ITEM 1. BUSINESS
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Business Development
History - -------
Amexdrug Corporation, a Nevada corporation, is a holding company. It 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 27 years.
Amexdrug Corporation, through its wholly-owned subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, 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, 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.
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References in this report to "we," "our," "us," the "Company" and "Amexdrug" refer to Amexdrug Corporation and also to our subsidiaries, Allied Med, Inc., Dermagen, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. where appropriate.
Amexdrug currently has 50,000,000 shares of authorized common stock $.001 par value, of which 8,470,481 are issued and outstanding.
Significant acquisitions - ------------------------
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.
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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 nine products have been manufactured for sale by BioRx Pharmaceuticals, Inc., and a total of ten 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.
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.
Industry trends
Pharmaceutical and healthcare markets
According to IMS Health, a company specializing in information services for the pharmaceutical and health care industries, the United States is the world's largest pharmaceutical market, with 2000 sales of $150 billion, including diagnostics and over-the-counter drugs. That figure is expected to increase due to a number of factors including:
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. the value added by the introduction of new drugs into the marketplace, which more than offsets the value lost by medications losing patent protection; . new patterns of drug lifestyle management, resulting in higher sales occurring earlier in the life cycle of a medication; . increased money spent on direct-to-consumer marketing initiatives; and . an unprecedented period of investment by pharmaceutical companies worldwide.
Amexdrug believes that, currently, the pharmaceutical and health care product markets are serviced primarily by traditional full-line wholesalers.
Internet
The Internet has emerged as the fastest growing communications medium in history and is dramatically changing how businesses and individuals communicate and share information. The Internet has created new opportunities for conducting commerce, such as business-to-consumer and person-to-person e-commerce. Recently, the widespread adoption of intranets and the acceptance of the Internet as a business communications platform has created a foundation for business-to-business e-commerce that offers the potential for organizations to streamline complex processes, lower costs and increase productivity. Internet-based business-to-business e-commerce has experienced significant growth. According to Gartner Group, worldwide business-to-business Internet revenue was $433.3 billion in 2000. Significant growth in the industry has been forecasted. Amexdrug hopes, although it cannot guarantee, that it will benefit from this growth.
The dynamics of business-to-business e-commerce relationships differ significantly from those of other e-commerce relationships. Business-to- business e-commerce solutions frequently automate processes that are fundamental to a business' operations by replacing various paper-based transactions with electronic communications. In addition, business-to-business e-commerce solutions must often be integrated with a customer's existing systems, a process that can be complex, time-consuming and expensive. Consequently, selection and implementation of a business-to-business e-commerce solution represents a significant commitment by the customer, and the costs of switching solutions are high. In addition, because business transactions are typically recurring and non-discretionary, the average order size and lifetime value of a business-to-business e-commerce customer is generally greater than that of a business-to-consumer e-commerce customer. These solutions are likely to be most readily accepted by industries characterized by a large number of buyers and sellers, a high degree of fragmentation among buyers, sellers or both, significant dependence on information exchange, large transaction volume and user acceptance of the Internet.
Objectives and strategy
Amexdrug's key business objective is to become a leading full-line wholesale distributor of pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements, with an emphasis on online sales.
To accomplish this objective, Amexdrug plans to:
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. market its name, products and services to create brand recognition and generate and capture traffic on its websites; . provide quality products at competitive prices and efficient service; . develop strategic relationships that increase Amexdrug's product offerings; and . attract and retain exceptional employees.
Sales and marketing, customer service and support
Our products are sold both through traditional wholesale distribution lines and e-commerce venues, including our website, www.amwrx.com. We believe our e-commerce, business-to-business model will allow the Company to leverage its existing wholesale distribution business, thus increasing its ability to effectively market and distribute its products. The Company uses a variety of programs to stimulate demand for its products and increase traffic to its websites, including a direct sales force, telemarketing, blast faxing and advertising.
Direct sales
The Company maintains employees to act as its direct sales force to target organizations that buy and sell the products it carries.
Telemarketing
The Company maintains an in-house telemarketing group for use in customer prospecting, lead generation and lead follow-up.
Blast faxing
The Company has an automated system which it uses to fax weekly updates to its customers informing them of special offers during the week.
Advertising
The Company advertises in trade journals, and at trade shows, and the Company will seek to engage in co-branding arrangements in the future. In addition to strategic agreements and traditional advertising, the Company, will, as revenue allows, implement online sales and marketing techniques in an attempt to increase brand recognition and direct traffic to its website. Some of these techniques may include banner ads on search engine websites and Internet directories, direct links from healthcare home pages, and mass e-mailings.
Customer service and support
Amexdrug believes that it can establish and maintain long-term relationships with its customers and encourage repeat visits if, among other things, the Company has excellent customer support and service. The Company currently offers information regarding its products and services and answers customer questions about the ordering process, and investigates the status of orders, shipments and payments. A customer can access the Company by fax or e-mail by following prompts located on the Company's website or by calling the Company's toll-free telephone line.
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Promotion of website
As revenue allows, the Company will promote, advertise and increase recognition of its website through a variety of marketing and promotional techniques, including:
. developing co-marketing agreements with major online sites and services; . enhancing online content and ease of use of its website; . enhancing customer service and technical support; . advertising in trade journals and at industry trade shows; . conducting an ongoing public relations campaign; and . developing other business alliances and partnerships.
Distribution
The Company distributes its Allied Med products from its facility in Beverly Hills, California. Dermagen, Inc. manufactures and distributes its products from Fullerton, California. The Company fills orders with a combination of existing inventory and products it orders from suppliers. Currently, customers are receiving their products within 24 to 48 hours of order placement. As funds allow, the Company will increase its in-house inventory of products to allow for shorter delivery times.
Purchasing and Manufacturing
Allied Med, Inc. purchases its products primarily from manufacturers and secondarily from other wholesalers and distributors. Allied Med's purchasing department constantly monitors the market to take advantage of periodic volume discounts, market discounts and pricing changes. Dermagen, Inc. purchases its raw materials from suppliers, and manufactures its products in Fullerton, California for its customers.
Technology and security
The Company website is hosted and maintained by a third party. This provider delivers a secure platform for server hosting, including various safety features to protect the information residing in its servers. Moreover, the Company does not release information about its customers to third parties without the prior written consent of its customers unless otherwise required by law.
Notwithstanding these precautions, the Company cannot assure that the security mechanisms will prevent security breaches or service breakdowns. Despite the implemented security measures, servers can be vulnerable to computer viruses, physical or electronic break-ins or other similar disruptions. Such a disruption could lead to interruptions or delays in service, loss of data, or an inability to accept and fulfill online customer orders. Any of these events could materially affect the Company's business.
Management information system
The Company's information system is maintained on an IBM AS 400 platform. The accounting information for sales, purchases, perpetual inventory transactions, cash receipts and disbursements and sophisticated management reports are provided timely for analytical and bookkeeping purposes. Also, the order entry system was designed specifically for the Company and allows its customers to order product 24 hours per day either via fax, internet or phone modem. The system provides data to management enabling it to review sales trends and customer base, monitor inventory levels, credit and collection issues, and purchasing frequency and cost anticipation. Communication and availability of data is possible through a local area network ring.
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Competition
Amexdrug faces strong competition both in price and service from national, regional and local full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains and from manufacturers engaged in direct distribution. Many of our current and potential competitors have longer operating histories and much larger customer bases than we have. In addition, many of our competitors have greater brand recognition and significantly greater financial, marketing and other resources. To compete successfully, we have had to constantly monitor our competitive situation and develop strategies to allow us to compete with other companies who are able to:
. secure merchandise from vendors on more favorable terms; . devote greater resources to marketing and promotional campaigns; and . adopt more aggressive pricing or inventory availability policies.
In addition, many of our competitors have developed or may be able to develop e-commerce operations that compete with our e-commerce operations, and may be able to devote substantially more resources to website development and systems development than we do. The online commerce market is new, rapidly evolving and intensely competitive. The Company expects competition to intensify in the future because barriers to entry are minimal, and current and new competitors can launch new websites at relatively low cost. The Company believes that the critical success factors for companies seeking to create Internet business-to-business e-commerce solutions include the following:
. breadth and depth of product offerings; . brand recognition; . depth of existing customer base; and . ease of use and convenience.
Unlike other well-publicized product categories such as online book or compact disc retailing, there is no current market leader in its online business-to- business market segment. The Company's immediate goal is to position itself as a leading business-to-business e-commerce and online trade exchange provider for pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements. To that end, we believe that our early entry into the online market may enable us to establish critical competitive advantages over future competitors. We believe that such competitive advantages include:
. the establishment of a recognizable brand; . the development of online marketing and media relationships; . the development of important relationships with manufacturers, distributors, wholesalers and content providers; and . exposure to an existing customer base.
However, competitive pressures created by any one of its current or future competitors, or by its competitors collectively, could materially affect the Company's business. We believe that the principal competitive factors in its market are and will be:
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. brand recognition . customer service . speed and accessibility . reliability and speed of . quality of site content fulfillment . convenience . price . selection
Government regulations and legal uncertainties
Healthcare regulation ---------------------
The manufacturing, packaging, labeling, advertising, promotion, distribution and sale of most of the products we distribute are subject to regulation by numerous governmental agencies, particularly the United States Food and Drug Administration, which regulates most of the products we distribute under the Federal Food, Drug and Cosmetic Act, and the United States Federal Trade Commission, which regulates the advertising of many of the products we distribute under the Federal Trade Commission Act. The products we distribute are also subject to regulation by, among other regulatory agencies, the Consumer Product Safety Commission, the United States Department of Agriculture, the United States Department of Environmental Regulation and the Occupational Safety and Health Administration. The manufacturing, labeling and advertising of the products we distribute is also regulated by the Occupational Safety and Health Administration through various state and local agencies.
