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U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File No. 0-7473
Amexdrug Corporation
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(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 95-2251025
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
Incorporation or Organization)
8909 West Olympic Boulevard, Suite 208
Beverly Hills, California 90211
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(Address of Principal Executive offices)
Issuer's Telephone Number: (310) 855-0475
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: As of November 12, 2007, there were
8,470,481 shares of the issuer's common stock issued and outstanding.
AMEXDRUG CORPORATION
FORM 10-QSB
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)................................3
Condensed Consolidated Balance Sheet -- As of
September 30, 2007 (Unaudited).................................5
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2007 and 2006
(Unaudited)....................................................6
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2007 and 2006 (Unaudited)......7
Notes to Condensed Consolidated Financial Statements
(Unaudited)....................................................8
Item 2. Management's Discussion and Analysis or Plan of Operations.....11
Item 3. Controls and Procedures........................................15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..............................................16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....16
Item 3. Defaults Upon Senior Securities................................16
Item 4. Submission of Matters to a Vote of Security Holders............16
Item 5. Other Information..............................................16
Item 6. Exhibits and Reports on Form 8-K...............................17
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited condensed consolidated balance sheet of Amexdrug
Corporation, a Nevada corporation, and subsidiary as of September 30, 2007, the
related unaudited condensed consolidated statements of operations for the three
and nine month periods ended September 30, 2007 and September 30, 2006, the
related unaudited condensed consolidated statements of cash flows for the nine
month periods ended September 30, 2007 and September 30, 2006, and the notes to
the unaudited condensed consolidated financial statements follow. The
consolidated financial statements have been prepared by Amexdrug's management,
and are condensed; therefore they do not include all information and notes to
the financial statements necessary for a complete presentation of the financial
position, results of operations and cash flows, in conformity with accounting
principles generally accepted in the United States of America, and should be
read in conjunction with the annual consolidated financial statements included
in Amexdrug Corporation's annual report on Form 10-KSB for the year ended of
December 31, 2006.
The accompanying condensed consolidated financial statements reflect
all adjustments which are, in the opinion of management, necessary to present
fairly the results of operations and financial position of Amexdrug Corporation
consolidated with Allied Med, Inc., Dermagen, Inc., Royal Health Care, Inc. and
BioRx Pharmaceuticals, Inc., its wholly owned subsidiaries, and all such
adjustments are of a normal recurring nature. The names "Amexdrug", "we", "our"
and "us" used in this report refer to Amexdrug Corporation.
Operating results for the quarter ended September 30, 2007, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2007.
3
AMEXDRUG CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
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Condensed Consolidated Balance Sheets (Unaudited) - September 30, 2007......5
Condensed Consolidated Statements of Operations (Unaudited) for the
Nine Months Ended September 30, 2007 and 2006............................6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 2007 and 2006............................7
Notes to Condensed Consolidated Financial Statements........................8
4
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2007
- --------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 72,115
Accounts receivable 304,128
Inventory 87,909
Inventory- Biorx 112,220
Deferred tax asset 11,800
Account Settlement Receivable 8,288
- --------------------------------------------------------------------------------
Total Current Assets 596,460
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Property and Equipment
Office and computer equipment 173,320
Leasehold improvements 15,700
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Total Property and Equipment 189,020
Less: Accumulated depreciation (170,298)
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Net Property and Equipment 18,722
Lease Deposits 12,158
Customer Base, Net of Accumulated Amortization
of $12,176 6,084
Trademark, Net of Accumulated Amortization of $120 1,530
Goodwill 17,765
- --------------------------------------------------------------------------------
Total Assets $ 652,719
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 390,740
Payables - related parties 62,343
Accrued liabilities 6,138
Accrued income taxes 19,724
Business Line of Credit 58,217
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Total Current Liabilities 537,162
- --------------------------------------------------------------------------------
Stockholders' Equity
Common Stock - $0.001 par value; 50,000,000 shares authorized;
8,470,481 shares issued and outstanding 8,471
Additional paid-in capital 83,345
Retained earnings 23,741
