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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
[ ] TRANSITION REPORT PURSUANT TO 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
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(Exact name of registrant as specified in its charter)
NEVADA 95-2251025
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
7251 Condor Street
Commerce, California 90040
--------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (323) 725-3100
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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] 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 [ ] (Do not check if a smaller reporting company)
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 [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of May 10, 2011, there were
8,457,309 shares of the issuer's common stock issued and outstanding, and an
additional 13,172 shares held as treasury shares.
AMEXDRUG CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (Unaudited)...................................3
Consolidated Balance Sheets -- As of March 31, 2011
(Unaudited) and December 31, 2010 (Audited)......................5
Consolidated Statements of Operations for the Three Months
Ended March 31, 2011 and 2010 (Unaudited)........................6
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2011 and 2010 (Unaudited)........................7
Notes to Consolidated Financial Statements (Unaudited).............8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........14
Item 4. Controls and Procedures............................................14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................14
Item 1A. Risk Factors.......................................................15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........15
Item 3. Defaults Upon Senior Securities....................................15
Item 4. (Removed and Reserved)............................................15
Item 5. Other Information.................................................15
Item 6. Exhibits..........................................................15
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The consolidated balance sheets of Amexdrug Corporation, a Nevada
corporation, and subsidiaries as of March 31, 2011 (unaudited) and December 31,
2010 (audited), the related unaudited consolidated statements of operations for
the three month periods ended March 31, 2011 and March 31, 2010, the related
unaudited consolidated statements of cash flows for the three month periods
ended March 31, 2011 and March 31, 2010 and the notes to the unaudited
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-K for the year ended December 31, 2010.
The accompanying 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
BioRx Pharmaceuticals, Inc., Allied Med, Inc. and Dermagen, 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 March 31, 2011, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2011.
3
Amexdrug Corporation and Subsidiaries
index to financial statements
Page
----
Consolidated Balance Sheets - March 31, 2011 (Unaudited)
and December 31, 2010 (Audited)...........................................5
Consolidated Statements of Operations (Unaudited) for the
Three Months Ended March 31, 2011 and 2010...............................6
Consolidated Statements of Cash Flows (Unaudited) for the
Three Months Ended March 31, 2011 and 2010...............................7
Notes to Consolidated Financial Statements..................................8
4
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2011 2010
-------------- ---------------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 257,925 $ 443,703
Investment 6,568 7,649
Accounts receivable, net of allowance
of $37,000 and 37,000, respectively 623,222 473,983
Prepaid expenses 6,875 8,079
Inventory, net of allowance of $33,613
and 33,613, respectively 409,379 304,186
Deferred tax asset 43,970 53,140
Advances officer 4,950 3,918
-------------- ---------------
Total Current Assets 1,352,889 1,294,658
-------------- ---------------
Property and Equipment, at cost
Office and computer equipment 197,295 197,295
Leasehold improvements 15,700 15,700
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212,995 212,995
Less accumulated depreciation (200,280) (199,364)
-------------- ---------------
Net Property and Equipment 12,715 13,631
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Other Assets
Other deposits 28,212 14,462
Intangibles
Customer base, net of accumulated
amortization of $18,259 - -
Trademark, net of accumulated
amortization of $670 and $629,
respectively 980 1,021
Goodwill 17,765 17,765
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Total Other Assets 46,957 33,248
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Total Assets $ 1,412,561 $ 1,341,537
============== ===============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 465,780 $ 534,337
Accrued liabilities 16,200 29,776
Corporate tax payable 162,615 108,304
Notes payable related parties 108,023 108,023
Business lines 245,932 310,590
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Total Current Liabilities 998,550 1,091,030
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Shareholders' Equity
Common stock, $0.0001 par value;
50,000,000 authorized common shares
8,470,481 shares issued and outstanding 8,471 8,471
Additional paid in capital 83,345 83,345
Treasury stock (12,048) (11,441)
Retained earnings 334,243 170,132
-------------- ---------------
Total Shareholders' Equity 414,011 250,507
-------------- ---------------
Total Liabilities and
Shareholders' Equity $ 1,412,561 $ 1,341,537
============== ===============
The accompanying notes are an integral part of
these consolidated financial statements.
