AXRX AmexDrug Corporation (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q
(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission file number 0-7473

 NEVADA 95-2251025
 ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
 incorporation or organization) identification No.)

Registrant's telephone number: (310) 855-0475

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ]
(Do not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 26, 2010, there were 8,457,809 shares of the issuer's common stock issued and outstanding, and an additional 12,672 shares held as treasury shares.

AMEXDRUG CORPORATION
FORM 10-Q

TABLE OF CONTENTS

 PART I - FINANCIAL INFORMATION

 Page
 ----
Item 1. Financial Statements (Unaudited)....................................3

 Consolidated Balance Sheets -- As of September 30, 2010
 (Unaudited) and December 31, 2009 (Audited).......................5

 Consolidated Statements of Operations for the
 Three and Nine Months Ended September 30, 2010
 and 2009 (Unaudited)..............................................6

 Consolidated Statements of Cash Flows for the Nine Months
 Ended September 30, 2010 and 2009 (Unaudited).....................7

 Notes to Consolidated Financial Statements (Unaudited)..............8

Item 2. Management's Discussion and Analysis of Financial
 Condition and Results of Operations...............................9

Item 3. Quantitative and Qualitative Disclosures About Market Risk.........14

Item 4. Controls and Procedures............................................14

 PART II - OTHER INFORMATION

Item 1. Legal Proceedings..................................................15

Item 1A. Risk Factors.......................................................15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........15

Item 3. Defaults Upon Senior Securities....................................15

Item 4. (Removed and Reserved).............................................15

Item 5. Other Information..................................................15

Item 6. Exhibits...........................................................15

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The consolidated balance sheets of Amexdrug Corporation, a Nevada corporation, and subsidiaries as of September 30, 2010 (unaudited) and December 31, 2009 (audited), the related unaudited consolidated statements of operations for the three and nine month periods ended September 30, 2010 and September 30, 2009, the related unaudited consolidated statements of cash flows for the nine month periods ended September 30, 2010 and the notes to the unaudited consolidated financial statements follow. The consolidated financial statements have been prepared by Amexdrug's management, and are condensed; therefore they do not include all information and notes to the financial statements necessary for a complete presentation of the financial position, results of operations and cash flows, in conformity with accounting principles generally accepted in the United States of America, and should be read in conjunction with the annual consolidated financial statements included in Amexdrug's annual report on Form 10-K for the year ended December 31, 2009.

The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations and financial position of Amexdrug Corporation consolidated with Allied Med, Inc., Dermagen, Inc., and BioRx Pharmaceuticals, Inc., its wholly owned subsidiaries, and all such adjustments are of a normal recurring nature. The names "Amexdrug", "we", "our" and "us" used in this report refer to Amexdrug Corporation.

Operating results for the quarter ended September 30, 2010, are not necessarily indicative of the results that can be expected for the year ending December 31, 2010.

Amexdrug Corporation and Subsidiaries

index to financial statements

 Page
 ----

Consolidated Balance Sheets - September 30, 2010
 (Unaudited) and December 31, 2009 (Audited)........................5

Consolidated Statements of Operations (Unaudited)
 for the Three and Nine Months Ended September 30,
 2010 and 2009......................................................6

Consolidated Statements of Cash Flows (Unaudited)
 for the Nine Months Ended September 30, 2010 and 2009..............7

Notes to Consolidated Financial Statements...........................8

AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 September 30, December 31,
 2010 2009
 -------------- --------------
 (Unaudited)
 Assets

Current Assets
 Cash and cash equivalents $ 303,362 $ 121,182
 Investment 7,100 7,490
 Accounts receivable, net of allowance
 of $30,853 and $32,253, respectively 456,019 430,184
 Inventory 328,633 157,810
 Deferred tax asset 26,426 13,778
 Other receivable 4,165 18,274
 Advances officer 3,704 1,057
 -------------- --------------

 Total Current Assets 1,129,409 749,775
 -------------- --------------

Property and Equipment, at cost
 Office and computer equipment 197,296 193,257
 Leasehold improvements 15,700 15,700
 -------------- --------------
 212,996 208,957
 Less accumulated depreciation (198,286) (191,426)
 -------------- --------------

