-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fx/L55+rwWmoGINNJfuHOR87t+oHA0OYAMnoItJ/t7Kx2qw4N0PpVdk1DlfqiEjn ZYp3G0RiTyWkFMvOORrBxQ== 0001096906-08-002000.txt : 20081112 0001096906-08-002000.hdr.sgml : 20081111 20081112164050 ACCESSION NUMBER: 0001096906-08-002000 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081112 DATE AS OF CHANGE: 20081112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMEXDRUG CORP CENTRAL INDEX KEY: 0000045621 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 952251025 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10304 FILM NUMBER: 081181371 BUSINESS ADDRESS: STREET 1: 369 SOUTH DOHENY DR SUITE 326 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3108550475 MAIL ADDRESS: STREET 1: 369 SOUTH DOHENY DR SUITE 326 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10-Q 1 amexdrug10q.txt ================================================================================ 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 September 30, 2008 [ ] 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) Registrant's telephone number, including area code: (310) 855-0475 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ X ] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of November 10, 2008, there were 8,470,481 shares of the issuer's common stock issued and outstanding. 1 AMEXDRUG CORPORATION FORM 10-Q TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial Statements (Unaudited)...................................3 Condensed Consolidated Balance Sheets -- As of September 30, 2008 (Unaudited) and December 31, 2007 (Audited)....................................................5 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007 (Unaudited).......................................................6 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007 (Unaudited).......................................................7 Notes to Condensed Consolidated Financial Statements (Unaudited).......................................................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............................9 Item 3. Quantitative and Qualitative Disclosures About Market Risk........12 Item 4T. Controls and Procedures..........................................12 PART II - OTHER INFORMATION Item 1. Legal Proceedings.................................................13 Item 1A. Risk Factors......................................................13 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......13 Item 3. Defaults Upon Senior Securities...................................13 Item 4. Submission of Matters to a Vote of Security Holders...............13 Item 5. Other Information.................................................13 Item 6. Exhibits and Reports on Form 8-K..................................13 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The condensed consolidated balance sheets of Amexdrug Corporation, a Nevada corporation, and subsidiaries as of September 30, 2008 (unaudited) and December 31, 2007 (unaudited), the related unaudited condensed consolidated statements of operations for the three and nine month periods ended September 30, 2008 and September 30, 2007, the related unaudited condensed consolidated statements of cash flows for the nine month periods ended September 30, 2008 and September 30, 2007 and the notes to the unaudited condensed consolidated financial statements follow. The consolidated financial statements have been prepared by Amexdrug's management, and are condensed; therefore they do not include all information and notes to the financial statements necessary for a complete presentation of the financial position, results of operations and cash flows, in conformity with accounting principles generally accepted in the United States of America, and should be read in conjunction with the annual consolidated financial statements included in Amexdrug's annual report on Form 10-KSB for the year ended December 31, 2007. The accompanying condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations and financial position of Amexdrug Corporation consolidated with Allied Med, Inc., Dermagen, Inc., and BioRx Pharmaceuticals, Inc., its wholly owned subsidiaries, and all such adjustments are of a normal recurring nature. The names "Amexdrug", "we", "our" and "us" used in this report refer to Amexdrug Corporation. Operating results for the quarter ended September 30, 2008, are not necessarily indicative of the results that can be expected for the year ending December 31, 2008. 