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Total Stockholders' Equity 115,557
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Total Liabilities and Stockholders' Equity $ 652,719
================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
5
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Nine Months
Ended Sept 30 Ended Sept 30
------------------------ -------------------------
2007 2006 2007 2006
- --------------------------------------------------------------------------------
Sales $ 1,248,547 $ 972,121 $ 4,721,093 $ 3,407,401
Cost of Goods Sold 1,165,679 899,292 4,361,981 3,074,562
- --------------------------------------------------------------------------------
Gross Profit (Loss) 82,868 72,829 359,112 332,839
Operating Expenses
Selling, general and
administrative expense (144,752) (77,755) (381,706) (326,889)
Interest expense (1,146) (1,469) (3,546) (4,198)
Interest and other income 55,415 0 110,862 0
- --------------------------------------------------------------------------------
Income (Loss) From
Operations (7,615) (6,395) 84,722 1,752
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Income (Loss) Before
Income Taxes (7,615) (6,395) 84,722 1,752
Provision for Income Taxes
(Expense) Benefit (669) 1,112 64 1,559
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Net Income (Loss) $ (8,284) $ (5,283) $ 84,786 $ 3,311
================================================================================
Basic & Diluted Income
(Loss) Per Common Share (0.00) (0.00) $ 0.01 0.00
================================================================================
Basic Weighted-Average
Common Shares Outstanding 8,470,481 8,473,866 8,470,481 8,473,866
================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
6
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months
Ended Sept 30,
-------------------------
2007 2006
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $ 84,786 $ 3,311
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation 21,233 16,219
Amortization 4,650 4,584
Deferred income taxes - (4,899)
Changes in operating assets and liabilities:
Accounts receivable (99,918) (83,366)
Allowance for doubtful accounts (29,788) -
Prepaid expenses 3,993 3,780
Account settlement receivable (8,288) -
Inventory (58,280) 17,010
Accounts payable and accrued liabilities 51,840 (43,537)
Deferred Tax Asset 64 -
Corp Income Tax Payable-Fed 8,151 -
Deferred Tax Liability (13,954) -
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Net Cash Provided by Operating Activities (35,511) (86,898)
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Cash Flows from Investing Activities:
Purchase of furniture (998) -
Purchase pf property & equipment (7,339) -
Increase in lease deposits - (1,075)
Trademark (650) (1,000)
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Net Cash Used in Investing Activities (8,987) (2,075)
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Cash Flows from Financing Activities:
Note Payable-Nora Amin (10,798) -
Proceeds from borrowings from business
line of credit 58,217 20,000
Principal payments on capital lease obligations (19,823) (5,844)
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Net Cash Provided by (Used in) Financing
Activities 27,596 14,156
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Net Decrease in Cash (16,902) (74,817)
Cash at Beginning of Period 89,017 177,408
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Cash at End of Period $ 72,115 $ 102,591
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Supplemental Cash Flow Information:
Cash paid for interest $ 3,546 $ 3,207
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Conversion of notes payable to common stock - -
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The accompanying notes are an integral part of these
consolidated financial statements.
7
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
Organization and Nature of Operations - Amexdrug's wholly owned subsidiaries
include Allied Med, Inc., Dermagen Inc. and this year Biorx Pharmaceuticals.
Allied Med Inc., was formed in October 1997 and is engaged in the pharmaceutical
wholesale business of selling brand and generic pharmaceuticals products,
over-the-counter drug and non-drug products and health and beauty products to
independent and chain pharmacies, alternative care facilities and other
wholesalers.
Dermagen Inc., is a manufacturing company specializing in the manufacturing and
distribution of certain pharmaceuticals, medical devices, and health and beauty
products. Dermagen has a US Federal Drug Administration (FDA) registered and
state FDA approved manufacturing facility licensed to develop skin and novel
health and beauty products for niche markets.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Amexdrug Corporation and its wholly-owned subsidiaries,
Allied Med, Inc., Dermagen, Inc. and Biorx Pharmaceuticals. The accompanying
condensed statements have been prepared based on the documents and schedules
provided by the client and are unaudited. In our opinion and of management, the
accompanying unaudited financial statements contain all necessary adjustments
for fair presentation, consisting of normal recurring adjustments except as
disclosed therein.
The accompanying unaudited interim financial statements have been condensed
pursuant to the rules and regulations of the Securities and Exchange Commission;
therefore, certain information and disclosures generally included in financial
statements have been condensed or omitted. The condensed financial statements
should be read in connection with the Company's annual financial statements
included in its annual report on Form 10-KSB as of December 31, 2006.
