ADVANCED MEDICAL ISOTOPE Corp (Form: 10-K/A, Received: 12/02/2011 16:12:22)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K /A

(Amendment No. 1)

ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

Commission file number: 0-53497

(Exact name of registrant as specified in charter)

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

6208 W Okanogan Ave, Kennewick WA 99336

(Address of principal executive offices) (Zip Code)

(509) 736-4000

Registrant's telephone Number:

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 Par Value

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

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

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference.

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

Large Accelerated Filer	o	Accelerated Filer	o

Non-Accelerated Filer	o	Smaller Reporting Company	x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on December 31, 2010 based on the price at which the common equity was last sold on such date was approximately $13,215,345. Shares of common stock held by each officer and director and by each person who owns 10% or more of the outstanding common stock of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. Without acknowledging that any individual director of registrant is an affiliate, all directors have been included as affiliates with respect to shares owned by them.

As of March 1, 2011, there were 68,134,150 shares of the registrant’s Common Stock outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on March 1, 2011, is to respond to a comment letter received from the staff of the Securities and Exchange Commission. Specifically, the following items are being amended:

(i) Item 8 – Financial Statements and Supplementary Data, in which our auditor’s report on page F-2 is amended to add a sentence that the issues referenced in the last paragraph of the auditor’s report raise substantial doubt about our ability to continue as a going concern. No other changes are being made to the financial statements as previously filed in our Form 10-K report;

(ii) Item 9(A)(T) – Controls and Procedures, is amended on page 4 to include management’s conclusion that, because of a previously disclosed material weakness in internal control over financial reporting (which was first identified in our Form 10-K/A amended annual report for the year ended December 31, 2008), our disclosure controls and procedures and our internal control over financial reporting were ineffective as of December 31, 2010;

(iii) Item 11 – Executive Compensation, in which the summary compensation table on page 5 is amended to move two payments, referenced in footnote (1) to that table, from the “salary” column to the “bonus” column; and

(iv) Item 15 – Exhibits, in which certain additional exhibits numbered 10.8 through 10.10 have been filed, and certain minor and conforming changes have been made to this item.

In addition, in Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, the table for Equity Compensation Plan Information on page 3 has been changed to correctly reflect as of December 31, 2010 the shares issuable under equity compensation plans not approved by stockholders and the weighted average exercise price of the outstanding compensatory options as of that date.

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, we have filed the following additional exhibits under Item 15:

31.3

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002;

31.4

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002; and

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. SECTION 1350.

Except as described above, no other amendments have been made to our Form 10-K report as filed on March 1, 2011, and this Amendment No. 1 to our Annual Report on Form 10-K does not reflect the occurrence of any events after that date. Accordingly, this Amendment No. 1 should be read in conjunction with our original Form 10-K report and our other reports filed with the Securities and Exchange Commission after the filing of our original Form 10-K report, including any amendments to those filings.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is traded on the OTC Bulletin Board under the symbol “ADMD.OB.” The following table sets forth, in U.S. dollars the high and low bid prices for each of the calendar quarters indicated, as reported by the Bulletin Board for the past two fiscal years. The prices in the table may not represent actual transactions and do not include retail markups, markdowns or commissions.

	Company Common Stock Bid Prices
	High		Low
2010
Quarter ended December 31	$	0.48	$	0.11
Quarter ended September 30		0.23		0.09
Quarter ended June 30		0.47		0.14
Quarter ended March 31		0.57		0.20

2009
Quarter ended December 31	$	0.65	$	0.29
Quarter ended September 30		0.39		0.18
Quarter ended June 30		0.35		0.21
Quarter ended March 31		0.50		0.27

Holders

As of March 1, 2011 there were 68,134,150 shares of common stock outstanding and approximately 180 stockholders of record.

Dividend Policy

We have not paid any cash dividends on our common stock to date and do not anticipate we will pay dividends in the foreseeable future. The payment of dividends in the future will be contingent upon revenues and earnings, if any, capital requirements, and our general financial condition. The payment of any dividends will be within the discretion of the then Board of Directors. It is the present intention of the Board of Directors to retain all earnings, if any, for use in the business operations. Accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. - continued

Securities Authorized for Issuance Under Equity Compensation Plans

We currently do not have any compensation plan under which equity securities are authorized for issuance. We have however granted and issued options and warrants to purchase and acquire shares of our common stock. The following table sets forth information as of December 31, 2010 , with respect to our equity compensation plans previously approved by shareholders and equity compensation plans not previously approved by shareholders.

	Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)			(b)			(c)
Equity compensation plans approved by stockholders		0		$	0			0
Equity compensation plans not approved by stockholders		3,455,000		$	0.45			0
Total		3,455,000	(1)	$	0.45	(1)		0

(1) This information is provided in conjunction with the instructions to Paragraph (d) as required for Item 201 of Regulation S-K. While there are no equity compensation plans in general, the Company does have individual compensation arrangements under which equity securities are authorized for issuance in exchange for consideration in the form of goods or services of certain individuals.

Recent Sales of Unregistered Securities

In October 2010 the Company issued 551,632 restricted shares of its common stock in exchange for services of $56,698 and accrued liabilities of $68,250. No underwriters were used. The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

In December 2010 the Company issued 5,784,792 restricted shares of its common stock in exchange for a conversion of $825,000 in convertible notes plus $70,138 of accrued interest. No underwriters were used. The securities and convertible note were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act and Regulation D promulgated pursuant thereto.

Subsequent to the Period Covered by this Report

In January 2011 the Company issued 102,000 restricted shares of its common stock in exchange for services of $30,600. No underwriters were used. The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

In January 2011 the Company issued 156,167 restricted shares of its common stock for liabilities accrued as of December 31, 2010. No underwriters were used. The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

In February 2011 the Company issued 60,000 restricted shares of its common stock in exchange for services of $18,000. No underwriters were used. The securities were issued pursuant to an exemption from registration provided under Section 4(2) of the Securities Act of 1933.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

All financial information required by this Item is attached hereto at the end of this report beginning on page F-1 of Exhibit FS .1 and is hereby incorporated by reference.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Based on an evaluation as of the date of the end of the period covered by report, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, because of a previously disclosed material weakness in our internal control over financial reporting , our disclosure controls and procedures were ineffective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of the internal control over financial reporting as of December 31, 2010, using the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result of management’s assessment, management has determined that there is a material weakness due to the lack of segregation of duties and, due to this material weakness, management concluded that, as of December 31, 2010, our internal control over financial reporting was ineffective. This material weakness was first identified in our Form 10-K/A amended annual report for the year ended December 31, 2008 . In order to address and resolve this weakness we will endeavor to locate and appoint additional qualified personnel to the board of directors and pertinent officer positions as our financial means allow. To date, our limited financial resources have not allowed us to hire the additional personnel necessary to address this material weakness.

Additionally, as a result of management’s assessment, management has determined that there is a significant deficiency with regard to the lack of a backup process for electronic financial information. There is no stored backup offsite or in a media safe, and as such, there are no regularly run test restorations of said financial information. In order to address and resolve this deficiency we are currently researching the options available given our financial means to have a regularly scheduled and dependable offsite backup of our Company records.

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

ITEM 9A(T). CONTROLS AND PROCEDURES. - continued

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(a)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

(b)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

(c)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation paid to our Chief Executive Officer and those executive officers that earned in excess of $100,000 during the twelve month periods ended December 31, 2010 and 2009 (collectively, the “Named Executive Officers”):

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Total ($)

James C. Katzaroff,	2010	$	439,489	$	-	$	-	$	-	$	439,489
CEO and Chairman	2009	$	113,150	$	-	$	-	$	-	$	113,150

L. Bruce Jolliff,	2010	$	100,000	$	121,688	$	-	$	-	$	221,688
CFO (1)	2009	$	100,000	$	30,000	$	-	$	-	$	130,000

Fu-Min Su,	2010	$	95,000	$	3,654	$	-	$	-	$	98,654
Chief Radiochemist	2009	$	90,000	$	5,000	$	19,500	$	-	$	114,500

(1)

Mr. Jolliff received the additional $121,688 and $30,000 in 2010 and 2009, respectively, to compensate him for additional duties he performed that were not contemplated in his employment contract.

Narrative Disclosure to Summary Compensation Table

We have employment agreements with L. Bruce Jolliff and Fu-Min Su that determine the compensation paid to each of them. Our Chief Executive Officer, James C. Katzaroff, does not have a written employment agreement and therefore no structured amount or schedule of pay so no accruals are made for his compensation. In 2009 and 2010, he received $113,150 and $439,489, respectively, in salary. During the period of limited liquidity for the Company the CEO had taken limited compensation.

We paid bonuses to certain employees based on their performance, our need to retain such employees and funds available. All bonus payments were approved by our board of directors.

ITEM 11. EXECUTIVE COMPENSATION - continued

Narrative Disclosure to Summary Compensation Table - continued

Employment Agreement with L. Bruce Jolliff

In August 2007, Mr. Jolliff signed an employment agreement with the Company and will receive a salary of $100,000 per year. He also received 1,500,000 options (500,000 options per year beginning in August 2008) to purchase the Company’s common stock at $0.50. Mr. Jolliff received bonuses in the amount of $121,688 and $30,000 for the twelve months ended December 31, 2010 and 2009, respectively.

The Company may terminate the agreement without cause at any time upon 30 days' written notice. Upon termination, the Company will pay Mr. Jolliff a severance allowance of two month’s salary.

Employment Agreement with Dr. Fu Min-Su

In January 2008, the Company entered into a five-year employment agreement with Dr. Fu Min-Su pursuant to which the Company agreed to pay Dr. Fu Min-Su an annual salary equal to $90,000 which was increased to $95,000 January 1, 2010.

In the event the employment is terminated by the Company without cause, by Dr. Fu Min-Su for good reason or a change in control, the Company will have to provide Dr. Fu Min-Su with one month of his base salary and any portion of an annual bonus allocated by the Board of Directors, disability and other welfare plan benefits for a period of one year from the date of termination and pro-rated vesting of all outstanding options, stock grants, shares of restricted stock and any other equity incentive compensation; provided, that the stock options shall be exercisable only until the earlier to occur of (A) two years from the date of the termination, or (B) the date the option would have otherwise expired if Dr. Fu Min-Su had not terminated employment.

During the term of the employment agreement, including any extension thereof, and for a period of one year thereafter, Dr. Fu Min-Su shall not provide services that he provides for the Company for a business in the production, import for resale, and distribution of radioisotopes for use in the medical industries.

Outstanding Equity Awards

The following table sets forth all outstanding equity awards held by our Named Executive Officers as of the end of last fiscal year.

Name	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Unearned Options (#) Unexercisable	Option Exercise Price ($)		Option Expiration Date
James C. Katzaroff	100,000	-	$	0.55	11-26-2011

L. Bruce Jolliff	1,500,000	-	$	0.50	5-16-2012
	50,000	-	$	0.55	11-26-2011

Fu-Min Su	50,000	-	$	0.55	11-26-2011

Narrative Disclosure to Outstanding Equity Awards

During May 2007, the Company granted L. Bruce Jolliff an option to purchase an aggregate of 1,500,000 shares of the Company’s common stock at an exercise price of $0.50 per share. The options vest at 500,000 shares May 2008, 500,000 shares May 2009, and 500,000 shares May 2010 and expire May 2012. The quoted market price of the common stock at the time of issuance of the options was $0.70 per share.

During November 2008, the Company granted James C. Katzaroff an option to purchase 100,000 shares and granted Fu-Min Su and L. Bruce Jolliff, each, an option to purchase 50,000 shares of the Company’s common stock. All options issued in November 2008 have an exercise price of $0.55 per share and are fully vested and expire on November 26, 2011. The quoted market price of the common stock at the time of issuance of the options was $0.51 per share.

ITEM 11. EXECUTIVE COMPENSATION - continued

Equity Compensation, Pension or Retirement Plans

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

Compensation of Directors

The following table sets forth information relating to compensation paid to our directors in 2010 and 2009:

	Fees Earned
	or Paid		Stock		Option
Name	in Cash ($)		Awards ($)		Awards ($)		Total ($)
Carlton Cadwell	$	-	$	-	$	-	$	-
William Root	$	-	$	-	$	-	$	-
Michael Korenko	$	-	$	-	$	131,000	$	131,000
Bruce Ratchford	$	-	$	-	$	12,500	$	12,500

William E. Root resigned effective May 12, 2009.

Michael Korenko resigned effective March 2, 2010.

Bruce Ratchford became a Director effective November 17, 2010.

During November 2010, the Company granted a board member options to purchase 50,000 shares of the Company’s common stock, at an exercise price of $0.40 per share. The options are fully vested and expire November 16, 2013.

There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any Director that would result in payments to such person because of his or her resignation with the Company, or its subsidiaries, any change in control of the Company. There are no agreements or understandings for any Director to resign at the request of another person. None of our Directors or executive officers acts or will act on behalf of or at the direction of any other person.

ITEM 15. EXHIBITS.

(a) Documents filed as part of this Report.

1. Financial Statements . The Balance Sheet of Advanced Medical Isotope Corporation as of December 31, 2010 and 2009, the Statements of Operations for the years ended December 31, 2010 and 2009, the Statement of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2010 and December 31, 2009, and Statements of Cash Flows for the years ended December 31, 2010 and 2009, and together with the notes thereto and the report of HJ & Associates, LLC as required by Item 8 are included in this 2010 Annual Report on Form 10-K /A as Exhibit FS .1 and is hereby incorporated by reference.

3. Exhibits . The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601of Regulation S-K. Exhibits 10.3, 10.5, 10.7 and 10.10 relate to compensatory plans or arrangements included or incorporated by reference as exhibits hereto pursuant to Item 15(b) of Form 10-K.

Exhibit
Number		Description

3.1		Certificate of Incorporation of Savage Mountain Sports Corporation dated January 11, 2000. (1)
3.2		By-Laws (1)
3.3		Articles and Certificate of Merger of HHH Entertainment Inc. and Savage Mountain Sports Corporation dated April 3, 2000. (1)
3.4		Articles and Certificate of Merger of Earth Sports Products Inc. and Savage Mountain Sports Corporation dated May 11, 2000. (1)
3.5		Certificate of Amendment of Certificate of Incorporation changing the name of the Company to Advanced Medical Isotope Corporation dated May 23, 2006. (1)
3.6		Certificate of Amendment of Certificate of Incorporation increasing authorized capital dated September 26, 2006. (1)
10.1		Agreement and Plan of Reorganization, dated as of December 15, 1998, by and among HHH Entertainment, Inc. and Earth Sports Products, Inc. (1)
10.2		Agreement and Plan of Merger of HHH Entertainment, Inc. and Savage Mountain Sports Corporation, dated as of January 6, 2000. (1)
10.3		Employment Agreement dated August 15, 2006 with William J. Stokes. (1)
10.4		Agreement and Plan of Acquisition by and between Neu-Hope Technologies, Inc., UTEK Corporation and Advanced Medical Isotope Corporation dated September 22, 2006. (1)
10.5		Employment Agreement dated May 16, 2007 with Leonard Bruce Jolliff. (1)
10.6		Agreement and Plan of Acquisition by and between Isonics Corporation and Advanced Medical Isotope Corporation dated June 13, 2007. (1)
10.7		Employment Agreement dated January 15, 2008 with Dr. Fu-Min Su. (1)
10.8		Master Lease Agreement dated September 20, 2007 between BancLeasing, Inc. and Advanced Medical Isotope Corporation, and related documents. (5)
10.9		Lease Agreement dated July 17, 2007 between Robert L. and Maribeth F. Myers and Advanced Medical Isotope Corporation. (5)
10.10		Stock Options. (5)
23.1		Consent of HJ & Associates, LLC (3)
31.1		Certification of Chief Executive Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002 (4)
31.2		Certification of Chief Financial Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002 (4)
31.3		Certification of Chief Executive Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002 (5)
31.4		Certification of Chief Financial Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002 (5)
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. SECTION 1350 (4)
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. SECTION 1350 (5)
FS		Advanced Medical Isotope Corporation Financial Statements for year ended December 31, 2010 (4)
FS.1		Advanced Medical Isotope Corporation Financial Statements for year ended December 31, 2010 (5)

(1) Incorporated by reference to the Company's Registration Statement on Form 10 as filed with the SEC on November 12, 2008.

(2) Incorporated by reference to the Company's Registration Statement on Form 10/A as filed with the SEC on February 17, 2009.

(3) Incorporated by reference to the Company's Annual Report of Form 10-K as filed with the SEC on April 15, 2009.

(4) Previously filed with the Company’s Annual Report on Form 10-K as filed with the SEC on March 1, 2011.

(5) Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to the annual report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADVANCED MEDICAL ISOTOPE CORPORATION

Date: December 2 , 2011	By:	/s/ James C. Katzaroff
		Name: James C. Katzaroff
		Title: Chief Executive Officer and Chairman
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1 to the annual report on Form 10-K/A has been signed below by the following persons on behalf or the Registrant and in the capacities and on the dates indicated.

	ADVANCED MEDICAL ISOTOPE CORPORATION

Date: December 2 , 2011	By:	/s/ James C. Katzaroff
		Name: James C. Katzaroff
		Title: Chief Executive Officer, Director and Chairman
		(Principal Executive Officer)



Date: December 2 , 2011	By:	/s/ L. Bruce Jolliff
		Name: L. Bruce Jolliff
		Title: Chief Financial Officer
		(Principal Financial and Accounting Officer)


Date: December 2, 2011	By:	/s/ Carlton Cadwell
		Name: Carlton Cadwell
		Title: Director


Date: December 2 , 2011	By:	/s/ Bruce Ratchford
		Name: Bruce Ratchford
		Title: Director

Exhibit FS .1

Advanced Medical Isotope Corporation

Index to Financial Statements

	Pages

Report of Independent Registered Public Accounting Firm for 2010 and 2009	F-2

Financial Statements:

Balance Sheets as of December 31, 2010 and 2009	F-3

Statements of Operations for the years ended December 31, 2010 and 2009	F-4

Statement of Shareholders’ Equity (Deficit) for the years ended December 31, 2010 and 2009	F-5

Statements of Changes in Cash Flow for the years ended December 31, 2010 and 2009	F-6 - 7

Notes to Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders

Advanced Medical Isotope Corporation

Kennewick, Washington

We have audited the accompanying balance sheets of Advanced Medical Isotope Corporation as of December 31, 2010 and 2009, and the related statements of operations, shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Medical Isotope Corporation as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses, used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant restructuring to sustain its operation for the foreseeable future. These issues raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of uncertainty.

HJ & Associates, LLC

Salt Lake City, Utah

March 1, 2011

F-2

Advanced Medical Isotope Corporation

Balance Sheets

ASSETS
	December 31,			December 31,
	2010			2009

Current Assets:
Cash and cash equivalents	$	589,390		$	37,562
Accounts receivable - trade		15,370			19,030
Accounts receivable - other		425,504			-
Prepaid expenses		46,975			-
Prepaid expenses paid with stock, current portion		89,949			151,432
Inventory		1,400			1,550
Total current assets		1,168,588			209,574

Fixed assets, net of accumulated depreciation		1,211,664			1,970,113

Other assets:
License fees, net of amortization		16,390			2,083
Patents		219,803			106,476
Prepaid expenses paid with stock, long-term portion		21,875			103,125
Deposits		5,406			158,171
Total other assets		263,474			369,855

Total assets	$	2,643,726		$	2,549,542

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses	$	591,416		$	622,713
Accrued interest payable		245,105			131,264
Payroll liabilities payable		13,229			20,047
Deferred income		1,191,492			-
Loans from shareholder		126,508			163,275
Convertible notes payable		2,006,128			1,581,504
Current portion of capital lease obligations		405,338			1,839,418
Total current liabilities		4,579,216			4,358,221

Long term liabilities:
Capital lease obligations, net of current portion		1,029,171			-
Total liabilities		5,608,387			4,358,221

Shareholders’ Equity (Deficit):
Common stock, $.001 par value; 100,000,000 shares authorized;
67,917,983 and 52,128,817 shares issued and outstanding,
respectively		67,918			52,129
Paid in capital		18,299,253			15,415,998
Accumulated deficit		(21,331,832	)		(17,276,806	)
Total shareholders’ equity (deficit)		(2,964,661	)		(1,808,679	)

Total liabilities and shareholders’ equity (deficit)	$	2,643,726		$	2,549,542

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

F-3

Advanced Medical Isotope Corporation

Statements of Operations

	Years ended
	December 31,
	2010			2009

Revenues	$	360,613		$	320,363
Cost of goods sold (exclusive of depreciation, shown separately below)		70,130			125,685
Gross profit		290,483			194,678

Operating expenses
Sales and marketing expenses		29,072			6,627
Depreciation and amortization expense		545,192			562,671
Impairment expense		150,000			-
Professional fees		1,492,883			766,861
Stock options granted		400,535			480,024
Payroll expenses		853,641			433,175
General and administrative expenses		544,499			494,969
Total operating expenses		4,015,822			2,744,327

Operating loss		(3,725,339	)		(2,549,649	)

Non-operating income (expense):
Interest expense		(860,252	)		(839,627	)
Loss on sale of assets		(10,000	)		-
Net gain (loss) on settlement of debt		27,500			(602,718	)
Recognized income from grants		512,466			-
Interest income		599			-
Non-operating income (expense), net		(329,687	)		(1,442,345	)

Loss before Income Taxes		(4,055,026	)		(3,991,994	)

Income Tax Provision		-			-

Net loss		(4,055,026	)	$	(3,991,994	)

Loss per common share	$	(0.07	)	$	(0.08	)

Weighted average common shares outstanding		56,172,887			48,168,743

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

F-4

Advanced Medical Isotope Corporation

Statements of Changes in Shareholders’ Equity (Deficit)

	Series A Preferred
	Stock						Common Stock				Paid in Capital		Accumulated
	Shares			Amount			Shares		Amount		Paid in Capital		Deficit			Total

Balances at December 31, 2008		95,000		$	95			36,778,612	$	36,779	$	9,546,087	$	(13,284,812	)	$	(3,701,851	)

Common stock issued for:
Cash		-			-			2,396,920		2,397		452,803		-			455,200
Services & other		-			-			1,629,583		1,629		541,738		-			543,367
Loan fees on convertible debt		-			-			466,560		467		157,379		-			157,846

Convert 95,000 convertible
preferred shares ($.351
per share)		(95,000	)		(95	)		10,857,142		10,857		3,800,095		-			3,810,857
Stock options granted for
payables		-			-			-		-		237,000		-			237,000
Intrinsic value of convertible
debt issued		-			-			-		-		200,872		-			200,872
Vesting of stock options		-			-			-		-		480,024		-			480,024
Net loss		-			-			-		-		-		(3,991,994	)		(3,991,994	)

Balances at December 31, 2009		-		$	-			52,128,817	$	52,129	$	15,415,998	$	(17,276,806	)	$	(1,808,679	)

Common stock issued for:
Cash		-			-			5,090,912		5,091		541,909		-			547,000
Services & other		-			-			4,106,632		4,107		969,891		-			973,998
Loan fees on convertible debt		-			-			413,080		413		186,611		-			187,024
Options exercised		-			-			250,000		250		72,250		-			72,500
Debt converted		-			-			5,928,542		5,928		946,708		-			952,636
Vesting of stock options		-			-			-		-		165,886		-			165,886
Net loss		-			-			-		-		-		(4,055,026	)		(4,055,026	)

Balances at December 31, 2010		-		$	-			67,917,983	$	67,918	$	18,299,253	$	(21,331,832	)		(2,964,661	)

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

F-5

Advanced Medical Isotope Corporation

Statements of Cash Flow

	Year ended			Year ended
	December 31, 2010			December 31, 2009
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(4,055,026	)	$	(3,991,994	)

Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation of fixed assets		539,499			537,671
Amortization of licenses and intangible assets		5,693			25,000
Amortization of convertible debt discount		410,198			526,341
Amortization of prepaid expenses paid with stock		205,233			148,397
Impairment of intangible assets		150,000			-
Common stock issued for services		843,248			182,150
Stock options issued for services		165,886			480,024
Net (gain) loss on settlement of debt		(27,500	)		602,718
Net (gain) loss on sale of fixed assets		10,000			-
Changes in operating assets and liabilities:
Accounts receivable – trade		3,660			16,717
Accounts receivable - other		(41,675	)		-
Inventory		150			5,549
Prepaid expenses		(46,975	)		3,000
Deposits		2,765			-
Accounts payable		64,453			316,114
Payroll liabilities		(6,818	)		10,949
Stock based consulting fees payable		-			10,400
Accrued interest		235,227			113,936
Deferred income		(907,663	)		-

Net cash used by operating activities		(634,319	)		(1,013,028	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used to acquire equipment		(16,050	)		(235,000	)
Cash used to acquire patents		(113,327	)		(81,882	)
Purchase of intangibles		(20,000	)		-
Sale of fixed assets		125,000			-
Net cash used in investing activities		(24,377	)		(316,882	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on Washington Trust debt		(36,767	)		(31,324	)
Principal payments on capital lease		(404,909	)		(299,435	)
Proceeds from convertible note		1,032,700			1,156,400
Proceeds from officers related party debt		-			40,800
Payments on officers related party debt		-			(40,800	)
Proceed from short term loan		60,000			-
Payment on short term loan		(60,000	)		-
Proceeds from cash sales of common shares		547,000			455,200
Proceeds from exercise of options and warrants		72,500			-
Net cash provided by financing activities	$	1,210,524		$	1,280,841

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

F-6

Advanced Medical Isotope Corporation

Statements of Cash Flow (continued)

Statements of Cash Flow – continued

Net increase (decrease) in cash and cash equivalents	$	551,828	$	(49,069	)
Cash and cash equivalents, beginning of period		37,562		86,631

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	589,390	$	37,562


Supplemental disclosures of cash flow information:
Cash paid for interest	$	204,455	$	211,167
Cash paid for income taxes	$	-	$	-

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

F-7

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 1: BASIS OF PRESENTATION

Nature of Organization

Advanced Medical Isotope Corporation (the “Company” or “AMIC”) was incorporated under the laws of Delaware on December 23, 1994 as Savage Mountain Sports Corporation (“SMSC”) for the purpose of acquiring or investing in businesses which were developing and marketing active sports products, equipment, and apparel. The Company had limited activity since inception and was considered dormant from the period May 1, 2000 through December 31, 2005. On September 6, 2006, the Company changed its name to Advanced Medical Isotope Corporation. AMIC has an authorized capital of 100,000,000 shares of Common Stock, $.001 par value per share and 100,000 of Series A Preferred Stock, $.001 par value per share.