3 AMEXDRUG CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS Page ---- Condensed Consolidated Balance Sheets - September 30, 2008 (Unaudited) and December 31, 2007 (Audited).......................5 Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2008 and 2007..........................................................6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2008 and 2007.............7 Notes to Condensed Consolidated Financial Statements................8 4 AMEXDRUG CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2008 2007 -------------- -------------- (Unaudited) Assets Current Assets Cash and cash equivalents $ 94,967 $ 217,549 Accounts receivable 318,760 210,557 Inventory 136,008 194,542 Deferred tax asset 11,500 7,000 Other receivable 8,288 8,288 Prepaid insurance 1,397 - -------------- -------------- Total Current Assets 570,920 637,936 -------------- -------------- Property and Equipment, at cost Office and computer equipment 231,090 181,026 Leasehold improvements 15,700 15,700 -------------- -------------- 246,790 196,726 Less accumulated depreciation (186,469) (175,665) -------------- -------------- Net Property and Equipment 60,321 21,061 -------------- -------------- Other Assets Other deposits 12,158 12,158 Intangibles Customer base, net of accumulated amortization of $4,561 2,281 4,561 Trademark, net of accumulated amortization of $134 1,516 1,516 Goodwill 17,765 17,765 -------------- -------------- Total Other Assets 33,720 36,000 -------------- -------------- Total Assets $ 664,961 $ 694,997 ============== ============== Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 351,593 $ 518,540 Accrued liabilities 7,831 16,971 Corporate tax payable 13,487 - Loan payable-Dell 714 - Notes payable related parties 122,342 62,342 Wells Fargo Business Line 66,987 54,936 National Bank of California Credit Line 22,000 - -------------- -------------- Total Current Liabilities 584,954 652,789 -------------- -------------- Shareholders' Equity Capital stock 8,471 8,471 Additional paid in capital 83,345 83,345 Accumulated deficit (11,809) (49,608) -------------- -------------- Total Shareholders' Equity 80,007 42,208 -------------- -------------- Total Liabilities and Shareholders' Equity $ 664,961 $ 694,997 ============== ============== The accompanying notes are an integral part of these consolidated financial statements 5
AMEXDRUG CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2008 2007 2008 2007 ------------- -------------- -------------- -------------- Sales $ 1,331,654 $ 1,248,547 $ 4,104,641 $ 4,721,093 Cost of Goods Sold 1,190,200 1,165,679 3,760,487 4,361,981 ------------- -------------- -------------- -------------- Gross Profit 141,454 82,868 344,154 359,112 ------------- -------------- -------------- -------------- Operating Expenses Selling, general and administrative expense 92,725 144,752 269,561 355,823 Research and development 1,050 - 3,309 - ------------- -------------- -------------- -------------- Total Operating Expenses 93,775 144,752 272,870 355,823 ------------- -------------- -------------- -------------- Income/(Loss) before depreciation and amortization expense 47,679 (61,884) 71,284 3,289 Depreciation and amortization expense 3,601 - 13,085 25,883 ------------- -------------- -------------- -------------- Income/(Loss) before Other Income/(Expenses) 44,078 (61,884) 58,199 (22,594) ------------- -------------- -------------- -------------- Other Income/(Expenses) Interest and other income 266 55,415 266 110,862 Penalty - - (344) - Unrealized gain/(loss) (470) (797) - Interest expense (4,714) (1,146) (10,947) (3,546) ------------- -------------- -------------- -------------- Total Other Income/(Expenses) (4,918) 54,269 (11,822) 107,316 ------------- -------------- -------------- -------------- Income/(Loss) before Provision for Income Taxes 39,160 (7,615) 46,377 84,722 Income tax benefit/(expense) (14,188) (669) (8,575) 64 ------------- -------------- -------------- -------------- Net Income/(Loss) $ 24,972 $ (8,284) $ 37,802 $ 84,786 ============= ============== ============== ============== BASIC AND DILUTED INCOME/(LOSS) PER SHARE $ 0.00 $ (0.00) $ 0.00 $ 0.01 ============= ============== ============== ============== WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 8,470,481 8,470,481 8,470,481 8,470,481 ============= ============== ============== ==============
The accompanying notes are an integral part of these consolidated financial statements 6 AMEXDRUG CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 2008 2007 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 37,802 $ 84,786 Adjustment to reconcile net loss to net cash used in operating activities Depreciation and amortization 13,085 25,883 (Increase) Decrease in: Accounts receivable (108,203) (99,918) Allowance for doubtful accounts - (29,788) Inventory 58,534 (58,280) Prepaid expenses (1,397) 3,993 Account settlement receivable - (8,288) Deferred tax asset (4,500) 64 Increase (Decrease) in: Accounts payable and accrued liabilities (176,091) 51,840 Corporate income tax payable 13,487 8,151 Deferred tax liability - (13,954) -------------- -------------- NET CASH USED IN OPERATING ACTIVITIES (167,283) (35,511) -------------- -------------- NET CASH FLOWS USED IN INVESTING ACTIVITIES: Purchase of fixed assets (50,064) (8,337) Purchase of trademark - (650) -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES (50,064) (8,987) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Loan payable, Dell 714 - Payments on capital leases - (19,823) Proceeds from credit lines 34,051 58,217 Proceeds from related parties 60,000 (10,798) -------------- -------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 94,765 27,596 -------------- -------------- NET DECREASE IN CASH (122,582) (16,902) CASH, BEGINNING OF PERIOD 217,549 89,017 -------------- -------------- CASH, END OF PERIOD $ 94,967 $ 72,115 ============== ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ 2,464 $ 3,546 ============== ============== Income taxes $ 2,974 $ - ============== ============== The accompanying notes are an integral part of these consolidated financial statements 7 AMEXDRUG CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED SEPTEMBER 30, 2008 1. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended December 31, 2007. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of Amexdrug Corporation is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Loss per Share Calculations --------------------------- The Company adopted Statement of Financial Standards ("SFAS") No. 128 for the calculation of "Loss per Share". SFAS No. 128 dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company's diluted loss per share is the same as the basic loss per share for the period ended September 30, 2008 as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. Reclassification ---------------- Certain items included in the nine months ended September 30, 2007 financial statements have been reclassified to conform to the current year presentation. 3. CAPITAL STOCK During the nine months ended September 30, 2008, the Company issued no shares of common stock. 4. INCOME TAXES The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. Deferred income taxes have been provided by temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, we provide valuation allowances against the deferred tax assets for amounts when the realization is uncertain. The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview Amexdrug Corporation is located at 8909 West Olympic Boulevard, Suite 208, Beverly Hills, California 90211. Its phone number is (310) 855-0475. Its fax number is (310) 855-0477. Its website is www.amexdrug.com. Shares of Amexdrug common stock are traded on the OTC Bulletin Board under the symbol AXRX.OB. The President of Amexdrug has had experience working in the pharmaceutical industry for the past 26 years. Amexdrug Corporation, through its wholly-owned subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. is a growing pharmaceutical and cosmeceutical company specializing in the research and development, manufacturing and distribution of pharmaceutical drugs, cosmetics and distribution of prescription and over-the-counter drugs, private manufacturing and labeling and a quality control laboratory. At Amexdrug Corporation, it is our anticipation to give our clientele the opportunity to purchase cost effective products while maximizing the return of investments to our shareholders. Amexdrug Corporation distributes its products through its subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. primarily to independent pharmacies and secondarily to small and medium-sized pharmacy chains, alternative care facilities and other wholesalers and retailers in the state of California. Amexdrug Corporation was initially incorporated under the laws of the State of California on April 30, 1963 under the name of Harlyn Products, Inc. Harlyn Products, Inc. was engaged in the business of selling jewelry to department stores and retail jewelry stores until the mid-1990s. The name of the Company was changed to Amexdrug Corporation in April 2000 to reflect the change in the Company's business to the sale of pharmaceutical products. The officers and directors of the Company also changed in April 2000. The domicile of the Company was changed from California to Nevada in December 2001. At that time the Company changed its fiscal year end from June 30 to December 31. References in this report to "we," "our," "us," the "company" and "Amexdrug" refer to Amexdrug Corporation and also to our subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. Amexdrug currently has 50,000,000 shares of authorized common stock $.001 par value, of which 8,470,481 are issued and outstanding as of September 30, 2008. Allied Med, Inc. ---------------- On December 31, 2001, Amexdrug acquired all of the issued and outstanding common shares of Allied Med, Inc., an Oregon corporation, ("Allied Med") in a related party transaction. Allied Med was formed as an Oregon corporation in October 1997, to operate in the pharmaceutical wholesale business of selling a full line of brand name and generic pharmaceutical products, over-the-counter (OTC) drug and non-drug products and health and beauty products to independent and chain pharmacies, alternative care facilities and other wholesalers. Amexdrug has assumed the operations of Allied Med, and Amexdrug intends to build on the pharmaceutical wholesale operations of Allied Med. The accompanying financial information includes the operations of Allied Med for all periods presented and the operations of Amexdrug Corporation from April 25, 2000. 