Furthermore, Amexdrug and/or its customers are subject to extensive licensing requirements and comprehensive regulation governing various aspects of the healthcare delivery system, including the so called "fraud and abuse" laws. The fraud and abuse laws preclude:
. persons from soliciting, offering, receiving or paying any remuneration in order to induce the referral of a patient for treatment or for inducing the ordering or purchasing of items or services that are in any way paid for by Medicare or Medicaid, and . physicians from making referrals to certain entities with which they have a financial relationship.
The fraud and abuse laws and regulations are broad in scope and are subject to frequent modification and varied interpretations. Significant criminal, civil and administrative sanctions may be imposed for violation of these laws and regulations.
The Company's advertising of dietary supplement products is also subject to regulation by the Federal Trade Commission under the Federal Trade Commission Act, in addition to state and local regulation. The Federal Trade Commission Act prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce. The Federal Trade Commission Act also provides that the dissemination or the causing to be disseminated of any false advertisement pertaining to drugs or foods, which would include dietary supplements, is an unfair or deceptive act or practice. Under the Federal Trade Commission's Substantiation Doctrine, an advertiser is required to have a "reasonable basis" for all objective product claims before the claims are made.
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Failure to adequately substantiate claims may be considered either deceptive or unfair practices. Pursuant to this Federal Trade Commission requirement, the Company is required to have adequate substantiation for all material advertising claims made for its products.
The Company may be subject to additional laws or regulations by the Food and Drug Administration or other federal, state or foreign regulatory authorities, the repeal of laws or regulations which the Company considers favorable, such as the Dietary Supplement Health and Education Act of 1994, or more stringent interpretations of current laws or regulations, from time to time in the future. We cannot predict the nature of such future laws, regulations, interpretations or applications, nor can we predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on our business in the future. The Food and Drug Administration or other governmental regulatory bodies could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, imposition of additional record keeping requirements, expanded documentation of the properties of certain products, expanded or different labeling and scientific substantiation. Any or all of such requirements could have a material and adverse effect on our business.
The products we distribute function within the structure of the healthcare financing and reimbursement system of the United States. As a result of a wide variety of political, economic and regulatory influences, this system is currently under intense scrutiny and subject to fundamental changes. In recent years, the system has changed significantly in an effort to reduce costs. These changes include increased use of managed care, cuts in Medicare, consolidation of pharmaceutical and medical-surgical supply distributors, and the development of large, sophisticated purchasing groups. In addition, a variety of new approaches have been proposed to continue to reduce cost, including mandated basic healthcare benefits and controls on healthcare spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid spending. The Company anticipates that Congress and state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods and that public debate with respect to these issues will likely continue in the future. Because of uncertainty regarding the ultimate features of reform initiatives and their enactment and implementation, the Company cannot predict which, if any, of such reform proposals will be adopted, when they may be adopted, or what impact they may have on the Company. The Company expects the healthcare industry to continue to change significantly in the future. Some of these changes, such as a reduction in governmental support of healthcare services or adverse changes in legislation or regulations governing the privacy of patient information, or the delivery of pricing of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to greatly reduce the amount of the Company's products and services they purchase or the price they are willing to pay for the products we distribute. Changes in pharmaceutical manufacturers' pricing or distribution policies could also significantly reduce our income.
While the Company uses its best efforts to adhere to the regulatory and licensing requirements, as well as any other requirements affecting the products we distribute, compliance with these often requires subjective legislative interpretation. Consequently, we cannot assure that our compliance efforts will be deemed sufficient by regulatory agencies and commissions enforcing these requirements. Violation of these regulations may result in civil and criminal penalties, which could materially and adversely affect our operations.
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Internet regulation -------------------
Few laws currently regulate the Internet. Because of the Internet's popularity and increasing use, new laws and regulations may be adopted. Such laws and regulations may cover issues such as:
. user privacy . distribution . pricing . taxation . content . characteristics and quality of products . copyrights . services
Laws and regulations directly applicable to electronic commerce or Internet communications are becoming more prevalent. We believe that our use of third party material on our website is permitted under current provisions of copyright law. Because legal rights to certain aspects of Internet content and commerce are not clearly settled, our ability to rely upon exemptions or defenses under copyright law is uncertain. Also, although not yet enacted, Congress is considering laws regarding Internet taxation. In addition, various jurisdictions already have enacted laws that are not specifically directed to electronic commerce but that could affect its business. The applicability of many of these laws to the Internet is uncertain and could expose the Company to substantial liability. Any new legislation or regulation regarding the Internet, or the application of existing laws and regulations to the Internet, could materially and adversely affect the Company. If the Company were alleged to violate federal, state or foreign, civil or criminal law, even if the Company could successfully defend such claims, it could materially and adversely affect the Company.
Additionally, several telecommunications carriers are seeking to have telecommunications over the Internet regulated by the Federal Communications Commission in the same manner as other telecommunications services. Furthermore, local telephone carriers have petitioned the Federal Communications Commission to regulate Internet service providers and online service providers in a manner similar to long distance telephone carriers and to impose access fees on such providers. If either of these petitions are granted, the costs of communicating on the Internet could increase substantially. This, in turn, could slow the growth of use of the Internet. Any such legislation or regulation could materially and adversely affect its business, financial condition and operating results.
Research and Development
Amexdrug engages in some research and development of its products. Total research and development costs were $44,576 and $165,481 for the years ended December 31, 2008 and 2007, respectively. Amexdrug anticipates that research and development costs to be incurred in 2009 will be similar in amount to the research and development costs incurred in 2008.
Intellectual Property and Patent Protection
We presently have no patents, and we have no immediate plans to pursue any patents.
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We believe that protecting the Company's trademarks and registered domain name is important to our business strategy of building strong brand name recognition and that such trademarks have significant value in the marketing of the Company's products. To protect our proprietary rights, the Company will rely on copyright, trademark and trade secret laws, confidentiality agreements with employees and third parties, and license agreements with consultants, vendors and customers. Despite such protections, however, we may be unable to fully protect our intellectual property.
Dependence on major suppliers
During the year ended December 31, 2008, purchases from two suppliers accounted for 75% and 21% of total purchases, respectively. Accounts payable to these two suppliers accounted for 78% and 18% of the total accounts payable balance as of December 31, 2008. During the year ended December 31, 2007, purchases from the same two suppliers accounted for 65% and 19% of our total purchases, respectively. Accounts payable to these two suppliers accounted for 8% and 68% of the total accounts payable balance as of December 31, 2007. We presently enjoy a good relationship with our suppliers. If for any reason our business with our suppliers was interrupted or discontinued in the future, we would be able to acquire most, if not all, of the same products from other suppliers at similar competitive prices. However, the loss of our largest supplier could have a potential negative effect upon our future operations.
Dependence on major customers
Two customers accounted for 10% or more of our sales during the year ended December 31, 2008. Two customers accounted for 10% or more of our sales during the year ended December 31, 2007. They accounted for approximately 30% and 11% of our 2008 sales, respectively, and 26.4% and 11.8% of our 2007 sales, respectively.
Employees
The Company currently employs twelve full time and three part time employees. Nine of the full time employees have been hired since October 2008, and they work in the Company's new marketing office located in the Philippines, and work on marketing the Company's products in the U.S. Labor unions do not represent any of these employees. The Company considers its employee relations to be good. Competition for qualified personnel in its industry is intense, particularly for technical staff responsible for marketing, advertising, web development, and general and administrative activities.
Employees will be permitted to participate in employee benefit plans of the Company that may be in effect from time to time, to the extent eligible.
Physical facilities
The Company's principal executive offices and its Allied Med, Inc. operations are located in Beverly Hills, California. The Company leases approximately 800 square feet of office space for approximately $1,160 per month. This space is leased on a month to month basis. The Company believes this space will be sufficient for at least the next twelve months.
The Company's Dermagen, Inc. operations are currently located at 2500 East Fender Avenue, Building IJK, Fullerton, California in approximately 6,000 square feet. The monthly lease payment is approximately $3,750, and the lease expires in September 2009. The Company intends to renew the lease for an additional year. The Company believes this space will be sufficient for at least the next twelve months.
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In October 2008, the Company opened a new marketing office located in Manila, Philippines. The office is approximately 800 square feet in size, and the Company pays $175 per month for rent. The Company believes this space will be sufficient for at least the next twelve months.
Company history prior to the acquisition of Allied Med, Inc.
The Company was incorporated under the laws of the State of California on April 30, 1963 with authorized common stock of 10,000,000 shares at a par value of $.10 and 1,000,000 preferred shares with a par value of $1.00 under the name of Harlyn Products, Inc. Harlyn Products, Inc. was engaged in the business of selling jewelry to department stores until the mid-1990s.
