================================================================================


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

                                  FORM 10-KSB/A

(x)  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

     For the fiscal year ended      December 31, 2005
                               -----------------------------

( )  TRANSITION REPORT UNDER 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 small business issuer as specified in charter)


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

     8909 West Olympic Blvd., Suite 208, Beverly Hills, CA        90211
     -----------------------------------------------------      ----------
          (Address of principal executive offices)              (Zip Code)

     Issuer's telephone number,     (310) 855-0475
                                ----------------------

     Securities registered under Section 12(b) of the Exchange Act:

     Title of each class            Name of each exchange on which registered
            None                                       None
     -------------------            -----------------------------------------

     Securities registered under Section 12(g) of the Act:

                         Common stock, par value $0.001
                         ------------------------------
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act [ ]

Check whether the issuer (1) filed all reports required to be filed by section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [x] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [x]

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

State issuer's revenues for its most recent fiscal year: $4,950,960




<PAGE>


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 common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days.

At April 13, 2006, the aggregate market value of the voting stock held by
non-affiliates was $1,473,675 based upon 718,866 shares held by non-affiliates,
and the average of the bid price ($1.80 per share) and the asked price ($2.30
per share) of $2.05 per share.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of April 13, 2006, the registrant had 8,473,866 shares of common stock issued
and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the part
of the form 10-KSB (e.g., part I, part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or other
information statement; and (3) any prospectus filed pursuant to rule 424 (b) or
(c) under the Securities Act of 1933: None

Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]


Explanatory Note
----------------

The annual report is being amended to provide stock quote information for 2005
in Item 5.



















                                       2
<PAGE>


                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----
PART I

ITEM 1.    DESCRIPTION OF BUSINESS........................................    4

ITEM 2.    DESCRIPTION OF PROPERTIES......................................   14

ITEM 3.    LEGAL PROCEEDINGS..............................................   15

ITEM 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS..............   15


PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......   15

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......   16

ITEM 7.    FINANCIAL STATEMENTS...........................................   19

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE.......................................   34

ITEM 8A.   CONTROLS AND PROCEDURES........................................   34

ITEM 8B.   OTHER INFORMATION..............................................   35


PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE
           ACT............................................................   35

ITEM 10.   EXECUTIVE COMPENSATION.........................................   37

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT..................................................   38

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................   39

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K...............................   40

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................   41



                                       3
<PAGE>


                                     PART I

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. DESCRIPTION OF BUSINESS

--------------------------------------------------------------------------------

General

Amexdrug Corporation, a Nevada corporation, is a holding company. Through its
subsidiaries, Allied Med, Inc. and Dermagen, Inc., it is primarily a full-line,
wholesale distributor of pharmaceuticals, over-the-counter products, health and
beauty care products, and nutritional supplements. Dermagen, Inc. also
manufactures products which it sells. Amexdrug Corporation distributes its
products through Allied Med, Inc. and Dermagen, Inc. primarily to independent
pharmacies in the western and southeastern regions of the United States, and
secondarily to small and medium-sized pharmacy chains, alternative care
facilities and other wholesalers and retailers. Over the next several months,
Amexdrug Corporation anticipates expanding its market area to include other
regions in the continental United States.

References in this report to "we," "our," "us," the "Company" and "Amexdrug"
refer to Amexdrug Corporation and also to our subsidiary, Allied Med, Inc. where
appropriate.

Amexdrug currently has 50,000,000 shares of authorized common stock $.001 par
value, of which 8,473,866 are issued and outstanding.

Significant acquisitions

                                Allied Med, Inc.
                                ----------------

On December 31, 2001, Amexdrug acquired all of the issued and outstanding common
shares of Allied Med, Inc., an Oregon corporation ("Allied") in a share
exchange. Amexdrug acquired the 50,000 issued and outstanding shares of Allied
Med, Inc. from its sole shareholder, Jack Amin, in exchange for 7,000,000
restricted common shares of Amexdrug, and Amexdrug assumed responsibility for
payment of a $100,000 promissory note and accrued interest thereon owned by Mr.
Amin to Allied Med, Inc. At all times during the negotiations of the
transaction, Mr. Amin was an officer, director and controlling shareholder of
both companies. Allied Med, Inc. is sometimes referred to herein as "Allied".

Consideration for the acquisition was determined through negotiations between
the boards of directors of both companies and was based on Allied's past
operating history and future potential growth.