5
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31, March 31,
2011 2010
-------------- ---------------
Sales $ 2,840,717 $ 2,749,686
Cost of Goods Sold 2,409,415 2,515,851
-------------- ---------------
Gross Profit 431,302 233,835
-------------- ---------------
Operating Expenses
Selling, general and administrative expense 150,632 127,249
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Total Operating Expenses 150,632 127,249
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Income before depreciation expense 280,670 106,586
Depreciation and amortization expense 958 1,600
-------------- ---------------
Income before Other Income/(Expenses) 279,712 104,986
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Other Income/(Expenses)
Interest income - -
Penalty (221) -
Unrealized gain/(loss) (474) 330
Interest expense (6,426) (6,279)
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Total Other Income/(Expenses) (7,121) (5,949)
-------------- ---------------
Income/(Loss) before Provision for Income Taxes 272,591 99,037
Income tax benefit/(expense) (108,480) (22,828)
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Net Income $ 164,111 $ 76,209
============== ===============
BASIC AND DILUTED INCOME/(LOSS) PER SHARE $ 0.02 $ 0.01
============== ===============
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED 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)
Three Months Ended
March 31, March 31,
2011 2010
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 164,111 $ 76,209
Adjustment to reconcile net income to
net cash used in operating activities
Depreciation and amortization 958 1,600
Unrealized loss (gain) on investment 474 (330)
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts receivable (149,239) (80,947)
Inventory (105,192) (46,139)
Prepaid expenses 1,204 -
Deferred tax asset 9,170 (13,655)
Other assets (13,750) (2,304)
Increase (Decrease) in:
Accounts payable and accrued liabilities (82,135) 13,773
Corporate income tax payable 54,311 34,883
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NET CASH USED IN
OPERATING ACTIVITIES (120,088) (16,910)
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Net CASH FLOWS USED IN INVESTING ACTIVITIES:
Proceeds (payments) from investments 607 (1,094)
Purchase of fixed assets - (826)
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NET CASH PROVIDED (USED) IN
INVESTING ACTIVITIES 607 (1,920)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to officer (1,032) (33)
Purchase of treasury stock (607) (405)
Proceeds (Payments) from credit line (64,658) 24,721
-------------- ---------------
NET CASH (USED) PROVIDED
BY FINANCING ACTIVITIES (66,297) 24,283
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NET INCREASE (DECREASE) IN CASH (185,778) 5,453
CASH, BEGINNING OF PERIOD 443,703 121,182
-------------- ---------------
CASH, END OF PERIOD $ 257,925 $ 126,635
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SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ 2,819 $ 4,118
============== ===============
Income taxes $ 45,000 $ 800
============== ===============
The accompanying notes are an integral part of
these consolidated financial statements.
7
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2011
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 three month period ended March 31, 2011 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2011. 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, 2010.
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 per Share Calculations
Income per Share 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 per share is the same as the basic income per share for the three
month period ended March 31, 2011, because there are no outstanding
dilutive instruments.
3. CAPITAL STOCK
During the three month period ended March 31, 2011, 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 2007.
The Company accounts for uncertainty in tax positions by recognition in
the financial statements.
The Company's policy is to recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in operating
expenses.
8
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2011
5. BUSINESS SEGMENT INFORMATION
Beginning in 2005, 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 pharmaceutical products, over-the-counter
drugs and non-drug products and health and beauty products. Health and
Beauty Products consist of the manufacture and distribution of primarily
health and beauty products.
The following tables describe information regarding the operations and
assets of these reportable business segments:
Health and
Beauty
Distributions Products Total
============== ============== ===============
For the period ended March 31,
2011
Sales to external customers $ 2,446,688 $ 394,029 $ 2,840,717
Depreciation and amortization 797 161 958
Segment income (loss) before
taxes 118,498 154,094 272,592
Segment assets 756,986 655,574 1,412,560
For the period ended March 31,
2010
Sales to external customers $ 2,526,591 $ 223,095 $ 2,749,686
Depreciation and amortization 794 806 1,600
Segment income (loss) before
taxes 36,710 62,327 99,037
Segment assets 564,519 383,077 947,596
6. SUBSEQUENT EVENT
Management has evaluated subsequent events according to the requirements
of ASC TOPIC 855, and has determined there are no subsequent events to be
reported.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
--------
Amexdrug Corporation is located at 7251 Condor Street, Commerce,
California 90040. Its phone number is (323) 725-3100. Its fax number is (323)
725-3133. 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
29 years.
