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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-7473
Amexdrug Corporation
--------------------
(Exact name of registrant as specified in its charter)
NEVADA 95-2251025
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
8909 West Olympic Boulevard, Suite 208
Beverly Hills, California 90211
-------------------------------
(Address of principal executive offices)
Registrant's telephone number: (310) 855-0475
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
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
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ X ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 5, 2008, there were
8,470,481 shares of the issuer's common stock issued and outstanding.
1
AMEXDRUG CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (Unaudited)....................................3
Condensed Consolidated Balance Sheets -- As of June 30,
2008 (Unaudited) and December 31, 2007 (Audited)..................5
Condensed Consolidated Statements of Operations for
the Three and Six Months Ended June 30, 2008 and 2007
(Unaudited).......................................................6
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 2008 and 2007 (Unaudited)...........7
Notes to Condensed Consolidated Financial Statements
(Unaudited).......................................................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........12
Item 4T. Controls and Procedures...........................................12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................13
Item 1A. Risk Factors.......................................................13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........13
Item 3. Defaults Upon Senior Securities....................................13
Item 4. Submission of Matters to a Vote of Security Holders................13
Item 5. Other Information..................................................13
Item 6. Exhibits and Reports on Form 8-K...................................13
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed consolidated balance sheets of Amexdrug Corporation, a
Nevada corporation, and subsidiaries as of June 30, 2008 (unaudited) and
December 31, 2007 (unaudited), the related unaudited condensed consolidated
statements of operations for the three and six month periods ended June 30, 2008
and June 30, 2007, the related unaudited condensed consolidated statements of
cash flows for the six month periods ended June 30, 2008 and June 30, 2007 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's annual report on Form 10-KSB for the year ended December
31, 2007.
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., 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 June 30, 2008, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2008.
3
AMEXDRUG CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
----
Condensed Consolidated Balance Sheets - June 30, 2008
(Unaudited) and December 31, 2007 (Audited).......................5
Condensed Consolidated Statements of Operations (Unaudited)
for the Three and Six Months Ended June 30, 2008 and 2007.........6
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 2008 and 2007..................7
Notes to Condensed Consolidated Financial Statements................8
4
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) December 31,
June 30, 2008 2007
------------- ------------
Assets
Current Assets
Cash and cash equivalents $ 24,057 $ 217,549
Accounts receivable 281,056 210,557
Inventory 135,760 194,542
Deferred tax asset 10,200 7,000
Other receivable 8,288 8,288
Prepaid insurance 1,397 -
----------- -----------
Total Current Assets 460,758 637,936
----------- -----------
Property and equipment, at cost
Office and computer equipment 231,090 181,026
Leasehold improvements 15,700 15,700
----------- -----------
246,790 196,726
Less accumulated depreciation (182,868) (175,665)
----------- -----------
Net Property and Equipment 63,922 21,061
----------- -----------
Other Assets
Other deposits 12,158 12,158
Intangibles
Customer base, net of accumulated
amortization of $15,978 2,281 4,561
Trademark, net of accumulated
amortization of $134 1,516 1,516
Goodwill 17,765 17,765
----------- -----------
Total Other Assets 33,720 36,000
----------- -----------
Total Assets $ 558,400 $ 694,997
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 306,009 $ 518,540
Accrued liabilities 6,421 16,971
Corporate tax payable 173 -
Loan payable-AFS/IBEX 437 -
Loan payable-Dell 1,005 -
Notes payable related parties 122,342 62,342
Wells Fargo business line 66,980 54,936
----------- -----------
Total Current Liabilities 503,367 652,789
----------- -----------
Shareholders' Equity
Capital stock 8,471 8,471
Additional paid in capital 83,345 83,345
Accumulated deficit (36,783) (49,608)
----------- -----------
Total Shareholders' Equity 55,033 42,208
----------- -----------
Total Liabilities and Shareholders' Equity $ 558,400 $ 694,997
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
5
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------- -----------------------------
The Three Months Ended The Six Months Ended
6/30/2008 6/30/2007 6/30/2008 6/30/2007
--------------------------- -----------------------------
Sales $ 1,469,772 $ 1,710,723 $ 2,772,986 $ 3,472,546
Cost of Goods Sold 1,386,701 1,628,917 2,570,287 3,196,300
------------ ------------ ------------- -------------
Gross Profit 83,071 81,806 202,699 276,246
------------ ------------ ------------- -------------
Operating Expenses
Selling, general and administrative expense 94,657 107,398 177,832 220,223
Research and development 1,050 - 2,063 -
------------ ------------ ------------- -------------
Total Operating Expenses 95,707 107,398 179,895 220,223
------------ ------------ ------------- -------------
Income/(Loss) before depreciation expense (12,636) (25,592) 22,804 56,023
Depreciation expense 5,882 8,388 9,484 16,731
------------ ------------ ------------- -------------
Income/(Loss) before Other Income/(Expenses) (18,518) (33,980) 13,320 39,292
------------ ------------ ------------- -------------
Other Income/(Expenses)
Interest and other income - 385 - 55,445
Penalty - - (344) -
Unrealized gain/(loss) (327) (327) -
Interest expense (3,333) (1,200) (6,233) (2,400)
------------ ------------ ------------- -------------
Total Other Income/(Expenses) (3,660) (815) (6,904) 53,045
------------ ------------ ------------- -------------
Income/(Loss) before Provision for Income Taxes (22,178) (34,795) 6,416 92,337
Income tax benefit/(expense) 12,832 (733) 6,412 (733)
------------ ------------ ------------- -------------
Net Income/(Loss) $ (9,346) $ (34,062) $ 12,828 $ 93,070
============ ============ ============= =============
BASIC AND DILUTED INCOME/(LOSS) PER SHARE $ (0.02) $ (0.00) $ 0.02 $ 0.01
============ ============ ============= =============
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED 8,470,481 8,470,481 8,470,481 8,470,481
============ ============ ============= =============
The accompanying notes are an integral part of
these consolidated financial statements.