Solely for the purpose of changing domicile from California to Nevada, on December 12, 2001, Amexdrug Corporation, a California corporation, entered into a certain Merger Agreement with a newly formed, wholly-owned subsidiary Nevada corporation named Amexdrug Corporation. The Nevada corporation had been incorporated on December 4, 2001. As a result of the merger, which became effective on December 17, 2001, the Company became a Nevada corporation and the separate existence of the California corporation ceased. At the time of the merger, the Company changed its fiscal year end from June 30 to December 31.
Asset acquisitions following the acquisition of Allied Med, Inc.
In December 2002, Jack Amin's wife contributed four undeveloped parcels of real property to Allied Med, Inc. as an additional capital contribution to the Company. In October 2003, Jack Amin's wife contributed an additional four undeveloped parcels of real property to Allied Med, Inc. as an additional capital contribution to the Company. These eight undeveloped parcels of real property were subsequently transferred by Allied Med, Inc. in 2004 to a third party as part of a litigation settlement.
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 a third party 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.
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Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005 with Amexdrug paying $70,000 cash to the Dermagen, Inc. shareholders. Dermagen, Inc. is now an operating subsidiary of Amexdrug.
Dermagen, Inc. is a rapidly growing manufacturing company specializing in the manufacturing and distribution of certain pharmaceuticals, medical devices, health and beauty products. Dermagen 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. Our competitive advantage is in our superior product research and development for large leading domestic and international companies.
New subsidiaries formed
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. Currently, Royal Health Care, Inc. has no assets, liabilities, or operations.
On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. was formed for the purpose of repacking and selling generic and branded pharmaceuticals. Currently, BioRx Pharmaceuticals, Inc. has assets, liabilities, and operations.
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ITEM 1A.
ITEM 1A. RISK FACTORS
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You should carefully consider the risks and uncertainties described below and other information in this report. If any of the following risks or uncertainties actually occur, our business, financial condition and operating results, would likely suffer. Additional risks and uncertainties, including those not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or operating results.
Risks Relating to Our Business - ------------------------------
The industry in which Amexdrug operates is highly competitive and could affect our results of operations.
The industry in which we operate is highly competitive and is marked by changes and new products. Our competitors and potential competitors include many large national and international companies as well as medium and small sized companies. Most existing and potential competitors have greater financial resources, larger market share, and larger production and research capability, which may enable them to establish and/or maintain a stronger competitive position than we have. If we fail to address competitive developments quickly and effectively, we will not be able to grow our business or remain a viable entity.
Our business could be adversely affected by any adverse economic developments in wholesale pharmaceutical distribution and health and beauty products.
We depend on the demand for our products in the U.S. Therefore, our business is susceptible to downturns in the wholesale pharmaceutical distribution and health and beauty products industry and the economy in general. Any significant downturn or worsening in the market or in general economic conditions would likely hurt our business.
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If we fail to keep up with changes affecting our products, we will become less competitive and thus adversely affect future financial performance.
In order to remain competitive, we must respond on a timely and cost-efficient basis to changes in our industry in general, industry standards and procedures and customer preferences. Management believes that to remain competitive, we will need to continuously obtain and/or develop new products and applications for existing products. In some cases these changes may be significant and the cost to comply with these changes may be substantial. We cannot assure you that we will be able to adapt to any changes in the future or that we will have the financial resources to keep up with changes in the marketplace. Also, the cost of adapting to any changes in our products may have a material and adverse effect on our operating results.
Our business could be adversely affected by local, state, national, international laws or regulations.
Our future success depends in part on laws and regulations that exist, or are expected to be enacted in the geographical areas where we do business. These laws and regulations could negatively affect our business and anticipated revenues. We cannot guarantee a positive outcome in direction, timing, or scope of laws and regulations that may be enacted which will affect our business.
Our future success depends on retaining our existing key employees and hiring and assimilating new key employees. The loss of key employees or the inability to attract new key employees could limit our ability to execute our growth strategy, resulting in lost sales and a slower rate of growth.
Our future success depends in part on our ability to retain our key employees including our president. We do not presently have employment agreements with our executives, each executive may be able to terminate his or her agreement at any time. It would be difficult for us to replace our president. In addition, as we grow we may need to hire additional key personnel. We may not be able to identify and attract high quality employees or successfully assimilate new employees into our existing management structure.
We may be unable to protect our intellectual property adequately or cost effectively, which may cause us to lose market share or reduce prices.
Our future success depends in part on our ability to protect and preserve proprietary rights related to our products. We cannot assure you that we will be able to prevent third parties from using our intellectual property rights and technology without our authorization. We have not obtained any patents on our products. We rely on trade secrets, common law trademark rights and trademark registrations. We may also employ confidentiality and work for hire, development, assignment and license agreements with employees, consultants, third party developers, licensees and customers. However, these measures afford only limited protection and may be flawed or inadequate. Also, enforcing intellectual property rights could be costly and time-consuming and could distract management's attention from operating business matters.
Our intellectual property may infringe on the rights of others, resulting in costly litigation.
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In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. In particular, there has been an increase in the filing of suits alleging infringement of intellectual property rights, which pressure defendants into entering settlement arrangements quickly to dispose of such suits, regardless of their merits. Other companies or individuals may allege that we infringe on their intellectual property rights. Litigation, particularly in the area of intellectual property rights, is costly and the outcome is inherently uncertain. In the event of an adverse result against future rights we may acquire, we could be liable for substantial damages and we may be forced to discontinue our use of the subject matter in question or obtain a license to use those rights or develop non-infringing alternatives. Any of these results would increase our cash expenditures, adversely affecting our financial condition.
Risks Relating to Ownership of Our Common Stock
We cannot assure you that there will be an active trading market for our common stock and it could be difficult for holders of our common stock to liquidate their shares.
Our common stock is quoted on the OTC Bulletin Board. The price of our shares has been volatile, our shares are thinly traded, and liquidation of a person's holdings may be difficult. Thus, holders of our common stock may be required to retain their shares for a long period of time.
We do not anticipate paying dividends in the foreseeable future, which could make our stock less attractive to potential investors.
We anticipate that we will retain any future earnings and other cash resources for future operations and development of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.
Future sales or the potential for sale of a substantial number of shares of our common stock could cause our market value to decline and could impair our ability to raise capital through subsequent equity offerings.
Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our common stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities.
It may be difficult for a third party to acquire us, and this could depress our stock price.
Under Nevada corporate law, we are permitted to include or exclude certain provisions in our articles of incorporation and/or by-laws that could discourage information contests and make it more difficult for you and other stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. For example:
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o Under Nevada law, we are not required to provide for, and our by-laws do not provide for, cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and o Stockholders cannot call a special meeting of stockholders unless they, in the aggregate, hold at least 10% of our common stock.
Trading in our shares is subject to certain "penny stock" regulation which could have a negative effect on the price of our shares in the public trading market.
Public trading of our common stock on the OTCBB is subject to certain provisions, commonly referred to as the penny stock rule, promulgated under the Securities Exchange Act of 1934. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our stock is deemed to be a penny stock, trading in our stock will be subject to additional sales practice requirements on broker-dealers. These may require a broker dealer to:
o make a special suitability determination for purchasers of penny stocks; o receive the purchaser's written consent to the transaction prior to the purchase; and o deliver to a prospective purchaser of a penny stock, prior to the first transaction, a risk disclosure document relating to the penny stock market.
Consequently, penny stock rules restrict the ability of broker-dealers to trade and/or maintain a market in our common stock. Also, many prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.
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ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
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Not applicable.
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ITEM 2.
ITEM 2. PROPERTIES
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Operating facilities
The Company's Dermagen, Inc. operations are currently located at 2500 East Fender Avenue, Building IJK, Fullerton, California in approximately 6,000 square feet. The monthly lease payment is approximately $3,750, and the lease expires in September 2009. The Company intends to renew the lease for an additional year. The Company believes this space will be sufficient for at least the next twelve months. The lease is with an unrelated third party.
Executive offices and Allied Med operations
Amexdrug's executive offices and its Allied Med operations are presently located at 8909 W. Olympic Boulevard, Suite 208, Beverly Hills, California 90211, and consist of three offices and a reception area comprising approximately 800 square feet. Amexdrug leases its executive facilities on a month to month basis under an oral lease agreement from an unrelated third party. The monthly lease payment under this lease is approximately $1,160. The Company believes this space will be sufficient for at least the next twelve months.
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Marketing office
In October 2008, the Company opened a new marketing office located in Manila, Philippines. The office is approximately 800 square feet in size, and the Company pays $175 per month for rent. The Company believes this space will be sufficient for at least the next twelve months.
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ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
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Amexdrug is not presently a party to any material pending legal proceedings. To the best of Amexdrug's knowledge, no governmental authority or other party has threatened or is contemplating the filing of any material legal proceeding against Amexdrug.
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ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matter was submitted to a vote of our security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report.
PART II
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ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Market information
Our common stock is presently traded in the over-the-counter market and quoted on the National Association of Securities Dealers' OTC Bulletin Board under the ticker symbol "AXRX.OB". The shares are thinly traded and a limited market presently exists for the shares. The following table describes, for the respective periods indicated, the prices of Amexdrug common stock in the over-the-counter market, based on inter-dealer bid prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The quotations have been provided by market makers in common stock and/or Pink Sheets LLC.