9 Dermagen, Inc. -------------- Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005. Dermagen, Inc. is now an operating subsidiary of Amexdrug. The acquisition of Dermagen, Inc. is not considered to be an acquisition of a significant amount of assets which would require audited financial statements of Dermagen, Inc. Dermagen, Inc. is a growing manufacturing company specializing in the manufacturing and distribution of certain pharmaceuticals, medical devices, health and beauty products. Dermagen, Inc. has a U.S.-FDA registered and state FDA approved manufacturing facility licensed to develop high margin skin and novel health and beauty products for niche markets. Dermagen's competitive advantage is in its superior product research and development for large leading domestic and international companies. Royal Health Care Company ------------------------- In October 2003, Allied Med acquired 100% of the assets of Royal Health Care Company. Royal Health Care Company is a health and beauty company which has sold specially manufactured facial and body creams, arthritic pain relief medications and an exclusive patented hair care product to pharmacies, beauty salons, beauty supply stores and other fine shops. Royal Health Care Company uses the highest quality ingredients for the finest quality products. Each product has been formulated with the essential ingredients and plant extracts to achieve optimum potential and quality. Royal Health Care Company products are manufactured by Dermagen, Inc., in an FDA approved manufacturing facility. The Royal Health Care Company assets acquired include the "Royal Health Care Company" name, logo, and related trademarks, all formulas to products manufactured for sale under the Royal Health Care Company name, and the Royal Health Care Company list of customers. These intellectual property rights were acquired without cost from a company in which Jack Amin's wife is a principal shareholder. Mr. Amin is the CEO and Chairman of Amexdrug Corporation and Allied Med, Inc. Management believes this acquisition will provide the Company with an opportunity to increase the number of products sold by the Company, and expand the Company's customer base. On October 28, 2004, Amexdrug formed a new subsidiary, Royal Health Care, Inc. as a Nevada corporation. Royal Health Care, Inc. was formed to manufacture and sell health and beauty products. BioRx Pharmaceuticals --------------------- On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. is committed to offer over the counter (OTC) products that are recommended with trust and faith by physicians, primarily podiatrists and dermatologists. The focus and mission of BioRx Pharmaceuticals, Inc. is to create, develop and manufacture products to help ease pain and restore and maintain the overall well-being of our customers. We strive for high performance and quality. Our commitment is to offer natural and OTC products that are recommended with confidence by doctors and pharmacists and that the customer can use with pleasure. Our compliance program is diligently followed through the Company. BioRx Pharmaceuticals, Inc. maintains high ethics for animal welfare and our products are never tested on animals. All products are made in the USA. A total of eleven products are currently under different stages of development. These over-the-counter and natural products are effective for treatment of fungus, arthritis, sunburn protection and for healthy feet and nails. BioRx Pharmaceuticals is planning to sell these products to national chain drugstores, sport chain stores, natural food markets and other mass markets. These products will be marketed under the names of Sponix and Bactivex, and will be sold under the name of BioRx Pharmaceuticals. 10 Results of Operations --------------------- For the Three Months Ended September 30, 2008. For the three months ended September 30, 2008, Amexdrug reported sales of $1,331,654, comprised entirely of income from the pharmaceutical wholesale business of selling brand name and generic pharmaceutical products, and (OTC) health and beauty products by our subsidiaries, Dermagen, Inc., Allied Med and BioRx Pharmaceuticals, Inc. This is $83,107 more than the $1,248,547 of sales reported for the three months ended September 30, 2007. Cost of goods sold for the three months ended September 30, 2008 was $1,190,200, an increase of $24,521 from the $1,165,679 cost of goods sold for the three months ended September 30, 2007. During the three months ended September 30, 2008 gross profit increased by $58,586 to $141,454, or 10.6% of sales, from the $82,868, or 6.6% of sales recorded for the three months ended September 30, 2007. The change in gross profit margin is attributable