-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JwjF5WDg9+Tf5gG9+aIr/sUugLG0F4P5oqkHSgQK4U6zOgQig6q00l082TUu2CWs DcRoRamU+HWEhVlCdHp7Hg== 0001021408-01-001177.txt : 20010223 0001021408-01-001177.hdr.sgml : 20010223 ACCESSION NUMBER: 0001021408-01-001177 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRUGMAX COM INC CENTRAL INDEX KEY: 0000921878 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 341755390 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-15445 FILM NUMBER: 1542980 BUSINESS ADDRESS: STREET 1: 12505 STARKEY RD STREET 2: SUITE A CITY: LARGO STATE: FL ZIP: 33773 BUSINESS PHONE: 7275330431 MAIL ADDRESS: STREET 1: 6950 BRYAN DAIRY ROAD CITY: LARGO STATE: FL ZIP: 33777 FORMER COMPANY: FORMER CONFORMED NAME: NUTRICEUTICALS COM CORP DATE OF NAME CHANGE: 19990629 FORMER COMPANY: FORMER CONFORMED NAME: NUMED SURGICAL INC DATE OF NAME CHANGE: 19940419 10QSB 1 0001.txt FORM 10-Q 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 December 31, 2000 or [_] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from ______ to ______ Commission File Number 1-15445 DRUGMAX.COM, INC., (Exact Name of Small Business Issuer as Specified in Its Charter) STATE OF NEVADA 34-1755390 --------------- ---------- (State or other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 12505 Starkey Road, Suite A, Largo, Florida 33773 ------------------------------------------------- (Address of Principal Executive Offices) (727) 533-0431 -------------- (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. [X] Yes [_] No As of February 5, 2001, there were 6,949,647 outstanding shares of the Issuer's common stock, par value $.001 per share. Transitional Small Business Disclosure Formats (check one): Yes [_] No [X] PART I - FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS. DRUGMAX.COM, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2000 March 31, 2000 ------------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 3,586,977 $ 6,020,129 Accounts receivable, net of allowance for doubtful accounts of $497,870 and $113,282 15,465,888 4,106,105 Inventory 12,390,320 1,416,241 Due from affiliates 50,349 13,564 Prepaid expenses and other current assets 885,242 126,542 ------------------- --------------- Total current assets 32,378,776 11,682,581 Property and equipment, net 648,225 693,340 Intangible assets (primarily goodwill), net 27,976,610 26,090,635 Stockholder notes receivable 100,000 -- Notes receivable -- 37,614 Deposits 8,242 9,742 ------------------- --------------- Total assets $ 61,111,853 $ 38,513,912 =================== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,093,793 $ 3,170,890 Accrued expenses 468,325 442,598 Credit lines payable 13,419,552 2,391,095 Notes payable - current portion -- 4,872 Due to affiliates 550,065 511,717 ------------------- --------------- Total current liabilities 27,531,735 6,521,172 Notes payable - long term 1,944,444 -- ------------------- --------------- Total liabilities 29,476,179 6,521,172 ------------------- --------------- Stockholders' equity: Preferred stock, $.001 par value; 2,000,000 shares authorized; no preferred shares issued or outstanding -- -- Common stock, $.001 par value; 24,000,000 shares authorized; 6,467,754 and 6,200,499 shares issued and outstanding 6,469 6,202 Additional paid-in capital 36,476,272 34,079,957 Accumulated deficit (4,847,067) (2,093,419) ------------------- --------------- Total stockholders' equity 31,635,674 31,992,740 ------------------- --------------- Total liabilities and stockholders' equity $ 61,111,853 $ 38,513,912 =================== ===============
See accompanying notes to unaudited condensed consolidated financial statements. -2- DRUGMAX.COM, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended December 31, 2000 December 31, 1999 December 31, 2000 December 31, 1999 ----------------------------------------------------------------------------------- Net revenues $ 54,697,214 $ 7,170,581 $ 122,473,558 $ 7,221,279 Cost of goods sold 53,065,833 7,112,971 118,549,908 7,139,562 ------------- ------------- ------------- -------------- Gross profit 1,631,381 57,610 3,923,650 81,717 Selling, general and administrative expenses 1,964,997 458,800 6,072,162 728,918 ------------- ------------- ------------- -------------- Operating loss (333,616) (401,190) (2,148,512) (647,201) ------------- ------------- ------------- -------------- Other income (expense): Interest income 70,773 38,981 209,462 39,539 Other Income -- (31,667) 375 (31,307) Interest expense (343,361) (32,159) (814,973) (36,575) ------------- ------------- ------------- -------------- Total other expense (272,588) (24,845) (605,136) (28,343) ------------- ------------- ------------- -------------- Net loss $ (606,204) $ (426,035) $ (2,753,648) $ (675,544) ============= ============= ============= ============== Basic and diluted loss per share $ (0.09) $ (0.10) $ (0.43) $ (0.21) ============= ============= ============= ============== Basic and diluted wieghted average number of common shares outstanding 6,419,384 4,085,185 6,404,079 3,151,616 ============= ============= ============= ==============
See accompanying notes to unaudited condensed consolidated financial statements. -3- DRUGMAX.COM, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months For the Nine Months Ended Ended December 31, 2000 December 31, 1999 ------------------- ------------------- Cash flows from operating activities: Net loss $ (2,753,648) $ (675,544) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,201,117 90,077 Impairment of intangible asset -- 31,667 Changes in operating assets and liabilities, net of effects from purchase of Valley Drug Company and Becan Distributors, Inc.: Increase in accounts receivable, net (7,881,146) (3,077,922) Increase in inventory (4,283,443) (64,287) Increase in due from affiliates (36,785) -- Increase in prepaid expenses and other current assets (528,905) (159,080) Decrease in shareholder notes receivable 70,000 -- Decrease in notes receivable 37,614 -- Increase in other assets -- (12,243) Decrease in deposits 1,500 -- Increase in accounts payable 5,962,349 2,547,156 Decrease in accrued expenses (155,165) (438,738) ----------------- ---------------- Net cash used in operating activities (7,366,512) (1,758,914) Cash flows from investing activities: Purchases of property and equipment (77,883) (32,783) Increase in intangible assets (276,466) (67,162) Cash paid for acquisitions, net (1,757,481) (2,000,000) ----------------- ---------------- Net cash used in investing activities (2,111,830) (2,099,945) Cash flows from financing activities: Net change under revolving line of credit agreements 6,814,457 61,269 Payments of long-term obligations (296,575) -- Repayment of principal on note payable (1,511,040) -- Proceeds from related party obligation -- 200,000 Payments of related party obligation -- (200,000) Proceeds from issuance of note payable 2,000,000 -- Proceeds from affiliates 38,348 -- Proceeds from issuance of common stock -- 11,898,601 ----------------- ---------------- Net cash provided by financing