 Net Property and Equipment 14,710 17,531
 -------------- --------------

Other Assets
 Other deposits 14,462 12,158
 Intangibles
 Customer base, net of accumulated
 amortization of $18,259 - -
 Trademark, net of accumulated
 amortization of $588 and $464,
 respectively 1,062 1,186
 Goodwill 17,765 17,765
 -------------- --------------

 Total Other Assets 33,289 31,109
 -------------- --------------

 Total Assets $ 1,177,408 $ 798,415
 ============== ==============

 Liabilities and Shareholders' Equity

Current Liabilities:
 Accounts payable $ 463,816 $ 406,585
 Accrued liabilities 10,658 10,157
 Corporate tax payable 110,118 5,167
 Notes payable related parties 108,023 108,023
 Business lines 219,680 204,881
 -------------- --------------

 Total Current Liabilities 912,295 734,813
 -------------- --------------

Shareholders' Equity
 Common stock, $0.001 par value;
 50,000,000 authorized common shares
 8,470,481 shares issued and outstanding 8,471 8,471
 Additional paid in capital 83,345 83,345
 Treasury stock (10,834) (9,284)
 Retained earnings/(accumulated deficit) 184,131 (18,930)
 -------------- --------------

 Total Shareholders' Equity 265,113 63,602
 -------------- --------------

Total Liabilities and Shareholders' Equity $ 1,177,408 $ 798,415
 ============== ==============

The accompanying notes are an integral part of these consolidated financial statements.

AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

 Three Months Ended Nine Months Ended
 September 30, September 30, September 30, September 30,
 2010 2009 2010 2009
 -----------------------------------------------------------------
Sales $ 2,934,779 $ 2,615,387 $ 8,622,365 $ 6,993,096

Cost of Goods Sold 2,677,962 2,508,212 7,860,284 6,430,416
 -------------- -------------- -------------- --------------

Gross Profit 256,817 107,175 762,081 562,680
 -------------- -------------- -------------- --------------

Operating Expenses
 Selling, general and
 administrative expense 153,915 113,001 426,422 320,601
 Research and development - 9,297 - 99,092
 -------------- -------------- -------------- --------------

 Total Operating Expenses 153,915 122,298 426,422 419,693
 -------------- -------------- -------------- --------------

Income/(Loss) before
 depreciation expense 102,902 (15,123) 335,659 142,987

 Depreciation and
 amortization expense 1,767 2,096 6,983 6,250
 -------------- -------------- -------------- --------------

Income/(Loss) before Other
 Income/(Expenses) 101,135 (17,219) 328,676 136,737
 -------------- -------------- -------------- --------------

Other Income/(Expenses)
 Interest and other income 1 - 1,667 -
 Penalty - (244) - (512)
 Realized gain/(loss) - (1,740) -
 Unrealized gain/(loss) 199 278 (173) (2,128)
 Interest expense (7,013) (6,845) (20,048) (17,671)
 -------------- -------------- -------------- --------------

 Total Other Income/
 (Expenses) (6,813) (6,811) (20,294) (20,311)
 -------------- -------------- -------------- --------------

Income/(Loss) before
 Provision for Income Taxes 94,322 (24,030) 308,382 116,426

Income tax expense (39,804) (2,588) (105,321) (33,360)
 -------------- -------------- -------------- --------------

Net Income/(Loss) $ 54,518 $ (26,618) $ 203,061 $ 83,066
 ============== ============== ============== ==============

BASIC AND DILUTED INCOME
 PER SHARE $ 0.01 $ (0.00) $ 0.02 $ 0.01
 ============== ============== ============== ==============

WEIGHTED-AVERAGE COMMON
 SHARES OUTSTANDING
 BASIC AND DILUTED 8,470,481 8,470,481 8,470,481 8,470,481
 ============== ============== ============== ==============

 The accompanying notes are an integral part of these
 consolidated financial statements.

AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

 Nine Months Ended
 September 30, September 30,
 2010 2009
 -------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income $ 203,061 $ 83,066
 Adjustment to reconcile net income to
 net cash provided in operating activities
 Depreciation and amortization 6,984 6,250
 Allowance for doubtful accounts (1,400) -
 Unrealized (gain)/loss on investment 173 2,128
 Realized loss on sales of investment 1,740 -
 Change in Assets and Liabilities
 (Increase) Decrease in:
 Accounts receivable (24,435) (162,913)
 Inventory (170,823) (190,690)
 Prepaid expenses - 7,900
 Other receivable 14,109 963
 Deferred tax asset (12,648) (936)
 Other asset (2,304) -
 Increase (Decrease) in:
 Accounts payable and accrued liabilities 57,732 8,015
 Corporate income tax payable 104,951 23,900
 -------------- --------------

NET CASH PROVIDED/(USED) IN OPERATING ACTIVITIES 177,140 (222,317)
 -------------- --------------

NET CASH FLOWS USED IN INVESTING ACTIVITIES:
 Proceeds from sale of investment 1,515 -
 Purchase of investments (3,038) (9,518)
 Purchase of fixed assets (4,039) (8,883)
 -------------- --------------

NET CASH USED IN INVESTING ACTIVITIES (5,562) (18,401)
 -------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Advances to officer (2,647) 4,337
 Payments on related party loans - -
 Purchase of treasury stock (1,550) (9,284)
 Proceeds from credit line 14,799 191,739
 -------------- --------------

NET CASH PROVIDED BY FINANCING ACTIVITIES 10,602 186,792
 -------------- --------------

NET INCREASE (DECREASE) IN CASH 182,180 (53,926)

CASH, BEGINNING OF PERIOD 121,182 96,390
 -------------- --------------

CASH, END OF PERIOD $ 303,362 $ 42,464
 ============== ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION
 Interest paid $ 13,607 $ 6,457
 ============== ==============
 Income taxes $ 800 $ 800
 ============== ==============

The accompanying notes are an integral part of these consolidated financial statements.

AMEXDRUG CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS-UNAUDITED
SEPTEMBER 30, 2010

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2009.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of AmexDrug Corporation is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Income per Share dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company's diluted income per share is the same as the basic income per share for the period ended September 30, 2010, because there are no outstanding dilutive instruments.

3. CAPITAL STOCK

During the three months ended September 30, 2010, the Company issued no shares of common stock.

4. INCOME TAXES

The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

The Company accounts for uncertainty in tax positions by recognition in the financial statements.

The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

5. SUBSEQUENT EVENT

Management has evaluated subsequent events as required by FASB ASC Topic 855, and has determined there are no subsequent events to be reported.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Amexdrug Corporation is located at 8909 West Olympic Boulevard, Suite 208, Beverly Hills, California 90211. Its phone number is (310) 855-0475. Its fax number is (310) 855-0477. Its website is www.amexdrug.com. Shares of Amexdrug common stock are traded on the OTC Bulletin Board under the symbol AXRX.OB. The President of Amexdrug has had experience working in the pharmaceutical industry for the past 28 years.

Amexdrug Corporation, through its wholly-owned subsidiaries, BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care, Inc., is a pharmaceutical and cosmeceutical company specializing in the research and development, manufacturing and distribution of pharmaceutical drugs, cosmetics and distribution of prescription and over-the-counter drugs, private manufacturing and labeling and a quality control laboratory. At Amexdrug Corporation, it is our anticipation to give our clientele the opportunity to purchase cost effective products while maximizing the return of investments to our shareholders.

Amexdrug Corporation distributes its products through its subsidiaries, BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care, Inc. primarily to independent pharmacies and secondarily to small and medium-sized pharmacy chains, alternative care facilities and other wholesalers and retailers in the state of California.

We plan to introduce three skin care over the counter (OTC) and natural products in 2010, which are in various stages of development. We presently market twelve products under the Sponix name. Our team of professionals fully pledges the effectiveness of our distinct products.

