UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 31, 2001 Commission file number 000-23250 ------------------------ MARKET AMERICA, INC. (Exact name of registrant as specified in its charter) North Carolina 56-1784094 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1302 Pleasant Ridge Road Greensboro, North Carolina (Address of principal executive offices) 27409 (Zip Code) (336) 605-0040 (Registrant's Telephone Number, Including Area Code) ------------------------ 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 / / APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock as of September 14, 2001. 19,420,000 ================================================================================ PART I ITEM 1 Statement of Financial Position as of July 31, 2001 (Unaudited) and April 30, 2001 Statement of Operations for the Three-Month Periods Ended July 31, 2001 and 2000 (Unaudited) Statement of Changes in Stockholders' Equity for the Three-Month Periods Ended July 31, 2001 and 2000 (Unaudited) Statement of Cash Flows for the Three-Month Periods Ended July 31, 2001 and 2000 (Unaudited) Notes to Financial Statements as of July 31, 2001 (Unaudited) 2 Statement of Financial Position as of MARKET AMERICA, INC. July 31, 2001 and April 30, 2001 - -------------------------------------------------------------------------------- (Unaudited) July 31, April 30, ASSETS 2001 2001 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 69,501,793 $ 60,511,367 Investment in available-for-sale securities 1,870,589 6,301,797 Income tax refunds receivable 0 2,366,440 Interest receivable 138,127 550,827 Advances to related parties (32,078) 16,222 Advances to officers, directors and employees 474,262 236,467 Inventories 4,093,335 3,296,701 Deferred tax assets 366,300 372,500 Other current assets 282,873 134,190 ------------ ------------ Total current assets 76,695,201 73,786,511 ------------ ------------ PROPERTY AND EQUIPMENT Buildings 8,153,533 4,593,133 Furniture and equipment 5,440,224 5,346,209 Yacht 3,610,000 3,610,000 Software 427,000 397,000 Leasehold improvements 1,282,456 1,253,536 ------------ ------------ 18,913,213 15,199,878 Less accumulated depreciation 2,218,342 1,913,505 ------------ ------------ Total property and equipment 16,694,871 13,286,373 ------------ ------------ OTHER ASSETS Restricted cash 2,954,786 2,933,477 Deposit on building -- 1,100,000 Other 1,559,994 1,326,729 ------------ ------------ 4,514,780 5,360,206 ------------ ------------ TOTAL ASSETS $ 97,904,852 $ 92,433,090 ============ ============ The accompanying notes are an integral part of these financial statements. 3 Statement of Financial Position as of MARKET AMERICA, INC. July 31, 2001 and April 30, 2001 - -------------------------------------------------------------------------------- (Unaudited) July 31, April 30, LIABILITIES AND STOCKHOLDERS' EQUITY 2001 2001 ------------ ------------ CURRENT LIABILITIES Current portion of long-term debt $ 84,078 $ 80,478 Accounts payable - trade 2,101,442 1,861,504 Commissions payable 2,847,900 2,676,825 Sales tax payable 1,057,883 1,039,156 Income taxes payable 3,486,464 3,811,363 Other accrued liabilities 544,934 526,462 Unearned revenue 3,647,117 4,289,569 ------------ ------------ Total current liabilities 13,769,818 14,285,357 ------------ ------------ LONG-TERM DEBT 1,931,599 1,955,346 ------------ ------------ DEFERRED TAX LIABILITIES 106,600 92,300 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, $.00001 par value; 800,000,000 shares authorized; 19,420,000 shares issued and outstanding at July 31, 2001 and April 30, 2001 194 194 Additional paid-in capital 39,801 39,801 Retained earnings 82,056,840 76,030,856 Accumulated other comprehensive Income: Unrealized gains on available- for-sale securities, net of deferred taxes -- 29,236 ------------ ------------ Total stockholders' equity 82,096,835 76,100,087 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,904,852 $ 92,433,090 ============ ============ The accompanying notes are an integral part of these financial statements. 