activities 7,045,190 11,959,870 ----------------- ---------------- Net (decrease) increase in cash and cash equivalents (2,433,152) 8,101,011 Cash and cash equivalents at beginning of period 6,020,129 99,620 ----------------- ---------------- Cash and cash equivalents at end of period $ 3,586,977 $ 8,200,631 ================= ================ Supplemental disclosure of cash flow information: Cash paid during period for interest $ 27,065 $ 49,739 ================= ================ Cash paid for income taxes $ -- $ -- ================= ================ Supplemental schedule of non-cash investing and financing activities: In November 1999, DrugMax.com, Inc, purchased all of the capital stock of Becan Distributors, Inc. for $2,000,000 in cash plus 2,000,000 shares of its common stock In conjunction with the acquisition, liabilities were assumed as follows: Fair value of assets acquired $ 15,450,992 Cash and stock issued for Becan capital stock 12,000,000 ================ Liabilities assumed $ 3,450,992 ================ In April 2000, DrugMax.com, Inc. purchased all of the capital stock of Valley Drug Company for $1,757,481 in cash, plus 217,255 shares of its common stock In conjunction with the acquisition, liabilities were assumed as follows: Fair value of assets acquired 14,059,822 Cash and stock issued for Valley capital stock 3,957,188 ================= Liabilities assumed $ 10,102,634 ================= In December 2000, DrugMax.com, Inc. issued 50,000 shares of its common stock to Utendahl Capital Partners, L.L.C, in connection with the termination agreement as lead managing underwriter for the proposed offering $ 196,875 =================
See accompanying notes to unaudited condensed consolidated financial statements. -4- DrugMax.com, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements For the Three- and Nine-Month Periods Ended December 31, 2000 and 1999. NOTE A-BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of DrugMax.com, Inc. and its wholly-owned subsidiaries: Discount Rx, Inc., Valley Drug Company, Desktop Ventures, Inc., and Desktop Media Group, Inc. and its subsidiary Desktop Corporation; and its 70% owned subsidiary VetMall, Inc. (collectively referred to as the "Company"). All intercompany balances and transactions have been eliminated. In March 2000, Becan Distributors, Inc. ("Becan"), the Company's wholly owned subsidiary, was merged into the Company. All Becan financial activity has been included as a division of the Company. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for a full year. These statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Form 10-KSB/A as of and for the year ended March 31, 2000, and as of and for the period September 8, 1998 through March 31, 1999. NOTE B - RECENTLY ISSUED AUTHORITATIVE GUIDANCE In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101, as amended, provides guidance related to revenue recognition issues based on interpretations and practices followed by the SEC. Management has determined that the adoption of SAB 101 did not have a material impact on its December 31, 2000, condensed consolidated financial statements. In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities", which will be effective for the Company on April 1, 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments embedded in other contracts, and for hedging activities. SFAS 133, as amended by SFAS 137 and 138, requires, among other things, that all derivatives be recognized in the consolidated balance sheets as either assets or liabilities and measured at fair value. The corresponding derivative gains and losses should be reported based upon the hedge relationship, if such a relationship exists. Changes in the fair value of derivatives that are not designated as hedges or that do not meet the hedge accounting criteria in SFAS 133, are required to be reported in income. The Company is in the process of quantifying the impact of SFAS 133 on its consolidated financial statements. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving Stock Compensation". FIN 44 clarifies the application of APB Opinion No. 25 regarding (a) the definition of employee for purposes of applying APB Opinion No. 25, (b) the criteria for determining whether a stock option plan qualifies as a noncompensatory plan, (c) the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions cover specific events that occur after either December 15, 1998, or January 12, 2000. Management believes that the adoption of FIN 44 will not have a material effect on the financial position or results of operations of the Company. NOTE C - ACQUISITIONS In November 1999, the Company acquired all of the outstanding shares of common stock of Becan Distributors, Inc. ("Becan"), a wholesale distributor primarily of pharmaceutical products and, to a lesser extent, over-the-counter drugs and health and beauty care products. Becan had net revenues of approximately $31.1 million and $26.5 million for its fiscal year ended March 31, 1999, and for its six months ended September 30, 1999, respectively. Results of operations for the fiscal year ended March 31, 2000, include the results of operations of Becan from November 26, 1999, through March 31, 2000. In March 2000, the Company acquired Desktop Corporation ("Desktop") and a 70% interest in VetMall, Inc. ("VetMall"). Desktop is an Internet e-commerce solutions provider specializing in the design, development and delivery of technology solutions by providing custom programming services and web hosting services. VetMall is an e-commerce pet care product sales distributor. Desktop had revenues and a net loss for the year ended March 31, 2000, of $2.4 million and ($1.9) million, respectively. Results of operations for the fiscal year ended March 31, 2000, include the results of operations of Desktop and VetMall from March 20, 2000 through March 31, 2000. On April 19, 2000, DrugMax Acquisition Corporation ("Buyer"), a wholly owned subsidiary of the Company, Valley Drug Company ("Valley"), Ronald J. Patrick ("Patrick") and Ralph A. Blundo ("Blundo" and together with Patrick, the "Sellers") signed a Merger Purchase Agreement (the "Agreement"). In connection with the merger, the Sellers received an aggregate of 226,666 shares of the Company's common stock and cash in the amount of $1.7 million. Valley loaned the Sellers $170,000, of which $100,000 is outstanding at December 31, 2000, to pay for a portion of the flow through effects of their S Corporation taxable income resulting from the sale of Valley. These interest-free notes receivable are to be repaid upon the Sellers' sale of Company common stock, which is restricted stock subject to a holding period through April 19, 2001. The Sellers were granted the right to include their shares in any registration filed by the Company until such time as their shares of the Company common stock may be sold pursuant to Rule 144 of the General Rules and Regulations promulgated under the Securities Act of 1933, as amended. In addition, the Sellers deposited 22,666 shares of the Company's common stock