At this time, we have certain distribution channels with suppliers and customers whom we know and trust, such as CVS, Target, Amazon, and hundreds of independent pharmacies. Of the estimated 100,000 retailers (drug stores and food mass), our goal is to have approximately 5,000 stores carry our products by the end of 2010.

Amexdrug Corporation was initially incorporated under the laws of the State of California on April 30, 1963 under the name of Harlyn Products, Inc. Harlyn Products, Inc. was engaged in the business of selling jewelry to department stores and retail jewelry stores until the mid-1990s.

The name of the Company was changed to Amexdrug Corporation in April 2000 to reflect the change in the Company's business to the sale of pharmaceutical products. The officers and directors of the Company also changed in April 2000. The domicile of the Company was changed from California to Nevada in December 2001. At that time the Company changed its fiscal year end from June 30 to December 31.

References in this report to "we," "our," "us," the "company" and "Amexdrug" refer to Amexdrug Corporation and also to our subsidiaries, BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care.

Amexdrug currently has 50,000,000 shares of authorized common stock $.001 par value, of which 8,457,809 are issued and outstanding as of September 30, 2010, with an additional 12,672 shares held as treasury shares.

On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. is committed to offer over the counter (OTC) products that are recommended with trust and faith by physicians, primarily podiatrists and dermatologists. The focus and mission of BioRx Pharmaceuticals, Inc. is to create, develop and manufacture products to help ease pain and restore and maintain the overall well-being of our customers. We strive for high performance and quality. Our commitment is to offer natural and OTC products that are recommended with confidence by doctors and pharmacists and that the customer can use with pleasure. Our compliance program is diligently followed through the Company. BioRx Pharmaceuticals, Inc. maintains high ethics for animal welfare and our products are never tested on animals. All products are made in the USA.

A total of twelve products have been manufactured for sale by BioRx Pharmaceuticals, Inc., and a total of three products are under different stages of development. These over-the-counter and natural products are effective for treatment of fungus, arthritis, sunburn protection and for healthy feet and nails. BioRx Pharmaceuticals is planning to sell these products to national chain drugstores, sport chain stores, natural food markets and other mass markets. These products will be marketed under the names of Sponix and Bactivex, and will be sold under the name of BioRx Pharmaceuticals. BioRx Pharmaceuticals also distributes pharmacy supplies.

On December 31, 2001, Amexdrug acquired all of the issued and outstanding common shares of Allied Med, Inc., an Oregon corporation, in a share exchange in a related party transaction.

Allied Med, Inc., was formed as an Oregon corporation in October 1997 to operate in the pharmaceutical wholesale business of selling a full line of brand name and generic pharmaceutical products, over-the-counter (OTC) drug and non-drug products and health and beauty products to independent and chain pharmacies, alternative care facilities and other wholesalers.

Amexdrug assumed the operations of Allied Med, and Amexdrug has been building on the wholesale pharmaceutical operations of Allied Med.

The accompanying financial information includes the operations of Allied Med for all periods presented and the operations of Amexdrug Corporation from April 25, 2000.

Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005. Dermagen, Inc. is now an operating subsidiary of Amexdrug. The acquisition of Dermagen, Inc. is not considered to be an acquisition of an significant amount of assets which would require audited financial statements of Dermagen, Inc.

Dermagen, Inc. is a growing manufacturing company specializing in the manufacturing and distribution of certain pharmaceuticals, medical devices, health and beauty products. Dermagen, Inc. has a U.S.-FDA registered and state FDA approved manufacturing facility licensed to develop high margin skin and novel health and beauty products for niche markets. Dermagen's competitive advantage is in its superior product research and development for large leading domestic and international companies.

In October 2003, Allied Med, Inc. acquired 100% of the assets of Royal Health Care Company. Royal Health Care Company is a health and beauty company which has sold specially manufactured facial and body creams, arthritic pain relief medications and an exclusive patented hair care product to pharmacies, beauty salons, beauty supply stores and other fine shops. Royal Health Care Company uses the highest quality ingredients for the finest quality products. Each product has been formulated with the essential ingredients and plant extracts to achieve optimum potential and quality. Royal Health Care Company products are manufactured by Dermagen, Inc. in an FDA approved manufacturing facility.