4 Statement of Operations for the Three-Month MARKET AMERICA, INC. Periods Ended July 31, 2001 and 2000 (Unaudited) - -------------------------------------------------------------------------------- July 31, July 31, 2001 2000 ------------ ------------ SALES $ 40,049,330 $ 33,536,881 COST OF SALES 10,581,707 8,985,799 ------------ ------------ GROSS PROFIT 29,467,623 24,551,082 ------------ ------------ SELLING EXPENSES Commissions 16,315,005 15,598,060 ------------ ------------ GENERAL and ADMINISTRATIVE EXPENSES Salaries 1,957,631 1,480,189 Consulting 53,067 371,955 Rents 295,096 364,845 Depreciation and amortization 308,805 187,590 Other operating expenses 1,721,552 1,424,436 ------------ ------------ 4,336,151 3,829,015 ------------ ------------ INCOME FROM OPERATIONS 8,816,467 5,124,007 ------------ ------------ OTHER INCOME (EXPENSE) Interest income 634,699 687,260 Interest expense (47,477) (11,740) Dividend income 13,595 1,311 Realized gains on available- for-sale securities 74,347 163,939 Loss on disposal of assets -- (110,264) Miscellaneous Income 96,904 160,600 ------------ ------------ Total other income (expense) 772,068 891,106 ------------ ------------ INCOME BEFORE TAXES 9,588,535 6,015,113 INCOME TAXES 3,562,551 2,457,924 ------------ ------------ NET INCOME $ 6,025,984 $ 3,557,189 ============ ============ BASIC EARNINGS PER COMMON SHARE $ .31 $ .18 ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 19,420,000 19,452,174 ============ ============ The accompanying notes are an integral part of these financial statements. 5 Statement of Changes in Stockholders' Equity for the Three-Month Periods Ended July 31, 2001 and 2000 MARKET AMERICA, INC. (Unaudited) - -------------------------------------------------------------------------------- Additional Accumulated Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Earnings Income Total -------------------------------------------------------------------------------------------- Balance at April 30, 2000 19,550,000 $ 195 $ 39,801 $ 56,187,461 $ 51,695 $ 56,279,152 Purchase and retirement of common stock (100,000) (1) -- (308,999) -- (309,000) Comprehensive Income: Net Income -- -- -- 3,557,189 -- 3,557,189 Other Comprehensive Income: Reclassification adjustment for gains realized in net income, net of deferred taxes of $60,657 -- -- -- -- (103,282) (103,282) Unrealized holding gains on available- for-sale securities, net of deferred taxes of $74,022 -- -- -- -- 126,038 126,038 ------------ ------------ ------------ ------------ ------------ ------------ Total Comprehensive Income 3,579,945 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at July 31, 2000 19,450,000 $ 194 $ 39,801 $ 59,435,651 $ 74,451 $ 59,550,097 ============ ============ ============ ============ ============ ============ Balance at April 30, 2001 19,420,000 $ 194 $ 39,801 $ 76,030,856 $ 29,236 $ 76,100,087 Comprehensive Income: Net Income -- -- -- 6,025,984 -- 6,025,984 Other Comprehensive Income: Unrealized holding gains on available- for-sale securities net of deferred taxes of $7,253 -- -- -- -- 19,603 19,603 Reclassification adjustment for gains realized in net income, net of deferred taxes of $25,508 -- -- -- -- (48,839) (48,839) ------------ ------------ ------------ ------------ ------------ ------------ Total Comprehensive Income 5,996,748 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at July 31, 2001 19,420,000 $ 194 $ 39,801 $ 82,056,840 $ -- $ 82,096,835 ============ ============ ============ ============ ============ ============ The accompanying notes are an integral part of these financial statements 6 Statement of Cash Flows for the Three-Month Periods Ended July 31, 2001 and 2000 MARKET AMERICA, INC. (Unaudited) - -------------------------------------------------------------------------------- July 31, July 31, 2001 2000 --------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 6,025,984 $ 3,557,189 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 308,805 187,590 Deferred income taxes 38,300 (48,300) Loss on disposal of fixed assets -- 110,264 Gains on sales of available-for-sale securities (74,347) (163,939) Decrease in income tax refunds receivable 2,366,440 -- (Increase) decrease in interest receivable 412,700 (47,068) (Increase) decrease in inventories (796,634) (96,519) (Increase) decrease in other current assets (148,683) (373,079) (Increase) decrease in other assets (101,500) (22,726) (Increase) decrease in accounts payable - trade 239,938 185,562 Increase (decrease) in commissions payable 171,075 (68,775) Increase (decrease) in sales tax payable 18,727 (5,318) Increase (decrease) in income taxes payable (324,899) (1,298,000) Increase (decrease) in other accrued liabilities 18,472 (211,905) Increase (decrease) in unearned revenue (642,452) 436,952 --------------- --------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,511,926 2,141,928 --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of available-for-sale securities -- (7,087,753) Proceeds from sale or maturity of available- for-sale securities 4,458,519 10,576,652 Increase in advances