UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

xT Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2009

For the quarterly period ended September 30, 2009

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to

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
Nevada		88-0409144
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Level 4, Terrace Tower, 80 William Street Sydney, NSW 2011 Australia ~~2000~~ (Address of Principal Executive Offices) (Zip Code)

	(61) 2 9640 5253
	(Registrant’s Telephone Number, Including Area Code)


	(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ~~x No~~ T 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 x T No o

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

Large accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company xT (Do not check if a smaller reporting company)

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

There were 53,507,450 shares of the Registrant’s Common Stock issued and outstanding on ~~November 23,~~ ~~2009~~February 24, 2010.

TABLE OF CONTENTS

		~~Page~~	Page
Part I.	~~Financial Information~~	3Financial Information	3
	Item 1. Financial Statements	3
		Item 1. Financial Statements (Unaudited)	3
	Consolidated Balance Sheets (Unaudited) as at September 30, 2009 and June 30, 2009	3
		Unaudited Consolidated Balance Sheets as at December 31, 2009 and June 30, 2009	3
	Consolidated Statements of Operations (Unaudited) for the Three Month Periods Ended September 30, 2009 and 2008	4
		Unaudited Consolidated Statements of Operations for the Three and Six Month Periods Ended December 31, 2009 and 2008	4
	Consolidated Statements of Cash Flows (Unaudited) for the Three Month Periods Ended September 30, 2009 and 2008	5
		Unaudited Consolidated Statements of Cash Flows for the Six Month Periods Ended December 31, 2009 and 2008	5
	Notes to Consolidated Unaudited Financial Statements	7
		Notes to Unaudited Consolidated Financial Statements	7
	~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	17Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~	21Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
	~~Item 4T. Controls and Procedures~~	22Item 4T. Controls and Procedures	24
Part II.	~~Other Information~~	22Other Information	24
	~~Item 1. Legal Proceedings~~	22Item 1. Legal Proceedings	24
	~~Item 1A. Risk Factors~~	22Item 1A. Risk Factors	24
	~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
	~~Item 3. Defaults Upon Senior Securities~~	22Item 3. Defaults Upon Senior Securities	24
	~~Item 4. Submission of Matters to a Vote of Security Holders~~	22Item 4. Submission of Matters to a Vote of Security Holders	24
	~~Item 5. Other Information~~	22Item 5. Other Information	24
	~~Item 6. Exhibits~~	22Item 6. Exhibits	24
SIGNATURES		23	25

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ADVANCED MEDICAL INSTITUTE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2009			June 30, 2009
	As at
	December 31, 2009			June 30, 2009
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	~~344~~218,~~270~~420		$	295,245
Receivables, net		2722,~~632~~728,~~227~~548			24,021,361
Receivables due from related parties		~~380~~348,~~677~~699			428,525
Inventory		~~897~~937,~~671~~433			911,405
Other assets		~~813~~1,~~678~~147,977			1,014,424
TOTAL CURRENT ASSETS		3025,~~068~~381,~~523~~077			26,670,960
NON-CURRENT ASSETS
Security deposits		~~191~~198,~~384~~159			181,584
Property and equipment, net		1,~~717~~709,~~528~~898			1,630,979
Assets related to discontinued operations		~~301~~296,~~542~~553			289,977
Deferred tax assets		~~264~~281,~~479~~665			678,270
Intangible assets, net		19,~~538~~651,~~754~~924			18,327,078
TOTAL NON-CURRENT ASSETS		22,~~013~~138,~~687~~199			21,107,888
TOTAL ASSETS	$	5247,~~082~~519,~~210~~276		$	47,778,848
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Unearned revenue	$	7,~~983~~146,~~157~~073		$	8,003,468
Accounts payable & accrued expenses		17,~~576~~420,~~748~~644			15,852,436
Payables due to related parties		~~107~~106,~~201~~596			278,737
Interest bearing liabilities – current		~~692~~714,~~468~~853			1,083,908
Liabilities related to discontinued operations		54,~~171~~532			4,100
TOTAL CURRENT LIABILITIES		2625,~~364~~392,~~745~~698			25,222,649
NON-CURRENT LIABILITIES
Interest bearing liabilities - non-current		~~783~~630,~~086~~969			642,453
Payable due to related parties		45,~~827~~360,~~936~~693			3,803,131
TOTAL NON-CURRENT LIABILITIES		5,~~611~~991,~~022~~662			4,445,584
TOTAL LIABILITIES		31,~~975~~384,~~767~~360			29,668,233
Commitments & Contingency
STOCKHOLDERS’ EQUITY
Common stock, par value $0.001 per share, 90,000,000 shares authorized, 53,507,450 issued and outstanding as at September 30, 2009 and June 30, 2009		53,507			53,507
Common stock, par value $0.001 per share, 90,000,000 shares authorized, 53,507,450 issued and outstanding as at December 31, 2009 and June 30, 2009		53,507			53,507
Additional paid in capital		24,149,420			24,149,420
Other comprehensive loss		2,~~133~~408,~~221~~921			953,945
Accumulated deficit		(610,~~229~~476,~~705~~932	)		(7,046,257	)
TOTAL STOCKHOLDERS’ EQUITY		2016,~~106~~134,~~443~~916			18,110,615
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5247,~~082~~519,~~210~~276		$	47,778,848

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

ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

ADVANCED MEDICAL INSTITUTE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(~~Unaudited~~UNAUDITED)

	Three Month Periods Ended
	Three Months Ended December 31,						Six Months Ended December 31,
	September 30, 2009			September 30, 2008
	2009			2008			2009			2008
NET REVENUE	$	146,~~507~~363,~~711~~028		$	1513,~~944~~210,~~448~~997		$	20,870,739		$	29,155,445
COST OF REVENUE		(3 2,~~291~~392,~~231~~886	)		(32,~~591~~789,~~200~~937	)		(5,684,117	)		(6,381,137	)
GROSS PROFIT		113,~~216~~970,~~480~~142			1210,~~353~~421,~~248~~060			15,186,622			22,774,308
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		(98,~~774~~025,~~975~~415	)		(119,~~753~~800,~~265~~763	)		(17,800,390	)		(21,554,028	)
OPERATING INCOME		1,441,505			599,983
OPERATING INCOME/(LOSS)		(4,055,273	)		620,297			(2,613,768	)		1,220,280
OTHER INCOME AND (EXPENSE)
Bank interest		12,~~736~~262			348,~~610~~119			3,998			42,729
Other income		-			20,646
Other income (expense)		26			(2,105	)		26			18,541
Interest expense		(~~154~~172,~~022~~497	)		(7158,~~745~~335	)		(326,519	)		(130,080	)
TOTAL OTHER INCOME (EXPENSE)		(152,286	)		(16,489	)
TOTAL OTHER EXPENSES		(170,209	)		(52,321	)		(322,495	)		(68,810	)
INCOME FROM CONTINUED OPERATIONS		1,289,219			583,494
INCOME/(LOSS) FROM CONTINUED OPERATIONS		(4,225,482	)		567,976			(2,936,263	)		1,151,470
DISCONTINUED OPERATIONS
Loss from discontinued operations		(23,334	)		(95,001	)
Gain on disposal of subsidiary (including income from discontinued operation)		-			119,677			-			119,677
Total loss from discontinued operations		(23,334	)		(95,001	)
Loss from discontinued operations		(12,043	)		(138,280	)		(35,377	)		(233,281	)
INCOME BEFORE INCOME TAXES		1,265,885			488,493
Total loss from discontinued operations		(12,043	)		(18,603	)		(35,377	)		(113,604	)
INCOME TAX EXPENSE		(449,333	)		(373,847	)
INCOME/(LOSS) BEFORE INCOME TAXES		(4,237,525	)		549,373			(2,971,640	)		1,037,866
NET INCOME		816,552			114,646
INCOME TAX EXPENSE		(9,702	)		(162,440	)		(459,035	)		(536,287	)
Other Comprehensive item - Foreign currency translation income (loss)		1,179,276			(4,854,822	)
NET INCOME (LOSS)		(4,247,227	)		386,933			(3,430,675	)		501,579
Net Comprehensive Income (Loss)	$	1,995,828		$	(4,740,176	)
Other Comprehensive item - Foreign currency translation income (loss)		275,700			(4,660,654	)		1,454,976			(9,515,476	)
Earnings per common share – continued operations	$	0.02		$	0.00
Net Comprehensive Income (loss)	$	(3,971,527	)	$	(4,273,721	)	$	(1,975,699	)	$	(9,013,897	)
Earnings per common share – discontinued operations	$	(0.00	)	$	0.00
Earnings per common share, basic & diluted	$	(0.08	)	$	0.01		$	(0.06	)	$	0.01
Earnings per common share – basic & diluted	$	0.02		$	0.00
Weighted average number of shares, basic & diluted		53,507,450			53,507,450			53,507,450			53,507,450
Weighted average number of shares, basic & diluted		53,507,450			53,507,450

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

ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

ADVANCED MEDICAL INSTITUTE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(~~Unaudited~~UNAUDITED)

