UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
FORM 10-K
 
(Mark One)
(X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2011
   
( )
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________ to _________________
 
Commission File number 0-7473


AMEXDRUG CORPORATION
(Exact name of registrant as specified in its charter)


Nevada
95-2251025
State or other jurisdiction of
 (I.R.S. Employer I.D. No.)
incorporation or organization
 
   
7251 Condor Street, Commerce, CA
   90040
(Address of principal executive offices)
  (Zip Code)
   
Registrant’s telephone number, including area code:  (323) 725-3100
   
Securities registered pursuant to Section 12(b) of the Exchange Act:
   
Title of each class
Name of each exchange on which registered
None
None
   
Securities registered pursuant to Section 12(g) of the Exchange Act:
   
Common stock, par value $0.001
(Title of Class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [   ]   No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [] No [x]
 
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 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.  Yes [x] No [ ]

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

 
 
 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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 Act).Yes [] No [x]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the voting and non-voting common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. At June 30, 2011, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $2,744,287 based upon 1,132,362 shares held by non-affiliates, and the average of the bid price and the asked price of $2.45 per share.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  As of March 23, 2012, the registrant had 8,470,481 shares of common stock issued and outstanding, and an additional 13,972 shares held as treasury shares.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated:  (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424 (b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g. annual report to security holders for fiscal year ended December 24, 1980).  None
 
 

 
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TABLE OF CONTENTS
 
   
Page
PART I
 
     
ITEM 1.
  BUSINESS
3
     
ITEM 1A.
  RISK FACTORS
16
     
ITEM 1B.
  UNRESOLVED STAFF COMMENTS
19
     
ITEM 2.
  PROPERTIES
19
     
ITEM 3.
  LEGAL PROCEEDINGS
19
     
ITEM 4.
  MINE SAFETY DISCLOSURES
20
     
PART II
 
     
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OR EQUITY SECURITIES
20
     
ITEM 6.
SELECTED FINANCIAL DATA
22
     
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
22
     
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLSOURES ABOUT MARKET RISK
26
     
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
26
     
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
39
     
ITEM 9A.
CONTROLS AND PROCEDURES
39
     
ITEM 9B.
OTHER INFORMATION
40
     
PART III
 
     
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
40
     
ITEM 11.
EXECUTIVE COMPENSATION
44
     
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
46
     
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
47
     
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
49
     
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
50
 

 
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PART I

Note Regarding Forward Looking Statements

MANY STATEMENTS MADE IN THIS REPORT ARE FORWARD-LOOKING STATEMENTS THAT ARE NOT BASED ON HISTORICAL FACTS.  ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT REFLECT MANAGEMENT’S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS AND UNCERTAINTIES.  BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.  ACTUAL RESULTS MAY VARY MATERIALLY.
 

ITEM 1. BUSINESS
 

Business Development

History

Amexdrug Corporation, a Nevada corporation, is a holding company.  It is located at 7251 Condor Street, Commerce, California 90040.  Its phone number is (323) 725-3100.  Its fax number is (323) 725-3133. 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 30 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 attempting to maximize 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-sized pharmacy chains, alternative care facilities and other wholesalers and retailers in the state of California.

We do not plan to introduce any new skin care over the counter (OTC) and natural products in 2012.  We presently market fourteen products under the Sponix name.  Our team of professionals fully pledges the effectiveness of our distinct products.

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

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

 
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References in this report to “we,” “our,” “us,” the “Company” and “Amexdrug” refer to Amexdrug Corporation and also to our subsidiaries, BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care, Inc. where appropriate.

Amexdrug currently has 50,000,000 shares of authorized common stock $.001 par value, of which 8,470,481 are issued and outstanding, and an additional 13,972 shares held as treasury shares.

Significant acquisitions
BioRx Pharmaceuticals

On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation.  BioRx Pharmaceuticals, Inc. is a wholesale manufacturer of cost saving pharmacy supplies, prescription packaging and skin care, hair and nail care products.  BioRx manufactures, markets and distributes products to wholesalers, distributors and independent pharmacies. We expect to grow sales to drugstore chains in the near future.  BioRX 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, manufacture and distribute 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 fourteen innovative health and wellness products have been manufactured for sale by BioRx Pharmaceuticals, Inc.  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 name of Sponix, and are being sold under the name of BioRx Pharmaceuticals.

Allied Med, Inc.

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

Allied Med, Inc., was formed as an Oregon corporation in October 1997 to operate in the pharmaceutical wholesale business of selling a full line of brand name and generic pharmaceutical products, over-the-counter (OTC) drug and non-drug products and health and beauty products to independent pharmacies, other retailers, alternative care facilities and other  wholesalers. At Allied Med, our sincere interest is our customers needs.  Our competitive discount pricing allows our customers advantage to compete.

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

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

Dermagen, Inc.

Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005.  Dermagen, Inc. is now an operating subsidiary of Amexdrug.  The acquisition of Dermagen, Inc. was not considered to be an acquisition of a significant amount of assets which would have required 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 excellent product research and development.

Royal Health Care Company

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

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 has provided 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.

Business Segments

Since 2005, Amexdrug has had operations in two segments of its business, namely:  Distribution and Health and Beauty Products.  Distribution consists of the wholesale pharmaceutical distribution and resale of brand and generic pharmaceutical products, over-the-counter drugs and non-drug products and health and beauty products.  Health and Beauty Products consist of the manufacture and distribution of primarily health and beauty products.  Manufacturing includes expertise in research and development for the healthcare industry, including pharmacy supplies.

 
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Industry trends
 
Pharmaceutical and healthcare markets
 
According to IMS Health, the U.S. will remain the single largest pharmaceutical market.  It forecasted 3-5% growth in 2011.  The Company was unable to locate data confirming the amount of growth which actually occurred in 2011.  Pharmaceutical sales in the U.S. were projected to reach $320 to $330 billion, up form an estimated $310 billion in 2010. Sales are expected to increase due to a number of factors including:
 
Ÿ
the value added by the introduction of new drugs into the marketplace, which more than offsets the value lost by medications losing patent protection;
   
Ÿ
new patterns of drug lifestyle management, resulting in higher sales occurring earlier in the life cycle of a medication;
   
Ÿ
increased money spent on direct-to-consumer marketing initiatives;
   
Ÿ
an unprecedented period of investment by pharmaceutical companies worldwide;
   
Ÿ
divergent growth rates expected for developed markets;
   
Ÿ
peak years of patent expiries shift major therapies to generic dominance; and
   
Ÿ
therapy growth dynamics allow promising new wave of innovation for new treatment options.
 
Amexdrug believes that, currently, the pharmaceutical and health care product markets are serviced primarily by traditional full-line wholesalers.
 
Internet

The Internet has emerged as the fastest growing communications medium in history and is dramatically changing how businesses and individuals communicate and share information.  The Internet has created new opportunities for conducting commerce, such as business-to-consumer and person-to-person e-commerce.  Recently, the widespread adoption of intranets and the acceptance of the Internet as a business communications platform has created a foundation for business-to-business e-commerce that offers the potential for organizations to streamline complex processes, lower costs and increase productivity. Internet-based business-to-business e-commerce has experienced significant growth. Significant growth in the industry has been forecasted.  Amexdrug hopes, although it cannot guarantee, that it will benefit from this growth.

 
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The dynamics of business-to-business e-commerce relationships differ significantly from those of other e-commerce relationships.   Business-to- business e-commerce solutions frequently automate processes that are fundamental to a business' operations by replacing various paper-based transactions with electronic communications. In addition, business-to-business e-commerce solutions must often be integrated with a customer's existing systems, a process that can be complex, time-consuming and expensive.  Consequently, selection and implementation of a business-to-business e-commerce solution represents a significant commitment by the customer, and the costs of switching solutions are high. In addition, because business transactions are typically recurring and non-discretionary, the average order size and lifetime value of a business-to-business e-commerce customer is generally greater than that of a business-to-consumer e-commerce customer.  These solutions are likely to be most readily accepted by industries characterized by a large number of buyers and sellers, a high degree of fragmentation among buyers, sellers or both, significant dependence on information exchange, large transaction volume and user acceptance of the Internet.

Objectives and strategy

Amexdrug’s key business objective is to become a leading wholesale manufacturer and distributor of pharmacy supplies, and a leading full-line distributor of pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements, with an emphasis on online sales.

To accomplish this objective, Amexdrug plans to:

Ÿ
market its name, products and services to create brand recognition and generate and capture traffic on its websites;
   
Ÿ
provide quality products at competitive prices and efficient service;
   
Ÿ
develop strategic relationships that increase Amexdrug’s product offerings; and
   
Ÿ
attract and retain exceptional employees.
 
Sales and marketing, customer service and support

Our products are sold both through traditional wholesale distribution lines and e-commerce venues, including our website, www.amwrx.com .  We believe our e-commerce, business-to-business model will allow the Company to leverage its existing wholesale distribution business, thus increasing its ability to effectively market and distribute its products.  The Company uses a variety of programs to stimulate demand for its products and increase traffic to its websites, including a direct sales force, telemarketing, blast faxing and advertising.

Direct sales

The Company maintains employees to act as its direct sales force to target organizations that buy and sell the products it carries.

 
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Telemarketing

The Company maintains an in-house telemarketing group for use in customer prospecting, lead generation and lead follow-up.

Advertising

The Company advertises in trade journals, and at trade shows, and the Company will seek to engage in co-branding arrangements in the future. In addition to strategic agreements and traditional advertising, the Company, will, as revenue allows, implement online sales and marketing techniques in an attempt to increase brand recognition and direct traffic to its website. Some of these techniques may include banner ads on search engine websites and Internet directories, direct links from healthcare home pages, and mass e-mailings.

Customer service and support

Amexdrug believes that it can establish and maintain long-term relationships with its customers and encourage repeat visits if, among other things, the Company has excellent customer support and service. The Company currently offers information regarding its products and services and answers customer questions about the ordering process, and investigates the status of orders, shipments and payments. A customer can access the Company by fax or e-mail by following prompts located on the Company's website or by calling the Company's toll-free telephone line.

Promotion of website

As revenue allows, the Company will promote, advertise and increase recognition of its website through a variety of marketing and promotional techniques, including:

Ÿ
developing co-marketing agreements with major online sites and services;
   
Ÿ
enhancing online content and ease of use of its website;
   
Ÿ
enhancing customer service and technical support;
   
Ÿ
advertising in trade journals and at industry trade shows;
   
Ÿ
conducting an ongoing public relations campaign; and
   
Ÿ
developing other business alliances and partnerships.

Distribution

The Company distributes its Allied Med products from its facility in Commerce, California.  Dermagen, Inc. manufactures and distributes its products from Fullerton, California.  The Company fills orders with a combination of existing inventory and products it orders from suppliers. Currently, customers are receiving their products within 24 to 48 hours of order placement. As funds allow, the Company will increase its in-house inventory of products to allow for shorter delivery times.

Purchasing and Manufacturing

Allied Med, Inc. purchases its products primarily from manufacturers and secondarily from other wholesalers and distributors. Allied Med’s purchasing department constantly monitors the market to take advantage of periodic volume discounts, market discounts and pricing changes.  Dermagen, Inc. purchases its raw materials from suppliers, and manufactures its products in Fullerton, California for its customers.

Technology and security

The Company website is hosted and maintained by a third party. This provider delivers a secure platform for server hosting, including various safety features to protect the information residing in its servers. Moreover, the Company does not release information about its customers to third parties without the prior written consent of its customers unless otherwise required by law.

 
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Notwithstanding these precautions, the Company cannot assure that the security mechanisms will prevent security breaches or service breakdowns.  Despite the implemented security measures, servers can be vulnerable to computer viruses, physical or electronic break-ins or other similar disruptions.  Such a disruption could lead to interruptions or delays in service, loss of data, or an inability to accept and fulfill online customer orders. Any of these events could materially affect the Company's business.

