10QSB 1 amexdrug10qsb093005.txt -------------------------------------------------------------------------------- U. S. Securities and Exchange Commission Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to____________ Commission File No. 0-7473 Amexdrug Corporation -------------------- (Exact Name of Small Business Issuer as Specified in its Charter) NEVADA 95-2251025 -------------------------------- ------------------------- (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) Incorporation or Organization) 8909 West Olympic Boulevard, Suite 208 Beverly Hills, California 90211 ------------------------------- (Address of Principal Executive offices) Issuer's Telephone Number: (310) 855-0475 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes [X] No [ ] (2) Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of November 7, 2005, there were 8,473,866 shares of the issuer's common stock issued and outstanding. AMEXDRUG CORPORATION FORM 10-QSB TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial Statements (Unaudited).....................................3 Condensed Consolidated Balance Sheets -- As of September 30, 2005 and December 31, 2004 (Unaudited)................4 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2005 and 2004 (Unaudited).............................5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004 (Unaudited)................................................6 Notes to Condensed Consolidated Financial Statements (Unaudited).........................................................7 Item 2. Management's Discussion and Analysis or Plan of Operation............9 Item 3. Controls and Procedures.............................................12 PART II - OTHER INFORMATION Item 1. Legal Proceedings...................................................13 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.........13 Item 3. Defaults Upon Senior Securities.....................................13 Item 4. Submission of Matters to a Vote of Security Holders.................13 Item 5. Other Information...................................................13 Item 6. Exhibits and Reports on Form 8-K......... .........................13 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The unaudited condensed consolidated balance sheets of Amexdrug Corporation, a Nevada corporation, and subsidiary as of September 30, 2005 and December 31, 2004, the related unaudited condensed consolidated statements of operations for the three and nine month periods ended September 30, 2005 and September 30, 2004, the related unaudited condensed consolidated statements of cash flows for the nine month periods ended September 30, 2005 and September 30, 2004 and the notes to the unaudited condensed consolidated financial statements follow. The consolidated financial statements have been prepared by Amexdrug's management, and are condensed; therefore they do not include all information and notes to the financial statements necessary for a complete presentation of the financial position, results of operations and cash flows, in conformity with accounting principles generally accepted in the United States of America, and should be read in conjunction with the annual consolidated financial statements included in Amexdrug's annual report on Form 10-KSB for the year ended December 31, 2004. The accompanying condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations and financial position of Amexdrug Corporation consolidated with Allied Med, Inc., its wholly owned subsidiary, and all such adjustments are of a normal recurring nature. The names "Amexdrug", "we@, "our@ and "us@ used in this report refer to Amexdrug Corporation. Operating results for the quarter ended September 30, 2005, are not necessarily indicative of the results that can be expected for the year ending December 31, 2005. 3 AMEXDRUG CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 2005 2004 -------------------------------------------------------------------------------- ASSETS Current Assets Cash $ 251,056 $ 4,693 Investments in securities available for sale 1,600 -- Accounts receivable, net of allowance for doubtful accounts of $19,500 and $39,494, respectively 202,996 297,310 Prepaid expenses 3,686 -- Inventory 64,730 73,493 -------------------------------------------------------------------------------- Total Current Assets 524,068 375,496 ------------------------------------------------------------------------------- Property and Equipment Office and computer equipment 133,641 133,641 Leasehold improvements 15,700 15,700 -------------------------------------------------------------------------------- Total Property and Equipment 149,341 149,341 Less: Accumulated depreciation (121,293) (105,834) -------------------------------------------------------------------------------- Net Property and Equipment 28,048 43,507 Deposits 15,408 1,100 -------------------------------------------------------------------------------- Total Assets $ 567,524 $ 420,103 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable $ 419,130 $ 427,487 Payables - related parties 13,140 29,674 Accrued liabilities 1,441 4,252 Accrued income taxes 33,687 800 Current portion of capital lease obligations 9,385 10,747 -------------------------------------------------------------------------------- Total Current Liabilities 476,783 472,960 -------------------------------------------------------------------------------- Long-Term Liabilities Deferred income taxes 5,583 -- Capital lease