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 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.

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.

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