Management information system

The accounting information for sales, purchases, perpetual inventory transactions, cash receipts and disbursements and sophisticated management reports are provided timely for analytical and bookkeeping purposes. Also, the order entry system was designed specifically for the Company and allows its customers to order product 24 hours per day either via fax, internet or phone modem. The system provides data to management enabling it to review sales trends and customer base, monitor inventory levels, credit and collection issues, and purchasing frequency and cost anticipation. Communication and availability of data is possible through a local area network ring.

Competition

Amexdrug faces strong competition both in price and service from national, regional and local full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains and from manufacturers engaged in direct distribution. Many of our current and potential competitors have longer operating histories and much larger customer bases than we have.  In addition, many of our competitors have greater brand recognition and significantly greater financial, marketing and other resources. To compete successfully, we have had to constantly monitor our competitive situation and develop strategies to allow us to compete with other companies who are able to:

Ÿ
secure merchandise from vendors on more favorable terms;
   
Ÿ
devote greater resources to marketing and promotional campaigns; and
   
Ÿ
adopt more aggressive pricing or inventory availability policies.
 
In addition, many of our competitors have developed or may be able to develop e-commerce operations that compete with our e-commerce operations, and may be able to devote substantially more resources to website development and systems development than we do.  The online commerce market is new, rapidly evolving and intensely competitive. The Company expects competition to intensify in the future because barriers to entry are minimal, and current and new competitors can launch new websites at relatively low cost.  The Company believes that the critical success factors for companies seeking to create Internet business-to-business e-commerce solutions include the following:
 
Ÿ
breadth and depth of product offerings;
   
Ÿ
brand recognition;
   
Ÿ
depth of existing customer base; and
   
Ÿ
ease of use and convenience .

 
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Unlike other well-publicized product categories such as online book or compact disc retailing, there is no current market leader in its online business-to- business market segment. The Company's immediate goal is to position itself as a leading business-to-business e-commerce and online trade exchange provider for pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements.  To that end, we believe that our early entry into the online market may enable us to establish critical competitive advantages over future competitors.  We believe that such competitive advantages include:

Ÿ
the establishment of a recognizable brand;
   
Ÿ
the development of online marketing and media relationships;
   
Ÿ
the development of important relationships with manufacturers, distributors, wholesalers and content providers; and
   
Ÿ
exposure to an existing customer base.
 
However, competitive pressures created by any one of its current or future competitors, or by its competitors collectively, could materially affect the Company's business.  We believe that the principal competitive factors in its market are and will be:
 
Ÿ
brand recognition
 
Ÿ
customer service
Ÿ
speed and accessibility
 
Ÿ
reliability and speed of fulfillment
Ÿ
quality of site content
 
Ÿ
price
Ÿ
convenience
   
 
Ÿ
selection
     

Government regulations and legal uncertainties

Healthcare regulation

The manufacturing, packaging, labeling, advertising, promotion, distribution and sale of most of the products we distribute are subject to regulation by numerous governmental agencies, particularly the United States Food and Drug Administration, which regulates most of the products we distribute under the Federal Food, Drug and Cosmetic Act, and the United States Federal Trade Commission, which regulates the advertising of many of the products we distribute under the Federal Trade Commission Act. The products we distribute are also subject to regulation by, among other regulatory agencies, the Consumer Product Safety Commission, the United States Department of Agriculture, the United States Department of Environmental Regulation and the Occupational Safety and Health Administration. The manufacturing, labeling and advertising of the products we distribute is also regulated by the Occupational Safety and Health Administration through various state and local agencies.

Furthermore, Amexdrug and/or its customers are subject to extensive licensing requirements and comprehensive regulation governing various aspects of the healthcare delivery system, including the so called "fraud and abuse" laws.  The fraud and abuse laws preclude:

 
10
 
 
Ÿ
persons from soliciting, offering, receiving or paying any remuneration in order to induce the referral of a patient for treatment or for inducing the ordering or purchasing of items or services that are in any way paid for by Medicare or Medicaid, and
   
Ÿ
physicians from making referrals to certain entities with which they have a financial relationship.
 
The fraud and abuse laws and regulations are broad in scope and are subject to frequent modification and varied interpretations. Significant criminal, civil and administrative sanctions may be imposed for violation of these laws and regulations.

The Company's advertising of dietary supplement products is also subject to regulation by the Federal Trade Commission under the Federal Trade Commission Act, in addition to state and local regulation. The Federal Trade Commission Act prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce. The Federal Trade Commission Act also provides that the dissemination or the causing to be disseminated of any false advertisement pertaining to drugs or foods, which would include dietary supplements, is an unfair or deceptive act or practice. Under the Federal Trade Commission’s Substantiation Doctrine, an advertiser is required to have a “reasonable basis” for all objective product claims before the claims are made.

Failure to adequately substantiate claims may be considered either deceptive or unfair practices. Pursuant to this Federal Trade Commission requirement, the Company is required to have adequate substantiation for all material advertising claims made for its products.

The Company may be subject to additional laws or regulations by the Food and Drug Administration or other federal, state or foreign regulatory authorities, the repeal of laws or regulations which the Company considers favorable, such as the Dietary Supplement Health and Education Act of 1994, or more stringent interpretations of current laws or regulations, from time to time in the future. We cannot predict the nature of such future laws, regulations, interpretations or applications, nor can we predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on our business in the future. The Food and Drug Administration or other governmental regulatory bodies could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, imposition of additional record keeping requirements, expanded documentation of the properties of certain products, expanded or different labeling and scientific substantiation. Any or all of such requirements could have a material and adverse effect on our business.

 
11
 
The products we distribute function within the structure of the healthcare financing and reimbursement system of the United States. As a result of a wide variety of political, economic and regulatory influences, this system is currently under intense scrutiny and subject to fundamental changes. In recent years, the system has changed significantly in an effort to reduce costs.   These changes include increased use of managed care, cuts in Medicare, consolidation of pharmaceutical and medical-surgical supply distributors, and the development of large, sophisticated purchasing groups. In addition, a variety of new approaches have been proposed to continue to reduce cost, including mandated basic healthcare benefits and controls on healthcare spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid spending. The Company anticipates that Congress and state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods and that public debate with respect to these issues will likely continue in the future. Because of uncertainty regarding the ultimate features of reform initiatives and their enactment and implementation, the Company cannot predict which, if any, of such reform proposals will be adopted, when they may be adopted, or what impact they may have on the Company. The Company expects the healthcare industry to continue to change significantly in the future. Some of these changes, such as a reduction in governmental support of healthcare services or adverse changes in legislation or regulations governing the privacy of patient information, or the delivery of pricing of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to greatly reduce the amount of the Company's products and services they purchase or the price they are willing to pay for the products we distribute.  Changes in pharmaceutical manufacturers' pricing or distribution policies could also significantly reduce our income.

While the Company uses its best efforts to adhere to the regulatory and licensing requirements, as well as any other requirements affecting the products we distribute, compliance with these often requires subjective legislative interpretation. Consequently, we cannot assure that our compliance efforts will be deemed sufficient by regulatory agencies and commissions enforcing these requirements. Violation of these regulations may result in civil and criminal penalties, which could materially and adversely affect our operations.

Internet regulation
 
Few laws currently regulate the Internet. Because of the Internet's popularity and increasing use, new laws and regulations may be adopted. Such laws and regulations may cover issues such as:
 
Ÿ
user privacy
 
Ÿ
distribution
Ÿ
pricing
 
Ÿ
taxation
Ÿ
content
 
Ÿ
characteristics and quality of products
Ÿ
copyrights
 
Ÿ
services

Laws and regulations directly applicable to electronic commerce or Internet communications are becoming more prevalent. We believe that our use of third party material on our website is permitted under current provisions of copyright law. Because legal rights to certain aspects of Internet content and commerce are not clearly settled, our ability to rely upon exemptions or defenses under copyright law is uncertain. Also, although not yet enacted, Congress is considering laws regarding Internet taxation. In addition, various jurisdictions already have enacted laws that are not specifically directed to electronic commerce but that could affect its business. The applicability of many of these laws to the Internet is uncertain and could expose the Company to substantial liability. Any new legislation or regulation regarding the Internet, or the application of existing laws and regulations to the Internet, could materially and adversely affect the Company. If the Company were alleged to violate federal, state or foreign, civil or criminal law, even if the Company could successfully defend such claims, it could materially and adversely affect the Company.

 
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Additionally, several telecommunications carriers are seeking to have telecommunications over the Internet regulated by the Federal Communications Commission in the same manner as other telecommunications services.  Furthermore, local telephone carriers have petitioned the Federal Communications Commission to regulate Internet service providers and online service providers in a manner similar to long distance telephone carriers and to impose access fees on such providers. If either of these petitions are granted, the costs of communicating on the Internet could increase substantially. This, in turn, could slow the growth of use of the Internet. Any such legislation or regulation could materially and adversely affect its business, financial condition and operating results.

Research and Development

Amexdrug engages in some research and development of its products from time to time.  Total research and development costs were $0 and $0 for the years ended December 31, 2011 and 2010, respectively.  Amexdrug anticipates that it likely will not incur any research and development costs in 2012.

Intellectual Property and Patent Protection

We presently have no patents, and we have no immediate plans to pursue any patents.

We believe that protecting the Company’s trademarks and registered domain name is important to our business strategy of building strong brand name recognition and that such trademarks have significant value in the marketing of the Company's products. To protect our proprietary rights, the Company will rely on copyright, trademark and trade secret laws, confidentiality agreements with employees and third parties, and license agreements with consultants, vendors and customers. Despite such protections, however, we may be unable to fully protect our intellectual property.

Dependence on major suppliers

During the year ended December 31, 2011, purchases from two suppliers accounted for 79% and 14% of total purchases, respectively. Accounts payable to these two suppliers accounted for 75% and 13% of the total accounts payable balance as of December 31, 2011, respectively.  During the year ended December 31, 2010, purchases from the same two suppliers accounted for 79% and 14% of our total purchases, respectively.  Accounts payable to these two suppliers accounted for 79% and 14% of the total accounts payable balance as of December 31, 2010. We presently enjoy a good relationship with our suppliers.  If for any reason our business with our suppliers was interrupted or discontinued in the future, we would be able to acquire most, if not all, of the same products from other suppliers at similar competitive prices.  However, the loss of our largest supplier could have a potential negative effect upon our future operations.

Dependence on major customers

One customer(s) accounted for 10% or more of our sales during the year ended December 31, 2011.  One customer accounted for 10% or more of our sales during the year ended December 31, 2010. That customer accounted for approximately 15% of our 2011 sales and 16% of our 2010 sales.

 
13
 
Employees

The Company currently employs six full time and three part time employees. Labor unions do not represent any of these employees. The Company considers its employee relations to be good. Competition for qualified personnel in its industry is intense, particularly for technical staff responsible for marketing, advertising, web development, and general and administrative activities.

Employees will be permitted to participate in employee benefit plans of the Company that may be in effect from time to time, to the extent eligible.