with an escrow agent (the "Holdback Shares"). Based on audited financial statements of Valley as of April 19, 2000, the stockholders' equity amounted to $400,667 which was $141,160 less than the threshold amount of $541,827. Therefore, 9,411 of the Holdback Shares have been returned to the Company. After consideration of the return of the Holdback Shares, a total of 217,255 shares at $10.125 per share were issued for the acquisition. The acquisition was accounted for using the purchase method of accounting and accordingly $3.6 million of goodwill was recorded. The goodwill will be amortized over fifteen (15) years. The results of operations of Valley are included in the condensed consolidated financial statements from the purchase date. The Company acquired the following assets and liabilities (net of cash received of $502) in the Valley business combination: Accounts receivable $ 3,478,637 Inventory 6,690,636 Property and equipment 67,146 Other assets 266,380 Goodwill 3,557,023 Assumption of liabilities (10,102,634) ------------ Net value of purchased assets 3,957,188 Fair value of common stock issued 2,199,707 ------------ Cash paid for acquisitions $ 1,757,481 ============ The unaudited pro forma effects of the acquisitions of Becan, Valley, Desktop and VetMall on the Company's revenues, net loss and net loss per share, had the acquisitions occurred on April 1, 1999 are as follows:
For the Nine Months For the Nine Months Ended December 31, Ended December 31, 2000 1999 -------------------------------------------- Revenues $ 125,290,557 $ 80,300,522 Net loss $ (2,891,876) $ (545,012) Basic and diluted net loss per share $ (0.45) $ (0.10)
NOTE D - IMPAIRMENT OF LONG-LIVED ASSETS As events and circumstances change, the Company evaluates the recoverability of the net carrying value of its property and equipment and its intangible assets by comparing the carrying values to the estimated future undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment write-down would be the difference between the carrying amounts and the fair value of these assets. A loss on impairment would be recognized by a charge to earnings. Management has reviewed the Company's long-lived assets for impairment and has concluded that there are no indications of impairment as of December 31, 2000. NOTE E - INCOME TAXES The Company has adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes. Under SFAS 109, the Company uses the asset and liability method which recognizes the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the consolidated financial statements and as measured by the provisions of enacted tax laws. The Company has an estimated gross deferred tax asset as of December 31, 2000, which represents the potential future tax benefit associated with its operating losses to date. Management has evaluated the available evidence regarding the Company's future taxable income and other possible sources of realization of deferred tax assets. As a result of the evaluation, a 100 percent valuation allowance has been established by management against the gross deferred tax asset, as it is more likely than not that the deferred tax asset will not be realized. The Company continually reviews the adequacy of the valuation allowance and will recognize deferred tax asset benefits only when a reassessment indicates that it is more likely than not that the benefits will be realized. NOTE F - COMMITMENTS AND CONTINGENCIES On February 15, 2000, the Company entered into an Agreement with Purchasepro.com, Inc. ("PPRO") wherein PPRO will design and develop a "sell-side" private e-marketplace labeled to include the marks and logos of the Company and powered by PPRO. The custom e-marketplace will be utilized within the Company's web site. PPRO's development and unlimited buyer license fee for private e-marketplace will be issued in the form of 200,000 of the Company's warrants and revenue sharing will take place on transactions and subscriptions resulting from the Company's marketplace. The warrants shall be exercisable, in whole or in part, during the term commencing on the date of project completion (the "Initial Exercise Date"), and ending at 5:00 p.m., Pacific Standard Time, six months after the date of completion (the "Exercise Period"), and shall be void thereafter. In consideration for the hosting, archiving, maintenance and recurring customization of the private e-marketplace, the Company will guarantee PPRO at least $80,000 in annual transaction revenue. The Company plans to use the sell-side e-marketplace to primarily sell pharmaceuticals and health supplements as well as the value added services from PPRO's preferred providers. On April 19, 2000, in conjunction with the Valley acquisition, the Company agreed to become an additional guarantor of the outstanding bank indebtedness of Valley. Valley's indebtedness with National City Bank consisted of a revolving line of credit and a term loan which were also personally guaranteed by the former owners of Valley. On October 24, 2000, the Company entered into a new credit facility with Mellon Bank N.A. ("Mellon"). The line of credit and term loan with National City Bank were paid in full with the proceeds from the Mellon credit facility. On July 7, 2000, the Company entered into a consulting agreement with Marc Mazur Consulting, Inc. ("Mazur"). Upon satisfaction by Mazur of its obligations under the agreement, the Company was to grant to Mazur warrants to purchase 200,000 shares of the Company's common stock with an exercise price of $10.00 per share. On December 31, 2000, the consulting agreement expired without any warrants being issued to Mazur. On August 10, 2000, the Company entered into a Consulting Agreement with Stephen M. Watters ("Watters") for an annual fee of $100,000, payable monthly, for a term of thirty-six months, terminating August 10, 2003. The Consulting Agreement terminates the Employment Agreement by and between the Company and Watters dated April 15, 1999. On September 13, 2000, the Company entered into a letter of intent to purchase substantially all of the assets of Penner & Welsch, Inc. ("P&W"), a wholesale distributor of pharmaceuticals, over-the-counter products and health and beauty care products, headquartered near New Orleans, Louisiana. Also on that date, P&W filed a voluntary petition for Chapter 11 relief under the United States Bankruptcy Code. The case is pending in the United States Bankruptcy Court for the Eastern District of Louisiana. Pursuant to the letter of intent, the Company will work with P&W, on an exclusive basis, to formulate a bankruptcy reorganization plan, pursuant to which the Company offered to purchase, for $750,000 worth of restricted DrugMax common stock, all of P&W's assets and/or equity, without its liabilities, while keeping P&W's customers in continuous service. While the Company expects that any plan of reorganization filed by P&W will conform with the terms of the Company's letter of intent, it can not guarantee that when filed, such plan of reorganization will in fact conform to the terms of the Company's