Concentration of Credit Risk - The Company's historical revenues and receivables
have been derived solely from the pharmaceutical industry. Although the Company
primarily sells products on a cash-on-delivery basis, the Company also sells
products to certain customers under credit terms. The Company performs ongoing
credit evaluations of its customers' financial conditions and usually requires a
post dated check from its customers at the date products are shipped. The
Company maintains an allowance for accounts receivable that may become
uncollectible.
During the nine months period ended September 30, 2007, purchases from these
vendors accounted for 70%, 10% and 8% of total purchases, respectively. Accounts
payable to these vendors accounted for 78%, 15% and 3% of the total accounts
payable as of September 30, 2007.
Cash and Cash Equivalents - For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid debt instruments purchases with a
maturity of three months or less to be cash equivalents.
Accounts Receivable - An allowance for uncollectible accounts receivable is
established by charges to operations for amounts required to maintain an
adequate allowance, in management's judgment, to cover anticipated losses from
customer accounts and sales returns. Such accounts are charged to the allowance
when collection appears doubtful. Any subsequent recoveries are credited to the
allowance account. For the period ended September 30, 2007, management decided
not to recognize any allowance for bad debts.
8
Inventory - Inventory includes purchased products for resale and raw materials
and supplies necessary to manufacture pharmaceuticals, medical devices, and
health and beauty products and is stated at the lower of cost (using first-in,
first-out method) or market value. Provisions, when required, are made to reduce
excess and expired inventory to its estimated net realizable value. Although
competitive pressures and pharmaceutical advancements expose the Company to the
risk that estimates of the net realizable could change in the near term, the
Company's agreements with most vendors provide for the right of return of
outdated or expired inventory. The Company is exposed to other ownership related
risks associated with inventory. The following table describes the balances in
inventory as of September 30, 2007:
September 30, 2007
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Raw materials $ 66,590
Finished goods 21,319
Finished goods - Biorx Pharmaceuticals 112,220
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Total Inventory $ 200,129
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Property and Equipment - Property and equipment are stated at cost less
accumulated depreciation. Major additions and improvements are capitalized,
while minor repairs and maintenance costs are expensed when incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets, which are as follows:
Office and computer equipment 3 - 10 years
Leasehold improvements 2 - 5 years
Intangible Assets - The estimated fair value of Dermagen's customer base was
recorded as an intangible asset at the date of acquisition and is amortized over
the estimated useful life of the customer base, which is three years. Trademarks
are recorded at cost and are amortized over their estimated useful life, which
is ten years. An impairment charge is recognized if the carrying amount is not
recoverable and the carrying amount exceeds the fair value of the intangible
assets as determined by projected discounted cash flows.
Goodwill- Goodwill represents the excess of the purchase price of Dermagen, Inc.
over the fair value of its net assets at the date of acquisition. Goodwill is
not amortized, but is tested for impairment quarterly or when a triggering event
occurs. The testing for impairment requires the determination of the fair value
of the asset or entity to which the goodwill relates (the reporting unit). The
fair value of a reporting unit is determined based upon a weighting of the
quoted price of the Company's common stock and present value techniques based
upon estimated future cash flows of the reporting unit, considering future
revenues, operating costs, the risk-adjusted discount rate and other factors.
Impairment is indicated if the fair value of the reporting unit is allocated to
the assets and liabilities of that unit, with the excess of the fair value of
the reporting unit over the amounts assigned to its assets and liabilities
assigned to the fair value of goodwill. The amount of impairment of goodwill is
measured by the excess of the goodwill's carrying value over its fair value. As
of September 30,2007, the Company's goodwill was not deemed to be impaired.
NOTE 2 - SEGMENT INFORMATION
The Company has operations in two segments of its business, namely: distribution
and health and beauty products. Distribution consists of the wholesale
pharmaceutical distribution and resale of brand and generic pharmaceuticals
products, over-the counter drugs and non-drug products. Health and beauty
products consist of the manufacture and distribution of primarily health and
beauty products.