Quarter ended High bid Low bid - ------------- -------- ------- March 31, 2008 $1.20 $1.10 June 30, 2008 $1.10 $1.10 September 30, 2008 $1.10 $0.30 December 31, 2008 $0.30 $0.30 March 31, 2007 $1.70 $1.20 June 30, 2007 $1.25 $1.20 September 30, 2007 $1.45 $1.20 December 31, 2007 $1.20 $1.20
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Based on its trading price, our common stock is considered a "penny stock" for purposes of federal securities laws, and therefore has been subject to certain regulations, which are summarized below.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires special disclosure relating to the market for penny stocks in connection with trades in any stock defined as a "penny stock." Specifically, Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934 (the "Exchange Act") impose sales practice and disclosure requirements on NASD broker-dealers who make a market in a "penny stock." Securities and Exchange Commission regulations generally define a penny stock to be an equity security that has a market price of less than $5.00 per share and is not listed on The NASDAQ SmallCap Stock Market or a major stock exchange. These regulations affect the ability of broker-dealers to sell the Company's securities and also may affect the ability of purchasers of the Company's common stock to sell their shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor," generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.
As long as the penny stock regulations apply to the Company's stock, it may be difficult to trade such stock because compliance with the regulations can delay and/or preclude certain trading transactions. Broker-dealers may be discouraged from effecting transactions in the Company's stock because of the sales practice and disclosure requirements for penny stock. This could adversely affect the liquidity and/or price of the Company's common stock, and impede the sale of the Company's stock.
Holders
The number of record holders of Amexdrug's common stock as of April 6, 2009 is approximately 190. This number does not take into consideration stockholders whose shares are held by broker-dealers, finance institutions or other nominees.
Dividend Policy
Amexdrug has not declared any cash dividends with respect to its common stock during the last two fiscal years, and we do not intend to declare dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, Amexdrug's ability to pay dividends on our securities, except for any applicable limitations under Nevada corporate law.
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Equity Compensation Plans
The Company has not approved any compensation plans under which equity securities of the Company are authorized for issuance.
Recent sales of unregistered securities
During the past three years, Amexdrug has not sold any shares of its common stock without registration under the Securities Act of 1933.
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ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
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A smaller reporting company is not required to provide the information specified by this item.
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ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
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Forward Looking Statements
The following information contained in this Item 7 should be read in conjunction with the financial statements and accompanying notes and the other financial information appearing elsewhere in this Form 10-K. The Company's fiscal year end is December 31.
This report and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, statements as to management's good faith expectations and beliefs, which are subject to inherent uncertainties which are difficult to predict and may be beyond the ability of the Company to control. Forward-looking statements are made based upon management's expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management.
The words "believes," "expects," "intends," "plans," "anticipates," "hopes," "likely," "will," and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.
These risks and uncertainties, many of which are beyond the Company's control, include (i) the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations; and (ii) general economic conditions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations may prove to be incorrect.
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Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's view only as of the date of this report. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.
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 27 years.
Amexdrug Corporation, through its wholly-owned subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. is a rapidly growing pharmaceutical and cosmeceutical company specializing in the research and development, manufacturing and distribution of pharmaceutical drugs, cosmetics and distribution of prescription and over-the-counter drugs, private manufacturing and labeling and a quality control laboratory. At Amexdrug Corporation, it is our anticipation to give our clientele the opportunity to purchase cost effective products while maximizing the return of investments to our shareholders.
Amexdrug Corporation distributes its products through its subsidiaries, Dermagen, Inc., Allied Med, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc. primarily to independent pharmacies and secondarily to small and medium-sized pharmacy chains, alternative care facilities and other wholesalers and retailers in the state of California.
BioRx Pharmaceuticals, Inc. is a proud member of the National Association of Chain Drug Stores (NACDS). BioRx Pharmaceuticals, Inc. has developed numerous unique innovative products in the industry under the names Sponix and Bactivex.
We have introduced five pharmaceutical over the counter (OTC) and natural products in 2008 and plan to add three more products, in various stages of development, in 2009. 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), we expect to have 25,000 stores carry our products in 2009. Our mission is to expand the sales of our products to more than 40,000 stores in 2010.
The accompanying financial information includes the operations of Allied Med, Inc. and the operations of Amexdrug Corporation for all periods presented.
Results of operations for the years ended December 31, 2008 and 2007
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Revenues - --------
For the year ended December 31, 2008, Amexdrug reported sales of $5,693,502, comprised of $5,456,852 of 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 $236,650 of sales of health and beauty products manufactured by the Company. This was $446,133 less than the $6,139,635 of sales reported for the year ended December 31, 2007 which was comprised primarily of $5,914,631 sales from the Company's pharmaceutical wholesale distribution business of selling brand name generic pharmaceutical products, and over-the-counter (OTC) health and beauty products and $225,004 of sales of health and beauty products manufactured by the Company. The decrease in sales is primarily due to a decrease in sales of products in our wholesale distribution business.
Costs of Goods Sold - -------------------
Cost of goods sold for the year ended December 31, 2008 was $5,238,994, a decrease of $518,714 from the $5,757,708 cost of goods sold for the year ended December 31, 2007.
Gross Profit - ------------
During the year ended December 31, 2008 gross profit increased by $72,581 to $454,508 or 8.0% of sales from the $381,927 or 6.2% of sales recorded for the year ended December 31, 2007. The Company attributes its increase in gross profit margin in 2008 due to increased sales of higher profit margin products in 2008.
Expenses - --------
Total operating expenses for the year ended December 31, 2008 were $421,188, a decrease of $56,339 from the total operating expenses of $477,527 recorded for the year ended December 31, 2007. Selling, general and administrative expense was $364,201 for the year ended December 31, 2008, an increase of $78,038 from the $286,163 recorded for the year ended December 31, 2007. This increase in selling, general and administrative expense is attributable to increased employee expense. Research and development expense for the year ended December 31, 2008 was $44,576, a decrease of $120,905 from the $165,481 recorded for the year ended December 31, 2007. The Company anticipates that research and development expenses for 2009 may be similar to the amount incurred in 2008.
Net Income - ----------
During the year ended December 31, 2008, Amexdrug experienced net income of $12,332. This was $896 more than the $11,436 net income recorded for the year ended December 31, 2007.
Liquidity and capital resources - December 31, 2008
As of December 31, 2008, Amexdrug reported total current assets of $662,899, comprised primarily of cash of $96,390, accounts receivable of $314,397 and inventory of $211,538. Total assets as of December 31, 2008 were $709,403, which included total current assets of $662,899, plus net property and equipment of $15,230, lease deposits of $12,158, goodwill of $17,765 and trademarks of $1,351.
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Amexdrug's liabilities as of December 31, 2008 consist of accounts payable of $430,818, notes payable to a related party of $109,202, accrued liabilities of $14,286, corporate income tax payable of $9,270 and business line of credit balance of $91,287.
During the year ended December 31, 2008, Amexdrug used $193,706 cash in operating activities compared to $120,910 cash generated in operating activities in the year ended December 31, 2007. The primary adjustments to reconcile net income to net cash provided by operating activities during 2008 were as follows: an increase in accounts receivable of $125,940, an increase in accounts payable and accrued liabilities of $90,407, an increase in inventory of $16,996, depreciation expense of $12,411, accrued corporate income taxes payable of $9,270, an increase of prepaid expenses of $7,900, an increase in deferred tax asset of $9,345 and an increase in allowance for doubtful accounts of $22,100. Cash decreased during the year ended December 31, 2008 by $121,159 compared to an increase during 2008 of $128,532. Amexdrug had a cash balance of $96,390 at December 31, 2008. Operations have primarily been funded through an increase in a related party loan and an increase in the credit line balance. Management does not anticipate that Amexdrug will need to seek additional financing during the next twelve months.
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 $1,854 and $16,044 on capital expenditures during the years ended December 31, 2008 and 2007, respectively. The Company has no current plans for capital expenditures.
Critical Accounting Policies
In the notes to the audited consolidated financial statements for the year ended December 31, 2008, included in this 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.
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.
Recent Accounting Pronouncements - --------------------------------
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For a description of recent accounting pronouncements adopted by the Company see the footnotes to the Company's consolidated financial statements.
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ITEM 7A.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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A smaller reporting company is not required to provide the information specified by this item.
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ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Amexdrug's consolidated audited balance sheets as of December 31, 2008 and 2007, Amexdrug's consolidated audited statements of income, stockholders' equity, and cash flows for the fiscal years ended December 31, 2008 and 2007 are included hereafter.
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AMEXDRUG CORPORATION AND SUBSIDIARIES
Page ----
Reports of Independent Registered Public Accounting Firms...................27
Consolidated Balance Sheets -- December 31, 2008 and 2007...................28
Consolidated Statements of Income for the Years Ended December 31, 2008 and 2007.............................................................29
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2008 and 2007...............................................30
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008 and 2007............................................................31
Notes to Consolidated Financial Statements..................................32
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------
Board of Directors Amexdrug Corporation Beverly Hills, California
We have audited the accompanying balance sheets of Amexdrug Corporation as of December 31, 2008 and 2007, and the related statements of income, stockholders equity and cash flows for the years ended December 31, 2008 and 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Amexdrug Corporation as of December 31, 2008 and 2007, and the results of their operations and their cash flows for the years ended December 31, 2008 and 2007, in conformity with U.S. generally accepted accounting principles.
We were not engaged to examine management's assessment about the effectiveness of Amexdrug Corporation's internal control over financial reporting as of December 31, 2008 and, accordingly, we do not express an opinion thereon.
