Attached files
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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, 2010
[] 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
---------------------
(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) (Zip code)
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 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, 2010, there were
8,458,381 shares of the issuer's common stock issued and outstanding, and an
additional 12,100 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, 2010
(Unaudited) and December 31, 2009 (Audited)........................5
Consolidated Statements of Operations for the Three Months
Ended March 31, 2010 and 2009 (Unaudited).........................6
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2010 and 2009 (Unaudited).........................7
Notes to 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........13
Item 4. Controls and Procedures...........................................13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................13
Item 1A. Risk Factors......................................................14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......14
Item 3. Defaults Upon Senior Securities...................................14
Item 4. Submission of Matters to a Vote of Security Holders...............14
Item 5. Other Information.................................................14
Item 6. Exhibits..........................................................14
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, 2010 (unaudited) and December 31,
2009 (audited), the related unaudited consolidated statements of operations for
the three month periods ended March 31, 2010 and March 31, 2009, the related
unaudited consolidated statements of cash flows for the three month periods
ended March 31, 2010 and March 31, 2009 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, 2009.
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, 2010, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2010.
3
AMEXDRUG CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
----
Consolidated Balance Sheets - March 31, 2010 (Unaudited)
and December 31, 2009 (Audited)........................................5
Consolidated Statements of Operations (Unaudited) for
the Three Months Ended March 31, 2010 and 2009........................6
Consolidated Statements of Cash Flows (Unaudited) for
the Three Months Ended March 31, 2010 and 2009........................7
Notes to Consolidated Financial Statements...............................8
4
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2010 2009
------------- --------------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 126,635 $ 121,182
Investment 8,914 7,490
Accounts receivable, net of allowance
of $32,253, respectively 511,131 430,184
Inventory 203,949 157,810
Deferred tax asset 27,433 13,778
Other receivable 18,274 18,274
Advances officer 1,090 1,057
Prepaid insurance - -
------------- --------------
Total Current Assets 897,426 749,775
------------- --------------
Property and Equipment, at cost
Office and computer equipment 194,083 192,257
Leasehold improvements 15,700 15,700
------------- --------------
209,783 208,957
Less accumulated depreciation (192,985) (191,426)
------------- --------------
Net Property and Equipment 16,798 17,531
------------- --------------
Other Assets
Other deposits 14,462 12,158
Intangibles
Customer base, net of accumulated
amortization of $18,259 - -
Trademark, net of accumulated amortization
of $505 and $464, respectively 1,145 1,186
Goodwill 17,765 17,765
------------- --------------
Total Other Assets 33,372 31,109
------------- --------------
Total Assets $ 947,596 $ 798,415
============= ==============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 424,184 $ 406,585
Accrued liabilities 6,331 10,157
Corporate tax payable 40,050 5,167
Notes payable related parties 108,023 108,023
Business lines 229,602 204,881
------------- --------------
Total Current Liabilities 808,190 734,813
------------- --------------
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 (9,689) (9,284)
Retained earnings/(accumulated deficit) 57,279 (18,930)
------------- --------------
Total Shareholders' Equity 139,406 63,602
------------- --------------
Total Liabilities and Shareholders' Equity $ 947,596 $ 798,415
============= ==============
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,
2010 2009
------------- --------------
Sales $ 2,749,686 $ 1,942,535
Cost of Goods Sold 2,515,851 1,743,958
------------- --------------
Gross Profit 233,835 198,577
------------- --------------
Operating Expenses
Selling, general and administrative expense 127,249 92,110
Research and development - 61,648
------------- --------------
Total Operating Expenses 127,249 153,758
------------- --------------
Income before depreciation expense 106,586 44,819
Depreciation and amortization expense 1,600 2,057
------------- --------------
Income before Other Income/(Expenses) 104,986 42,762
------------- --------------
Other Income/(Expenses)
Interest and other income - -
Penalty - (268)
Unrealized gain/(loss) 330 (100)
Interest expense (6,279) (5,306)
------------- --------------
Total Other Income/(Expenses) (5,949) (5,674)
------------- --------------
Income before Provision for Income Taxes 99,037 37,088
Income tax expense (22,828) (6,565)
------------- --------------
Net Income $ 76,209 $ 30,523
============= ==============
BASIC AND DILUTED INCOME PER SHARE $ 0.01 $ 0.00
============= ==============
