, 2009 was $69,500 and applicable for the fiscal year ended June 30, 2008 was $46,950.

AUDIT RELATED FEES FOR FISCAL YEAR ENDED JUNE 30, 2009

TAX FEES FOR FISCAL YEAR ENDED JUNE 30, 2009

There were no tax fees billed by Kabani & Company, Inc. for the fiscal year ended June 30, 2009.

ALL OTHER FEES FOR FISCAL YEAR ENDED JUNE 30, 2009

There were no other fees billed by Kabani & Company, Inc. for the fiscal year ended June 30, 2009.

PART IV

Item 15.

Exhibits Financial Statement Schedules.

(a) The following are filed with this report:

(1) The financial statements listed on the Financial Statement’s Table of Contents

(2) Not applicable

(3) The exhibits referred to below, which include the following managerial contracts or compensatory plans or arrangements:

Employment Agreement between AMI Australia and Forhad (Tony) Khan dated July 30, 2005

Employment Agreement between AMI Australia and Dilip Shrestha dated July 30, 2005

Employment Agreement between AMI Australia and Jacov (Jack) Vaisman dated July 30, 2005

(b) The exhibits listed on the Exhibit Index are filed as part of this report.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADVANCED MEDICAL INSTITUTE INC.

Date: November 13, 2009	By:	/s/ Jacov (Jack) Vaisman
		Jacov (Jack) Vaisman
		Chief Executive Officer and President
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: November 13, 2009	By:	/s/ Jacov (Jack) Vaisman
		Jacov (Jack) Vaisman
		Chief Executive Officer and President
		(Principal Executive Officer)
Date: November 13, 2009	By:	/s/ Dilip Shrestha
		Dilip Shrestha
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)
Date: November 13, 2009	By:	/s/ Forhad (Tony) Kahn
		Forhad (Tony) Kahn
		Executive Vice President and Secretary
Date: November 13, 2009	By:	/s/ Anatoly Fanshil
		Anatoly Fanshil
		Director

Date: November 13, 2009	By:	/s/ Spiro Baramilis
		Spiro Baramilis
		Director

EXHIBIT INDEX

Exhibit Number		Description

2.1		Share Exchange Agreement, dated January 28, 2005 (incorporated herewith by reference to Exhibit 2.1 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated March 21, 2005 and filed with the Securities and Exchange Commission on March 28, 2005).

2.2		Share Exchange Agreement, dated November 16, 2005 (incorporated herewith by reference to Exhibit 2.2 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated November 16, 2005 and filed with the Securities and Exchange Commission on November 17, 2005).

2.3		Share Exchange Agreement, dated April 18, 2006 (incorporated herewith by reference to Exhibit 2.2 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated April 18, 2006 and filed with the Securities and Exchange Commission on April 19, 2006).

3.1		Certificate of Incorporation of Advanced Medical Institute Inc. (incorporated herewith by reference to Exhibit 3.1 to Advanced Medical Institute Inc.’s Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on February 16, 2000).

3.2		By-laws of Advanced Medical Institute Inc. (incorporated herewith by reference to Exhibit 3.2 to Advanced Medical Institute Inc.’s Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on February 16, 2000).

10.1		Subscription Agreement, dated June 29, 2005 (incorporated herewith by reference to Exhibit 10.1 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated June 29, 2005 and filed with the Securities and Exchange Commission on June 30, 2005).

10.2		Employment Agreement between AMI Australia and Forhad (Tony) Khan (incorporated herewith by reference to Exhibit 10.2 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated July 30, 2005 and filed with the Securities and Exchange Commission on August 1, 2005).

10.3		Employment Agreement between AMI Australia and Dilip Shrestha (incorporated herewith by reference to Exhibit 10.3 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated July 30, 2005 and filed with the Securities and Exchange Commission on August 1, 2005).

10.4		Employment Agreement between AMI Australia and Jacov (Jack) Vaisman (incorporated herewith by reference to Exhibit 10.4 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated August 29, 2005 and filed with the Securities and Exchange Commission on August 30, 2005).

10.5		Consultant Agreement between AMI Australia and Doyle Corporate Pty Limited (incorporated herewith by reference to Exhibit 10.1 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated April 24, 2006 and filed with the Securities and Exchange Commission on April 24, 2006).

10.6		Share Exchange Agreement dated as of September 8, 2006 (incorporated herewith by reference to Exhibit 10.1 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated September 8, 2006 and filed with the Securities and Exchange Commission on September 11, 2006).

10.7		Loan Agreement between AMI Australia and ANZ Nominees Limited as Custodian for the Professional Pension PST – Super dated September 8, 2006 (incorporated herewith by reference to Exhibit 10.2 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated September 8, 2006 and filed with the Securities and Exchange Commission on September 11, 2006).

10.8		Loan Agreement between AMI Australia and ANZ Nominees Limited as Custodian for the Professional Pension PST – Pension dated September 8, 2006 (incorporated herewith by reference to Exhibit 10.3 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated September 8, 2006 and filed with the Securities and Exchange Commission on September 11, 2006).