9
The following tables describe information regarding the operations and assets of
these reportable business segments:
Health and
For the Nine Months Beauty
Ended September 30, 2007 Distribution Products Total
- --------------------------------------------------------------------------------
Sales to external customers $ 4,547,066 $ 174,027 $ 4,721,093
Segment income (loss) before taxes 62,432 22,354 84,786
Segment assets 630,310 373,604 1,003,914
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September 30, 2007
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Total assets for reportable segments $ 1,003,914
Elimination of intersegment assets (351,195)
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Consolidated Total Assets $ 652,719
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NOTE 2 - RELATED PARTY TRANSACTIONS
As of September 30, 2007 the balance of notes payable to the wife of the
president of the Company amounted to $49,202, is payable on demand and carried
an annual interest rate of 8%, payable every 6 months. The interest accrued for
this note as of September 30, 2007 amounted to $3,421 and $ 2,200 in 2006.
10
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation.
Not applicable.
(b) Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
--------
Amexdrug Corporation is located at 8909 West Olympic Boulevard, Suite
208, Beverly Hills, California 90211. Its phone number is (310) 855-0475. Its
fax number is (310) 855-0477. Its website is www.amexdrug.com. Shares of
Amexdrug common stock are traded on the OTC Bulletin Board under the symbol
AXRX.OB. The President of Amexdrug has had experience working in the
pharmaceutical industry for the past 26 years.
Amexdrug Corporation, through its wholly-owned subsidiaries, Dermagen,
Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc.
is a rapidly growing pharmaceutical and cosmeceutical company specializing in
the research and development, manufacturing and distribution of pharmaceutical
drugs, cosmetics and distribution of prescription and over-the-counter drugs,
private manufacturing and labeling and a quality control laboratory. At Amexdrug
Corporation, it is our anticipation to give our clientele the opportunity to
purchase cost effective products while maximizing the return of investments to
our shareholders.
Amexdrug Corporation distributes its products through its subsidiaries,
Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx
Pharmaceuticals, Inc. primarily to independent pharmacies and secondarily to
small and medium-sized pharmacy chains, alternative care facilities and other
wholesalers and retailers in the state of California.
Amexdrug Corporation was initially incorporated under the laws of the
State of California on April 30, 1963 under the name of Harlyn Products, Inc.
Harlyn Products, Inc. was engaged in the business of selling jewelry to
department stores and retail jewelry stores until the mid-1990s.
The name of the Company was changed to Amexdrug Corporation in April
2000 to reflect the change in the Company's business to the sale of
pharmaceutical products. The officers and directors of the Company also changed
in April 2000. The domicile of the Company was changed from California to Nevada
in December 2001. At that time the Company changed its fiscal year end from June
30 to December 31.
References in this report to "we," "our," "us," the "company" and
"Amexdrug" refer to Amexdrug Corporation and also to our subsidiaries, Dermagen,
Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc.
11
Amexdrug currently has 50,000,000 shares of authorized common stock
$.001 par value, of which 8,470,481 are issued and outstanding.
Allied Med, Inc.
----------------
On December 31, 2001, Amexdrug acquired all of the issued and
outstanding common shares of Allied Med, Inc., an Oregon corporation, ("Allied
Med") in a related party transaction.
Allied Med was formed as an Oregon corporation in October 1997, to
operate in the pharmaceutical wholesale business of selling a full line of brand
name and generic pharmaceutical products, over-the-counter (OTC) drug and
non-drug products and health and beauty products to independent and chain
pharmacies, alternative care facilities and other wholesalers.
Amexdrug has assumed the operations of Allied Med, and Amexdrug intends
to build on the pharmaceutical wholesale operations of Allied Med.
The accompanying financial information includes the operations of
Allied Med for all periods presented and the operations of Amexdrug Corporation
from April 25, 2000.
Dermagen, Inc.
--------------
Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005.
Dermagen, Inc. is now an operating subsidiary of Amexdrug. The acquisition of
Dermagen, Inc. is not considered to be an acquisition of a significant amount of
assets which would require audited financial statements of Dermagen, Inc.
Dermagen, Inc. is a growing manufacturing company specializing in the
manufacturing and distribution of certain pharmaceuticals, medical devices,
health and beauty products. Dermagen, Inc. has a U.S.-FDA registered and state
FDA approved manufacturing facility licensed to develop high margin skin and
novel health and beauty products for niche markets. Dermagen's competitive
advantage is in its superior product research and development for large leading
domestic and international companies.