obligations, net of current portion 20,692 27,495 -------------------------------------------------------------------------------- Total Long-Term Liabilities 26,275 27,495 -------------------------------------------------------------------------------- Stockholders' Equity (Deficit) Common Stock - $0.001 par value; 50,000,000 shares authorized; 8,473,866 and 8,052,783 shares issued and outstanding, respectively 8,474 8,053 Additional paid-in capital 83,342 7,969 Accumulated deficit (27,350) (96,374) -------------------------------------------------------------------------------- Total Stockholders' Equity (Deficit) 64,466 (80,352) -------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity (Deficit) $ 567,524 $ 420,103 ================================================================================ See accompanying notes to condensed consolidated financial statements 4 AMEXDRUG CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------------- -------------------------- 2005 2004 2005 2004 --------------------------------------------------------------------------------------------- Sales $ 1,552,772 $ 1,178,454 $ 3,698,090 $ 5,414,543 Cost of Goods Sold 1,443,225 1,182,951 3,423,682 5,121,557 --------------------------------------------------------------------------------------------- Gross Profit (Loss) 109,547 (4,497) 274,408 292,986 Operating Expenses Selling, general and administrative expense (72,723) (42,831) (180,400) (206,661) Interest expense (521) (770) (2,300) (2,952) Interest and other income 583 -- 648 -- --------------------------------------------------------------------------------------------- Income (Loss) From Operations 36,886 (48,098) 92,356 83,373 Gain on Sale of Property -- 165,000 -- 165,000 Gain (Expense) on Settlement -- 5,426 17,234 (134,574) --------------------------------------------------------------------------------------------- Income (Loss) Before Income Taxes 36,886 122,328 109,590 113,799 Provision for Income Taxes (15,985) (45,416) (40,566) (44,412) --------------------------------------------------------------------------------------------- Net Income (Loss) $ 20,901 $ 76,912 $ 69,024 $ 69,387 ============================================================================================= Basic Income (Loss) Per Common Share $ -- $ 0.01 $ 0.01 $ 0.01 ============================================================================================= Basic Weighted-Average Common Shares Outstanding 8,473,866 8,052,783 8,359,726 8,052,783 ============================================================================================= See accompanying notes to condensed consolidated financial statements
5 AMEXDRUG CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30, ----------------------- 2005 2004 -------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net income (loss) $ 69,024 $ 69,387 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 15,459 17,229 Gain on sale of property -- (165,000) Recovery of bad debt (19,994) -- Expense from (gain on) settlement (17,234) 134,574 Deferred income taxes 5,583 6,138 Changes in operating assets and liabilities: Accounts receivable 114,308 124,996 Prepaid expenses (3,686) -- Inventory 8,763 61,036 Accounts payable and accrued liabilities 53,953 (170,896) -------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 226,176 77,464 -------------------------------------------------------------------------------- Cash Flows from Investing Activities: Payment of security deposits (11,808) -- Payment of deposit to purchase subsidiary (2,500) -- Purchase of investments (1,600) -- -------------------------------------------------------------------------------- Net Cash Used in Investing Activities (15,908) -- -------------------------------------------------------------------------------- Cash Flows from Financing Activities: Payment of checks written in excess of cash in bank -- (41,024) Payment for lawsuit settlement (15,000) -- Proceeds from borrowings from related party 59,260 -- Principal payments on capital lease obligations (8,165) (18,342) -------------------------------------------------------------------------------- Net Cash Provided by (Used in) Financing Activities 36,095 (59,366) -------------------------------------------------------------------------------- Net Increase in Cash 246,363 18,098 Cash at Beginning of Period 4,693 1,185 -------------------------------------------------------------------------------- Cash at End of Period $ 251,056 $ 19,283 ================================================================================ Supplemental Cash Flow Information: Cash paid for interest $ 2,300 $ 2,952 -------------------------------------------------------------------------------- Conversion of notes payable to common stock $ 75,794 $ -- -------------------------------------------------------------------------------- See accompanying notes to condensed consolidated financial statements 6 AMEXDRUG CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANICAL STATEMENTS NOTE 1 - Organization and Nature of Operations Condensed Financial Statements -- The accompanying condensed financial statements have been prepared by the Company and are unaudited. In the opinion of management, the accompanying unaudited financial statements contain all necessary adjustments for fair presentation, consisting of normal recurring adjustments except as disclosed herein. The accompanying unaudited interim financial statements have been condensed pursuant to the