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,
2010 2009
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 76,209 $ 30,523
Adjustment to reconcile net income to net cash
used in operating activities
Depreciation and amortization 1,600 2,057
Allowance for doubtful accounts - -
Unrealized (gain)/loss on investment (330) 100
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts receivable (80,947) (212,303)
Inventory (46,139) 17,979
Prepaid expenses - (11,717)
Other receivable - (2,263)
Deferred tax asset (13,655) 4,905
Other asset (2,304) -
Increase (Decrease) in:
Accounts payable and accrued liabilities 13,773 24,488
Corporate income tax payable 34,883 60
------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (16,910) (146,171)
------------- --------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of investments (1,094) -
Purchase of fixed assets (826) (8,079)
------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (1,920) (8,079)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to officer (33) (3,289)
Payments on related party loans - -
Purchase of treasury stock (405) -
Proceeds from credit line 24,721 84,967
Proceeds from related parties - -
------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 24,283 81,678
------------- --------------
NET INCREASE IN CASH 5,453 (72,572)
CASH, BEGINNING OF PERIOD 121,182 96,390
------------- --------------
CASH, END OF PERIOD $ 126,635 $ 23,818
============= ==============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ 4,118 $ 3,122
============= ==============
Income taxes $ 800 $ 1,600
============= ==============
The accompanying notes are an integral part of
these consolidated financial statements
7
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS-UNAUDITED
MARCH 31, 2010
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, 2010 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2010. 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, 2009.
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 period
ended March 31, 2010, because there are no outstanding dilutive
instruments.
3. CAPITAL STOCK
During the three months ended March 31, 2010, 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 2008.
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.
5. SUBSEQUENT EVENT
Management has evaluated subsequent events as required by FASB ASC Topic
855, and has determined there are no subsequent events to be reported.
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 28 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 maximizing 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 and
medium-sized pharmacy chains, alternative care facilities and other wholesalers
and retailers in the state of California.
We plan to introduce three skin care over the counter (OTC) and natural
products in 2010, which are in various stages of development. We presently
market twelve products under the Sponix name. 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 CVS, Target, 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 2010.
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, 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 8,458,381 are issued and outstanding as of March 31, 2010,
with an additional 12,100 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.
9
A total of twelve products have been manufactured for sale by BioRx
Pharmaceuticals, Inc., and a total of three products are under different stages
of development. These over-the-counter and natural products are effective for
treatment of fungus, arthritis, sunburn protection and for healthy feet and
nails. BioRx Pharmaceuticals is planning to sell these products to national
chain drugstores, sport chain stores, natural food markets and other mass
markets. These products will be marketed under the names of Sponix and Bactivex,
and will be sold under the name of BioRx Pharmaceuticals.
Allied Med, Inc.
----------------
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.
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 an 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, 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.
10
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.
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.
Results of Operations
---------------------
Revenues
--------
For the three months ended March 31, 2010, Amexdrug reported sales of
$2,749,686, comprised of $2,526,591 of sales from the Company's pharmaceutical
wholesale business of selling brand name and generic pharmaceutical products,
and (OTC) health and beauty products, and $223,095 of sales of health and beauty
products manufactured by the Company. This is $807,151 more than the $1,942,535
of sales reported for the three months ended March 31, 2009 which was comprised
primarily of $1,886,942 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 $55,593 of sales of
health and beauty products manufactured by the Company. During the three month
period ended March 31, 2010, Amexdrug experienced an 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, 2010 was
$2,515,851, an increase of $771,893 from the $1,743,958 cost of goods sold for
the three months ended March 31, 2009.
Gross Profit
------------
During the three months ended March 31, 2010, gross profit increased by
$35,258 to $233,835, or 8.5% of sales, from the $198,577, or 10.2% of sales,
recorded for the three months ended March 31, 2009. The change in gross profit
margin is attributable to increased sales of lower gross margin products sold in
2010.