10.9		Fixed and Floating Charge Agreement between AMI Australia and ANZ Nominees Limited as Custodian for the Professional Pension PST – Super dated September 8, 2006 (incorporated herewith by reference to Exhibit 10.4 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated September 8, 2006 and filed with the Securities and Exchange Commission on September 11, 2006).

10.10		Fixed and Floating Charge Agreement between AMI Australia and ANZ Nominees Limited as Custodian for the Professional Pension PST – Pension dated September 8, 2006 (incorporated herewith by reference to Exhibit 10.5 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated September 8, 2006 and filed with the Securities and Exchange Commission on September 11, 2006).

10.11		Consulting Agreement between the Company and the Heartcheck Group dated February 12, 2007 (incorporated herewith by reference to Exhibit 10.11 to Advanced Medical Institute Inc.’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on October 15, 2007).

10.12		Option Agreement between Worldwide PE Patent Holdco Pty Limited and AMI Group Limited dated May 2, 2007 (incorporated herewith by reference to Exhibit 10.1 to Advanced Medical Institute Inc.’s Current Report on Form 8-K dated May 2, 2007 and filed with the Securities and Exchange Commission on May 3, 2007).

10.13		Share Sale Agreement, dated as of April 30, 2008 (incorporated herewith by reference to Exhibit 10.13 to Advanced Medical Institute Inc.’s Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission on October 15, 2007).

10.14		Facility Agreement with St. George Bank Limited, dated October 22, 2008 (incorporated herewith by reference to Exhibit 10.1 to Advanced Medical Institute Inc.’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2009).

10.15		Amendment to Facility Agreement with St. George Bank Limited, dated November 21, 2008 (incorporated herewith by reference to Exhibit 10.2 to Advanced Medical Institute Inc.’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2009).

10.16		Loan Agreement with Secare Health Centre Pty Limited, dated December 4, 2008 (incorporated herewith by reference to Exhibit 10.3 to Advanced Medical Institute Inc.’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2009).

14.1		Code of Ethics (incorporated herewith by reference to Exhibit 14.1 to Advanced Medical Institute Inc.’s Annual Report on Form 10-KSB for the period ended December 31, 2004 filed with the Securities and Exchange Commission on May 31, 2005).

31.1		Certification of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).*

32.2		Certification of the Principal Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).*

*Filed herewith

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

FINANCIAL REPORT

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

F-1

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

FINANCIAL STATEMENTS

TABLE OF CONTENTS

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-3

FINANCIAL STATEMENTS

Consolidated Balance Sheets as of June 30, 2009 and 2008	F-4

Consolidated Statements of Operations for the years ended June 30, 2009 and 2008	F-5

Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2009 and 2008	F-6

Consolidated Statements of Cash Flows for the years ended June 30, 2009 and 2008	F-7

Notes to Consolidated Financial Statements	F-9

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Advanced Medical Institute, Inc.

We have audited the accompanying consolidated balance sheets of Advanced Medical Institute, Inc. and its subsidiaries (the “Company”) as of June 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended June 30, 2009 and 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Medical Institute, Inc. and its subsidiaries as of June 30, 2009 and 2008, and the results of its operations and its cash flows for the years ended June 30, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has accumulated deficit of $7,046,257 as of June 30, 2009 and a net loss of $9,344,989 for the year ended June 30, 2009. Theses factors, as discussed in Note 1 to the financial statements raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the matter are also described in Note 1. The statements do not include any adjustments.

/s/ Kabani & Company, Inc.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California

November 13, 2009

F-3

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			June 30, 2009			June 30, 2008
	Notes
CURRENT ASSETS
Cash & cash equivalent			$	295,245		$	3,092,611
Receivables, net				24,021,361			18,196,304
Receivables due from related parties		11		428,525			751,034
Inventory				911,405			468,950
Other assets		3		1,014,424			657,388

TOTAL CURRENT ASSETS				26,670,960			23,166,287

NON-CURRENT ASSETS
Security deposits				181,584			124,569
Property, plant and equipment, net		4		1,630,979			1,283,879
Net assets held for disposition		10		289,977			505,647
Deferred tax assets		12		678,270			-
Intangible assets, net		2		18,327,078			30,281,340

TOTAL NON-CURRENT ASSETS				21,107,888			32,195,435

TOTAL ASSETS				47,778,848		$	55,361,722

CURRENT LIABILITIES
Unearned revenue			$	8,003,468		$	6,922,800
Accounts payables & accrued expenses		6		15,852,436			9,874,446
Payables due to related parties				278,737			-
Interest bearing liabilities – current		5		1,083,908			422,715
Liabilities related to discontinued operation				4,100			385
Income taxes payable				-			820,289

TOTAL CURRENT LIABILITIES				25,222,649			18,040,635

NON-CURRENT LIABILITIES
Interest bearing liabilities – non current		5		642,453			1,523,716
Payables due to related parties				3,803,131			-
Deferred tax liabilities				-			2,323,212

TOTAL NON-CURRENT LIABILITIES				4,445,584			3,846,928

TOTAL LIABILITIES				29,668,233			21,887,563

COMMITMENTS & CONTINGENCIES				-			-

STOCKHOLDERS’ EQUITY
Common stock, par value $0.001 per share,
90,000,000 shares authorized,
53,507,450 issued and outstanding as of June 30, 2009 and 2008				53,507			53,507
Additional paid in capital				24,149,420			24,149,420
Other comprehensive income		14		953,945			6,972,500
(Accumulated losses) Retained earnings				(7,046,257	)		2,298,732

TOTAL STOCKHOLDERS’ EQUITY				18,110,615			33,474,159

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	47,778,848		$	55,361,722

See accompanying notes to the financial statements.