6
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
----------------------------
Six Months Ended June 30,
2008 2007
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 12,828 $ 93,070
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 9,484 16,731
(Increase) Decrease in:
Accounts receivable (70,499) (13,263)
Allowance for doubtful accounts - (14,441)
Inventory 58,781 (83,146)
Prepaid expenses (1,397) 3,993
Account settlement receivable - (16,348)
Deferred tax asset (3,200) -
Increase (Decrease) in:
Accounts payable and accrued liabilities (223,084) (1,540)
Deferred taxes - (6,136)
Corporate income tax payable 173 7,782
Deferred tax liability - (13,954)
------------- ------------
NET CASH USED IN OPERATING ACTIVITIES (216,914) (27,252)
------------- ------------
Net CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of furniture (50,064) (998)
Purchase of trademark - (650)
------------- ------------
NET CASH USED IN INVESTING ACTIVITIES (50,064) (1,648)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan payable, Dell 1,005 -
Loan payable, AFS/IBEX 437 -
Proceeds from credit line 12,044 -
Proceeds from related parties 60,000 15,138
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 73,486 15,138
------------- ------------
NET DECREASE IN CASH (193,492) (13,762)
CASH, BEGINNING OF PERIOD 217,549 89,017
------------- ------------
CASH, END OF PERIOD $ 24,057 $ 75,255
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ 3,848 $ -
============= ============
Income taxes $ 800 $ -
============= ============
The accompanying notes are an integral part of
these consolidated financial statements.
7
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all normal recurring adjustments considered
necessary for a fair presentation have been included. Operating results for
the six month period ended June 30, 2008 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2008. For
further information refer to the financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended December 31, 2007.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
This summary of significant accounting policies of AmexDrug Corporation is
presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally accepted in
the United States of America and have been consistently applied in the
preparation of the financial statements.
Income/Loss per Share Calculations
----------------------------------
The Company adopted Statement of Financial Standards ("SFAS") No. 128 for
the calculation of "Loss per Share". SFAS No. 128 dictates the calculation
of basic earnings per share and diluted earnings per share. Basic earnings
per share are computed by dividing income available to common shareholders
by the weighted-average number of common shares available. Diluted earnings
per share is computed 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 the potential common shares had been
issued and if the additional common shares were dilutive. The Company's
diluted income/loss per share is the same as the basic income/loss per
share for the period ended June 30, 2008 as the inclusion of any potential
shares would have had an anti-dilutive effect due to the Company generating
a loss.
Reclassification
----------------
Certain items included in the six months ended June 30, 2007 financial
statements have been reclassified to conform to the current year
presentation.
3. CAPITAL STOCK
-------------
During the six months ended June 30, 2008, the Company issued no shares of
common stock.
4. INCOME TAXES
------------
The Company files income tax returns in the U.S. Federal jurisdiction, and
the state of California. With few exceptions, the Company is no longer
subject to U.S. federal, state and local, or non-U.S. income tax
examinations by tax authorities for years before 2000.
The Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, on January 1, 2007. Deferred
income taxes have been provided by temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for tax purposes. To the extent allowed by GAAP, we
provide valuation allowances against the deferred tax assets for amounts
when the realization is uncertain.
Included in the accompanying consolidated balance sheet at June 30, 2008,
we recorded an increase of $2,400 of deferred income tax assets related to
uncertain tax positions, which increased retained earnings.
The Company's policy is to recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in operating
expenses.
8
Item 2. 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.
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.
9
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.
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 eleven products are currently 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.