/s/ HJ Associates & Consultants, LLP
HJ Associates & Consultants, LLP Salt Lake City, Utah April 8, 2009
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AMEXDRUG CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2008 2007 ------------ -------------
Assets
Current Assets Cash and cash equivalents $ 96,390 $ 217,549 Investment 2,681 - Accounts receivable, net of allowance of $22,100 314,397 210,557 Inventory 211,538 194,542 Deferred tax asset 16,345 7,000 Prepaid expense 7,900 - Other receivable 8,288 8,288 Advance officer 5,360 - ------------ -------------
Total Current Assets 662,899 637,936 ------------ -------------
Property and Equipment, at cost Machinery and Equipment 56,700 56,700 Office and computer equipment 126,180 124,326 Leasehold improvements 15,700 15,700 ------------ ------------- 198,580 196,726 Less accumulated depreciation (183,350) (175,665) ------------ -------------
Net Property and Equipment 15,230 21,061 ------------ -------------
Other Assets Lease deposits 12,158 12,158 Intangibles Customer base, net of accumulated amortization of $18,259 - 4,561 Trademark, net of accumulated amortization of $299 1,351 1,516 Goodwill 17,765 17,765 ------------ -------------
Total Other Assets 31,274 36,000 ------------ -------------
Total Assets $ 709,403 $ 694,997 ============ =============
Liabilities and Shareholders' Equity
Current Liabilities: Accounts payable $ 430,818 $ 518,540 Accrued liabilities 14,286 16,971 Corporate income tax payable 9,270 - Note payable, related party 109,202 62,342 Credit lines 91,287 54,936 ------------ -------------
Total Current Liabilities 654,863 652,789 ------------ -------------
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 Accumulated deficit (37,276) (49,608) ------------ -------------
54,540 42,208 ------------ -------------
Total Liabilities and Shareholders' Equity $ 709,403 $ 694,997 ============ =============
The accompanying notes are in integral part of these financial statements.
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AMEXDRUG CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2008 2007 ------------ -------------
Sales $ 5,693,502 $ 6,139,635
Cost of Goods Sold 5,238,994 5,757,708 ------------ -------------
Gross Profit 454,508 381,927 ------------ -------------
Operating Expenses Selling, general and administrative expense 364,201 286,163 Research and development 44,576 165,481 Depreciation expense 12,411 25,883 ------------ -------------
Total Operating Expenses 421,188 477,527 ------------ -------------
Income/(Loss) before Other Income/(Expenses) 33,320 (95,600) ------------ -------------
Other Income/(Expenses) Interest and other income 266 116,302 Penalty (403) - Unrealized gain/(loss) (769) - Interest expense (15,322) (4,530) ------------ -------------
Total Other Income/(Expenses) (16,228) 111,772 ------------ -------------
Income before Provision for Income Taxes 17,092 16,172
Income tax benefit/(expense) (4,760) (4,736) ------------ -------------
Total (4,760) (4,736) ------------ -------------
Net Income $ 12,332 $ 11,436 ============ =============
BASIC AND DILUTED INCOME PER SHARE $ 0.00 $ 0.00 ============ =============
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 8,470,481 8,470,481 ============ =============
The accompanying notes are in integral part of these financial statements.
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AMEXDRUG CORPORATION AND SUBSIDIARIES STATEMENTS OF STOCKHOLDERS' EQUITY
Common stock Additional Total --------------------- Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity ---------- --------- ----------- ----------- ------------- Balance, December 31, 2006 8,470,481 $ 8,471 $ 83,345 $ (61,044) $ 30,772
Net income - - - 11,436 11,436 ---------- --------- ----------- ----------- ------------- Balance, December 31, 2007 8,470,481 8,471 83,345 (49,608) 42,208
Net income - - - 12,332 12,332 ---------- --------- ----------- ----------- -------------
Balance, December 31, 2008 8,470,481 $ 8,471 $ 83,345 $ (37,276) $ 54,540 ========== ========= =========== =========== =============
The accompanying notes are in integral part of these financial statements.
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AMEXDRUG CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2008 2007 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 12,332 $ 11,436 Adjustment to reconcile net income to net cash used in operating activities Depreciation and amortization 12,411 32,787 Allowance for doubtful accounts 22,100 (29,788) Deferred income taxes - - Unrealized gain/(loss) on investment 769 - (Increase) Decrease in: Accounts receivable (125,940) (6,346) Inventory (16,996) (52,693) Prepaid expenses (7,900) 3,993 Account settlement receivable - (8,288) Deferred tax asset (9,345) 4,864 Increase (Decrease) in: Accounts payable and accrued liabilities (90,407) 186,286 Corporate income tax payable 9,270 (7,387) Deferred tax liability - (13,954) ------------ -------------
NET CASH USED IN OPERATING ACTIVITIES (193,706) 120,910 ------------ -------------
Net CASH FLOWS USED IN INVESTING ACTIVITIES: Investment (3,450) - Purchase of fixed assets (1,854) (16,044) Purchase of trademark - (650) ------------ ------------- NET CASH USED IN INVESTING ACTIVITIES (5,304) (16,694) ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES: Advances to officer (5,360) - Payments on capital leases - (19,822) Payments on related party loans (13,140) - Proceeds from credit lines, net 36,351 54,936 Proceeds from related parties 60,000 (10,798) ------------ -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 77,851 24,316 ------------ -------------
NET INCREASE/(DECREASE) IN CASH (121,159) 128,532
CASH, BEGINNING OF PERIOD 217,549 89,017 ------------ -------------
CASH, END OF PERIOD $ 96,390 $ 217,549 ============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ 8,502 $ 3,546 ============ ============= Income taxes $ 8,221 $ - ============ =============
The accompanying notes are in integral part of these financial statements.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
1. ORGANIZATION AND LINE OF BUSINESS
Amexdrug's wholly owned subsidiaries include Allied Med, Inc., Dermagen, Inc. and BioRx Pharmaceuticals.
Allied Med, Inc., was formed in October 1997 and is engaged in the pharmaceutical wholesale business of selling brand and generic pharmaceuticals products, over-the-counter drug and non-drug products and health and beauty products to independent and chain pharmacies, alternative care facilities and other wholesalers.
Dermagen, Inc. is a manufacturing company specializing in the manufacturing and distribution of certain pharmaceuticals, medical devices, and health and beauty products. Dermagen has a US Federal Drug Administration (FDA) registered and state FDA approved manufacturing facility license to develop skin and novel health and beauty products for niche markets.
On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. was formed for the purpose of repacking and selling generic and branded pharmaceuticals. Currently, BioRx Pharmaceuticals, Inc. has assets, liabilities, and operations.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Amexdrug Corporation and its wholly-owned subsidiaries, Allied Med, Inc., Dermagen, Inc. and BioRx Pharmaceuticals. Inter-company accounts and transactions have been eliminated in consolidation.
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.
Revenue Recognition ------------------- The Company generates revenues from the manufacture and resale of pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements. The Company accounts for these revenues at the time of shipment to the customer. An allowance for sales returns is provided for products sold on a cash-on-delivery basis that are not accepted or paid for by the customer.
Cash and Cash Equivalent ------------------------ The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Investments ----------- Certificate of Deposits with banking institutions are short-term investments with initial maturities of more than 90 days. The carrying amount of these investments is a reasonable estimate of fair value due to their short-term nature.
Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment ---------------------- Property and equipment are stated at cost, and are depreciated using the modified accelerated cost recovery system (macrs) method over its estimated useful lives:
Machinery & Office equipment 3-10 Years Leasehold improvements 2-5 Years
Depreciation expense was $7,685 and $26,601 for the years ended December 31,2008 and 2007, respectively
Fair Value of Financial Instruments ----------------------------------- SFAS No. 107, "Disclosures About Fair Value of Financial Instruments", requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2008, the amounts reported for cash, accounts receivable, accounts payable, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.
Basic Income per Share Calculations ----------------------------------- Basic income per share is computed by dividing net income by the weighted-average number of common shares outstanding. As of December 31, 2008 and 2007, the Company did not have any potentially issuable common shares outstanding; accordingly, diluted income per share is not applicable to the Company and is not presented.
Income Taxes ------------ The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. The measurement of deferred tax assets and liabilities is based on provisions of applicable tax law. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the amount of tax benefits that, based on available evidence, is not expected to be realized.
Research and Development ------------------------ Research and development costs are expensed as incurred. Total research and development costs were $44,576 and $165,481 for the years ended December 31, 2008 and 2007, respectively.
Advertising Costs ----------------- The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $1,350 and $16,500 for the years ended December 31, 2008 and 2007, respectively.
Stock based Compensation ------------------------ In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R, Share-based Payment. SFAS 123R revises SFAS 123 and supersedes APB 25. SFAS 123R will be effective for the period ending December 31, 2006, and applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. Under SFAS 123R, we will be required to follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. The adoption of SFAS 123R has not had a material impact on our results of operations.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk ---------------------------- The Company's historical revenues and receivables have been derived solely from the pharmaceutical industry. Although the Company primarily sells products on a cash-on-delivery basis, the Company also sells products to certain customers under credit terms. The Company performs ongoing credit evaluations of its customers' financial conditions and usually requires a delayed check depository from its customers at the date products are shipped. The Company maintains an allowance for accounts receivable that may become uncollectible.