                                       4
<PAGE>


Allied Med, Inc., was formed in October 1997 and is engaged in the
pharmaceutical wholesale business of selling brand and generic pharmaceutical
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.

As discussed herein, Amexdrug has assumed the operations of Allied, and Amexdrug
intends to build on the wholesale pharmaceutical operations of Allied.

                                 Dermagen, Inc.
                                 --------------

Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005 with
Amexdrug paying $70,000 cash to the Dermagen, Inc. shareholders. Amexdrug
borrowed approximately $40,000 from Nora Amin, the wife of Amexdrug's CEO, which
was used to complete the acquisition. Dermagen, Inc. is now an operating
subsidiary of Amexdrug. The acquisition of Dermagen, Inc. is not considered to
be an acquisition of a significant amount of assets which would require audited
financial statements of Dermagen, Inc.

Dermagen, Inc. is a rapidly 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. Our competitive advantage is
in our superior product research and development for large leading domestic and
international companies.

Industry trends

                      Pharmaceutical and healthcare markets

According to IMS Health, a company specializing in information services for the
pharmaceutical and health care industries, the United States is the world's
largest pharmaceutical market, with 2000 sales of $150 billion, including
diagnostics and over-the-counter drugs. That figure is expected to rise to $263
billion in 2005, a projected compound annual growth rate of 11.8%. This
continued growth rate of the sales of pharmaceutical products was attributed to
a number of factors including:

          *    the value added by the introduction of new drugs into the
               marketplace, which more than offsets the value lost by
               medications losing patent protection;
          *    new patterns of drug lifestyle management, resulting in higher
               sales occurring earlier in the life cycle of a medication;
          *    increased money spent on direct-to-consumer marketing
               initiatives; and
          *    an unprecedented period of investment by pharmaceutical companies
               worldwide.

Amexdrug believes that, currently, the pharmaceutical and health care product
markets are serviced primarily by traditional full-line wholesalers.

                                    Internet

The Internet has emerged as the fastest growing communications medium in history
and is dramatically changing how businesses and individuals communicate and
share information. The Internet has created new opportunities for conducting


                                       5
<PAGE>


commerce, such as business-to-consumer and person-to-person e-commerce.
Recently, the widespread adoption of intranets and the acceptance of the
Internet as a business communications platform has created a foundation for
business-to-business e-commerce that offers the potential for organizations to
streamline complex processes, lower costs and increase productivity.
Internet-based business-to-business e-commerce has experienced significant
growth. According to Gartner Group, worldwide business-to-business Internet
revenue was $433.3 billion in 2000. By 2005, worldwide business-to-business
Internet commerce was expected to be more than $8.5 trillion, and the North
American region was expected to total $3.6 trillion, approximately 42% of the
overall market. Amexdrug hopes, although it cannot guarantee, that it will
benefit from this growth.

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

Objectives and strategy

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

To accomplish this objective, Amexdrug plans to:

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

Sales and marketing, customer service and support

Our products are sold both through traditional wholesale distribution lines and
e-commerce venues, including our website, www.amwdrug.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.



                                       6
<PAGE>


                                  Direct sales

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

                                  Telemarketing

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

                                  Blast faxing

The Company has an automated system which it uses to fax weekly updates to its
customers informing them of special offers during the week.

                                   Advertising

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

                          Customer service and support

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

                              Promotion of website

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

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

Distribution

The Company distributes its Allied Med products from its facility in Beverly
Hills, California. Dermagen, Inc. manufactures and distributes its products from
Fullerton, California. The Company fills orders with a combination of existing
inventory and products it orders from suppliers. Currently, customers are
receiving their products within 24 to 48 hours of order placement. As funds



                                       7
<PAGE>


allow, the Company will increase its in-house inventory of products to allow for
shorter delivery times.

Purchasing and Manufacturing

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

Technology and security

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

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

Management information system

The Company's information system is maintained on an IBM AS 400 platform. The
accounting information for sales, purchases, perpetual inventory transactions,
cash receipts and disbursements and sophisticated management reports are
provided timely for analytical and bookkeeping purposes. Also, the order entry
system was designed specifically for the Company and allows its customers to
order product 24 hours per day either via fax, internet or phone modem. The
system provides data to management enabling it to review sales trends and
customer base, monitor inventory levels, credit and collection issues, and
purchasing frequency and cost anticipation. Communication and availability of
data is possible through a local area network ring.