rules and regulations of the Securities and Exchange Commission; therefore, certain information and disclosures generally included in financial statements have been condensed or omitted. The condensed financial statements should be read in connection with the Company's annual financial statements included in its annual report on Form 10-KSB as of December 31, 2004. The financial position and results of operations for the nine months ended September 30, 2005 are not necessarily indicative of the results to be expected for the full year ending December 31, 2005. Use of Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Investment in Debt and Equity Securities--Investment in equity securities are classified as available-for-sale and are carried at fair value. Net unrealized gains and losses are reported in accumulated other comprehensive income, which is a separate component of shareholder's equity, net of applicable deferred taxes. Realized gains and losses on sales of securities and impairment losses from other-than-temporary declines in market value are included in earnings with the cost of securities sold determined on a specific cost basis. Investment in debt securities are classified as held-to-maturity and carried at cost. Accounts Receivable -- The Company's historical revenues and receivables have been derived solely from the pharmaceutical industry. Although the Company primarily sells products on a cash basis, some sales are made under credit terms. The Company performs ongoing credit evaluations of its customers' financial condition and usually requires a delayed check depository from its customers at the date products are shipped. The Company maintains an allowance for uncollectible accounts receivable based upon the expected collectibility of all accounts receivable. Concentrations -- During the nine months ended September 30, 2005, purchases from four vendors accounted for 46%, 18%, 12%, and 10% of total purchases. As of September 30, 2005, accounts payable to these vendors accounted for 76%, 0%, 0%, and 0% of the total accounts payable, respectively. Fair Value of Financial Instruments -- The carrying amount of capital lease obligations approximate fair value based on current interest rates available to the Company. Revenue Recognition -- The Company generates revenues from the 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 and acceptance by the customer. Basic Loss Per Common Share -- Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. No agreements or contracts exist that have created any potentially issuable common shares. 7 AMEXDRUG CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANICAL STATEMENTS NOTE 2 - 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. As of September 30, 2005 and 2004, accounts payable to Amrx totaled $13,140 and $0, respectively. In December 2004, the Company borrowed $16,534 from the wife of the president of the Company. In January 2005, the Company borrowed an additional $59,260 from this person. On March 15, 2005, the loans were converted into 421,083 shares of common stock at the market price of $0.18 per share. NOTE 3 - SETTLEMENT OF CONTINGENT LIABILITIES On June 9, 2003 a lawsuit was filed in the Superior Court of the State of California, County of Los Angeles against the Company, its predecessor corporation, Harlyn Products, Inc., a California corporation, the Company's wholly owned subsidiary, Allied Med, Inc., and the Company's principal shareholder, Jack Amin. The plaintiffs alleged in the complaint that the parties entered into a one page finder's agreement on April 10, 2000 relating to the acquisition of Harlyn Products, Inc., and that the plaintiffs were entitled to receive a finder's fee equal to 7.5% (approximately 603,959 shares) of the fully diluted shares of the Company with a value not less than $600,000 and unspecified lost profits. The plaintiffs alleged causes of action for breach of contract, for specific performance, for services rendered and for unjust enrichment. The plaintiffs sought compensation for damages, legal fees, costs and interest. Although management had determined, with the advice of its legal counsel, that there was some likelihood that a loss from the claim may have been incurred, on October 26, 2004, the trial court entered a decision in favor of the Company disallowing the plaintiffs' claim. The plaintiffs filed a notice of intent of move for a new trial, which was denied by the court on December 13, 2004. The plaintiffs then filed a notice of appeal. Effective June 7, 2005, both parties executed a settlement agreement whereby the Company paid $10,000 in exchange for a release of all claims and dismissal of the plaintiff's appeal. On October 9, 2004 a vendor filed suit to collect on an account in the amount of $32,234. The Company reached a settlement whereby it paid $5,000 for a full and broad release of all claims. A gain of $27,234 was recognized during 2005 upon payment of the $5,000. NOTE 4 - SUBSEQUENT EVENTS On July 22, 2005, Amexdrug's wholly-owned subsidiary, Allied Med, Inc., (Allied) entered into an agreement to acquire all of the shares of stock of Dermagen, Inc., a California corporation ("Dermagen") for $120,000 cash. Related escrow instructions were signed by both parties on August 5, 2005. On September 20, 2005, the parities agreed to reduce the purchase price to $70,000 cash. Allied completed its purchase of Dermagen on October 7, 2005 with Amexdrug paying $70,000 in cash to the Dermagen shareholders. Amexdrug borrowed approximately $40,000 from Nora Amin, wife of Amexdrug's CEO, which was used to complete the acquisition. Dermagen has a US-FDA registered and state FDA approved facility licensed to manufacture certain pharmaceutical products and medical devices. 