F-4

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

	2009			2008

NET REVENUES	$	53,351,946			51,847,992

COST OF REVENUES		12,957,681			11,597,159

GROSS PROFIT		40,394,265			40,250,833

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		46,616,853			36,801,510
Impairment loss		5,279,462			-
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		51,896,315			36,801,510

OPERATING INCOME		(11,502,050	)		3,449,323

OTHER INCOME AND EXPENSE
Bank interest		52,828			92,499
Sundry income		19,818			23,779
Management fee income		-			33,813
Interest expense		(269,865	)		(263,482	)

TOTAL OTHER INCOME AND EXPENSE		(197,219	)		(113,391	)

INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(11,699,269	)		3,335,932
INCOME TAX BENEFIT (EXPENSE)		2,760,387			(1,257,679	)
INCOME/(LOSS) FROM CONTINUING OPERATIONS		(8,938,882	)		2,078,253
LOSS FROM DISCONTINUED OPERATIONS		(406,107	)		( 1,083,474	)
NET INCOME/(LOSS)		(9,344,989	)		994,779

Other Comprehensive item – Foreign currency translation income/(loss)		(6,018,555	)		3,800,994

Net Comprehensive Income/(Loss)	$	(15,363,544	)	$	4,795,773

Earnings/(Loss) per share, continued operations	$	(0.16	)	$	0.03
Loss per share, discontinued operations		(0.01	)		(0.01	)

Earnings/(Loss) per share, basic & diluted	$	(0.17	)	$	0.02

Weighted average number of shares outstanding, basic		53,507,450			53,507,450

See accompanying notes to the financial statements.

F-5

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

					Additional		Other
	Common Stock				Paid-In		Comprehensive			Retained
	Shares		Amount		Capital		Income (Loss)			Earnings			Total

Balance June 30, 2007		53,507,450		53,507		24,149,420		3,171,506			1,303,953			28,678,386
Other comprehensive income		-		-		-		3,800,994			-			3,800,994
Net income, June 30, 2008		-		-		-		-			994,779			994,779

Balance June 30, 2008		53,507,450		53,507		24,149,420		6,972,500			2,298,732			33,474,159
Other comprehensive income		-		-		-		(6,018,555	)		-			(6,018,555	)
Net loss, June 30, 2009		-		-		-		-			(9,344,989	)		(9,344,989	)

Balance June 30, 2009		53,507,450	$	53,507	$	24,149,420	$	953,945		$	(7,046,257	)	$	18,110,615

See accompanying notes to the financial statements.

F-6

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

	2009			2008

Cash Flows from Operating Activities

Receipts from customers	$	42,496,872		$	43,664,868
Interest received		52,827			89,200
Interest paid		(673,730	)		(263,482	)
Payment to suppliers & employees		(47,355,193	)		(39,105,267	)
Income tax paid		(96,945	)		(214,786	)

Net cash (used in) provided by operating activities of continuing operations		(5,576,169	)		4,170,533
Net cash provided by (used in) discontinuing operation		81,147			(609,639	)

Net cash (used in) provided by operating activities		(5,495,022	)		3,560,894

Cash Flows from Investing Activities

Loan to related entities		(212,035	)		-
Proceeds from sales of investment		239,370			-
Payment for property, plant & equipment		(378,305	)		(338,501	)
Purchase of intangible assets		(152,159	)		(93,819	)

Net cash used in investing activities		(503,129	)		(432,320	)

Cash Flows From Financing Activities
Proceeds from borrowings		4,975,492			-
Repayment of borrowings		(1,615,939	)		(869,468	)

Net cash (used in) provided by financing activities		3,359,553			(869,468	)

Net increase in cash and cash equivalent		(2,638,598	)		2,259,106
Effect of exchange rate changes on cash and cash equivalent		(158,768	)		128,953
Cash & cash equivalent at beginning of year		3,092,611			704,552

Cash & cash equivalent at end of year	$	295,245		$	3,092,611

NON-CASH INVESTING & FINANCING ACTIVITY:
1) Assets acquired under capital leases $353,088

See accompanying notes to the financial statements.

F-7

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

	June 30, 2009			June 30, 2008

Reconciliation of Cash

Cash at the end of financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Cash	$	295,245		$	3,092,611

Reconciliation of Cash Flow from Operations with Profit from Ordinary Activities after Income Tax
Net (Loss) Income		(9,344,989	)		994,779

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense		1,627,210			1,787,437
Provision for doubtful debt		4,737,659			4,917,980
Impairment loss		5,279,462			-
Gain on disposal of investment		(119,677	)		-

Changes in Assets and Liabilities
Increase in current inventories		(482,280	)		(152,377	)
Increase in receivables		(13,270,978	)		(9,202,808	)
Increase in deferred tax assets/liabilities		(2,579,005	)		580,143
Increase in unearned revenue		2,053,093			1,066,787
Increase in payables		6,981,933			3,315,337
(Decrease) Increase in rental deposit received		(71,863	)		2,959
Increase in provisions for compensated absences		251,494			397,768
(Decrease) Increase in income tax payable		(638,228	)		462,528

Net cash (used in) provided by operating activities of continuing operations		(5,576,169	)		4,170,533
Net cash provided by (used in) operating activities of discontinued operation		81,147			(609,639	)

Cash Flows (Used in) Provided by Operating Activities	$	(5,495,022	)	$	3,560,894

See accompanying notes to the financial statements.