Competition

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

          *    secure merchandise from vendors on more favorable terms;
          *    devote greater resources to marketing and promotional campaigns;
               and
          *    adopt more aggressive pricing or inventory availability policies.



                                       8
<PAGE>


In addition, many of our competitors have developed or may be able to develop
e-commerce operations that compete with our e-commerce operations, and may be
able to devote substantially more resources to website development and systems
development than we do. The online commerce market is new, rapidly evolving and
intensely competitive. The Company expects competition to intensify in the
future because barriers to entry are minimal, and current and new competitors
can launch new websites at relatively low cost. The Company believes that the
critical success factors for companies seeking to create Internet
business-to-business e-commerce solutions include the following:

          *    breadth and depth of product offerings;
          *    brand recognition;
          *    depth of existing customer base; and
          *    ease of use and convenience.

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

          *    the establishment of a recognizable brand;
          *    the development of online marketing and media relationships;
          *    the development of important relationships with manufacturers,
               distributors, wholesalers and content providers; and
          *    exposure to an existing customer base.

However, competitive pressures created by any one of its current or future
competitors, or by its competitors collectively, could materially affect the
Company's business. We believe that the principal competitive factors in its
market are and will be:

          *    brand recognition           *    selection
          *    speed and accessibility     *    customer service
          *    quality of site content     *    reliability and speed of
                                                fulfillment
          *    convenience                 *    price

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



                                       9
<PAGE>


and Health Administration. The manufacturing, labeling and advertising of the
products we distribute is also regulated by the Occupational Safety and Health
Administration through various state and local agencies.

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

          *    persons from soliciting, offering, receiving or paying any
               remuneration in order to induce the referral of a patient for
               treatment or for inducing the ordering or purchasing of items or
               services that are in any way paid for by Medicare or Medicaid,
               and
          *    physicians from making referrals to certain entities with which
               they have a financial relationship.

The fraud and abuse laws and regulations are broad in scope and are subject to
frequent modification and varied interpretations. Significant criminal, civil
and administrative sanctions may be imposed for violation of these laws and
regulations.

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

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.



                                       10
<PAGE>


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:

          *    user privacy                *    distribution
          *    pricing                     *    taxation
          *    content                     *    characteristics and quality of
                                                products
          *    copyrights                  *    services

Laws and regulations directly applicable to electronic commerce or Internet
communications are becoming more prevalent. We believe that our use of third
party material on our website is permitted under current provisions of copyright
law. Because legal rights to certain aspects of Internet content and commerce
are not clearly settled, our ability to rely upon exemptions or defenses under
copyright law is uncertain. Also, although not yet enacted, Congress is
considering laws regarding Internet taxation. In addition, various jurisdictions
already have enacted laws that are not specifically directed to electronic



                                       11
<PAGE>


commerce but that could affect its business. The applicability of many of these
laws to the Internet is uncertain and could expose the Company to substantial
liability. Any new legislation or regulation regarding the Internet, or the
application of existing laws and regulations to the Internet, could materially
and adversely affect the Company. If the Company were alleged to violate
federal, state or foreign, civil or criminal law, even if the Company could
successfully defend such claims, it could materially and adversely affect the
Company.

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

Proprietary rights

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, 2005, purchases from one supplier accounted
for 46% of total purchases. Accounts payable to this supplier accounted for 82%
of the accounts payable balance as of December 31, 2005. During the year ended
December 31, 2004, purchases from three suppliers accounted for 41%, 25% and 11%
of our total purchases, respectively. 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

None of our customers accounted for 10% or more of our sales during the years
ended December 31, 2005 or 2004.

Employees

The Company currently employs three 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.



                                       12
<PAGE>


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

During 2005, the Company's principal business operations were housed in 800
square feet of office space and 1,200 square feet of warehouse space in
Portland, Oregon. This lease recently expired, and the Company's Allied Med
operations were relocated to Beverly Hills, California.

The Company's Dermagen, Inc. operations are currently located at 2500 East.
Fender Avenue, Building IJK, in approximately 6,000 square feet. The monthly
lease payment is approximately $3,750, and the lease expires in September 2006.
The Company intends to renew the lease for an additional year. The Company
believes this space will be sufficient for at least the next twelve months.