8 Item 2. Management's Discussion and Analysis or Plan of Operation. (a) Plan of Operation. Not applicable. (b) Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview -------- Amexdrug Corporation is located at 8909 West Olympic Boulevard, Suite 208, Beverly Hills, California 90211. Its phone number is (310) 855-0475. Its fax number is (310) 855-0477. Its website is www.amexdrug.com. Shares of Amexdrug common stock are traded on the OTC Bulletin Board under the symbol AXRX. The President of Amexdrug has had experience working in the pharmaceutical industry for the past 20 years. Through its wholly-owned subsidiary, Allied Med, Inc., Amexdrug is engaged in the pharmaceutical wholesale business of selling brand name and generic pharmaceutical products, over-the-counter (OTC) and health and beauty products in 7 or 8 states. Amexdrug is expanding its business, and it would like to eventually sell and distribute products in all 50 states. 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. On December 31, 2001, Amexdrug acquired all of the issued and outstanding common shares of Allied Med, Inc. ("Allied") in a share exchange. Amexdrug acquired all 50,000 issued and outstanding shares of Allied common stock from its sole shareholder, Mr. Jack Amin, in exchange for 7,000,000 restricted common shares of Amexdrug and the assumption of a $100,000 promissory note, and all accrued interest thereon owed by Mr. Amin to Allied. At all times during the negotiations of the transaction, Mr. Amin was an officer, director and controlling shareholder of both companies. Consideration for the acquisition was determined through negotiations between the boards of directors of both companies and was based on Allied's past operating history and potential for future growth. 9 Allied was formed as an Oregon corporation in October 1997, to operate in the pharmaceutical wholesale business of selling brand name and generic pharmaceutical products, over-the-counter (OTC) and health and beauty products. Amexdrug has assumed the operations of Allied as its primary operations, and Amexdrug intends to build on the pharmaceutical wholesale operations of Allied. 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. On November 28, 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. The accompanying financial information includes the operations of Allied Med, Inc. for all periods presented and the operations of Amexdrug Corporation from April 25, 2000. Results of Operations --------------------- For the three months ended September 30, 2005, Amexdrug reported sales of $1,552,772, comprised entirely of income from the Allied Med, Inc.'s pharmaceutical wholesale business of selling brand name and generic pharmaceutical products, and over-the-counter (OTC) and health and beauty products. This is $374,318 more than the $1,178,454 of sales reported for the three months ended September 30, 2004. For the nine months ended September 30, 2005, sales reported by Amexdrug were $3,698,090, which is $1,716,453 less than the $5,414,543 of sales reported for the nine months ended September 30, 2004. During the three month period ended September 30, 2005, Amexdrug experienced an increase in total sales due to management's ability to focus on making sales following the settlement of litigation matters. During the nine month period ended September 30, 2005, Amexdrug experienced a decline in total sales due to increased competition and Amexdrug's search for better discount products to sell. Cost of goods sold for the three months ended September 30, 2005 was $1,443,225, an increase of $260,274 over the $1,182,951 cost of goods sold for the three months ended September 30, 2004. Cost of goods sold for the nine months ended September 30, 2005 was $3,423,682, a decrease of $1,697,875 over the $5,121,557 cost of goods sold for the nine months ended September 30, 2004. During the three months ended September 30, 2005 gross profit increased to $109,547, or 7.1% of sales, from ($4,497), or (0.4%) of sales, recorded for the three months ended September 30, 2004. For the nine months ended September 30, 2005 gross profit decreased by $18,578 to $274,408, or 7.4% of sales, from the $292,986, or 5.4% of sales, recorded for the nine months ended September 30, 2004. Amexdrug attributes its improvement in gross profit for the three months ended September 30, 2005 primarily to the sale of inventory at fairly normal profit margins during the later period compared to a significant amount of inventory sold at or below cost in the earlier three months ended September 30, 2004. 