	Three Month Periods Ended
	Six Months Ended December 31,
	September 30, 2009			September 30, 2008
	2009			2008
Cash Flows from Operating Activities
Receipts from Customers	$	1015,~~964~~562,~~097~~761		$	1121,~~383~~177,~~497~~500
Interest Received		13,~~736~~998			3442,~~610~~729
Payment to Suppliers & Employees		(1015,~~295~~486,~~645~~520	)		(1021,~~749~~613,~~565~~500	)
Interest Paid		(~~154~~92,~~022~~871	)		(71130,~~745~~080	)
Income Tax Paid		~~(107,885~~-	)		(~~115~~101,~~570~~400	)
Net cash provided by operating activities of continued operations		408,281			481,227
Net cash used in operating activities of continued operations		(12,632	)		(624,751	)
Net cash provided by (used in) discontinued operations		68,~~949~~376			(~~100~~110,~~639~~643	)
Net cash provided by operating activities		415,230			380,588
Net cash used in operating activities		(4,256	)		(735,394	)
Cash Flows from Investing Activities
Loans to related entities		-			(~~784~~1,~~233~~264,699	)
Payment for Property, Plant & Equipment		(6,272	)		(143,452	)
Proceeds from Sale of Investment		-			250,368
Payment for Intangible Assets		(24,659	)		(17,629	)
Purchase of Property, Plant & Equipment		(12,707	)		(285,638	)
Net cash used in investing activities		(30,931	)		(945,314	)
Purchase of Intangible Assets		(24,948	)		(34,635	)
Net cash used in investing activities		(37,655	)		(1,334,604	)
Cash Flows From Financing Activities
Proceeds from Borrowings		~~869~~913,~~900~~920			~~356~~3,~~696~~529,040
Repayment of Borrowings		(~~855~~555,~~769~~463	)		(912,~~130~~234,369	)
Net cash provided by (used in) financing activities		14,131			265,566
Net cash provided by financing activities		358,457			1,294,671
Net increase(decrease) in cash and cash equivalents		398,430			(299,160	)
Net increase (decrease) in cash and cash equivalents		316,546			(775,327	)
Effect of exchange rate on cash		(~~349~~393,~~405~~371	)		(~~486~~1,~~066~~017,334	)
Cash and cash equivalents at beginning of period		295,245			3,127,029
Cash and cash equivalents at end of period	$	~~344~~218,~~270~~420		$	21,~~341~~334,~~803~~368

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

ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

ADVANCED MEDICAL INSTITUTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(~~Unaudited~~UNAUDITED)

(CONTINUED)

	Three Months Ended
	Six Months Ended December 31,
	September 30, 2009			September 30, 2008
	2009			2008
Reconciliation of Cash & Cash Equivalents
Cash & cash equivalents at the end of financial period as shown in the Statement of Cash Flows is reconciled to the related items in the Consolidated Balance Sheets as follows:
Cash & Cash Equivalents	$	~~344~~218,~~270~~420		$	21,~~341~~334,~~803~~368
Reconciliation of Cash Flow from Operations with Profit from Ordinary Activities after Income Tax
Net Income	$	~~816~~(3,~~552~~430,675	)	$	~~114~~501,~~646~~579
Non-Cash Flows in Profit from Ordinary Activities
Depreciation and amortization		~~410~~804,~~348~~790			~~463~~798,~~165~~927
Provision for doubtful accounts		17,~~373~~445,~~313~~091			13,~~764~~170,~~158~~063
Gain on disposal of investments		-			(119,677	)
Changes in Assets and Liabilities
Decrease in inventories		86,643			210,906
(Increase) Decrease in inventories		72,087			(502,992	)
Increase in receivables		(23,~~524~~514,~~889~~651	)		(58,~~188~~611,~~309~~531	)
(Decrease) Increase in unearned revenue		(~~665~~1,~~211~~691,398	)		~~612~~600,~~625~~883
Increase in payables		382,107			2,175,148
(Decrease) Increase in payables		(230,069	)		3,161,964
Increase in provisions for compensated absences		7469,~~777~~894			70143,~~431~~842
Increase in deferred tax liabilities		~~449~~459,~~333~~035			~~633~~855,~~613~~058
Increase in security deposit		53,~~308~~264			~~183~~(70,096	)
Decrease in income tax payable		-			(~~375~~552,~~339~~771	)
Net cash provided by operating activities of continued operations		408,281			481,227
Net cash used in operating activities of continued operations		(12,632	)		(624,751	)
Net cash provided by (used in) operating activities of discontinued operations		68,~~949~~376			(~~100~~110,~~639~~643	)
Net cash provided by operating activities	$	415,230		$	380,588
Net cash used in operating activities	$	(4,256	)	$	(735,394	)
Supplemental Cash Flow Disclosures:
Interest paid	$	~~154~~92,~~022~~871		$	71130,~~745~~080
Income tax paid	$	-		$	~~115~~233,~~570~~604
Non-Cash Investing/Financing Activities:
Assets acquired under capital leases	$	-		$	~~136~~114,~~303~~656

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

ADVANCED MEDICAL INSTITUTE INC.

AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~DECEMBER 3031, 2009

1.	NATURE OF BUSINESS

Nature of Business

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 into 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 into 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~~that arranges for patients with sexual dysfunction ~~and~~ 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~~our fiscal year ended June 30, 2009, AMI’s revenues were approximately $53.4 million.

2.	BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of AMI’s financial position and the results of operations for the interim periods presented. Notes to the unaudited consolidated financial statements that would substantially duplicate the disclosures contained in AMI’s audited consolidated financial statements for its most recent fiscal year have been omitted.

3. RECENT PRONOUNCEMENTS

~~In June 2009, the FASB issued SFAS No~~3.~~167,~~ ~~Consolidation~~RECENT 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.PRONOUNCEMENTS

In ~~August~~June 2009, the FASB issued ~~Accounting~~SFAS ~~Standards Update (“ASU”) 2009-05~~No.167, ~~which amends Accounting~~Consolidation ~~Standards~~of ~~Codification~~Variable ~~(“ASC”) Topic 820,~~Interest ~~Measuring~~Entities ~~Liabilities at Fair Value~~, which ~~provides~~changes ~~additional guidance on~~ the ~~measurement~~consolidation ~~of liabilities~~rules atas ~~fair~~they ~~value. Specifically,~~relate ~~when a quoted price in an active~~to ~~market~~variable ~~for~~interest ~~the~~entities. ~~identical liability is not available~~Specifically, the new standard ~~requires that~~makes ~~the fair value of a liability be measured using one or more of the~~significant ~~valuation~~changes ~~techniques~~to ~~that should maximize~~ the ~~use~~model offor ~~relevant~~determining ~~observable~~who ~~inputs and~~should ~~minimize~~consolidate ~~the use of unobservable inputs. In addition, an entity is not required to include~~ a ~~separate~~variable ~~input or adjustment to other inputs relating to~~interest ~~the~~entity, ~~existence~~and ofalso aaddresses ~~restriction~~how ~~that~~often ~~prevents~~this ~~the~~assessment ~~transfer~~should ofbe ~~a liability~~performed. ~~This~~ This standard will be effective for us on ~~October~~July 1, ~~2009~~2010. We do not expect the adoption will have a material impact on our consolidated ~~financial~~ financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends Accounting Standards Codification ( “ 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 became effective for us on October 1, 2009.

In October 2009, the FASB issued 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.

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements”, now codified under FASB ASC Topic 605, “Revenue Recognition”, (“ASU 2009-13”). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. Management is currently evaluating the potential impact of ASU2009-13 on our financial statements.

In October, 2009, the FASB issued ASU 2009-15, “Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing”, now codified under FASB ASC Topic 470 “Debt”, (“ASU 2009-15”), and provides guidance for accounting and reporting for own-share lending arrangements issued in contemplation of a convertible debt issuance. At the date of issuance, a share-lending arrangement entered into on an entity’s own shares should be measured at fair value in accordance with Topic 820 and recognized as an issuance cost, with an offset to additional paid-in capital. Loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs. The amendments also require several disclosures including a description and the terms of the arrangement and the reason for entering into the arrangement. The effective dates of the amendments are dependent upon the date the share-lending arrangement was entered into and include retrospective application for arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Management is currently evaluating the potential impact of ASU 2009-15 on our financial statements.

In December, 2009, under FASB ASC Topic 860, “Transfers and Servicing.” New authoritative accounting guidance under ASC Topic 860, “Transfers and Servicing,” amends prior accounting guidance to enhance reporting about transfers of financial assets, including securitizations, and where companies have continuing exposure to the risks related to transferred financial assets. The new authoritative accounting guidance eliminates the concept of a “qualifying special-purpose entity” and changes the requirements for derecognizing financial assets. The new authoritative accounting guidance also requires additional disclosures about all continuing involvements with transferred financial assets including information about gains and losses resulting from transfers during the period. The new authoritative accounting guidance under ASC Topic 860 will be effective January 1, 2010 and is not expected to have a significant impact on the Company’s financial statements.

4.	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 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.

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 September 30, 2009 and June 30, 2009, intangibles consist of the following:

Intangibles	Gross Carrying Amount		Accumulated Amortization			Impairment Loss			Net Carrying Amount September 30, 2009		Net Carrying Amount June 30, 2009
Amortized intangibles:
Australian Patents	$	5,764,240	$	(1,193,929	)	$	-		$	4,570,311	$	4,284,773
Worldwide Patents		4,364,496		(735,881	)		(1,494,711	)		2,133,904		2,011,523
Intellectual Property		17,667,245		(2,891,419	)		(5,380,966	)		9,394,860		8,865,082
Computer Software		540,322		(361,888	)		-			178,434		158,883
Unamortized intangibles:
Intellectual Property		3,261,245		-			-			3,261,245		3,006,817
	$	31,597,548	$	(5,183,117	)	$	(6,875,677	)	$	19,538,754	$	18,327,078

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

The exchange rate used for the period ended June 30, 2009 was A$:US$ 1:0.80480, and the rate used for the period ended September 30, 2009 was A$:US$ 1:0.87290. The rate change caused net book value of intangible assets to increase, notwithstanding the addition to accumulated amortization.

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 a 3 year life.