The Company's principal executive offices and its Allied Med, Inc. operations
are located in Beverly Hills, California. The Company leases approximately 800
square feet of office space for approximately $1,061 per month. This space is
leased on a month to month basis. The Company believes this space will be
sufficient for at least the next twelve months.

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

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

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

Asset acquisitions following the acquisition of Allied Med, Inc.

In December 2002, Jack Amin's wife contributed four undeveloped parcels of real
property to Allied Med, Inc. as an additional capital contribution to the
Company. In October 2003, Jack Amin's wife contributed an additional four
undeveloped parcels of real property to Allied Med, Inc. as an additional
capital contribution to the Company. These eight undeveloped parcels of real
property were subsequently transferred by Allied Med, Inc. in 2004 to a third
party as part of a litigation settlement.

In October 2003, Allied Med, Inc. acquired 100% of the assets of Royal Health
Care Company. Royal Health Care Company is a health and beauty company which has
sold specially manufactured facial and body creams, arthritic pain relief
medications and an exclusive patented hair care product to pharmacies, beauty
salons, beauty supply stores and other fine shops. Royal Health Care Company
uses the highest quality ingredients for the finest quality products. Each



                                       13
<PAGE>


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

New subsidiaries formed

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

On November 8, 2004, Amexdrug formed a new subsidiary, Biorx Pharmaceuticals,
Inc. as a Nevada corporation. Biorx Pharmaceuticals, Inc. was formed for the
purpose of repacking and selling generic and branded pharmaceuticals. Currently,
Biorx Pharmaceuticals, Inc. has no assets, liabilities, or operations.



--------------------------------------------------------------------------------

                        ITEM 2. DESCRIPTION OF PROPERTIES

--------------------------------------------------------------------------------

Operating facilities

During 2005, Amexdrug's operating facilities were located at 2519 North Hayden
Island Drive, Portland, Oregon 97217 where Amexdrug leased approximately 2,000
square feet of building space for its operating facilities, which included four
offices in approximately 800 square feet and a warehouse that occupied the
remaining 1,200 square feet. This lease recently terminated, and the Company's
operations were relocated.

The Company's Dermagen, Inc. operations are currently located at 2500 East
Fender Avenue, Building IJK, in approximately 6,000 square feet. The monthly
lease payment is approximately $3,750, and the lease expires in September 2006.



                                       14
<PAGE>


The Company intends to renew the lease for an additional year. The Company
believes this space will be sufficient for at least the next twelve months. The
lease is with an unrelated third party.


Executive offices and Allied Med Operations

Amexdrug's executive offices and its Allied Med operations are presently located
at 8909 W. Olympic Boulevard, Suite 208, Beverly Hills, California 90211, and
consist of three offices and a reception area comprising approximately 800
square feet. Amexdrug leases its executive facilities on a month to month basis
under an oral lease agreement from an unrelated third party. The monthly lease
payment under this lease is approximately $1,061. The Company intends to renew
the lease for an additional year. The Company believes this space will be
sufficient for at least the next twelve months.


--------------------------------------------------------------------------------

                            ITEM 3. LEGAL PROCEEDINGS

--------------------------------------------------------------------------------

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


--------------------------------------------------------------------------------

          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

--------------------------------------------------------------------------------

No matter was submitted to a vote of our security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.


                                     PART II

--------------------------------------------------------------------------------

        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

--------------------------------------------------------------------------------

Market information

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



                                       15
<PAGE>


Quarter ended                 High bid          Low bid
-------------                 --------          -------
March 31, 2004                 $2.00             $2.00
June 30, 2004                  $2.00             $0.32
September 30, 2004             $0.32             $0.13
December 31, 2004              $0.15             $0.12
March 31, 2005                 $0.17             $0.15
June 30, 2005                  $0.18             $0.17
September 30, 2005             $2.25             $0.18
December 31, 2005              $2.00             $1.90

Holders

The number of record holders of Amexdrug's common stock as of April 13, 2006 is
approximately 200.

Dividends

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.

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, except for the
following:

On March 15, 2005, the wife of Amexdrug's President converted approximately
$75,000 in loans that she had made to Amexdrug or its subsidiaries to 421,083
shares of Amexdrug common stock at the then current market price of
approximately $0.18 per share. The shares were issued without registration
pursuant to Section 4(2) of the Securities Act of 1933 for a transaction not
involving any public offering. The certificate representing the shares was given
a restricted legend.