10 Selling, general and administrative expense was $72,723 for the three months ended September 30, 2005, an increase of $29,892 from the $42,831 recorded for the three months ended September 30, 2004. For the nine months ended September 30, 2005, Amexdrug reported selling, general and administrative expense as $180,400, a decrease of $26,261 from the $206,661 reported for the nine months ended September 30, 2004. The changes in selling, general and administrative expenses are attributable to changes in expenses related to the changes in sales and the changes in the Company's operations. In addition, in late May 2005 the Company began distributing products from Los Angeles, California, instead of Portland, Oregon. This has resulted in some cost savings to the Company due to lower shipping costs. During the nine months ended September 30, 2004, Amexdrug recorded a nonrecurring gain on sale of property of $165,000 in connection with Allied Med, Inc.'s transfer of ownership of eight parcels of undeveloped real estate to settle a lawsuit. No similar expenses were incurred during the nine month period ended September 30, 2005. During the nine months ended September 30, 2005, Amexdrug recorded a nonrecurring gain from litigation settlement of $17,234. This included a settlement expense of $10,000 incurred during the second quarter of 2005 and a gain of $27,234 achieved in a separate lawsuit in the first quarter of 2005. In that lawsuit, the parties reached a settlement under which Allied Med, Inc. paid a vendor $5,000 to settle a claim of $32,234. A gain of $27,234 was recognized upon payment. During the nine months ended September 30, 2004, Amexdrug reported incurring a settlement expense of $140,000 associated with the lawsuit which was eventually settled in June 2005 for a payment of $10,000. During the three months ended September 30, 2005, Amexdrug experienced net income of $20,901, a decrease of $56,011 from the $76,912 recorded for the three months ended September 30, 2004. During the nine months ended September 30, 2005, Amexdrug experienced net income of $69,024, a decrease of $363 from the $69,387 reported for the nine months ended September 30, 2004. Amexdrug's change in net profits during the three month period ended September 30, 2005 compared to the three month period ended September 30, 2004 is attributable largely to an improvement in gross profit offset by an increase in selling, general and administrative expense and a decrease in gain on sale of property. Liquidity and Capital Resources - September 30, 2005 ---------------------------------------------------- As of September 30, 2005, Amexdrug reported total current assets of $524,068, comprised mostly of cash of $251,056, accounts receivable, net of $202,996 and inventory of $64,730. Total assets as of September 30, 2005 were $567,524, which included total current assets, plus net property and equipment of $28,048 and deposits of $15,408. Amexdrug's liabilities as of September 30, 2005 consist of accounts payable of $419,130 payables to related parties of $13,140, accrued liabilities of $1,441, accrued income taxes of $33,687, current portion of capital lease obligations of $9,385, and total long-term liabilities of $26,275. 11 During the nine months ended September 30, 2005, Amexdrug's operating activities provided net cash of $226,176 compared to $77,464 in the nine months ended September 30, 2004. The primary adjustments to reconcile net income to net cash provided by operating activities during 2005 were as follows: a decrease in accounts receivable of $114,308, a decrease in inventory of $8,763, an increase in accounts payable and accrued liabilities of $53,953, depreciation expense of $15,459, a gain on settlement of $17,234, an increase in prepaid expenses of $3,686 and deferred income taxes of $5,583. Cash increased during the nine months ended September 30, 2005 by $246,363 compared to an increase during the nine months ended September 30, 2004 of $18,098. Cash from operating activities in the nine months ended September 30, 2005 increased primarily due to a decrease in accounts receivable and an increase in accounts payable and accrued liabilities. Amexdrug had $251,056 of cash at September 30, 2005. Management does not anticipate that Amexdrug will need to obtain additional financing during the next twelve months. Forward-looking statements -------------------------- This document includes various forward-looking statements with respect to future operations of Amexdrug that are subject to risks and uncertainties. Forward-looking statements include information concerning expectations of future results of operations and such statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates" or similar expressions. For those statements, Amexdrug claims the protection of the safe harbor for forward-looking statements contained in the Private Litigation Reform Act of 1995. Actual results may vary materially. Item 3. Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REPORT REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY. 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None; not applicable. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. No unregistered securities were issued by Amexdrug during the three month period ended September 30, 2005. For information concerning unregistered securities issued by Amexdrug in the three months ended March 31, 2005, see Amexdrug's quarterly report on Form 10-QSB for the three months ended March 31, 2005. Item 3. Defaults Upon Senior Securities. None; not applicable. Item 4. Submission of Matters to a Vote of Security Holders. None; not applicable. Item 5. Other Information. None; not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit Number Description ------- ----------- 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. No Current Reports on Form 8-K were filed by Amexdrug during the three months ended September 30, 2005. 13 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMEXDRUG CORPORATION Date: November 7, 2005 By: /s/ Jack Amin ------------------------------------ Jack Amin Director, President, Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer 14