Physical facilities

The Company's principal executive offices and its warehouse and distribution operations moved to 7251 Condor Street, Commerce California in March 2011.  The Company leases 27,500 square feet at a rental rate of $7,700 per month.  The rental amount is scheduled to increase to $8,800 per month effective March 1, 2013.  Approximately 2,500 square feet of the premises is used for executive offices, and the balance of the premises is used for warehouse and distribution operations.  The lease is for a period of three years which commenced on March 1, 2011 and terminates on February 28, 2014.  The Company has the option to extend the lease for two additional three year periods.  If the Company exercises the first option to extend, the rental rate would increase to $9,900 per month effective March 1, 2014, $11,000 per month effective March 1, 2015 and $11,550 per month effective March 1, 2016. If the Company exercises the second option to extend, the rental rate would be adjusted to a fair market rental value as may be agreed to by the parties or as may be determined by an appraiser or arbitrator as provided in the Option to Extend Addendum. Payment of the lease has been personally guaranteed by Jack Amin and his wife, Nora Amin.  The Company believes this space will be sufficient for at least the next twelve months.

The Company’s Dermagen, Inc. manufacturing operations are currently located at 2500 East Fender Avenue, Units I&J, Fullerton, California, which is leased under one lease agreement dated March 1, 2011.  The Company leases approximately 3,520 square feet at a rental rate of $2,464 per month.  The lease was amended in early 2012 to extend the lease term for a period of one year.  The lease will now expire on February 28, 2013.  Payment of the lease has been personally guaranteed by Jack Amin. The Company believes this space will be sufficient for at least the next twelve months.

The Company believes that the various facilities covered by the leases described above will be sufficient for at least the next twelve months.

Company history prior to the acquisition of Allied Med, Inc.

The Company was incorporated under the laws of the State of California on April 30, 1963 with authorized common stock of 10,000,000 shares at a par value of $.10 and 1,000,000 preferred shares with a par value of $1.00 under the name of Harlyn Products, Inc.  Harlyn Products, Inc. was engaged in the business of selling jewelry to department stores until the mid-1990s.

Solely for the purpose of changing domicile from California to Nevada, on December 12, 2001, Amexdrug Corporation, a California corporation, entered into a certain Merger Agreement with a newly formed, wholly-owned subsidiary Nevada corporation named Amexdrug Corporation.  The Nevada corporation had been incorporated on December 4, 2001. As a result of the merger, which became effective on December 17, 2001, the Company became a Nevada corporation and the separate existence of the California corporation ceased. At the time of the merger, the Company changed its fiscal year end from June 30 to December 31.

 
14
 
Asset acquisitions following the acquisition of Allied Med, Inc.

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

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

Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005 with Amexdrug paying $70,000 cash to the Dermagen, Inc. shareholders.  Dermagen, Inc. is now an operating subsidiary of Amexdrug.

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

New subsidiaries formed

On October 28, 2004, Amexdrug formed a new subsidiary, Royal Health Care, Inc. as a Nevada corporation. Royal Health Care, Inc. was formed to manufacture and sell health and beauty products.  Currently, Royal Health Care, Inc. has no assets, liabilities, or operations.

On November 8, 2004, Amexdrug formed anew subsidiary,BioRx Pharmaceuticals, Inc. as a Nevada corporation.  BioRx Pharmaceuticals, Inc.’s expertise lies in the manufacturing of pharmacy supplies and in conducting research and development of products for the healthcare industry.  BioRx manufactures, develops distributes effective pharmaceuticals and cosmeceuticals, OTC products, and natural care products for the foot, nails, hair and for arthritis.  Currently, BioRx Pharmaceuticals, Inc. has assets, liabilities, and operations.

 
15
 
 
 
ITEM 1A. RISK FACTORS
 
 
You should carefully consider the risks and uncertainties described below and other information in this report. If any of the following risks or uncertainties actually occur, our business, financial condition and operating results, would likely suffer. Additional risks and uncertainties, including those not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or operating results.

Risks Relating to Our Business

The industry in which Amexdrug operates is highly competitive and could affect our results of operations.

The industry in which we operate is highly competitive and is marked by changes and new products. Our competitors and potential competitors include many large national and international companies as well as medium and small sized companies. Most existing and potential competitors have greater financial resources, larger market share, and larger production and research capability, which may enable them to establish and/or maintain a stronger competitive position than we have. If we fail to address competitive developments quickly and effectively, we will not be able to grow our business or remain a viable entity.

Our business could be adversely affected by any adverse economic developments in wholesale pharmaceutical distribution and health and beauty products.

We depend on the demand for our products in the U.S. Therefore, our business is susceptible to downturns in the wholesale pharmaceutical distribution and health and beauty products industry and the economy in general. Any significant downturn or worsening in the market or in general economic conditions would likely hurt our business.

If we fail to keep up with changes affecting our products, we will become less competitive and thus adversely affect future financial performance.

In order to remain competitive, we must respond on a timely and cost-efficient basis to changes in our industry in general, industry standards and procedures and customer preferences. Management believes that to remain competitive, we will need to continuously obtain and/or develop new products and applications for existing products. In some cases these changes may be significant and the cost to comply with these changes may be substantial. We cannot assure you that we will be able to adapt to any changes in the future or that we will have the financial resources to keep up with changes in the marketplace. Also, the cost of adapting to any changes in our products may have a material and adverse effect on our operating results.

Our business could be adversely affected by local, state, national, international laws or regulations.

Our future success depends in part on laws and regulations that exist, or are expected to be enacted in the geographical areas where we do business. These laws and regulations could negatively affect our business and anticipated revenues. We cannot guarantee a positive outcome in direction, timing, or scope of laws and regulations that may be enacted which will affect our business.

 
16
 
Our future success depends on retaining our existing key employees and hiring and assimilating new key employees. The loss of key employees or the inability to attract new key employees could limit our ability to execute our growth strategy, resulting in lost sales and a slower rate of growth.

Our future success depends in part on our ability to retain our key employees including our president.  We do not presently have employment agreements with our executives, each executive may be able to terminate his or her agreement at any time. It would be difficult for us to replace our president. In addition, as we grow we may need to hire additional key personnel. We may not be able to identify and attract high quality employees or successfully assimilate new employees into our existing management structure.

We may be unable to protect our intellectual property adequately or cost effectively, which may cause us to lose market share or reduce prices.

Our future success depends in part on our ability to protect and preserve proprietary rights related to our products. We cannot assure you that we will be able to prevent third parties from using our intellectual property rights and technology without our authorization. We have not obtained any patents on our products.  We rely on trade secrets, common law trademark rights and trademark registrations. We may also employ confidentiality and work for hire, development, assignment and license agreements with employees, consultants, third party developers, licensees and customers. However, these measures afford only limited protection and may be flawed or inadequate. Also, enforcing intellectual property rights could be costly and time-consuming and could distract management’s attention from operating business matters.

Our intellectual property may infringe on the rights of others, resulting in costly litigation.

In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. In particular, there has been an increase in the filing of suits alleging infringement of intellectual property rights, which pressure defendants into entering settlement arrangements quickly to dispose of such suits, regardless of their merits. Other companies or individuals may allege that we infringe on their intellectual property rights. Litigation, particularly in the area of intellectual property rights, is costly and the outcome is inherently uncertain. In the event of an adverse result against future rights we may acquire, we could be liable for substantial damages and we may be forced to discontinue our use of the subject matter in question or obtain a license to use those rights or develop non-infringing alternatives. Any of these results would increase our cash expenditures, adversely affecting our financial condition.

Risks Relating to Ownership of Our Common Stock

We cannot assure you that there will be an active trading market for our common stock and it could be difficult for holders of our common stock to liquidate their shares.

Our common stock is quoted on the OTC Bulletin Board.  The price of our shares has been volatile, our shares are thinly traded, and liquidation of a person’s holdings may be difficult. Thus, holders of our common stock may be required to retain their shares for a long period of time.
 
 
17
 
 
We do not anticipate paying dividends in the foreseeable future, which could make our stock less attractive to potential investors.

We anticipate that we will retain any future earnings and other cash resources for future operations and development of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.

Future sales or the potential for sale of a substantial number of shares of our common stock could cause our market value to decline and could impair our ability to raise capital through subsequent equity offerings.

Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our common stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities.

It may be difficult for a third party to acquire us, and this could depress our stock price.

Under Nevada corporate law, we are permitted to include or exclude certain provisions in our articles of incorporation and/or by-laws that could discourage information contests and make it more difficult for you and other stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. For example:

·
Under Nevada law, we are not required to provide for, and our by-laws do not provide for, cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and
   
·
Stockholders cannot call a special meeting of stockholders unless they, in the aggregate, hold at least 10% of our common stock.
 
Trading in our shares is subject to certain "penny stock” regulation which could have a negative effect on the price of our shares in the public trading market.
 
Public trading of our common stock on the OTCBB is subject to certain provisions, commonly referred to as the penny stock rule, promulgated under the Securities Exchange Act of 1934. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our stock is deemed to be a penny stock, trading in our stock will be subject to additional sales practice requirements on broker-dealers. These may require a broker dealer to:
 
·
make a special suitability determination for purchasers of penny stocks;
   
·
receive the purchaser's written consent to the transaction prior to the purchase; and
   
·
deliver to a prospective purchaser of a penny stock, prior to the first transaction, a risk disclosure document relating to the penny stock market.
 
 
Consequently, penny stock rules restrict the ability of broker-dealers to trade and/or maintain a market in our common stock. Also, many prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.

 
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ITEM 1B. UNRESOLVED STAFF COMMENTS
 

Not applicable.


ITEM 2. PROPERTIES
 

Executive offices and Operating facilities

The Company's principal executive offices and its warehouse and distribution operations moved to 7251 Condor Street, Commerce California in March 2011.  The Company leases 27,500 square feet at a rental rate of $7,700 per month.  The rental amount is scheduled to increase to $8,800 per month effective March 1, 2013.  Approximately 2,500 square feet of the premises is used for executive offices, and the balance of the premises is used for warehouse and distribution operations.  The lease is for a period of three years which commenced on March 1, 2011 and terminates on February 28, 2014.  The Company has the option to extend the lease for two additional three year periods.  If the Company exercises the first option to extend, the rental rate would increase to $9,900 per month effective March 1, 2014, $11,000 per month effective March 1, 2015 and $11,550 per month effective March 1, 2016. If the Company exercises the second option to extend, the rental rate would be adjusted to a fair market rental value as may be agreed to by the parties or as may be determined by an appraiser or arbitrator as provided in the Option to Extend Addendum. Payment of the lease has been personally guaranteed by Jack Amin and his wife, Nora Amin.  The Company believes this space will be sufficient for at least the next twelve months.

The Company’s Dermagen, Inc. manufacturing operations are currently located at 2500 East Fender Avenue, Units I &J, Fullerton, California, which is leased under one lease agreement dated March 1, 2011.  The Company leases approximately 3,520 square feet at a rental rate of $2,464 per month.  The lease was initially for a period of one year which commenced on March 1, 2011. In early 2012, the parties executed an Amendment to extend the lease term for one year.  It will now expire on February 28, 2012.  Payment of the lease has been personally guaranteed by Jack Amin. The Company believes this space will be sufficient for at least the next twelve months.

Adequacy of Facilities

The Company believes that the various facilities covered by the leases described above will be sufficient for at least the next twelve months.

 
 

ITEM 3. LEGAL PROCEEDINGS
 
 
 
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Amexdrug is not presently a party to any material pending legal proceedings.  To the best of Amexdrug’s knowledge, no governmental authority or other party has threatened or is contemplating the filing of any material legal proceeding against Amexdrug.


ITEM 4. MINE SAFETY DISCLOSURES
 
   
Not Applicable.
 
PART II

   
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
 

Market information

Our common stock is presently traded in the over-the-counter market and quoted on the National Association of Securities Dealers’ OTC Bulletin Board under the ticker symbol "AXRX.OB".  The shares are thinly traded and a limited market presently exists for the shares.  The following table describes, for the respective periods indicated, the prices of Amexdrug common stock in the over-the-counter market, based on inter-dealer bid prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.  The quotations have been provided by OTC Markets.