Going Concern

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

We anticipate a requirement of $1 million in funds over the next twelve months to maintain current operation activities. In addition we anticipate a requirement of approximately $15 million in funds over the next twelve months due to the anticipation of adding additional staff in the future assuming we are successful in selling our medical isotopes and/or the start of development by us on future manufacturing sites or other projects. Currently we have $589,390 cash on hand which means there will be an anticipated shortfall of nearly the full $15 million requirement in additional funds over the next twelve months. There are currently commitments to vendors for products and services purchased, plus, the employment agreements of the CFO and other employees of the Company and our current lease commitments that will necessitate liquidation of the Company if we are unable to raise additional capital. The current level of cash is not enough to cover the fixed and variable obligations of the Company.

F-8

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 1: NATURE OF ORGANIZATION - continued

Going Concern - continued

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

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

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Cash Equivalents

For the purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivables are stated at the amount that management of the Company expects to collect from outstanding balances. Management provides for probable uncollectible amounts through an allowance for doubtful accounts. Additions to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable. Payments received subsequent to the time that an account is written off are considered bad debt recoveries. As of December 31, 2010, the Company has experienced no bad debt write offs from operations.

Inventory

Inventory is reported at the lower of cost or market, determined using the first-in, first-out basis, or net realizable value. All inventories consist of Finished Goods. The company had no Raw Materials or Work in Process.

F-9

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Fixed Assets

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

Depreciation is computed using the straight-line method over the following estimated useful lives:

Production equipment

3 to 7 years

Office equipment

2 to 5 years

Furniture and fixtures

2 to 5 years

Leasehold improvements and capital lease assets are amortized over the shorter of the life of the lease or the estimated life of the asset.

Management of the Company reviews the net carrying value of all of its equipment on an asset by asset basis whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. These reviews consider the net realizable value of each asset, as measured in accordance with the preceding paragraph, to determine whether impairment in value has occurred, and the need for any asset impairment write-down.

The types of events and circumstances that management believes could indicate impairment are as follows:

A significant decrease in the market price of a live-lived asset.

A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.

A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator.

An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset.

A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset.

A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

The fair value of assets is first determined by quoted market prices, if available. Otherwise, the estimate of fair value is based on the best information available in the circumstances, including prices for similar assets and the results of using other valuation techniques. If quoted market prices are not available a present value technique is often the best available valuation technique with which to estimate fair value. It is believed that an expected present value technique is superior to a traditional present value technique, especially in situations in which the timing or amount of estimated future cash flows is certain.

The traditional approach is useful for many measurements, especially those in which comparable assets and liabilities can be observed in the marketplace. However the traditional approach does not provide the tools needed to address some complex measurement problems, including the measurement of nonfinancial assets and liabilities for which no market for the item or a comparable item exists. The traditional approach places most of the emphasis on selection of an interest rate. A proper search for “the rate commensurate with the risk” requires analysis of at least two items – one asset or liability that exists in the marketplace and has an observed interest rate and the asset or liability being measured. The appropriate rate of interest for the cash flows being measured must be inferred from the observable rate of interest in some other asset or liability and, to draw that inference, the characteristics of the cash flows must be similar to those of the asset being measured.

Although management has made its best estimate of the factors that affect the carrying value based on current conditions, it is reasonably possible that changes could occur which could adversely affect management’s estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

F-10

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

License Fees

License fees resulted from the acquisition of a patent license, for the production of Actinium 225, from a related individual for common stock valued, at the time of acquisition, at $75,000, and from the result of the acquisition of a patent license, for a Nutron Generator, from Neu-Hope Technologies for preferred stock valued, at the time of acquisition, at $3,040,000, discounted for 4.25% incremental borrowing rate to $2,897,625. License fees are stated at cost, less accumulated amortization. Amortization of license fees is computed using the straight-line method over the estimated economic useful life of the assets.

The Company made a $10,000 investment in 2010 for a patent license regarding its technology for the production of Mo-99. In May 2010 the Company entered into a License Agreement for the Patent Rights in the area of radioisotope production using electron beam accelerator(s) for creating short lived radioisotopes such as molybdenum-99 and technetium-99 with the University of Missouri. This Agreement calls for a $10,000 nonrefundable fee paid upon execution, a royalty agreement on sales, and an equipment licensing fee on equipment sales. Additionally the Agreement calls for a milestone payment of $250,000, due and payable five years after execution of this agreement and a milestone payment of $250,000, due and payable upon reaching $50,000,000 in cumulative net sales. The $10,000 nonrefundable fee paid upon execution was capitalized as License Fees and is amortized on the straight line basis over a three year life.

The Company made a $10,000 investment in 2010 for an exclusive patent license with Battelle Memorial Institute regarding its technology for the production of Brachytherapy. In September 2010 the Company entered into a License Agreement for the Patent Rights in the area of resorbable brachytherapy seed. This Agreement calls for a $10,000 nonrefundable fee upon execution, a royalty agreement on sales and on funds received from any sublicenses. The $10,000 nonrefundable fee paid upon execution was capitalized as License Fees and is amortized on the straight line basis over a three year life. Additionally the Agreement calls for a minimum annual fee as follows:

Calendar Year	Minimum Royalties per Calendar Year
2010	$	---
2011	$	-
2012	$	2,500
2013	$	5,000
2014	$	7,500
2015	$	10,000
2016 and each calendar year thereafter	$	25,000

The Company periodically reviews the carrying values of patents and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.

Amortization is computed using the straight-line method over the estimated useful live of three years. Amortization of license fees was $5,693 and $25,000 for the years ended December 31, 2010 and 2009, respectively. Based on the license fees recorded at December 31, 2010, and assuming no subsequent impairment of the underlying assets, the remaining unamortized portion of $16,390, will be fully amortized during the year ending December 31, 2013. Future annual amortization is expected to be as follows:

Calendar Year	Annual Amortization
2011	$	6,666
2012	$	6,666
2013	$	3,056

F-11

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Patents

Patent filing costs totaling $113,326, and $81,882, were capitalized during the twelve months ended December 31, 2010, and 2009; resulting in a total $219,803 of capitalized patents at December 31, 2010. The patents are pending and are being developed, as such, they are not being amortized. Management has determined that the economic life of the patents to be 10 years and amortization, over such 10-year period and on a straight-line basis, will begin once the patents have been issued and the Company begins utilization of the patents through production and sales, resulting in revenues. The Company evaluates the recoverability of intangible assets, including patents on a continual basis. Several factors are used to evaluate intangibles, including, but not limited to, management’s plans for future operations, recent operating results and projected and expected undiscounted future cash flows.

Revenue Recognition

The Company recognized revenue related to product sales when (i) persuasive evidence of the arrangement exists, (ii) shipment has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

Revenue for the fiscal year ended December 31, 2009 consisted of both the sales of Oxygen 18 (staple isotope) and Flouride 18. Revenue for the fiscal year ended December 31, 2010 consisted of the sales of Flouride 18 and Consulting Revenue. The Company recognizes revenue once an order has been received and shipped to the customer or services have been performed. Prepayments, if any, received from customers prior to the time products are shipped are recorded as deferred revenue. In these cases, when the related products are shipped, the amount recorded as deferred revenue is recognized as revenue. The Company does not accrue for sales returns and other allowances as it has not experienced any returns or other allowances.

Income from Grants

Government grants are recognized when all conditions of such grants are fulfilled or there is reasonable assurance that they will be fulfilled. The Company has chosen to recognize income from grants as it incurs costs associated with those grants, and until such time as it recognizes the grant as income those funds received will be classified as Deferred Income on the balance sheet.

For the twelve months ended December 31, 2010 the Company recognized $23,508 of the $1,215,000 Department of Energy grant as income with the remaining $1,191,492 recorded as deferred income as of December 31, 2010. The $23,508 recognized as of December 31, 2010 was for costs incurred for the twelve months ended December 31, 2010.

The Company fully recognized the $244,479 grant money received on both the Molybdenum tax grant and the Brachytherapy tax grant as income in the twelve months ended December 31, 2010.

As of December 31, 2010 the grant money received and grant money recognized as income and deferred income is:

	$1,215,000 Brachytherapy Grant		$244,479 Molybdenum Grant		$244,479 Brachytherapy Grant		Total
Grant money received	$	1,215,000	$	205,129	$	-	$	1,420,129
Grant money recorded as account receivable		-		39,350		244,479		283,829
Total grant money		1,215,000		244,479		244,479		1,703,958
Recognized income from grants		23,508		244,479		244,479		512,466
Deferred income	$	1,191,492	$	-	$	-	$	1,191,492

F-12

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Net Loss Per Share

The Company accounts for its income (loss) per common share by replacing primary and fully diluted earnings per share with basic and diluted earnings per share. Basic earnings/loss per share is computed by dividing income (loss) available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period, and does not include the impact of any potentially dilutive common stock equivalents since the impact would be anti-dilutive. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued.

Securities, all of which represent common stock equivalents, that could be dilutive in the future as of December 31, 2010 and 2009 are as follows:

	December 31, 2010		December 31, 2009
Convertible debt		4,775,415		5,150,333
Common stock options		9,295,912		5,049,327
Total potential dilutive securities		14,071,327		10,199,660

Research and Development Costs

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

The Company incurred $1,168,422, and $67,006 research and development costs for the years ended December 31, 2010, and 2009, respectively, all of which were recorded in our operating expenses noted on the income statements for the years then ended.

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred except for the cost of tradeshows which are deferred until the tradeshow occurs. There were no tradeshow expenses incurred and not expensed as of the year ended December 31, 2009. There were $12,675 tradeshow expenses incurred and not expensed as of the year ended December 31, 2010 which are prepayment costs for 2011 tradeshow expenses. During the twelve months ended December 31, 2010 and 2009 the Company incurred $1,750 and $1,750, respectively, in advertising costs.

Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of product sales.

Legal Contingencies

In the ordinary course of business, the Company is involved in legal proceedings involving contractual and employment relationships, product liability claims, patent rights, and a variety of other matters. The Company records contingent liabilities resulting from asserted and unasserted claims against it, when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. The Company discloses contingent liabilities when there is a reasonable possibility that the ultimate loss will exceed the recorded liability. Estimated probable losses require analysis of multiple factors, in some cases including judgments about the potential actions of third-party claimants and courts. Therefore, actual losses in any future period are inherently uncertain. Currently, the Company does not believe any probable legal proceedings or claims will have a material impact on its financial position or results of operations. However, if actual or estimated probable future losses exceed the Company’s recorded liability for such claims, it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred.

F-13

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Income Taxes

To address accounting for uncertainty in tax positions, the Company clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company also provides guidance on de-recognition, measurement, classification, interest, and penalties, accounting in interim periods, disclosure and transition.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and Delaware. The Company did not have any tax expense for the years ended December 31, 2010 and 2009. The Company did not have any deferred tax liability or asset on its balance sheet on December 31, 2010 and 2009.

Interest costs and penalties related to income taxes, if any, will be classified as interest expense and general and administrative costs, respectively, in the Company's financial statements. For the years ended December 31, 2010 and 2009, the Company did not recognize any interest or penalty expense related to income taxes. The Company believes that it is not reasonably possible for the amounts of unrecognized tax benefits to significantly increase or decrease within the next 12 months.

Fair Value of Financial Instruments

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

Stock-Based Compensation

The Company recognizes in the financial statements compensation related to all stock-based awards, including stock options, based on their estimated grant-date fair value. The Company has estimated expected forfeitures and is recognizing compensation expense only for those awards expected to vest. All compensation is recognized by the time the award vests.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements that the Company believes are applicable or would have a material impact on the consolidated financial statements of the Company.

F-14

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 3: ACCOUNTS RECEIVABLE - OTHER

Accounts receivable – other consist of the following at December 31, 2010 and 2009:

	December 31, 2010		December 31, 2009
Balance due on sale of fixed asset	$	125,000	$	-
Reimbursable expenses		16,675		-
Grant proceeds received February 2011		283,829		-


	$	425,504	$	-

NOTE 4: FIXED ASSETS

Fixed assets consist of the following at December 31, 2010 and 2009:

	December 31, 2010			December 31, 2009
Production equipment	$	2,116,627		$	2,113,218
Production equipment, not in use		-			235,000
Building		446,772			446,772
Leasehold improvements		3,235			3,235
Office equipment		32,769			20,128
		2,599,403			2,818,353
Less accumulated depreciation		(1,387,739	)		(848,240	)
	$	1,211,664		$	1,970,113

Accumulated depreciation related to fixed assets is as follows:

	December 31, 2010		December 31, 2009
Production equipment	$	1,098,194	$	675,403
Production equipment, not in use		-		-
Building		273,531		164,119
Leasehold improvements		2,054		7,411
Office equipment		13,960		1,370
	$	1,387,739	$	848,240

Depreciation expense for the above fixed assets for the years ended December 31, 2010 and 2009, respectively, was $539,499 and $537,671.

The Company had paid an upfront fee of $150,000 towards the upgrade of its linear accelerator purchased in 2008. This fee was for the eventual upgrade of the accelerator from a 7.5 MeV to a 10 MeV accelerator. Because the Company has not yet completed this upgrade and is unsure as to whether it intends to complete the upgrade in the near term, it has chosen to write off the $150,000 as impairment expense in the twelve months ended December 31, 2010.

F-15

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 5: INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 2010 and December 31, 2009:

	December 31, 2010			December 31, 2009
License Fee	$	95,000		$	75,000
Less accumulated amortization		(78,610	)		(72,917	)
		16,390			2,083
Patents		219,803			106,476
Intangible assets net of accumulated amortization	$	236,193		$	108,559

Amortization expense for the above intangible assets for the years ended December 31, 2010 and 2009, respectively, was $5,693 and $25,000.

NOTE 6: RELATED PARTY TRANSACTIONS

Indebtedness from Related Parties

The Company had a $200,000 revolving line of credit with Washington Trust Bank that was to expire in September 2009. The Company had $199,908 in borrowings under the line of credit as of October 28, 2008 at which time it was paid off and replaced with a loan from two of the major shareholders. The loan calls for $4,066 monthly payments, including 8% interest, beginning November 30, 2008, with a balloon payment for the balance at October 31, 2009 at which time the loan was extended for one year with a balloon payment for the balance due at October 31, 2010, at which time the loan was extended for one year with a balloon payment for the balance due at October 31, 2011. There is no security held as collateral for this loan. As of December 31, 2010, the balance was $126,508 and all payments were current on this shareholder loan.

During the first three months of 2009 the Company received a total of $22,800 from a shareholder and officer in the form of a loan and the Company repaid the entire balance in April 2009. There was no interest obligation on this loan to the Company.

The Company issued various shares of common stock and convertible promissory notes during the twelve months ended December 31, 2010 and 2009 from a director and major shareholder. The details of these transactions are outlined in NOTE 12 STOCKHOLDERS EQUITY - Common Stock Issued for Convertible Debt .

F-16

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 6: RELATED PARTY TRANSACTIONS - continued

Rent Expenses

On August 1, 2007 the Company began renting office and warehouse space, known as the Production Facility, located in Kennewick, Washington from a shareholder holding less that 5% of the total shares outstanding. The lease agreement calls for monthly rental payments starting at $3,500, increasing every August 1st until they become $4,762 as of August 1, 2011. During the years ended December 31, 2010 and 2009 the Company incurred rent expenses for this facility totaling $50,622 and $46,872, respectively. In addition, the lease agreement called for the issuance of $187,500 in common stock valued at $0.40 per share for a total of 416,667 shares. The company recognized the issuance of all 416,667 shares in 2007 and will amortize the $187,500 value of that stock over the sixty month term of the lease. For the years ended December 31, 2010 and 2009 the Company amortized $37,500 and $37,500 of this stock issuance and recognized it as rent expense. Additionally, during the years ended December 31, 2010 and 2009 the Company recognized an additional rent expense of $20,125 and $11,625. Respectively, for additional shares issued to the Company’s landlord.

Additionally, in June 2008, the Company entered into two twelve month leases for its corporate offices with three four month options to renew but in no event will the lease extend beyond December 31, 2010. Subsequent to December 31, 2010 the Company is renting this space on a month to month basis. The lease agreement calls for monthly rental payments of $2,733 and $2,328 per month for two separate office areas. Effective November 1, 2009 the Company terminated the portion of the lease consisting of the $2,328 rental payment per month. During the years ended December 31, 2010 and 2009 the Company incurred rent expenses for this facility totaling $32,800 and $56,076, respectively.

The Company purchased a used Cyclotron April 2009 and paid storage fees from that time until it was sold November 2010. The storage fees began at $2,050 per month until December 2009 when they were increased to $5,600 per month. Storage fees for the Cyclotron were $32,800 and $56,076 for the twelve months ended December 31, 2010 and 2009, respectively.

Future minimum rental payments required under the Company’s current rental agreements in excess of one year as of December 31, 2010, are as follows:

	Production
	Facility
Twelve months ended December 31, 2011	$	54,672
Twelve months ended December 31, 2012		33,332
Twelve months ended December 31, 2013		-
Twelve months ended December 31, 2014		-
Total	$	88,004

Rental expense for the years ended December 31, 2010 and 2009 consisted of the following:

	Year ended December 31, 2010		Year ended December 31, 2009
Office and warehouse space	$	50,622	$	46,872
Rental expense in the form of stock issuance		57,625		49,125
Corporate office		32,800		56,076
Cyclotron storage		47,500		27,900
Total Rental Expense	$	188,547	$	179,973

F-17

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 7: COMMITMENTS AND CONTINGENCIES

On September 27, 2006, the Company acquired the assets of Neu-Hope Technologies, Inc (“NHTI”), a Florida corporation and a subsidiary of UTEK Corporation (“UTEK”), a Delaware Corporation. We did not have a relationship with UTEK before the acquisition of Neu Hope Technologies and we do not currently have any business relationship or affiliation with UTEK. On August 30, 2006, NHTI had entered into a Non-Exclusive License Agreement with the Regents of the University of California. NHTI paid a non-refundable License Issue Fee in the amount of $25,000. The license fee is non-refundable unless the Company’s commercialization plan is deemed unacceptable by the University. If the plan is deemed unacceptable, the license agreement will terminate and may be converted to a non-exclusive license. To date, no commercialization plan has been deemed acceptable or unacceptable.

In consideration for the license, the Company agreed to the following payments:

$25,000 License Issue Fee, described above;

$25,000 upon submission by University of California to U.S. Federal Drug Administration (or comparable agency) of either notification of or request for approval of (as applicable), a Licensed Product;

$100,000 upon satisfaction of necessary requirements (e.g., notification or receipt of approval, as applicable) by Federal Drug Administration (or comparable agency) for commercial sale of a Licensed Product;

Royalties equal to the greater of three percent of the Selling Price of each Licensed Product Licensee sells or the maintenance fee according to the following schedule:

2008	$	10,000	(not yet paid)
2009	$	15,000	(not yet paid)
2010	$	15,000	(not yet paid)
2011	$	45,000
2012 (and each year thereafter)	$	60,000

The Company entered into an agreement effective January 22, 2009 for a two year project to develop and bring to market an innovative compact-systems technology for producing critically needed medical isotopes. The Company is to contribute $760,000 in the form of services to this project. To date, no services have been performed.

NOTE 8: PREPAID EXPENSES PAID WITH STOCK

The Company has issued stock to companies for various service agreements extending beyond December 31, 2010. Additionally, the Company issued stock for prepaid rent which will expire annually through July 2012 at the rate of $37,500 per year. Prepaid expenses are expected to mature as follows:

For the twelve month period ending December 31, 2011	$	89,949
For the twelve month period ending December 31, 2012		21,875
For the twelve month period ending December 31, 2013		-
For the twelve month period ending December 31, 2014		-
	$	111,824

F-18

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 9: CAPITAL LEASE OBLIGATIONS

During September 2007, the Company obtained two master lease agreements for $1,875,000 and $631,000, with interest on both leases accruing at 8.6% annually, secured by equipment and personal guarantee of two of the major shareholders. These long-term agreements shall be deemed capital lease obligations for purposes of financial statement reporting. The purpose of the lease is to acquire a Pulsar 10.5 PET Isotope Production System for a contracted amount of $1,875,000 plus ancillary equipment and facility for $933,888. Advances made by the Lessor for the benefit of the Company, less payments, total $1,839,418 as of December 31, 2010.

This capital lease and its resulting obligation is recorded at an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term, excluding any portion of the payments representing taxes to be paid by the Company. This amount does not exceed the fair value of the leased property at the lease inception, so the recorded amount is the fair value.

	Capital Lease Obligation
	PET Isotope Production System		Ancillary Equipment		Total
Total lease commitment	$	1,875,000	$	933,888	$	2,808,888
Advances made for purchases	$	1,511,268	$	933,888	$	2,445,156
Principal portion of payments		541,927		468,720		1,010,647
Net balance of advances payable		969,341		465,168		1,434,509
Add factor to arrive at total future minimum lease payments		164,426		40,335		204,761
Total future minimum lease payments		1,133,767		505,503		1,639,270
Less amount representing interest		164,426		40,335		204,761
Present value of net minimum lease payments		969,341		465,168		1,434,509
Amounts due within one year		208,957		196,381		405,338
Amounts due after one year	$	760,384	$	268,787	$	1,029,171

The lease requires the Company to maintain a minimum debt service coverage ratio of 1:1 measured at fiscal year- end; non compliance with this provision shall constitute a default and guarantors must contribute capital sufficient to fund any deficit in the debt service coverage ratio.

The definition of debt service coverage ratio is EBITDA (earnings before interest, taxes, depreciation and amortization), minus cash taxes, minus unfunded capital expenditures, plus capital injections, divided by (interest plus current portion of long-term debt). According to the debt service coverage ratio computation, at December 31, 2009 the Company was not in compliance with the minimum debt service coverage ratio stipulated in the loan covenants, accordingly the Company recorded the entire value of the leases as a current value at December 31, 2009. However the Company was in compliance with the minimum debt service coverage ratio stipulated in the loan covenants at December 31, 2010, and accordingly recognized current and long term portions of the lease on its balance sheet at December 31, 2010.

F-19

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 9: CAPITAL LEASE OBLIGATIONS - continued

The Company’s actual results of the minimum debt service ratio calculation for the years December 31, 2010 and 2009 are as follows:

	December 31, 2010			December 31, 2009
Net loss	$	(4,013,736	)	$	(3,991,994	)
Interest		860,252			839,628
Depreciation and amortization		545,192			562,671
Unfunded capital expenditures		-			-
Capital injections		4,084,965			1,664,100
	$	1,476,673		$	(925,595	)

Interest plus current portion of long-term debt	$	1,434,509		$	1,222,988

Debt service coverage ratio	$	1.03		$	(0.76	)

Principal maturities on the amount of the capital lease obligations advanced through December 31, 2010 are due as follows:

Year ended December 31,	Production Facility		Ancillary Equipment
2011	$	208,957	$	196,381
2012		228,209		200,534
2013		248,916		68,253
2014		235,538		-
2015		47,721		-
Thereafter		-		-
	$	969,341	$	465,168

The capital lease obligation is the only Company debt that contains covenants.