letter of intent, nor can the Company guarantee that the Bankruptcy Court will confirm a bankruptcy reorganization plan that is acceptable to the Company or that the Bankruptcy Court will approve the transactions contemplated by the letter of intent. In addition, even if the contemplated transactions are completed, the Company can not guarantee that it will successfully assimilate the additional personnel, operations, acquired technology and products of P&W into the Company's business, or retain key personnel and customers. In addition, on September 13, 2000, the Company entered into a management agreement with P&W, pursuant to which it will manage the day-to-day operations of P&W, in exchange for a management fee equal to a percentage of the gross revenues of P&W each month. Also on September 13, 2000, the Company entered into a financing and security agreement with P&W, pursuant to which the Company agreed to provide P&W with a secured revolving line of credit for the sole purpose of purchasing inventory from the Company, up to an aggregate amount of $2.5 million as may be requested by P&W and as may be allowed by the Company in its sole discretion. The line of credit is secured by a second lien on substantially all of the assets of P&W, second only to P&W's primary banking facility, as well as real estate owned by an affiliate of P&W. On October 31, 2000, the Bankruptcy Court entered a final order approving the management agreement and financing and security agreement. On October 24, 2000, the Company obtained from Mellon a line of credit and a $2 million term loan to refinance its prior bank indebtedness, to provide additional working capital and for other general corporate purposes. The new line of credit enables the Company to borrow a maximum of $15 million, with borrowings limited to 85% of eligible accounts receivable and 65% of eligible inventory. The term loan is payable in monthly principal installments of $55,556 commencing on December 1, 2000, and in one final payment of the remaining principal balance plus all accrued and unpaid interest thereon on October 24, 2003. The term loan bears interest (10.25% as of December 31, 2000), payable monthly at 0.75% per annum over the base rate, which is the higher of Mellon's prime rate or the effective federal funds rate plus 0.50% per annum. The revolving credit facility bears interest (9.75% as of December 31, 2000) at the floating rate of 0.25% per annum above the base rate. After the Company delivers its audited financial statements for the fiscal year ending March 31, 2001 to Mellon, the applicable margin over the base rate may change on an annual basis depending on the ratio of funded debt to EBITDA. At the Company's option, it may instead pay interest at a LIBOR rate plus an applicable margin, which also varies on the ratio of funded debt to EBITDA. Proceeds obtained from the Mellon facility were used to repay the Company's prior credit facilities with Merrill Lynch Financial and National City Bank, aggregating approximately $8.9 million. Approximately $2,023,000 was available for borrowing at December 31, 2000. The outstanding balances were approximately $12,423,000 and $1,944,400 on the revolving line of credit and term loan, respectively, at December 31, 2000. The credit facility imposes financial covenants including, net worth, net income (loss) and working capital ratios on a quarterly basis. At December 31, 2000, the Company was not in compliance with the financial covenants since the borrowers, namely, DrugMax.com Inc. and Valley Drug Company did not meet the net income (loss) covenant as outlined within the loan and security agreement between DrugMax.com Inc. and Valley Drug Company and Mellon dated October 24, 2000. On February 13, 2001, Mellon provided an amendment to the net income (loss) covenant for the quarter ended December 31, 2000. This amendment only modifies the net income (loss) covenant for the period ended December 31, 2000, subsequent to which time the original net income (loss) covenants within the loan and security agreement will remain in effect. On November 6, 2000, the Company extended its $1,000,000 line of credit agreement with First Community Bank of America for an additional period of six months with a due date of April 1, 2001. Terms and conditions of the agreement provide for interest to be charged at 1% over the rate of interest (7% as of December 31, 2000) paid on the Company's $1,000,000 certificate of deposit used to collateralize the loan facility, in accordance with the Security Agreement dated March 17, 2000. The certificate of deposit matures on March 15, 2001. The total balance outstanding on this line of credit was approximately $996,000 as of December 31, 2000. NOTE G - SEGMENT INFORMATION The Company is organized into two strategic business units which have separate management teams and infrastructures that offer different products and services. Each segment requires different employee skills, technology, and marketing strategies. The wholesale distribution segment includes traditional wholesale, as well as internet-based distribution operations. The computer software development segment includes the design, development and delivery of technology solutions through custom programming services and web hosting services. The Company evaluates the performance of each segment based upon profit or loss from operations before income taxes and non-recurring gains or losses. There has been no change in the basis of segmentation or in the measurement of segment losses since the Company's last annual report on Form 10-KSB/A. Summarized financial information by business segment is as follows:
For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended December 31, December 31, December 31, December 31, 2000 1999 2000 1999 --------------- --------------- -------------- -------------- Revenues from external customers Distribution $54,697,214 $ 7,170,581 $122,331,871 $7,221,279 Software Development - - 141,687 - -------------- -------------- ------------ ------------- Total $54,697,214 $ 7,170,581 $122,473,558 $7,221,279 ============== ============== ============= ============= Segment income (loss) from operations Distribution $ 108,215 $ (401,190) $(512,471) $ (647,201) Software Development (441,831) - (1,636,041) - -------------- -------------- ------------- ------------- Total $ (333,616) $ (401,190) $(2,148,512) $ (647,201) ============== ============== ============= ============= December 31, March 31, 2000 2000 -------------- -------------- Assets Distribution $60,450,940 $38,408,017 Software Development 660,913 105,895 -------------- -------------- Total $61,111,853 $38,513,912 ============== ==============