Quarter ended
 
High bid
   
Low bid
 
             
March 31, 2010
  $ 1.50     $ 0.10  
June 30, 2010
  $ 1.50     $ 0.51  
September 30, 2010
  $ 1.50     $ 1.50  
December 31, 2010
  $ 1.50     $ 1.50  
                 
March 31, 2011
  $ 1.50     $ 0.10  
June 30, 2011
  $ 1.50     $ 0.51  
September 30, 2011
  $ 1.50     $ 1.50  
December 31, 2011
  $ 1.50     $ 1.50  

Based on its trading price, our common stock is considered a “penny stock” for purposes of federal securities laws, and therefore has been subject to certain regulations, which are summarized below.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires special disclosure relating to the market for penny stocks in connection with trades in any stock defined as a “penny stock.”  Specifically, Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934 (the “Exchange Act”) impose sales practice and disclosure requirements on NASD broker-dealers who make a market in a “penny stock.”  Securities and Exchange Commission regulations generally define a penny stock to be an equity security that has a market price of less than $5.00 per share and is not listed on The NASDAQ SmallCap Stock Market or a major stock exchange. These regulations affect the ability of broker-dealers to sell the Company’s securities and also may affect the ability of purchasers of the Company’s common stock to sell their shares in the secondary market.

 
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Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor,” generally, an individual with net worth in excess of $1,000,000 (not including the net value of the person’s primary residence) or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.
 
As long as the penny stock regulations apply to the Company’s stock, it may be difficult to trade such stock because compliance with the regulations can delay and/or preclude certain trading transactions.  Broker-dealers may be discouraged from effecting transactions in the Company’s stock because of the sales practice and disclosure requirements for penny stock. This could adversely affect the liquidity and/or price of the Company’s common stock, and impede the sale of the Company’s stock.

Holders

The number of record holders of Amexdrug's common stock as of March 27, 2012 is approximately 192.  This number does not take into consideration stockholders whose shares are held by broker-dealers, finance institutions or other nominees.

Dividend Policy

Amexdrug has not declared any cash dividends with respect to its common stock during the last two fiscal years, and we do not intend to declare dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, Amexdrug’s ability to pay dividends on our securities, except for any applicable limitations under Nevada corporate law.

Equity Compensation Plans

The Company has not approved any compensation plans under which equity securities of the Company are authorized for issuance.

Recent sales of unregistered securities

During the past three years, Amexdrug has not sold any shares of its common stock without registration under the Securities Act of 1933.

 
21
 

ITEM 6. SELECTED FINANCIAL DATA

A smaller reporting company is not required to provide the information specified by this item.

   
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION
AND RESULTS OF OPERATION
 

Forward Looking Statements

The following information contained in this Item 7 should be read in conjunction with the financial statements and accompanying notes and the other financial information appearing elsewhere in this Form 10-K. The Company’s fiscal year end is December 31.

This report and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, statements as to management’s good faith expectations and beliefs, which are subject to inherent uncertainties which are difficult to predict and may be beyond the ability of the Company to control. Forward-looking statements are made based upon management’s expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.

The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.

These risks and uncertainties, many of which are beyond the Company’s control, include (i) the sufficiency of existing capital resources and our ability to raise additional capital to fund cash requirements for future operations; and (ii) general economic conditions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations may prove to be incorrect.

Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s view only as of the date of this report. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.

 
22
 
Overview

Amexdrug Corporation is located at 7251 Condor Street, Commerce, California 90040.  Its phone number is (323) 725-3100.  Its fax number is (323) 725-3133. 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 29 years.

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

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

BioRx Pharmaceuticals, Inc. is a proud member of the National Association of Chain Drug Stores (NACDS).  BioRx Pharmaceuticals, Inc. has developed fourteen   unique innovative products in the industry under the name Sponix.

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 Amazon, and hundreds of independent pharmacies.  Of the estimated 100,000 retailers (drug stores and food mass), our goal is to have 20,000 stores carry our products in 2012.

The accompanying financial information includes the operations of Allied Med, Inc. and the operations of Amexdrug Corporation for all periods presented.

Results of operations for the years ended December 31, 2011 and 2010

Revenues

For the year ended December 31, 2011, Amexdrug reported sales of $12,406,571, comprised of $10,972,638 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 $1,433,933 of sales of health and beauty products manufactured by the Company. This was $919,394 more than the $11,487,177 of sales reported for the year ended December 31, 2010 which was comprised primarily of $10,394,727 sales from the Company’s pharmaceutical wholesale distribution business of selling brand name generic pharmaceutical products, and over-the-counter (OTC) health and beauty products and $1,092,450 of sales of health and beauty products manufactured by the Company. The increase in sales is primarily due   to an increase in marketing efforts, as well as having an increased number of products to sell .
 
 
23
 
 
Costs of Goods Sold

Cost of goods sold for the year ended December 31, 2011 was $11,410,825, an increase of $886,326 from the $10,524,499 cost of goods sold for the year ended December 31, 2010.

Gross Profit

During the year ended December 31, 2011 gross profit increased by $33,068 to $995,746 or 8.0% of sales from the $962,678 or 8.4% of sales recorded for the year ended December 31, 2010.  The Company attributes its increase in gross profit margin in 2011 due primarily to an increase in sales.

Expenses

Total operating expenses for the year ended December 31, 2011 were $768,030, an increase of $103,882 from the total operating expenses of $664,148 recorded for the year ended December 31, 2010.  Selling, general and administrative expense was $768,030 for the year ended December 31, 2011, an increase of $103,882 from the $664,148 recorded for the year ended December 31, 2010.  This increase in selling, general and administrative expense is primarily attributable to an increase in officer compensation.

Net Income

During the year ended December 31, 2011, Amexdrug experienced net income of $100,647.  This was $88,415 less than the $189,062 of net income recorded for the year ended December 31, 2010. This decrease in net income is largely attributable to increases in selling, general and administrative expenses and income tax expenses.

Liquidity and capital resources – December 31, 2011

As of December 31, 2011, Amexdrug reported total current assets of $1,501,822, comprised primarily of cash and cash equivalents of $589,472, accounts receivable of $653,949, inventory of $198,176, and prepaid expenses of $45,513. Total assets as of December 31, 2011 were $1,598,502, which included total current assets of $1,501,822, plus net property and equipment of $49,890, other deposits of $28,212, goodwill of $17,765 and trademarks of $813.

Amexdrug’s current liabilities as of December 31, 2011 consist primarily of accounts payable of $463,098, notes payable to a related party of $108,023, accrued liabilities of $31,098, business line of credit balance of $631,903 and a deferred operating lease liability of $14,132.

During the year ended December 31, 2011, Amexdrug used $137,016 cash in operating activities compared to $226,784 cash generated in operating activities in the year ended December 31, 2010.  The primary adjustments to reconcile net income to net cash used in operating activities during 2011 were as follows:  an increase in accounts receivable of $164,527, a decrease in accounts payable and accrued liabilities of $68,248, a decrease in inventory of $106,011, a decrease in deferred tax asset of $40,540, an increase in prepaid expenses of $37,434, and a decrease in corporate income tax payable of $108,304.  Cash increased during the year ended December 31, 2011 by $145,769 compared to an increase during 2010 of $322,521. Amexdrug had a cash balance of $589,472 at December 31, 2011.  Operations have primarily been funded through an increase in the credit line balance and through net income. Management does not anticipate that Amexdrug will need to seek additional financing during the next twelve months.

 
24
 
Business Line of Credit

The Company has a business line of credit with National Bank of California.  In December 2011, the maximum credit line was increased to $700,000.

Stock Repurchases

Between approximately June 2007 and December 31, 2011, Amexdrug repurchased a total of 13,972   shares of its common stock at prices ranging from a low of $0.20 per share to a high of $3.03 per share.  These shares are held by Amexdrug as treasury shares.

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 $42,456 and $4,038 on capital expenditures during the years ended December 31, 2011 and 2010, respectively.  The Company has no current plans for capital expenditures.

Critical Accounting Policies

In the notes to the audited consolidated financial statements for the year ended December 31, 2011, included in this Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

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

Recent Accounting Pronouncements

For a description of recent accounting pronouncements adopted by the Company see the footnotes to the Company’s consolidated financial statements.

 
25
 
   
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 

A smaller reporting company is not required to provide the information specified by this item.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
   
Amexdrug’s consolidated audited balance sheets as of December 31, 2011 and 2010, Amexdrug’s consolidated audited statements of income, stockholders’ equity, and cash flows for the fiscal years ended December 31, 2011 and 2010 are included hereafter.

 

AMEXDRUG CORPORATION AND SUBSIDIARIES


INDEX TO FINANCIAL STATEMENTS
 

 
Page
   
Reports of Independent Registered Public Accounting Firms
27
   
Consolidated Balance Sheets — December 31, 2011 and 2010
28
   
Consolidated Statements of Income for the Years Ended December 31, 2011 and 2010
29
   
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2011 and 2010
30
   
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 and 2010
31
   
Notes to Consolidated Financial Statements
32


 
26
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders
Amexdrug Corporation
Commerce, California


We have audited the consolidated balance sheets of Amexdrug Corporation as of December 31, 2011 and 2010, and the related consolidated statements of income, shareholders' equity, and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Amexdrug Corporation as of December 31, 2011 and 2010, and the results of their operations and cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.


/s/ HJ Associates & Consultants, LLP

HJ Associates & Consultants, LLP
Salt Lake City, Utah
March 30, 2012
 
 
 
27
 
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 
   
December 31,
2011
   
December 31,
2010
 
             
Assets
           
Current Assets
           
   Cash and cash equivalents
  $ 589,472     $ 443,703  
   Investment
    2,112       7,649  
   Accounts receivable, net of allowance of $21,561 and 37,000, respectively
    653,949       473,983  
   Prepaid expenses
    45,513       8,079  
   Inventory, net of allowance of $0 andd $33,613, respectively
    198,176       304,186  
   Deferred tax asset
    12,600       53,140  
   Advances officer
    -       3,918  
                 
                   Total Current Assets
    1,501,822       1,294,658  
                 
Property and Equipment, at cost
               
   Office and computer equipment
    239,752       197,295  
   Leasehold improvements
    15,700       15,700  
      255,452       212,995  
   Less accumulated depreciation
    (205,562 )     (199,364 )
                 
                   Net Property and Equipment
    49,890       13,631  
                 
Other Assets
               
   Other deposits
    28,212       14,462  
   Intangibles
               
      Customer base, net of accumulated amortization of $18,259
    -       -  
      Trademark, net of accumulated amortization of $837 and $629, respectively
    813       1,021  
      Goodwill
    17,765       17,765  
                 
                   Total Other Assets
    46,790       33,248  
                 
                         Total Assets
  $ 1,598,502     $ 1,341,537  
                 
Liabilities and Shareholders' Equity
               
Current Liabilities:
               
   Accounts payable
  $ 463,098     $ 534,337  
   Accrued liabilities
    31,098       29,776  
   Deferred operating lease liability
    14,132       -  
   Corporate tax payable
    -       108,304  
   Loan, officer
    1,671       -  
   Notes payable related parties
    108,023       108,023  
   Business lines and short term promissory note
    631,903       310,590  
                 
                   Total Current Liabilities
    1,249,925       1,091,030  
                 
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
    (13,972 )     (11,441 )
   Retained earnings
    270,733       170,132  
                 
                   Total Shareholders' Equity
    348,577       250,507  
                 
Total Liabilities and Shareholders' Equity
  $ 1,598,502     $ 1,341,537  
 
The accompanying notes are an integral part of these consolidated financial statements.
 