Amortization expense from continuing operations for the three months ended September 30, 2009 and 2008 were $325,658 and $414,219, respectively. The Company expects the amortization expenses for the next five years to be as follows:

Year Ending September 30,	Annual Amount
2010	$	1,303,000
2011	$	1,303,000
2012	$	1,303,000
2013	$	1,303,000
2014	$	1,303,000

5. OTHER ASSETS

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

	September 30		June 30
Bank guarantees	$	224,367	$	206,863
Advances and prepayments		37,361		42,640
Other receivables		9,907		9,134
Other debtors		542,043		755,787
Total	$	813,678	$	1,014,424

At December 31, 2009 and June 30, 2009, intangibles were as follows:

Intangibles	Gross Carrying Amount		Accumulated Amortization			Impairment Loss			Net Carrying Amount December 31, 2009		Net Carrying Amount June 30, 2009

Amortized intangibles:
Australian Patents	$	5,897,631	$	(1,300,369	)	$	-		$	4,597,262	$	4,284,773

Worldwide Patents		4,465,496		(801,847	)		(1,529,300	)		2,134,349		2,011,523

Intellectual Property		18,068,593		(3,143,153	)		(5,505,488	)		9,419,952		8,865,082

Computer Software		552,826		(389,180	)		-			163,646		158,883

Unamortized intangibles:
Intellectual Property		3,336,715		-			-			3,336,715		3,006,817

	$	32,321,261	$	(5,634,549	)	$	(7,034,788	)	$	19,651,924	$	18,327,078

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

The exchange rate used at June 30, 2009 was A$1.00 = US$0.8048, and the rate used at December 31, 2009 was A$1.00 = US$0.8931. The strengthening Australian dollar against the U.S. dollar from June 30 to December 31, 2009 caused the net book value of intangible assets to increase, notwithstanding the addition to accumulated amortization.

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 Holdco, and indefinite life to the intellectual property that arose from IMT.

Computer software was assigned a 3-year life.

Amortization expense from continuing operations for the three months ended December 31, 2009 and 2008 were $664,753 and $714,611, respectively. The Company expects the amortization expenses for the next five fiscal years to be as follows:

Fiscal Year Ending June 30,	Annual Amount

2011	$	1,330,000
2012	$	1,330,000
2013	$	1,330,000
2014	$	1,330,000
2015	$	1,330,000

5.	OTHER ASSETS

Following is the summary of other current assets as of December 31, 2009 and June 30, 2009.

	December 31		June 30
Bank guarantees	$	224,235	$	206,863
Advances and prepayments		8,988		42,640
Other receivables		10,137		9,134
Other debtors		904,617		755,787

Total	$	1,147,977	$	1,014,424

6.	PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprised of the following as of ~~September~~December 3031, 2009 and June 30, 2009:

	September 30		June 30
	December 31		June 30
Leasehold improvements	$	~~634~~649,~~330~~009	$	590,908
Less: Accumulated depreciation		85105,~~078~~088		62,258
		549,252		528,650
		543,921		528,650
Motor Vehicles		8183,~~601~~489		75,235
Less: Accumulated Depreciation		4447,~~122~~045		38,966
		37,479		36,269
		36,444		36,269
Office Furniture & Equipment		1,~~363~~399,~~136~~153		1,217,911
Less: Accumulated Depreciation		~~372~~400,~~814~~160		289,911
		990,322		928,000
		998,993		928,000
Computer Hardware		~~451~~461,~~224~~667		413,800
Less: Accumulated Depreciation		~~352~~371,~~553~~246		315,635
		98,671		98,165
		90,421		98,165
Low Value Pooled Fixed Assets		~~190~~196,~~457~~700		173,057
Less: Accumulated Depreciation		~~148~~156,~~653~~581		133,162
		41,804		39,895
		40,119		39,895
Total Property, Plant and Equipment, net	$	1,~~717~~709,~~528~~898	$	1,630,979

Included in property, plant and equipment are assets of approximately $~~531~~543,~~261~~555 and $489,814, as of ~~September~~December 3031, 2009 and June 30, 2009, that are leased under non-cancellable 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 $~~127~~146,~~044~~255 and $102,469 as of ~~September 30~~December 31, 2009 and June 30, 2009, respectively.

7.	INTEREST BEARING LIABILITIES

Interest bearing liabilities comprised of the following as of ~~September~~December 3031, 2009 and June 30, 2009:

	September 30		June 30
	December 31		June 30
Current, as of the period ended
Capitalized lease liability	$	~~183~~191,~~071~~796	$	165,533
Secured loan (1)		~~509~~523,~~397~~057		918,375
	$	~~692~~714,~~468~~853	$	1,083,908
Non-current, as of the period ended
Capitalized lease liability	$	~~183~~137,~~314~~888	$	212,720
Secured loan (1)		~~599~~493,~~772~~081		429,733
Total non-current	$	~~783~~630,~~086~~969	$	642,453

(1) 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~~six ~~was~~months ended December 31, 2009 was 5.26%. On each rollover date 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 ~~September~~December 3031, 2009, the total outstanding under the facility was A$1,~~774~~640,~~967~~994.

The interest bearing liabilities require monthly payments of principal and interest at a per annum interest rate ranging from 5.26% to 14.17%. Interest expense on the interest bearing liabilities amounted to $~~152~~326,~~286~~519 and $71130,~~745~~080 for the ~~three~~six month periods ended ~~September~~December 3031, 2009 and 2008, respectively.

1011

8.	ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of ~~September~~December 3031, 2009 and June 30, 2009 are summarized as follows:

	September 30		June 30
	December 31		June 30
Bank overdraft	$	~~436~~570,~~201~~696	$	481,319
Accounts payable		89,~~830~~005,~~145~~760		8,642,972
Accrued salaries		~~750~~617,~~266~~342		480,436
Accrued professional fees		3042,~~552~~422		60,360
Other current liabilities		1,~~318~~342,~~458~~674		1,087,589
Accrued DDR medication cost		1,~~585~~479,~~186~~867		1,259,512
Accrued DDR sales commission		1,~~681~~570,~~205~~070		1,377,818
Accrued DDR collection fee		1,~~681~~570,~~205~~070		1,377,818
Provision for patient refund		~~139~~80,~~664~~379		120,720
Accrued compensated absences		1,~~123~~141,~~866~~364		963,892
Total	$	17,~~576~~420,~~748~~644	$	15,852,436

9.	LEGAL PROCEEDINGS

As of ~~September~~December 3031, 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~~appears 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. On December 4, 2009 the court found in favor of AMI Australia. The court ~~has~~allowed ~~indicated~~AMI Australia’s application, held that ~~judgment~~Bade ~~will~~contravened sections be52 ~~released~~an 53 of the Trade Practices Act and passing off, held that AMI ~~shortly~~Australia was entitled to a remedy of $220,000 from Bade, awarded costs in favor of AMI Australia and held that Mr and Mrs Wade were liable to pay interest to AMI Australia on the amount awarded to AMI Australia. Mr & Mrs Wade appealed this decision on January 27, 2010 and Dr Beani appealed this decision on January 29, 2010. The core claim in the appeal is that Mr Wade was medically unfit to give evidence in the matter and this fundamentally affected their defence.

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~~ The ~~hearing~~court ofhas ~~the~~ordered ~~matter~~AMI isAustralia ~~now~~to lodge ~~scheduled~~written ~~for~~submissions ~~February~~by 24March ~~and~~10, 252009, ~~2010~~with ~~and~~final oral submissions to be heard on March 19, 2009. AMI Australia’s interlocutory injunction has been extended until that date.

10.	LEASE COMMITMENTS

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

	September 30
	December 31
Due during the period ended,
2010	$	539,699
2011		536,361
2011		463,806
2012		454,078
2012		365,869
2013		360,621
2013		315,523
2014		310,544
2014		295,519
2015		302,357
2015		295,519
2016		302,357
2016		73,880
	$	2,266,318
	$	2,349,815

1112

Rent paid for the ~~three~~six month periods ended ~~September~~December 3031, 2009 and 2008 were $~~353~~698,~~037~~405 and $~~389~~582,~~178~~435, respectively.

11.	DISCONTINUED OPERATION

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 unsatisfactory operating results.

Loss from the discontinued operation of AMI Japan during the period ended ~~September~~December 3031, 2009 was $1324,~~042~~615.

The capital contributed to AMI Japan of $~~217~~211,~~897~~311 has been classified as assets pending sale on the accompanying consolidated balance sheet as of ~~September~~December 3031, 2009.

Following is the summary of net assets held as of ~~September~~December 3031 and June 30, 2009:

	September 30		June 30
	December 31		June 30
Assets
Cash and cash equivalents	$	~~853~~742	$	1,704
Other current assets		8990,~~196~~644		84,005
Property, Plant & Equipment, net		~~130~~123,~~449~~439		126,552
Intangible assets		~~2,547~~994		3,837
Total Assets		~~223~~215,~~045~~819		216,098
Liabilities
Accounts payable and accrued expense		54,~~148~~508		4,078
Total Liabilities		54,~~148~~508		4,078
Net Assets Held for disposal	$	~~217~~211,~~897~~311	$	212,020

The components of loss from operations related to the entity held for disposal for the periods ended ~~September~~December 3031, 2009 and 2008 are shown below.

	September 30, 2009			September 30, 2008
	December 31, 2009			December 31, 2008
Net sales	$	3765,~~673~~278		$	138,~~503~~034
Operating expenses
Selling, general and administrative		5089,~~715~~893			49173,~~232~~409
Total operating expenses		5089,~~715~~893			49173,~~232~~409
Loss from operations		(1324,~~042~~615	)		(47135,~~729~~375	)
Non-operating income (expenses)
Other income		-			217,516
Interest income		-			2135
Net Loss before income tax		(1324,~~042~~615	)		(47117,~~686~~824	)
Provision for income tax		-			-
Net loss from entity held for disposal	$	(1324,~~042~~615	)	$	(47117,~~686~~824	)

1213

AMI China

AMI China was a fully owned subsidiary of the Company.