The Royal Health Care Company assets acquired include the "Royal Health Care Company" name, logo, and related trademarks, all formulas to products manufactured for sale under the Royal Health Care Company name, and the Royal Health Care Company list of customers. These intellectual property rights were acquired without cost from a company in which Jack Amin's wife is a principal shareholder. Mr. Amin is the CEO and Chairman of Amexdrug Corporation and Allied Med, Inc. Management believes this acquisition will provide the Company with an opportunity to increase the number of products sold by the Company, and expand the Company's customer base.

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.

The Company has five written lease agreements covering the property in Fullerton, California leased by the Company. The Beverly Hills property leased by the Company is under a month to month verbal lease since the original lease on the property has expired. The Company operated a Manila, Philippines sales office under a verbal lease agreement until June 2010 when that office was closed. The Company's loan agreement with Nora Amin is verbal. The Company does not have written contracts with its major suppliers or buyers. The Company has a written line of credit agreement with National Bank of California. Copies of the Company's written lease agreements and material contracts have been filed as exhibits to certain of its quarterly and annual reports. See the Exhibit Index for a description of these agreements and for information on where copies can be found.

Since 2005, Amexdrug has had operations in two segments of its business, namely: Distribution and Health and Beauty Products. Distribution consists of the wholesale pharmaceutical distribution and resale of brand and generic pharmaceutical products, over-the-counter drugs and non-drug products and health and beauty products. Health and Beauty Products consist of the manufacture and distribution of primarily health and beauty products.

Revenues

For the three months ended September 30, 2010, Amexdrug reported sales of $2,934,779, comprised of $2,661,325 of sales from the Company's pharmaceutical wholesale business of selling brand name and generic pharmaceutical products and over the counter (OTC) health and beauty products and pharmacy supplies, and $273,454 of sales of health and beauty products manufactured by the Company. This is $319,392 more than the $2,615,387 of sales reported for the three months ended September 30, 2009, which was comprised primarily of $2,507,052 sales from the Company's pharmaceutical wholesale distribution business of selling brand name and generic pharmaceutical products and over the counter (OTC) health and beauty products, and $108,335 of sales of health and beauty products manufactured by the Company. During the three month period ended September 30, 2010, Amexdrug experienced an increase in total sales due, in part, to increased marketing efforts of the Company.

Costs of Goods Sold

Cost of goods sold for the three months ended September 30, 2010 was $2,677,962, an increase of $169,750 from the $2,508,212 cost of goods sold for the three months ended September 30, 2009.

Gross Profit

During the three months ended September 30, 2010 gross profit increased by $149,642 to $256,817 or 8.8% of sales, from the $107,175, or 4.1% of sales recorded for the three months ended September 30, 2009. The increase in gross profit margin is largely attributable to an increase in sales of higher gross margin products sold in the three month period ended September 30, 2010.

Expenses

Total operating expenses for the three months ended September 30, 2010 were $153,915, an increase of $31,617 from the total operating expenses of $122,298 recorded for the three months ended September 30, 2009. Selling, general and administrative expense was $153,915 for the three months ended September 30, 2010, an increase of $40,914 from the $113,001 of selling, general and administrative expense recorded for the three months ended September 30, 2009. This increase in selling, general and administrative expense is attributable to increases in rent, professional fees and outside services expenses. Research and development expense was $0 for the three months ended September 30, 2010, a decrease of $9,297 from the $9,297 of research and development expense recorded for the three months ended September 30, 2009. The Company anticipates that it may spend a modest amount of funds on research and development expenses during the remainder of 2010, but such expenses, on a quarterly basis, will be less than the amount spent in the same period of 2009.

Net Income (Loss)

During the three months ended September 30, 2010, Amexdrug earned net income of $54,518, as compared to the net loss of $26,618 incurred in the three months ended September 30, 2009. Amexdrug's improvement in net income during the three month period ended September 30, 2010 is attributable largely to increased sales and increased sales of higher margin products resulting in increased gross profits earned in the later period, partially offset by an increase in income tax expense in the later period.