Royal Health Care Company
-------------------------
In October 2003, Allied Med acquired 100% of the assets of Royal Health
Care Company. Royal Health Care Company is a health and beauty company which has
sold specially manufactured facial and body creams, arthritic pain relief
medications and an exclusive patented hair care product to pharmacies, beauty
salons, beauty supply stores and other fine shops. Royal Health Care Company
uses the highest quality ingredients for the finest quality products. Each
product has been formulated with the essential ingredients and plant extracts to
achieve optimum potential and quality. Royal Health Care Company products are
manufactured by Dermagen, Inc., in an FDA approved manufacturing facility.
12
The Royal Health Care Company assets acquired include the "Royal Health
Care Company" name, logo, and related trademarks, all formulas to products
manufactured for sale under the Royal Health Care Company name, and the Royal
Health Care Company list of customers. These intellectual property rights were
acquired without cost from a company in which Jack Amin's wife is a principal
shareholder. Mr. Amin is the CEO and Chairman of Amexdrug Corporation and Allied
Med, Inc. Management believes this acquisition will provide the Company with an
opportunity to increase the number of products sold by the Company, and expand
the Company's customer base.
On October 28, 2004, Amexdrug formed a new subsidiary, Royal Health
Care, Inc. as a Nevada corporation. Royal Health Care, Inc. was formed to
manufacture and sell health and beauty products.
BioRx Pharmaceuticals
---------------------
On November 8, 2004, Amexdrug formed a new subsidiary, BioRx
Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. is
committed to offer over the counter (OTC) products that are recommended with
trust and faith by physicians, primarily podiatrists and dermatologists. The
focus and mission of BioRx Pharmaceuticals, Inc. is to create, develop and
manufacture products to help ease pain and restore and maintain the overall
well-being of our customers. We strive for high performance and quality. Our
commitment is to offer natural and OTC products that are recommended with
confidence by doctors and pharmacists and that the customer can use with
pleasure. Our compliance program is diligently followed through the Company.
BioRx Pharmaceuticals, Inc. maintains high ethics for animal welfare and our
products are never tested on animals. All products are made in the USA.
A total of nine products have been manufactured for sale by BioRx
Pharmaceuticals, Inc., and a total of ten products are under different stages of
development. These over-the-counter and natural products are effective for
treatment of fungus, arthritis, sunburn protection and for healthy feet and
nails. BioRx Pharmaceuticals is planning to sell these products to national
chain drugstores, sport chain stores, natural food markets and other mass
markets. These products will be marketed under the names of Sponix and Bactivex,
and will be sold under the name of BioRx Pharmaceuticals.
13
Results of Operations
---------------------
For the three months ended September 30, 2007, Amexdrug reported sales
of $1,248,547, comprised entirely of income from the Company's pharmaceutical
wholesale business of selling brand name and generic pharmaceutical products,
and over-the-counter (OTC) and health and beauty products. This is $276,426 more
than the $972,121 of sales reported for the three months ended September 30,
2006. For the nine months ended September 30, 2007, sales reported by Amexdrug
were $4,721,093, which is $1,313,692 more than the $3,407,401 of sales reported
for the nine months ended September 30, 2006. During the three and nine month
periods ended September 30, 2007, Amexdrug experienced an increase in total
sales due, in part, to an increase in sales of Dermagen products and to an
increased customer base. Cost of goods sold for the three months ended September
30, 2007 was $1,165,679, an increase of $266,387 over the $899,292 cost of goods
sold for the three months ended September 30, 2006. Cost of goods sold for the
nine months ended September 30, 2007 was $4,361,981, an increase of $1,287,419
over the $3,074,562 cost of goods sold for the nine months ended September 30,
2006. During the three months ended September 30, 2007 gross profit increased by
$10,039 to $82,868 or 6.6% of sales for the three months ended September 30,
2007, from the $72,829 or 7.5% of sales recorded for the three months ended
September 30, 2006. For the nine months ended September 30, 2007 gross profit
increased by $26,273 to $359,112 or 7.6% of sales from the $332,839 or 9.8% of
sales recorded for the nine months ended September 30, 2006.