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

Loss from the discontinued operation of AMI China during the period ended ~~September~~December 3031, 2009 was US$10,~~292~~762.

The capital contributed to AMI Japan of US$7880,~~474~~712 has been classified as assets pending sale on the accompanying consolidated balance sheet as of ~~September~~December 3031, 2009.

Following is the summary of net assets held as of ~~September~~December 3031 and June 30, 2009:

	September 30		June 30
	December 31		June 30
Assets
Cash and cash equivalents	$	13,~~137~~511	$	13,121
Other current assets		4445,~~108~~365		39,532
Property, Plant & Equipment, net		21,~~252~~858		21,226
Total Assets		7880,~~497~~734		73,879
Liabilities
Accounts payable and accrued expense		2324		22
Total Liabilities		2324		22
Net Assets Held for disposal	$	7880,~~474~~710	$	73,857

The components of loss from operations related to the entity held for disposal for the periods ended ~~September~~December 3031, 2009 and 2008 are shown below.

	2009			2008
Net sales	$	-		$	45,~~854~~148
Operating expenses
Selling, general and administrative		10,~~292~~762			(52120,~~169~~606	)
Total operating expenses		10,~~292~~762			(52120,~~169~~606	)
Net loss before income tax		(10,~~292~~762	)		(47115,~~315~~458	)
Provision for Income tax		-			-
Net loss from entity held for disposal	$	(10,~~292~~762	)	$	(47115,~~315~~458	)

1314

12.	RELATED PARTY TRANSACTIONS

	September 30, 2009		June 30, 2009
	December 31, 2009		June 30, 2009
Related party transactions comprised of the following:
Prostate Health Clinic Pty. Ltd. (an AU co.)
Relationship: Under common management control by Jack Vaisman
Receivable from this related party		1,~~865~~908		1,719
Loan to affiliate in Indonesia		~~378~~346,~~812~~791		426,806
Receivable due from related parties - current	$	~~380~~348,~~677~~699	$	428,525
Peter Riley
Relationship: Director of AMI UK
Payable to this related party		70,~~845~~872		73,513
Jacov Vaisman
Relationship: Director of AMI Inc.
Payable to this related party		~~1,440~~-		173,032
Tony Khan
Relationship: Executive Vice President of AMI Inc.
Payable to this related party		3435,~~916~~724		32,192
Payable due to related parties - current	$	~~107~~106,~~201~~596	$	278,737
Secare Health Centre Pty Limited
Relationship: Under common management control by Jack Vaisman
Payable to this related party – non current	$	45,~~827~~360,~~936~~693	$	3,803,131

Total receivables due from related parties included in the Company’s balance sheets were $~~380~~348,~~677~~699 and $428,525, as of ~~September~~December 3031, 2009 and June 30, 2009, respectively.

Total payables due to related parties included in the Company’s balance sheets were $45,~~935~~467,~~137~~289 as of ~~September~~December 3031, 2009 and $4,081,868 as of June 30, 2009.

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

1415

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~~Company’s ~~chief~~ chief executive officer and founder, Jack Vaisman. The Company subsequently borrowed a further A$4,~~281~~631,489 from Secare. The loan is secured by a second ~~ranking~~ ranking security interest in all of AMI Australia’s assets and undertakings (including its existing equity interests in PE Patent Holdco Pty Limited, ~~Intelligent~~ Intelligent Medical Technologies Pty Limited and Advanced Medical Institute (NZ) Limited). The loan ~~attracts~~bears an interest ~~cost~~at a rate of 10% per annum. No repayment of this loan has been made upas toat ~~September~~December 3031, 2009. The loan is due for repayment in December 2011.

13.	INCOME TAXES

Total income tax expense for the ~~three~~six months ended ~~September~~December 3031, 2009 and 2008 ~~amounted~~ amounted to $~~449~~459,~~333~~035 and $~~373~~536,~~847~~287, respectively. For the ~~three~~six month ~~periods~~ period ended ~~September 30~~December 31, 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.

September 30, 2009

U.S.

State

International

Total

December 31, 2009

U.S.

State

International

Total

Current

~~548~~255,~~690~~932

Deferred

~~(99~~203,~~357~~103

)

~~(99~~203,~~357~~103

)

Total

~~449~~459,~~333~~035

September 30, 2008

U.S.

State

International

Total

December 31, 2008

U.S.

State

International

Total

Current

~~146~~423,~~548~~816

Deferred

~~227~~112,~~299~~471

Total

~~373~~536,~~847~~287

Reconciliation of the differences between the statutory U.S. Federal income tax rate and the effective rate is as follows:

	September 30, 2009			September 30, 2008
	December 31,
	2009			2008
Federal statutory tax rate		34	%		34	%
Decrease in rate resulting from:
Non US income taxed at different rates		(1	)%		(1	)%
Non-US income taxed at different rates		(1	)%		(1	)%
		33	%		33	%
Temporary Difference		221	%		445	%
Effective Tax Rate		3554	%		7738	%

Deferred tax liability arises due to the following temporary differences:

	September 30, 2009			Future tax rate %			Deferred tax liability				June 30, 2009				Future tax rate %			Deferred tax liability
	December 31, 2009			Future tax rate %				Deferred tax liability				June 30, 2009				Future tax rate %				Deferred tax liability
Owing by patients via ACFC	$	(3435,~~413~~268,~~617~~470	)	30	%30	%	$	~~(10,324,085~~$	)(10,580,541	)	$	~~(28,861,821~~$	)(28,861,821	)	30	%	30	$%	~~(8,658,546~~	)$	(8,658,546	)
Provision DDR cancellation		1819,~~634~~708,~~670~~930		30	%30	%		~~5,590,401~~	5,912,679			~~16,788,933~~	16,788,933		30	%	30	%	~~5,036,680~~		5,036,680
Provision un-dispensed DDR medications		1,~~585~~479,~~187~~867		30	%30	%		~~475,556~~	443,960			~~1,259,512~~	1,259,512		30	%	30	%	~~377,854~~		377,854
Accrued ACFC collection and commission		3,~~362~~140,~~410~~140		30	%30	%		~~1,008,723~~	942,042			~~2,755,635~~	2,755,635		30	%	30	%	~~826,691~~		826,691
Provision for patient refund		~~139~~80,~~663~~380		30	%30	%		~~41,899~~	24,114			~~120,720~~	120,720		30	%	30	%	~~36,216~~		36,216
Unutilized tax losses		67,~~764~~038,~~857~~387		30	%30	%		~~2,029,457~~	2,111,516			~~5,663,851~~	5,663,851		30	%	30	%	~~1,699,155~~		1,699,155
Amortization of patents		(2,~~416~~631,~~213~~617	)	30	%30	%		~~(724,864~~	)(789,485	)		~~(2,083,987~~	)(2,083,987	)	30	%	30	%	~~(625,196~~	)	(625,196	)
Impairment loss		6,~~160~~303,~~770~~340		30	%30	%		~~1,848,231~~	1,891,002			~~5,680,134~~	5,680,134		30	%	30	%	~~1,704,040~~		1,704,040
Other miscellaneous		1,~~063~~087,~~871~~927		30	%30	%		~~319,161~~	326,378			~~937,806~~	937,806		30	%	30	%	~~281,354~~		281,354
Total	$	~~881~~938,~~598~~884		30	%30	%	$	~~264,479~~$	281,665		$	~~2,260,783~~$	2,260,783		30	%	30	$%	~~678,248~~	$	678,248

14. OTHER COMPREHENSIVE INCOME (LOSS)

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

	Accumulated Other Comprehensive Income
Balance at June 30, 2008	$	6,972,500
Change for year ended June 30, 2009		(6,018,555	)
Balance at June 30, 2009		953,945
Change for three months ended September 30, 2009		1,179,276
Balance at September 30, 2009	$	2,133,221

The change for the three months ended September 30, 2009 is primarily attributable to the appreciation in the Australian dollar against the US dollar from the closing rate of A$:US$ 1:0.80480 for the year ended June 30, 2009 to A$:US$ 1:0.87290 for the three-month period ended September 30, 2009.

14.	OTHER COMPREHENSIVE INCOME (LOSS)

Balances of related after-tax components comprising accumulated other comprehensive income (loss), included in stockholders’ equity, at December 31, 2009 and June 30, 2009 are as follows:

	Accumulated Other Comprehensive Income
Balance at June 30, 2008	$	6,972,500
Change for year ended June 30, 2009		(6,018,555	)
Balance at June 30, 2009		953,945
Change for six months ended December 31, 2009		1,454,976
Balance at December 31, 2009	$	2,408,921

The change for the six months ended December 31, 2009 is primarily attributable to the appreciation in the Australian dollar against the US dollar from the closing rate of A$:US$ 1:0.80480 as at June 30, 2009 to A$:US$ 1:0.89310 as at December 31, 2009.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~THE~~The ~~FOLLOWING~~following ~~DISCUSSION~~discussion ~~SHOULD~~should BEbe ~~READ~~read INin ~~CONJUNCTION~~conjunction ~~WITH~~with ~~THE~~the ~~INFORMATION~~Company's financial ~~CONTAINED~~statements INand ~~THE~~the ~~FINANCIAL~~notes ~~STATEMENTS~~to OFthose ~~THE~~financial ~~COMPANY~~statements ~~AND~~appearing ~~THE~~elsewhere ~~NOTES THERETO~~in ~~APPEARING~~this ~~ELSEWHERE~~quarterly ~~HEREIN~~report ~~AND~~on INForm ~~CONJUNCTION~~10-Q ~~WITH~~as ~~THE~~well ~~MANAGEMENT~~as the Company’Ss ~~DISCUSSION~~annual ~~AND~~report ~~ANALYSIS~~on ~~SET~~Form ~~FORTH IN THE COMPANY’S ANNUAL REPORT ON FORM~~ 10-K ~~FOR~~for ~~THE~~the ~~YEAR ENDED~~year ~~JUNE~~ended June 30, 2009.