to, officers, directors and employees (237,795) (86,891) Repayment from (advances to) related parties 48,460 (18,910) (Increase) decrease in restricted cash (21,309) 9,854 Increase in other assets (135,893) -- Purchase of property and equipment (2,613,335) (3,519,681) --------------- --------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,498,647 (126,729) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Purchase and retirement of common stock -- (309,000) Payments on notes payable and long-term debt (20,147) (29,751) Proceeds from long-term debt -- 1,280,837 --------------- --------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (20,147) 942,086 --------------- --------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 8,990,426 2,957,285 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,511,367 43,870,755 --------------- --------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 69,501,793 $ 46,828,040 =============== =============== The accompanying notes are an integral part of these financial statements. 7 Statement of Cash Flows for the Three- Month Periods Ended July 31, 2001 and 2000 MARKET AMERICA, INC. (Unaudited) - -------------------------------------------------------------------------------- July 31, 2001 July 31, 2000 --------------- --------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 47,477 $ 11,740 Income taxes $ 1,503,560 $ 3,710,000 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES Net change in unrealized holding gains or losses on available-for-sale securities, net of deferred income tax of $17,800 and $15,000 ($ 29,236) $ 22,756 The accompanying notes are an integral part of these financial statements. 8 Notes to Financial Statements MARKET AMERICA, INC. July 31, 2001(Unaudited) - -------------------------------------------------------------------------------- Interim Financial Information The unaudited interim financial statements of Market America, Inc. (the "Company")as of July 31, 2001 and 2000 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company's financial statements as of July 31, 2001 and for the three-month periods ended July 31, 2001 and 2000. Management suggests that these financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. The results of operations for the quarter ended July 31, 2001 may not be indicative of the results that may be expected for the fiscal year ending April 30, 2002. Earnings Per Share The Company computes earnings per share ("EPS") based upon the requirements of Statement of Financial Accounting Standards No. 128. This statement specifies the calculation, presentation, and disclosure requirements for both basic and diluted EPS. The Company does not have any securities or agreements outstanding with dilutive potential for its common shares. Reclassifications Certain reclassifications have been made to prior period amounts to conform with the current period financial statements presentation. Reclassifications made had no effect on previously reported net income. Related Party Transactions In December 1999, the Company entered into an agreement with a company owned by Mr. and Mrs. James H. Ridinger, officers/stockholders of the Company, to lease real estate in Miami, Florida for direct sales training and education, as well as other corporate functions. The monthly rental is $60,000 and the lease has a 20-year term with a renewal option for an additional 20-year term. The Company has paid a $600,000 non-interest bearing damage deposit as part of this lease, which is included in other assets on the balance sheet. The amount of rent expense under this agreement aggregated $180,000 during each of the three-month periods ended July 31, 2001 and 2000. In connection with this lease, the Company has guaranteed a $5.3 million five-year loan to the related company for the purchase of the real estate being leased. As of July 31, 2001, the guaranteed loan had an outstanding balance of $4,168,113. The Company had restricted cash of $2,729,786 as collateral under the loan guarantee as of July 31, 2001. During the year ended April 30, 1999, the Company entered into a 33-year net ground lease with a company owned by Mr. and Mrs. James H. Ridinger for the site on which the Company has constructed its new headquarters and warehouse facility in Greensboro, North Carolina at a cost of $4,593,133. Required rental payments are $17,000 per month since October 2000, and $10,666 per month prior to that date. The amount of rent expense under 9 Notes to Financial Statements MARKET AMERICA, INC. July 31, 2001(Unaudited)-Continued - -------------------------------------------------------------------------------- this agreement was $51,000 for the three-month period ended July 31, 2001. Rent expense for the three-month period ended July 31, 2000 was $31,998. In June 1999, the Company paid $500,000 to the Ridinger company for a Right of First Refusal on this site, which provides the Company with the opportunity to purchase the land, should it be offered for sale, before the land is offered for sale to other parties. The amount paid is included in other assets and is being amortized on a straight-line basis over the lease term. The unamortized balance will be applied to the purchase price of the land in the event the Company buys it. On June 28, 1999, the Company became guarantor of a $1.6 million bank loan to the Ridinger company used for the purchase of the land. The guaranteed loan had an outstanding balance of $1,047,997 at July 31, 2001. This loan and the Company's term loan are cross-collateralized by the land being leased from the Ridinger company and by the building improvement constructed thereon by the Company. The guaranteed loan is repayable over a five-year period. During the three month period ended July 31, 2001, the Company purchased a facility in Miami, Florida from an unrelated party for $3,560,400. The Company had made an earnest money deposit of $1,100,000 on this facility during the fourth quarter of fiscal 2001 and paid the remaining $2,460,400 in cash in June 2001. The Company will lease the land on which the facility sits from a company owned by Mr. and Mrs. James H. Ridinger, officers/stockholders of the Company, at an amount and period yet to be determined. The building will be depreciated over the shorter of its estimated useful life or the term of the ground lease. Substantially all of the Company's leasehold improvements are to properties leased from related companies. Related party transactions are more fully described in the Company's most recent annual report on Form 10-K. 10 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity & Capital Resources The Company had unrestricted and restricted cash on deposit with various financial institutions and an available-for-sale security totaling $74.3 million at July 31, 2001 compared to $69.7 million at April 30, 2001. The $74.3 million as of July 31, 2001 was comprised of $69.5 million of unrestricted cash, $2.9 million of restricted cash and $1.9 million of an available-for-sale security. The restricted cash consisted of certificates of deposit, which were restricted for use as collateral under a loan guarantee of a $5.3 million loan by a financial institution to a related company during fiscal 2000. The guaranteed loan had an outstanding balance of $4,168,113 as of July 31, 2001. The loan proceeds were used by the related company to purchase real estate in Miami, Florida. The Company is leasing this real estate under a twenty-year agreement. The real estate is to be used for direct sales training and education as well as other corporate functions (see "Related Party Transactions" in the Notes to Financial Statements above). The available-for-sale security is an obligation of a governmental agency. The security was purchased in order to increase the Company's yield on assets pending use in the Company's business and can be converted into cash if the need arises. The Company has a five-year $2.1 million term loan related to its office and distribution facility in Greensboro, North Carolina. The loan contains an annual fixed interest rate of 7.625% and requires 59 monthly payments of $19,750, including interest, with a balloon payment of all outstanding principal plus interest due in June 2005. The building was constructed on land leased from a related company (see "Related Party Transactions" in the Notes to Financial Statements above). The Company is also a guarantor of a $1.6 million loan by a financial institution to a related company. The guaranteed loan had an outstanding balance of $1,047,997 as of July 31, 2001. The proceeds of the loan were used by the related company to purchase the land on which the Company's office and distribution facility in Greensboro, North Carolina resides. This loan and the Company's building loan are cross-collateralized by the land being leased from the related company and by the building constructed thereon by the Company. The guaranteed loan is repayable over a five-year period. During the three month period ended July 31, 2001, the Company purchased a facility in Miami, Florida for $3,560,400. The Company had made an earnest money