Revenues

For the nine months ended September 30, 2010, Amexdrug reported sales of $8,622,365, comprised of $7,856,799 of sales from the Company's pharmaceutical wholesale business of selling brand name and generic pharmaceutical products and over the counter (OTC) health and beauty products and pharmacy supplies, and $765,566 of sales of health and beauty products manufactured by the Company. This is $1,629,269 more than the $6,993,096 of sales reported for the nine months ended September 30, 2009 which was comprised primarily of $6,763,480 of sales from the Company's pharmaceutical wholesale distribution business of selling brand name and generic pharmaceutical products and over the counter (OTC) health and beauty products, and $229,616 of sales of health and beauty products manufactured by the Company. During the nine month period ended September 30, 2010, Amexdrug experienced an increase in total sales due, in part, to increased marketing efforts of the Company.

Costs of Goods Sold

Cost of goods sold for the nine months ended September 30, 2010 was $7,860,284, an increase of $1,429,868 from the $6,430,416 cost of goods sold for the nine months ended September 30, 2009.

Gross Profit

During the nine months ended September 30, 2010 gross profit increased by $199,401 to $762,081, or 8.8% of sales, from the $562,680, or 8.0% of sales recorded for the nine months ended September 30, 2009. The change in gross profit margin is attributable to an increase in sales of higher gross margin products sold in the first nine months of 2010.

Expenses

Total operating expenses for the nine months ended September 30, 2010 were $426,422, an increase of $6,729 from the total operating expenses of $419,693 recorded for the nine months ended September 30, 2009. Selling, general and administrative expense was $426,422 for the nine months ended September 30, 2010, an increase of $105,821 from the $320,601 of selling, general and administrative expense recorded for the nine months ended September 30, 2009. This increase in selling, general and administrative expense is attributable to increases in rent, professional fees and outside services expenses. Research and development expense was $0 for the nine months ended September 30, 2010, a decrease of $99,092 from the $99,092 of research and development expense recorded for the nine months ended September 30, 2009. The Company anticipates that it may spend a modest amount of funds on research and development expenses during the remainder of 2010, but such expenses, on a quarterly basis, will be less than the amount spent in the same period in 2009.

Net Income

During the nine months ended September 30, 2010, Amexdrug earned net income of $203,061, an increase of $119,995 from the net income of $83,066 earned in the nine months ended September 30, 2009. Amexdrug's increase in net income during the nine month period ended September 30, 2010 is attributable largely to increased sales and increased sales of higher margin products resulting in increased gross profits earned in the later period, partially offset by an increase in income tax expense in the later period.

As of September 30, 2010, Amexdrug reported total current assets of $1,129,409, comprised primarily of cash and cash equivalents of $303,362, accounts receivable of $456,019, inventory of $328,633 and a deferred tax asset of $26,426. Total assets as of September 30, 2010 were $1,177,408, which included total current assets, plus net property and equipment of $14,710, other deposits of $14,462, trademark of $1,062, and goodwill of $17,765.

Amexdrug's liabilities as of September 30, 2010 consisted primarily of accounts payable of $463,816, notes payables to related parties of $108,023, business line of credit of $219,680, corporate tax payable of $110,118 and accrued liabilities of $10,658.

During the nine months ended September 30, 2010, Amexdrug generated $177,140 cash in operating activities compared to using $222,317 cash in operating activities in the nine months ended September 30, 2009. The primary adjustments to reconcile net income to net cash generated in operating activities during the nine months ended September 30, 2010 were as follows: an increase in accounts receivable of $24,435, an increase in inventory of $170,823, an increase in accounts payable and accrued liabilities of $57,732, and an increase in corporate tax payable of $104,951. Amexdrug had $303,362 in cash and cash equivalents at September 30, 2010. Operations have primarily been funded through cash generated from operations, and from a modest increase in the business line of credit. Management does not anticipate that Amexdrug will need to seek additional financing during the next twelve months.

Stock Repurchases

Between approximately June 2007 and September 30, 2010, Amexdrug repurchased a total of 12,672 shares of its common stock at prices ranging from a low of $0.20 per share to a high of $2.39 per share. These shares are held by Amexdrug as treasury shares. Amexdrug anticipates that it may make additional small purchases of its shares throughout the remainder of 2010.