Preliminary Note Regarding Forward-Looking Statements

The statements contained in this quarterly report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section ~~27A of the Securities Act of 1933, as amended, and Section~~ 21E of the Securities Exchange Act of 1934, as amended. These include statements about the ~~Company’s~~our expectations, beliefs, intentions or strategies for the future, ~~which~~and ~~are~~may be indicated by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “~~the Company~~ believes,” ~~“management believes”~~ and similar words or phrases. The forward-looking statements are based on the Company’s current expectations and are subject to certain risks, uncertainties and assumptions. ~~The~~that ~~Company’s~~could cause our actual results ~~could~~in future periods to differ materially from ~~results~~those ~~anticipated~~projected or contemplated in ~~these~~ the forward-looking statements. All forward-looking statements included in this document are based on information available to ~~the~~us ~~Company~~ on the date ~~hereof, and~~of ~~the~~this ~~Company~~quarterly ~~assumes~~report and we assume no obligation to update any ~~such~~ forward-looking statements.

Overview

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 into 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 into 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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable reserves, provisions for impairment losses of affiliated companies and other intangible assets, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

WeThe ~~believe the~~ following critical accounting policies ~~reflect~~have ~~our~~been ~~more significant estimates and assumptions~~ used in the preparation of our consolidated financial statements:

~~REVENUE~~Revenue ~~RECOGNITION~~ Recognition. Sales are ~~reported~~recorded as ~~deferred~~unearned ~~income~~ revenue when the sales contracts are executed and the term of the contract exceeds three months. Up to three months medication is delivered to the patient upon the signing of a contract. Generally the terms of the sales contracts are up to one year, but they can be for longer periods of time. The ~~deferred~~unearned ~~income~~revenue 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.

~~ALLOWANCE~~Allowance for ~~FOR~~Doubtful ~~DOUBTFUL ACCOUNTS~~ Accounts. We evaluate the collectibility of our ~~trade~~ trade receivables based on a combination of factors. We regularly analyze our significant customer accounts, and, when we become aware of a specific customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s ability to pay for ~~our~~ our services, we record a specific reserve for bad debt to reduce the related receivable to the amount we reasonably believe is collectible. The allowances are calculated based on detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions affecting our customer base. We review a customer’s credit history with the Company before extending credit. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

1718

~~INCOME~~Long-lived ~~TAXES~~Assets. ~~Income~~Effective ~~taxes~~January ~~have~~1, ~~been~~2002, ~~provided~~the ~~based~~Company ~~upon~~adopted Statement ~~the~~of ~~tax~~Financial ~~laws and~~Accounting ~~rates~~Standards inNo. 144 (ASC 360), “Accounting for the ~~countries~~Impairment inor ~~which~~Disposal ~~operations~~of ~~are~~Long-Lived ~~conducted~~Assets” ~~and~~(“SFAS ~~income~~144”), iswhich addresses ~~earned. The~~financial ~~income~~accounting ~~tax~~and ~~rates~~reporting ~~imposed~~for by the ~~taxing~~impairment ~~authorities~~or disposal of long-lived ~~vary~~assets and supersedes SFAS No. ~~Taxable~~ ~~income~~121, ~~may~~“Accounting ~~vary~~for ~~from~~the ~~pre~~Impairment of Long-~~tax~~Lived Assets ~~income~~and for ~~financial accounting~~Long-Lived ~~purposes. There~~Assets isto nobe ~~expected~~Disposed ~~relationship~~Of,” ~~between~~and the ~~provision~~ ~~for~~accounting ~~income~~and reporting ~~taxes~~provisions ~~and~~of ~~income~~APB ~~before~~Opinion ~~income~~No. ~~taxes~~30, ~~because~~“Reporting the ~~countries have~~Results ~~different~~of ~~taxation~~Operations for ~~rules,~~a ~~which~~Disposal ~~vary~~of ~~not~~a ~~only~~Segment asof toa ~~nominal~~Business.” ~~rates,~~The ~~but~~Company ~~also~~periodically evaluates inthe ~~terms~~carrying value of ~~available~~long-lived ~~deductions,~~assets ~~credits~~to be held and ~~other~~used in accordance with ~~benefits~~SFAS 144 (ASC 360). ~~Deferred~~ ~~tax~~SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and ~~liabilities~~the undiscounted cash flows estimated to be generated by those assets are ~~recognized~~less ~~for~~than the ~~anticipated~~ ~~future~~assets’ ~~tax~~carrying ~~effects~~amounts. ofIn ~~temporary~~that ~~differences~~event, ~~between~~a ~~the~~loss ~~financial~~is ~~statement~~recognized ~~basis~~based ~~and~~on the ~~tax~~amount ~~basis~~by ofwhich the ~~Company’s~~carrying ~~assets~~amount ~~and~~exceeds ~~liabilities~~the ~~using~~fair market value of the ~~applicable~~long-lived ~~tax~~assets. ~~rates~~Loss on long-lived assets to be disposed of is determined in ~~effect~~a atsimilar ~~year~~manner, ~~end~~except asthat ~~prescribed~~fair bymarket ~~SFAS~~values ~~109~~are ~~(ASC~~reduced ~~740)~~for ~~“Accounting~~the ~~for~~cost ~~Income~~of ~~Taxes~~disposal.”

CONTINGENCIES We may be subject to certain asserted and unasserted claims encountered in the normal course of business. It is our belief that the resolution of these matters will not have a material adverse effect on our financial position or results of operations; however, we cannot provide assurance that damages that result in a material adverse effect on our financial position or results of operations will not be imposed in these matters. We account for contingent liabilities when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

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.

CURRENCY CONVERSION As of September 30, 2009 and 2008, the accounts of AMI Australia were maintained, and its financial statements were expressed, in Australian Dollars (A$). Such financial statements were translated into US Dollars ($) in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”, with the Australian Dollar as the functional currency. In accordance with the Statement, all assets and liabilities were translated at the exchange rate (A$1 = US$0.87290) as of September 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, “Reporting Comprehensive Income”.

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

Results of operations:

	Three Months ended September 31,			Three Months ended September 31,
	Three Months ended December 31,						Six Months ended December 31,
	2009			2008			2009			2008
Revenue		100	%		100	%		100	%		100	%
Cost of revenue		2237.76	%		2221.51	%		27.2	%		21.9	%
Gross profit		7762.34	%		7778.59	%		72.8	%		78.1	%
Selling, general and administrative expenses		67126.41	%		7374.72	%		85.3	%		73.9	%
Other income and expenses		(12.07	)%		(0.15	)%		(1.5	)%		0.2	%
Discontinued operations		(0.2	)%		(0.6	)%
Discontinued operation		(0.2	)%		(1.0	)%		(0.2	)%		(0.8	)%
Income before income tax		8(66.76	)%		34.12	%		(14.2	)%		3.6	%
Income tax expenses		30.1	%		21.43	%		2.2	%		1.9	%
Net income		5(66.67	)%		02.79	%		(16.4	)%		1.7	%

LIQUIDITY AND CAPITAL RESOURCES

AsWe ofmanage ~~September~~our ~~30,~~cash ~~2009,~~so we ~~had~~are ~~total~~able ~~liabilities~~to ofmeet ~~$31,975,767,~~the ~~including~~obligations ~~unearned revenue~~ of ~~$7,983,157,~~our ~~and we had a positive net worth of $20~~business,~~106,443. As~~ ~~of June 30, 2009, we had total liabilities of $29,668,233, including unearned~~while ~~revenue~~maintaining offinancial ~~$8,003,468,~~liquidity and ~~we had a positive net worth of $18,110,615~~flexibility. ~~The~~ ~~predominant~~We ~~reason for the significant increase in the net worth of the Company between June 30~~forecast, ~~2009~~analyze and ~~September~~monitor ~~30,~~our cash ~~2009~~flows ~~is due~~ to aenable ~~significant appreciation~~prudent ininvestment ~~the~~management A$and ~~exchange~~financing ~~rate~~within asthe confines ~~compared~~of toour ~~the~~financial ~~US$ exchange rate~~strategy.

18Our primary sources of liquidity are cash and cash flows from operations. Our aggregate cash balances as at December 31, 2009 were $218,420 and our net receivables were approximately $22.7 million. Our receivables are due on average within 90-180 days. Our accounts payable have increased from $15.8 million at June 30, 2009 to $17.4 million at December 31, 2009.

~~Our aggregate~~Net cash used ~~balances~~in asoperating atactivities ~~September~~was 30$(4,256) ~~2009~~in ~~were~~the ~~$344~~six months ended December 31,~~270~~ 2009, ~~our~~compared ~~inventory was~~to $~~897~~(735,~~671,~~394) ~~and~~in ~~our~~the ~~net~~six ~~receivables~~months ~~were~~ended ~~approximately~~December ~~$27.6~~31, ~~million. These~~2008, ~~receivables~~representing ~~are~~a ~~due~~decrease onof ~~average~~$721,138 ~~within 90-180 days~~or 98%. The Wedecrease ~~forecast~~in ~~that~~net cash weused ~~will~~in ~~be able~~operating toactivities ~~generate~~was ~~sufficient~~commensurate ~~funds~~with ~~from~~the ~~our~~decrease ~~business~~ in ~~order~~fewer patients topurchasing ~~fund~~ our ~~operations~~ inprograms ~~the~~as ~~ordinary~~a ~~course~~result ~~during~~of ~~the~~difficult ~~next~~economic ~~12 months. This~~conditions ~~forecast~~and isa ~~based~~reduction onin the ~~significant~~advertising ~~positive~~and ~~cash~~promotion ~~flow~~of ~~from~~our ~~operating activities~~programs ~~generated~~in byAustralia during the ~~Company~~six ~~over~~months ~~the~~ended ~~past~~December 331, ~~months~~2009.