Amexdrug Corporation, through its wholly-owned subsidiaries, BioRx
Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care,
Inc., is a 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 attempting to maximize the return of
investments to our shareholders.
Amexdrug Corporation distributes its products through its subsidiaries,
BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health
Care, Inc. primarily to independent pharmacies and secondarily to small-sized
pharmacy chains, alternative care facilities and other wholesalers and retailers
in the state of California.
BioRx Pharmaceuticals, Inc. is a proud member of the National Association
of Chain Drug Stores (NACDS). BioRx Pharmaceuticals, Inc. has developed numerous
unique innovative products in the industry under the name Sponix.
Our team of professionals fully pledges the effectiveness of our distinct
products.
At this time, we have certain distribution channels with suppliers and
customers whom we know and trust, such as Amazon, and hundreds of independent
pharmacies. Of the estimated 100,000 retailers (drug stores and food mass), our
goal is to have 20,000 stores carry our products in 2011.
References in this report to "we," "our," "us," the "company" and
"Amexdrug" refer to Amexdrug Corporation and also to our subsidiaries, BioRx
Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care.
Amexdrug currently has 50,000,000 shares of authorized common stock $.001
par value, of which 8,457,309 are issued and outstanding as of March 31, 2011,
with an additional 13,172 shares held as treasury shares.
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 fourteen innovative health and wellness products have been
manufactured for sale by BioRx Pharmaceuticals, Inc. 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
name of Sponix, and will be sold under the name of BioRx Pharmaceuticals.
10
Allied Med, Inc.
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On December 31, 2001, Amexdrug acquired all of the issued and outstanding
common shares of Allied Med, Inc., an Oregon corporation, in a share exchange in
a related party transaction.
Allied Med, Inc., 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. At Allied Med our
sincere interest is our customers' needs. Our competitive discount pricing
allows our customers an advantage.
Amexdrug assumed the operations of Allied Med, and Amexdrug has been
building on the wholesale pharmaceutical 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.
Royal Health Care Company
-------------------------
In October 2003, Allied Med, Inc. 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.
11
Lease Agreements and Certain Other Contracts
--------------------------------------------
The Company has one written lease agreement covering the property leased
to the Company in Fullerton, California, and one lease agreement covering the
property leased to the Company in Commerce, California. The Company's loan
agreement with Nora Amin is verbal. The Company does not have written contracts
with its major suppliers or buyers. The Company has a written line of credit
agreement with National Bank of California. Copies of the Company's written
lease agreements and material contracts have been filed as exhibits to certain
of its quarterly and annual reports. See the Exhibit Index for a description of
these agreements and for information on where copies can be found.
Business Segments
-----------------
Since 2005, Amexdrug has had 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
pharmaceutical products, over-the-counter drugs and non-drug products and health
and beauty products. Health and Beauty Products consist of the manufacture and
distribution of primarily health and beauty products. Manufacturing includes
expertise in research and development for health care industry products,
including pharmacy supplies.
Results of Operations
---------------------
Revenues
--------
For the three months ended March 31, 2011, Amexdrug reported sales of
$2,840,717, comprised of $2,446,688 of sales from the Company's pharmaceutical
wholesale business of selling brand name and generic pharmaceutical products,
and (OTC) health and beauty products, and $394,029 of sales of health and beauty
products manufactured by the Company. This is $91,031 more than the $2,749,686
of sales reported for the three months ended March 31, 2010 which was comprised
primarily of $2,526,591 sales from the Company's pharmaceutical wholesale
distribution business of selling brand name and generic pharmaceutical products,
and over the counter (OTC) health and beauty products, and $223,095 of sales of
health and beauty products manufactured by the Company. During the three month
period ended March 31, 2011, Amexdrug experienced a modest increase in total
sales due, in part, to increased marketing efforts by the Company, as well as
having an increased number of products to sell.
Cost of Goods Sold
------------------
Cost of goods sold for the three months ended March 31, 2011 was
$2,409,415, a decrease of $106,436 from the $2,515,851 cost of goods sold for
the three months ended March 31, 2010.