NOTE 10: DEBT

The Company borrowed $60,000 July 2010, due April 2011, with interest at 8%. The holder of the note had the right, after the first ninety days of the note (October 19, 2010), to convert the note and accrued interest into common stock at a price per share equal to 58% (representing a discount rate of 42%) of the average closing price of the last five trading prices for the common stock ending one trading day prior to the date of conversion.

The Company had the right to prepay the note and accrued interest during the first ninety days following the date of the note. The amount of any prepayment equals 150% of the outstanding principal balance of the note plus accrued interest on the note. The Company prepaid the note in full prior to October 19, 2010 and therefore had recorded interest expense of $30,467 related to the prepayment cost in the accompanying financial statements for the year ending December 31, 2010. If the Company had not paid off the note and related accrued interest by October 19, 2010, the note would have become convertible and the Company would have had to accrue an additional $12,981 to interest expense to account for the beneficial conversion feature of the note. The Company paid the debt in full as of October 7, 2010.

F-20

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 11: INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components as of December 31, 2010 and 2009:

	December 31, 2010			December 31, 2009
Deferred tax assets:
Net operating loss carryover	$	5,042,968		$	4,363,957
Related party accrued interest		88,844			32,533
Deferred tax liabilities:
Depreciation		(248,808	)		(362,550	)
Valuation allowance		(4,883,004	)		(4,033,940	)
Net deferred tax asset	$	-		$	-

The income tax provision differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pretax income from continuing operations for the years ended December 31, 2010 and 2009 due to the following:

	December 31, 2010			December 31, 2009
Book income	$	(1,581,460	)	$	(1,556,878	)
Depreciation		113,742			98,113
Meals and entertainment		3,514			1,224
Stock for services		328,867			132,969
Options expense		64,696			187,209
Related party interest		56,311			31,924
Loss on settlement of debt		-			242,314
Non-cash interest expense		255,760			245,100
Other		16,136			-
Valuation allowance		742,434			618,025
	$	-		$	-

At December 31, 2010, the Company had net operating loss carryforwards of approximately $12,930,688 that may be offset against future taxable income from the year 2011 through 2031.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

F-21

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 11: INCOME TAXES - continued

At the adoption date of January 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2010, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and in the state of Washington. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006.

NOTE 12: STOCKHOLDERS’ EQUITY

Common Stock Sale

The Company issued 2,396,920 shares of common stock for cash during 2009. The price per share ranged from $0.15 to $0.58 per share. The Company also granted 2,669,327 warrants in conjunction with these stock for cash issuances, with an exercise price ranging from $0.15 to $0.87 and an exercise period ranging from one to two years.

The Company issued 5,090,912 shares of common stock for cash during 2010. The price per share ranged from $0.10 to $0.58 per share. The Company also granted 5,090,912 warrants in conjunction with these stock for cash issuances, with an exercise price per share ranging from $0.20 to $0.87 and an exercise period of one year.

The Company issued 250,000 shares of common stock for cash during 2010 for options exercised at $0.29 per share.

Preferred Stock

On September 27, 2006, the Company acquired the assets of Neu-Hope Technologies, Inc (“NHTI”), a Florida corporation from UTEK Corporation (“UTEK”), a Delaware corporation. UTEK is a shareholder of less than 5% of the Company’s issued and outstanding common stock. The Company acquired NHTI’s assets from UTEK in exchange for 100,000 shares of the Company’s Series A preferred stock. At any time after September 27, 2007, these Series A preferred stock shares can be converted to unrestricted common stock in the amount of $3,350,000. The number of shares shall be calculated based on the previous 10 day average closing price on the day of conversion. Additionally, during the initial twelve months period in which UTEK is holding said preferred stock, interest shall accrue at the annual rate of five percent, compounded quarterly, payable in cash or in common shares of the Company. The Company conducted the acquisition in order to obtain NHTI’s cash, rights, and customer relationships.

In December 2007, 5,000 shares of the Company’s Series A preferred stock were converted to 299,642 shares of common stock at $0.56 per share by an executive and director of the UTEK.

F-22

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Preferred Stock - continued

A board member of the Company acquired the remaining 95,000 shares of the Company’s Series A Preferred Stock from UTEK in February 2009. In March 2009 the board member converted the 95,000 shares of the Company’s Series A Preferred Stock and the related accrued interest into 10,857,142 shares of the Company’s common stock. The value of the transaction totaled $3,810,857 based on common stock’s average closing price for the ten trading days before the date of conversion of $0.35 per share. The Company’s Preferred Stock Redeemable as common liability was reduced by $3,182,405, accrued interest was reduced by $171,628, preferred stock was reduced by $95, and a loss on settlement of debt of $456,823 has been recognized in the accompanying financial statements for the twelve months ended December 31, 2009.

Common Stock Issued for Services and Other

In 2009, the company issued 1,629,583 shares of common stock with a total fair market value of $543,367. The fair market value of the shares issued ranged from $0.27 to $0.43. The shares were issued for $182,150 in services, $165,500 in prepaid expenses, $58,750 in stock based consulting fees, $129,973 in accounts payable and $6,994 in loss on settlement of debt.

In 2010, the Company issued 4,106,632 shares of common stock with a total fair market value of $973,998. The fair market value of the shares issued ranged from $0.11 to $0.50. The shares were issued to extinguish $68,250 of a prior year liability, for $62,500 worth of prepaid services, and for $843,248 worth of current year services.

Common Stock Issued for Convertible Debt

The Company issued 100,000 shares of its common stock in exchange for a $250,000 convertible note in 2008. The value of the $250,000 debt plus the $0.70 fair market value of the 100,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $250,000 debt and the value of the 100,000 shares. This computation resulted in an allocation of $195,313 toward the debt and $54,687 to the shares. The $54,687 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $36,459 has been accreted and added to the note payable bringing the total debt balance to $250,000 as of December 31, 2009. The note was rewritten May 26, 2010 for the original $250,000 note plus $43,750 of interest for the period September 4, 2008 through May 26, 2010 for a new note of $293,750, 10%, expiration date of September 30, 2010. The Company recognized interest expense on the notes principal balance of $25,000 and $27,553 in the accompanying financial statements for the years ended December 31, 2009 and 2010, respectively. The $293,750 original value of the note plus $17,866 interest from May 26, 2010 through January 3, 2011, for a total of $311,616, was paid January 3, 2011.

The Company issued 20,000 shares of its common stock in exchange for $50,000 convertible note in 2008. The value of the $50,000 debt plus the $0.53 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature. This computation resulted in an allocation of $16,258 toward the debt and $8,746 to the shares and $24,996 to the beneficial conversion feature. The $8,746 value of the shares and the $24,996 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense for the beneficial conversion feature of $0 and $28,118 has been recognized in the accompanying financial statements for the years ended December 31, 2010 and 2009. The Company recognized interest expense for the note of $1,667 and $5,000 in the accompanying financial statements for the years ended December 31, 2010 and 2009, respectively. The $50,000 original value of the note plus $7,500 interest from October 27, 2008 through April 30, 2010, for a total of $57,500, was converted into 143,750 shares of the Company’s common stock at a price of $0.40 per share effective April 30, 2010.

F-23

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Issued for Convertible Debt - continued

The Company issued a convertible promissory note in the amount of $375,000 with interest payable at 10% per annum in 2008. The Note matures on December 16, 2009 (the "Maturity Date"). The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. Interest on the Note is payable every six months until the Note is paid in full. Additionally, in connection with the convertible note, 150,000 shares of the Company’s common stock were issued to the note holder. At the option of the holder, the note is convertible, in whole or in part, into the Company’s common stock by taking the principal to be converted and dividing it by fifty percent of the volume-weighted average trading price of the Company’s common stock for the 10 consecutive trading days immediately preceding the date of conversion. The note is convertible at any time.

The embedded conversion feature within the convertible promissory note was assessed to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.

The company believes that the embedded derivative instrument shall not be separated from the host contract and accounted for as a derivative instrument because the criteria for that treatment has not been met as the Company’s stock is not considered to be readily convertible to cash. Per the agreement the Company is required to deliver shares of its common stock and there is no mechanism outside the contract that facilitates that. Therefore the company concluded that conversion feature should not be bifurcated from the host instrument.

The Company allocated the proceeds to the shares issued and the debt and then calculated a beneficial conversion feature. The company performed these calculations which resulted in a beneficial conversion feature with an intrinsic value of $322,234. The 150,000 shares of common stock were valued at $46,053 and the debt was recorded at $6,713. Because the debt is immediately convertible, the value of the beneficial conversion feature is calculated as if converted on the commitment date. The $322,234 allocated to the beneficial conversion feature along with the $46,053 allocated to the 150,000 shares of common stock is being accreted to interest expense over the twelve month life of the debt. Interest expense of $368,287 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $375,000 as of December 31, 2009. The note expired December 16, 2009, was extended by the note holder for another year until December 16, 2010, and another year to December 16, 2011. The Company recognized interest expense of $37,500 in the accompanying financial statements for the twelve months ending December 31, 2010 and interest expense of $1,562 for the period from December 16 through December 31, 2009 in the accompanying financial statements for the twelve months ended December 31, 2009.

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in 2009. The Note matured in March of 2010, was extended by the note holder for another year until March, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.30 per share. The value of the $100,000 debt plus the $0.31 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $74,603 toward the debt and $11,032 to the shares and $14,365 to the beneficial conversion feature. The $11,032 value of the shares and the $14,365 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $20,105 and $5,292 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $94,708 and $100,000 as of December 31, 2009 and 2010, respectively. Additionally, $7,915 and $10,000 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

F-24

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Issued for Convertible Debt - continued

The Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum in 2009. The Note matured in April of 2010, was extended by the note holder for another year until April, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share. The value of the $50,000 debt plus the $0.31 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $31,268 toward the debt and $6,140 to the shares and $12,592 to the beneficial conversion feature. The $6,140 value of the shares and the $12,592 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $12,488 and $6,244 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $43,756 and $50,000 as of December 31, 2009 and 2010, respectively. Additionally, $3,333 and $5,000 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

The Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum in 2009. The Note matured in May of 2010, was extended by the note holder for another year until May, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.28 per share. The value of the $50,000 debt plus the $0.21 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $46,125 toward the debt and $3,875 to the shares and resulted in no beneficial conversion feature. The $3,875 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $2,342 and $1,533 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $48,467 as of December 31, 2009 and $50,000 as of December 29, 2010, the date the note was paid. Additionally, $3,020 and $5,035 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010. The $50,000 original value of the note plus $8,055 interest from May 20, 2009 through December 29, 2010, for a total of $58,055, was converted into 207,339 shares of the Company’s common stock at a price of $0.28 per share effective December 29, 2010.

The Company issued 110,000 shares of its common stock and a convertible promissory note in the amount of $275,000 with interest payable at 10% per annum in 2009. The Note matured in June of 2010, was extended by the note holder for another year until June, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.27 per share. The value of the $275,000 debt plus the $0.21 fair market value of the 110,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $275,000 debt and the value of the 110,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $253,690 toward the debt and $21,310 to the shares and resulted in no beneficial conversion feature. The $21,310 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $11,986 and $9,324 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $265,676 as of December 31, 2009 and $275,000 as of December 29, 2010, the date the note was paid. Additionally, $15,470 and $27,174 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010. The $275,000 original value of the note plus $42,644 interest from June 11, 2009 through December 29, 2010, for a total of $317,644, was converted into 1,176,459 shares of the Company’s common stock at a price of $0.27 per share effective December 29, 2010.

F-25

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Issued for Convertible Debt - continued

The Company issued 90,560 shares of its common stock and a convertible promissory note in the amount of $226,400 with interest payable at 10% per annum in 2009. The Note matured in September of 2010, was extended by the note holder for another year until September, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share. The value of the $226,400 debt plus the $0.39 fair market value of the 90,560 shares at the date of the agreement was prorated to arrive at the allocation of the original $226,400 debt and the value of the 90,560 shares and the beneficial conversion feature. The computation resulted in an allocation of $106,870 toward the debt and $30,552 to the shares and $88,978 to the beneficial conversion feature. The $30,552 value of the shares and the $88,978 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $39,844 and $79,686 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $146,714 and $226,400 as of December 31, 2009 and 2010, respectively. Additionally, $7,547 and $22,640 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

The Company issued 66,000 shares of its common stock and a convertible promissory note in the amount of $155,000 with interest payable at 10% per annum in 2009. The Note matured in October of 2010, was extended by the note holder for another year until October, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.51 per share. The value of the $155,000 debt plus the $0.51 fair market value of the 66,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $155,000 debt and the value of the 66,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $99,690 toward the debt and $27,655 to the shares and $27,655 to the beneficial conversion feature. The $27,655 value of the shares and the $27,655 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $11,520 and $43,790 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $111,210 and $155,000 as of December 31, 2009 and 2010, respectively. Additionally, $3,230 and $15,500 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

The Company issued 80,000 shares of its common stock and a convertible promissory note in the amount of $200,000 with interest payable at 10% per annum in 2009. The Note matured in November of 2010, was extended by the note holder for another year until November, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.59 per share. The value of the $200,000 debt plus the $0.59 fair market value of the 80,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $200,000 debt and the value of the 80,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $123,624 toward the debt and $38,188 to the shares and $38,188 to the beneficial conversion feature. The $38,188 value of the shares and the $38,188 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $8,150 and $68,226 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $131,774 and $200,000 as of December 31, 2009 and 2010, respectively. Additionally, $2,500 and $20,000 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in 2009. The Note matured in December of 2010, was extended by the note holder for another year until December, 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.59 per share. The value of the $100,000 debt plus the $0.59 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $61,812 toward the debt and $19,094 to the shares and $19,094 to the beneficial conversion feature. The $19,094 value of the shares and the $19,094 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $2,387 and $35,801 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $64,199 and $100,000 as of December 31, 2009 and 2010, respectively. Additionally, $625 and $10,000 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2009 and 2010.

F-26

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Issued for Convertible Debt - continued

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in January 2010. The Note matures in January of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.50 per share. The value of the $100,000 debt plus the $0.45 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $79,492 toward the debt and $15,254 to the shares and $5,254 to the beneficial conversion feature. The $15,254 value of the shares and the $5,254 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $19,231 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $98,723 as of December 31, 2010. Additionally, $9,452 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010.

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in February 2010. The Note matures in February of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.50 per share. The value of the $100,000 debt plus the $0.49 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $69,224 toward the debt and $16,388 to the shares and $14,388 to the beneficial conversion feature. The $16,388 value of the shares and the $14,388 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $26,932 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $96,156 as of December 31, 2010. Additionally, $8,750 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010.

The Company issued 90,000 shares of its common stock and a convertible promissory note in the amount of $225,000 with interest payable at 10% per annum in March 2010. The Note matures in March of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.40 per share. The value of the $225,000 debt plus the $0.40 fair market value of the 90,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $225,000 debt and the value of the 90,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $162,932 toward the debt and $31,034 to the shares and $31,034 to the beneficial conversion feature. The $31,034 value of the shares and the $31,034 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $49,131 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $212,063 as of December 31, 2010. Additionally, $17,815 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010.

The Company issued 20,200 shares of its common stock and a convertible promissory note in the amount of $50,500 with interest payable at 10% per annum in April 2010. The Note matures in April of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.40 per share. The value of the $50,500 debt plus the $0.40 fair market value of the 20,200 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,500 debt and the value of the 20,200 shares and the beneficial conversion feature. The computation resulted in an allocation of $36,568 toward the debt and $6,966 to the shares and $6,966 to the beneficial conversion feature. The $6,966 value of the shares and the $6,966 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $9,866 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $46,434 as of December 31, 2010. Additionally, $3,431 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010.

F-27

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Issued for Convertible Debt – continued

The Company issued 22,880 shares of its common stock and a convertible promissory note in the amount of $57,200 with interest payable at 10% per annum in May 2010. The Note matures in May of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.30 per share. The value of the $57,200 debt plus the $0.30 fair market value of the 22,880 shares at the date of the agreement was prorated to arrive at the allocation of the original $57,200 debt and the value of the 22,880 shares and the beneficial conversion feature. The computation resulted in an allocation of $44,942 toward the debt and $6,129 to the shares and $6,129 to the beneficial conversion feature. The $6,129 value of the shares and the $6,129 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $7,660 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $52,602 as of December 31, 2010. Additionally, $3,575 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010.

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in June 2010. The Note matures in June of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.18 per share. The value of the $100,000 debt plus the $0.18 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $86,568 toward the debt and $6,716 to the shares and $6,716 to the beneficial conversion feature. The $6,716 value of the shares and the $6,716 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $13,432 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $100,000 as of December 29, 2010, the date the note was paid. Additionally, $5,233 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010. The $100,000 original value of the note plus $5,233 interest from June 21, 2010 through December 29, 2010, for a total of $105,233, was converted into 584,627 shares of the Company’s common stock at a price of $0.18 per share effective December 29, 2010.

The Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum in 2010. The Note matures in July of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.13 per share. The value of the $100,000 debt plus the $0.13 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $90,114 toward the debt and $4,943 to the shares and $4,943 to the beneficial conversion feature. The $4,943 value of the shares and the $4,943 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $9,886 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $100,000 as of December 29, 2010, the date the note was paid. Additionally, $4,466 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010. The $100,000 original value of the note plus $4,466 interest from July 19, 2010 through December 29, 2010, for a total of $104,466, was converted into 584,627 shares of the Company’s common stock at a price of $0.13 per share effective December 29, 2010.

The Company issued 60,000 shares of its common stock and a convertible promissory note in the amount of $150,000 with interest payable at 10% per annum in 2010. The Note matures in August of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.09 per share. The value of the $150,000 debt plus the $0.09 fair market value of the 60,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $150,000 debt and the value of the 60,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $139,575 toward the debt and $5,212 to the shares and $5,212 to the beneficial conversion feature. The $5,212 value of the shares and the $5,212 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $10,424 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $100,000 as of December 29, 2010, the date the note was paid. Additionally, $5,384 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010. The $150,000 original value of the note plus $5,384 interest from August 20, 2010 through December 29, 2010, for a total of $155,384, was converted into 1,726,484 shares of the Company’s common stock at a price of $0.09 per share effective December 29, 2010.

F-28

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY – continued

Common Stock Issued for Convertible Debt – continued

The Company issued 60,000 shares of its common stock and a convertible promissory note in the amount of $150,000 with interest payable at 10% per annum in 2010. The Note matures in September of 2011. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date. At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.12 per share. The value of the $150,000 debt plus the $0.12 fair market value of the 60,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $150,000 debt and the value of the 60,000 shares and the beneficial conversion feature. The computation resulted in an allocation of $136,260 toward the debt and $6,870 to the shares and $6,870 to the beneficial conversion feature. The $6,870 value of the shares and the $6,870 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $13,740 has been accreted and added to the note payable bringing the total debt balance related to this convertible promissory note to $150,000 as of December 29, 2010, the date the note was paid. Additionally, $4,356 worth of interest expense on the notes principal balance has been recognized in the accompanying financial statements for the twelve months ending December 31, 2010. The $150,000 original value of the note plus $4,356 interest from September 14, 2010 through December 29, 2010, for a total of $154,356, was converted into 1,286,301 shares of the Company’s common stock at a price of $0.12 per share effective December 29, 2010.

Common Stock Options

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

During February 2009, the Company granted three consultants options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $0.50 per share. The options are fully vested and expire February 5, 2012. The quoted market price of the common stock at the time of issuance of the options was $0.49 per share. The fair value of the options totaled $230,000 using the Black-Scholes option pricing model. The Company’s accounts payable was reduced by $79,500 and a loss on settlement of debt of $150,500 has been recognized in the accompanying financial statements for the year ended December 31, 2009.

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

Risk-free interest rate		1.37	%
Dividend yield		0	%
Volatility factor		211.2	%
Weighted average expected life	3 years

During May 2009, the Company granted a board member options to purchase 200,000 shares of the Company’s common stock, at an exercise price of $0.26 per share. The options are fully vested and expire May 8, 2012. The quoted market price of the common stock at the time of issuance of the options was $0.26 per share. The fair value of the options totaled $36,000 using the Black-Scholes option pricing model.

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

Risk-free interest rate		1.39	%
Dividend yield		0	%
Volatility factor		120.2	%
Weighted average expected life	3 years

F-29

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Options – continued

During August 2009, the Company granted a board member options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $0.27 per share. The options are fully vested and expire August 6, 2012. The quoted market price of the common stock at the time of issuance of the options was $0.27 per share. The fair value of the options totaled $95,000 using the Black-Scholes option pricing model.

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

Risk-free interest rate		1.65	%
Dividend yield		0	%
Volatility factor		98.3	%
Weighted average expected life	3 years

During December 2009, the Company granted a consultant options to purchase 50,000 shares of the Company’s common stock, at an exercise price of $0.43 per share. The options are fully vested and expire December 30, 2010. The quoted market price of the common stock at the time of issuance of the options was $0.43 per share. The fair value of the options totaled $7,000 using the Black-Scholes option pricing model.

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

Risk-free interest rate		0.37	%
Dividend yield		0	%
Volatility factor		81.9	%
Weighted average expected life	1 year

During April 2010, the Company granted a consultant options to purchase 50,000 shares of the Company’s common stock, at an exercise price of $0.26 per share. The options are fully vested and expire April 15, 2013. The quoted market price of the common stock at the time of issuance of the options was $0.26 per share. The fair value of the options totaled $7,000 using the Black-Scholes option pricing model.

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

Risk-free interest rate		1.64	%
Dividend yield		0	%
Volatility factor		86.2	%
Weighted average expected life	3 year

During November 2010, the Company granted a director options to purchase 50,000 shares of the Company’s common stock, at an exercise price of $0.40 per share. The options are fully vested and expire November 16, 2013. The quoted market price of the common stock at the time of issuance of the options was $0.39 per share. The fair value of the options totaled $12,500 using the Black-Scholes option pricing model.

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

Risk-free interest rate		0.67	%
Dividend yield		0	%
Volatility factor		106.1	%
Weighted average expected life	3 year

F-30

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 12: STOCKHOLDERS’ EQUITY - continued

Common Stock Options – continued

During November 2010, the Company granted a consultant options to purchase 100,000 shares of the Company’s common stock, at an exercise price of $0.39 per share. The options are fully vested and expire January 31, 2011. The quoted market price of the common stock at the time of issuance of the options was $0.39 per share. The fair value of the options totaled $15,500 using the Black-Scholes option pricing model.

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

Risk-free interest rate		0.67	%
Dividend yield		0	%
Volatility factor		175.8	%
Weighted average expected life	2.5 month

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

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

Balance at December 31, 2008		5,609,021		$	0.15-1.05	1.52 years		$	422,029		$	0.75

Options granted		2,644,327		$	0.15-0.87	1.54 years			165,000		$	0.33
Options exercised		-		$	-	-			-		$	-
Options expired		(3,204,021	)	$	0.17-1.05	-			(87,029	)	$	0.95

Balance at December 31, 2009		5,049,327		$	0.15-0.87	1.72 years			500,000		$	0.40

Options granted		5,290,912		$	0.20-0.87	0.76 years			-		$	0.22
Options exercised		(250,000	)	$	0.29		-		-		$	0.29
Options expired		(794,327	)	$	0.40-0.87		-		(35,000	)	$	0.46

Balance at December 31, 2010		9,295,912		$	0.15-0.87	0.90 years		$	465,000		$	0.29

Exercisable at December 31, 2009		5,049,327		$	0.15-0.87	1.72 years		$	500,000		$	0.40

Exercisable at December 31, 2010		9,295,912		$	0.15-0.87	0.90 years		$	465,000		$	0.29

F-31

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 13: CONCENTRATIONS OF CREDIT AND OTHER RISKS

Accounts Receivable

The Company’s accounts receivable result from credit sales to customers. The Company had one customer that represented 61.3% and 70.0% of the Company’s total revenues for the years ended December 31, 2010 and 2009; and 100% of the total F-18 sales for the years ended December 31, 2010 and 2009. This same customer accounted for 100% of the Company’s net accounts receivable balance at December 31, 2010 and 2009.

The loss of this significant customer would have a temporary adverse effect on the Company’s revenues, which would continue until the Company located new customers to replace them

The Company routinely assesses the financial strength of its customers and provides an allowance for doubtful accounts as necessary.

Inventories

The Company has two products, one of which is produced in the Company’s production facility and the other product sold by the Company is purchased from one supplier. The failure of this supplier to meet its commitment on schedule could have a material adverse effect on the Company’s business, operating results and financial condition. If the sole-source supplier were to go out of business or otherwise become unable to meet its supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time the Company’s sales could be delayed. Such delays could have a material adverse effect on the Company’s business, operating results and financial condition.