10
Results of Operations
---------------------
For the Three Months Ended June 30, 2008. For the three months ended
June 30, 2008, Amexdrug reported sales of $1,469,772, comprised entirely of
income from the pharmaceutical wholesale business of selling brand name and
generic pharmaceutical products, and (OTC) health and beauty products by our
subsidiaries, Dermagen, Inc., Allied Med and BioRx Pharmaceuticals, Inc. This is
$240,951 less than the $1,710,723 of sales reported for the three months ended
June 30, 2007. During the three month period ended June 30, 2008, Amexdrug
experienced a decrease in total sales due, in part, to the loss of a few
customers. Cost of goods sold for the three months ended June 30, 2008 was
$1,386,701, a decrease of $242,216 from the $1,628,917 cost of goods sold for
the three months ended June 30, 2007. During the three months ended June 30,
2008 gross profit increased by $1,265 to $83,071, or 5.7% of sales, from the
$81,806, or 4.8% of sales recorded for the three months ended June 30, 2007. The
change in gross profit margin is attributable to an increased percentage of
sales made from higher gross margin products manufactured and sold in the three
month period ended June 30, 2008.
Selling, general and administrative expense was $94,657 for the three
months ended June 30, 2008, a decrease of $12,741 from the $107,398 of selling,
general and administrative expense recorded for the three months ended June 30,
2007. This decrease in selling, general and administrative expense is
attributable to decreases in certain administrative expenses.
During the three months ended June 30, 2008, Amexdrug experienced a net
loss of $9,346, an improvement of $24,716 from the net loss of $34,062
experienced in the three months ended June 30, 2007. Amexdrug's decrease in net
loss during the three month period ended June 30, 2008 is attributable largely
to the decrease of selling, general and administrative expense and a slight
decrease in depreciation expense in the later period.
For the Six Months Ended June 30, 2008. For the six months ended June
30, 2008, Amexdrug reported sales of $2,772,986, comprised entirely of income
from the pharmaceutical wholesale business of selling brand name and generic
pharmaceutical products, and (OTC) health and beauty products by our
subsidiaries, Dermagen, Inc., Allied Med and BioRx Pharmaceuticals, Inc. This is
$699,560 less than the $3,472,546 of sales reported for the six months ended
June 30, 2007. During the six month period ended June 30, 2008, Amexdrug
experienced a decrease in total sales due, in part, to the loss of a few
customers. Cost of goods sold for the three months ended June 30, 2008 was
$2,570,287, a decrease of $626,013 from the $3,196,300 cost of goods sold for
the six months ended June 30, 2007. During the six months ended June 30, 2008
gross profit decreased by $73,547 to $202,699, or 7.3% of sales, from the
$276,246, or 8.0% of sales recorded for the six months ended June 30, 2007. The
change in gross profit margin is attributable to an increased percentage of
sales of lower gross margin products manufactured and sold in the first six
months of 2008.
Selling, general and administrative expense was $177,832 for the six
months ended June 30, 2008, a decrease of $42,391 from the $220,223 of selling,
general and administrative expense recorded for the six months ended June 30,
2007. This decrease in selling, general and administrative expense is
attributable to decreases in certain administrative expenses.
During the six months ended June 30, 2008, Amexdrug experienced net
income of $12,828, a decrease of $80,242 from the net income of $93,070
experienced in the six months ended June 30, 2007. Amexdrug's decrease in net
profits during the six month period ended June 30, 2008 is attributable largely
to the decrease of sales and the resulting decrease in gross profits earned in
the later period.
Liquidity and Capital Resources - June 30, 2008
-----------------------------------------------
As of June 30, 2008, Amexdrug reported total current assets of
$460,758, comprised primarily of cash and cash equivalents of $24,057, accounts
receivable of $281,056, inventory of $135,760, a deferred tax asset of $10,200,
other receivable of $8,288 and prepaid insurance of 1,397. Total assets as of
June 30, 2008 were $558,400, which included total current assets, plus net
property and equipment of $63,922, other deposits of $12,158, customer base of
2,281, trademark of $1,516, and goodwill of $17,765.
11
Amexdrug's liabilities as of June 30, 2008 consisted primarily of
accounts payable of $306,009, notes payables to related parties of $122,342,
business line of credit of $66,980and accrued liabilities of $6,421.
During the six months ended June 30, 2008, Amexdrug used $216,914 cash
in operating activities compared to $27,252 cash used in operating activities in
the six months ended June 30, 2007. The primary adjustments to reconcile net
income to net cash used in operating activities during the six months ended June
30, 2008 were as follows: a decrease in accounts payable and accrued liabilities
of $223,084, a decrease in inventory of $58,781, and an increase in accounts
receivable of $70,499. Amexdrug had $24,057 in cash and cash equivalents at June
30, 2008. Operations have primarily been funded through cash generated from
operations, and from loans made from the wife of our President. 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. Quantitative and Qualitative Disclosures About Market Risk.
A "smaller reporting company" (as defined by Item 10 of the Regulation
S-K) is not required to provide the information required by this Item.
Item 4T. 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
Exchange Act of 1934 ("Exchange Act"), as of June 30, 2008. 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 June 30, 2008, 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-Q REPORT
REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE
RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.
12
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 1A. Legal Proceedings.
A "smaller reporting company" (as defined by Item 10 of the Regulation
S-K) is not required to provide the information required by this Item.
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.
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 June 30, 2008.
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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: August 11, 2008 By: /s/ Jack Amin
------------------------------------
Jack Amin
Director, President, Chief Executive
Officer, Chief Financial Officer and
Chief Accounting Officer
14
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