F-8

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009 AND 2008

1.	NATURE OF BUSINESS

Business Overview

AMI is a service provider company, which arranges for patients with sexual dysfunction and prostate problems in Australia, New Zealand, China and the United Kingdom to be provided with medical services, pharmaceuticals and associated clinical support services.

On September 15, 2008, we announced expansion of our operations to the United Kingdom where we opened up our treatment centers, contracts with independent doctors and pharmacies and begun airing infomercials throughout the country.

For the year ended June 30, 2009, AMI’s revenues were approximately $53.4 million.

Principal Products and Services

The effectiveness of AMI’s treatment programs depend highly on the delivery system. These include:

(a)

injections, nasal spray, lozenges, tablets and gels for the treatment of erectile dysfunction;

F-9

(b)

injections, nasal spray, lozenges and gels for the treatment of premature ejaculation;

(c)

topical gels for the treatment of female sexual arousal dysfunction; and

(d)

an oral elixir for the treatment of prostate problems.

New Products and Services

On July 29, 2008, AMI announced the development of new transdermal gel used to treat premature ejaculation and erectile dysfunction in men as well as sexual arousal dysfunction in women.

Since 2003, AMI’s subsidiary, Intelligent Medical Technologies Pty Limited (“IMT”) has been developing an ultrasonic nebulizer which will deliver drugs to the lungs. The group’s intention is to use this delivery system to administer its compound formulations. In order to utilize this delivery system IMT needs to obtain regulatory approval of the nebulizer as a medical device. IMT has been working on this process for the last 3 years however IMT has not yet completed such process.

Distribution

AMI currently operates a centralized call center and 20 clinics offices throughout Australia and New Zealand. AMI has an arrangement with two hospitals in Beijing where Chinese patients are treated, and AMI has recently established 2 clinics in the United Kingdom to service UK patients. AMI’s products and services are only available by prescription and are sold on an “off-label” basis. AMI Australia’s treatment programs are generally available in the same manner through its medical clinics and its over-the-phone sales and marketing program.

Subsidiaries of the Company

Following are the significant Subsidiaries of the Company and AMI Australia

F-10

The Company’s subsidiaries are AMI Australia, AMI International Pty Limited and AMI Management Services Pty Limited.

AMI Australia’s subsidiaries are Advanced Medical Institute Pty Limited, PE Patent Holdco, Worldwide PE, Advanced Medical Institute (NZ) Limited, IMT and AMI Clinic Limited.

During the second half of the financial year, AMI discontinued operations of AMI China.

On February 4, 2008, AMI discontinued operations of AMI Japan Kabushiki Gaisya .

AMI International Pty Limited was established to hold the Group’s shareholdings in the Chinese company established to conduct operations in that jurisdiction.

AMI Management Services Pty Limited provides treasury and management services to AMI Australia and its subsidiaries.

Advanced Medical Institute (NZ) Limited conducts the group’s business in New Zealand.

Ai Te Wei (Beijing) Medicine Consulting Company conducts the group’s business in China.

During September 2006, AMI commenced a not-for-profit division of the Company, AMI-SCI that provides treatment options to men who have sustained a spinal cord injury.

Managements Plans

The Company has incurred significant net losses, cash outflows from operations and has working capital of $9,344,989, $5,495,022 and $1,448,311, respectively, for the year ended June 30, 2009. This factor raises doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern will be dependent on its ability of the Company to reduce operating expenses, generate sufficient cash flows from operations and to obtain additional financing to meet its obligations on a timely basis.

In July 2009, as part of its efforts to conserve its existing capital resources, the Company implemented steps to reduce operating expenses, and will monitor its liquidity closely and will take further steps, if need, to further reduce operating cost to preserve operating capital. The Company also may need to raise additional capital through the sale of debt or equity. The Company believes that with these steps, it should have sufficient cash to fund its activities in the near future

F-11

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, AMI Australia Holdings Pty Limited, AMI Management Services Pty Limited (“AMI MS”) and AMI International Pty Limited (“AMI International”) and their direct and indirect wholly-owned subsidiaries: Advanced Medical Institute Pty Ltd, PE Patent Holdco Pty Limited (“PE”), Advanced Medical Institute (NZ) Limited (“AMI NZ”) and Intelligent Medical Technologies Pty Ltd (“IMT”), Worldwide PE Patent Holdco Pty Ltd and AMI Clinic Limited. All significant inter-company accounts and transactions have been eliminated upon consolidation.