NOTE 14: SUPPLEMENTAL CASH FLOW INFORMATION

During the year ended December 31, 2010, the Company had the following non-cash investing and financing activities:

Increased prepaid expenses by $62,500 and increased paid in capital by $62,250 and increased common stock by $250 due to shares issued for prepaid services.

Increased accounts receivable - other by $125,000 and increased fixed assets by $125,000 due to cash not yet received for the sale of fixed assets.

Decreased accrued expenses by $68,250 and increased paid in capital by $27,105 and increased common stock by $195 and decreased expenses by $40,950 due to stock issued for a stock subscription payable.

Increased accounts receivable - other by $283,829 and increased deferred income by $283,829 due to grant revenue not yet received or recognized.

Increased convertible notes payable by $43,750 and decreased accrued interest by $43,750 due to accrued interest capitalized to notes payable.

Decreased convertible notes payable by $187,024 and increased additional paid in capital by $186,611 and increased common stock by $413 due to shares issued in conjunction with convertible notes for a debt discount.

Decreased convertible notes payable by $875,000 and decreased accrued interest by $77,636 and increased additional paid in capital by $946,707 and increased common stock by $5,929 due to shares issued for debt conversion.

During the year ended December 31, 2009, the Company had the following non-cash investing and financing activities:

Increased prepaid expenses by $165,500 and increased paid in capital by $164,950 and increased common stock by $550 due to shares issued for prepaid services.

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

F-32

Advanced Medical Isotope Corporation

Notes to Financial Statements

For the years ended December 31, 2010 and 2009

NOTE 15: SUBSEQUENT EVENTS

In January 2011 the Company issued 156,167 shares of its common stock valued at $0.30 per share on the date of issuance, in exchange for services of $46,850. This value was recorded by the Company as an expense and an accrued liability as of December 31, 2010.

In January 2011 the Company granted eleven employees, two consultants and two directors options to purchase a total of 1,235,000 shares of the Company’s common stock, at an exercise price of $0.30 per share. The options are fully vested upon grant and expire January 12, 2014. The quoted market price of the common stock at the time of issuance of the options was $0.30 per share. The fair value of the options totaled $234,650 using the Black-Scholes option pricing model and was recorded as option expense and an accrued liability as of December 31, 2010.

In February 2011 the Company issued 60,000 shares of its common stock valued at $0.30 per share on the date of issuance, in exchange for services of $18,000.

The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional subsequent events to disclose.

F-33

EXHIBIT 10.8

CashFlow

LEASE

Master Lease Agreement

Lease # 73558WA-006

Date September 20, 2007

Lessee:		Billing Address (if different):
Name:	Advanced Medical Isotope Corporation (hereinafter "Lessee")
Address:	6208 W. Okanogan Ave	Address:
City, St Zip:	Kennwick, WA 99336	City, St Zip:
Attn:	James Katzaroff	Attn:
Phone #:	(509) 736-4000	Phone #:
Fax #:	(509) 736-4007	Fax #:

A. MASTER LEASE AGREEMENT TERMS AND CONDITIONS. Each lease ("Lease") that is made and entered into pursuant to the terms of this Master Lease Agreement ("Master Lease Agreement" or "Agreement") consists of one or more acceptance certificate(s) ("Acceptance Certificate(s)") that incorporate by reference, the terms and conditions of this Master Lease Agreement. A schedule ("Schedule") summarizes all facts and data of each Acceptance Certificate. The terms and conditions of Section B of this Master Lease Agreement are incorporated by reference in each and every Lease. Lessor may, but shall not be obligated to designate a unique transaction number ("TA #") for each Schedule. Each Acceptance Certificate constitutes a separate obligation of the Lessee. This Master Lease Agreement shall become effective upon its execution by the Lessor and shall remain effective until terminated by either party hereto upon ten (10) day's prior written notice. At any time Lessor may, at Lessor's sole discretion, refrain from entering into a new lease provided however, that such actions by Lessor shall not terminate this Master Lease Agreement. Notwithstanding the termination of this Master Lease Agreement, all Leases shall remain in full force until the expiration of their respective term.

B. LEASE TERMS AND CONDITIONS. The following terms and conditions shall be incorporated by reference in each and every Acceptance Certificate that is made and entered into pursuant to this Master Lease Agreement:

1. EQUIPMENT ACQUISITION. Lessee requests that Lessor (a) order from the applicable vendor the Equipment described in any Lease, (b) arrange for delivery of such Equipment to Lessee, (c) and pay for the Equipment. If Lessor has paid for all or any part of the Equipment and the Equipment is not delivered, assembled or accepted by Lessee within sixty (60) days that Lessor orders the Equipment, Lessor will have the right to recover from Lessee all sums advanced together with interest thereon at the highest rate allowed by law from the date that Lessor paid for the equipment to the date that Lessee pays Lessor in full for the amounts expended by the Lessor for the Equipment

2. LEASE. Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor all items of Equipment described in each Acceptance Certificate. The terms and conditions of this Section B of this Master Lease Agreement are incorporated in each and every Acceptance Certificate. In the event of a conflict between the Master Lease Agreement and any Acceptance Certificate and/or Schedule the terms and conditions of the Acceptance Certificate shall prevail. If more than one Acceptance Certificate is to be executed in connection with a Lease, Lessor may determine in its sole and absolute discretion, which Acceptance Certificates

will apply to and be summarized on any Schedule.

3. WARRANTIES. LESSOR HAS NOT MADE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE QUALITY OR CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR A PARTICULAR PURPOSE. REGARDLESS OF CAUSE, LESSOR IS NOT RESPONSIBLE FOR AND LESSEE WILL NOT MAKE ANY CLAIM FOR DAMAGES, WHETHER CONSEQUENTIAL, DIRECT, SPECIAL OR INDIRECT. LESSEE HEREBY ACKNOWLEDGES THAT NEITHER THE SUPPLIER OF THE EQUIPMENT NOR ANY SALES PERSON, EMPLOYEE OR AGENT OF THE EQUIPMENT SUPPLIER IS LESSOR'S AGENT OR REPRESENTATIVE AND HAS NO POWER OR AUTHORITY TO REPRESENT OR BIND LESSOR IN ANY WAY. Lessor will not be liable for any loss, cost or damage to Lessee or others arising from defects, negligence, delays, failure of delivery, interference with any patent, trademark, copyright or other intellectual property right or nonperformance of the Equipment. Lessee warrants to Lessor that; (a) the Lessee is in good standing under the laws of the state of its formation and any where it conducts business; (b) the person(s) executing this Master Lease Agreement and any resulting Schedule(s) and/or Acceptance Certificate(s) on behalf of the Lessee shall be Lessee's authorized representative empowered to bind the Lessee. Lessee shall provide executed Certificate(s) of Incumbency evidencing such authorization, if so requested by Lessor; (c) this Lease does not violate any other agreement(s) binding the Lessee; and (d) Lessee has

furnished Lessor or the Equipment's supplier ("Supplier") the specifications regarding the Equipment or the Lessee has selected the Supplier and has directed the Lessor to acquire the Equipment in connection with the Lease

4. DURATION OF LEASE AND LEASE PAYMENTS. Lessee's obligation to pay lease payments ("Lease Payments") will commence on the date set forth on each Acceptance Certificate ("Acceptance Date"). The Lessee shall be obligated to and shall pay Lease Payments from the Acceptance date to the last date of the Base Term, as herein after defined or any extension thereof. The base term of the Lease ("Base Term") shall be set forth on any Acceptance Certificate and shall commence on a date chosen by the Lessor, which shall be no greater than forty-five (45) days from (i) the Acceptance Date; or in the case where one or more Acceptance Certificates are summarized on a Schedule, (ii) the latest Acceptance Date of any Acceptance Certificate summarized on a Schedule ("Commencement Date"). Lessee shall pay Lease Payments in immediately available funds and in advance on the Commencement Date and on the same day of each period of the Base Term, or any extension thereof. During the period from the Acceptance Date to the Commencement Date, Lessee shall pay immediately upon Lessee's receipt of an invoice from Lessor, an amount equal to the

product of (x) 1/360th of the annual Lease Payments multiplied by (y) the number of days that have elapsed or that will elapse from the Acceptance Date or the date of the invoice that immediately preceded the current invoice to, but not including, the Commencement Date. Each remittance from Lessee to Lessor shall contain information as to the Lease for which payment is made. Lessee agrees to lease from Lessor all upgrades, additions and all replacement equipment (as hereinafter defined) of the Equipment. Lessee will pay all Lease Payments, in advance, on the date(s) specified by Lessor. At the expiration of the Base Term or any and all extensions thereof, unless terminated as provided in accordance with the provisions of Section 18 hereof or unless the Equipment is purchased or returned by Lessee in accordance with Section 18 herein, the Lease shall automatically extend for one (1) year under the same terms and conditions of the Base Term or any extension thereof Lessee may terminate the Lease at the end of the Base Term or any extension thereof by providing Lessor with written notice, as required in Section 21 hereof, of its intent to terminate the Lease no less than ninety (90) days prior to the expiration of the Base Term and/or extensions thereof.

5. FINANCE LEASE, PURCHASE AND ACCEPTANCE OF THE EQUIPMENT. Lessee acknowledges and agrees that the Lease is a "Finance Lease" as that term is defined in the Article 2A 103 of the Uniform Commercial Code ("UCC"). Lessee acknowledges that (a) Lessor has not selected, manufactured, sold or supplied any of the Equipment, its supplies, service(s) or software; (b) Lessee has selected the Supplier and/or each item of Equipment, its supplies, services(s ), software, and all other items related to the Equipment; (c) Lessee is responsible for all shipping costs and

Page 1 of 4

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURJ1Y INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.

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Equipment installation and deinstallation charges; (d) Lessor is purchasing or has purchased the Equipment solely in connection with this Lease. Lessor hereby notifies Lessee that Lessee is entitled to the promises and warranties, including those of any third party, provided to the Lessor by the entity supplying the Equipment in connection with or as part of the contract by which Lessor acquired the Equipment or the right to possession and use of the Equipment. Lessee may communicate with the Supplier and receive an accurate and complete statement of the promises and warranties, including any disclaimers and limitations thereof, or remedies made by the Supplier. Lessee hereby appoints Lessor its attorney-in-fact to insert the Acceptance Date and the serial numbers of any Equipment appearing on any Acceptance Certificate or Schedule. Such power-of—attorney is coupled with an interest and is irrevocable.

6. ADVANCE PAYMENT. Any advance payment(s) ("Advance Payment(s)") set forth in an Acceptance Certificate shall be security for Lessee's performance under this Lease and, so long as Lessee is not in default under this Lease or any lease made pursuant to the Master Lease Agreement, the Advance Payment(s) shall be used to pay the Lease Payment(s) number(s) set forth on the related Acceptance Certificate. Lessor may, at its sole discretion, apply Advance Payment(s) to cure any default under this Lease or any lease made pursuant to the Master Lease.

7. UNCONDITIONAL LEASE. Lessee's obligation to pay Lease Payments is ABSOLUTE AND UNCONDITIONAL UNDER ALL CIRCUMSTANCES WHATSOEVER and shall not be affected by, without limitation, any defect in condition, design, or operation of the Equipment, any lack of maintenance or service for the Equipment, its supplies or software, or any setoff, counterclaim, defense or reduction which Lessee may have against Lessor or any other party.

8. OWNERSHIP OF EQUIPMENT. Lessor is the owner of the Equipment and shall at all times retain title to the Equipment. Lessee will defend Lessor's title to the Equipment and will keep it free and clear of any and all claims, liens and encumbrances of any nature whatsoever and expressly authorizes Lessor or its assignee(s) to complete and file financing statements reflecting the parties' interest in the Equipment. Lessee will obtain and maintain all required, customary or appropriate licenses, titles, registrations and permits reflecting Lessor as owner. Although this Agreement is the standard form used by Lessor to lease hardware equipment to Lessee, Lessor and Lessee acknowledge that, with respect to any software which may be included in the description and definition of Equipment ("Software"), this Lease is a Finance Lease and a portion of Lessee's Lease Payment applicable to any Software represents license fees which has been paid by Lessor to the Software vendor ("Vendor"). Neither Lessor nor Lessee have or were granted any ownership or other proprietary rights in the Software, and neither party purports to transfer any such rights to the other hereunder. Lessee has only those rights in the Software that were granted to Lessee pursuant to the software license agreement entered into directly between Vendor and Lessee ("License"). The terms of this Lease are applicable only as between Lessor (and any Assignee) and Lessee. The terms of the License are applicable only as between Lessee and Vendor, and Lessor does not assume and is not liable for any obligations under any of the provisions of the License. Lessee's Lease Payment obligation is absolute and unconditional in all respects regardless of any problem Lessee may have with the Software, any dispute Lessee may have with the Vendor, any inability of Lessee to use the Software, or the exercise by Vendor of any remedies it may have pursuant to the License.

9. CARE, USE AND LOCATION. During the Base Term or any extensions thereof, and at Lessee's sole expense, Lessee shall cause the Equipment to be kept and maintained in accordance with the original Supplier's or approved maintenance provider's maintenance specifications. Lessee shall keep and maintain the Equipment in like new condition, repair, and appearance, ordinary wear and tear excepted. Lessee shall use the Equipment in the regular course of its business, and shall comply with all laws and regulations relating to the Equipment and its use. Lessee will not modify the Equipment without the prior written approval of Lessor, except if such modification is made in accordance with the Supplier's specific recommendation. All alterations, additions, replacements and accessions made to or upon the Equipment shall immediately become Lessor's sole and absolute property. The Equipment shall at all times be deemed to be personal property. Lessee shall keep the Equipment at the location set forth in the Acceptance Certificate and shall not remove the Equipment under any condition or circumstance without Lessor's prior written approval, provided: however, that under no circumstances shall the Equipment be

moved outside the continental United States. A Lessor or Lessor's representative shall have the right to enter Lessee's premises at all reasonable times to inspect the Equipment.

10. TAXES. Lessee will pay all excise taxes, sales and use taxes, personal property taxes and all other taxes and charges which may be imposed by any governmental entity during the term of this Lease, arising from the acquisition, use, ownership or leasing of the Equipment whether due before or after termination of this Lease (all such charges collectively referred to as "Taxes"). Lessor shall file personal property tax returns with respect to the Equipment directly with the taxing jurisdiction; provided, however, Lessee shall remit to Lessor, in advance, the Taxes that Lessor estimates are due and owing for the taxable year or immediately upon request from the Lessor or as otherwise directed by the Lessor. The provisions of this Section 10 shall survive termination of this Lease.

11. INSURANCE. Lessee shall be responsible for all risk of loss to the Equipment from the time the Equipment leaves the Supplier's place of business until it is returned to the location designated by the Lessor as provided for in Section 18 hereof. Prior to the time the Equipment leaves the Supplier's place of business, Lessee shall provide and maintain from insurance companies satisfactory to Lessor (A) property damage insurance against loss, fire, theft, damage or destruction of the Equipment., naming Lessor and its assignees as the loss payee, in an amount which is the greater of (i) the then current full replacement value of the Equipment or (ii) the value set forth on the Acceptance Certificate as "Stipulated Loss Value" less the product of 15% of the Stipulated Loss Value multiplied by the number of anniversary dates (but not greater than four) elapsed since the Acceptance Date; and (B) comprehensive general all-risk liability insurance including without limitation, product liability coverage, insuring Lessor, its assigns and Lessee, with a severability of interest endorsement or its equivalent, against any and all loss or liability for all damages, either to persons or property, or otherwise, which might result, or happen in connection with the condition, use or operation of the Equipment, with such limits as are satisfactory to Lessor. Each policy shall expressly provide that said insurance as to Lessor and Lessor's assigns shall not be invalidated by any act, omission or neglect of Lessee and cannot be cancelled or modified without thirty (30) days prior written notice to Lessor or its assigns. As to each policy, upon request from Lessor or its assignee(s), Lessee shall immediately furnish to Lessor, a loss payable endorsement, a certificate of insurance and/or copies of the insurance policies from the insurer, evidencing the insurance coverage required by this Section 11 ("Valid Evidence"). Lessor shall have no obligation to ascertain the existence of or provide any insurance coverage for the Equipment or for Lessee's benefit. The insurance proceeds shall be the sole property of Lessor, and may, at Lessor's discretion, used for any of the following: (i) to reimburse Lessee for the cost of repair or replacement of the Equipment as required in Section 13 hereof; or (ii) to pay any remaining obligations under this Lease, provided however, that if all such obligations are paid in full, this Lease will terminate and the terms and conditions of section 18 will apply to such termination; or (iii) if Lessee is in default under the terms of this Lease, to pay any of Lessee's obligations under this Lease; provided however, that Lessor shall not be obligated to apply such insurance proceeds toward Lessee's obligations under the Lease and the application of such insurance proceeds by Lessor shall not waive or eliminate Lessor's default remedies hereunder. In the event Lessee fails to procure the insurance required above, prior to the commencement of this Lease or if Lessee fails to provide Valid Evidence, or in the event Lessee fails to maintain the required insurance, Lessor may, but shall not be required to, and without notice to Lessee, purchase such insurance and add the cost, including customary charges or fees associated with the placement, maintenance or service of such insurance, to the next monthly Lease Payment to become due hereunder and such charges shall constitute additional Lease Payments. Lessor may terminate or allow to lapse any coverage obtained by Lessor without having any liability to Lessee. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make a claim for, receive payment of, and execute and endorse all documents, checks or drafts for loss, theft, damage or destruction to the Equipment under any insurance obtained by Lessee. Such power-of—attorney is coupled with an interest and is non-revocable. Notwithstanding whether the Equipment is lost, destroyed, damaged, stolen or whether insurance is in effect or a claim pending thereunder, Lessee's obligation to pay Lease Payments is ABSOLUTE AND UNCONDITIONAL UNDER ALL CIRCUMSTANCES WHATSOEVER and Lessee will continue to pay Lease Payments throughout the Base Term and any extension thereof.

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THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.

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12. INDEMNITY. Lessee indemnifies and defends Lessor, its affiliates, their officers, agents and employees, assigns, successors, heirs and personal representatives of Lessor against all loss, liability and expense, including, without limitation, all attorney's fees (including costs of a successful defense) from claims for negligence, tort, strict liability, bodily injury, including death or property damage or for any alleged violation of rights of others, including contract, patent, trademark, copyright or intellectual property rights or for any alleged violation of any law, ordinance, rule, regulation, decree, or otherwise arising from or in any way related to the Equipment, supplies, software, the Lease or the Master Lease Agreement, or otherwise, including, without limitation, the ownership, operation, manufacturing, maintenance or services of the Equipment. This provision shall survive expiration, assignment or termination of this Lease or the Master Lease Agreement.

13. LOSS OR DAMAGE. Lessee shall bear all the risks of loss of and damage to the Equipment from any cause and the occurrence of such loss or damage shall not relieve Lessee of any obligation hereunder. In the event of such loss or damage, Lessee shall immediately notify the Lessor in writing and, at the election of Lessor, shall; (a) place the same in like new condition and working order, certified for original Supplier's maintenance and deliver to Lessor written confirmation thereof or; (b) replace the same with equipment having a fair market value at the expiration of the Base Term equal to or greater than the fair market value of the Equipment replaced, and anticipated to have a fair market value that the replaced Equipment would have had at the end of the Base Term, and be the same manufacture, model and type and of at least equal capacity as that of the replaced Equipment ("Replacement Equipment"). Lessor will remit to Lessee the proceeds of insurance in an amount that is the lesser of (i) the actual cost of such repairs or Replacement Equipment or (ii) the insurance proceeds. The Replacement Equipment shall be free and clear of liens and encumbrances and Lessee shall immediately deliver to Lessor, a bill of sale in a form satisfactory to Lessor containing serial number(s) of the Replacement Equipment that conveys the Replacement Equipment to Lessor.

14. FEES, COLLECTION EXPENSES AND LATE CHARGES. Lessee shall also pay to Lessor hereunder as an additional Lease Payment, reasonable fee(s), which shall cover, among other things, Lessor's costs and expenses associated with the initial set-up, revisions, reporting and payment of any taxes due hereunder, monitoring insurance coverage and termination of the Lease. If any Lease Payment, tax payment or any other amount payable herein is not paid when due ("Amount Due"), Lessor may elect for Lessee to pay on demand the following which shall constitute additional Lease Payments: (a) any collection agency fees and expenses plus; (b) a late payment service fee equal to the greater of fifteen ($15.00) dollars or fifteen (15%) percent of the Amount Due for every month that the Amount Due remains unpaid. Lessor and Lessee agree that the fees set forth in this Section 14 are a reasonable approximation of the internal costs that Lessor will incur as a result of Lessee's delay in paying such Amount Due plus; (c) interest at an interest rate that is the highest rate permitted by law ("Late Charge Rate") on such Amount Due for the period for which it is overdue;

(d) reasonable attorney fees and expenses. If Lessee fails to make any Lease Payment or fails to perform any of its other obligations under this Lease (including, without limitation, its agreement to provide insurance coverage or pay taxes), Lessor may make such payment or perform such agreement and the amount of such payment and the expense of Lessor shall be additional Lease Payments payable by Lessee on demand by Lessor. Lessee shall pay to Lessor as an additional Lease Payment, a fee of one hundred ($100.00) dollars for each check returned to Lessor unpaid in addition to any other fee provided for herein for a delinquent Lease Payment.

15. ASSIGNMENT. LESSEE SHALL NOT, DIRECTLY OR INDIRECTLY; (A) ASSIGN, SELL OR OTHERWISE DISPOSE OF ANY LEASE OR ANY INTEREST THEREIN OR THE EQUIPMENT OR ANY PART THEREOF OR; (B) SUBLEASE, CREATE, GRANT, ASSUME OR ALLOW TO EXIST ANY LIEN OR OTHER CLAIM TO THE EQUIPMENT OR ANY PART HEREOF. Lessor or any assignee hereof, may sell or grant a security interest in all or any part of Lessor's rights, obligations, title or interest in the Equipment and rights, obligations or interest arising under this Lease or under the Master Lease Agreement or any Lease Payment(s) or other amount payable under this Lease, to any entity ("Assignee") and in such event the Assignee shall have all of the rights, powers and remedies of Lessor hereunder. Lessee shall execute all documentation deemed necessary by Lessor, and/or any Assignee, to reflect Lessee's obligations under the Lease and/or Lessor's or Assignee's interest in the Lease and the Equipment. Lessee agrees that after written notice by

Lessor or any Assignee (which notice for the purpose of this Section 15 may be an invoice bearing Lessor's or Assignee's name), Lessee shall pay all Lease Payments to the party and to the location as directed by the Lessor or Assignee. Lessee agrees to make all Lease Payments whether or not the Master Lease Agreement is terminated by operation of law, act of the parties hereto or otherwise. Lessee will not (a) assert against any Assignee, any claims by way of abatement, defense, setoff, counterclaim, recoupment or otherwise which Lessee may have, (b) look to such Assignee to perform any of Lessor's obligations hereunder or (c) terminate or attempt to terminate this Lease on account of any default by Lessor or Assignee. Lessee acknowledges that a transfer or assignment of this Lease will not materially increase or change its obligations, burdens, duties or risks under this Lease. This Lease shall inure to the benefit of and be binding upon the successors and assigns of the respective parties hereto and the heirs, executors and administrators of the Lessee, if the Lessee is an individual, always providing that nothing contained in this paragraph shall impair any of the provisions herein before set forth inhibiting assignment without written approval of Lessor.

16. DEFAULT. Any of the following events or conditions shall constitute an event of default hereunder; (a) Lessee fails to pay any Lease Payment hereunder when due; (b) Lessee fails to perform any covenant, in part or whole, herein; (c) Lessee becomes insolvent or makes an assignment for the benefit of creditors or ceases conducting business as a going concern; (d) a receiver, trustee, conservator, or liquidator of Lessee is appointed with or without the application or approval of Lessee; (e) the filing by or against Lessee of a petition under the United States Bankruptcy Code or any amendment thereto; or under any other insolvency law or laws providing for, but not limited to, the relief of debtors or; (f) any representation or statement made or furnished to Lessor by or on behalf of Lessee which could prove to have been false, misleading or have a material effect on Lessee in any respect when made or furnished; (g) Lessee dissolves liquidates, or suspends its business; (h) Lessee sell, transfer or otherwise dispose of all or a majority of its assets, except that Lessee may sell its inventory in the ordinary course of its business; (i) Lessee enter into any merger, consolidation or similar reorganization unless it is the surviving entity; (j) Lessee transfers all or any substantial part of its operations or assets outside of the United States of America; (k) Lessee changes its name or chief place of business, without providing Lessor at least thirty days prior written notice thereof; or (1) when Lessor believes in good faith that the prospect for performance of the terms and conditions of this Lease by Lessee or payment of the Lease Payments by Lessee is impaired. As used in this Section 16, the term "Lessee" also includes any guarantor of all of Lessee's obligations hereunder.