During the year ended December 31, 2008, purchases from two vendors accounted for 75% and 21% of total purchases, respectively. Accounts payable to these vendors accounted for 78% and 18% of the total accounts payable balance as of December 31, 2008, respectively. During the year ended December 31, 2007, purchases from those two vendors accounted 65% and 19% of total purchases, respectively. Accounts payable to these vendors accounted for 8% and 68% of the total accounts payable balance as of December 31, 2007. The loss of these vendors could have a potential negative effect upon the Company's future operations.
Customer Concentration Risk --------------------------- Two customers accounted for 10% or more of our sales during the year ended December 31, 2008. Two customers accounted for 10% or more of our sales during the year ended December 31, 2007. They accounted for approximately 30% and 11% of our 2008 sales, respectively, and 26.4% and 11.8% of our 2007 sales, respectively.
Accounts Receivable ------------------- An allowance for uncollectible accounts receivable is established by charges to operations for amounts required to maintain an adequate allowance, in management's judgment, to cover anticipated losses from customer accounts and sales returns. Such accounts are charged to the allowance when collection appears doubtful. Any subsequent recoveries are credited to the allowance account.
Inventory --------- Inventory includes purchased products for resale and raw materials and supplies necessary to manufacture pharmaceuticals, medical devices, and health and beauty products and is stated at the lower of cost (using the first-in, first-out method) or market value. Provisions, when required, are made to reduce excess and expired inventory to its estimated net realizable value. Although competitive pressures and pharmaceutical advancements expose the Company to the risk that estimates of the net realizable could change in the near term, the Company's agreements with most vendors provide for the right of return of outdated or expired inventory. The Company is exposed to other ownership related risks associated with inventory. Inventory consists of the following:
2008 2007 ------------ -------------
Raw materials $ 53,943 $ 62,719 Finished goods 157,595 131,823 ------------ -------------
Total Inventory $ 211,538 $ 194,542 ============ =============
Intangible Assets ----------------- The estimated fair value of Dermagen's customer base was recorded as an intangible asset at the date of acquisition and is amortized over the estimated useful life of the customer base, which is three years.
Trademarks are recorded at cost and are amortized over their estimated useful life, which is ten years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted cash flows.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangible Assets (continued) ----------------------------- Goodwill represents the excess of the purchase price of Dermagen, Inc. over the fair value of its net assets at the date of acquisition. Goodwill is not amortized, but is tested for impairment quarterly or when a triggering event occurs. The testing for impairment requires the determination of the fair value of the asset or entity to which the goodwill relates (the reporting unit). The fair value of a reporting unit is determined based upon a eighting of the quoted market price of the Company's common stock and present value techniques based upon estimated future cash flows of the reporting unit, considering future revenues, operating costs, the risk-adjusted discount rate and other factors. Impairment is indicated if the fair value of the reporting unit is allocated to the assets and liabilities of that unit, with the excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities assigned to the fair value of goodwill. The amount of impairment of goodwill is measured by the excess of the goodwill's carrying value over its fair value. As of December 31, 2008 and 2007, the Company's goodwill was not deemed to be impaired.
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable. The Company evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment. The Company uses an estimate of future undiscounted net cash flows from the related asset or group of assets over their remaining life in measuring whether the assets are recoverable. As of December 31, 2008, based on the analysis of estimated undiscounted future net cash flows, the Company did not consider any of its long-lived assets to be impaired.
Reclassification of Expenses ---------------------------- Certain amounts from the prior year have been reclassified to conform with the current year presentation.
3. INTANGIBLE ASSETS
Intangible assets that have finite useful lives continue to be amortized over their useful lives, and are reviewed for impairment when warranted by economic condition.
Useful Lives 2008 2007 ------------ ------------ -------------
Trademarks $ 1,650 $ 1,650 Less accumulated amortization 10 years (299) (134) ------------ ------------- $ 1,351 $ 1,516 ============ =============
Customer base $ 18,259 $ 18,259 Less accumulated amortization 3 years (18,259) (13,698) ------------ ------------- $ - $ 4,561 ============ =============
In aggregate, the Company recognized amortization expense of $4,726 and $6,186 for the years ended December 31, 2008 and 2007, respectively.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
4. RENTAL LEASES
The Company leases certain of its operating facilities under non-cancelable operating leases that expire during 2008. Rent expense is recognized on a straight-line basis over the term of the leases. Rent expense relating to its' operating facility for the years ended December 31, 2008 and 2007 was $48 403 and $61,459, respectively.
In addition, the Company pays payments on and uses an automobile that is under a non-cancelable operating lease in the name of the wife of the president of the Company. The automobile lease was initiated in January of 2007 and requires 36 monthly payments of $530. The lease expires in 2009.
As of December 31, 2008, the Company had refundable deposits relating to these operating leases of $11,058. Additionally, the Company leases its executive offices on a month-to-month basis for $1,168 per month.
5. 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 2006.
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended December 31, 2008 and 2007, the Company did not recognize interest and penalties.
6. DEFERRED TAX BENEFIT
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The provision (benefit) for income taxes for the year ended December 30, 2008 and 2007 consist of the following:
2008 2007 ------------ ------------- Federal: Current $ 5,630 $ 4,185
Deferred (6,000) (22,046)
State:
Current 3,640 -
Deferred (3,345) - ------------ ------------- $ (75) $ (17,861) ============ =============
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
6. DEFERRED TAX BENEFIT (Continued)
Net deferred tax assets consist of the following components as of December 31, 2008 and 2007:
2008 2007 ------------ ------------- Deferred Tax Assets:
Depreciation $ 9,390 $ 6,700
Related Party Accruals 1,500 300
Allowance for Doubtful Accounts 5,455 -
Deferred Tax Liabilities - - ------------ -------------
Net Deferred Tax Asset $ 16,345 $ 7,000 ============ =============
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rate of 24.69% to pretax income from continuing operations for the years ended December 31, 2008 and 2007 due to the following:
2008 2007 ------------ -------------
Book income $ 4,295 $ 3,324 State income taxes (900) 1,643 Depreciation (1,480) - M & E 450 - Non deductible expenses 100 (782) Related party accrual 1,140 - Unrealized loss 200 - Allowance for doubtful accounts 5,455 -
Valuation Allowance - - ------------ -------------
Income tax expense $ 9,260 $ 4,185 ============ =============
7. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2004, the Company purchased inventory totaling $34,304 from Amrx Corporation, a corporation owned by the president of the Company. No inventory was purchased from this company during the years ended December 31, 2008 and 2007. Accounts payable to Amrx totaled $13,140, which was paid off as of December 31, 2008.
The Company borrowed $109,202 from a shareholder to facilitate the purchase of Dermagen and to cover operating expenses. The balance of $109,202 is payable on demand and carries an annual interest rate of 8%, payable every 6 months. The interest paid as of December 31, 2008 and 2007 was $6,820 and $3,936 respectively.
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AMEXDRUG CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2007
8. BANK LINE OF CREDIT
The Company received a line of credit from Wells Fargo Bank for $70,000, which as of December 31, 2008 and 2007 has a balance owing of $51,287 and $54,936 respectively. The interest rate is prime plus 4% payable every month.
9. PROMISSORY NOTE
The Company received a promissory note on June 23, 2008 from National Bank of California for $150,000, which as of December 31, 2008 and 2007 has a balance owing of $40,000 and $0 respectively. The interest rate is 2.5% over the index payable every month. The note matures on June 9, 2009.
10. BUSINESS SEGMENT INFORMATION
Beginning in 2005, the Company has operations in two segments of its business, namely: Distribution and Health and Beauty Products. Distribution consists of the wholesale pharmaceutical distribution and resale of brand and generic pharmaceutical products, over-the-counter drugs and non-drug products and health and beauty products. Health and Beauty Products consist of the manufacture and distribution of primarily health and beauty products.
The following tables describe information regarding the operations and assets of these reportable business segments:
Health and Beauty Distributions Products Total ------------- ------------ ------------- For the year ended December 31, 2008 Sales to external customers $ 5,456,852 $ 236,650 $ 5,693,502 Depreciation and amortization 5,590 6,821 12,411 Segment income (loss) before taxes 126,395 (109,303) 17,092 Segment assets 357,321 352,122 709,443
For the year ended December 31, 2007 Sales to external customers $ 5,907,116 $ 225,004 $ 6,132,120 Depreciation and amortization 13,738 19,049 32,787 Segment income (loss) before taxes 136,299 (120,127) 16,172 Segment assets 455,076 239,921 694,997
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ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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As previously reported in a Form 8-K/A Current Report filed by the Company on May 25, 2007, Hansen, Barnett & Maxwell, P.C. was terminated on April 30, 2007 as the certifying accountant for the Company (the "Registrant").
Hansen, Barnett & Maxwell, P.C.'s report on the Registrant's financial statements for either of the two years ended December 31 2006 and 2005 did not contain an adverse opinion or disclaimer of opinion, nor was it modified as to uncertainty, audit scope, or accounting principles.