 
28
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Year Ended
       
   
December 31,
2011
   
December 31,
2010
 
             
Sales
  $ 12,406,571     $ 11,487,177  
                 
Cost of Goods Sold
    11,410,825       10,524,499  
                 
Gross Profit
    995,746       962,678  
                 
Operating Expenses
               
   Selling, general and administrative expense
    768,030       664,148  
                 
              Total Operating Expenses
    768,030       664,148  
                 
Income  before depreciation expense
    227,716       298,530  
                 
   Depreciation and amortization expense
    6,407       8,102  
                 
Income before Other Income/(Expenses)
    221,309       290,428  
                 
Other Income/(Expenses)
               
   Interest and other income
    7       1,668  
   Penalty
    (4,098 )     -  
   Realized gain/(loss)
    -       (3,341 )
   Unrealized gain/(loss)
    (2,995 )     2,584  
   Interest expense
    (27,276 )     (25,486 )
                 
              Total Other Income/(Expenses)
    (34,362 )     (24,575 )
                 
Income before Provision for Income Taxes
    186,947       265,853  
                 
Income tax expense
    (86,300 )     (76,791 )
                 
Net Income
  $ 100,647     $ 189,062  
                 
BASIC AND DILUTED INCOME PER SHARE
  $ 0.01     $ 0.02  
                 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
 
      BASIC AND DILUTED
    8,470,481       8,470,481  
 
 
The accompanying notes are an integral part of these consolidated financial statements.

 
29
 
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Year Ended
       
   
December 31,
2011
   
December 31,
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 100,647       189,062  
Adjustment to reconcile net income to net cash  used in operating activities
               
Depreciation and amortization
    6,407       8,102  
Allowance for doubtful accounts
    (15,439 )     4,747  
Unrealized (gain)/loss on investment
    2,995       (2,584 )
 Realized loss on sale of investment
    -       3,341  
Change in Assets and Liabilities
               
 Loss on Inventory
    -       33,613  
Adjustment to retained earnings
    (46 )     -  
 (Increase) Decrease in:
               
Accounts receivable
    (164,527 )     (48,546 )
Inventory
    106,011       (179,990 )
Prepaid expenses
    37,434       (8,079 )
Other receivable
    -       18,274  
Deferred tax asset
    40,540       (39,362 )
Other assets
    (13,750 )     (2,304 )
Increase (Decrease) in:
               
Accounts payable and accrued liabilities
    (68,248 )     147,373  
Deferred operating lease liability
    14,132       -  
Corporate income tax payable
    (108,304 )     103,137  
                 
NET CASH USED IN OPERATING ACTIVITIES
    (137,016 )     226,784  
                 
Net CASH FLOWS USED IN INVESTING ACTIVITIES:
               
Proceeds from the sale of investment
    2,542       1,515  
Purchase of investments     -        (2,431 )
Purchase of fixed assets
    (42,456 )     (4,038 )
                 
NET CASH USED IN INVESTING ACTIVITIES
    (39,914 )     (4,954 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
     Advances to officer
    -       (2,861 )
     Proceeds from officer
    3,918          
     Purchase of treasury stock
    (2,531 )     (2,157 )
     Proceeds from credit line
    321,312       105,709  
                 
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES
    322,699       100,691  
                 
NET INCREASE/(DECREASE) IN CASH
    145,769       322,521  
                 
                 
CASH, BEGINNING OF PERIOD
    443,703       121,182  
                 
CASH, END OF PERIOD
  $ 589,472     $ 443,703  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
               
Interest paid
  $ 21,666     $ 16,882  
Income taxes
  $ 28,176     $ 7,850  
 
The accompanying notes are an integral part of these consolidated financial statements.

 
 
30
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
 

                           
Retained
       
               
Additional
         
Earnings
   
Total
 
   
Common stock
         
Paid-in
   
Treasury
   
(Accumulated
   
Shareholders'
 
   
Shares
   
Amount
   
Capital
   
Stock
   
Deficit)
   
Equity
 
Balance at December 31, 2009
    8,470,481     $ 8,471     $ 83,345     $ (9,284 )   $ (18,930 )   $ 63,602  
                                                 
Treasury stock
    -       -       -       (2,157 )     -       (2,157 )
                                                 
Net income for the year ended December 31, 2010
    -       -       -       -       189,062       189,062  
                                                 
Balance at December 31, 2010
    8,470,481     $ 8,471     $ 83,345     $ (11,441 )   $ 170,132     $ 250,507  
                                                 
Treasury stock
    -       -       -       (2,531 )     -       (2,531 )
                                                 
Adjustment to retained earnings
    -       -       -       -       (46 )     (46 )
                                                 
Net income for the year ended December 31, 2011
    -       -       -       -       100,647       100,647  
                                                 
Balance at December 31, 2011
    8,470,481     $ 8,471     $ 83,345     $ (13,972 )   $ 270,733     $ 348,577  
 
 
The accompanying notes are an integral part of these consolidated financial statements.

 
31
 
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010



1.   ORGANIZATION AND LINE OF BUSINESS

Amexdrug's wholly owned subsidiaries include Allied Med, Inc., Dermagen, Inc. and BioRx  Pharmaceuticals.

Allied Med, Inc. was formed in October 1997 and is engaged in the pharmaceutical wholesale business of selling brand and generic pharmaceuticals products, over-the-counter drug and non-drug products and health and beauty products to independent and chain pharmacies, alternative care facilities and other wholesalers.

Dermagen, Inc. is a manufacturing company specializing in the manufacturing and distribution of certain pharmaceuticals, medical devices, and health and beauty products. Dermagen has a US Federal Drug Administration (FDA) registered and state FDA approved manufacturing facility license to develop skin and novel health and beauty products for niche markets.

On November 8, 2004, Amexdrug formed a new subsidiary, BioRx Pharmaceuticals, Inc. as a Nevada corporation. BioRx Pharmaceuticals, Inc. was formed for the purpose of repacking and selling generic and branded pharmaceuticals. Currently, BioRx Pharmaceuticals, Inc. has assets, liabilities, and operations.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Amexdrug Corporation and its wholly-owned subsidiaries, Allied Med, Inc., Dermagen, Inc. and BioRx Pharmaceuticals. Inter-company accounts and transactions have been eliminated in consolidation.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Revenue Recognition
The Company generates revenues from the manufacture and resale of pharmaceuticals, over-the-counter products, health and beauty care products and nutritional supplements. The Company accounts for these revenues at the time of shipment to the customer. An allowance for sales returns is provided for products sold on a cash-on-delivery basis that are not accepted or paid for by the customer.

Cash and Cash Equivalent
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Investments
Certificate of Deposits with banking institutions are short-term investments with initial maturities of more than 90 days. The carrying amount of these investments is a reasonable estimate of fair value due to their short-term nature.
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements.  Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuationallowance, and the fair value of stock options. Actual results could differ from those estimates.


 
32
 

AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment
Property and equipment are stated at cost, and are depreciated using the modified accelerated cost recovery system (macrs) method over its estimated useful lives:
 
Machinery & Office equipment
 
3-10 Years
Leasehold improvements
 
2-5 Years
 
Depreciation expense was $6,199 and $7,938 for the years ended December 31, 2011 and 2010, respectively

Fair Value of Financial Instruments
Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2011, the amounts reported for cash, accounts receivable, accounts payable, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.

Basic Income per Share Calculations
Basic income per share is computed by dividing net income by the weighted-average number of common shares outstanding. As of December 31, 2011 and 2010, the Company did not have any potentially issuable common shares outstanding; accordingly, diluted income per share is not applicable to the Company and is not presented.

Income Taxes
The Company uses the liability method of accounting for income taxes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.  The measurement of deferred tax assets and liabilities is based on provisions of applicable tax law.  The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based on the amount of tax benefits that, based on available evidence, is not expected to be realized.

Research and Development
 
Research and development costs are expensed as incurred.  Total research and development costs were $0 for the years ended December 31, 2011 and 2010, respectively.

Advertising Costs
 
The Company expenses the cost of advertising and promotional materials when incurred.  Total advertising costs were $5,349 and $7,096 for the years ended December 31, 2011 and 2010, respectively.

Stock based Compensation
Share-based Payment applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. Under SFAS 123R, we will be required to follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. The adoption of this accounting pronouncement has not had a material impact on our results of operations.
 
 
33
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010


 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Concentration of Credit Risk

The Company's historical revenues and receivables have been derived solely from the pharmaceutical industry. Although the Company primarily sells products on a cash-on-delivery basis, the Company also sells products to certain customers under credit terms. The Company performs ongoing credit evaluations of its customers' financial conditions and usually requires a delayed check depository from its customers at the date products are shipped. The Company maintains an allowance for accounts receivable that may become uncollectible.

During the year ended December 31, 2011, purchases from two vendors accounted for 79% and 14% of total purchases, respectively. Accounts payable to these vendors accounted for 75% and 13% of the total accounts payable balance as of December 31, 2011, respectively. During the year ended December 31, 2010, purchases from those two vendors accounted 79% and 14% of total purchases, respectively. Accounts payable to these vendors accounted for 79% and 14% of the total accounts payable balance as of December 31, 2010. The loss of these vendors could have a potential negative effect upon the Company's future operations.

Accounts Receivable

An allowance for uncollectible accounts receivable is established by charges to operations for amounts required to maintain an adequate allowance, in management's judgment, to cover anticipated losses from customer accounts and sales returns. Such accounts are charged to the allowance when collection appears doubtful. Any subsequent recoveries are credited to the allowance account.

Inventory

Inventory includes purchased products for resale and raw materials and supplies necessary to manufacture pharmaceuticals, medical devices, and health and beauty products and is stated at the lower of cost (using the first-in, first-out method) or market value. Provisions, when required, are made to reduce excess and expired inventory to its estimated net realizable value. Although competitive pressures and pharmaceutical advancements expose the Company to the risk that estimates of the net realizable could change in the near term, the Company's agreements with most vendors provide for the right of return of outdated or expired inventory. The Company is exposed to other ownership related risks associated with inventory. Inventory consists of the following:
 
 
    2011         2010  
             
 Raw Materials   $ 16,170     $ 11,000  
 Finished goods     182,006       293,186  
                 
 Total inventory   $ 198,176     $ 304,186  
 
Intangible Assets
The estimated fair value of Dermagen's customer base was recorded as an intangible asset at the date of acquisition and is amortized over the estimated useful life of the customer base, which is three years.

Trademarks are recorded at cost and are amortized over their estimated useful life, which is ten years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted cash flows.
 
34
 
AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Intangible Assets (Continued)
Goodwill represents the excess of the purchase price of Dermagen, Inc. over the fair value of its net assets at the date of acquisition. Goodwill is not amortized, but is tested for impairment quarterly or when a triggering event occurs. The testing for impairment requires the determination of the fair value of the asset or entity to which the goodwill relates (the reporting unit). The fair value of a reporting unit is determined based upon an eighth of the quoted market price of the Company's common stock and present value techniques based upon estimated future cash flows of the reporting unit, considering future revenues, operating costs, the risk-adjusted discount rate and other factors. Impairment is indicated if the fair value of the reporting unit is allocated to the assets and liabilities of that unit, with the excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities assigned to the fair value of goodwill. The amount of impairment of goodwill is measured by the excess of the goodwill's carrying value over its fair value. As of December 31, 2011 and 2010, the Company's goodwill was not deemed to be impaired.

The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable. The Company evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment. The Company uses an estimate of future undiscounted net cash flows from the related asset or group of assets over their remaining life in measuring whether the assets are recoverable. As of December 31, 2011, based on the analysis of estimated undiscounted future net cash flows, the Company did not consider any of its long-lived assets to be impaired.
 
3.    INTANGIBLE ASSETS

 
Intangible assets that have finite useful lives continue to be amortized over their useful lives, and are reviewed for impairment when warranted by economic condition.
 