The Company also re-classed assets of its 75% owned subsidiary AMI Japan and wholly own subsidiary AMI China, which were discontinued during the reporting period, to ‘Assets held for disposition’.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

Use of Estimates

Revenue Recognition

Sales are reported as deferred income when the sales contracts are executed and the term of the contract exceeds three months. Up to three months of medication is delivered to the patient upon the signing of a contract. Generally the term of the sales contracts are up to one year, but they can be for longer periods of time. The deferred income arising from the contracts that exceed three months is then amortized, on a straight line basis, into income during the approximated composite remaining medication delivery period. This approximated composite is an estimate that may vary from period to period.

F-12

Unearned Revenue

Unearned revenue arises from programs that exceed three months. The average program length purchased by each individual patient is approximately 4 ½ months. The Company made its estimate of unearned revenue based on the average program length less three months for which medication is provided and revenue is recognized.

Advertising Expense

Advertising costs are charged to expense as they are incurred. Advertising expense is $22.4 million in financial year 2009 and $18.0 million in financial year 2008.

Income Tax

Accounts Receivable

Accounts receivable are sales for the year, net of sales refund, cancellation, unearned revenue and provision for doubtful debt. The Company estimates provision for doubtful debts based on the historical results.

Inventories

Inventories are valued at the lower of cost (determined on a first-in first-out basis) or market. Management compares the cost of inventories with the market value and allowance is made for writing down our inventories to market value, if lower. As of June 30, 2009 inventory mainly consisted of raw materials.

Property and Equipment

Property and Equipment placed in service is depreciated over the estimated useful lives of the assets using the diminishing value depreciation method.

F-13

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Employee Entitlements

Contributions are made to an employee superannuation fund and are charged as expenses when incurred.

Exchange Gain (Loss)

During the fiscal year ended June 30, 2009 and 2008, the transactions of AMI Australia were denominated in foreign currency and were recorded in Australian Dollars (AUD) at the rates of exchange in effect when the transactions occur. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.

Foreign Currency

Research and Development Costs

Research and development costs are charged against income from ordinary activities before income tax as incurred. Research and development costs are $0.3 million in financial year 2009 and $0.2 million in financial year 2008.

F-14

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible assets

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the intangible asset relates. When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised.

At June 30, 2009, intangibles consist of the following:

Intangibles	Gross Carrying Amount		Accumulated Amortization			Impairment Loss			Net

Amortized intangibles:
Australian Patents	$	5,314,538	$	(1,029,765	)	$	-		$	4,284,773
Worldwide Patents		4,023,996		(634,373	)		(1,378,100	)		2,011,523
Intellectual Properties		16,314,189		(2,487,941	)		(4,961,166	)		8,865,082
Computer Software		476,830		(317,947	)		-			158,883

Unamortized intangibles:
Intellectual Properties		3,006,817		-			-			3,006,817

	$	29,136,370	$	(4,470,026	)	$	(6,339,266	)	$	18,327,078

The Company assigned an 18 year life to the patents that are held by Worldwide PE Patent, a 19 year life to the patents that are held by PE Patent.

F-15

For intellectual property, the company assigned an 18 year life to the intellectual property that arose from Worldwide PE Patent, a 19 year life to the intellectual property that arose from PE Patent, and indefinite life to the intellectual property that arose from IMT.

Computer software was assigned as having a 3 year life.

Amortization expense from continuing operation for the year ended June 30, 2009 and 2008 was $1,361,727 and $1,618,431 respectively. The Company expects the amortization expenses for the next five years to be as follows:

Year Ending June 30,	Annual Amount

2010	$	1,362,000
2011	$	1,362,000
2012	$	1,362,000
2013	$	1,362,000
2014	$	1,362,000

Long-Lived Assets

Segment Reporting

F-16

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128) (ASC 260), “Earnings per share.”. Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128 (ASC 260). Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

F-17

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Pronouncements

In December 2007, the FASB issued SFAS No. 160 (ASC 810), “Noncontrolling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51.” The objective of this statement is to establish new accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a material impact on the consolidated financial statements.

In March, 2008, the “FASB” issued SFAS No. 161 (ASC 815), “Disclosures about Derivative Instruments and Hedging Activities.” The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. FASB Statement No. 161 (ASC 815) achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important. Based on current conditions, the Company does not expect the adoption of SFAS 161 (ASC 815) to have a significant impact on its results of operations or financial position.

In May 2008, FASB issued SFASB No. 163 (ASC 944), “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The Company does not believe this pronouncement will impact its financial statements.

In June 2009, the FASB issued SFASB No.167, Consolidation of Variable Interest Entities, which changes the consolidation rules as they relate to variable interest entities. Specifically, the new standard makes significant changes to the model for determining who should consolidate a variable interest entity, and also addresses how often this assessment should be performed. This standard will be effective for us on July 1, 2010. We do not expect the adoption will have a material impact on our consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. Specifically, when a quoted price in an active market for the identical liability is not available, the new standard requires that the fair value of a liability be measured using one or more of the valuation techniques that should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. In addition, an entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. This standard will be effective for us on October 1, 2009. We do not expect the adoption will have a material impact on our consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13, which amends ASC Topic 605, Revenue Recognition, to require companies to allocate revenue in multiple-element arrangements based on an element’s estimated selling price if vendor-specific or other third-party evidence of value is not available. ASU 2009-13 is effective beginning July 1, 2010. Earlier application is permitted. The Company is currently evaluating both the timing and the impact of the pending adoption of the ASU on its consolidated financial statements.