deposit of $1,100,000 on this facility during the fourth quarter of fiscal 2001 and paid the remaining $2,460,400 in cash in June 2001. See "Related Party Transactions" above for a further discussion of this transaction. The Company believes that its current level of cash and cash equivalents and its cash provided by operating activities will provide sufficient resources for operations in the foreseeable future. In the event that the Company's operating environment becomes adverse, there can be no assurance that additional financing would not be required. Results of Operations The Company's sales continued to grow during the quarter ended July 31, 2001. Net sales increased 19.4% to $40.0 million for the quarter ended July 31, 2001 compared to $33.5 million for the same period in the prior fiscal year. There were two primary factors for the sales increase for 2001 quarter compared to the 2000 quarter. Foremost, the Company accelerated the recognition of approximately $3.4 million of revenue during the 2001 11 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED period as a result of its' annual convention being moved from August to July. Secondly, as disclosed in the Company's most recent Form 10-K filing with the Securities and Exchange Commission, the Company experienced delays in delivering its' new human growth hormone enhancer (HGH) product to the marketplace during the fourth quarter of fiscal 2001. Upon shipment in early May 2001, the Company recognized approximately $1 million of revenue from first time orders for this product. Without these two occurrences, sales would have increased by 6.1% for the three-month period ended July 31, 2001 compared to the same period in fiscal 2001. Commission expense was $16.3 million for the three-month period ended July 31, 2001. This compares to $15.6 million for the same period last year. Commissions, as a percentage of sales, were 40.7% and 46.5% for the three-month periods ended July 31, 2001 and 2000, respectively. The lower percentage for the fiscal 2002 period is largely due to the recognition of revenue in July 2001 from the annual convention. Commission expense as a percentage of sales, excluding the annual convention revenue, was 44.6% for the fiscal 2002 period. The commission payout as a percentage of business volume earned through commissionable product sales has remained consistent during the three-month period ended July 31, 2001 when compared to fiscal 2001. General and administrative expenses (G&A expenses) were $4.3 million and $3.8 million for the three-month periods ended July 31, 2001 and 2000, respectively. As a percentage of sales, general and administrative expenses were 10.8% and 11.4% for the three-month periods ended July 31, 2001 and 2000, respectively. G&A expenses as a percentage of sales, excluding the annual convention revenue, were 11.8% for the 2001 period. For the three-month periods ended July 31, 2001 and 2000, other operating expenses included the following items: 2001 2000 --------------- --------------- Legal and professional fees $ 191,034 $ 151,778 Insurance 253,398 152,789 Other taxes and licenses 170,346 189,539 Utilities 75,117 92,440 Other 1,031,657 837,890 --------------- --------------- $ 1,721,552 $ 1,424,436 =============== =============== Due to efforts to expand human resources to better serve the Company's distributors, the Company had a larger workforce by 24% during the three-month period ended July 31, 2001 compared to the same period in fiscal 2001. This resulted in increased payroll expenses and employee benefits. The Company incurred larger consulting expenses during the 2000 period due to renovations of the leased corporate facility in Miami, Florida. The Company incurred larger rental expense during the 2000 period as result of leasing a building in Greensboro, North Carolina prior to the completion of its' new office and distribution facility during July 2000. Depreciation and amortization increased in the fiscal 2002 quarter over the fiscal 2001 quarter primarily due to the completion of the office and distribution facility in Greensboro, North Carolina during July 2000. The facility in North Carolina is being depreciated over 33 years (ground lease term). The equipment and furnishings for this facility are being depreciated over 10 years. 