 
 
Useful Lives
 
2011
   
2010
 
               
Trademarks
    $ 1,650     $ 1,650  
Less accumulated amortization
10 years
    (837 )     (629 )
      $ 813     $ 1,021  
                   
Customer base
    $ 18,259     $ 18,259  
Less accumulated amortization
3 years
    (18,259 )     (18,259 )
      $ -     $ -  
 
In aggregate, the Company recognized amortization expense of $208 and $165 for the years ended December 31, 2011 and 2010, respectively.

4.   RENTAL LEASES

The Company’s leases expired during 2011, and were renewed on a month-to-month basis. Rent expense is recognized on a straight-line basis over the term of the leases. Also, the Company moved to a new facility during the year and signed a new operating lease for three years as of March 1, 2011. The monthly lease payments per month are $7,600. The lease of the facility expires in 2014. Rent expense is recognized on a straight-line basis over the term of the leases. Rent expense relating to its operating facility for the years ended December 31, 2011 and 2010 was $127,556 and $100,360, respectively.

As of December 31, 2011, the Company had refundable deposits relating to these operating leases of $28,212.

 
35
 

AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010


5. 
 INCOME TAXES

 
The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2009.

 
Accounting for Uncertainty in Income Taxes was adopted by the Company on January 1, 2007.  The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended December 31, 2011 and 2010, the Company did not recognize interest and penalties.

6.
DEFERRED TAX BENEFIT

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
 
 
The provision (benefit) for income taxes for the years ended December 31, 2011 and 2010 consist of the following:

     
2011
   
2010
 
Federal:
           
  Current
  $ 4,800     $ 87,565  
  Deferred
  $ 4,100     $ (30,440 )
                 
State
               
  Current
  $ 2,000     $ 25,665  
  Deferred
  $ 1,700     $ (8,922 )
    $ 12,600     $ 73,868 )

 
Net deferred tax assets consist of the following components as of December 31, 2011 and 2010:

   
2011
   
2010
 
Deferred Tax Assets:
           
  Depreciation
  $ 4,100     $ 20,011  
  Related Party Accruals
    300     $ 3,370  
  Allowance for Doubtful Accounts
    6,500     $ 14,430  
  Allowance for Inventory
    -     $ 13,109  
  Unrealized gain/(loss)
    1,700     $ 2,220  
                 
Deferred Tax Liabilities:
      -     $ -  
                 
Net Deferred Tax Asset:
  $ 12,600     $ 53,140  

 
 
36
 

AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010



6.
DEFERRED TAX BENEFIT (Continued)

 
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rate of 30.11% to pretax income from continuing operations for the years ended December 31, 2011 and 2010 due to the following:
 
   
2011
   
2010
 
             
Book income
  $ 56,300     $ 103,683  
State income taxes
    (2,700 )     (9,363 )
Depreciation
    (12,000 )     489  
M & E
    1,700       1,099  
Non deductible expenses
    1,200       -  
Related party accrual
    (2,300 )     3,370  
Unrealized gain/(loss)
    900       (1,008 )
Allowance for doubtful accounts
    (4,600 )     1,851  
Allowance for Inventory
    (10,100 )     13,109  
Prior Year Tax Expense Over Estimate
    17,000       -  
Change in Deferred Tax Asset
    40,900       -  
Valuation Allowance
    -       -  
                 
Income tax expense
  $ 86,300     $ 113,230  

 
7.   RELATED PARTY TRANSACTIONS

 
The Company borrowed $109,202 from a shareholder to facilitate the purchase of Dermagen and to cover operating expenses. The balance of $108,023 is payable on demand and carries an annual interest rate of 8%, payable every 6 months.The interest paid as of December 31, 2011 and 2010 was $16,317 and $0 respectively.

8.
 BANK LINE OF CREDIT

 
The Company received a line of credit from Wells Fargo Bank for $70,000, which as of December 31, 2011 and 2010 has a balance owing of $5,096 and $65,988 respectively. The interest rate is prime plus 4% payable every month.

9.   PROMISSORY NOTE

 
The Company renewed a promissory note during June 2011 from National Bank of California for $700,000, which as of December 31, 2011 and 2010 has a balance owing of $626,807 and $244,602 respectively. The interest rate is 2.5% over the index payable every month. The note matures in June 2012.


 
37
 

AMEXDRUG CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010


10.  
BUSINESS SEGMENT INFORMATION

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

 
The following tables describe information regarding the operations and assets of these reportable business segments:
                   
         
Health and
       
         
Beauty
       
   
Distributions
   
Products
   
Total
 
For the year ended December 31, 2011
                 
     Sales to external customers
  $ 10,972,638     $ 1,433,933     $ 12,406,571  
     Depreciation and amortization
    3,527       2,880       6,407  
     Segment income (loss) before taxes
    616,871       (429,924 )     186,947  
     Segment assets
    1,265,427       330,075       1,598,502  
                         
For the year ended December 31, 2010
                       
     Sales to external customers
  $ 10,394,727     $ 1,092,450     $ 11,487,177  
     Depreciation and amortization
    4,736       3,367       8,103  
     Segment income (loss) before taxes
    249,804       48,618       298,422  
     Segment assets
    794,331       522,936       1,317,267  
 
11.
 SUBSEQUENT EVENTS
 
 
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has determined there are no subsequent events to be reported.


 
38
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
 

Not Applicable.


ITEM 9A. CONTROLS AND PROCEDURES
 

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, Jack Amin, acting as our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of December 31, 2011. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective 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.

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the required time periods and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.  The effectiveness of any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate improper conduct completely.  A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.  As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud.

 
39
 
Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.  Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles.  Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance of achieving their control objectives.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)in Internal Control -Integrated Framework.  Based upon this evaluation our management, including the Chief Executive Officer and Principal Financial Officer, has concluded that our internal controls over financial reporting were effective as of December 31, 2011.
 
During the quarter ended December 31, 2011, there has been no change in our internal controls over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management’s report in this annual report.


ITEM 9B. OTHER INFORMATION
 
 
None.

PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 

Identification of directors and executive officers

The following table as of March 23, 2012, includes the name, age, and position of each executive officer and director of Amexdrug and the term of office of each director.

Name
Age
Position
Director and/or Officer Since
       
Jack Amin
53
President, Secretary,
April 2000
   
Treasurer and Director
 
Rodney S. Barron,
59
Director
December 2001
M.D.
     
       
Behrooz Meimand
63
Director
December 2001
 
 
 
40
 
 
Each director of the Company serves for a term of one year and until his successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders.  Each officer serves, at the pleasure of the board of directors, for a term of one year and until his successor is elected at the annual meeting of the board of directors and is qualified.

Currently, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs. Present management openly accepts and appreciates any input or suggestions from stockholders.  However, the board is elected by the stockholders and the stockholders have the ultimate say in who represents them on the board.  There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current offers or directors are acting on behalf of, or will act at the direction of any other person.

The business experience for at least the last five years of each of the Company's executive officers and directors is as follows.

Jack Amin has served as the President, Secretary, Treasurer and as a director of Amexdrug since April 2000.  He holds a Bachelor of Science in Electronic Engineering from Western State College of Engineering of LA, California in 1982.  Since 1980 Mr. Amin has been engaged in various capacities, including sales and management, within the pharmaceutical industry.  Mr. Amin has served as the President, Chief Executive Officer and director of Amexdrug’s wholly-owned subsidiary, Allied Med, Inc., a company which he founded in 1997.

Rodney S. Barron, M.D., has served as a director of Amexdrug since December 2001.  Dr. Barron obtained his medical degree from New York Medical College in 1978.  He then performed a residency in general surgery from 1978 to 1980, and a residency in urology from 1980 to 1983.  Dr. Barron has been involved in the private practice of medicine in Los Angeles, California from 1983 through the present time.
 
Behrooz Meimand has served as a director of Amexdrug since December 2001.  Mr. Meimand obtained a master’s degree in insurance from the National University of Iran in 1970.  He has had 30 years of experience in the insurance industry. Mr. Meimand has been the president of Behrooz Meimand Insurance Services, Inc. for a period of time exceeding the past 5 years.  Currently Mr. Meimand is also a director of Magbid Foundation and Nessah Education & Culture Center.

Significant employees

Amexdrug and its subsidiaries have no present employees who are expected to make a significant contribution to Amexdrug’s business other than Amexdrug’s current officers and directors.  It is expected that current members of management will be the only persons whose activities will be material to Amexdrug’s operations.
 
 
41
 
 
Family relationships

There are no family relationships between any directors or executive officers of Amexdrug and/or the officers, directors or managers of its subsidiary companies, BioRx Pharmaceuticals, Inc., Allied Med, Inc., Dermagen, Inc. and Royal Health Care, Inc., either by blood or by marriage.

Involvement in certain legal proceedings

During the past ten years, no present director, person nominated to become a director, or executive officer, of Amexdrug:

(1) was a general partner or executive officer of any business which filed a petition in bankruptcy or against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; or

(2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or

(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in the following activities:

(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Commission, or an associated person of any of the foregoing, or as an investment adviser,  underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

(ii) Engaging in any type of business practice; or

(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; or

(4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; or

(5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; or

 
42
 
(6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

(7) was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 
(i)
Any federal or state securities law or regulation; or

 
(ii)
Any law or regulation respecting financial institutions or insurance companies including, but not limited to a temporary or permanent injunction, order or disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 
(iii)
Any law or regulation prohibiting mail or wire transfer fraud or fraud in connection with business entity; or

(8) was the subject of, or a party to, any sanction nor order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C §78c(a)(26))), any registered entity (as defined in section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.§1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Section 16(a) beneficial ownership reporting compliance

Based solely upon a review of Forms 3 and 4 furnished to the Company under Rule 16a-3(d) during its most recent fiscal year, the Company knows of no person who was a director, officer, beneficial owner of more than ten percent of any class of equity securities of the Company registered pursuant to Section 12 ("Reporting  Person") that failed to file on a timely basis any reports required to be furnished pursuant to Section 16(a) during the most recent fiscal year.

Code of Ethics

We adopted a Code of Ethics in 2008 that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions .   A copy of the Code of Ethics is incorporated by reference to this Annual Report.
 
 
43
 
 
Audit Committee and Financial Expert

At the present time, our Board of Directors serves as our audit committee.  We do not presently have a financial expert on our Board of Directors.  Two of our directors, Rodney S. Barron and Behrooz Meimand, are independent.

Nominating Committee

The Company does not have a standing nominating committee or a committee performing similar functions. Due to the Company's size, it is difficult to attract individuals who would be willing to accept membership on the Company's Board of Directors.  Therefore, the full Board of Directors would participate in nominating candidates to the Board of Directors.  The Company did not have an annual meeting of shareholders in the past fiscal year.  The Company presently has no procedure by which a shareholder may recommend nominees to serve on the Company’s Board of Directors.

Other Committees

We presently do not have a compensation committee, executive committee of our Board of Directors, stock plan committee or any other committees.

 
 
ITEM 11. EXECUTIVE COMPENSATION
 

Cash compensation

The following table shows compensation earned during fiscal 2011 and 2010 by the Chief Executive Officer and by any other executive officers whose compensation during one of the two fiscal years totaled $100,000 or more The information in the table includes salaries, bonuses, stock options granted, restricted stock awards granted and other miscellaneous compensation. We presently have no long term compensation benefits.

SUMMARY COMPENSATION TABLE

Name and
                     
All
       
Principal
Fiscal
             
Stock
   
Other
       
Position
Year
  Salary       Bonus    
Awards
   
Compensation
   
Total
 
                                 
Jack Amin
 12/31/11
  $ 178,300     $ 33,400       0       0     $ 211,700  
President/ Director
 12/31/10
  $ 114,000       0       0       0     $ 114,000  

Columns have been omitted from the Summary Compensation Table above for option awards, non-equity incentive plan compensation and changes in pension value and nonqualified deferred compensation earnings since there were none.