F-18

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

3. OTHER ASSETS

Following is the summary of other assets as of June 30, 2009

	June 30, 2009		June 30, 2008
Bank guarantees	$	206,863	$	112,256
Advances and prepayments		42,640		23,220
Other receivables		9,134		67,305
Other debtors		755,787		454,607
Total	$	1,014,424	$	657,388

4. PROPERTY, PLANT AND EQUIPMENT

	June 30, 2009		June 30, 2008

Leasehold improvements at cost	$	590,908	$	557,408
Less: Accumulated depreciation		62,258		118,234
		528,650		439,174

Motor Vehicles		75,235		89,884
Less: Accumulated Depreciation		38,966		36,316
		36,269		53,568

Office Furniture & Equipment		1,217,911		757,542
Less: Accumulated Depreciation		289,911		162,810
		928,000		594,732

Computer Hardware – at Cost		413,800		462,013
Less: Accumulated Depreciation		315,635		318,141
		98,165		143,872

Low Value Pooled Fixed Assets		173,057		188,491
Less: Accumulated Depreciation		133,162		135,958
		39,895		52,533

Total Property, Plant and Equipment	$	1,630,979	$	1,283,879

Depreciation expenses were $265,483 and $172,222 for the fiscal years ended June 30, 2009 and 2008, respectively.

F-19

Included in property and equipment is approximately $489,814 of assets, which are leased under non-cancelable leases and accounted for as capital leases, which expire through October 2013. The accumulated depreciation included in the property and equipment for these leases is approximately $102,469.

F-20

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

JUNE 30, 2009

5. INTEREST BEARING LIABILITIES

	June 30, 2009		June 30, 2008

Current, as of the period ended June 30:
Capitalized lease liability	$	165,533	$	45,037
Secured loan 2008		918,375		377,678
	$	1,083,908	$	422,715

Non-current, due during the year ended June 30:
Capitalized lease liability	$	212,720	$	26,061
Secured Loan		429,733		1,497,655
Total non-current	$	642,453	$	1,523,716

The interest bearing liabilities require monthly payments of principal and interest at a per annum interest rate ranging from 7.4% to 13.8%. Obligations under the notes are secured by the financed assets included in property and equipment.

Interest expenses were $269,865 and $263,479 for the fiscal years ended June 30, 2009 and 2008, respectively.

Obligations under the notes are secured by the financed assets included in property and equipment. The secured loan is secured over all of AMI Australia’s assets and undertakings. The principal of the loan is due to mature in September 2009.

Obligation under capital lease will expire during the period from September 2010 to April 2013.

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of June 30, 2009 and 2008 are summarized as follows:

	Amount
	June 30, 2009		June 30, 2008

Bank overdraft	$	481,319	$	-
Accounts payable		8,642,972		4,195,940
Accrued salaries		480,436		611,049
Accrued professional fees		60,360		62,305
Accrued legal fee		-		89,083
Other current liabilities		1,087,589		290,800
Accrued DDR medication cost		1,259,512		1,204,760
Accrued DDR sales commission		1,377,818		1,204,760
Accrued DDR collection fee		1,377,818		1,204,760
Provision for patient refunds		120,720		182,685
Accrued compensated absences		963,892		828,304
Total	$	15,852,436	$	9,874,446

F-21

7. LAWSUITS

F-22

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENT

JUNE 30, 2009

8. LEASE COMMITMENTS

The Company is party to long-term, non-cancelable operating lease agreements for administrative offices and clinic locations. The future aggregate minimum annual lease payments arising from these lease agreements are as follows:

	June 30, 2009

Due during the period ended June 30:
2010	$	566,563
2011		440,783
2012		355,830
2013		301,973
2014		272,463
2015		272,463
2016		136,232

	$	2,346,307

Total rent expense under these operating leases was approximately $1,239,402 and $1,085,779 during the years ended June 30, 2009 and 2008, respectively.

9. CONCENTRATIONS

Sales Markets – 75% of the Company’s revenues arise from Australian customers.

Suppliers - Although the Company has access to a variety of suppliers, the majority of the Company’s products that are obtained for resale are purchased from a limited number of suppliers.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to credit risk consist of uninsured cash deposited in the bank and large receivables that are sometimes due from a limited number of debtors. The Company extends credit to a variety of related parties.

10. DISCONTINUED OPERATION/ASSETS HELD FOR DISPOSITION

AMI Japan Kabushiki Gaisya

AMI Japan Kabushiki Gaisya (“AMI Japan”) was an indirect 75% owned subsidiary of the Company. AMI Japan had formed an alliance with a Japanese party with expertise in marketing in the Japanese market and two financial investors. AMI Japan commenced operations on October 1, 2006.

On or about February 4, 2008, the operation of AMI Japan was wound down and discontinued due to unsatisfied operating result.

Loss from the discontinued operation of AMI Japan during the period ended June 30, 2009 was US$358,033.