17. REMEDIES AND LIQUIDATED DAMAGES. If any event of default exists in any of Lessee's obligations or covenants hereunder, Lessor or Lessor's agent or assigns, at any of their sole discretion, may, at any time, do one or more of the following in any order and Lessee shall perform its obligations imposed immediately thereby; (a) require Lessee to return to any location designated by Lessor any or all Equipment that is the subject of this Lease; (b) repossess any or all Equipment wherever found; (c) sell any or all Equipment at public or private sale, with or without advertisement or publication, (d) re-lease or otherwise dispose of the Equipment, use, hold or keep it; (e) require Lessee to immediately pay to Lessor as liquidated damages , with respect to any or all Equipment the sum of (i) all Lease Payments that are then due and unpaid; (ii) the Present Value, as that term is defined in the UCC, of the Lease Payments that are not then due but that will be due throughout the remaining Base Term or any extension thereof ("Remaining Payments"). The Remaining Payments shall be discounted in advance at an interest rate of Two Percent (2%) per annum. Lessee acknowledges and agrees that Two Percent (2%) per annum is a commercially reasonable interest rate and takes into account the facts and circumstances of the Lease at the time it is entered into; (iii) the anticipated market value of the Equipment as of the end of the Lease and determined in a commercially reasonable manner by Lessor; (iv) all costs, expenses, damages, including, without limitation any collection agency and attorney's fees and expenses incurred in connection with the enforcement of this Lease or any related document; and (v) interest at the maximum rate permitted by the laws governing this Lease on the total of all sums due from time to time and on which interest has not previously been charged, accruing from the date of the Lessee's default under the Lease and continuing until all such amounts are paid; Lessee acknowledges and agrees that the sum of the aforementioned amounts is reasonable in light of the anticipated harm caused by the Lessee's default or other act or omission; (f) terminate this Lease and all Leases under the Master Lease Agreement; (g) sue to enforce

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THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.

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Lessee's performance of its obligation under this Lease or any other Lease under the Master Lease; and (h) exercise any other right or remedy then available to Lessor at law or in equity. Lessor is not required to undertake any legal process or give Lessee any notice before exercising any of the above remedies. Lessee expressly waives all rights of notice prior to Lessor exercising such remedies and pursuing any and all legal action(s) against Lessee. None of the above remedies is exclusive, and each is cumulative and in addition to any other remedy available to Lessor. Lessor's exercise of one or more remedies shall not preclude its exercise of any other remedy at any time. No delay or failure on the part of Lessor to exercise any right or remedy hereunder shall operate as a waiver thereof nor as an acquiescence in any default, nor shall any single or partial exercise of any right preclude any other exercise thereof or the exercise of any other right at any future and all Lessor's rights and remedies contained herein shall survive the termination of this or the Master Lease Agreement. Lessor shall not be required to sell, re-lease or otherwise dispose of any Equipment prior to Lessor enforcing any of the remedies described above. Lessor may sell or re-lease the Equipment in any manner it chooses, free and clear of any claims or rights of Lessee and without any duty to account to Lessee with respect thereto except, at Lessor's sole discretion, as provided below.

18. END OF LEASE PROVISIONS. Upon the expiration of the Base Term or any extension thereof: Lessee may either (i) terminate the Lease in accordance with the terms herein and return the Equipment, by fulfilling the conditions set forth below, to a location designated by Lessor or (ii) purchase the Equipment in accordance with the terms herein. If Lessee elects to return the Equipment, at Lessee's sole expense, Lessee shall fulfill all of the conditions and requirements hereinafter set forth in (a) through (d) hereof: (a) cure any defaults then existing under the Lease, (b) place the Equipment in like new condition, ordinary wear and tear excepted, and if the Equipment is required by the Supplier to be certified for re-sale or release, cause the Equipment to be certified for maintenance by the Supplier; (c) pay Lessor a restocking and disposition fee equal to Ten Percent (10%) of the original cost of the Equipment; (d) pay all unpaid Taxes. After the Equipment has been returned to the Lessor, if Lessee has failed for any reason to bring the Equipment to like new condition, ordinary wear and tear excepted, and pay all Taxes due and owing on the Equipment, upon written notice by Lessor, Lessee shall immediately pay all amounts expended by Lessor to bring the Equipment to a like new condition and pay all Taxes. The provisions of the preceding sentence shall survive termination of the Lease. If the Lessee has provided Lessor with its notice of intent to purchase the Equipment, as set forth in Section 4 hereof, upon Lessor's receipt of such notice from Lessee, Lessor shall, as soon as reasonably possible, notify Lessee of the Equipment's purchase price, which shall be in Lessor's sole and absolute discretion, based upon Lessor's estimate of the then market value ("Fair Market Value") of the Equipment. Within five (5) business days of Lessor's notification to Lessee of the Equipment's Fair Market Value, Lessee shall notify Lessor whether or not it intends to purchase the Equipment for the Equipment's Fair Market Value. If the Lessee wishes to purchase the Equipment, it shall purchase all, but not less than all, of the Equipment at the time and in the manner determined by the Lessor. In the event that the Lessee decides not to purchase the Equipment, it shall either return the Equipment in the manner herein provided or continue to Lease the Equipment as specified in Section 4 hereof. If Lessee does not complete the purchase of the Equipment after notifying Lessor of its intent to do so, or does not return the Equipment after giving timely notice to terminate a Lease, Lessee shall pay Lessor, as liquidated damages and not as penalty, the sum of one year's Lease Payments in addition to returning the Equipment. Lessor and Lessee agree that the aforementioned liquidated damages are a fair and reasonable estimate of Lessor's damages resulting from Lessee's failure to purchase the Equipment.

19. UCC FILINGS AND FINANCIAL STATEMENTS. Lessor and Lessee agree that a reproduction of this Lease Agreement and its attachments may be filed as a financing statement and shall be sufficient as a financing statement under the UCC. Lessee hereby ratifies all action of the Lessor in executing and filing financing statements prior to the execution of this Lease. Lessee shall execute or obtain or deliver to Lessor, upon Lessor's request, such other documents as Lessor deems necessary or advisable for the protection or perfection of this Lease and Lessor's rights hereunder and shall pay all costs incident thereto. Lessee shall make available to the Lessor all financial statements and tax returns upon request. At a minimum, Lessee agrees to provide Lessor such statements during the term of this Lease.

20. ENTIRE AGREEMENT. This Agreement represents the final, complete and entire agreement between the parties hereto. There are no oral or unwritten agreements or understandings affecting this Lease agreement, the Lease or the Equipment. This Agreement may not be modified, rescinded or altered except by a subsequent written document duly signed by an authorized representative of each party.

21. MISCELLANEOUS. In the event any provision, in whole or in part, of this Lease shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provision(s), in whole or in part shall remain and survive in full force and effect. The provisions of this Lease shall be binding upon and inure to the benefit of any successors or permitted assigns. If this Lease or the Master Lease is signed by more than one Lessee, each of such Lessees shall be jointly and severally liable for payment and performance of all of the Lessee's obligations under this Lease. In the event(s) an unauthorized party or parties execute the Master Lease Agreement, an Acceptance Certificate or a Schedule, or represents that such party or parties has or have authority to bind the Lessee, then the Lessee shall be deemed to have authorized the execution of such document and shall be unconditionally bound under the terms of the Master Lease Agreement, the Acceptance Certificate or the Schedule, as the case may be. All notices permitted hereunder shall be effective when (i) delivered in person to the recipient of such notice; (ii) delivered to a delivery carrier and when the carrier obtains from the intended recipient the recipient's or recipient's agent's signature; (iii) deposited in the United Stated mail with postage prepaid and sent certified mail return receipt requested; or (iv) sent via facsimile with evidence of a successful transmittal by the sender.

22. JURISDICTION. This Lease Agreement shall be binding when accepted in writing by the Lessor. THE INTERPRETATION, ENFORCEMENT, CONSTRUCTION, AND VALIDITY OF THIS LEASE AND ALL OF THE OTHER LEASE DOCUMENTS, AND RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WASHINGTON (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, ENFORCEMENT, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT. With respect to any legal action commenced hereunder, Lessee hereby voluntarily consents to the jurisdiction of any Federal or State Court located in the county of Spokane, State of WASHINGTON. Lessee expressly waives any right to a trial by jury.

23. STATEMENT OF PURPOSE. Lessee hereby warrants and represents that all leased Equipment under this Lease Agreement will be used for business purposes and not for personal, family or household purposes and Lessee acknowledges that Lessor has relied upon this representation entering into this Lease Agreement.

Lessor:

BancLeasing, Inc.

660 North Central Expressway, Suite 400

Plano, TX 75074

Tel. No: 214.778.1840

Fax No: 214.778.1841

Lessee:

Advanced Medical Isotope Corporation

By:	/s/ Pam Rogers	9/24/07	By:	/s/ James C. Katzaroff	9/21/07
	Authorized Signature	Date		Authorized Signature	Date

Pam Rogers			James C. Katzaroff
Name			Name

Assistant Secretary			President
Title			Title

Page 4 of 4

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE. NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OP ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.

	Cash Flow LEASE	Addendum to Master Lease Agreement

		#73558WA-006 Date 9/20/07

The following provisions shall be added to the above referenced Master Agreement:

Section 16 DEFAULT: Add: (m) Failure to provide the following lease covenants apply to all credit facilities for Advanced Medical Isotopes Corporation:

Borrower shall provide annual CPA Audited financial statements within 120 days of fiscal year-end.

Borrower shall provide tax returns within 120 days of fiscal year-end.

Borrower shall cause any and all guarantors to provide annual financial statements within 120 days of fiscal year-end.

Borrower shall cause any and all guarantors to provide tax returns within 120 days of fiscal year-end.

Borrower shall provide quarterly Audited statements within 45 days of quarter-end.

Borrower shall maintain a minimum debt service coverage ratio (see below for definition) of 1.0 to 1 measured at fiscal year-end from the borrower's CPA audited statement. In addition, guarantors agree to additional contributions to the capital accounts as required to fund any deficit in the debt service coverage ratio above.

All business deposit accounts are to be maintained with Washington Trust Bank for the duration of the lease.

Except as expressly added to or amended, all other terms and conditions of the Master Agreement shall remain the same and in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Addendum.

Lessor:	BancLeasing, Inc.		Lessee:	Advanced Medical Isotope Corporation


	660 North Central Expressway, Suite 400			/s/ Carlton M. Cadwell	9/21/07
	Plano, TX 75074
	Tel. No. 214.778.1840
	Fax No. 214.778.1841

By:	/s/ Pam Rogers	9/24/07	By:	/s/ James C. Katzaroff	9/21/07
	Authorized Signature	Date		Authorized Signature	Date

	Pam Rogers			James C. Katzaroff
Name			Name

INSURANCE ADDENDUM

This addendum applies to the lease ("Lease") that consists of Schedule 1 and each Acceptance C ertificate that is made in connection therewith, all being made in accordance with Master Lease Agreement number 73558WA-006 dated September 20, 2007 between BancLeasing, Inc., as Lessor, and Advanced Medical Isotope Corporation, as Lessee.

Lessee hereby certifies that property and liability insurance coverage(s) ("Coverage(s)") required by the Leasse is provided under the insurance policy or policies referenced below. I.essee hereby authorizes Lessor to obtain, and any insurance company or companies providing said Coverage(s) to release or issue to Lessor upon Lessor's request, either or both, the policy or policies of insurance, and/or endorsement(s) of Coverage.

Agent/Broker Name:_________________________________________________________________________________________________

Company Name: ____________________________________________________________________________________________________

Policy No.:___________________________ Policy Expiration Date ____________________________________________________________

Address: _________________________________________________________________________________________________________

City: ____________________________________________________State:_________________________ Zip: ________________________

Phone No.: _______________________________________________ Fax No.: ___________________________________________________

Please provide a certificate of insurance, lender's loss payable endorsement, and additional insured endorsement as follows:

Loss Payee & Additional Insured:	BancLeasing, Inc. and Washington Trust Bank As Their Interests Appear 660 North Central Expressway, Suite 400 Plano, TX 75074 214.778.1840 Phone 214.778.1841 Fax

Insured Amount:	$2,062,500.00
Equipment Description:	See Exhibit "A"

	LESSEE:	Advanced Medical Isotope Corporation

	BY:	/s/ James C. Katzaroff
	NAME:	James C. Katzaroff
	TITLE:	President
	DATE:	9/21/07

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Lease #: 73558WA-006

Schedule #: 1

Date: September 20, 2007

PROGRESS PAYMENT ADDENDUM

This Progress Payment Addendum is an Addendum to that certain Master Lease Agreement referenced above. All terms and conditions of the Master Lease Agreement not inconsistent with this addendum shall be and remain in full force and effect. All capitalized terms used herein but not defined herein shall have the same meaning as set forth in the Master Lease Agreement.

Lessee hereby acknowledges that AccSys Technology, Inc. ("Vendor") requires advance payment(s) in the manner specified below ("Progress Payments") prior to complete delivery, installation and commencement of Lease Rental obligations by Lessee for the equipment ("Equipment"). Lessee hereby requests that Lessor advance said Progress Payments to Vendor on Lessee's behalf. In accordance with the terms herein, and for good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, Lessor may, in its sole discretion, accommodate such request and advance the Progress Payments to Vendor. In advance of each Progress Payment made by Lessor, Lessee will execute a separate Acceptance Certificate acknowledging its obligation to Lessor for each particular Progress Payment.

Advanced Medical Isotope Corporation paid a deposit in the amount of One Hundred Twenty Five Thousand Dollars and 00/100 ($125,000.00) to AccSys Technology, Inc. upon placement of order.

Four Hundred Thirty Seven Thousand Five Hundred. Dollars and 00/100 ($437,500.00) will be paid to AccSys Technology, Inc. (Vendor) upon execution of this Addendum.

Eight Hundred Twenty Five Thousand Dollars and 00/100 ($825,000.00) will be paid to AccSys Technology, Inc. (Vendor) upon shipping of the Equipment.

One Hundred Thirty Seven Thousand Five Hundred Dollars and 00/100 ($137,500.00) will be paid to AccSys Technology, Inc. (Vendor) upon Site Acceptance Test.

Three Hundred Thousand Dollars and 00/100 ($300,000.00) will be paid to AccSys Technology, Inc. (Vendor) upon shipping of the Upgraded equipment.

Fifty Thousand Dollars and 00/100 ($50,000.00) will be paid to AccSys Technology, Inc. (Vendor) upon Site Acceptance Test of the Upgraded equipment.

In the event Lessee fails or refuses to execute the Lease Equipment Schedule or Acceptance Certificate(s) for any reason whatsoever (including, without limitation, Lessee's dissatisfaction with the Equipment or Vendor's failure to deliver the Equipment), then (i) Lessee will immediately reimburse to Lessor all Progress Payments advanced by Lessor to Vendor together with a processing fee equal to five percent (5%) of the total Progress Payment(s); and (ii) Lessee shall forfeit to Lessor any advance payments or security deposit previously paid by Lessee in liquidation of administrative costs; and (iii) Lessee shall hold Lessor harmless from and against any and all claims by Vendor against Lessor arising out of Lessee's failure or refusal to execute the Acceptance Certificate(s) or related Equipment Schedule.

Notwithstanding anything to the contrary herein or in the lease documents, Lessor hereby reserves the right to terminate this Addendum and discontinue Progress Payments at any time if Lessor determines, in Lessor's sole discretion, that there has been an adverse change in Lessee's financial condition, at which time Lessor may seek reimbursement from Lessee as set forth herein or commence the Equipment Schedule immediately.

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.

LESSOR: BancLeasing, Inc.		LESSEE: Advanced Medical Isotope Corporation

By:	/s/ Mark Buchanan	By:	/s/ James C. Katzaroff

Name:	Mark Buchanan	Name:	James C. Katzaroff

Title:	EVP	Title:	President

Date:	9/24/07	Date:	9/21/07

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.1.

Page 1 of 1

Washington Trust Bank

BEYOND MONEY

SCHEDULE

MADE IN COMPLIANCE WITH MASTER LEASE AGREEMENT #: 73558WA-006

T.A. #: WA-006-1

Qty	Equipment Type	Model Number	Equipment Description	Serial Number
As set forth on each Acceptance Certificate that is summarized by this Schedule.

Number of Acceptance Certificates summarized by this Schedule: 4

Base Term in months:	84

Lease Payments are paid:	monthly

Amount of Lease Payment:	$23,762.60 plus Tax, if applicable

Advance Payment:	$23,762.60 (constituting an amount equal to the last Lease Payment)

Stipulated Loss Value(s):	$1,662,394.80 (The Aggregate of the Stipulated Loss Value(s) set forth on each Acceptance Certificate that is summarized on this Schedule)

End of Term Purchase Option:	As set forth in the Master Lease or Purchase Option Addendum, attached thereto and incorporated therein.

THIS SCHEDULE CONSOLIDATES AND INCORPORATES BY REFERENCE THE FACTS AND DATA OF EACH ACCEPTANCE CERTIFICATE THAT IS RELATED TO AND ASSOCIATED WITH THIS SCHEDULE AS IDENTIFIED ABOVE. WHEN EXECUTED BY THE LESSEE, THIS SCHEDULE SHALL BE THE LEASE OF THE EQUIPMENT IDENTIFIED ON THE ACCEPTANCE CERTIFICATE(S), IS GOVERNED BY THE TERMS AND CONDITIONS OF MASTER LEASE AGREEMENT 73558WA-006 AND SHALL BE BINDING UPON AND ENFORCEABLE AGAINST LESSEE IN THE SAME MANNER AS EACH ACCEPTANCE CERTIFICATE(S).

LESSOR: BancLeasing, Inc.		LESSEE: Advanced Medical Isotope Corporation

By:	/s/ Mark Buchanan	By:	/s/ Leonard Bruce Jolliff

Name:	Mark Buchanan	Name:	Leonard Bruce Jolliff

Title:	EVP	Title:	CFO

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.1.

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$1.00 PURCHASE OPTION ADDENDUM

This addendum "Addendum" is made to Schedule #1, dated September 20, 2007 of Master Lease Agreement # 73558WA-006 ("Lease") between BancLeasing, Inc., Lessor, and Advanced Medical Isotope Corporation, (“Lessee”).

1. Provided no Event of Default or event which with the giving of notice or lapse of time, or both, would constitute an Event of Default under the Lease, has occurred and is continuing, and further provided that the Lessee has, on a timely basis, fully complied with all terms and conditions of the Lease, Lessee upon giving prior written notice of its election to Lessor no later than Ninety (90) days prior to the end of the Base Term or any renewal thereof, may exercise one of the following options upon the expiration of the Base Term, or any renewal thereof.

Lessee may purchase all, but not less than all, of the Equipment on an "AS IS, WHERE IS" b asis for an amount equal to One Dollar ($1.00), plus any applicable taxes and fees, which amount shall be payable to Lessor within ten (10) days following the end of the Base Term or any renewal thereof.

If Lessee does not purchase the equipment as set forth above, Lessee may return the equipment to the Lessor pursuant to the terms of the Lease.

2. If this Lease is deemed by a court of competent jurisdiction to constitute a conditional sales agreement or a lease intended as a security, as that term is defined in Article 2.1 of the Uniform Commercial Code as adopted by the State of WASHINGTON, the following shall apply: Interest evidenced by this Agreement shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved. charged or received under law; any interest in excess of the maximum amount of interest allowable by law shall be credited on the principal of the debt, or, if that has been paid, refunded. On any acceleration required or permitted prepayment, any such excess shall be cancelled automatically as of the date of acceleration or prepayment, or if the principal of the debt has been paid. refunded. This provision shall supersede any other contrary provisions in this document and all other instruments concerning the debt, if it is deemed to be a debt.

3. Notwithstanding any other provision of the Master Lease Agreement. the Acceptance Certificate or the Schedule to the contrary, Lessee shall timely file directly with each governmental entity having jurisdiction over the Equipment ("Governmental Entity"), all reports or returns concerning the value, use, ownership or lease of the Equipment, including without limitation, reports of excise taxes, personal property taxes and all other taxes and charges (all such amounts are collectively referred herein as "Taxes"). Lessee will timely pay directly to the appropriate Governmental Entity all Taxes imposed by each Governmental Entity during the term of this Lease. whether due before or after termination of this Lease. If Lessee, in good faith, believes that the value of the Equipment or the amount of Taxes determined or imposed are incorrect. Lessee shall comply with all requirements of any Governmental Entity regarding filing of protests and shall timely file all documents necessary to effectuate such protest. At the same time that Lessee notifies any Governmental Entity of a protest, it shall notify Lessor of the same. If requested by Lessor, Lessee shall immediately furnish Lessor proof of payment of Taxes . Lessee indemnifies and defends Lessor, its affiliates, their officers, agents and employees, assigns, successors, heirs and personal representatives of Lessor against all loss, liability and expense, including, without limitation, all attorney's fees (including costs of a successful defense) from claims for unpaid Taxes and penalties thereon. The provisions of this Section 3 shall survive termination of this Lease.

4. The capitalized terms used in this Addendum, not otherwise defined herein, shall have the same definition as in the Lease, and in the event of a conflict of terms and conditions among this Addendum and the Lease, and/or the Schedule to which this Addendum applies, the terms and conditions of this Addendum will apply.

LESSOR: BancLeasing, Inc.		LESSEE: Advanced Medical Isotope Corporation

By:	/s/ Pam Rogers	By:	/s/ James C. Katzaroff
Name:	Pam Rogers	Name:	James C. Katzaroff
Title:	Assistant Secretary	Title:	President
Date:	9/24/07	Date:	9/21/07

NOTE: SIGNATURE MUST BE SAME AS ON LEASE

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.1.

Page 1 of 1

Washington Trust Bank

BEYOND MONEY

SCHEDULE

MADE IN COMPLIANCE WITH MASTER LEASE AGREEMENT #: 73558WA-006

T.A. #: WA-006-2

Qty	Equipment Type	Model Number	Equipment Description	Serial Number
As set forth on each Acceptance Certificate that is summarized by this Schedule.

Number of Acceptance Certificates summarized by this Schedule: 43

Base Term in months:	60

Lease Payments are paid:	monthly

Amount of Lease Payment:	$19,050.29 plus Tax, if applicable

Advance Payment:	$19,050.29 (constituting an amount equal to the last Lease Payment)

Stipulated Loss Value(s):	$1,027,275.88 (The Aggregate of the Stipulated Loss Value(s) set forth on each Acceptance Certificate that is summarized on this Schedule)

End of Term Purchase Option:	As set forth in the Master Lease or Purchase Option Addendum, attached thereto and incorporated therein.

LESSOR: BancLeasing, Inc.		LESSEE: Advanced Medical Isotope Corporation

By:	/s/ Mark Buchanan	By:	/s/ Leonard Bruce Jolliff

Name:	Mark Buchanan	Name:	Leonard Bruce Jolliff

Title:	EVP	Title:	CFO

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.1.

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$1.00 PURCHASE OPTION ADDENDUM

This addendum "Addendum" is made to Schedule #2, dated October 23, 2007 of Master Lease Agreement # 73558WA-006 ("Lease") between BancLeasing, Inc., Lessor, and Advanced Medical Isotope Corporation, ("Lessee").

Lessee may purchase all, but not less than all, of the Equipment on an "AS IS, WHERE IS" basis for an amount equal to One Dollar ($1.00), plus any applicable taxes and fees, which amount shall be payable to Lessor within ten (10) days following the end of the Base Term or any renewal thereof.

If Lessee does not purchase the equipment as set forth above, Lessee may return the equipment to the Lessor pursuant to the terms of the Lease.

2. If this Lease is deemed by a court of competent jurisdiction to constitute a conditional sales agreement or a lease intended as a security, as that term is defined in Article 2A of the Uniform Commercial Code as adopted by the State of WASHINGTON, the following shall apply: Interest evidenced by this Agreement shall not exceed the maximum amount of non- usurious interest that may be contracted for, taken, reserved, charged or received under law; any interest in excess of the maximum amount of interest allowable by law shall be credited on the principal of the debt, or, if that has been paid, refunded. On any acceleration required or permitted prepayment, any such excess shall be cancelled automatically as of the date of acceleration or prepayment, or if the principal of the debt has been paid, refunded. This provision shall supersede any other contrary provisions in this document and all other instruments concerning the debt, if it is deemed to be a debt.