Selling, general and administrative expense was $144,752 for the three
months ended September 30, 2007, an increase of $66,997 from the $77,755
recorded for the three months ended September 30, 2006. For the nine months
ended September 30, 2007, Amexdrug reported selling, general and administrative
expense of $381,706, an increase of $54,817 from the $326,889 reported for the
nine months ended September 30, 2006. Interest and other income was $55,415 for
the three months ended September 30, 2007, compared to $0 recorded for the three
months ended September 30, 2006. For the nine months ended September 30, 2007,
Amexdrug earned interest and other income of $110,862, compared to $0 recorded
for the nine months ended September 30, 2006.
During the three months ended September 30, 2007, Amexdrug experienced
a net loss of $8,284, as compared to a net loss of $5,283 experienced in the
three months ended September 30, 2006. During the nine months ended September
30, 2007, Amexdrug experienced net income of $84,786, which is $81,475 greater
than the $3,311 of net income earned during the nine months ended September 30,
2006.
14
Liquidity and Capital Resources - September 30, 2007
----------------------------------------------------
As of September 30, 2007, Amexdrug reported total current assets of
$596,460, comprised of cash of $72,115, accounts receivable of $304,128,
inventory of $87,909, inventory - BioRx of $112,220, deferred tax asset of
$11,800 and an account settlement receivable of $8,288. Total assets as of
September 30, 2007 were $652,719, which included total current assets, plus net
property and equipment of $18,722, lease deposits of $12,158, customer base of
$6,084 trademark of $1,530 and goodwill of $17,765.
Amexdrug's liabilities as of September 30, 2007 consisted of accounts
payable of $390,740, notes payable to related parties of $62,343, accrued
liabilities of $6,138, accrued income taxes of $19,724 and business line of
credit balance of $58,217.
During the nine months ended September 30, 2007, Amexdrug's operating
activities used $35,511 cash compared to $86,898 cash used in Amexdrug's
operating activities in the nine months ended September 30, 2006. The primary
adjustments to reconcile net income to net cash used in operating activities
during the first nine months of 2007 were as follows: an increase in inventory
of $58,280, an increase in accounts receivable of $99,918, an increase of
accounts payable and accrued liabilities of $51,840, depreciation expense of
$21,233, an increase in allowance for doubtful accounts of $29,788, an increase
of $13,954 in deferred income tax liability. Cash decreased during the nine
months ended September 30, 2007 by $16,902 compared to a decrease during the
nine months ended September 30, 2006 of $74,817. Cash from operating activities
in the nine months ended September 30, 2007 decreased primarily due to increases
in accounts receivable and inventory. Operations have primarily been funded
through loans and/or capital infusions from related parties, and from drawing
upon the Company's line of credit. Management does not anticipate that Amexdrug
will need to seek additional financing during the next twelve months.
Forward-looking statements
--------------------------
This document includes various forward-looking statements with respect
to future operations of Amexdrug that are subject to risks and uncertainties.
Forward-looking statements include information concerning expectations of future
results of operations and such statements preceded by, followed by or that
otherwise include the words "believes," "expects," "anticipates," "intends,"
"estimates" or similar expressions. For those statements, Amexdrug claims the
protection of the safe harbor for forward-looking statements contained in the
Private Litigation Reform Act of 1995. Actual results may vary materially.
Item 3. Controls and Procedures.
Under the supervision and with the participation of management, our
principal executive officer and principal financial officer evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
15
Exchange Act of 1934 ("Exchange Act"), as of September 30, 2007. Based on this
evaluation, our principal executive officer and our principal financial officer
concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective and adequately designed to
ensure that the information required to be disclosed by us in the reports we
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the applicable rules and forms and that
such information was accumulated and communicated to our chief executive officer
and chief financial officer, in a manner that allowed for timely decisions
regarding required disclosure.
During the last fiscal quarter ended September 30, 2007, there has been
no change in internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect our internal control over
financial reporting.
ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REPORT
REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE
RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Amexdrug is not presently a party to any material pending legal
proceedings. To the best of Amexdrug's knowledge, no governmental authority or
other party has threatened or is contemplating the filing of any material legal
proceeding against Amexdrug.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
Number Description
------- -----------
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed by Amexdrug during the
quarter ended September 30, 2007.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMEXDRUG CORPORATION
Date: November 11, 2007 By: /s/ Jack Amin
------------------------------------
Jack Amin
Director, President, Chief Executive
Officer, Chief Financial Officer and
Chief Accounting Officer
18
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