Hansen, Barnett & Maxwell, P.C. served as the certifying accountant for the Company's financial statements for more than three years prior to termination. From the date on which Hansen, Barnett & Maxwell, P.C. was engaged until the date Hansen, Barnett & Maxwell, P.C. was terminated, there were no disagreements with Hansen, Barnett & Maxwell, P.C. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Hansen, Barnett & Maxwell, P.C. would have caused Hansen, Barnett & Maxwell, P.C. to make reference to the subject matter of the disagreements in connection with any reports it would have issued, and there were no "reportable events" as that term is defined in Item 304(a)(1)(iv) of Regulation S-B, except for the following:
1. In connection with the audit of the December 31, 2005 financial statements, as disclosed under Item 8A in the Company's Form 10-KSB for the year ended December 31, 2005, Hansen, Barnett & Maxwell, P.C. informed the Company of the following material weakness affecting the Company's ability to develop reliable financial statements:
The Company has a material weakness in the adequacy of its closing process and its preparation of adjusting entries to effectively prepare accurate financial statements with the necessary level of review and supervision.
2. In connection with the audit of the December 31, 2006 financial statements, as disclosed under Item 8A in the Company's Form 10-KSB for the year ended December 31, 2006, Hansen, Barnett & Maxwell, P.C. informed the Company of the following material weakness affecting the Company's ability to develop reliable financial statements:
The Company has a material weakness in the adequacy of its ability to complete notes to the financial statements.
On April 30, 2007, the Company entered into an engagement letter with HJ Associates & Consultants, LLP to assume the role of its new certifying accountant. HJ Associates & Consultants, LLP has been asked to audit the year ended December 31, 2007. During the two most recent fiscal years and the subsequent interim periods prior to the engagement of HJ Associates & Consultants, LLP, the Company did not consult with HJ Associates & Consultants, LLP with regard to:
(i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements; or
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(ii) any matter that was either the subject of a disagreement or a reportable event (as described in Item 304(a)(1)(iv) of Regulation S-B).
The termination of the former auditor and the engagement of the new principal auditor was recommended and approved by the Company's Board of Directors.
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ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures - ------------------------------------------------
Under the supervision and with the participation of management, Jack Amin, acting as our chief executive officer and chief 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 December 31, 2008. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective 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.
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the required time periods and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. The effectiveness of any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate improper conduct completely. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud.
Management's Annual Report on Internal Control Over Financial Reporting - -----------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed 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. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance of achieving their control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based upon this evaluation our management, including the Chief Executive Officer and Principal Financial Officer, has concluded that our internal controls over financial reporting were effective as of December 31, 2008.
During the quarter ended December 31, 2008, there has been no change in our internal controls over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this annual report.
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ITEM 9B.
ITEM 9B. OTHER INFORMATION
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None.
PART III
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ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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Identification of directors and executive officers
The following table as of April 7, 2009, includes the name, age, and position of each executive officer and director of Amexdrug and the term of office of each director.
Director and/or Name Age Position Officer Since - ---- --- -------- ----------------
Jack Amin 50 President, Secretary, April 2000 Treasurer and Director
Rodney S. Barron, 56 Director December 2001 M.D.
Behrooz Meimand 60 Director December 2001
Each director of the Company serves for a term of one year and until his successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until his successor is elected at the annual meeting of the board of directors and is qualified.
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Currently, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs. Present management openly accepts and appreciates any input or suggestions from stockholders. However, the board is elected by the stockholders and the stockholders have the ultimate say in who represents them on the board. There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current offers or directors are acting on behalf of, or will act at the direction of any other person.
The business experience for at least the last five years of each of the Company's executive officers and directors is as follows.
Jack Amin has served as the President, Secretary, Treasurer and as a director of Amexdrug since April 2000. He holds a Bachelor of Science in Electronic Engineering from Western State College of Engineering of LA, California in 1982. Since 1980 Mr. Amin has been engaged in various capacities, including sales and management, within the pharmaceutical industry. Mr. Amin has served as the President, Chief Executive Officer and director of Amexdrug's wholly-owned subsidiary, Allied Med, Inc., a company which he founded in 1997.
Rodney S. Barron, M.D., has served as a director of Amexdrug since December 2001. Dr. Barron obtained his medical degree from New York Medical College in 1978. He then performed a residency in general surgery from 1978 to 1980, and a residency in urology from 1980 to 1983. Dr. Barron has been involved in the private practice of medicine in Los Angeles, California from 1983 through the present time.
Behrooz Meimand has served as a director of Amexdrug since December 2001. Mr. Meimand obtained a master's degree in insurance from the National University of Iran in 1970. He has had 30 years of experience in the insurance industry. Mr. Meimand has been the president of Behrooz Meimand Insurance Services, Inc. for a period of time exceeding the past 5 years. Currently Mr. Meimand is also a director of Magbid Foundation and Nessah Education & Culture Center.
Significant employees
Amexdrug and its subsidiaries have no present employees who are expected to make a significant contribution to Amexdrug's business other than Amexdrug's current officers and directors. It is expected that current members of management will be the only persons whose activities will be material to Amexdrug's operations.
Family relationships
There are no family relationships between any directors or executive officers of Amexdrug and/or the officers, directors or managers of its subsidiary companies, Allied Med, Inc., Dermagen, Inc., Royal Health Care, Inc. and BioRx Pharmaceuticals, Inc., either by blood or by marriage.
Involvement in certain legal proceedings
During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of Amexdrug:
(1) was a general partner or executive officer of any business which filed a petition in bankruptcy or against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; or
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(2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or
(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; or
(4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; or
(5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or funding by the Commission has not been subsequently reversed, suspended, or vacated; or
(6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Section 16(a) beneficial ownership reporting compliance
Based solely upon a review of Forms 3 and 4 furnished to the Company under Rule 16a-3(d) during its most recent fiscal year, the Company knows of no person who was a director, officer, beneficial owner of more than ten percent of any class of equity securities of the Company registered pursuant to Section 12 ("Reporting Person") that failed to file on a timely basis any reports required to be furnished pursuant to Section 16(a) during the most recent fiscal year.
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Code of Ethics
We have recently adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of the Code of Ethics is attached to this Annual Report as Exhibit 14.1.
Audit Committee and Financial Expert
At the present time, our Board of Directors serves as our audit committee. We do not presently have a financial expert on our Board of Directors. Two of our directors, Rodney S. Barron and Behrooz Meimand, are independent.
Nominating Committee
The Company does not have a standing nominating committee or a committee performing similar functions. Due to the Company's size, it is difficult to attract individuals who would be willing to accept membership on the Company's Board of Directors. Therefore, the full Board of Directors would participate in nominating candidates to the Board of Directors. The Company did not have an annual meeting of shareholders in the past fiscal year.
Other Committees
We presently do not have a compensation committee, executive committee of our Board of Directors, stock plan committee or any other committees.
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ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
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Cash compensation
The following table shows compensation earned during fiscal 2008 and 2007 by the Chief Executive Officer and by any other executive officers whose compensation during one of the two fiscal years totaled $100,000 or more The information in the table includes salaries, bonuses, stock options granted, restricted stock awards granted and other miscellaneous compensation. We presently have no long term compensation benefits.
SUMMARY COMPENSATION TABLE
Name and Principal Fiscal Salary Bonus Stock All Other Position Year ($) ($) Awards Compensation Total - --------------------------------------------------------------------------------
Jack Amin 12/31/08 $29,600 0 0 0 $29,600 President/ 12/31/07 $51,600 0 0 0 $51,600 Director
Columns have been omitted from the Summary Compensation Table above for option awards, non-equity incentive plan compensation and changes in pension value and nonqualified deferred compensation earnings since there were none.
Except as described above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to Amexdrug's management during the fiscal years ended December 31, 2008 and 2007. Except as described above, no other officers or directors were paid any salaries or compensation during the years ended December 31, 2008 or 2007. Further, no member of Amexdrug's management has been granted any option or stock appreciation rights. Accordingly, no tables relating to such items have been included within this Item 11.
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There are no present plans whereby Amexdrug will issue any of its securities to management, promoters, their affiliates or associates in consideration of services rendered or otherwise, except as described herein.
Compensation of directors
Amexdrug has no arrangement for compensating its directors for their services as directors or for serving on any committees. However, directors may be compensated for services which they render as officers and/or as employees of Amexdrug.
Employment contracts and termination of employment and change-in-control arrangements
There are no employment contracts, compensatory plans or arrangements, including payments to be received from Amexdrug with respect to any executive officer of Amexdrug which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with Amexdrug or its subsidiaries, any change in control of Amexdrug or a change in the person's responsibilities following a change in control of Amexdrug.
Nor are there any agreements or understandings for any director or executive officer to resign at the request of another person. None of Amexdrug's directors or executive officers is acting on behalf of or will act at the direction of any other person.
Amexdrug intends to enter into an employment agreement with Jack Amin in the near future that may provide for a salary of $150,000 per year retroactive to January 1, 2009, and possible bonuses as the board of directors may determine are appropriate. In the event Amexdrug is unable to pay the full $150,000 per year annual salary to Mr. Amin, he has indicated that he may accept a portion of the salary in the form of Amexdrug common stock.
Compensation pursuant to plans; pension table
There were no stock awards, restricted stock awards, stock options, stock appreciation rights, long-term incentive plan compensation or similar rights granted to any of our officers or directors. None of our officers or directors presently holds directly any stock options or stock purchase rights. We have no retirement, pension, profit sharing, or other plan covering any of our officers and directors.
We have adopted no formal stock option plans for our officers, directors and/or employees. We reserve the right to adopt one or more stock options plans in the future. Presently we have no plans to issue additional shares of our common or preferred stock or options to acquire the same to our officers, directors or their affiliates or associates.