12 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONCLUDED Insurance expense increased due to higher health care costs incurred and number of employees covered under the Company's self-insured health insurance plan during the three-month period ended July 31, 2001 compared to the three-month period ended July 31, 2000. The amount of expense incurred under the plan can vary from year to year depending upon the health and number of Company employees. The Company's health plan does have a $30,000 annual stop loss limit per employee and an annual aggregate stop loss limit of approximately $652,000. The Company also incurred larger property insurance due to the expansion of corporate facilities in both Greensboro, North Carolina and Miami, Florida since the three-month period ended July 31, 2000. Other operating expenses were 2.6% and 2.5% of sales for the three-month periods ended July 31, 2001 and 2000, respectively. Other operating expenses were 2.8% of sales for the most recent three-month fiscal period excluding the annual convention revenue. Forward-Looking Information Statements in this report concerning the Company's business outlook for future economic performance, anticipated profitability, revenues, expenses or other financial items, together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under federal securities laws. "Forward-looking statements" are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, decreases in sales volume or number of distributors, unfavorable regulatory action, loss of key personnel, loss of key suppliers and general economic conditions. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has evaluated the disclosure requirements of Item 305 of Regulation S-K "Quantitative and Qualitative Disclosures about Market Risk," and has concluded that the Company has no market risk sensitive instruments for which these additional disclosures are required. 13 PART II ITEM 1 LEGAL PROCEEDINGS The Company did not become a party and its property did not become subject to any material pending legal proceeding during the quarter. There were no material developments in any legal proceeding previously reported. The Company is periodically involved in routine litigation incidental to its business, including litigation involving distributor terminations. Management believes that any such pending litigation will not have a material effect on the Company's financial position or results of operations. ITEM 2 CHANGES IN SECURITIES NONE ITEM 3 DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5 OTHER INFORMATION NONE ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS The exhibits to this report are listed in the Exhibit Index, which is incorporated herein by reference. (b) REPORTS ON FORM 8-K None 14 - ------------------------------------------------------------------------------- SIGNATURE - ------------------------------------------------------------------------------- Pursuant to the requirements of Section 13 or 15 (d) 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. MARKET AMERICA, INC. (Registrant) Date: September 14, 2001 /s/ James H. Ridinger - ------------------------ ----------------------------------- James H. Ridinger, President and CEO (Principal Executive Officer and Principal Financial Officer) 15 EXHIBITS TO FORM 10-Q EXHIBIT INDEX Exhibit Number Identification ------ -------------- 2.1 Agreement and Plan of Merger dated as of October 31, 1993 between Atlantis Ventures, Inc. and Market America, Inc. and Addendum (to same)dated October 1, 1993 (incorporated by reference to Exhibits 2.1 and 2.2, respectively, to the Company's Current Report on Form 8-K filed October 6, 1993) 3.1 Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Commission on November 3, 1993) 3.2 Articles of Amendment of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1996 filed with the Commission on July 30, 1996) 3.3 By-laws of the Company (incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1996 filed with the Commission on July 30, 1996) 10.2 Vendor agreement between Market America, Inc. and Isontonix (x) Corporation dated October 25, 1993 (incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended April 13, 1998 filed with the Commission on August 13, 1998) 10.4 Lease between Miracle Holdings LLC and Market America, Inc. dated November 1, 1998 (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1999 filed with the Commission on July 29, 1999) 10.5 Right of First Refusal agreement between Market America, Inc. and Miracle Holdings LLC dated May 20, 1999 (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1999 filed with the Commission on July 29, 1999) 10.6 Lease between Miracle Properties LLC and Market America, Inc. dated February 1, 2000 (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2000 filed with the Commission on July 28, 2000) 16