3. Notwithstanding any other provision of the Master Lease Agreement, the Acceptance Certificate or the Schedule to the contrary, Lessee shall timely file directly with each governmental entity having jurisdiction over the Equipment ("Governmental Entity"), all reports or returns concerning the value, use, ownership or lease of the Equipment, including without limitation, reports of excise taxes, personal property taxes and all other taxes and charges (all such amounts are collectively referred herein as "Taxes"). Lessee will timely pay directly to the appropriate Governmental Entity all Taxes imposed by each Governmental Entity during the term of this Lease, whether due before or after termination of this Lease. If Lessee, in good faith, believes that the value of the Equipment or the amount of Taxes determined or imposed are incorrect, Lessee shall comply with all requirements of any Governmental Entity regarding filing of protests and shall timely file all documents necessary to effectuate such protest. At the same time that Lessee notifies any Governmental Entity of a protest, it shall notify Lessor of the same. If requested by Lessor, Lessee shall immediately furnish Lessor proof of payment of Taxes. Lessee indemnifies and defends Lessor, its affiliates, their officers, agents and employees, assigns, successors, heirs and personal representatives of Lessor against all loss, liability and expense, including, without limitation, all attorney's fees (including costs of a successful defense) from claims for unpaid Taxes and penalties thereon. The provisions of this Section 3 shall survive termination of this Lease.

LESSOR: BancLeasing, Inc.		LESSEE: Advanced Medical Isotope Corporation

By:	/s/ Pam Rogers	By:	/s/ James C. Katzaroff
Name:	Pam Rogers	Name:	James C. Katzaroff
Title:	Assistant Secretary	Title:	President
Date:	10/25/07	Date:	October 27, 2007

NOTE: SIGNATURE MUST BE SAME AS ON LEASE

THIS IS COUNTERPART NO. 2 OF 2 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.1.

EXHIBIT 10.9

LEASE AGREEMENT

THIS AGREEMENT made and entered into this day of 17 day of July, 2007, by and between Robert L. and Maribeth F. Myers, 6211 West Okanogan Avenue, Kennewick Washington, 99336, hereinafter referred to as Landlord/Lessor, and Advanced Medical Isotopes Corporation, a Delaware corporation, with a principal place of business at 6208 West Okanogan Avenue, Kennewick, Washington, 99336, hereinafter Tenant/Lessee, WITNESSETH:

For and in consideration of the covenants to be performed by the respective parties, the Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord the real property situated in the City of Kennewick, Benton County, State of Washington, commonly known as 6208 West Okanogan Avenue, Kennewick, WA 99336. The legal description of the subject property is attached hereto as Exhibit A.

The parties covenant and agree as follows:

Article 1. TERM .

The term of this lease shall be for five (5) years commencing on the 1 st day of August, 2007.

Article 2. RENT.

The Tenant will pay to the Landlord the following as rent for said premises:

2.1 Monthly Rent. Monthly rental payments, in the amount on the following schedule, commencing on the first day of August, 2007, and continuing on the first day of each and every month thereafter.

Monthly Rental Schedule:

August 1, 2007 to July 31, 2008:		$3,500.00
August 1, 2008 to July 31, 2009:		$3,780.00
August 1, 2009 to July 31, 2010:		$4,082.40
August 1, 2010 to July 31, 2011:		$4,408.99
August 1, 2011 to July 31, 2012:		$4,761.71

All monthly rental payments shall be payable monthly in advance. The Tenant further covenants and agrees to deposit with the Landlord the sum of $8,261.71, receipt of which is hereby acknowledged by the Landlord, which sum shall represent and be applied to the first and last months' rental under the terms of this lease agreement or repair or damage to the premises;

2.2 Stock Issuance Rent. In addition to the Monthly Rent provided for in paragraph 2.1, above, Tenant shall further pay to Landlord an additional three thousand dollars ($3,000.00) per month, sixty (60) months prepaid in full, without refund or reimbursement for early termination of this Lease Agreement, through issuance of Advanced Medical Isotope Corporation stock, at the two hundred day simple moving average per share price on the date of execution of this Lease Agreement, plus an additional seven thousand five hundred dollars ($7,500.00) through issuance of Advanced Medical Isotope Corporation stock at the two hundred day moving average per share price on the date of execution of this lease agreement, such that Tenant will issue to Landlord stock with a value on the date of execution of this agreement of one-hundred eighty-seven thousand five hundred dollars ($187,500.00) based upon the two hundred day simple moving average, not later than August 1, 2007. The stock shall be issued in the name of Robert L. and Maribeth F. Myers with no restrictions other than a one-year hold; and

2.3 Triple Net. This Lease is a triple net lease and in addition to the rents due hereunder, Tenant shall be responsible for all insurance, taxes, maintenance (including repair and replacement) expenses and management fee as hereinafter in this Lease more particularly described, it being generally understood and agreed that Landlord shall not be responsible for any costs or expenses in connection with the Premises during the term of this Lease and shall be entitled to a net return of the rental herein specified undiminished by the cost of insurance, taxes described in Article 4, and assessments for water, electrical, gas, sewer or other utility charges or levies of any kind or nature whatsoever, now or at any time hereafter, during the term of this Lease or any renewal or extension hereof, except where otherwise specifically provided to the contrary herein.

Article 3. USE OF THE PREMISES.

The Premises shall be used for the conduct of a medical isotope production company. Tenant shall not allow the use of the Premises as a dwelling or any other use which would be in violation of the use restrictions set forth in the Lease.

Article 4. TAXES.

4.1 Real Property Taxes. In addition to the rents provided for in Article 2 above, and commencing with the term of this Lease, as defined in Article 1, Tenant agrees to pay monthly, on the first day of each month, (on an estimated basis by Landlord) all taxes (including other fees or charges hereinafter defined as New Taxes) and assessments levied and assessed for any year upon the Premises and the underlying realty. In the event the Landlord does not have the Premises separately assessed for tax purposes, then and in that event the taxes and assessments on the Premises shall be apportioned according to the floor area of the Premises, including mezzanine (if any), as it relates to the total leasable floor area of the building or buildings included in said tax assessment. All such taxes and assessments shall be payable by Tenant to Landlord within thirty (30) days after receipt of an invoice from Landlord advising Tenant of its share of said taxes and assessments. With respect to any assessments which may be levied against or upon the Premises or which under the laws then in force may be evidenced by improvement or other bonds, or may be paid in annual installments, only the amount of such annual installment (with appropriate proration for any partial year) and statutory interest shall be included within the computation of the annual taxes and assessments levied against the Premises. Taxes for the first and last year of the term hereof shall be prorated between the Landlord and Tenant as of the commencement of, and expiration of the term, subject to the provisions of Article 1, and shall be payable within ten (10) days after a receipt of an invoice from Landlord.

In the event taxes are billed on an estimated basis, Tenant shall pay to Landlord one-twelfth (1/12th) of its proportionate share of the estimated Real Property Taxes for each tax year on the first day of each month, which occurs in such tax year. The amount of the estimated Real Property Taxes shall be based on the most recent available assessment notices or tax bills concerning the entire Building or, at the option of Landlord, the Parcel of which the Premises are a part, or, if there are none, on such amount as Landlord, in good faith, shall estimate. If the amount paid by Tenant toward the estimated Real Property Taxes exceeds the actual amount due at the end of such tax year (as determined from the specific tax bills for such tax year), the excess shall be applied against Tenant's next succeeding payment(s) due under this Section. If the amount paid by Tenant under this Section is less than said actual amount due, Tenant shall pay to Landlord the deficiency within ten (10) days after notice from Landlord. A tax bill or assessment notice submitted by Landlord to Tenant shall be conclusive evidence of the amount of Real Property Taxes assessed or levied and of the items taxed or assessed.

4.2 Personal Property Taxes. Tenant shall pay, before delinquency, all taxes, assessments, license fees and public charges levied, assessed or imposed upon or measured by the value of its business operation, including but not limited to the furniture, fixtures, leasehold improvements, equipment and other property of Tenant at any time situated on or installed in the Premises by Tenant or by the Landlord for Tenant's use, including any HVAC Unit(s) and/or systems. If at any time during the term of this Lease any of the foregoing are assessed as a part of the real property of which the Premises are a part, Tenant shall pay to Landlord upon demand the amount of such additional taxes as may be levied against said real property of which the Premises are a part. For the purpose of determining said amount, figures supplied by the tax assessor as to the amount so assessed shall be conclusive.

4.3 New Taxes. In addition to rent and other charges to be paid by Tenant hereunder, Tenant shall reimburse to Landlord, within thirty (30) days of the mailing of notice of a demand therefor, any and all taxes payable by Landlord (other than net income, estate and inheritance taxes) whether or not now customary or within the contemplation of the parties hereto:

4.3.1 Upon, allocable to, or measured by the area of the Premises or on the rent payable hereunder, including without limitation, any gross income tax or excise tax levied by the State of Washington, Benton County, and the City of Kennewick, any political subdivision thereof, City or Federal Government with respect to the receipt of such rent; or

4.3.2 Upon or with respect to the possession, leasing, operations, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or

4.3.3 Any fees or charges levied against Landlord or the Premises by or on behalf of any governmental (either public or quasi-public) entity for services rendered by or on behalf of any governmental (public or quasi-public) entity, including those established in place of property taxes whether called "fees" or otherwise.

Article 5. UTILITIES SERVICES

Tenant agrees at its own cost and expense, to pay for all water, gas, sewer (and septic tank service, if any), power and electric current, garbage collection and/or compacting, and other similar utilities or services used by the Tenant on the Premises and for all connection and/or hookup fees, standby charges, service fees, whether charged before or after completion of the Premises and/or the Building, maintenance, repair, replacement and inspection service for fire sprinkler system, drainage and sewer facilities, and all utilities from and after the delivery of possession of the Premises by Landlord. If separate meters are provided for Tenant, the cost of the meters, deposit for meters, and their installation shall be at Tenant's expense.

In addition to the Rent specified in Article 2, Tenant shall pay as additional rent a utility charge to reimburse Landlord for utilities furnished by Landlord, if any, to the Premises.

If Tenant installs upon the Premises any electrical equipment which constitutes an overload on the electrical lines of the Premises, Tenant shall at its own expense make whatever changes are necessary to comply with the requirements of the insurance underwriters and any governmental authority having jurisdiction thereover, but nothing herein contained shall be deeded to constitute Landlord's consent to such overloading.

Tenant agrees at its own cost and expense to pay for all lawn and yard care and maintenance and to maintain all landscaping in good repair and condition, specifically including the waterfall. Tenant shall not alter or remove the landscaping, including the waterfall, without the express, written consent of the Landlord. Landlord shall be permitted to remove the waterfall and surrounding landscaping at its own election and expense.

Tenant agrees at its own cost and expense to pay for all security and fire alarm system maintenance and cost, including false alarm costs, and Tenant further agrees that any changes, alterations, or additions to the security/alarm system are to be provided and performed by J. Compton with Tri-City Sales, Incorporated, at Tenant's sole cost and expense.

Tenant agrees at its own cost and expense to pay for all telephone system maintenance and cost and that any changes, alterations, or additions to the telephone system are to be provided and performed by Telco Wiring & Repair, Inc., at Tenant's sole cost and expense.

Article 6. MAINTENANCE AND REPAIRS; ALTERATIONS AND ADDITIONS

6.1 Maintenance And Repairs.

6.1.1 The Tenant agrees at all times, from and after delivery of possession of the Premises to the Tenant, and at its own cost and expense to maintain, repair and/or replace in good and tenantable condition the Premises and every part thereof, excluding only the roof, exterior walls, structural parts of the Premises and structural floor. Tenant's obligation includes without limitation floor covering (including carpeting, terrazzo or other special flooring), the utility meters, electrical wiring, plumbing pipes and conduits, all fixtures, air conditioning, heating, HVAC, sewage, and sprinkler systems, including equipment serving the Premises (operation and maintenance to be performed at least in accordance with manufacturer's specifications or other minimum operation and maintenance standards furnished to Tenant by Landlord) and other equipment therein, the ceiling, storefront or storefronts, all Tenant's signs, locks and closing devices, and all window sash, casement or frames, door and door frames, and all such items of maintenance, repair and/or replacement, improvement or reconstruction as may at any time or from time to time be required by a governmental agency having jurisdiction thereof. Tenant shall have all heating, air conditioning and HVAC systems regularly serviced and maintained pursuant to a service contract with a professional heating and air conditioning service firm, and both the contractor and the contract shall be approved in writing by Landlord. All glass, both exterior and interior, is at the sole risk of Tenant, and any glass broken shall be promptly replaced by Tenant with glass of equal or greater quality, all meeting applicable codes. As used in this Article the expression "exterior walls" shall not be deemed to include storefront or storefronts, plate glass, gates, window cases, or window frames, doors or door frames and their appurtenances even if located in or on such walls. It is understood and agreed that the Landlord shall be under no obligation to make any repairs, alterations, renewals, replacements or improvements to and upon the Premises or the mechanical equipment exclusively serving the Premises at any time. Tenant shall provide for pest extermination services at reasonable intervals.

6.1.2 The Tenant further covenants and agrees that if Tenant refuses or neglects to make repairs and/or maintain the Premises, or any part or component thereof, including the regular cleaning of windows and floor coverings and the regular servicing of air conditioning, heating and HVAC systems, in a manner reasonably satisfactory to Landlord, then Landlord may go upon the Premises and make any necessary repairs or maintenance to the Premises or any part or component thereof, and perform any work therein including that which may be necessary to comply with any laws, ordinances, rules or regulations of any public authority or of the State Surveying and Rating Bureau or of any similar body, or that the Landlord may deem necessary to prevent waste or deterioration in connection with the Premises if the Tenant does not make or cause such repairs to be made or performed or cause such work to be performed promptly after receipt of written demand from the Landlord. Nothing herein contained shall imply any duty on the part of the Landlord to do any work which under any provision of this Lease the Tenant may be required to do, nor shall it constitute a waiver of Tenant's default in failing to do the same. No exercise by the Landlord of any rights herein reserved shall entitle the Tenant to any damage for any injury or inconvenience occasioned thereby nor to any abatement of rent. In the event Landlord makes or causes any such repairs to be made or performed, as provided herein, Tenant shall pay the cost thereof to Landlord, forthwith, as additional rent upon receipt of a bill therefor, and such cost shall include interest at the rate provided for on Past Due Obligations as provided in Section 20.14 from the date of completion of the repairs or earlier payment by Landlord for services or costs associated therewith.

6.1.3 Tenant waives the provisions of any law permitting Tenant to make repairs at Landlord's expense so long as this waiver does not conflict with requirements of insurance. Tenant expressly agrees that the use of roof areas shall be limited to ingress for maintenance purposes only, and then only after the prior consent of Landlord, and that said roof areas shall not be used for storage, inventory and other similar uses.

6.1.4 Upon the expiration or earlier termination of this Lease, Tenant shall surrender the Premises in broom-clean condition and otherwise in as good a condition as received, ordinary wear and tear and damage by fire, earthquake, act of God or the elements alone excepted, and shall promptly remove or cause to be removed at Tenant's expense from the Premises and the Building any signs, notices and displays placed by Tenant. Tenant agrees to repair any damage to the Premises or the Building caused by or in connection with the removal of any articles of personal property, business or trade fixtures, machinery, equipment, cabinetwork, signs, furniture, moveable partitions or permanent improvements or additions, including without limitation thereto, repairing the floor and patching and painting the walls where required by Landlord to Landlord's reasonable satisfaction, all at Tenant's sole cost and expense. Tenant shall fill, patch and otherwise repair any holes and other damage to the store front as a result of removal of Tenant's signs and shall repaint such store front to match the then existing building paint. Tenant shall indemnify the Landlord against any loss or liability resulting from delay by Tenant in so surrendering the Premises, including without limitation, any claims made by any succeeding tenant founded on such delay.

6.2 Alterations.

6.2.1 Tenant shall not make any alterations or additions to the Premises nor make any contract therefor without first procuring Landlord's written consent. Any alterations, additions, and improvements are to be made at Tenant's sole and separate cost. All alterations, additions, and improvements made by Tenant to or upon the Premises, except light fixtures, signs, electrical equipment, cases, counters or other removable trade fixtures, shall at once when made or installed be deemed to have been attached to the Premises and to have become the property of Landlord; provided, however, if prior to termination of this Lease, or within thirty (30) days thereafter, Landlord so directs by written notice to Tenant, Tenant shall at the termination of this Lease or if notified within thirty (30) days thereafter, promptly remove the additions, improvements, fixtures, trade fixtures, floor covering and installations which were placed in the Premises by Tenant and which are designated in said notice or which are to be retained by Tenant and shall repair any damage occasioned by such removal; and in default thereof Landlord may effect said removal and repairs at Tenant's expense.

6.2.2 All work with respect to any alterations, additions, and changes must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work.

6.2.3 Any such changes, alterations and improvements shall be performed and done strictly in accordance with the laws and ordinances relating thereto. In performing the work of any such alterations, additions or changes or of any construction, Tenant shall have the work performed in such a manner as not to cause nuisance.

6.2.4 Before commencing any such construction in or about the Premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall have the right at any time and from time to time to post and maintain on the Premises such notices as Landlord deems necessary to protect the Premises and Landlord from mechanics' liens, materialmen's liens, or any other liens.

Article 7. ENTRY BY LANDLORD

Landlord and the authorized representatives of Landlord may enter the Premises at all reasonable times with a 24-hour notice, for the purpose of exhibiting the same to prospective purchasers and, during the final ninety (90) days of the term of this Lease, may exhibit the Premises for lease and display thereon, in such manners not unreasonably to interfere with Tenant's business, the usual "For Lease" signs, and such signs shall remain unmolested upon the Premises.

Landlord and its agents shall have reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain if they are in good repair, and at its option to make reasonable repair, which Landlord may be authorized to make hereunder and Tenant hereby grants to Landlord such licenses and easements as necessary or expedient to effectuate the foregoing.

Article 8. LIENS.

Tenant agrees that it will pay or cause to be paid all costs for work done by it on the Premises, and Tenant will keep the Premises free and clear of all mechanics' liens on account of work done by Tenant or persons claiming under Tenant. Tenant agrees to and shall indemnify and save Landlord free and harmless against claims, liability, loss, damage, costs, attorney's fees, and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under Tenant.

If Tenant shall desire to contest any claim of lien, it shall furnish Landlord adequate security for the value or in the amount of the claim, plus estimated costs and interest, or a bond of responsible corporate surety in such amount conditioned on the discharge of the lien. If a final judgment establishing the validity or existence of lien for any amount is entered, Tenant shall pay and satisfy the same at once.

If Tenant shall be in default in paying any charge for which a mechanics' lien claim and suit to foreclose the lien have been filed, and shall not have given Landlord security to protect the property and Landlord against such claim of lien, Landlord may (but shall not be so required to) pay the claim and any costs, and the amount so paid, together with reasonable attorneys fees incurred in connection therewith, shall be immediately due and owing from Tenant to Landlord, and Tenant agrees to and shall pay the same with interest at the rate provided for on Past Due Obligations as provided in Section 20.14 from the dates of Landlord's payments.

Should any claims of lien be filed against the Premises or any action affecting the title to such property be commenced, the party receiving notice of such lien or action shall forthwith give the other party written notice thereof.

Landlord or its representative shall have the right to go upon and inspect the Premises at all reasonable times and shall have the right to post and keep posted thereon notices which Landlord may deem to be proper for the protection of Landlord's interest in the Premises. Tenant shall, before the commencement of any work which might result in any such lien, give to Landlord written notice of its intention to do so in sufficient time to enable Landlord to file and record such notices.

Article 9. INDEMNITY.

9.1 Indemnity. Except to the extent directly caused by the negligence of Landlord, Tenant hereby agrees to defend, pay, indemnify and hold Landlord (and its respective affiliates, employees and agents) harmless from and against any and all claims, demands, fines, suits, actions, proceedings, orders, decrees, judgments and liabilities of every kind, and all reasonable expenses incurred in investigating and resisting the same (including reasonable attorneys' fees), resulting from or in connection with loss of life, bodily or personal injury or property damage (i) arising out of or on account of any occurrence in or on the Premises, including, specifically without limitation, arising out of the bursting, release, breaking, leaking, overflowing or backing up of utility lines or any sprinkler system within the Premises, or (ii) occasioned wholly or in part through the use and occupancy of the Premises or any improvements therein or appurtenances thereto, or (iii) occasioned by any act or omission or negligence of Tenant or any assignee, subtenant, concessionaire or licensee of Tenant, or their respective employees, agents or contractors in the Premises or in the doorways. Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord. Tenant, as a material part of the consideration to Landlord, hereby waives all claims in respect thereof against Landlord.

9.2 Exemption Of Landlord From Liability. Landlord shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees or customers, or any other person in or about the Premises caused by or resulting from fire, steam, electricity, gas, water or rain, which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defect of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the same, whether the said damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant of the Building.

Article 10. INSURANCE.

10.1 General Liability And Property Damage. Tenant shall at all times during the term hereof, or upon the date of occupancy, whichever is sooner, and at its own cost and expense procure and continue in force Workmen's Compensation Insurance, Bodily Injury and Property Damage Liability Insurance adequate to protect Landlord and naming Landlord as an additional insured in the liability contract against liability for injury or death of any person in connection with the construction of the improvements, use, operation or condition of the Premises (and related sidewalks, loading docks and other appurtenances). Such insurance at all times shall be in an amount of not less than Two Million Dollars ($2,000,000) combined single limit for bodily injury and property damage. The limits of such insurance shall not limit the liability of Tenant.

10.2 Fire And Extended Coverage.

10.2.1 PREMISES. Landlord shall procure and maintain at its own expense during the term of this Lease, Fire, Windstorm and Extended Coverage Insurance (with additional perils to be covered at Landlord's option) on the Premises in amounts no less than eighty percent (80%) of the insurable value above foundation. Landlord's reasonable estimate of the insurable value shall be binding on Tenant for the purposes of establishing the amount of insurance coverage due hereunder. Tenant shall pay for all increases in all insurance premiums caused by Tenant's use or occupancy of the Premises, act of negligence, or violation of the policy provisions.

10.2.2 FIXTURES. Tenant shall at all times during the term hereof, and commencing upon the date of the installation of Tenant's fixtures if sooner, and at its own cost and expense, (i) maintain in effect policies of insurance covering fixtures, equipment, plate glass, and personal property located in or on the Premises, with no deductible unless expressly approved in writing by Landlord, in an amount not less than ninety percent (90%) of their actual cash value from time to time during the term of this Lease, providing protection against any peril included within the classification Fire and Extended Coverage, together with insurance against sprinkler damage, vandalism, and malicious mischief, and (ii) be responsible for the maintenance, repair, and replacement of the plate glass on the Premises, and (iii) procure and maintain in full force and effect boiler and machinery insurance on all air conditioning equipment, boilers, and other pressure vessels and systems, whether fired or unfired, located in or serving the Premises; and if the said objects and the damage that may be caused by them or result from them are not covered by Tenant's Extended Coverage insurance, then such insurance shall be in an amount not less than One Hundred Thousand Dollars ($100,000). The proceeds of such insurance shall be used to repair or replace the fixtures, equipment, personal property, and glass so covered, and any Lender providing financing and taking a security interest on fixtures with Landlord's consent shall expressly agree to this provision.

10.2.3 ENVIRONMENTAL HAZARD. Tenant shall at all times during the term hereof or upon the date of occupancy, whichever is sooner, and at its own cost and expense procure and continue in force all risk Environmental Hazard insurance adequate to protect Landlord and naming Landlord as an additional insured in the liability contract against liability for contamination, environmental hazard, hazardous waste, radioactive waste, or any other environmental liability in connection with the Tenant's use of the use, operation or condition of the Premises (and related sidewalks, loading docks and other appurtenances). Such insurance at all times shall be in an amount of not less than Two Million Dollars ($2,000,000) combined single limit for bodily injury and property damage. The limits of such insurance shall not limit the liability of Tenant.

10.3 Tenant's Share Of Insurance Cost. Tenant shall pay, in addition to the rent, and commencing with the term of this Lease, the amount of the cost to Landlord of the insurance required to be maintained by Landlord on the Premises under Section 10.2.1. Such payments shall be made by Tenant within ten (10) days after receipt of a written statement from Landlord, or on the first day of each month if billed monthly, setting forth the amount of any such insurance cost. If the amount paid by Tenant towards the estimated cost to Landlord of the insurance to be maintained by Landlord on the Premises under Section 10.2.1 exceeds the actual amount due at the end of Landlord's insurance year, the excess shall be applied against Tenant's next succeeding payment(s) due. If the amount paid by Tenant is less than said actual amount due, Tenant shall pay to Landlord within ten (10) days after notice from Landlord the amount of such deficiency. Insurance premium invoices submitted by Landlord to Tenant shall be conclusive evidence of amount due Landlord.