The capital contributed to AMI Japan of US$212,020 has been classified as assets pending sale on the accompanying consolidated balance sheet as of June 30, 2009.

F-23

Following is the summary of net assets held as of June 30:

	June 30, 2009		June 30, 2008
Assets :-
Cash and cash equivalents	$	1,704	$	34,288
Other current assets		84,005		75,693
Property, Plant & Equipment, net		126,552		117,950
Intangible assets		3,837		8,643
Total Assets		216,098		236,574
Liabilities :-
Accounts payable and accrued expense		4,078		849

Total Liabilities		4,078		849

Net Assets Held for disposal	$	212,020	$	235,725

The components of loss from operations related to the entity held for disposal for the year ended June 30, 2009 are shown below.

	June 30, 2009			June 30, 2008
Net sales	$	164,845		$	77,092

Operating expenses
Selling, general and administrative		540,825			553,425
Total operating expenses		540,825			553,425

Loss from operations		(375,980	)		(476,333	)

Non-operating income (expenses) :-
Other income		17,904			218
Interest income		43			93

Net Loss before income tax		(358,033	)		(476,022	)

Provision for Income tax		-			-

Net loss from entity held for disposal	$	(358,033	)	$	(476,022	)

AMI China

AMI China was a fully owned subsidiary of the Company.

During the second half of the financial year, the operation of AMI China was wound down and discontinued due to unsatisfied operating result.

Loss from the discontinued operation of AMI China during the period ended June 30, 2009 was US$167,752.

The capital contributed to AMI Japan of US$78,378 has been classified as assets pending sale on the accompanying consolidated balance sheet as of June 30, 2009.

F-24

Following is the summary of net assets held as of June 30:

	June 30, 2009		June 30, 2008
Assets :-
Cash and cash equivalents	$	13,121	$	34,418
Other current assets		39,532		44,964
Property, Plant & Equipment, net		21,226		30,328
Total Assets		73,879		109,710
Liabilities :-
Accounts payable and accrued expense		22		386

Total Liabilities		22		386

Net Assets Held for disposal	$	73,857	$	109,324

The components of loss from operations related to the entity held for disposal for the year ended June 30, 2009 are shown below.

	June 30, 2009			June 30, 2008
Net sales	$	5,116		$	42,057

Operating expenses
Selling, general and administrative		172,868			492,892
Total operating expenses		172,868			492,892

Net Loss before income tax		(167,752	)		(450,825	)

Provision for Income tax		-			-

Net loss from entity held for disposal	$	(167,752	)	$	(450,825	)

F-25

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENT

JUNE 30, 2009

11. RELATED PARTY TRANSACTIONS

	June 30, 2009


Prostate Health Clinic Pty. Ltd. (an AU co.)
Relationship: Under common management control by Jack Vaisman
Receivable from this related party		1,719

Loan to affiliate in Indonesia		426,806

Receivable due from related parties - current		428,525

Peter Riley
Relationship: Director of AMI UK
Payable to this related party		73,513

Jacov Vaisman
Relationship: Director of AMI Inc.
Payable to this related party		173,032

Tony Khan
Relationship: Executive Vice President of AMI Inc.
Payable to this related party		32,192

Payables due to related parties - current		278,737

Secare Health Centre Pty Limited
Relationship: Under common management control by Jack Vaisman
Payables to this related party – non-current		3,803,131

Total receivables due from related parties included in the Company’s balance sheet was $428,525 and $751,034 as of June 30, 2009 and 2008.

Total payables due to related parties included in the Company’s balance sheet was $4,081,868 and $Nil as of June 30, 2009 and 2008.

Receivables from related parties are unsecured, interest-free and are due on demand.

Payables to related parties are as follows:

The Company originally borrowed A$1.0 million from Secare Health Centre Pty Limited (“Secare”) in November 2008. Secare is controlled by the company’s chief executive officer and founder, Jack Vaisman. The Company subsequently borrowed a further A$3,881,489 from Secare. The loan is secured by a second ranking security interest in all of AMI Australia’s assets and undertakings (including its existing equity interests in PE Patent Holdco Pty Limited, Intelligent Medical Technologies Pty Limited and Advanced Medical Institute (NZ) Limited). The loan attracts an interest cost of 10% per annum. No repayment of this loan has been made up to June 30, 2009. The loan is due for repayment in December 2011.

F-26

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENT

JUNE 30, 2009

12. INCOME TAXES

Total Federal and State income tax expense for the fiscal years ended June 30, 2009 and 2008 amounted to ($2,760,387) and $1,257,679, respectively. For the fiscal years ended June 30, 2009 and 2008 there is a difference of 1% between the Australian federal statutory tax rate and the effective tax rate. This difference is due to the domicile of operating profits and losses in the Group as well as the impact of timing and past operating profits (losses) on these matters.