InNet ~~the~~cash ~~event~~used ~~that~~in weinvesting ~~continue~~activities towas ~~expand our business~~$(937,655) wefor ~~may~~the ~~need~~six tomonths ~~raise~~ended ~~debt or~~December ~~equity~~31, ~~funding~~2009, incompared ~~order~~ to ~~undertake such expansion. However~~$(1,334,604) ~~there can~~for bethe nosix ~~assurance~~months ~~that~~ended weDecember ~~can~~31, or2008. This ~~will~~increase ~~obtain~~results ~~sufficient~~primarily ~~funds~~ from ~~operations or~~a ~~from~~reduction ~~additional financings~~ on ~~terms~~funding ~~acceptable~~invested tointo ~~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~~UK ~~operations~~operation.

~~The~~Net cash ~~Company~~provided ~~borrowed~~by ~~A$3~~financing ~~million~~activities ~~from~~was ~~ANZ~~$358,457 ~~Nominees~~for ~~Limited~~the insix ~~its~~months ~~capacity~~ended asDecember ~~custodian~~31, of2009, compared to $1,294,671 for the ~~Professional~~six ~~Pensions~~months ~~PST~~ended inDecember ~~September~~31, ~~2006~~2008. ~~The~~ ~~outstanding~~This ~~balance~~decrease ofis ~~this~~attributable ~~loan~~to ~~was~~the ~~fully~~reduction ~~repaid~~ in new loans obtained during the six months ended December ~~2008~~31, ~~using~~2009. We ~~funds~~obtained a term facility of ~~from~~A$1.9 during the Stsix ~~George~~months ~~facility~~ended ~~discussed~~December ~~below~~31, 2008.

~~The~~We ~~Company~~forecast ~~borrowed~~that ~~A$2.4~~we ~~million~~will ~~from~~be Stable ~~George~~to ~~Bank~~generate ~~Limited~~sufficient infunds ~~December~~from ~~2008 comprising~~our abusiness ~~A$1.9 million term facility and a A$500,000 overdraft facility. The~~in ~~loan~~order isto ~~secured~~fund byour aoperations ~~first ranking security interest~~ in ~~all~~the ofordinary ~~AMI~~course ~~Australia’s assets~~during ~~and~~the ~~undertakings~~next ~~(including~~12 ~~its existing equity interests in PE Patent~~months. ~~Holdco Pty Limited~~However, ~~Intelligent~~there ~~Medical~~is ~~Technologies~~some ~~Pty~~uncertainty ~~Limited~~associated ~~and~~with ~~Advanced~~this ~~Medical Institute (NZ) Limited)~~forecast. This ~~The~~forecast ~~term facility~~ is abased ~~commercial~~on ~~bill acceptance/discount facility whereby~~ the ~~Company~~positive ~~regularly~~cash ~~discounts~~flow ~~bills with~~from ~~the~~operating ~~bank~~activities atover the ~~prevailing~~past ~~interest~~six ~~rate plus a margin of 1~~months.~~65%.~~ ~~The~~If ~~average all-up~~our ~~cost~~actual ofresults ~~this~~over ~~facility during~~ the next ~~period~~six ~~was~~months ~~5.26%.~~are Onmaterially ~~each~~worse ~~rollover~~than the ~~interest~~ ~~rate~~forecast, isthen ~~reset. The~~it ~~loan~~ is ~~due~~possible ~~for repayment in~~that ~~December~~we ~~2011,~~would ~~however~~need ~~the~~to ~~Company~~raise isfunds ~~required~~through toborrowings ~~make~~or ~~principal~~capital ~~repayments~~raisings. ofIn such ~~A$50~~event,~~000~~ ~~per~~there ~~month~~could ~~during~~be ~~each~~no ~~month~~assurance ofas ~~the~~to ~~term. As~~whether atwe ~~September~~could ~~30,~~obtain any such ~~2009~~financing or, ~~the~~if ~~total~~successful, ~~outstanding~~what ~~under~~ the ~~facility~~terms ~~was~~might ~~A$1,774,967~~be.

~~The~~In the ~~Company~~event ~~borrowed~~that awe ~~further~~were ~~A$1~~to ~~million~~expand ~~from~~our ~~Secare~~business, ~~Health~~we ~~Centre~~would ~~Pty~~need ~~Limited (“Secare”)~~to raise debt or equity in ~~December~~order ~~2008~~to finance any expansion. ~~Secare~~However, isthere ~~controlled~~can bybe ~~the~~no ~~company’s~~assurance ~~chief~~that ~~executive~~we ~~officer~~could ~~and~~obtain ~~founder,~~sufficient ~~Jack~~funds ~~Vaisman~~from ~~and~~operations ~~the~~or ~~Company~~from ~~has~~additional ~~subsequently~~financing. ~~borrowed~~Our access to additional financing will depend on a ~~further~~variety ~~A$4~~of factors such as market conditions,~~281,489~~ ~~from~~the ~~Secare.~~general ~~The~~availability ~~loan~~of iscredit, ~~secured~~the byoverall availability of acredit ~~second~~to ~~ranking~~our ~~security~~industry, ~~interest~~our incredit ~~all~~capacity, ofas ~~AMI~~well ~~Australia’s~~as ~~assets~~the ~~and~~possibility that ~~undertakings~~lenders ~~(including~~could ~~its~~develop ~~existing~~a ~~equity~~negative ~~interests~~perception inof PEour ~~Patent~~long- ~~Holdco~~or ~~Pty~~short-term financial ~~Limited,~~prospects. ~~Intelligent~~If ~~Medical~~a ~~Technologies~~combination ~~Pty~~of ~~Limited~~these ~~and~~factors ~~Advanced~~were ~~Medical~~to occur, our internal sources ~~Institute~~of ~~(NZ)~~liquidity ~~Limited).~~may ~~The~~prove ~~loan~~to ~~attracts~~be aninsufficient, ~~interest~~and ~~cost~~in ofsuch ~~10%~~case, ~~per~~we may not be able ~~annum. No~~to ~~repayment~~successfully ofobtain ~~this~~additional ~~loan~~financing ~~has~~on ~~been~~favorable ~~made~~terms. This upcould restrict our ability to: ~~September~~(1) acquire 30new businesses or enter new markets, ~~2009. The~~(2) service ~~loan~~our isexisting ~~due~~debt, (3) make necessary capital investments, and (4) make other expenditures necessary for ~~repayment~~the inongoing ~~December~~conduct ~~2011~~of our business.

We 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.

We 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 5.26%. 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 December 31, 2009, the total outstanding under the facility was A$1,640,994.

We borrowed A$1 million from Secare Health Centre Pty Limited (“Secare”) in December 2008. Secare is controlled by our chief executive officer and founder, Jack Vaisman and the Company has subsequently borrowed a further A$4,631,489 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 bears interest at 10% per annum. 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.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2008

Revenue. Revenue was $14,507,711 in the three months ended September 30, 2009, compared to $15,944,448 in the three months ended September 30, 2008, a decrease of $1,436,737, or 9%. The decrease in the three-month period ended September 30, 2009 is primarily attributable to the depreciation in the Australian dollar against the US dollar from the rate of A$:US$ 1:0.89174 for the three-month period ended September 30, 2008 to A$:US$ 1:0.83244 for the three-month period ended September 30, 2009. Revenue in Australian dollars was A$17,427,936 in the three months ended March 31, 2009 compared to A$17,880,153 in the three months ended September 30, 2008, an decrease of A$452,217 or 2.5%. We attribute this decrease primarily to the decrease in the number of patients purchasing our programs which is due to difficult economic conditions and a reduction in the advertising and promotion of our programs in Australia during the relevant period.

Our unearned revenue as at September 30, 2009 was $7,983,157 compared to $6,476,016 as at September 30, 2008. The gross increase in unearned revenue from the three months ended September 30, 2008 to the three months ended September 30, 2009 was $1,507,141, or an increase of 23.2%. The increase in unearned revenue in the three-month period is primarily attributed to the increase in weighted average program length of treatment programs during the quarter ended September 30, 2009.

Revenue in our PE treatments has increased by $2,619,643 or 34.9% to $10,119,678, and revenue in our ED treatments decreased by $3,501,986 or 44.7% to $4,327,937, in the three months ended September 30, 2009, compared to the three months ended September 30, 2008. We attribute the increase in revenue in our PE treatments to the increase in the number of sales per patient along with the higher sales price of the treatment programs sold. Revenue in our prostate treatments has decreased by $409,296 or 79.8%, to $103,460, in the three months ended September 30, 2009, compared to the three months ended September 30, 2008. We attribute the decrease in revenue in our prostate treatments to decreases in the number of patients. We attribute the decrease in revenue in our ED treatments to the decrease in the number of patients as well as the depreciation in Australian dollar against the US dollar.