Gross Profit
------------
During the three months ended March 31, 2011, gross profit increased by
$197,467 to $431,302, or 15.2% of sales, from the $233,835, or 8.5% of sales,
recorded for the three months ended March 31, 2010. The change in gross profit
margin is attributable to increased sales of higher gross margin products sold
in 2011.
Expenses
--------
Total operating expenses for the three months ended March 31, 2011,
consisting entirely of selling, general and administrative expenses were
$150,632, an increase of $23,383 from the total operating expenses of $127,249
recorded for the three months ended March 31, 2010. The increase in selling,
general and administrative expense is primarily attributed to increased
commissions payable on the increased sales and increased amounts paid for
outside services and moving expenses.
12
Net Income
----------
During the three months ended March 31, 2011, Amexdrug experienced net
income of $164,111, an increase of $87,902 from the $76,209 of net income
recorded for the three months ended March 31, 2010. Amexdrug's increase in net
profits during the three month period ended March 31, 2011, is attributable
largely to the increase of sales of higher gross margin products sold and
resulting increase in gross profits earned in the later period.
Liquidity and Capital Resources - March 31, 2011
------------------------------------------------
As of March 31, 2011, Amexdrug reported total current assets of
$1,352,889, comprised primarily of cash and cash equivalents of $257,925, net
accounts receivable of $623,222, inventory of $409,379, and a deferred tax asset
of $43,970. Total assets as of March 31, 2011 were $1,412,561, which included
total current assets, plus net property and equipment of $12,715, other deposits
of $28,212, trademark of $980, and goodwill of $17,765.
Amexdrug's liabilities as of March 31, 2011, consisted primarily of
accounts payable of $465,780, note payable to related party of $108,023,
business lines of credit of $245,932, accrued liabilities of $16,200 and
corporate tax payable of $162,615.
During the three months ended March 31, 2011, Amexdrug used $120,088 cash
in operating activities compared to $16,910 cash used in operating activities in
the three months ended March 31, 2010. The primary adjustments to reconcile net
income to net cash used in operating activities during the first quarter of 2011
were as follows: an increase in accounts receivable of $149,239, an increase in
inventory of $105,192, a decrease in accounts payable and accrued liabilities of
$82,135, an increase in other assets of $13,750, a decrease in deferred tax
asset of $9,170 and an increase in corporate income tax payable of $54,311.
Amexdrug had $257,925 in cash and cash equivalents at March 31, 2011. Operations
have primarily been funded through net income and an increase in the credit line
balances when needed. Management does not anticipate that Amexdrug will need to
seek additional financing during the next twelve months.
Stock Repurchases
-----------------
Between approximately June 2007 and March 31, 2011, Amexdrug repurchased a
total of 13,172 shares of its common stock at prices ranging from a low of $0.20
per share to a high of $3.03 per share. These shares are held by Amexdrug as
treasury shares. Amexdrug anticipates that it may make additional small
purchases of its shares throughout the remainder of 2011.
Inflation
---------
In the opinion of management, inflation has not and will not have a
material effect on our operations in the immediate future. Management will
continue to monitor inflation and evaluate the possible future effects of
inflation on our business and operations.
Capital Expenditures
--------------------
The Company expended $0 and $826 on capital expenditures during the three
month periods ended March 31, 2011 and 2010, respectively. The Company has no
current plans for any significant capital expenditures.
Critical Accounting Policies
----------------------------
In the notes to the audited consolidated financial statements for the year
ended December 31, 2010, included in the Company's Annual Report on Form 10-K,
the Company discusses those accounting policies that are considered to be
significant in determining the results of operations and its financial position.
The Company believes that the accounting principles utilized by it conform to
accounting principles generally accepted in the United States of America.
13
The preparation of financial statements requires Company management to
make significant estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. By their nature, these judgments are
subject to an inherent degree of uncertainty. On an on-going basis, the Company
evaluates estimates. The Company bases its estimates on historical experience
and other facts and circumstances that are believed to be reasonable, and the
results form the basis for making judgments about the carrying value of assets
and liabilities. The actual results may differ from these estimates under
different assumptions or conditions.