There were no inter-segment sales or transfers during either the three-or nine-month periods ended December 31, 2000 or 1999. Operating loss by business segment excludes interest income, interest expense, and other income and expenses. NOTE H - SIGNIFICANT EVENTS In August 2000, the Company established its online trade exchange, DrugMaxTrading.com, which offers one of the first business-to-business online trade exchanges for pharmaceuticals, over-the-counter products, health and beauty care products, and nutritional supplements dedicated exclusively to manufacturers, distributors, wholesalers and retailers in the pharmaceutical and over-the-counter product markets. DrugMaxTrading.com allows the Company's trade exchange members to lower their overall costs of doing business while providing them with wider market access and competitively priced products. Capitalizing on the efficiencies of the Internet and its strategic alliances, DrugMaxTrading.com aggregates a variety of product and market participant information, and, in doing so, facilitates the execution of mutually beneficial online transactions among trade exchange members in an open-market format. No significant revenues have been generated from the DrugMaxTrading.com site at December 31, 2000. On or about September 19, 2000, the Company informed the selling shareholders of Desktop that 20,000 shares held under escrow, pursuant to the acquisition agreement, would not be released as contemplated in the initial purchase price. Upon final resolution of this matter and cancellation of these shares, management anticipates reducing the purchased goodwill by approximately $329,000. On November 1, 2000, the Company filed a registration statement with the Securities and Exchange Commission for a proposed secondary offering of 2,000,000 shares of the Company's common stock. Of the 2,000,000 offered shares, the Company will offer 1,600,000 shares and certain selling stockholders will offer 400,000 shares. The Company will not receive any proceeds from the sale of shares by the selling stockholders. The Company expects to use the net proceeds from this offering primarily for working capital, as well as future strategic acquisitions, business expansion and marketing efforts. There can be no assurance as to the completion of the secondary offering. In connection with the proposed offering, the Company entered into an agreement with Utendahl Capital Partners, L.P. ("Utendahl"), pursuant to which Utendahl was to act as lead managing underwriter of the proposed offering. However, On December 29, 2000, the Company and Utendahl agreed to terminate their agreement. In consideration of the termination, the mutual release executed between Utendahl and the Company and the services provided by Utendahl through the date of termination, the Company issued 50,000 shares of its common stock with a fair market value of $3.9375 per share to Utendahl. NOTE I - SUBSEQUENT EVENTS On or about January 15, 2001, the Company entered into a Letter of Intent with Southwest Securities, Inc. ("Southwest"), pursuant to which Southwest proposed to organize, lead and manage a group of underwriters to represent the Company for the proposed secondary offering. However, the Company remains unable to make any assurances as to the successful completion of the proposed secondary offering. NOTE J - LOSS PER SHARE Basic net loss per common share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is calculated by dividing loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method. The Company does not have any dilutive shares outstanding as of December 31, 2000 and 1999, respectively. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS. The following management discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes presented elsewhere in this Form 10-QSB. Certain oral statements made by management from time to time and certain statements contained herein that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements, including those in Management's Discussion and Analysis or Plan of Operations, are statements regarding the intent, belief or current expectations, estimates or projections of the Company, its Directors or its Officers about the Company and the industry in which it operates, and assumptions made by management, and include among other items, (a) the Company's strategies regarding growth and business expansion, including future acquisitions; (b) the Company's financing plans; (c) trends affecting the Company's financial condition or results of operations; (d) the Company's ability to continue to control costs and to meet its liquidity and other financing needs; (e) the declaration and payment of dividends; (f) the Company's use of proceeds from the currently contemplated equity offering, and (g) the Company's ability to respond to changes in customer demand and regulations. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that the anticipated results will occur. When used in this report, the words "expects," "anticipates," intends," "plans," "believes," "seeks," "estimates," and similar expressions are generally intended to identify forward-looking statements. Important factors that could cause the actual results to differ materially from those in the forward-looking statements include, among other items, (i) changes in the regulatory and general economic environment related to the health care industry; (ii) conditions in the capital markets, including the interest rate environment and the availability of capital; (iii) changes in the competitive marketplace that could affect the Company's revenue and/or cost bases, such as increased competition, lack of qualified marketing, management or other personnel, and increased labor and inventory costs; (iv) changes in technology or customer requirements, which could render the Company's technologies noncompetitive or obsolete; (v) new product introductions, product sales mix and the geographic mix of sales and (vi) our customers' willingness to accept our Internet platform. Further information relating to factors that could cause actual results to differ from those anticipated is included but not limited to information under the headings "Business" and "Risk Factors" in the Company's Form 10-KSB/A for the year ended March 31, 2000 and the Company's Registration Statement on Form SB-2, as well as information contained in this Form 10-QSB. The Company disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Overview DrugMax.com, Inc. is primarily an e-commerce business providing: (1) the wholesale distribution of pharmaceuticals, over-the-counter products, health and beauty care products, veterinary products, and nutritional supplements and (2) one of the first business-to-business online trade exchanges for the same products, dedicated exclusively to manufacturers, distributors, wholesalers and retailers in the pharmaceuticals and over-the-counter product markets. The Company will continue to derive a significant portion of revenue from its traditional "brick and mortar" full-line wholesale distribution business. The Company utilizes its competitive advantage of being one of the early entrants into the Internet business-to-business pharmaceutical market, leveraging its existing infrastructure, technology, relationships, marketing and management resources. The Company believes that the combination of its traditional wholesale distribution business with both its online