Revenue in our Australian operations was $11,675,252 in the three months ended September 30, 2009, compared to $15,407,506 in the three months ended September 30, 2008. Compared to the same period in the previous year, there is a decrease of $3,732,254, or 24.2%, in the three months ended September 30, 2009. The decrease in the three-month period ended September 30, 2009 is primarily attributable to the decrease in the number of patients purchasing our programs which is due to difficult economic condition and a reduction in the advertising and promotion of our programs in Australia during the relevant period.

Revenue in our UK operations was $2,627,632 in the three months ended September 30, 2009, compared to $149,412 in the three months ended September 30, 2008. The Company’s UK operation started its business activities in September 2008.

Cost of Revenue. Cost of revenue was $3,291,231 in the three months ended September 30, 2009, compared to $3,591,200 in the three months ended September 30, 2008. The increase in cost of revenue was attributable to an increase in the medication cost incurred by AMI Australia and AMI’s UK operation. As a percentage of revenue, cost of revenue was 22.7% in the three months ended September 30, 2009, compared to 22.5% in the three months ended September 30, 2008. The stable cost of revenue percentage in 2009 is primarily attributable to management’s efforts to address operation performance and control its costs.

Gross Profit. Gross profit was $11,126,480 in the three months ended September 30, 2009, compared to $12,353,248 in the 2008 comparable period. As a percentage of revenue, gross profit decreased to 77.3% in the quarter ended September 30, 2009 from 77.5% in the 2008 quarter. The stable gross profit percentage in 2009 is primarily attributable to management’s efforts to address operation performance and control its costs.

Gross profit in our UK operations was $1,967,813 in the three months ended September 30, 2009, compared to $15,035 in the three months ended September 30, 2008. The Company’s UK operation started its business activities in September 2008.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $9,774,975 in the three months ended September 30, 2009, compared to $11,753,265 in the three months ended September 30, 2008. As a percentage of revenue, selling, general and administrative expenses decreased to 67.4% in the three months ended September 30, 2009 from 73.7% in the three months ended September 30, 2008. The decrease in the three months ended September 30, 2009 is primarily attributable to management’s efforts to address operation performance which significantly reduced advertising expenses and staff costs.

Selling, general and administrator expenses in our UK operations was $2,144,635 in the three months ended September 30, 2009, compared to $524,021 in the three months ended September 30, 2008. The Company’s UK operation started its business activities in September 2008.

Other Income. Other income and expenses was ($152,286) in the three months ended September 30, 2009, compared to ($16,489) in the three months ended September 30, 2008. As a percentage of revenue, other income and expenses was (1.0%) in the three months ended September 30, 2009 and (0.1%) in the three months ended September 30, 2008. The 0.9% increase in the other income and expenses in 2009 is primarily attributable to the increase in interest expenses, following the increase in interest bearing borrowings.

~~Net Income Before~~RESULTS ~~Income~~OF Tax and Income Tax Expenses. Net income before income tax was $1,265,885 in the three months ended September 30, 2009, compared to $488,493 in the three months ended September 30, 2008. This increase was primarily attributable to the significant decrease in selling, general and administrative expenses as a percentage of revenue in the three months ended September 30, 2009 as well as the improvement in the UK operations for the relevant period.OPERATIONS

~~Income~~SIX ~~tax~~MONTHS ~~expenses~~ENDED ~~were~~DECEMBER ~~$449~~31,~~333~~ ~~in the three months ended September 30,~~ 2009 ~~compared to~~COMPARED ~~$373,847~~TO inSIX ~~the~~MONTHS ~~three~~ENDED ~~months~~DECEMBER ~~ended September 30~~31, ~~2008. As a percentage of~~ ~~revenue, income tax expense increased to 3.1% in the three months ended September 30, 2009 from 2.4% in the three months ended September 30,~~ 2008~~. This increase is attributable to the decrease in selling, general and administrative expenses.~~

~~Net Income~~Revenue. Revenue ~~Net income~~ was $~~816~~20,~~552~~870,739 in the ~~three~~six months ended ~~September~~December 3031, 2009, compared to $~~114~~29,~~646~~155,445 in the ~~three~~six months ended ~~September~~December 3031, 2008., ~~This increase~~representing ina ~~the~~decrease of ~~2009~~$8,284,706, ~~quarter~~or 28%. This ~~compared~~decrease toin ~~the~~revenue ~~2008~~was primarily ~~quarter~~due ~~is attributable~~ to an ~~the significant~~increase ~~decrease~~ in ~~selling,~~the provision ~~general~~for ~~and~~doubtful accounts ~~administrative~~from ~~expenses~~$3,170,063 asto ~~a percentage~~$7,445,091 ~~of revenue~~ for the ~~three-month~~six ~~period~~months ended ~~September~~December 3031, 2009 ~~as well~~that asmostly ~~the~~related ~~improvement~~to our ~~in the~~ UK operations ~~for the relevant period~~.

~~Net~~Our ~~income~~unearned inrevenue ~~our~~as ~~Australian~~at ~~operations~~December 31, 2009 was $17,~~030~~146,~~471~~073 incompared ~~the~~to ~~three~~$8,003,468 as ~~months~~at ~~ended September~~June 30, 2009,. ~~compared~~The togross ~~$876,185~~decrease in unearned revenue from the ~~three~~six months ended ~~September~~December 3031, 2008. ~~The~~to ~~increase~~the issix ~~primarily~~months ~~attributable~~ended toDecember ~~the~~31, 2009 was $857,395, or a decrease of 10.7%. The decrease in ~~selling~~unearned revenue at December 31, ~~general~~2009 is ~~and~~primarily ~~administrative~~attributed ~~expenses~~to infewer ~~the~~patients ~~three~~seeking ~~months~~new treatments during the quarter ended ~~September~~December 3031, 2009.

~~Net loss~~Revenue in our UKPE ~~operations~~treatments ~~was~~has decreased by $~~176~~4,~~824~~209,424 or 26.8% to $11,513,709, and revenue in ~~the~~our ~~three~~ED ~~months~~treatments ~~ended~~decreased ~~September~~by 30$3, ~~2009~~351, ~~compared~~738 or 26.8% to $~~508~~9,~~986~~165,652, in the ~~three~~six months ended ~~September~~December 3031, 2009, compared to the six months ended December 31, 2008. ~~The~~ We attribute the decrease isin ~~primarily~~revenue ~~attributable~~in toour ~~the~~PE UKand ~~operations~~ED ~~being~~treatments into athe ~~loss~~decrease ~~making~~in ~~start~~the upnumber ~~period~~of ~~during~~patients and the ~~period~~significant provision ~~ending~~for ~~September~~doubtful ~~30, 2008~~debt ~~and~~on ~~the~~our ~~improvement~~UK operation. Revenue in ~~operating~~our ~~performance~~prostate treatments has decreased by $545,345 or 71.2%, to $220,345, in the UKsix ~~operation~~months ended ~~during~~December 31, 2009, compared to the ~~three~~ six months ended ~~September~~December 3031, ~~2009~~2008. We attribute the decrease in revenue in our prostate treatments to decreases in the number of patients.

Revenue in our Australian operations was $20,372,971 in the six months ended December 31, 2009, compared to $25,142,030 in the six months ended December 31, 2008. Compared to the same period in the previous year, there is a decrease of $4,769,059, or 18.9%, in the six months ended December 31, 2009. The ~~above~~decrease in ~~discussions~~the six-month period ended December 31, 2009 is primarily attributable to the decrease in the number of ~~results~~patients ~~exclude~~purchasing ~~those~~our ~~entities~~programs which ~~have~~is nodue orto difficult ~~what~~economic ~~management~~condition and a reduction in the advertising and promotion of ~~deems~~our ~~insignificant~~programs ~~operations~~in Australia during the relevant period.

Cost of Revenue. Cost of revenue was $5,684,117 in the six months ended December 31, 2009, compared to $6,381,137 in the six months ended December 31, 2008. The decrease in cost of revenue was attributable to a decrease in the medication cost incurred by AMI Australia. As a percentage of revenue, cost of revenue was 27.2% in the six months ended December 31, 2009, compared to 21.9% in the six months ended December 31, 2008. We attribute this increase primarily to the decrease in revenue during the relevant period being more than the decrease in related staff costs such as salaries of doctors, sales consultants and customer services.

Gross Profit. Gross profit was $15,186,622 in the six months ended December 31, 2009, compared to $22,774,308 in the 2008 comparable period. As a percentage of revenue, gross profit decreased to 72.8% in the quarter ended December 31, 2009 from 78.1% in the 2008 quarter. We attribute this decrease primarily to the increase in the percentage of cost of revenue to revenue during the relevant period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $17,800,390 in the six months ended December 31, 2009, compared to $21,554,028 in the six months ended December 31, 2008, representing a decrease of $3.7 million or 17%. This decrease was primarily due to less advertising. As a percentage of revenue, selling, general and administrative expenses increased to 85.3% in the six months ended December 31, 2009 from 73.9% in the six months ended December 31, 2008. We attribute this increase primarily to the decrease in revenue during the six months ended December 31, 2009being more than the decrease in selling, general and administrative expenses.

Other Income and (Expenses). Other income and expenses was net expenses of $322,495 in the six months ended December 31, 2009, compared to other net income of $50,867 in the six months ended December 31, 2008. As a percentage of revenue, other income and expenses was (1.5%) in the six months ended December 31, 2009 and 0.2% in the six months ended December 31, 2008. The 1.7% decrease in the other income and expenses in six months ended December 31, 2009 is primarily attributable to the increase in interest expenses that resulted from additional borrowings and higher interest rates on our Australian dollar borrowings.

Net Income Before Income Tax and Income Tax Expenses. Net income before income tax was ($2,971,640) in the six months ended December 31, 2009, compared to $1,037,866 in the six months ended December 31, 2008. The decrease is primarily attributable losses generated in our UK operations in the six months ended December 31, 2009.