--------------------------------------------------------------------------------

        ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

--------------------------------------------------------------------------------

Overview

Amexdrug Corporation is located at 8909 West Olympic Boulevard, Suite 208,
Beverly Hills, California 90211. Its phone number is (310) 855-0475. Its fax
number is (310) 855-0477. Its website is www.amexdrug.com. Shares of Amexdrug
common stock are traded on the OTC Bulletin Board under the symbol AXRX.OB. The
President of Amexdrug has had experience working in the pharmaceutical industry
for the past 20 years.

Through its wholly-owned subsidiary, Allied Med, Inc., formed in October 1997,
Amexdrug is engaged in the pharmaceutical wholesale business of selling brand
and generic pharmaceutical 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 in approximately 7 or 8 states. Amexdrug



                                       16
<PAGE>


is attempting to expand its business, and it would like to eventually sell and
distribute products in all 50 states.

Through its wholly-owned subsidiary, Dermagen, Inc., Amexdrug is a rapidly
growing manufacturing company specializing in the manufacturing and distribution
of certain pharmaceuticals, medical devices and 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. Our competitive advantage is in our superior product
research and development for large leading domestic and international companies.

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

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

On December 31, 2001, Amexdrug acquired all of the issued and outstanding common
shares of Allied Med, Inc. ("Allied") in a share exchange. Amexdrug acquired all
50,000 issued and outstanding shares of Allied common stock from its sole
shareholder, Mr. Jack Amin, in exchange for 7,000,000 restricted common shares
of Amexdrug and the assumption of a $100,000 promissory note, and all accrued
interest thereon owed by Mr. Amin to Allied. At all times during the
negotiations of the transaction, Mr. Amin was an officer, director and
controlling shareholder of both companies. Consideration for the acquisition was
determined through negotiations between the boards of directors of both
companies and was based on Allied's past operating history and potential for
future growth.

Amexdrug has assumed the operations of Allied, and Amexdrug intends to build on
the pharmaceutical wholesale operations of Allied.

On October 28, 2004, Amexdrug formed a new subsidiary, Royal Health Care, Inc.
as a Nevada corporation. Royal Health Care, Inc. was formed to manufacture and
sell health and beauty products.

On November 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.

Amexdrug completed its purchase of Dermagen, Inc. on October 7, 2005 with
Amexdrug paying $70,000 cash to the Dermagen, Inc. shareholders. Amexdrug
borrowed approximately $40,000 from Nora Amin, the wife of Amexdrug's CEO, which
was used to complete the acquisition. Dermagen, Inc. is now an operating
subsidiary of Amexdrug.

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



                                       17
<PAGE>


Results of operations

For the year ended December 31, 2005, Amexdrug reported sales of $4,950,960,
comprised entirely of income from Allied Med, Inc.'s and Dermagen Inc.'s
pharmaceutical wholesale business of selling brand name and generic
pharmaceutical products, and over-the-counter (OTC) health and beauty products.
This was $1,579,525 less than the $6,530,485 of sales reported for the year
ended December 31, 2004. The decline in sales is due to increased competition
and Amexdrug's search for better discount products to sell. Cost of goods sold
for the year ended December 31, 2005 was $4,612,908, a decrease of $1,621,900
from the $6,234,808 cost of goods sold for the year ended December 31, 2004.
During the year ended December 31, 2005 gross profit increased by $42,375 to
$338,052 or 6.8% of sales from the $295,677 or 4.5% of sales recorded for the
year ended December 31, 2004. The Company believes its gross profit margin will
increase in 2006 due to the higher profit margin products manufactured and sold
by Dermagen, Inc.

Selling, general and administrative expense was $350,048 for the year ended
December 31, 2005, an increase of $36,044 from the $314,004 recorded for the
year ended December 31, 2004. This increase in selling, general and
administrative expense is attributable to increased employee expense and lease
obligations assumed by the Company due to its acquisition of Dermagen, Inc.

During the year ended December 31, 2005, Amexdrug recorded a gain on a
litigation settlement of $28,428. During the year ended December 31, 2004,
Amexdrug recorded a loss on a litigation settlement of $134,574 in connection
with Allied Med, Inc.'s settlement of a lawsuit which included the transfer of
eight parcels of undeveloped real estate from Allied Med, Inc. to the other
party.