wholesale distribution business and its e-commerce trade exchange provides the "click and mortar" combination that will allow it to aggressively market and distribute its products and services. In general, the Company distributes its products primarily to independent pharmacies in the continental United States, and secondarily to small and medium-sized pharmacy chains, alternate care facilities and other wholesalers and retailers. Since the early December 1999 launch of its website, www.drugmax.com, over 9,000 independent pharmacies, small regional pharmacy chains, wholesalers and distributors have registered to purchase products through the Company's web site. The Company believes it has been successful in attracting potential customers to its web site because it has designed its web site as an online source for a select group of products, typically higher cost and margin products, which make up a large percentage of the Company's targeted customers sales. In addition, the Company maintains an inventory of over 20,000 stock keeping units, and continues to serve its customers as a primary, full-line wholesale distributor through a combination of its e-commerce venues and traditional distribution methods. The Company's online trade exchange, DrugMaxTrading.com, established in August 2000, offers one of the first business-to-business online trade exchanges for pharmaceuticals, over-the-counter products, health and beauty care products, and nutritional supplements dedicated exclusively to manufacturers, distributors, wholesalers and retailers in the pharmaceutical and over-the-counter product markets. DrugMaxTrading.com allows the Company's trade exchange members to lower their overall costs of doing business while providing them with wider market access and competitively priced products. The DrugMaxTrading.com concept capitalizes on the efficiencies of the Internet and its strategic alliances, offering a variety of product and market participant information, and, in doing so, facilitates the execution of mutually beneficial online transactions among trade exchange members in an open-market format. Results of Operations Three- and Nine-Month Periods Ended December 31, 2000 and 1999. Revenues. The Company generated revenues of $54.7 million and $122.5 million, respectively, for the three- and nine-month periods ended December 31, 2000, compared to $7.2 million for both the three- and nine-month periods ended December 31, 1999. The increase is primarily attributable to the acquisitions of Becan in November 1999, Desktop and VetMall in March 2000, and Valley in April 2000, as well as additional organic growth within each respective acquired operation. Gross Profit. The Company secured gross profits of $1.6 million and $3.9 million, respectively, for the three- and nine-month periods ended December 31, 2000, compared to $57,610 and $81,717, respectively, for the three- and nine-month periods ended December 31, 1999. Gross margins for the three- and nine-month periods ended December 31, 2000 were 3.0% and 3.2%, respectively, compared to .8% and 1.1% for the three- and nine-month periods ended December 31, 1999, respectively. The increase in gross profit is attributable to the acquisitions of Becan in November 1999, Desktop and VetMall in March 2000, and Valley in April 2000. Selling, general and administrative expenses. The Company incurred selling, general and administrative expenses of $2.0 million and $6.1 million for the three- and nine-month periods ended December 31, 2000, respectively, compared to $458,800 and $728,918 for the three- and nine-month periods ended December 31, 1999, respectively. These costs typically include various administrative, sales, marketing and other indirect operating costs. The increase between periods was primarily due to increased payroll, amortization of goodwill associated with the acquisitions of Becan, Desktop, VetMall and Valley, and additional advertising and promotional expenses Interest expense. Interest expense was $343,361 and $814,973, respectively, for the three- and nine-month periods ended December 31, 2000, compared to $32,159 and $36,575, respectively, for the three- and nine-month periods ended December 31, 1999. The increase between periods was a result of borrowings under the Company's credit facilities for the financing of additional working capital needs associated with the various acquisitions made by the Company, and the outstanding debt assumed with the Valley acquisition. On October 24, 2000, the Company obtained a new revolving line of credit and term loan with Mellon, satisfying the prior Merrill Lynch and National City credit facilities. Interest expense in November 2000, and forward, will primarily be related to the new Mellon credit facilities. Net loss per share. The net loss per share for the quarter ended December 31, 2000, amounted to $(.09) per share compared to $(.10) per share and $(.24) per share for the quarters ended September 30, 2000 and June 30, 2000, respectively, an improvement of $.01 per share and $.15 per share, respectively. Income Tax. The Company has no income tax provision for the periods presented due to its net operating losses. These net operating losses may be carried forward for up to 15 years to offset future taxable income. Inflation; Seasonality. Management believes that there was no material effect on operations or the financial condition of the Company as a result of inflation for the three or nine months ended December 31, 2000. Management also believes that its business is not seasonal; however, significant promotional activities can have a direct impact on sales volume in any given quarter. Financial Condition, Liquidity and Capital Resources The Company's operations produced positive cash flow (defined as net income (loss) plus non-cash expenses) for the quarter ended December 31, 2000. The significant improvement from prior periods was attributable to growth of the Company's core business, control over corporate expenditures and management's ability to maintain acceptable gross margins. The Company had previously financed its operations primarily through proceeds received from a public offering in November 1999. Net proceeds from that offering were approximately $11.9 million. The Company has working capital, and cash and cash equivalents, of $4.8 million and $3.6 million at December 31, 2000, respectively. Net cash used in operating activities was $7,366,512 for the nine months ended December 31, 2000. The usage of cash is primarily attributable to an increase in accounts receivable and inventory as a result of increased sales associated with the Becan and Valley acquisitions, increases in due from affiliated companies, and prepaid expenses and other current assets, and a decrease in accrued expenses, partially offset by an increase in accounts payable and a decrease in notes receivable. Net cash used in investing activities of $2,111,830 for the nine months ended December 31, 2000, primarily represents the cash paid for the acquisition of Valley and the deferred financing costs associated