Expenses
--------
Total operating expenses for the three months ended March 31, 2010 were
$127,249, a decrease of $26,509 from the total operating expenses of $153,758
recorded for the three months ended March 31, 2009. Selling, general and
administrative expense was $127,249 for the three months ended March 31, 2010,
an increase of $35,139 from the $92,110 of selling, general and administrative
expense recorded for the three months ended March 31, 2009. The increase in
selling, general and administrative expense is primarily attributed to increased
commissions payable on the increased sales and also to an increase in officer
compensation. Research and development expense was $0 for the three months ended
March 31, 2010, a decrease of $61,648 from the $61,648 of research and
development expense recorded for the three months ended March 31, 2009. The
Company anticipates that it may spend additional funds on research and
development expenses during the remainder of 2010, but such expenses, on a
quarterly basis, will be less than the amount spent in the first quarter of
2009.
11
Net Income
----------
During the three months ended March 31, 2010, Amexdrug experienced net
income of $76,209, an increase of $45,686 from the $30,523 of net income
recorded for the three months ended March 31, 2009. Amexdrug's increase in net
profits during the three month period ended March 31, 2010, is attributable
largely to the increase of sales and resulting increase in gross profits earned
in the later period.
Liquidity and Capital Resources - March 31, 2010
------------------------------------------------
As of March 31, 2010, Amexdrug reported total current assets of $897,426,
comprised primarily of cash and cash equivalents of $126,635, net accounts
receivable of $511,131, inventory of $203,949, a deferred tax asset of $27,433,
other receivable of $18,274, investment of $8,914 and advances to an officer of
$1,090. Total assets as of March 31, 2010 were $947,596, which included total
current assets, plus net property and equipment of $16,798, other deposits of
$14,462, trademark of $1,145, and goodwill of $17,765.
Amexdrug's liabilities as of March 31, 2010, consisted primarily of
accounts payable of $424,184, note payable to related party of $108,103,
business line of credit of $229,602, accrued liabilities of $6,331 and corporate
tax payable of $40,050.
During the three months ended March 31, 2010, Amexdrug used $16,910 cash
in operating activities compared to $146,171 cash used in operating activities
in the three months ended March 31, 2009. The primary adjustments to reconcile
net income to net cash used in operating activities during the first quarter of
2010 were as follows: an increase in accounts receivable of $80,947, an increase
in inventory of $46,139, an increase in accounts payable and accrued liabilities
of $13,773, an increase in deferred tax asset of $13,655 and an increase in
corporate income tax payable of $34,883. Amexdrug had $126,635 in cash and cash
equivalents at March 31, 2010. Operations have primarily been funded through an
increase in the credit line balance. 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 17 2010, Amexdrug repurchased a
total of 12,100 shares of its common stock at prices ranging from a low of $0.20
per share to a high of $2.39 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 2010.
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 $826 and $8,079 on capital expenditures during the
three month periods ended March 31, 2010 and 2009, 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, 2009, 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.
12
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, 2010. 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, 2010, 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.
13
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, 2010, 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, 2006.
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.
(a) Exhibits.
The following exhibits are filed as part of this report.