Except as described above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to Amexdrug’s management during the fiscal years ended December 31, 2011 and 2010.  Except as described above, no other officers or directors were paid any salaries or compensation during the years ended December 31, 2011 or 2010.  Further, no member of Amexdrug’s management has been granted any option or stock appreciation rights.  Accordingly, no tables relating to such items have been included within this Item 11.

 
44
 
There are no present plans whereby Amexdrug will issue any of its securities to management, promoters, their affiliates or associates in consideration of services rendered or otherwise, except as described herein.

Compensation of directors

Amexdrug has no arrangement for compensating its directors for their services as directors or for serving on any committees.  However, directors may be compensated for services which they render as officers and/or as employees of Amexdrug.

Employment contracts and termination of employment and change-in-control arrangements

There are no employment contracts, compensatory plans or arrangements, including payments to be received from Amexdrug with respect to any executive officer of Amexdrug which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with Amexdrug or its subsidiaries, any change in control of Amexdrug or a change in the person's responsibilities following a change in control of Amexdrug.

Nor are there any agreements or understandings for any director or executive officer to resign at the request of another person.  None of Amexdrug’s directors or executive officers is acting on behalf of or will act at the direction of any other person.

Amexdrug intends to enter into an employment agreement with Jack Amin in the near future that may provide for a salary of $200,400 per year retroactive to January 1, 2012, and possible bonuses as the board of directors may determine are appropriate.  In the event Amexdrug is unable to pay the full $200,400 per year annual salary to Mr. Amin, he has indicated that he may accept a portion of the salary in the form of Amexdrug common stock.

Compensation pursuant to plans; pension table

There have been no stock awards, restricted stock awards, stock options, stock appreciation rights, long-term incentive plan compensation or similar rights granted to any of our officers or directors.  None of our officers or directors presently holds directly any stock options or stock purchase rights. We have no retirement, pension, profit sharing, or other plan covering any of our officers and directors.

We have adopted no formal stock option plans for our officers, directors and/or employees. We reserve the right to adopt one or more stock options plans in the future.  Presently we have no plans to issue additional shares of our common or preferred stock or options to acquire the same to our officers, directors or their affiliates or associates.

Other compensation

None.
 
 
45
 

Compensation Committee Interlocks and Insider Participation

The Company has no compensation committee, and the function of the compensation committee is handled by the Board of Directors.  Jack Amin also serves as an officer of the Company.

Compensation Committee Report

The Company has no compensation Committee, and the function of the compensation committee is handled by the Board of Directors.  Jack Amin also serves as an officer of the Company.  The Board of Directors approved the compensation paid to Jack Amin in 2011.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 

Security ownership of certain beneficial owners

The following table sets forth the share holdings of those persons who are known to Amexdrug to be the beneficial owners of more than five percent of Amexdrug’s common stock as of March 23, 2012.  Each of these persons has sole investment and sole voting power over the shares indicated.

   
Number of Shares
   
Percent
 
Name and Address
 
Beneficially Owned
   
of Class
 
             
Jack Amin
    7,759,202 (1)     91.7 %
7251 Condor Street
               
Commerce, CA 90040
               

(1) Mr. Amin disclaims beneficial ownership of 421,083 shares of common stock acquired by his wife, Nora Amin, during 2005 that are not included in the foregoing amount.

Security ownership of management

The following table sets forth the share holdings of Amexdrug's directors and executive officers as of March 23, 2012.  Each of these persons has sole investment and sole voting power over the shares indicated.

   
Number of Shares
   
Percent
 
Name and Address
 
Beneficially Owned
   
of Class
 
             
Jack Amin
    7,759,202 (1)     91.7 %
Rodney Barron, M.D.
    0       0.0 %
Behrooz Meimand
    0       0.0 %
                 
All directors and executive
               
officers as a group (3)
    7,759,202       91.7 %
                 

(1) Mr. Amin disclaims beneficial ownership of 421,083 shares of common stock acquired by his wife, Nora Amin, during 2005 that are not included in the foregoing amount.

All common shares held by the officers, directors and principal shareholders listed above are “restricted or control securities” and are subject to limitations on resale. The shares may be sold in compliance with the requirements of Rule 144, after a minimum six months holding period has been met.

 
46
 

Rule 13d-3 generally provides that beneficial owners of securities include any person who directly or indirectly has or shares, voting power and/or investment power with respect to such securities; and any person who has the right to acquire beneficial ownership of such security within 60 days.

Any securities not outstanding which are subject to options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person.  But such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person.

Changes in control

There are no present arrangements or pledges of Amexdrug’s securities, known to management, which may result in a change in control of Amexdrug.

Securities Authorized for Issuance under Equity Compensation Plans

The Company has no equity compensation plans that have been approved by the Company’s security holders or the Board of Directors.  There presently are no securities authorized for issuance under any equity compensation plans.  There are no outstanding options, warrants or rights to acquire securities of the Company.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
 

Transactions with management and others

Except as indicated below, and for the periods indicated, there were no material transactions, or series of similar transactions, during the last two fiscal years ended December 31, 2011, or since December 31, 2011, or any currently proposed transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be party, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, in which any related person (as defined in Item 404 of Regulation S-K) had a direct or indirect material interest, other than the following:

1.           Amexdrug anticipates that it may enter into an employment agreement with Jack Amin in the near future.  It is expected that the employment agreement may be retroactive to January 1, 2012, and that it will provide for an annual salary of $200,400 and possible bonuses as the board of directors may determine are appropriate.  The employment agreement may give Mr. Amin the option to take a portion of the salary in shares of the Company’s common stock.

2.           Amexdrug borrowed $109,202 from the wife of our CEO to facilitate the purchase of Dermagen and to cover operating expenses.  The balance of $108,023 as of December 31, 2011 is payable on demand and carries an annual interest rate of 8%, payable every six months.  The interest paid as of December 31, 2011 and 2010 was $16,350 and $0, respectively.

 
47
 

3.           Jack Amin loaned funds to the Company during 2011.  As of December 31, 2011, the balance of the loan was $1,671.  The loan was interest free and unsecured.

No other related party transaction is presently proposed.

Parents of the company

Amexdrug has no parents, except to the extent that Mr. Amin may be deemed to be a parent by virtue of his large percentage stockholdings of the Company’s common stock.  See the caption “Security ownership of certain beneficial owners and management” in item 12 of this report for a description of Mr. Amin’s stock ownership.

Transactions with promoters

The Company was organized more than five years ago therefore transactions between the Company and its promoters or founders are not deemed to be material.

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

Our board of directors reviews, and must approve any related person transactions before such transactions are engaged in by the Company.  A related person means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company; any person who is know to be the beneficial owner of more than 5% of any class of our voting securities; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owners; and any firm, corporation, or other equity in which any of the foregoing persons is employed or is a general partner or principal or is a similar position or in which such person has a 5% or greater beneficial ownership interest.  Our board of directors reviews these related person transactions and considers all of the relevant facts and circumstances available to the board of directors, including (if applicable) but not limited to; the benefits to us; the availability of other sources of comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally.  The board of directors may approve only those related person transactions that are in, or are not inconsistent with the best interests of us and of our stockholders, as the board of directors determines in good faith.  At the beginning of each fiscal year, the board of directors will review any previously approved or ratified related person transactions that remain ongoing and have a remaining term of more than six months.  The board of directors will consider all of the relevant facts and circumstances and will determine if it is in the best interests of us and our stockholders to continue, modify or terminate these related person transactions.

 
48
 

Independence of Directors

The Company has, but is not required to have, a majority of independent directors.  Should the Company decide to list on a securities exchange, we will be required to adhere to the independence requirements of that exchange.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 

We do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.  As a result, we do not rely on pre-approval policies and procedures.

Audit Fees

For the fiscal years ended December 31, 2011 and 2010, our principal accountant billed $19,100 and $18,500, respectively, for the audit of our annual financial statements and review of financial statements included in our Form 10-Q filings.

Audit-Related Fees

There were no other fees billed for services reasonably related to the performance of the audit or review of our financial statements outside of those fees disclosed above under “Audit Fees” for the fiscal years ended December 31, 2011 and 2010.

Tax Fees

For the fiscal years ended December 31, 2011 and 2010, our principal accountant billed us $3,800   and $1,500, respectively, for services for tax compliance, tax advice, and tax planning work.

All Other Fees

There were no other fees billed by our principal accountants other than those disclosed above for fiscal years ended December 31, 2011 and 2010.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Our Board of Directors serves as our audit committee.  The audit committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis.

 
49
 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 

1.            Financial Statements:

Index to Financial Statements
 
Amexdrug Corporation
 
Report of Independent Registered Public Accounting Firm
27
Balance Sheets at December 31, 2011 and December 31, 2010
28
Statements of Income for the years ended December 31, 2011 and 2010
29
Statements of Changes in Stockholders Equity for the years ended December 31, 2011, and 2010
30
Statements of Cash Flows for the years ended December 31, 2011 and 2010
31
Notes to Financial Statements
32
 
2.            Financial Statement Schedule(s):

No financial statement schedules are filed herewith because (i) such schedules are not required or (ii) the information required has been presented in the aforementioned financial statements.

3.            Exhibits

The following exhibits are filed as part of this report.

Exhibit
 
Exhibit
Number
Description
Location
     
2.1
Agreement and Plan of Merger (to change domicile from California)
*
     
2.2
Agreement and Plan of Reorganization
**
     
3.1
Articles of Incorporation
***
     
3.2
By-Laws
***
     
10.1
Promissory Note with National Bank of California dated June 23, 2008
*****
     
10.2
Change in Terms Agreement with National Bank of California dated June 9, 2009
*****
     
10.3
Change in Terms Agreement with National Bank of California dated March 3, 2009
******
     
10.4
Subordination Agreement between Nora Y. Amin, National Bank of California, Amexdrug and its subsidiaries dated June 9, 2009
 ******
     


 
50
 


10.5
Business Loan Agreement between National Bank of California, Amexdrug and its subsidiaries dated June 23, 2008
 ******
     
10.6
Commercial Security Agreement between National Bank of California, Amexdrug and its subsidiaries dated June 23, 2008
 ******
     
10.7
Commercial Guarantee between National Bank of California, Jack N. Amin, Amexdrug and its Subsidiaries
 ******
     
10.8
Commercial Guarantee between National Bank of California, Nora Y. Amin, Amexdrug and its subsidiaries
 ******
     
10.9
Lease Agreement between Fullerton Business Center, LLC, Lessor, and Allied Med, Inc., Lessee, dated March 1, 2011 (Units I & J)
*******
     
10.10
Guaranty of Lease by Jack Amin (Units I & J)
*******
     
10.11
Lease Agreement between Condor Associates, LLC, Lessor, and Allied Med, Inc., Lessee, dated February 22, 2011
*******
     
10.12
Guaranty of Lease by Jack Amin and Nora Amim
*******
     
10.13
First Amendment to Lease Extending Lease Term (Units I&J) dated January 18, 2012
This Filing
     
10.14
Change in Terms Agreement with National Bank of California dated December 21, 2011
This Filing
     
14.1
Code of Ethics
   ****
     
21.1
List of Subsidiaries of Amexdrug Corporation
 ******
     
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
This Filing
     
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
This Filing
     
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
This Filing
     
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
This Filing

 
51
 


101.INS
XBRL Instance Document
********
     
101.PRE
XBRL Taxonomy Extension
********
 
Presentation Linkbase
 
     
101.LAB
XBRL Taxonomy Extension
********
 
Label Linkbase
 
     
101.DEF
XBRL Taxonomy Extension
********
 
Definition Linkbase
 
     
101.CAL
XBRL Taxonomy Extension
********
 
Calculation Linkbase
 
     
101.SCH
XBRL Taxonomy Extension Schema
********
     
 
Summaries of all exhibits contained within this report are modified in their entirety by reference to these Exhibits.
 