June 30, 2009	U.S.			State			International			Total
Current	$	0		$	0		$	(3,560,106	)	$	(3,560,106	)
Deferred	$	0		$	0		$	799,719		$	799,719
Total	$	0		$	0		$	(2,760,387	)	$	(2,760,387	)

June 30, 2008	U.S.			State			International			Total
Current	$	0		$	0		$	821,610		$	821,610
Deferred	$	0		$	0		$	436,069		$	436,069
Total	$	0		$	0		$	1,257,679		$	1,257,679

Reconciliation of the differences between the statutory U.S. Federal income tax rate and the effective rate is as follows:
	June 30, 2009			June 30, 2008

Federal statutory tax rate		34	%		34	%
Increase (decrease) in rate resulting from:
Non US income taxed at different rates		(1	)%		(1	)%
		33	%		33	%
Temporary Difference		(9	)		5	%
Effective Tax Rate		24	%		38	%

F-27

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENT

JUNE 30, 2009

Deferred tax asset arises due to the following temporary differences.

	June 30, 2009			Future tax rate %			Deferred tax liability
Owing to patients via ACFC		(28,861,821	)		30	%		(8,658,546	)
Provision DDR cancellation		16,788,933			30	%		5,036,680
Provision un-dispensed DDR medications		1,259,512			30	%		377,854
Accrued ACFC collection and commission		2,755,635			30	%		826,691
Provision for patient refund		120,720			30	%		36,216
Unutilized tax losses		5,663,851			30	%		1,699,155
Amortization of patents		(2,083,987	)		30	%		(625,196	)
Impairment loss		5,680,134			30	%		1,704,040
Other miscellaneous		937,920			30	%		281,376
Total		2,260,900			30	%	$	678,270

F-28

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENT

JUNE 30, 2009

13. STOCK

On October 28, 2004 the officers and directors of the Company surrendered for cancellation 1,450,000 shares of common stock.

On November 8, 2004 the Company issued a stock dividend of 15 shares for each share outstanding on November 8, 2004.

All prior year information has been adjusted to reflect the stock cancellation and the stock dividend.

On May 25, 2005 the Company’s Articles of Incorporation were amended to increase the number of authorized shares of the capital stock of the Company to 100,000,000. The Company designated 90,000,000 shares as Common Stock and 10,000,000 shares as Preferred Stock.

On June 29, 2005 the Company entered into a subscription agreement with certain non-U.S. persons pursuant to which the Company issued an aggregate of 6,122,450 shares of common stock for aggregate gross proceeds of $762,000.

On November 17, 2005, the Company entered into a share exchange agreement with PE Patent Holdco Pty Limited (“PE”), pursuant to which the Company acquired all of the issued and outstanding shares of stock of PE in exchange for the issuance in the aggregate of 5,000,000, or 13.85%, of the Company’s issued shares of Common Stock to the shareholders of PE.

On April 18, 2006, the Company entered into a share exchange agreement with certain non-US persons pursuant to which the Company acquired the remaining 7% of Intelligent Medical Technologies Pty Limited (“IMT”) which was previously held by those persons in exchange for 1,260,000 or 3.37% of the Company’s issued shares of Common Stock.

On September 8, 2006, the Company entered into a share exchange Agreement with Worldwide PE Patent Holdco Pty Limited (ACN 117 157 727), a privately owned Australian company (“Worldwide PE”), and Worldwide PE’s shareholders pursuant to which the Company acquired all of the issued and outstanding shares of stock of Worldwide PE in exchange for the payment of A$3 million (approximately $2.25 million) and the issuance in the aggregate of 16,125,000 shares of the Company’s common stock valued at $1.00 per share.

14. OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income (loss), included in stockholders’ equity, at June 30, 2009are as follows:

	Accumulated Other Comprehensive Income
Balance at June 30, 2007	$	3,171,506

Change for 2008		3,800,994

Balance at June 30, 2008	$	6,972,500

Change for 2009		(6,018,555	)

Balance at June 30, 2009	$	953,945

F-29

15 – Segment Information

The following tables summarize segment information for the years ended:

	June 30,			June 30,
	2009			2008
Total revenues
AMI Australia		41,801,703			50,572,311
AMI New Zealand		974,782			1,275,681
AMI UK		10,575,461			-
		53,351,946			51,847,992
Income (Loss) from operations
AMI Inc.		(176,594	)		(227,270	)
AMI Australia		(9,017,724	)		4,292,129
AMI New Zealand		(290,137	)		(615,536	)
AMI UK		(2,017,595	)		-
		(11,502,050	)		3,449,323
Income tax (expense) benefit
AMI Australia		2,760,387			(1,257,679	)
AMI New Zealand		-			-
AMI UK		-			-
Others		-			-
		2,760,387			(1,257,679	)
Net income (loss)
AMI Inc.		(176,594	)		(227,271	)
AMI Australia		(6,340,886	)		3,054,583
AMI New Zealand		(284,129			(615,443	)
AMI UK		(2,017,595			-
Discontinued operation		(525,785			(1,217,090	)
		(9,344,989	)		994,779
Provision for depreciation and amortization
AMI Australia		1,535,715			1,787,437
AMI New Zealand		7,033			-
AMI UK		84,462			-
		1,627,210			1,787,437
Total Assets
AMI Australia		44,531,003			54,148,005
AMI New Zealand		436,457			708,070
AMI UK		2,521,411			-
Discontinued operation		289,977			505,647
		47,778,848			55,361,722

F-30

ADVANCED MEDICAL INSTITUTE INC. - FORM 10-K - November 13, 2009

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