During the year ended December 31, 2005, Amexdrug experienced net income of
$14,163. This was $3,713 more than the $10,450 net income recorded for the year
ended December 31, 2004. Although Amexdrug's net income increased during the
year ended December 31, 2005 by $3,713, this included a non-recurring gain on a
litigation settlement of $28,428.

Liquidity and capital resources - December 31, 2005

As of December 31, 2005, Amexdrug reported total current assets of $362,777,
comprised primarily of cash and cash equivalents of $177,408, accounts
receivable of $95,890 and inventory of $77,931. Total assets as of December 31,
2005 were $461,704, which included total current assets of $362,777, plus net
property and equipment of $52,267, lease deposits of $12,158, customer base of
$16,737 and goodwill of $17,765.

Amexdrug's liabilities as of December 31, 2005 consist of accounts payable of
$339,895, payables to a related party of $53,140, accrued liabilities of $7,461,
current portion of capital lease obligations of $8,190, accrued taxes of $1,263
and total long-term liabilities of $42,150.

During the year ended December 31, 2005, Amexdrug had $165,229 cash provided by
operating activities compared to $49,377 cash provided in the year ended
December 31, 2004. The primary adjustments to reconcile net income to net cash
provided by operating activities during 2005 were as follows: a decrease in
accounts receivable of $201,420, a decrease in accounts payable of 59,164, a
gain on litigation settlement of $28,428, a decrease in inventory of $15,962,
and a depreciation expense of $22,581. Cash increased during the year ended
December 31, 2005 by $172,715 compared to an increase during 2004 of $3,508.
Amexdrug had a cash balance of $177,408 at December 31, 2005. Operations have
primarily been funded through cash generated from operations. Increases in



                                       18
<PAGE>


loans from related parties have also provided some additional cash for
operations. Management does not anticipate that Amexdrug will need to seek
additional financing during the next twelve months.

Forward-looking statements

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

--------------------------------------------------------------------------------

                          ITEM 7. FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

Amexdrug's consolidated audited balance sheets as of December 31, 2005 and 2004,
and Amexdrug's consolidated audited statements of operations, stockholders'
equity (deficit), and cash flows for the fiscal years ended December 31, 2005
and 2004 are included hereafter.






















                                       19
<PAGE>



                      AMEXDRUG CORPORATION AND SUBSIDIARIES


                          INDEX TO FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----

 Report of Independent Registered Public Accounting Firm..................... 21

 Consolidated Balance Sheets -- December 31, 2005 and 2004................... 22

 Consolidated Statements of Operations for the Years Ended December 31,
   2005 and 2004............................................................. 23

 Consolidated Statements of Stockholders' Equity (Deficit) for the Years
    Ended December 31, 2005 and 2004......................................... 24

 Consolidated Statements of Cash Flows for the Years Ended December 31,
    2005 and 2004............................................................ 25

 Notes to Consolidated Financial Statements.................................. 26













                                       20
<PAGE>


  HANSEN, BARNETT & MAXWELL
 A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
  5 Triad Center, Suite 750
Salt Lake City, UT 84180-1128
    Phone: (801) 532-2200
     Fax: (801) 532-7944
       www.hbmcpas.com



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and the Stockholders
Amexdrug Corporation
Beverly Hills, California

We have  audited  the  accompanying  consolidated  balance  sheets  of  Amexdrug
Corporation  and  subsidiaries as of December 31, 2005 and 2004, and the related
consolidated statements of operations,  stockholders' equity (deficit), and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Amexdrug Corporation
and  subsidiaries  as of December  31,  2005 and 2004,  and the results of their
operations  and their cash flows for the years then ended,  in  conformity  with
U.S. generally accepted accounting principles.



                                               HANSEN, BARNETT & MAXWELL

Salt Lake City, Utah
April 7, 2006



                                       21
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                            2005         2004
--------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents                                $ 177,408    $   4,693
Accounts receivable, net of allowance for
 doubtful accounts of $19,500 and $39,494,
 respectively                                               95,890      297,310
Inventory                                                   77,931       73,493
Prepaid expenses                                             3,780            -
Deferred tax asset                                           7,768            -
--------------------------------------------------------------------------------
  Total Current Assets                                     362,777      375,496
--------------------------------------------------------------------------------