     
  *
Exhibit 2.1 is incorporated by reference from Amexdrug’s Form 8-K Current Report filed December 21, 2001 as Exhibit No. 10.01.
 
     
  **
Exhibit 2.2 is incorporated by reference from Amexdrug’s Form 8-K Current Report filed January 15, 2002 as Exhibit No. 10.01.
 
     
  ***
Exhibit 3.1 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.
 
     
****
Exhibit 14.1 is incorporated by reference from Amexdrug’s Form 10-K for the year ended December 31, 2008 filed April 13, 2009
 
     
*****
Exhibits 10.1 and 10.2 are incorporated by reference From Amexdrug’s Form 10-Q for the period ended June 30, 2009 filed August 14, 2009
 
     
******
Exhibits 10.3 through 10.8 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
 
     
*******
Exhibits 10.9 through 10.12 are incorporated by reference from Amexdrug’s Form 10-K for the year ended December 31, 2010 filed March 31, 2011
 
     
********
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.
 

 
52
 


SIGNATURES
 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMEXDRUG CORPORATION



Date: March 30, 2012
By_ /s/ Jack Amin
 
Jack Amin, Director, President and
 
Chief Executive Officer
   
   
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, in the capacities and on the dates indicated.
   
   
   
Date: March 30, 2012
By_ /s/ Jack Amin
 
Jack Amin, Director, President and
 
Chief Executive Officer, Chief
 
Financial Officer and Chief
 
Accounting Officer
   
   
   
Date: March 30, 2012
By_____________________
 
Rodney Barron, M.D., Director
   
   
   
Date: March 30, 2012
By_ /s/ Behrooz Meimand
 
Behrooz Meimand, Director
 
 
 
53
 
 
 
 
 
Exhibit 10.13
 

 
Document Reference Date: January 18, 2012
Tenant   Code: flalI4
Property, Building and Suite I.D.:   fl2204, 2500 I   & J
 

FIRST AMENDMENT TO LEASE
EXTENDING LEASE TERM

It is hereby agreed by the undersigned that the Lease dated the 1st day of March, 2011, as amended by that certain First Amendment to Lease, dated as of January 18, 2012, (collectively, the “Lease”) by and between Fullerton Business Center, LLC., a Delaware limited liability company, “Lessor”, and Allied Med, Inc., an Oregon Corporation, “Lessee”, for the Premises commonly known as  2500 E. Fender Avenue, Suite “I” and “J”, consisting of approximately 3,520 rentable square feet, including the overhang, shall be extended for a period of one (1) year , commencing March 1, 2012 , and ending February 28, 2013 .

All other terms and conditions of said Lease are incorporated herein by reference and shall remain in full force and effect during the Lease term, except as follows:

1.   RENT : Lessee agrees to pay to Lessor in advance at such places as may be designated from time to time by Lessor, without deduction or offset, and Lessor agrees to accept as Rent for the Premises, together with such other assessments additions and pass throughs as are described in the Lease, Rent for the Extended Lease Term pursuant to the following schedule:
 
·
March 1, 2012 through February 28, 2013 = $2,464.00 Per Month

2.   F IXED-RENTAL INCREASES :
The-Base-Rent shall be increased annually by _______ Percent (    )% on the dates set forth below:
·   
         - $________ Per Month

3.   ESTIMATED COMMON AREA OPERATING EXPENSES : Lessee agrees to pay to Lessor, in advance, on a monthly basis for its pro-rata share for Estimated Common Area Operating Expenses, Currently, $ 211.20 per month. Amounts subject to increase based on cost to Lessor.

4.       SECURITY DEPOSIT INCREASE : Commencing March 1, 2012 , the Security Deposit shall be adjusted to equal $7,758.00*, Lessee shall pay to Lessor the sum of $ 0.00 concurrent with the commencement of this Amendment representing the Increase in Security Deposit. Balance Due : $0.00 .
*Transfer Security Deposit on hand of $7,758.00. Apply to move-in costs.

5     . MONIES DUE UPON COMMENCEMENT :
 
Rent for March 1, 2012 through March 31, 2012
= $2,464.00
Monthl Common Area Operating Exp.
= $    211.20
Security Deposit Increase
= $      n/a    
Total Due Upon Commencement:
    $2,675.20

6.   There are no suite improvements nor rent concessions associated with this extension.

7.   Lessee warrants and represents that there has been no change in ownership of Lessee's Business as described in the Lease Agreement since the original execution of said Lease document.

8.       Lessee warrants and represents that there are no present and outstanding breaches of Lease by Lessor and that Lessee has no claims or offset of any kind or nature against Lessor,
 
EXCEPT AS HEREINABOVE AMENDED , the Lease Agreement shall remain unchanged and shall continue in full force and effect.
 
THIS OFFER AND ANY SUBSEQUENT OFFERS SHALL BE CONSIDERED BINDING ONLY WHEN DOCUMENTS ARE FULLY EXECUTED BY LESSOR AND LESSEE.
 
Dated this 18th day of January, 2012
Attachments: n/a

LESSOR:
LESSEE:
FULLERTON BUSINESS CENTER, LLC,
Allied Med, Inc.
a Delaware limited liability company, By The
An Individual
Ezralow Company, LLC, a Delaware limited
 
Liability company, dba Mid Valley Management,
 
Its Managing Agent
 
   
By:_ /s/ Terri Rhoades ________________________
By:_ /s/ Jack Amin _________________________
        Terri Rhoades
        Jack Amin
Its: Authorized Agent
Its: President
Date:         2/16/12
Date:         2/10/12
   
 
By:_ /s/ Jack Amin __________________________
 
        Jack Amin
 
Its:   Secretary
 
Date:         2/10/12
 
 
 
Page 1 of 1
 
 
Exhibit 10.14
 
CHANGE IN TERMS AGREEMENT
 

Principal
$700,000.00
Loan Date
12-21-2011
Maturity
06-09-2012
Loan No.
930610000
Call/Coll
Account
Officer
RK
Initials
/s/

References in the boxes above are for Lender’s Use only and do not limit the applicability of this document to any particular loan or item.
Any Item above containing “***” has been omitted due to text length limitations.

Borrower:
Amexdrug Corporation, Dermagen, Inc.;
Lender: National Bank of California
 
Biorx Pharmaceuticals, Inc.; Royal
 
Corporate Banking Department
 
Health Care, Inc.; and Allied Med Inc.
 
12121 Wilshire Boulevard
 
7251 Condor Street
 
14 th Floor
 
Commerce, CA 90040
 
Brentwood, CA 90025

 

Principal Amount:  $700,000.00
 
Date of Agreement:  December 12, 2011

DESCRIPTION OF EXISTING INDEBTEDNESS:   The Promissory Note dated June 23, 2008 in the principal amount of $150,000.00 and Business Loan Agreement (Asset Based) dated June 9, 2011 and subsequent Change in Terms Agreements dated March 3, 2009, June 9, 2009, June 9, 2010 and June 9, 2011, with an outstanding principal balance of $81,806.94 as of December 12, 2011.

DESCRIPTION OF CHANGE IN TERMS:  The Principal Amount of the Note is hereby increased from $500,000.00 to $700,000.00.

The “AFFIRMATIVE COVENANTS” section of the Business Loan Agreement (Asset Based) is hereby deleted in its entirety and the following is inserted in its place:

Tangible Net Worth Requirements .  Other Net Worth requirements are as follows:  Borrower shall maintain a minimum Net Worth of $250,000.00 as of each Fiscal Year End.  Borrower shall maintain profitability at each Fiscal Year End.

The “DEFINITIONS” section of the Business Loan Agreement (Asset Based) is hereby amended as follows:

Borrowing Base .  The words “Borrowing Base” mean, as determined by Lender from time to time, the lesser of (1) $700,000.00 or (2) 80.000% of the aggregate amount of Eligible Accounts.

Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; then to any escrow or reserve account payments as required under any mortgage, deed of trust, or other security instrument or security agreement securing this Note; and then to any unpaid collection costs.  Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

CONTINUING VALIDITY.  Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect.  Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms.  Nothing in this Agreement will constitute a satisfaction of the obligation(s).  It is the intention of Lender to retain as liable parties all makers or endorsers including accommodation makers, will not be released by virtue of this Agreement.  If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledged that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it.  This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

PRIOR TO SIGNING THIS AGREEMENT, BORROWERS READ AND UNDERSTAND ALL PROVISIONS OF THIS AGREEMENT.  BORROWERS AGREE TO THE TERMS OF THE AGREEMENT.

AMEXDRUG CORPORATION

By:__ /s/ Jack N. Amin                                            
      Jack N. Amin, President/ Secretary of Amexdrug Corporation

DERMAGEN, INC.

By:__ /s/ Jack N. Amin                                            
      Jack N. Amin, President/ Secretary of Dermagen, Inc.

BIORX PHARMACEUTICALS, INC.

By:__ /s/ Jack N. Amin                                            
      Jack N. Amin, President/ Secretary of  Biorx Pharmaceuticals, Inc.

ROYAL HEALTH CARE, INC.

By:__ /s/ Jack N. Amin                                            
      Jack N. Amin, President/ Secretary of Royal Health Care, Inc.

ALLIED MED INC.

By:__ /s/ Jack N. Amin                                           
      Jack N. Amin, President/ Secretary of Allied Med Inc.

See next page for additional signers

 
 
 

CHANGE IN TERMS AGREEMENT
(Continued)
 
Loan No. 930610000
Page 2

 
PRIOR TO SIGNING THIS AGREEMENT, GUARANTORS READ AND UNDERSTAND ALL PROVISIONS OF THIS AGREEMENT.  GUARANTORS AGREE TO THE TERMS OF THE AGREEMENT.

GUARANTORS:

x__ /s/ Jack N. Amin                                          
  Jack N. Amin

x__ /s/ Nora Y Amin                                            
  Nora Y Amin
 
LASER PRO LENDING VER. 5.58.20.001 Copr. Harland Financial Solutions, Inc. 1997, 2011.  All rights reserved.

1096.Amexdrug Change in Terms Agreement



 
 
 

 
 

 
EXHIBIT 31.1

SECTION 302
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 

I, Jack Amin, chief executive officer of Amexdrug Corporation (the “registrant”), certify that:

1.           I have reviewed this annual report on Form 10-K of Amexdrug Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


 
Date: March 30, 2012
By_ /s/ Jack Amin
 
Jack Amin, Chief Executive Officer
 
 
 
 

EXHIBIT 31.2

SECTION 302
CERTIFICATION OF CHIEF FINANCIAL OFFICER
 

I, Jack Amin, chief financial officer of Amexdrug Corporation (the “registrant”), certify that:

1.           I have reviewed this annual report on Form 10-K of Amexdrug Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


 
Date: March 30, 2012
 By_ /s/ Jack Amin
 
Jack Amin, Chief Financial Officer
 
 
 
 EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 

In connection with the Annual Report of Amexdrug Corporation (the “Company”) on Form 10-K for the period ending December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack Amin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


_ /s/ Jack Amin Jack Amin
Chief Executive Officer
March 30, 2012
 
 
 
 
 



EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 

In connection with the Annual Report of Amexdrug Corporation (the “Company”) on Form 10-K for the period ending December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack Amin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


_ /s/ Jack Amin
Jack Amin
Chief Financial Officer
March 30, 2012