10.4 Form of Policies. All insurance required to be carried by Tenant hereunder shall be with companies rated. A+ Class VII or better in Best's Insurance Guide (or such larger Class as Landlord may determine appropriate in the event Tenant's use creates an unusual or greater than normal insurance risk) and shall be on forms and with loss payable clauses satisfactory to Landlord naming Landlord and any persons, films, or corporations designated by Landlord as an additional insured as its interest may appear, and copies of policies of such insurance or certificates issued by the insurance company evidencing the existence and amounts of such insurance shall be delivered to Landlord by Tenant at least fifteen (15) days prior to Tenant occupying the Premises. All such policies shall be written as primary policies, not contributing with and not in excess of coverage which Landlord may carry. No such policies shall be cancelable (or coverage reduced), except after thirty (30) days written notice to Landlord. Tenant shall, at least thirty (30) days prior to the expiration of such policies, furnish Landlord with renewals or "binders" thereof or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand and shall bear interest at the rate provided for Past Due Obligations as provided in Section 20.14 from the date of payment by Landlord. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Tenant provided such blanket policies expressly afford coverage to the Premises and to the Landlord as required by this Lease and contains the other requirements set forth herein.

10.5 Waiver of Subrogation. Landlord and Tenant each hereby waive any and all rights of recovery against the officers, employees, agents and representatives of such other party for loss of or damage to such waiving party of its property or the property of others under the form of fire insurance policy with all permissible extensions and endorsements covering additional perils or under any other policy of insurance carried by such waiving party in lieu thereof. Tenant shall obtain and furnish evidence to Landlord of the waiver by Tenant's workmen's compensation carrier of any right of subrogation against Landlord.

Article 11. CONDITION OF PREMISES

Tenant taking possession of the premises shall be conclusive evidence against the Tenant in the premises that the Premises were in satisfactory condition when Tenant took possession. Tenant acknowledges inspection of the Premises and hereby accepts the Premises "AS IS" with no representation or warranty by Landlord as to the condition of the Premises or their suitability for Tenant's proposed improvements thereto or use thereof or the condition of the Premises, and with no promise by Landlord or its agents to improve or repair the Premises.

Article 12. DAMAGE OR DESTRUCTION

12.1 Insured or Minor Damage. Subject to the provisions of Section 12.3, if at any time during the term hereof the Premises are destroyed or damaged and either (a) such damage is not Substantial as that term is hereinafter defined, or (b) such damage, including related damage to other parts of the Building, is covered by insurance proceeds received by Landlord, then Landlord shall promptly repair such damage at Landlord's expense and this Lease shall continue in full force and effect.

12.2 Substantial Damage. Subject to the provisions of Section 12.3, or at any time during the term hereof the Premises are destroyed or damaged and if such damage is Substantial as that term is hereinafter defined, and if such damage was caused by a casualty not required to be insured against under Article 10, then Landlord may at its option either (a) repair such damage as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (b) cancel and terminate this Lease as of the date of the occurrence of such damage by giving Tenant written notice of its election to do so within ninety (90) days after the date of occurrence of such damage.

12.3 Damage Near End of Term. If the Premises are destroyed or damaged during the last six (6) months of the term of this Lease and the estimated cost of repair exceeds ten percent (10%) of the Minimum Rent then remaining to be paid by Tenant for the balance of the term, Landlord may at its option cancel and terminate this Lease as of the date of occurrence of such damage by giving Tenant written notice of its election to do so within thirty (30) days after the date of occurrence of such damage. If Landlord shall not elect to terminate this Lease, the repair of such damage shall be governed by Section 12.1 or 12.2 as the case may be.

12.4 Partial Destruction. If twenty percent (20%) or more of the Building shall be damaged or destroyed by fire or any other cause notwithstanding that the Premises may be unaffected thereby, Landlord may at its option cancel and terminate this Lease by giving written notice of its election to do so within ninety (90) days from the date of occurrence of such damage or destruction in which event the term of this Lease shall expire at the end of the calendar month in which such notice is given and Tenant shall thereupon surrender the Premises to Landlord.

12.5 Abatement of Rent.

12.5.1 If the Premises are destroyed or damaged and Landlord repairs or restores them pursuant to the provisions of this Article, Tenant shall continue the operation of its business on the Premises to the extent reasonably practicable from the standpoint of prudent business management. The monthly Rent payable hereunder for the period during which such damage, repair or restoration continues (or during the period when Tenant cannot conduct its business in the Premises, whichever is longer) shall be abated in proportion to the degree to which the Premises are rendered untenantable. The provisions hereof shall not be effective to prevent full payment of the monthly Rent pursuant to the rent loss endorsements, if any, in effect with respect to the insurance policies. There shall be no abatement of stock issuance or any item of additional rent or other monetary charge payable hereunder. Tenant shall have no claim against Landlord for any damages suffered by Tenant by reason of any such damage, destruction, repair or restoration.

12.5.2 If Landlord shall be obligated to repair or restore the Premises under the provisions of this Article and shall not commence such repair or restoration within ninety (90) days after such obligations shall accrue (which shall be deemed to be the date on which the insurance carrier acknowledges liability and fixes the amount payable to Landlord), Tenant may at its option cancel and terminate this Lease as of the date Tenant vacates the Premises by giving Landlord written notice of its election to do so at any time prior to the commencement of such repair or restoration.

12.6 Definitions. For the purpose of this Article, Substantial damage to the Premises shall be deemed to be the damage, the estimated cost of repair of which exceeds twenty percent (20%) of the then estimated replacement cost of the building.

Article 13. CONDEMNATION

13.1 Entire Or Substantial Taking. If the entire Premises, or so much thereof as to make the balance not reasonably adequate for the conduct of Tenant's business, notwithstanding restoration by Landlord as hereinafter provided, shall be taken under the power of eminent domain, this Lease shall automatically terminate as of the date on which the condemning authority takes title or possession, whichever first occurs. A taking of any portion of the Building under power of eminent domain shall confer upon Landlord the option to terminate this Lease. Such option shall be exercised within thirty (30) days after such taking.

13.2 Partial Taking. In the event of any taking of the Premises under the power of eminent domain which does not so result in the termination of this Lease, the monthly Rent payable hereunder shall be reduced, on an equitable basis, taking into account the relative value of the portion taken as compared to the remaining portion. Landlord shall promptly at its expense restore the portion of the Premises not so taken as to near its former condition as is reasonably possible and this Lease shall continue in full force and effect.

13.3 Awards . Any award for any taking of all or any part of the Premises under the power of eminent domain shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee; provided that nothing contained herein, however, shall be deemed to preclude Tenant from obtaining, or to give Landlord any interest in, any award to Tenant for loss of or damage to Tenant's trade fixtures and removable personal property or for damage for cessation or interruption of Tenant's business, or for relocation costs, or for the portion of Tenant's business, or for the portion of such award as is allocable to improvements constructed or paid for by Tenant, provided that Tenant agrees that it will not hold up Landlord's award hereunder through its negotiations with respect to its award, if any.

13.4 Sale Under Threat of Condemnation. A sale by Landlord of the Premises to any authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes under this Section.

13.5 Tenant's Option. A taking of twenty-five percent (25%) or more of the leased floor area of the Premises shall confer upon Tenant the option to be exercised only within thirty (30) days after Tenant shall have received notice thereof, to terminate this Lease effective as of the date of such taking, upon written notice to Landlord. Failure of Tenant to exercise such option shall constitute Tenant's agreement that the balance of the Premises is reasonably adequate for the conduct of Tenant's business, and this Lease shall remain in effect subject to Section 13.2 hereof.

Article 14. ASSIGNMENT AND SUBLEASE

14.1 By Tenant . Tenant shall not voluntarily or by operation of any law, assign, license, transfer, mortgage or otherwise encumber all or any part of Tenant's interest in this Lease or in the Premises, and shall not sublet or license all or any part of the Premises without the prior written consent of Landlord in each instance, and any such transfer, mortgage, encumbrance or subletting without such consent shall be wholly void. Without in any way limiting Landlord's right to refuse to give such consent for any reason or reasons, Landlord reserves the right to refuse to give such consent if in Landlord's sole discretion and opinion the quality of the Building or the business conducted on the Premises is or may be in any way adversely affected during the term of this Lease, or if the financial worth of the proposed new tenant is less than that of the Tenant executing this Lease.

14.2 No Release. No subletting or assignment, even with the consent of Landlord, shall relieve Tenant of its obligations hereunder, including those to pay the rents and monetary charges hereunder, and perform all of the other obligations to be performed by Tenant hereunder, unless a novation is expressly approved in writing by Landlord, and any sublet of the Premises shall be subordinate to the terms of this Lease and any sublease of the Premises, or any portion thereof, shall specify that such sublease shall terminate upon the termination of this Lease for whatever reason or at the sole election of Landlord, shall remain in full force and effect and Landlord, after the termination of this Lease shall be entitled to receive all rents payable pursuant to such sublease. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any assignment, subletting or other transfer. Consent to one assignment, subletting or other transfer shall not be deemed to constitute consent to any subsequent assignment, subletting or other transfer.

14.3 Procedures. Should Tenant desire to enter into an assignment, sublease, transfer, sale, or other arrangement whereby the identity of the person or persons using, occupying or possessing the Premises changes or may change, Tenant shall give notice thereof to Landlord by requesting in writing Landlord's consent to such transaction at least sixty (60) days before the proposed effective date of any such transaction and shall provide Landlord with the following:

(a) The full particulars of the transaction including its nature, proposed effective date, terms and conditions, and copies of any offers, draft agreements, subleases, letters of commitment or intent, and other documents pertaining to such proposed transaction;

(b) The identity, and previous business experience of the proposed assignee, sublessee, pledgee, or other recipient of Tenant's interests in this Lease, including, without limitation, copies of the above recipients' last two annual, and the most recent interim income statement, balance sheet, and change-of-financial-position statements (with accompanying notes) prepared in accordance with generally acceptable accounting procedures in audited form, if available. If audited statements are not available, then, in addition, the last two years federal and state income tax records must be submitted;

(c) Any further information relevant to the transaction which Landlord shall have requested within fifteen (15) days after receipt of Tenant's request for consent; and

(d) A Fee of Two Hundred Fifty Dollars, which is non-refundable as partial compensation to Landlord for review of the requested assignment.

Should Tenant fail to make said written request in accordance with the requirements set forth in this Section, or attain Landlord's approval, Tenant's failure shall constitute a material breach of this Lease.

Notwithstanding the foregoing, any request for, or entry into, any of the above transactions which has not met with the notice provisions set forth in this Section shall be of no force or effect until Landlord's consent has been obtained in accordance with the above. Tenant shall pay Landlord's reasonable fees and costs incurred in connection with the processing of documents necessary to the giving of such consent and/or effecting such assignment, sublease, transfer, sale, or other arrangement, not to exceed One Thousand and No Dollars ($1,000.00).

14.4 By Landlord. Landlord shall have the right to sell, assign, transfer, convey or mortgage its interest in this Lease and in and to the Premises, provided, however, that any such sale, assignment, transfer, conveyance or mortgage shall not result in the disruption of Tenant's quiet enjoyment of the Premises and any such sale, assignment, transfer, conveyance or mortgage shall be subject to the terms of this Lease.

Article 15. SUBORDINATION; QUIET ENJOYMENT; ATTORNMENT

15.1 Subordination. This Lease at Landlord's option shall be subject and subordinate to all ground or underlying leases which now exist or may hereafter be executed affecting the Premises or the land upon which the Premises are situated or both, and to the lien of any mortgages or deeds of trust in any amount or amounts whatsoever now or hereafter placed on or against the land or improvements or either thereof by Landlord or on or against Landlord's interest or estate therein, or on or against any ground or underlying lease without the necessity of the execution and delivery of any further instruments on the part of Tenant to effectuate such subordination, provided, however, that so long as Tenant complies with the obligation imposed upon Tenant in this Lease, neither Tenant nor its successors and assigns (if approved by Landlord) shall be disturbed or molested in its possession of the Premises. If any mortgagee, trustee or ground lessor shall elect to have this Lease be prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease is dated prior to, or subsequent to the date of said mortgage, deed of trust, or ground lease, or the date of the recording thereof.

15.2 Subordination Agreements . Tenant covenants and agrees to execute and deliver upon demand without charge therefor, such further instruments evidencing such subordination of this Lease to such ground or underlying leases and to the lien of any such mortgage or deeds of trust as may be required by Landlord or prospective purchasers or mortgagees of the Premises. Landlord agrees that any trust deed or any indebtedness or mortgage of Landlord, shall contain apt provisions under the terms of which the existence of this Lease shall be recognized, and wherein it shall be provided that so long as Tenant complies with the obligations imposed upon Tenant in this Lease, neither Tenant nor its successors and assigns shall be disturbed or molested in its possession of the property covered by this Lease and the full enjoyment of this Lease for the term and any renewals or extensions hereof. This provision shall be binding upon trustees in deeds of trust, mortgagees in mortgages and receivers thereunder and purchasers at any sale pursuant thereto.

15.3 Quiet Enjoyment. Landlord covenants that there are no liens upon its estate other than (a) the effect of covenants, conditions, restrictions, easements, rights and rights-of-way of record, (b) the effect of any local or state zoning laws, (c) general and special taxes not delinquent; and (d) other liens, claims and encumbrances which will not affect the Tenant's quiet enjoyment of the Premises. Landlord agrees that Tenant, upon paying the Rent and other monetary sums due under this Lease and performing the covenants and conditions of this Lease, may quietly have, hold and enjoy the Premises during the term hereof or any extension thereof; subject, however, to any of the aforesaid ground leases, mortgages, or deeds of trust, if any.

15.4 Attornment. In the event any proceedings are brought for default under ground or any underlying lease or in the event of foreclosure, receivership or in the exercise of the power of sale under any mortgage or deed of trust made by Landlord covering the Premises, Tenant shall attorn to the receiver or any purchaser upon any such foreclosure or sale and recognize such receiver or purchaser as the Landlord under this Lease, provided said purchaser expressly agrees in writing to accept Tenant and to be bound by the terms of this Lease.

Article 16. DEFAULT AND REMEDIES

16.1 Default . The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant:

16.1.1 Any failure by Tenant to pay monthly Rent or any other monetary sums required to be paid hereunder, where such failure continues for three (3) days after receipt of written notice by Landlord to Tenant;

16.1.2 The abandonment or vacation of the Premises by Tenant;

16.1.3 The repudiation of this Lease by Tenant, any action by Tenant which renders performances by Tenant of its obligations under this Lease impossible, or any action by Tenant which demonstrates an intent by Tenant not to perform an obligation under this Lease or not to continue with the performance of obligations under this Lease;

16.1.4 A failure by Tenant to observe and perform any other provisions of this Lease to be observed or performed by Tenant, where such failure continues for thirty (30) days after written notice thereof by Landlord to Tenant; provided, however, that if the nature of the default is such that the same cannot reasonably be cured within said thirty (30) day period, Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion;

16.1.5 The making by Tenant of any general assignment or general arrangement for the benefit of creditors, the filing by or against Tenant of a petition to have Tenant adjudged bankrupt or of a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days), the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days, or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days.

16.2 Notice . Tenant shall pay Landlord the sum of Two Hundred Fifty and No/100ths Dollars ($250.00) in addition to any other obligations hereunder for the cost of sending each Notice of Default.

16.3 Remedies . In the event of any such material default or breach by Tenant, Landlord may at any time thereafter, without limiting Landlord in the exercise of any right of remedy at law or in equity which Landlord may have by reason of such default or breach;

16.3.1 Maintain this Lease in full force and effect and recover the Rent and other monetary charges as they become due (or alternatively, if Landlord exercises the right to accelerate the Rent due hereunder as set forth in Section 16.4 below, recover all Rent and other monetary charges due as a result of acceleration), without terminating Tenant's right to possession irrespective of whether Tenant shall have abandoned the Premises. In the event Landlord elects not to terminate this Lease, Landlord shall nevertheless have the right to attempt to re-let the Premises at such rent and upon such conditions and for such a term, and to do all acts necessary to maintain or preserve the Premises as Landlord deems reasonable and necessary without being deemed to have elected to terminate this Lease, including removal of all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant, and if Tenant does not pay for storage, then sold at public auction; the proceeds of such sale shall first be applied to payment of the expenses of such sale, second to amounts due Landlord and the balance, if any, to Tenant. In the event any re-letting occurs, Tenant's right to possession of the Premises under this Lease shall terminate automatically upon the new Tenant taking possession of the Premises, but Tenant shall nevertheless be responsible for damages, more particularly described in Sections 16.3.2.1 through 16.3.2.5. Notwithstanding that Landlord fails to elect to terminate the Lease initially, Landlord may at any time during the term of this Lease elect to terminate this Lease by virtue of such previous default of Tenant.

16.3.2 Terminate Tenant's right to possession by any lawful means and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including without limitation thereto the following;

16.3.2.1 the worth at the time of award of any unpaid Rent which had been earned at the time of such termination; plus

16.3.2.2 the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds, the amount of such rental loss that could have been reasonably avoided; plus

16.3.2.3 the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of such rental loss that could be reasonably avoided; plus

16.3.2.4 any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligation under this Lease or which in the ordinary course of events would be likely to result therefrom including costs and expenses incurred by Landlord in making the Premises ready for a new tenant; plus

16.3.2.5 at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law of the State where the Premises are located. Upon any such re-entry, Landlord shall have the right to make any reasonable repairs, alterations or modifications to the Premises, which Landlord in its sole discretion deems reasonable and necessary. As used in Section 16.3.2.1 above, the "worth at the time of award" is computed by allowing interest at the rate provided for on Past Due Obligations as provided in Section 20.14 from the date of default. The term Rent, means the rent to be paid pursuant to Article 2 and all other monetary sums required to be paid by Tenant pursuant to the terms of this Lease ("Rent"). Notwithstanding that Landlord fails to elect to terminate the Lease initially, Landlord may terminate this Lease at any time during the term of this Lease by virtue of such previous default by Tenant.

16.4 Acceleration Of Rent. In the event of any such material default or breach by Tenant, Landlord may, at its election and without limiting Landlord's other rights and remedies, accelerate the payment of all Rent and other monetary sums payable by Tenant for the balance of the term and upon any such elections such sums shall be immediately due and payable in full.

16.5 Special Damages. In addition to the damages for breach of this Lease described in Sections 16.3 and 16.4, Tenant agrees that Landlord shall be entitled to receive from Tenant any and all costs in connection with Tenant's default hereunder, including without limitation, administrative costs of Landlord associated with Tenant's default, costs of repairing and leasing commissions for any leasing agent engaged to re-let the Premises.

16.6 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which are unknown and will be extremely difficult to ascertain other than such charges and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Rent or any other sums due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after such amount shall be due, Tenant shall pay to Landlord in addition to the late charges incurred by Landlord under any mortgage or deed of trust covering the Premises, a late charge equal to ten percent (10%) of the amount(s) past due and additionally all such installments of Rent or other sums due shall bear interest at the rate provided for on Past Due Obligations as provided in Section 20.14 from the date the same became due and payable. The parties hereby agree that such late charge represents fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the rights and remedies granted hereunder.

16.7 Default By Landlord. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any mortgage or deed of trust covering the Premises furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligations; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion, provided, further, that in the event that Landlord has defaulted in the payments of a monetary obligation and Tenant has advanced monies to pay such obligation. Landlord shall pay Tenant interest on such monies advanced at a rate provided for on Past Due Obligations as provided in Section 20.14 from the date the money was advanced by Tenant.

16.8 Bankruptcy.

16.8.1 CHAPTER 7. In the event that Tenant shall become a debtor in a case filed under Chapter 7 of the Bankruptcy Code, and Tenant's trustee or Tenant shall elect to assume this Lease for the purpose of assigning the same or otherwise, such election and assignment may be made only if the provisions of Sections 16.8.2, 16.8.3, and 16.8.5 are satisfied. If Tenant or Tenant's trustee shall fail to elect to assume this Lease within sixty (60) days after the filing of such petition or such additional time as provided by the court within such 60-day period, this Lease shall be deemed to have been rejected. Immediately thereupon Landlord shall be entitled to possession of the Premises without further obligation to Tenant or Tenant's trustee and this Lease, upon the election of Landlord, shall terminate, but Landlord's right to be compensated for damages (including, without limitation, damages pursuant to this Article 16) in any such proceeding shall survive.

16.8.2 CHAPTER 11. In the event that Tenant shall become a debtor in a case filed under Chapter 11 of the Bankruptcy Code, or in a case filed under Chapter 7 of the Bankruptcy Code which is converted to Chapter 11, Tenant's trustee or Tenant, as debtorin-possession, must elect to assume this Lease within sixty (60) days from the date of the filing of the petition under Chapter 11 or conversion thereto, or Tenant's trustee or the debtor-in-possession shall be deemed to have rejected this Lease. Immediately thereupon Landlord shall be entitled to possession of the Premises without further obligation to Tenant or Tenant's trustee and this Lease, upon the election of Landlord, shall terminate, but Landlord's right to be compensated for damages (including, without limitation, damages pursuant to this Article 16) in any such proceeding shall survive.

16.8.2.1 Tenant's trustee or the debtor-in-possession has cured all defaults under this Lease, or has provided Landlord with Assurance (as defined below) that it will cure all defaults susceptible of being cured by the payment of money within ten (10) days from the date of such assumption, and that it will cure all other defaults under this Lease which are susceptible of being cured by the performance of any act promptly after the date of such assumption.

16.8.2.2 Tenant's trustee or the debtor-in-possession has compensated, or has provided Landlord with Assurance that within ten (10) days from the date of such assumption that it will compensate Tenant for any actual pecuniary loss incurred by Tenant arising from the default of Tenant, Tenant's trustee, or the debtor-in-possession indicated in any statement of actual pecuniary loss sent by Landlord to Tenant's trustee or the debtor-in-possession.

16.8.2.3 Tenant's trustee or the debtor-in-possession has provided Landlord with Assurance of future performance of each of the obligations under this Lease of Tenant, Tenant's trustee or the debtor-in-possession, and if Tenant's trustee or the debtor-in-possession has provided such Assurance, Tenant's trustee or the debtorin-possession shall also deposit with Landlord, as security for the timely payment of Rent hereunder, an amount equal to six (6) monthly installment payments of the monthly Rent, and Common Area expenses that shall become due under this Lease, provided all terms and provisions of this Lease shall have been complied with. The obligations imposed upon Tenant's trustee or the debtor-in-possession by this paragraph shall continue with respect to Tenant or any assignee of this Lease after the completion of bankruptcy proceedings.

16.8.2.4 Such assumption will not breach or cause a default under any provision of any other lease, mortgage, financing agreement or other agreement by which Landlord is bound relating to the Premises. For purposes of this Section 16.8, Landlord and Tenant acknowledge that "Assurance" shall mean no less than: Tenant's trustee or the debtor-in-possession has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that sufficient funds will be available to fulfill the obligations of Tenant under this Lease and there shall have been deposited with Landlord, or the Bankruptcy Court shall have entered an order segregating sufficient cash payable to Landlord and/or Landlord shall have been granted a valid and perfected first lien and security interest and/or mortgage in property of Tenant, Tenant's trustee or the debtor-in-possession, acceptable as to value and kind to Landlord, to secure to Landlord the obligation of Tenant's trustee or the debtor-in-possession to cure the defaults under this Lease, monetary and/or non-monetary, within the time periods set forth above.

16.8.3 SUBSEQUENT PETITIONS. In the event that this Lease is assumed in accordance with Section 16.8.2 and thereafter Tenant is liquidated or files or has filed against it a subsequent petition under Chapter 7 or Chapter 11 of the Bankruptcy Code, Landlord may, at its option, terminate this Lease and all rights of Tenant hereunder by giving Tenant notice of its election to so terminate within thirty (30) days after the occurrence of either of such events.

16.8.4 ADEQUATE ASSURANCES. If Tenant's trustee or the debtor-inpossession has assumed the Lease pursuant to the terms and provisions of Sections 16.8.1, 16.8.2, and 16.8.3 for the purposes of assigning (or thereafter elects to assign) this Lease, this Lease may be so assigned only if the proposed assignee has provided adequate assurance of future performances of all of the terms, covenants and conditions of this Lease to be performed by Tenant. Landlord shall be entitled to receive all cash proceeds of such assignment. As used herein, "adequate assurance of future performance" shall mean and include all such requirements as set forth in Section 365 of Title II, U.S. Code (as may be amended) are met, and further that no less than each of the following conditions has been satisfied:

16.8.4.1 The proposed assignee has furnished Landlord with either (i) a current financial statement audited by a certified public accountant indicating a net worth and working capital in amounts which Landlord reasonably determines to be sufficient to assure the future performance by such assignee of Tenant's obligations under this Lease, or (ii) a guarantee or guarantees, in form and substance satisfactory to Landlord, from one or more persons with a net worth which Landlord reasonably determines to be sufficient to secure the Tenant's obligations hereunder, and has also furnished information with respect to the proposed assignee's management ability, expertise and experience in Tenant's business and Landlord has reasonably determined that the proposed assignee has the management expertise and experience to operate the business conducted on the Premises.