Property and Equipment
Office and computer equipment                              164,982      133,641
Leasehold improvements                                      15,700       15,700
--------------------------------------------------------------------------------
  Total Property and Equipment                             180,682      149,341
Less:  Accumulated depreciation                           (128,415)    (105,834)
--------------------------------------------------------------------------------
  Net Property and Equipment                                52,267       43,507
Lease Deposits                                              12,158        1,100
Customer Base, Net of Accumulated
 Amortization of $1,522                                     16,737            -
Goodwill                                                    17,765            -
--------------------------------------------------------------------------------

Total Assets                                             $ 461,704    $ 420,103
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable                                         $ 339,895    $ 427,487
Notes payable to related parties                            53,140       29,674
Accrued liabilities                                          7,461        4,252
Accrued income taxes                                         1,263          800
Current portion of capital lease obligations                 8,190       10,747
--------------------------------------------------------------------------------
  Total Current Liabilities                                409,949      472,960
--------------------------------------------------------------------------------

Long-term Liabilities
--------------------------------------------------------------------------------
Deferred income taxes                                       22,814            -
Capital lease obligations, net of current
 portion                                                    19,336       27,495
--------------------------------------------------------------------------------
Total Long-Term Liabilities                                 42,150       27,495
--------------------------------------------------------------------------------

Stockholders' Equity (Deficit)
Common stock - $0.001 par value, 50,000,000
 shares authorized, 8,473,866 and 8,052,783
 shares issued and outstanding                               8,474        8,053
Additional paid-in capital                                  83,342        7,969
Accumulated deficit                                        (82,211)     (96,374)
--------------------------------------------------------------------------------
  Total Stockholders' Equity (Deficit)                       9,605      (80,352)
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity (Deficit)     $ 461,704    $ 420,103
================================================================================

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


                                       22
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,                         2005          2004
--------------------------------------------------------------------------------

Sales                                                $ 4,950,960    $ 6,530,485
Cost of Goods Sold                                     4,612,908      6,234,808
--------------------------------------------------------------------------------

Gross Profit                                             338,052        295,677

Expenses
Selling, general and administrative expense             (350,048)      (314,004)
Gain (loss) on litigation settlement                      28,428       (134,574)
Interest expense                                          (4,595)        (1,949)
Interest and other income                                    870             95
--------------------------------------------------------------------------------

Income (Loss) From Operations                             12,707       (154,755)

Gain on Disposition of Property                                -        165,000
--------------------------------------------------------------------------------

Income Before Income Taxes                                12,707         10,245

Benefit from Income Taxes                                  1,456            205
--------------------------------------------------------------------------------

Net Income                                           $    14,163    $    10,450
================================================================================

Basic Income Per Common Share                        $         -    $         -
================================================================================

Basic Weighted-Average Common Shares Outstanding       8,388,496      8,052,783
================================================================================


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



                                       23
<PAGE>


<TABLE>
<CAPTION>

                           AMEXDRUG CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                                                               Total
                                  Common Stock       Additional             Stockholders'
                               --------------------   Paid-In   Accumulated    Equity
                                Shares     Amount     Capital     Deficit     (Deficit)
------------------------------------------------------------------------------------------
<S>                            <C>        <C>        <C>        <C>          <C>

Balance, December 31, 2003     8,052,783  $   8,053  $   7,969  $ (106,824)  $  (90,802)

Net income                             -          -          -      10,450       10,450
------------------------------------------------------------------------------------------

Balance, December 31, 2004     8,052,783      8,053      7,969     (96,374)     (80,352)

Conversion of notes
 payable to common stock,
 $0.18 per share                 421,083        421     75,373           -       75,794

Net income                             -          -          -      14,163       14,163
------------------------------------------------------------------------------------------

Balance, December 31, 2005     8,473,866  $   8,474  $  83,342  $  (82,211)  $    9,605
==========================================================================================




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



                                            24
</TABLE>
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,                           2005          2004
--------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income                                               $  14,163    $  10,450
Adjustments to reconcile net income to net cash used
 in operating activities:
   Depreciation                                             22,581       22,971
   Amortization                                              1,522            -
   Provision for doubtful accounts                               -       18,955
   Deferred income taxes                                    (2,719)      (1,004)
   Gain on disposition of property                               -     (165,000)
   (Gain) loss on litigation settlement                    (28,428)     134,574
   Changes in operating assets and liabilities:
      Accounts receivable                                  201,420       88,959
      Inventory                                             15,962       64,455
      Prepaid expenses                                      (3,780)           -
      Accounts payable                                     (59,164)    (109,615)
      Payable - related parties for inventory                    -       (5,448)
      Accrued liabilities                                    3,209      (10,720)
      Accrued income taxes                                     463          800
--------------------------------------------------------------------------------
         Net Cash Provided by Operating Activities         165,229       49,377
--------------------------------------------------------------------------------