to an increased percentage of sales made from higher gross margin products manufactured and sold in the three month period ended September 30, 2008. For the three months ended September 30, 2008, Amexdrug reported other income of $266, a decrease of $55,149 from the $55,415 of other income reported for the three months ended September 30, 2007. Selling, general and administrative expense was $92,725 for the three months ended September 30, 2008, a decrease of $52,027 from the $144,752 of selling, general and administrative expense recorded for the three months ended September 30, 2007. This decrease in selling, general and administrative expense is largely attributable to decreases in trade show expenses and traveling expenses in the later period. During the three months ended September 30, 2008, Amexdrug experienced net income of $24,972, as compared to a net loss of $8,284 experienced in the three months ended September 30, 2007. Amexdrug's improvement during the three month period ended September 30, 2008 is attributable largely to the decrease of selling, general and administrative expense in the later period. For the Nine Months Ended September 30, 2008. For the nine months ended September 30, 2008, Amexdrug reported sales of $4,104,641, comprised entirely of income from the pharmaceutical wholesale business of selling brand name and generic pharmaceutical products, and (OTC) health and beauty products by our subsidiaries, Dermagen, Inc., Allied Med and BioRx Pharmaceuticals, Inc. This is $616,452 less than the $4,721,093 of sales reported for the nine months ended September 30, 2007. During the nine month period ended September 30, 2008, Amexdrug experienced a decrease in total sales due, in part, to the loss of a few customers. Cost of goods sold for the nine months ended September 30, 2008 was $3,760,487, a decrease of $601,494 from the $4,361,981 cost of goods sold for the nine months ended September 30, 2007. During the nine months ended September 30, 2008 gross profit decreased by $14,958 to $344,154, or 8.4% of sales, from the $359,112, or 7.6% of sales recorded for the nine months ended September 30, 2007. The change in gross profit margin is attributable to an increased percentage of sales of higher gross margin products manufactured and sold in the first nine months of 2008. For the nine months ended September 30, 2008, Amexdrug reported other income of $266, a decrease of $110,596 from the $110,862 of other income reported for the nine months ended September 30, 2007. Selling, general and administrative expense was $269,561 for the nine months ended September 30, 2008, a decrease of $86,262 from the $355,823 of selling, general and administrative expense recorded for the nine months ended September 30, 2007. This decrease in selling, general and administrative expense is largely attributable to decreases in trade show expenses and traveling expenses in the later period. During the nine months ended September 30, 2008, Amexdrug experienced net income of $37,802, a decrease of $46,984 from the net income of $84,786 experienced in the nine months ended September 30, 2007. Amexdrug's decrease in net profits during the nine month period ended September 30, 2008 is attributable largely to the decrease in other income earned in the later period. 11 Liquidity and Capital Resources - September 30, 2008 ---------------------------------------------------- As of September 30, 2008, Amexdrug reported total current assets of $570,920, comprised of cash and cash equivalents of $94,967, accounts receivable of $318,760, inventory of $136,008, a deferred tax asset of $11,500, other receivable of $8,288 and prepaid insurance of 1,397. Total assets as of September 30, 2008 were $664,961, which included total current assets, plus net property and equipment of $60,321, other deposits of $12,158, customer base of $2,281, trademark of $1,516, and goodwill of $17,765. Amexdrug's liabilities as of September 30, 2008 consisted primarily of accounts payable of $351,593, notes payables to related parties of $122,342, business lines of credit of $88,987and corporate tax payable of $13,487. During the nine months ended September 30, 2008, Amexdrug used $167,283 cash in operating activities compared to $35,511 cash used in operating activities in the nine months ended September 30, 2007. The primary adjustments to reconcile net income to net cash used in operating activities during the nine months ended September 30, 2008 were as follows: a decrease in accounts payable and accrued liabilities of $176,091, a decrease in inventory of $58,534, and an increase in accounts receivable of $108,203. Amexdrug had $94,967 in cash and cash equivalents at September 30, 2008. Operations have primarily been funded through cash generated from operations, and from loans made from the wife of our President. Management does not anticipate that Amexdrug will need to seek additional financing during the next twelve months. Forward-looking statements -------------------------- This document includes various forward-looking statements with respect to future operations of Amexdrug that are subject to risks and uncertainties. Forward-looking statements include information concerning expectations of future results of operations and such statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates" or similar expressions. For those statements, Amexdrug claims the protection of the safe harbor for forward-looking statements contained in the Private Litigation Reform Act of 1995. Actual results may vary materially. Item 3. Quantitative and Qualitative Disclosures About Market Risk. A "smaller reporting company" (as defined by Item 10 of the Regulation S-K) is not required to provide the information required by this Item. Item 4T. Controls and Procedures. Under the supervision and with the participation of management, our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"), as of September 30, 2008. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and adequately designed to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our chief executive officer and chief financial officer, in a manner that allowed for timely decisions regarding required disclosure. During the last fiscal quarter ended September 30, 2008, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q REPORT REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY. 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings. Amexdrug is not presently a party to any material pending legal proceedings. To the best of Amexdrug's knowledge, no governmental authority or other party has threatened or is contemplating the filing of any material legal proceeding against Amexdrug. Item 1A. Risk Factors. A "smaller reporting company" (as defined by Item 10 of the Regulation S-K) is not required to provide the information required by this Item. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None; not applicable. Item 3. Defaults Upon Senior Securities. None; not applicable. Item 4. Submission of Matters to a Vote of Security Holders. None; not applicable. Item 5. Other Information. None; not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit Number Description ------- ----------- 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. No Current Reports on Form 8-K were filed by Amexdrug during the quarter ended September 30, 2008. 13 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMEXDRUG CORPORATION Date: November 12, 2008 By: /s/ Jack Amin ------------------------------------ Jack Amin Director, President, Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer 14 - -------------------------------------------------------------------------------- EX-31.1 2 amexdrug10qexh311.txt ================================================================================ EXHIBIT 31.1 SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Jack Amin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Amexdrug Corporation, 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 12, 2008 /s/ Jack Amin ---------------------------------- Jack Amin, Chief Executive Officer - -------------------------------------------------------------------------------- EX-31.2 3 amexdrug10qexh312.txt ================================================================================ EXHIBIT 31.2 SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Jack Amin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Amexdrug Corporation, 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 12, 2008 /s/ Jack Amin ---------------------------------- Jack Amin, Chief Financial Officer - -------------------------------------------------------------------------------- EX-32.1 4 amexdrug10qexh321.txt ================================================================================ EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Amexdrug Corporation (the "Company") on Form 10-Q for the period ending September 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jack Amin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Jack Amin - ------------- Jack Amin Chief Executive Officer November 12, 2008 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and are not being filed as part of the Form 10-Q or as a separate disclosure document. - -------------------------------------------------------------------------------- EX-32.2 5 amexdrug10qexh322.txt ================================================================================ EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Amexdrug Corporation (the "Company") on Form 10-Q for the period ending September 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jack Amin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Jack Amin - ------------- Jack Amin Chief Financial Officer November 12, 2008 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and are not being filed as part of the Form 10-Q or as a separate disclosure document. - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----