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 Regulation S-K) is
not required to provide the information required by this Item.
Item 4. 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 March 31, 2011. 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 disclosures.
During the last fiscal quarter ended March 31, 2011, 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.
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.
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Item 1A. Risk Factors.
A "smaller reporting company" (as defined by Item 10 of 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.
During the three month period ended March 31, 2011, the Company did not
issue any shares of its unregistered common stock. For a description of any
sales of shares of the Company's unregistered stock made in the past three
years, please refer to the Company's Annual Reports on Form 10-KSB or Form 10-K,
and the Company's Quarterly Reports on Form 10-QSB or Form 10-Q filed since
December 31, 2007.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. (Removed and Reserved).
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits.
(a) Exhibits.
The following exhibits are filed as part of this report.
Exhibit Exhibit
Number Description Location
------- ----------- --------
2.1 Agreement and Plan of Merger *
(to change domicile from California)
2.2 Agreement and Plan of Reorganization **
3.1 Articles of Incorporation ***
3.2 By-Laws ***
10.1 Promissory Note with National Bank of California *****
dated June 23, 2008
10.2 Change in Terms Agreement with National Bank of *****
California dated June 9, 2009
10.3 Change in Terms Agreement with National Bank of ******
California dated March 3, 2009
10.4 Subordination Agreement between Nora Y. Amin, ******
National Bank of California, Amexdrug and its
subsidiaries dated June 9, 2009
10.5 Business Loan Agreement between National Bank of ******
California, Amexdrug and its subsidiaries dated
June 23, 2008
15
10.6 Commercial Security Agreement between National ******
Bank of California, Amexdrug and its subsidiaries
dated June 23, 2008
10.7 Commercial Guarantee between National Bank of ******
California, Jack N. Amin, Amexdrug and its
Subsidiaries
10.8 Commercial Guarantee between National Bank of ******
California, Nora Y. Amin, Amexdrug and its
subsidiaries
10.9 Lease Agreement between Fullerton Business *******
Center, LLC, Lessor, and Allied Med, Inc.,
Lessee, dated March 1, 2011 (Units I & J)
10.10 Guaranty of Lease by Jack Amin (Units I & J) *******
10.11 Lease Agreement between Condor Associates, LLC, *******
Lessor, and Allied Med, Inc.,
Lessee, dated February 22, 2011
10.12 Guaranty of Lease by Jack Amin and Nora Amin *******
14.1 Code of Ethics ****
21.1 List of Subsidiaries of Amexdrug Corporation ******
31.1 Certification of Chief Executive Officer This Filing
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
31.2 Certification of Chief Financial Officer This Filing
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
32.1 Certification of Chief Executive Officer This Filing
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
32.2 Certification of Chief Financial Officer This Filing
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Summaries of all exhibits contained within this
report are modified in their entirety by reference
to these Exhibits.
* Exhibit 2.1 is incorporated by reference from
Amexdrug's Form 8-K Current Report filed December
21, 2001 as Exhibit No. 10.01.
16
** Exhibit 2.2 is incorporated by reference from
Amexdrug's Form 8-K Current Report filed January
15, 2002 as Exhibit No. 10.01.
*** Exhibit 3.1 and 3.2 are incorporated by reference
from Amexdrug's Form 10-KSB for the year
ended December 31, 2001 filed on April 1, 2002.
**** Exhibit 14.1 is incorporated by reference from
Amexdrug's Form 10-K for the year ended
December 31, 2008 filed April 13, 2009
***** Exhibits 10.1 and 10.2 are incorporated
by reference From Amexdrug's Form 10-Q for the
period ended June 30, 2009 filed August 14, 2009
****** Exhibits 10.3 through 10.8 and
21.1 are incorporated by reference from Amexdrug's
Form 10-Q/A for the period ended June 30, 2009
filed September 18, 2009
******* Exhibits 10.9 through 10.12 are incorporated by
reference from Amexdrug's Form 10-K for the
year ended December 31, 2010 filed March 31,
2011
17
SIGNATURES
Pursuant to 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: May 5, 2011 By: /s/ Jack Amin
--------------------------
Jack Amin
Director, President, Chief
Executive Officer, Chief
Financial Officer and
Chief Accounting Officer
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