with the new credit facility with Mellon Bank N.A ("Mellon"). Net cash provided by financing activities was $7,045,190 for the nine months ended December 31, 2000, representing the net change in the Company's revolving line of credit agreements, proceeds from the new Mellon term loan and proceeds from affiliates, which was offset by repayments of notes payable and long-term obligations. On March 17, 2000, the Company signed a $1,000,000 line of credit agreement with First Community Bank of America. The total balance outstanding on this line of credit was approximately $996,000 as of December 31, 2000. Terms of the agreement provide for interest to be charged at 1% over the rate of interest (7% as of December 31, 2000) paid on the Company's $1,000,000 certificate of deposit held by First Community Bank of America and used to collateralize the loan facility. The balance on the line of credit became due on October 1, 2000. On November 6, 2000, documents were executed to extend the line of credit agreement for an additional six-month period with a due date of April 1, 2001. The certificate of deposit matures on March 15, 2001. Additionally, in March 2000, the Company entered into a line of credit with Merrill Lynch. The line of credit enabled the Company to borrow a maximum of $5,000,000 with borrowings limited to 80% of eligible accounts receivable and 50% of inventory (capped at $1,000,000). The Merrill Lynch line of credit was paid in full on October 24, 2000, with proceeds from the new Mellon credit facility. As part of the acquisition of Valley, the Company agreed to become an additional guarantor of the National City Bank revolving line of credit and term loan indebtedness of Valley. In October 2000, the National City Bank was paid in full with proceeds from the new Mellon credit facility. On October 24, 2000, the Company obtained from Mellon Bank, N.A. ("Mellon") a line of credit and a $2.0 million term loan to refinance its prior bank indebtedness, to provide additional working capital and for other general corporate purposes. The new line of credit enables the Company to borrow a maximum of $15 million, with borrowings limited to 85% of eligible accounts receivable and 65% of eligible inventory. The term loan is payable over a 36-month period with interest at 0.75% per annum over the base rate, which is the higher of Mellon's prime rate or the effective federal funds rate plus 0.50% per annum. The revolving credit facility will bear interest at the floating rate of 0.25% per annum above the base rate. After the Company delivers its audited financial statements for the fiscal year ending March 31, 2001, to Mellon, the applicable margin over the base rate may change on an annual basis depending on the ratio of funded debt to EBITDA. At the Company's option, it may instead pay interest at a LIBOR rate plus an applicable margin, which also varies on the ratio of funded debt to EBITDA. At the Company's option, it may instead pay interest at a LIBOR rate plus an applicable margin, which also varies on the ratio of funded debt to EBITDA. The Company used the proceeds from this credit facility to repay its prior credit facilities. The outstanding balances on the revolving line of credit and term loan were $12,423,000 and $1,944,400, respectively as of December 31, 2000. The credit facility imposes financial covenants including, net worth, net income (loss) and working capital ratios on a quarterly basis. At December 31, 2000, the Company was not in compliance with the financial covenants since the borrowers, namely, DrugMax.com Inc. and Valley Drug Company did not meet the net income (loss) covenant as outlined within the loan and security agreement between DrugMax.com Inc. and Valley Drug Company and Mellon dated October 24, 2000. On February 13, 2001, Mellon provided an amendment to the net income (loss) covenant for the quarter ended December 31, 2000. This amendment only modifies the net income (loss) covenant for the period ended December 31, 2000, subsequent to which time the original net income (loss) covenants within the loan and security agreement will remain in effect. On November 1, 2000, the Company filed a registration statement with the Securities and Exchange Commission for a proposed secondary offering of 2,000,000 shares of the Company's common stock. Of the 2,000,000 offered shares, the Company will offer 1,6000,000 shares and the certain selling stockholders will offer 400,000 shares. The Company will not receive any proceeds from the sale of shares by the selling stockholders. The Company expects to use the net proceeds from this offering primarily for working capital, as well as future strategic acquisitions, business expansion and marketing efforts. There can be no assurance as to the completion of the secondary offering. In connection with the proposed offering, the Company entered into an agreement with Utendahl Capital Partners, L.P. ("Utendahl"), pursuant to which Utendahl was to act as lead managing underwriter of the proposed offering. However, On December 29, 2000, the Company and Utendahl agreed to terminate their agreement. In consideration of the termination, the mutual release executed between Utendahl and the Company and the services provided by Utendahl through the date of termination, the Company issued 50,000 shares of its common stock with a fair market value of $3.9375 per share to Utendahl. On or about January 15, 2001, the Company entered into a Letter of Intent with Southwest Securities, Inc. ("Southwest"), pursuant to which Southwest proposed to organize, lead and manage a group of underwriters to represent the Company for the proposed secondary offering. However, the Company remains unable to make any assurances as to the successful completion of the proposed secondary offering. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. From time to time, the Company may become involved in litigation arising in the ordinary course of its business. The Company is not presently subject to any material legal proceedings. Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. During the past three years, the Company has issued unregistered securities to a limited number of persons as described below. The following information regarding the Company's shares of common stock has been adjusted to give effect to (i) the one-for-fifty reverse split of the Company's common stock effected in March 1999, (ii) the two-for-one stock split in the form of a stock dividend effected in April 1999, and (iii) a one-for-one reverse stock split in October 1999. (1) On March 18, 1999, the Company issued an aggregate of 2,400,000 shares of common stock to 14 investors in connection with the merger of Nutricueticals.com Corporation, a Florida corporation, with and into the Company. (2) On March 31, 1999, the Company issued an aggregate of 100,000 shares of common stock, to one investor in connection with the acquisition of Healthseek.com Corporation, a Massachusetts corporation. (3) On August 16, 1999, the Company issued an aggregate of 20,000 shares of common stock to Lyntren Communications, Inc. in connection with the acquisition of the Nutriceuticals.com domain name. (4) On November 26, 1999, the Company issued an aggregate of 2,000,000 shares of common stock to Dynamic Health Products, a Florida corporation, in connection with the acquisition of Becan Distributors, Inc. (5) On March 20, 2000, the Company issued an aggregate of 50,000 shares of common stock in connection with the acquisition of Desktop Corporation. (6) On March 20, 2000, the Company issued an aggregate of 49,985 shares of common stock to retire debt associated with the acquisition of Desktop Corporation. (7) On March 20, 2000, the Company issued 25,000 shares of common stock in connection with the acquisition of VetMall. (8) On April 19, 2000, the Company issued 217,225 shares of common stock in connection with the acquisition of Valley Drug Company. (9) On December 29, 2000, the Company issued 50,000 shares of common stock in connection with its Termination Agreement with Utendahl Capital Partners, L.P. None of the foregoing transactions involved any underwriter, underwriting discounts or commissions or any public offering, and the Company believes that each transaction was exempt from the registration requirements or the Securities Act by virtue of Section 4(2) thereof. The recipients in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients had adequate access to information about the Company. Item 3. - DEFAULTS UPON SENIOR SECURITIES Not applicable Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None Item 5. - OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. The following exhibits are filed with this report: 2.1 Agreement and Plan of Merger by and between NuMed Surgical, Inc. and Nutriceuticals.com Corporation, dated as of January 15, 1999. (1) 2.2 Agreement and Plan of Reorganization between the Registrant and Eric Egnet dated March 31, 1999. (1) 2.3 Agreement and Plan of Reorganization dated September 8, 1999 by and between Nutriceuticals.com Corporation and Dynamic Health Products, Inc. (2) 2.4 Agreement and Plan of Reorganization between DrugMax.com, Inc., Jimmy L. Fagala, K. Sterling Miller, and HCT Capital Corp. dated as of March 20, 2000. (3) 2.5 Stock Purchase Agreement between DrugMax.com, Inc. and W.A. Butler Company dated as of March 20, 2000. (3) 2.6 Merger Purchase Agreement between DrugMax.com, Inc., DrugMax Acquisition Corporation, and Valley Drug Company, Ronald J. Patrick and Ralph A. Blundo dated as of April 19, 2000. (4) 2.7 Letter of Intent to acquire Penner & Welsch, Inc. by Discount RX, Inc., a wholly-owned subsidiary of DrugMax.com, Inc., dated September 13, 2000. (10) 3.1 Articles of Incorporation of NuMed Surgical, Inc., filed October 18, 1993. (1) 3.2 Articles of Amendment to the Articles of Incorporation of NuMed Surgical, Inc., filed March 18, 1999. (1) 3.3 Articles of Merger of NuMed Surgical, Inc. and Nutriceuticals.com Corporation, filed March 18, 1999. (1) 3.4 Certificate of Decrease in Number of Authorized Shares of Common Stock of Nutriceuticals.com Corporation, filed October 29, 1999. (5) 3.5 Articles of Amendment to Articles of Incorporation of Nutriceuticals.com Corporation, filed January 11, 2000. (8) 3.6 Articles and Plan of Merger of Becan Distributors, Inc. and DrugMax.com, Inc., filed March 29, 2000. (8) 3.7 Amended and Restated Bylaws, dated November 11, 1999. (5) 4.2 Specimen of Stock Certificate. (8) 10.1 Employment Agreement by and between Nutriceuticals.com Corporation and William L. LaGamba dated January 1, 2000. (7) 10.3 Employment Agreement by and between Valley Drug Company and Ronald J. Patrick dated April 19, 2000. (8) 10.4 Employment Agreement by and between Valley Drug Company and Ralph A. Blundo dated April 19, 2000. (8) 10.5 Consulting Agreement by and between Nutriceuticals.com Corporation and Jugal K. Taneja, dated as of April 1, 1999. (1) 10.6 Loan and Security Agreement in favor of Merrill Lynch Business Financial Services, Inc. from the Company dated February 15, 2000. (8) 10.7 Security Agreement in favor of First Community Bank of America from the Company dated March 17, 2000. (8) 10.8 Consulting Agreement by and between DrugMax.com, Inc. and Stephen M. Watters dated August 10, 2000. (9) 10.9 Loan and Security Agreement among DrugMax.com, Inc. and Valley Drug Company and Mellon Bank, N.A., dated October 24, 2000. (9) 10.10 Note in favor of First Community Bank of America from the Company dated November 6, 2000. (10) 10.11 Management Agreement between Discount RX and Penner & Welsch, Inc. dated September 13, 2000. (10) 21.0 Subsidiaries of DrugMax.com, Inc. (9) 27.1 Financial Data Schedule (for SEC use only). * 99.1 DrugMax.com, Inc.1999 Incentive and Non-Statutory Stock Option Plan. (8) ___________________________ * Filed herewith. (1) Incorporated by reference to the Company's Registration Statement on Form SB-2, filed June 29, 1999, File Number 0-24362, as amended. (2) Incorporated by reference to Amendment No. 1 to the Company's Registration Statement on Form SB-2, filed on September 13, 1999, File No. 0-24362. (3) Incorporated by reference to the Company's Report on Form 8-K, filed April 6, 2000, File Number 0-24362. (4) Incorporated by reference to the Company's Report on Form 8-K, filed May 3, 2000, File Number 0-24362. (5) Incorporated by reference to Amendment No. 2 to the Company's Registration Statement on Form SB-2, filed on November 12, 1999, File No. 0-24362. (6) Incorporated by reference to the Company's Report on Form 8-K, filed February 8, 2000, File No. 0-24362. (7) Incorporated by reference to the Company's Form 10-KSB, filed June 29, 2000, File No. 0-24362. (8) Incorporated by reference to the Company's Form 10-KSB/A, filed July 14, 2000, File No. 0-24362. (9) Incorporated by reference to the Company's Registration Statement on Form SB-2, filed on November 1, 2000. (10) Incorporated by reference to the Company's Form 10-QSB, filed November 14, 2000, File No. 1-15445. (b) Reports on Form 8-K. - -------------------------- During the three months ended December 31, 2000, the Company filed no reports on Form 8-K. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DrugMax.com, Inc. Date: February 14, 2001 By: /s/ Jugal K. Taneja --------------------------- ------------------------------- Jugal K. Taneja Chief Executive Officer Date: February 14, 2001 By: /s/ Ronald J. Patrick --------------------------- ------------------------------- Ronald J. Patrick Chief Financial Officer, Vice President of Finance, Secretary and Treasurer EX-27.1 2 0002.txt FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the 10-QSB of DrugMax.com, Inc. for the 9 months ended December 31, 2000 and is qualified in its entirety by reference to such financial statements. 9-MOS MAR-31-2001 DEC-31-2000 3,586,977 0 15,963,758 497,870 12,390,320 29,020,443 866,753 218,528 61,111,853 27,531,735 0 0 0 6,469 31,629,205 61,111,853 122,473,558 122,473,558 118,549,908 118,549,908 5,862,325 0 814,973 (2,753,648) 0 (2,753,648) 0 0 0 (2,753,648) (0.43) (0.43)
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