Exhibit Exhibit
Number Description Location
------- ----------- --------
2.1 Agreement and Plan of Merger (1)
(to change domicile from California)
2.2 Agreement and Plan of Reorganization (2)
3.1 Articles of Incorporation (3)
3.2 By-Laws (3)
10.1 Lease Agreement between Fullerton Business (6)
Center, Lessor, and Allied Med, Inc., Lessee,
dated September 23, 2005 (Unit K)
10.2 Lease Agreement between Fullerton Business (6)
Center, Lessor, and Allied Med, Inc., Lessee,
dated September 23, 2005 (Units I & J)
10.3 Third Amendment to Lease Agreement between (5)
Fullerton Business Center, Lessor, and Allied Med,
Inc., Lessee, dated November 5, 2008 (Units I and J)
10.4 Promissory Note with National Bank of California (5)
dated June 23, 2008
14
10.5 Change in Terms Agreement with National Bank of (5)
California dated June 9, 2009
10.6 First Amendment to Lease Agreement between Fullerton (6)
Business Center, Lessor, and Allied Med, Inc.,
Lessee, dated September 11, 2006 (Unit K)
10.7 First Amendment to Lease Agreement between Fullerton (6)
Business Center, Lessor, and Allied Med, Inc.,
Lessee, dated September 11, 2006 (Units I & J)
10.8 Second Amendment to Lease Agreement between Fullerton (6)
Business Center, Lessor, and Allied Med, Inc.,
Lessee, dated October 25, 2007 (Unit K)
10.9 Second Amendment to Lease Agreement between Fullerton (6)
Business Center, Lessor, and Allied Med, Inc., Lessee,
dated October 25, 2007 (Units I & J)
10.10 Third Amendment to Lease Agreement between Fullerton (6)
Business Center, Lessor, and Allied Med, Inc.,
Lessee, dated November 5, 2008 (Unit K)
10.11 Change in Terms Agreement with National Bank of (6)
California dated March 3, 2009
10.12 Subordination Agreement between Nora Y. Amin, (6)
National Bank of California, Amexdrug and its
subsidiaries dated June 9, 2009
10.13 Business Loan Agreement between National Bank of (6)
California, Amexdrug and its subsidiaries dated
June 23, 2008
10.14 Commercial Security Agreement between National (6)
Bank of California, Amexdrug and its subsidiaries
dated June 23, 2008
10.15 Commercial Guarantee between National Bank of (6)
California, Jack N. Amin, Amexdrug and its
Subsidiaries
10.16 Commercial Guarantee between National Bank of (6)
California, Nora Y. Amin, Amexdrug and its
subsidiaries
10.17 Lease Agreement between Fullerton Business (7)
Center, LLC, Lessor, and Allied Med, Inc.,
Lessee, dated July 8, 2009 (Unit H)
10.18 Guaranty of Lease by Jack Amin (Unit H) (7)
15
10.19 Lease Agreement between Fullerton Business (8)
Center, LLC, Lessor, and Allied Med, Inc.,
Lessee, dated November 9, 2009 (Unit I at
2488 E. Fender Avenue)
10.20 Third Amendment to Lease Agreement between (8)
Fullerton Business Center, Lessor, and
Allied Med, Inc., Lessee, dated November 5,
2008 (Unit I & J)
10.21 Lease Agreement between Fullerton Business This Filing
Center, Lessor, and Allied Med, Inc., Lessee,
dated March 16, 2010 (Unit E)
14.1 Code of Ethics (4)
21.1 List of Subsidiaries of Amexdrug Corporation (6)
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.
(1) Exhibit 2.1 is incorporated by reference from
Amexdrug's Form 8-K Current Report filed December
21, 2001 as Exhibit No. 10.01.
(2) Exhibit 2.2 is incorporated by reference from
Amexdrug's Form 8-K Current Report filed January
15, 2002 as Exhibit No. 10.01.
(3) Exhibit 3.1 and 3.2 are incorporated by reference
from Amexdrug's Form 10-KSB for the years
ended December 31, 2001 filed on April 1, 2002.
(4) Exhibit 14.1 is incorporated by reference from
Amexdrug's Form 10-K for the year ended
December 31, 2008 filed April 13, 2009
16
(5) Exhibits 10.3, 10.4 and 10.5 are incorporated
by reference From Amexdrug's Form 10-Q for the
period ended June 30, 2009 filed August 14, 2009
(6) Exhibits 10.1, 10.2, 10.6 through 10.16, 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
(7) Exhibits 10.17 and 10.18 are incorporated by
reference from Amexdrug's Form 10-Q for the period
ended September 30, 2009 filed November 12, 2009
(8) Exhibits 10.19 and 10.20 are incorporated by
reference from Amexdrug's Form 10-K for the year
ended December 31, 2009 filed March 31, 2010
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 11, 2010 By: /s/ Jack Amin
-------------
Jack Amin
Director, President, Chief
Executive Officer, Chief
Financial Officer and
Chief Accounting Officer
18
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