16.8.4.2 Landlord has obtained all consents or waivers from others required under any lease, mortgage, financing arrangement or other agreement by which Landlord is bound, in order to permit Landlord to consent to such assignment without violating the terms of any such agreement.

16.8.4.3 The proposed assignment will not release or impair any guaranty of the obligations of Tenant (including the proposed assignee) under this Lease.

16.8.5 USE AND OCCUPANCY CHARGES. When, pursuant to the Bankruptcy Code, Tenant's trustee or the debtor-in-possession shall be obliged to pay reasonable use and occupancy charges for the use of the Premises, such charges shall not be less than the monthly Rent and other charges due hereunder. No acceptance by Landlord of said use and occupancy charger, or of Rent hereunder, shall constitute a waiver of any of the provisions of this Section 16.8 or any of Landlord's rights thereunder.

16.8.6 NO TRANSFER IN BANKRUPTCY WITHOUT CONSENT. Neither the whole nor any portion of Tenant’s interest in this Lease or its estate in the Premises shall pass to any trustee, receiver, or assignee for the benefit of creditors, or any other person or entity, or otherwise by operation of law under the laws of any state having jurisdiction of the person or property of Tenant unless the requirements and conditions of this Section 16.8 are fully met or unless Landlord shall have otherwise consented to such transfer in writing. No acceptance by Landlord of installment payments of Rent or any other payments from any such trustee, receiver, assignee, person or other entity shall be deemed to constitute such consent by Landlord nor shall it be deemed a waiver of Landlord’s rights under this Section 16.8 including the right to terminate this Lease for any transfer of Tenant’s interest under this Lease without such consent.

Article 17. NOTICES

All notices or demands of any kind required or desired to be given by or to Landlord, Tenant, or Guarantor(s) hereunder shall be in writing. All notice between the parties shall be deemed received when personally delivered or when deposited in the United States mail postage prepaid, registered or certified, with return receipt requested, or sent by recognized overnight delivery (e.g. Federal Express, UPS, DHL, etc.) addressed to the parties, as the case may be, at the address set forth in the introductory paragraph of this Lease or at such other addresses as the parties may subsequently designate by written notice given in the manner provided in this section.

Notice personally delivered will be effective upon delivery to an authorized representative of the party at the designated address.

Article 18. COMMON AREAS

Throughout the term of this lease, the Server Room and cabinet in the premises wherein Landlord maintains computer servers shall remain a common area to be used by both the Landlord and Tenant. Tenant shall not change the exterior door lock to the Break Room nor in any way shall Tenant limit or restrict Landlord's access or use of the Server Room through the Break Room. There shall be no reduction in Tenant's rent, insurance responsibilities, tax responsibility, or other obligations. due to Landlord's use of this common area.

Article 19. HAZARDOUS SUBSTANCES

Without limiting the generality of any other provision of this Lease, Tenant shall not cause or permit any "Hazardous Substance Law" (as defined below) to be violated or any "Hazardous Substances" (as defined below) that are not customarily used in Tenant's business to be used, stored, generated on, transported over or disposed of on or in the Demised Premises. If (i) Hazardous Substances are used, stored, generated on, transported over or disposed of on or in the Demised Premises, or if (ii) any Hazardous Substance Law is violated on or about the Demised Premises, or if (iii) the Demised Premises become contaminated in any manner, or if (iv) any other part of the Building or the surrounding properties become contaminated in any manner as a result of any willful or negligent act of Tenant or Tenant's employees, Tenant shall indemnify and hold harmless Landlord from any and all claims, damages, fines, judgments, penalties, costs (including, without limitation, legal costs, attorney's fees, costs of investigation, costs of mitigation and costs of remediation), liabilities or losses (including, without limitation, the decrease in the value of the Demised Premises and other property owned by Landlord, damages caused by loss or restriction of rentable or useable space or other damages caused by adverse impact on marketing of the space and other spaces and property owned by Landlord, and any and all sums paid for settlement of claims and attorneys fees) arising during the term of the Lease or after the Lease terminates. This indemnification includes, without limitation, any and all costs incurred because of any investigation of the site or any clean up removal or restoration mandated by any Hazardous Substance Law or by any federal, state or local agencies or political subdivision or deemed desirable by Landlord. Without limiting the foregoing, if Tenant desires or is obligated to conduct any testing, analysis, investigation, removal, remediation or mitigation with respect to any Hazardous Substance or suspected Hazardous Substance, Tenant shall first obtain Landlord's written approval for any such action.

For purposes of this Lease, "Hazardous Substance" means any chemical, compound or material which is deemed a hazardous substance, hazardous waste, hazardous material, infectious waste or toxic substance, or any combination or formulation of substances defined, listed or classified by reasons of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive carcinogenicity, extraction procedure toxicity, toxicity characteristic, leaching procedure toxicity, petroleum, including crude oil and any fractions thereof; "hazardous waste," "restricted hazardous waste," and "waste" with the above stated properties, as defined in applicable Washington law and any other chemical material or substance that because of its quantity, concentration, physical or chemical characteristics exposure to which is limited or regulated for health, safety, and environmental reasons by any governmental authority with jurisdiction, or which poses significant present or potential hazard to human health and safety or to the environment if released to the work place or environment.

For purposes of this Lease, "Hazardous Substance Law" means any federal, state or local statute, regulation, rule, ordinance or common law principle concerning the presence, possession, handling, storage, treatment, transportation, disposal or cleanup of, or liability for, a Hazardous Substance, as currently in effect and as hereafter enacted or modified, as well as common law principles of tort and strict liability.

Article 20. GENERAL.

20.1 Exclusives. It is herewith agreed that this Lease contains no restrictive covenants or exclusives in favor of Tenant.

20.2 Tenant Offset and Estoppel Certificate.

20.2.1 Tenant shall at any time within ten (10) days after written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing in any form that the Landlord, at its sole discretion, may require (i) certifying that this Lease is unmodified and in full force and effect (or if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the Rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to Landlord or Tenant's respective knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if they are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises.

20.2.2 Tenant hereby acknowledges that failure by Tenant to deliver such statement within said ten (10) days will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which are unknown and will be extremely difficult to ascertain. Accordingly, if any such statement shall not be received by Landlord or Landlord's designee within ten (10) days after such written request from Landlord, Tenant shall pay to Landlord a late submission charge in the amount of Five Hundred Dollars ($500). Such late submission charge shall be due and payable immediately and without further notice and if not paid on or before the next installment of Minimum Rent is due shall bear interest at the rate provided for on Past Due Obligations as provided in Section 20.14 from the date the same became due and payable until paid.

20.2.3 Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, and (ii) that there are no uncured defaults in Landlord's performance, and (iii) that not more than an amount equal to one month's rent has been paid in advance.

20.2.4 If Landlord desires to sell, finance, or refinance the Premises, the Building or any part thereof, Tenant hereby agrees to deliver to any purchaser or lender designated by Landlord such financial statements of Tenant as may be reasonably required by such purchaser or lender. All such financial statements shall be received by Landlord in confidence and shall be used only for the purpose herein set forth.

20.3 Transfer Of Landlord's Interest. In the event of a sale or conveyance by Landlord of Landlord's interest in the Building and/or the Premises, other than a transfer for security purposes only, Landlord shall be relieved from and after the date specified in any such notice of transfer of all obligations and liabilities accruing thereafter on the part of the Landlord, provided that any funds in the hands of Landlord at the time of transfer in which Tenant has an interest shall be delivered to the successor of Landlord. This Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee provided all Landlord's obligations hereunder are assumed in writing by the transferee. Upon the sale of the Premises, Tenant upon notice of any such transfer, shall change the named insured under the insurance policies described in Article 11 to the new Landlord.

20.4 Captions; Attachments; Defined Terms.

20.4.1 The captions of the Sections and Articles of this Lease are for convenience only and shall not be deemed to be relevant in resolving any question of interpretation or construction of any section of this Lease.

20.4.2 Exhibits attached hereto and addenda and schedules are deemed by attachment and/or reference to constitute part of this Lease and are incorporated herein as an integral part of this Lease.

20.4.3 The words "Landlord," "Tenant" and "Guarantor," as used herein, shall include the plural as well as the singular. Words used in neuter gender include the masculine and feminine. Words used in the masculine or feminine gender include the neuter. If there be more than one Landlord, Tenant, or Guarantor, the obligations hereunder imposed upon Landlord, Tenant, or Guarantor shall be joint and several; as to a Tenant or Guarantor which consists of husband and wife, the obligations shall extend individually to their sole and separate property as well as community property. The term "Landlord" shall mean only the owner or owners at the time in question of the fee title or a Tenant's interest in a ground lease of the Premises. The obligations contained in this Lease to be performed by Landlord shall be binding on Landlord's successors and assigns only during their respective periods of ownership.

20.5 Arbitration Agreement; Venue . Should either Party commence any action under this Lease, the parties hereto waive trial by jury on any and all claims, causes of action, liabilities, and issues arising in any action or proceeding between them which concerns this Lease or Tenant's use and occupancy of the Premises or the Common Area. Any controversy or claim arising out of or relating to this lease, or the breach thereof, other than an action by Landlord against Tenant for nonpayment of Rent, or for unlawful detainer or ejectment, shall be settled by arbitration in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. In the event of any action at law or in equity between the parties brought by reason of this lease, the venue shall be in Benton County, State of Washington.

20.6 Severability. If any term or provision of this Lease shall, to any extent be determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforceable to the fullest extent permitted by law; and it is the intention of the parties hereto that if any provision of this Lease is capable of two constructions, one of which would render the provision void and the other of which would render the provision valid, the provision shall have the meaning which renders it valid.

20.7 Costs of Suit.

20.7.1 If Tenant or Landlord shall bring any action for relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys fees which shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.

20.7.2 Should Landlord, without fault on Landlord's part, be made a party to any litigation instituted by Tenant or by any third party against Tenant, or by or against any person holding under or using the Premises, by license of Tenant, or for the foreclosure of any lien for labor or materials furnished to or for Tenant or any such other person or otherwise arising out of or resulting from any act or transaction of Tenant or of any such person, Tenant covenants to save and hold Landlord harmless from any judgment rendered against Landlord or the Premises or any part thereof, and all costs and expenses, including reasonable attorneys fees incurred by Landlord in or in connection with such litigation.

20.8 Time; Joint And Several Liability; Guarantors. Time is of the essence of this Lease and each and every provision hereof. All the terms, covenants and conditions contained in this Lease to be performed by either party, if such party shall consist of more than one person or organization, shall be deemed to be joint and several, and all rights and remedies of the parties shall be cumulative and nonexclusive of any other remedy at law or in equity. Any Guarantors executing this Lease covenant and agree that they bind themselves by their signatures hereon as principals with joint and several liability and not as sureties all as more particularly provided on Exhibit B.

20.9 Binding Effect; Choice of Law. The parties hereto agree that all the provisions hereof are to be construed as both covenants and conditions as though the words importing such covenants and conditions were used in each separate paragraph hereof. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to Section 20.3, all of the provisions hereof shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. This Lease shall be governed by the laws of the State of Washington as an agreement to be performed in said State and as an agreement between domiciliaries of said State.

20.10 Waiver. No covenant, term or condition or the breach thereof shall be deemed waived, except by written consent of the party against whom the waiver is claimed, and any waiver of the breach of any covenant, term or condition shall not be deemed to be a waiver of any other covenant, term or condition herein. Acceptance by Landlord of any performance by Tenant after the time the same shall have become due shall not constitute a waiver by Landlord of the breach or default of any such covenant, term or condition unless otherwise expressly agreed to by Landlord in writing.

20.11 Surrender of Premises. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies.

20.12 Holding Over. If Tenant remains in possession of all or any part of the Premises after the expiration of the term or any renewal hereof, with or without the express or implied consent of Landlord, such tenancy shall be from month-to-month only, and not a renewal hereof or an extension for any further term and in such case Rent and other monetary sums due hereunder, shall be payable in the amount and at the time specified in this Lease. The minimum monthly rental then in effect shall be increased by one hundred fifty percent (150%) or, shall be no less than the then market rents for similar space in similar Buildings, whichever amount is greater, and such month-to-month tenancy shall be subject to every other term, covenant and agreement contained herein.

20.13 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental controls, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, shall excuse the performance by such party for a period equal to any such prevention, delay or stoppage except the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease.

20.14 Interest on Past Due Obligation. Except as otherwise expressly herein provided, any amounts due to Landlord not paid when due shall bear interest at the rate which is the greater of (a) three (3) points over the prime rate of the Bank of America, San Francisco, California (or such other state or federal chartered bank doing business in Kennewick, Washington as may be specified in a written notice to Tenant hereafter), or (b) eighteen percent (18%) on a per annum basis from the due date, provided, however, that notwithstanding the foregoing such interest shall not in any event exceed the highest rate permitted by applicable law. Payment of such interest shall not excuse or cure any default by Tenant under this Lease.

20.15 Confidentiality. Tenant covenants to and agrees to keep the provisions of this Lease confidential, and not to disclose said terms and provisions to any person or entity whatsoever (except as may be required by law, or by any governmental entity or as requested by Landlord). Tenant acknowledges that Landlord may have made special concessions to Tenant to induce Tenant to execute this Lease, which, if known, could damage Landlord's future business and/or bargaining power. Tenant therefore agrees that any breach of the covenant contained in this paragraph by Tenant shall be a default of this Lease.

20.16 Corporate Authority. If Tenant and/or Guarantor is a corporation, each individual executing this Lease and/or the guaranty attached as Exhibit B on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease and/or guaranty on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease and/or guaranty is binding upon said corporation in accordance with its terms, and Tenant and/or Guarantor shall, simultaneously with the execution of this Lease and/or guaranty, deliver to Landlord a certified copy of a Resolution of the Board of Directors of said corporation authorizing or ratifying the execution of this Lease and a Certificate of Good Standing issued by the Secretary of State of the state of Tenant's incorporation dated not earlier than thirty (30) days prior to the execution hereof.

20.17 Americans With Disability Act. Tenant shall, at all times during the term of this Lease, and at Tenant's sole cost and expense, maintain and keep the Premises in full compliance with the Americans With Disability Act of 1990, Public Law No. 101-336, 42 USC 12101 et seq. (the "ADA"), for its intended use by Tenant as approved herein. Tenant shall indemnify and hold Landlord harmless from and against any and all claims arising from non-compliance or alleged non-compliance with the provisions of ADA in effect during the term hereof, including any extensions and renewals, and from and against all costs, attorneys fees, expenses and liabilities incurred in or from any such claim. Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord. Tenant, as a material part of the consideration to Landlord, hereby waives all claims in respect thereof against Landlord.

20.18 Submission For Review. The submission of this Lease to Tenant shall be for examination purposes only and does not and shall not constitute a reservation of or option for Tenant to Lease, or otherwise create any interest by Tenant in the Demised Premises or any other premises situated in the Building. Execution of this Lease by Tenant and return to Landlord shall not be binding upon Landlord, notwithstanding any time interval, until Landlord has in fact executed and delivered this Lease to Tenant.

20.19 Real Estate Agent. Tenant warrants that it has not had any dealings with any real estate broker or agent in connection with the negotiation of this Lease, and agrees to save and hold Landlord harmless from any cost, expense or liability (including, without limitation, attorneys' fees) for any compensation, commission or charges claimed by any real estate broker or agent with respect to this Lease or the negotiation of this Lease.

20.20 Nondiscrimination. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns and all persons claiming under or through Tenant that this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, sex, marital status, color, creed, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Demised Premises herein established and Tenant shall not permit any such practice or practices of discrimination or segregation with reference to the employment, hiring, selection, location, number, use or occupancy of Tenant's employees, agents, lessees, sublessees, subtenants or vendors in the Demised Premises.

20.21 Legal Representation. Tenant warrants that it has not received any legal advice from the law firm of Liebler, Ivey, Connor, Berry & St. Hilaire with regard to this lease agreement or any transactions between Landlord and Tenant, that Tenant understands that the law firm of Liebler, Ivey, Connor, Berry & St. Hilaire solely represents Landlord in connection with this Lease Agreement; and that Tenant should seek its own independent legal counsel with regard to this Lease Agreement.

Article 21. OPTION TO PURCHASE

FOR AND IN CONSIDERATION of the mutual promises contained herein, Landlord hereby grants unto Tenant the right to purchase the demised property, described on Exhibit A hereto, with this option to buy being exercised not less than one hundred eighty (180) days prior to the termination of this lease, with purchase to take place at the time said lease ends, provided Tenant is not in default of this lease agreement at the time of the option to purchase or at any time thereafter. Written notice of the intention to exercise this option must be given to Landlord at least one hundred eighty (180) days prior to the expiration of the lease. The written notice of the intention to exercise the option shall be accompanied by Tenant's deposit with the Landlord in the amount of ten thousand ($10,000.00). Upon receipt of the written notice of Tenant's intent to exercise the option and the Tenant's deposit of ten thousand dollars ($10,000.00), the Landlord shall cause to be performed an appraisal of the premises, by an MAI appraiser of Landlord's choosing, and the purchase price shall be the average of the high-low of said appraisal. If Tenant proceeds to close on the sale, the deposit will be credited toward the purchase price of the premises at closing. If Tenant does not close, Landlord shall be entitled to keep the entire deposit and Tenant's option to purchase shall be terminated.

Article 22. ENTIRE AGREEMENT.

THIS INSTRUMENT, ALONG WITH ANY EXHIBITS AND ATTACHMENTS HERETO, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN LANDLORD AND TENANT RELATIVE TO THE PREMISES AND THERE ARE NO ORAL AGREEMENTS OR REPRESENTATIONS BETWEEN THE PARTIES HERETO AFFECTING THIS LEASE, AND THIS LEASE SUPERSEDES AND CANCELS ANY AND ALL PREVIOUS NEGOTIATIONS, ARRANGEMENTS, BROCHURES, AGREEMENTS OR REPRESENTATIONS AND UNDERSTANDINGS, IF ANY, BETWEEN THE PARTIES HERETO OR DISPLAYED BY LANDLORD TO TENANT WITH RESPECT TO THE SUBJECT MATTER THEREOF, AND NONE THEREOF SHALL BE USED TO INTERPRET OR CONSTRUE THIS LEASE. THERE ARE NO OTHER REPRESENTATIONS OR WARRANTIES BETWEEN THE PARTIES OR THE PARTIES AND THEIR AGENTS OR REPRESENTATIVE AND ALL RELIANCE WITH RESPECT TO REPRESENTATIONS IS SOLELY UPON THE REPRESENTATIONS AND AGREEMENTS CONTAINED IN THIS DOCUMENT. THIS AGREEMENT AND THE EXHIBITS AND ATTACHMENTS MAY BE ALTERED, AMENDED OR REVOKED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY BOTH LANDLORD AND TENANT.

IN WITNESS WHEREOF, Landlord, Tenant, and Guarantors, if any, have executed this Lease.

LANDLORD:		TENANT:
		ADVANCED MEDICAL ISOTOPE CORPORATION

/s/ Robert L. Myers		/s/ James Katzaroff
Robert L. Myers		By: James Katzaroff
		Its P resident

/s/ Maribeth F. Myers
Maribeth F. Myers

STATE OF WASHINGTON )

ss .)

COUNTY OF BENTON )

On this day personally appeared before me Robert L. Myers, to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged that he signed the same as his free and voluntary act and deed, for the uses and purpose therein mentioned.

GIVEN under my hand and official seal this 18 day of July, 2007



		/s/ Ronald F. St. Hilaire
		NOTARY PUBLIC in and for the State of Washington residing at Kennewick

STATE OF WASHINGTON )

ss .)

COUNTY OF BENTON )

On this day personally appeared before me Maribeth F. Myers, to me known to be the individual described in and who executed the within and foregoing instrument, and acknowledged that he signed the same as his free and voluntary act and deed, for the uses and purposes therein mentioned.

GIVEN under my hand and official seal this 18 day of July, 2007



		/s/ Ronald F. St. Hilaire
		NOTARY PUBLIC in and for the State of Washington residing at Kennewick

.....

STATE OF WASHINGTON )

ss .)

COUNTY OF BENTON )

On this 17th day of July, 2007, before me, the undersigned, a notary public in and for the State of Washington, duly commissioned and sworn, personally appeared James Katzaroff, to me known to be the president of Advanced Medical Isotopes Corporation, the corporation that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that they are authorized to execute the said instrument and that the seal affixed is the corporate seal of said corporation.

Witness my hand and official seal hereto affixed the day and year first written.



		/s/ Kathleen M. Megow
		NOTARY PUBLIC in and for the State of Washington residing at Pasco

EXHIBIT A

LEGAL DESCRIPTION OF PREMISES

That portion of Lot 3, Short Plat Number 2374, according to the survey thereof recorded under Auditor's File Number 1998-025128, records or Benton County, Washington, described as follows:

Beginning at the most Southerly corner of said Lot 3, thence North 45 ° 11'04" East, along the Southeasterly line of said Lot 3, for 400 : 00 feet; thence North 44 ° 48'56" West for 200.02 feet to the Northwesterly line of said Lot 3, thence South 45 ° 11'00" West, along said Northwesterly line, for 400.00 feet to the most Westerly corner of said Lot 3, thence South 44 ° 48'56" East, along the Southwesterly line of said Lot 3, for 200.02 feet to the True Point of Beginning.

Excluding the Southwesterly 180 feet thereof, subject to subsequent amendment upon survey.

EXHIBIT 10.10

Stock Options

This exhibit summarizes below the stock options of Advanced Medical Isotope Corporation (i) outstanding as of December 31, 2010 and (ii) outstanding as of December 2, 2011, that have been issued to its directors, executive officers, and employees for compensatory purposes. All of the options were issued in connection with services.

Outstanding as of December 31, 2010

Optionee	Number of Shares	Exercise Price Per Share	Issue Date	Expiration Date
Carlton Cadwell Director	100,000	$.55	11/26/08	11/26/11
Bruce Jolliff CFO	1,500,000 50,000	$.50 $.55	5/16/07 11/26/08	5/16/12 11/26/11
James Katzaroff Chairman and CEO	100,000	$.55	11/26/08	11/26/11
Bruce Ratchford Director	50,000	$.40	11/16/10	11/16/13
Michael Korenko Former Director	200,000 500,000	$.26 $.27	5/8/09 8/6/09	5/8/12 8/6/12
Dr. Fu Min-Su Chief Radiochemist	50,000	$.55	11/26/08	11/26/11
Employee	100,000	$.50	7/29/08	7/29/11
Employees (5) (total number of shares shown)	125,000	$.55	11/26/08	11/26/11

Outstanding as of December 2, 2011

Optionee	Number of Shares	Exercise Price Per Share	Issue Date	Expiration Date
Carlton Cadwell Director	250,000	$.30	1/14/11	1/12/14
Bruce Jolliff CFO	1,500,000 250,000	$.50 $.30	5/16/07 1/14/11	5/16/12 1/12/14
James Katzaroff Chairman and CEO	250,000	$.30	1/14/11	1/12/14
Bruce Ratchford Director	50,000 250,000 1,000,000	$.40 $.30 $.20	11/16/10 1/14/11 7/6/11	11/16/13 1/12/14 7/6/12
Michael Korenko Former Director	200,000 500,000	$.26 $.27	5/8/09 8/6/09	5/8/12 8/6/12
Dr. Fu Min-Su Chief Radiochemist	100,000	$.30	1/14/11	1/12/14
Employees (8) (total number of shares shown)	120,000	$.30	1/14/11	1/12/14

EXHIBIT 31.3

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James C. Katzaroff, certify that:

I have reviewed this Amendment No. 1 to the annual report on Form 10-K/A of Advanced Medical Isotope Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 2, 2011

/s/ James C. Katzaroff

James C. Katzaroff

Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 31.4

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, L. Bruce Jolliff, certify that:

I have reviewed this Amendment No. 1 to the annual report on Form 10-K/A of Advanced Medical Isotope Corporation;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 2, 2011

/s/ L. Bruce Jolliff

L. Bruce Jolliff

Chief Financial Officer

(Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Amendment No. 1 to the Annual Report of Advanced Medical Isotope Corporation (the "Company") on Form 10-K/A for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, James C. Katzaroff, Chief Executive Officer and L. Bruce Jolliff, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

December 2, 2011

ADVANCED MEDICAL ISOTOPE CORPORATION

By: /s/ James C. Katzaroff

Name: James C. Katzaroff

Title: Chief Executive Officer and Chairman

By: /s/ L. Bruce Jolliff

Name: L. Bruce Jolliff

Title: Chief Financial Officer