Other compensation
None.
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Compensation Committee Interlocks and Insider Participation
The Company has no compensation committee, and the function of the compensation committee is handled by the Board of Directors. Jack Amin also serves as an officer of the Company.
Compensation Committee Report
The Company has no compensation Committee, and the function of the compensation committee is handled by the Board of Directors. Jack Amin also serves as an officer of the Company. The Board of Directors approved the compensation paid to Jack Amin in 2008.
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ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Security ownership of certain beneficial owners
The following table sets forth the share holdings of those persons who are known to Amexdrug to be the beneficial owners of more than five percent of Amexdrug's common stock as of April 6, 2009. Each of these persons has sole investment and sole voting power over the shares indicated.
Number of Shares Percent Name and Address Beneficially Owned of Class - ---------------- ------------------ --------
Jack Amin 7,755,000(1) 91.6% 8909 West Olympic Blvd. Suite 208 Beverly Hills, CA 90211
(1) Mr. Amin disclaims beneficial ownership of 421,083 shares of common stock acquired by his wife, Nora Amin, during 2005 that are not included in the foregoing amount.
Security ownership of management
The following table sets forth the share holdings of Amexdrug's directors and executive officers as of April 6, 2009. Each of these persons has sole investment and sole voting power over the shares indicated.
Number of Shares Percent Name and Address Beneficially Owned of Class - ---------------- ------------------ --------
Jack Amin 7,755,000(1) 91.6% Rodney Barron, M.D. 0 0.0% Behrooz Meimand 0 0.0%
All directors and executive officers as a group (3) 7,755,000 91.6%
(1) Mr. Amin disclaims beneficial ownership of 421,083 shares of common stock acquired by his wife, Nora Amin, during 2005 that are not included in the foregoing amount
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All common shares held by the officers, directors and principal shareholders listed above are "restricted or control securities" and are subject to limitations on resale. The shares may be sold in compliance with the requirements of Rule 144, after a minimum six months holding period has been met.
Rule 13d-3 generally provides that beneficial owners of securities include any person who directly or indirectly has or shares, voting power and/or investment power with respect to such securities; and any person who has the right to acquire beneficial ownership of such security within 60 days.
Any securities not outstanding which are subject to options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. But such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person.
Changes in control
There are no present arrangements or pledges of Amexdrug's securities, known to management, which may result in a change in control of Amexdrug.
Securities Authorized for Issuance under Equity Compensation Plans
The Company has no equity compensation plans that have been approved by the Company's security holders or the Board of Directors. There presently are no securities authorized for issuance under any equity compensation plans. There are no outstanding options, warrants or rights to acquire securities of the Company.
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ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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Transactions with management and others
Except as indicated below, and for the periods indicated, there were no material transactions, or series of similar transactions, during the last two fiscal years ended December 31, 2008, or since December 31, 2008, or any currently proposed transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be party, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company's total assets at year-end for the last two completed fiscal years, in which any related person (as defined in Item 404 of Regulation S-K) had a direct or indirect material interest, other than the following:
1. Amexdrug anticipates that it may enter into an employment agreement with Jack Amin in the near future. It is expected that the employment agreement will be retroactive to January 1, 2009, and that it will provide for an annual salary of $150,000 and possible bonuses as the board of directors may determine are appropriate. The employment agreement may give Mr. Amin the option to take a portion of the salary in shares of the Company's common stock.
2. Amexdrug borrowed $109,202 from the wife of our CEO to facilitate the purchase of Dermagen and to cover operating expenses. The balance of $109,202 as of December 31, 2008 is payable on demand and carries an annual interest rate of 8%, payable every six months. The interest paid as of December 31, 2008 and 2007 was $6,820 and $3,963 respectively.
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No other related party transaction is presently proposed.
Parents of the company
Amexdrug has no parents, except to the extent that Mr. Amin may be deemed to be a parent by virtue of his large percentage stockholdings of the Company's common stock. See the caption "Security ownership of certain beneficial owners and management" in item 12 of this report for a description of Mr. Amin's stock ownership.
Transactions with promoters
The Company was organized more than five years ago therefore transactions between the Company and its promoters or founders are not deemed to be material.
Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons
Our board of directors reviews, and must approve any related person transactions before such transactions are engaged in by the Company. A related person means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company; any person who is know to be the beneficial owner of more than 5% of any class of our voting securities; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owners; and any firm, corporation, or other equity in which any of the foregoing persons is employed or is a general partner or principal or is a similar position or in which such person has a 5% or greater beneficial ownership interest. Our board of directors reviews these related person transactions and considers all of the relevant facts and circumstances available to the board of directors, including (if applicable) but not limited to; the benefits to us; the availability of other sources of comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The board of directors may approve only those related person transactions that are in, or are not inconsistent with the best interests of us and of our stockholders, as the board of directors determines in good faith. At the beginning of each fiscal year, the board of directors will review any previously approved or ratified related person transactions that remain ongoing and have a remaining term of more than six months. The board of directors will consider all of the relevant facts and circumstances and will determine if it is in the best interests of us and our stockholders to continue, modify or terminate these related person transactions.
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Independence of Directors
The Company has, but is not required to have, a majority of independent directors. Should the Company decide to list on a securities exchange, we will be required to adhere to the independence requirements of that exchange.
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ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
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We do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. As a result, we do not rely on pre-approval policies and procedures.
Audit Fees
For the fiscal years ended December 31, 2008 and 2007, our principal accountant billed $21,855 and $25,900, respectively, for the audit of our annual financial statements and review of financial statements included in our Form 10-Q filings.
Audit-Related Fees
There were no other fees billed for services reasonably related to the performance of the audit or review of our financial statements outside of those fees disclosed above under "Audit Fees" for the fiscal years ended December 31, 2008 and 2007.
Tax Fees
For the fiscal years ended December 31, 2008 and 2007, our principal accountant billed us $4,615 and $0, respectively, for services for tax compliance, tax advice, and tax planning work.
All Other Fees
There were no other fees billed by our principal accountants other than those disclosed above for fiscal years ended December 31, 2008 and 2007.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Our Board of Directors serves as our audit committee. The audit committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis.
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ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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1. Financial Statements:
Amexdrug Corporation Report of Independent Registered Public Accounting Firm 27 Balance Sheets at December 31, 2008 and December 31, 2007 28 Statements of Income for the years ended December 31, 2008 and 2007 29 Statements of Changes in Stockholders Equity for the years ended December 31, 2008, and 2007 30 Statements of Cash Flows for the years ended December 31, 2008 and 2007 31 Notes to Financial Statements 32
2. Financial Statement Schedule(s):
No financial statement schedules are filed herewith because (i) such schedules are not required or (ii) the information required has been presented in the aforementioned financial statements.
3. Exhibits
The following exhibits are filed as part of this report.
Exhibit Number Description - ------- -----------
2.1 Agreement and Plan of Merger (to change domicile from California to Nevada)*
2.2 Agreement and Plan of Reorganization (to acquire Allied Med, Inc.)**
3.1 Articles of Incorporation***
3.2 By-Laws***
14.1 Code of Ethics
21.1 List of Subsidiaries of Amexdrug Corporation***
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
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Summaries of all exhibits contained within this report are modified in their entirety by reference to these Exhibits.
* Exhibit 2.1 is incorporated by reference from Amexdrug's Form 8-K Current Report filed December 31, 2001 as Exhibit 10.01
** Exhibit 2.2 is incorporated by reference from Amexdrug's Form 8-K Current Report filed January 15, 2002 as Exhibit 10.01
*** Exhibits 3.1, 3.2 and 21.1 are incorporated by reference from Amexdrug's 2001 Form 10-KSB filed April 1, 2002.
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SIGNATURES
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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.
AMEXDRUG CORPORATION
Date: April 9, 2009 By: /s/ Jack Amin ---------------------------------- Jack Amin, Director, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, in the capacities and on the dates indicated.
Date: April 9, 2009 By: /s/ Jack Amin ----------------------------------- Jack Amin, Director, President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer
Date: April 9, 2009 By: ----------------------------------- Rodney Barron, M.D., Director
Date: April 9, 2009 By: /s/ Behrooz Meimand ----------------------------------- Behrooz Meimand, Director
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EXHIBIT INDEX
Exhibit Exhibit Number Description Location - ------- ----------- -------- 2.1 Agreement and Plan of Merger * (to change domicile from California
2.2 Agreement and Plan of Reorganization **
3.1 Articles of Incorporation ***
3.2 By-Laws ***
14.1 Code of Ethics This Filing
21.1 List of Subsidiaries of Amexdrug Corporation ***
31.1 Certification of Chief Executive Officer This Filing pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
31.2 Certification of Chief Financial Officer This Filing pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
32.1 Certification of Chief Executive Officer This Filing pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
32.2 Certification of Chief Financial Officer This Filing pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
Summaries of all exhibits contained within this report are modified in their entirety by reference to these Exhibits.
* Exhibit 2.1 is incorporated by reference from Amexdrug's Form 8-K Current Report filed December 21, 2001 as Exhibit No. 10.01.
** Exhibit 2.2 is incorporated by reference from Amexdrug's Form 8-K Current Report filed January 15, 2002 as Exhibit No. 10.01.
*** Exhibit 3.1, 3.2 and 21.1 are incorporated by reference from Amexdrug's 2001 Form 10-KSB filed on April 1, 2002.
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