Inflation

In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.

Capital Expenditures

The Company expended $1,585 and $0 on capital expenditures during the three month periods ended September 30, 2010 and 2009, respectively. The Company has no current plans for any significant capital expenditures.

Critical Accounting Policies

In the notes to the audited consolidated financial statements for the year ended December 31, 2009, included in the Company's Annual Report on Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

This document includes various forward-looking statements with respect to future operations of Amexdrug that are subject to risks and uncertainties. Forward-looking statements include information concerning expectations of future results of operations and such statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates" or similar expressions. For those statements, Amexdrug claims the protection of the safe harbor for forward-looking statements contained in the Private Litigation Reform Act of 1995. Actual results may vary materially.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

A "smaller reporting company" (as defined by Item 10 of the Regulation S-K) is not required to provide the information required by this Item.

Item 4. Controls and Procedures.

Under the supervision and with the participation of management, our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"), as of September 30, 2010. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and adequately designed to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our chief executive officer and chief financial officer, in a manner that allowed for timely decisions regarding required disclosure.

During the last fiscal quarter ended September 30, 2010, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q REPORT REFLECT MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Amexdrug is not presently a party to any material pending legal proceedings. To the best of Amexdrug's knowledge, no governmental authority or other party has threatened or is contemplating the filing of any material legal proceeding against Amexdrug.

Item 1A. Risk Factors.

A "smaller reporting company" (as defined by Item 10 of the Regulation S-K) is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three month period ended September 30, 2010, the Company did not issue any shares of its unregistered common stock. For a description of any sales of shares of the Company's unregistered stock made in the past three years, please refer to the Company's Annual Reports on Form 10-KSB or Form 10-K, and the Company's Quarterly Reports on Form 10-QSB or Form 10-Q filed since December 31, 2006.

Item 3. Defaults Upon Senior Securities.

None; not applicable.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None; not applicable.

Item 6. Exhibits.

(a) Exhibits.

The following exhibits are filed as part of this report.

EXHIBIT INDEX

Exhibit Exhibit
Number Description Location
------- ----------- --------

2.1 Agreement and Plan of Merger (1)
 (to change domicile from California)

2.2 Agreement and Plan of Reorganization (2)

3.1 Articles of Incorporation (3)

3.2 By-Laws (3)

 15

10.1 Lease Agreement between Fullerton Business (6)
 Center, Lessor, and Allied Med, Inc., Lessee,
 dated September 23, 2005 (Unit K)

10.2 Lease Agreement between Fullerton Business (6)
 Center, Lessor, and Allied Med, Inc., Lessee,
 dated September 23, 2005 (Units I & J)

10.3 Third Amendment to Lease Agreement between (5)
 Fullerton Business Center, Lessor, and Allied Med,
 Inc., Lessee, dated November 5, 2008 (Units I and J)

10.4 Promissory Note with National Bank of California (5)
 dated June 23, 2008

10.5 Change in Terms Agreement with National Bank of (5)
 California dated June 9, 2009

10.6 First Amendment to Lease Agreement between Fullerton (6)
 Business Center, Lessor, and Allied Med, Inc.,
 Lessee, dated September 11, 2006 (Unit K)

10.7 First Amendment to Lease Agreement between Fullerton (6)
 Business Center, Lessor, and Allied Med, Inc.,
 Lessee, dated September 11, 2006 (Units I & J)

10.8 Second Amendment to Lease Agreement between Fullerton (6)
 Business Center, Lessor, and Allied Med, Inc.,
 Lessee, dated October 25, 2007 (Unit K)

10.9 Second Amendment to Lease Agreement between Fullerton (6)
 Business Center, Lessor, and Allied Med, Inc., Lessee,
 dated October 25, 2007 (Units I & J)

10.10 Third Amendment to Lease Agreement between Fullerton (6)
 Business Center, Lessor, and Allied Med, Inc.,
 Lessee, dated November 5, 2008 (Unit K)