Income tax expenses were $459,035 in the six months ended December 31, 2009 compared to $536,287 in the six months ended December 31, 2008. As a percentage of revenue, income tax expense increased to 2.9% in the six months ended December 31, 2009 from 1.9% in the six months ended December 31, 2008. The increase is primarily attributable to the decrease in revenue in the six months ended December 31, 2009.

Net Income. Net income was ($3,430,675) in the six months ended December 31, 2009, compared to $501,579 in the six months ended December 31, 2008. The decrease in net income is primarily attributable to losses generated in our UK operations for the six months ended December 31, 2009.

Net income in our Australian operations was $1,050,550 in the six months ended December 31, 2009, compared to $1,237,646 in the six months ended December 31, 2008. The decrease is primarily attributable to the decrease in revenue in AMI Australia in the six months ended December 31, 2009.

THREE MONTHS ENDED DECEMBER 31, 2009 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2008

Revenue. Revenue was $6,363,028 in the three months ended December 31, 2009, compared to $13,210,997 in the three months ended December 31, 2008, a decrease of $6,847,969, or 52%. We attribute this decrease primarily to the decrease in the number of patients purchasing our programs which is due to difficult economic conditions and a reduction in the advertising and promotion of our programs in Australia during the relevant period and the significant provision for doubtful debt on our UK operation.

Our unearned revenue as at December 31, 2009 was $7,146,073 compared to $8,003,468 as at June 30, 2009. The gross decrease in unearned revenue from the three months ended December 31, 2008 to the three months ended December 31, 2009 was $857,395, or a decrease of 10.7%. The decrease in unearned revenue in the three-month period is primarily attributed to fewer new patients during the quarter ended December 31, 2009.

Revenue in our PE treatments has decreased by $4,700,957 or 77.8% to $1,343,510, and revenue in our ED treatments decreased by $1,963,126 or 28.7% to $4,888,236, in the three months ended December 31, 2009, compared to the three months ended December 31, 2008. We attribute the decrease in revenue in our PE and ED treatments to the decrease in the number of patients and the significant provision for doubtful debt on our UK operation. Revenue in our prostate treatments has decreased by $409,302 or 77.8%, to $116,885, in the three months ended December 31, 2009, compared to the three months ended December 31, 2008. We attribute the decrease in revenue in our prostate treatments to decreases in the number of patients.

Revenue in our Australian operations was $8,697,719 in the three months ended December 31, 2009, compared to $9,734,524 in the three months ended December 31, 2008. Compared to the same period in the previous year, there is a decrease of $1,036,805, or 10.6%, in the three months ended December 31, 2009. The decrease in the three-month period ended December 31, 2009 is primarily attributable to the decrease in the number of patients purchasing our programs which is due to difficult economic condition and a reduction in the advertising and promotion of our programs in Australia during the relevant period.

Cost of Revenue. Cost of revenue was $2,392,886 in the three months ended December 31, 2009, compared to $2,789,937 in the three months ended December 31, 2008. The decrease in cost of revenue was attributable to a decrease in the medication cost incurred by AMI Australia. As a percentage of revenue, cost of revenue was 37.6% in the three months ended December 31, 2009, compared to 21.1% in the three months ended December 31, 2008. We attribute this increase primarily to the decrease in revenue during the relevant period being more than the decrease in related staff costs such as salaries of doctors, sales consultants and customer services.

Gross Profit. Gross profit was $3,970,142 in the three months ended December 31, 2009, compared to $10,421,060 in the 2008 comparable period. As a percentage of revenue, gross profit decreased to 62.4% in the quarter ended December 31, 2009 from 78.9% in the 2008 quarter. We attribute this decrease primarily to the increase in the percentage of cost of revenue to revenue during the relevant period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $8,025,415 in the three months ended December 31, 2009, compared to $9,800,763 in the three months ended December 31, 2008. As a percentage of revenue, selling, general and administrative expenses increased to 126.1% in the three months ended December 31, 2009 from 74.2% in the three months ended December 31, 2008. The increase in the three months ended December 31, 2009 is primarily attributable to the decrease in revenue during the relevant period.

Other Income and (Expenses). Other income and expenses was a net expense of ($170,209 in the three months ended December 31, 2009, compared to other net income of $67,356 in the three months ended December 31, 2008. As a percentage of revenue, other income and expenses was (2.7%) in the three months ended December 31, 2009 and 0.5% in the three months ended December 31, 2008. The 3.2% decrease in the other income and expenses in 2009 is primarily attributable to the increase in interest expenses that resulted from additional borrowings and higher interest rates on our Australian dollar borrowings.

Net Income Before Income Tax and Income Tax Expenses. Net income before income tax was ($4,237,525) in the three months ended December 31, 2009, compared to $549,373 in the three months ended December 31, 2008. The decrease is primarily attributable to losses generated in our UK operations in the three months ended December 31, 2009.

Income tax expenses were $9,702 in the three months ended December 31, 2009 compared to $162,440 in the three months ended December 31, 2008. As a percentage of revenue, income tax expense decreased to 0.1% in the three months ended December 31, 2009 from 1.3% in the three months ended December 31, 2008. The decrease is primarily attributable the decrease in revenue in the three months ended December 31, 2009.

Net Income . Net income was ($4,247,227) in the three months ended December 31, 2009, compared to $386,933 in the three months ended December 31, 2008. The decrease is primarily attributable to losses generated in our UK operations in the three months ended December 31, 2009.

Net income in our Australian operations was $20,079 in the three months ended December 31, 2009, compared to $361,461 in the three months ended December 31, 2008. The decrease is primarily attributable the decrease in revenue in the three months ended December 31, 2009.

OFF-BALANCE SHEET ARRANGEMENTS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a a “smaller reporting company” ~~as defined by Item 10 of Regulation S-K~~, ~~the Company~~we isare not required to provide this information.

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ITEM 4T. CONTROLS AND PROCEDURES

~~Disclosure~~(a) Evaluation of Disclosure Controls and Procedures

~~Under the~~Our ~~supervision~~management, ~~and~~ with the participation of our ~~management, including our~~ principal executive officer and principal financial officer, ~~the~~has ~~Company conducted~~evaluated anthe ~~evaluation~~effectiveness of ~~the~~our ~~effectiveness,~~disclosure controls and procedures (as ofsuch ~~the~~term ~~end~~is ofdefined ~~the~~in ~~period~~Rules 13a-15(e) and 15(d) – ~~covered~~15(e) byunder ~~this~~the Securities ~~report,~~Exchange Act of ~~our~~1934, ~~disclosure~~as ~~controls~~amended ~~and~~(the "Exchange ~~procedures~~Act"), as ~~such~~of ~~term is~~the ~~defined~~end inof ~~Exchange~~the ~~Act~~period ~~Rule~~covered ~~13a-15(e)~~by this report. Based on ~~this~~such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such ~~date~~period, ~~the~~our ~~Company’s~~ disclosure controls and procedures are effective toin ~~ensure~~recording ~~that~~processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in ~~our~~ ~~Exchange~~reports ~~Act~~we ~~reports~~file isor ~~recorded,~~submit ~~processed,~~under ~~summarized,~~the Exchange Act and ~~reported~~are ~~within~~effective ~~the~~in ensuring ~~time~~that ~~periods~~information ~~specified~~required into ~~the~~be ~~SEC’s~~disclosed ~~rules and~~by ~~forms,~~us ~~and~~in reports that ~~such~~we file or ~~information~~submit under the Exchange Act is accumulated and communicated to ~~our~~ management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding ~~required~~ disclosure.

(b) Changes in internal controls over financial reporting.

~~Not~~During ~~applicable~~the second quarter of 2009, in connection with our evaluation of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, we concluded that there were no changes in our internal control procedures that materially affected, or are reasonably likely to materially affect, our internal control our financial reporting.

PART II - OTHER INFORMATION

~~ITEM~~Item 1. ~~LEGAL~~Legal ~~PROCEEDINGS~~Proceedings.

Please see Note 8 to our financial statements above.

~~ITEM~~Item 1A. ~~RISK~~Risk ~~FACTORS~~Factors

~~There~~As a ~~have~~“smaller ~~been~~reporting ~~no material changes in our business~~company”, ~~operations~~we orare ~~prospects~~not ~~that would~~required ~~require a change~~ to ~~the~~provide ~~Risk Factor disclosure included in our most recent~~this ~~Annual Report on Form 10-K for the year ended June 30, 2009 that have not already been disclosed~~information.

~~ITEM~~Item 62. ~~EXHIBITS~~Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable for this quarterly report.

Item 3. Defaults upon Senior Securities.

Not applicable for this quarterly report.

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

Not applicable for this quarterly report.

Item 5. Other Information.

Not applicable for this quarterly report.

Item 6. Exhibits.

The following exhibits are filed as part of this report:

Exhibit Number		Description
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 Chief 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 and the Chief Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
32		Certification of Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

InPursuant ~~accordance~~to ~~with~~ the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 23, 2009	By:	/s/ Jacov (Jack) Vaisman
	ADVANCED MEDICAL INSTITUTE INC.
		Jacov (Jack) Vaisman
Date: March 3, 2010	By:	/s/ Jacov (Jack) Vaisman
		Chief Executive Officer
		Jacov (Jack) Vaisman
		Chief Executive Officer

23By: /s/ Dilip Shrestha Dilip Shrestna Chief Financial Officer

Exhibit Index

Exhibit Number		Description
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 Chief 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 and the Chief Financial Officer ~~Pursuant~~pursuant ~~to 18 U.S.C. 1350 (~~Section 906 of the Sarbanes-Oxley Act of 2002).

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