10.11 Change in Terms Agreement with National Bank of (6)
 California dated March 3, 2009

10.12 Subordination Agreement between Nora Y. Amin, (6)
 National Bank of California, Amexdrug and its
 subsidiaries dated June 9, 2009

10.13 Business Loan Agreement between National Bank of (6)
 California, Amexdrug and its subsidiaries dated
 June 23, 2008

10.14 Commercial Security Agreement between National (6)
 Bank of California, Amexdrug and its subsidiaries
 dated June 23, 2008

10.15 Commercial Guarantee between National Bank of (6)
 California, Jack N. Amin, Amexdrug and its
 Subsidiaries

10.16 Commercial Guarantee between National Bank of (6)
 California, Nora Y. Amin, Amexdrug and its
 subsidiaries

10.17 Lease Agreement between Fullerton Business (7)
 Center, LLC, Lessor, and Allied Med, Inc.,
 Lessee, dated July 8, 2009 (Unit H)

10.18 Guaranty of Lease by Jack Amin (Unit H) (7)

10.19 Lease Agreement between Fullerton Business (8)
 Center, LLC, Lessor, and Allied Med, Inc.,
 Lessee, dated November 9, 2009 (Unit I at
 2488 E. Fender Avenue)

10.20 Third Amendment to Lease Agreement between (8)
 Fullerton Business Center, Lessor, and
 Allied Med, Inc., Lessee, dated November 5,
 2008 (Unit I & J)

10.21 Lease Agreement between Fullerton Business (9)
 Center, Lessor, and Allied Med, Inc., Lessee,
 dated March 16, 2010 (Unit E)

14.1 Code of Ethics (4)

21.1 List of Subsidiaries of Amexdrug Corporation (6)

31.1 Certification of Chief Executive Officer This Filing
 pursuant to Section 302 of the Sarbanes-
 Oxley Act of 2002

31.2 Certification of Chief Financial Officer This Filing
 pursuant to Section 302 of the Sarbanes-
 Oxley Act of 2002

32.1 Certification of Chief Executive Officer This Filing
 pursuant to Section 906 of the Sarbanes-
 Oxley Act of 2002

32.2 Certification of Chief Financial Officer This Filing
 pursuant to Section 906 of the Sarbanes-
 Oxley Act of 2002

 Summaries of all exhibits contained within this
 report are modified in their entirety by reference
 to these Exhibits.

(1) Exhibit 2.1 is incorporated by reference from Amexdrug's Form 8-K Current Report filed December 21, 2001 as Exhibit No. 10.01.

(2) Exhibit 2.2 is incorporated by reference from Amexdrug's Form 8-K Current Report filed January 15, 2002 as Exhibit No. 10.01.

(3) Exhibit 3.1 and 3.2 are incorporated by reference from Amexdrug's Form 10-KSB for the years ended December 31, 2001 filed on April 1, 2002.

(4) Exhibit 14.1 is incorporated by reference from Amexdrug's Form 10-K for the year ended December 31, 2008 filed April 13, 2009

(5) Exhibits 10.3, 10.4 and 10.5 are incorporated by reference From Amexdrug's Form 10-Q for the period ended June 30, 2009 filed August 14, 2009

(6) Exhibits 10.1, 10.2, 10.6 through 10.16, and 21.1 are incorporated by reference from Amexdrug's Form 10-Q/A for the period ended June 30, 2009 filed September 18, 2009

(7) Exhibits 10.17 and 10.18 are incorporated by reference from Amexdrug's Form 10-Q for the period ended September 30, 2009 filed November 12, 2009

(8) Exhibits 10.19 and 10.20 are incorporated by reference from Amexdrug's Form 10-K for the year ended December 31, 2009 filed March 31, 2010

(9) Exhibit 10.21 is incorporated by reference from Amexdrug's Form 10-Q for the period ended March 31, 2010 filed May 11, 2010

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: October 29, 2010 By: /s/ Jack Amim
 ------------------------------------
 Jack Amin
 Director,President, Chief Executive
 Officer, Chief Financial Officer and
 Chief Accounting Officer

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