Cash Flow from Investing Activities:
Purchase of stock of Dermagen, Inc.                        (70,000)           -
Increase in lease deposits                                 (11,058)           -
--------------------------------------------------------------------------------
         Net Cash Used in Investing Activities             (81,058)           -
--------------------------------------------------------------------------------

Cash Flows from Financing Activities:
Proceeds from borrowings from related party                 99,260       16,534
Checks written in excess of cash in bank                         -      (41,024)
Principal payments on capital lease obligations            (10,716)     (21,379)
--------------------------------------------------------------------------------
         Net Cash Provided by (Used in)
          Financing Activities                              88,544      (45,869)
--------------------------------------------------------------------------------

Net Increase in Cash                                       172,715        3,508

Cash at Beginning of Year                                    4,693        1,185
--------------------------------------------------------------------------------

Cash at End of Year                                      $ 177,408    $   4,693
================================================================================

Supplemental Cash Flow Information:
Cash paid for interest                                   $   4,595    $   1,949
--------------------------------------------------------------------------------

Supplemental Schedule of Noncash Investing and
 Financing Activities:
Conversion of related party note payable
 to common stock                                         $  75,794    $       -
--------------------------------------------------------------------------------


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


                                       25
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005


NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Organization  and Nature of  Operations - Amexdrug's  wholly owned  subsidiaries
include Allied Med, Inc. and Dermagen, Inc.

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,  health and beauty
products.  Dermagen has a US-FDA registered and state FDA approved manufacturing
facility  license to develop skin and novel health and beauty products for niche
markets.

Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Amexdrug Corporation and its wholly-owned  subsidiaries,
Allied Med,  Inc. and Dermagen,  Inc. The  accompanying  consolidated  financial
statements  include the results of Dermagen  Inc.'s  operations  from October 7,
2005 through December 31, 2005.  Inter-company  accounts and  transactions  have
been eliminated in consolidation.

Business  Condition - During the years  ended  December  31, 2005 and 2004,  the
Company  experienced  decreases  in revenue  of  approximately  24% and 44%,  or
$1,579,525  and  $5,175,187,  respectively.  At December 31, 2005 and 2004,  the
Company had working capital  deficiencies of $47,172 and $97,464,  respectively.
Management has borrowed from related  parties as more fully described in Note 6.
The accompanying financial statements do not include any adjustments relating to
the  recoverability  and  classification of asset carrying amounts or the amount
and classification of liabilities that might result should the Company be unable
to continue as a going concern.

Use of Estimates - The  preparation of financial  statements in conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from these estimates.

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, 2004,  purchases from three vendors accounted
for 41%,  25%, and 11% of total  purchases,  respectively.  Accounts  payable to
these  vendors  accounted  for 23%,  27%, and 0% of the total  accounts  payable
balance as of December 31, 2004, respectively.



                                       26
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

During the year ended December 31, 2005, purchases from one vendor accounted 46%
of total  purchases.  Accounts  payable to this vendor  accounted for 82% of the
total accounts  payable balance as of December 31, 2005. The loss of this vendor
could have a potential negative effect upon the Company's future operations.

Cash and Cash Equivalents - For purposes of the consolidated  statements of cash
flows, the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

Fair Value of  Financial  Instruments  - The carrying  amounts of capital  lease
obligations  approximate  their  fair  values  based on current  interest  rates
available to the Company.

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.

Property  and  Equipment  -  Property  and  equipment  are  stated  at cost less
accumulated  depreciation.  Major additions and  improvements  are  capitalized,
while  minor  repairs  and   maintenance   costs  are  expensed  when  incurred.
Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the related assets, which are as follows:

   Office and computer equipment                  3 - 10 years
   Leasehold improvements                         2 - 5 years

Depreciation  expense was $22,581 and $22,971 for the years ended  December  31,
2005 and 2004,  respectively.  On  retirement  or  disposition  of property  and
equipment,  the cost and related  accumulated  depreciation and amortization are
removed from the accounts and any  resulting  gain or loss is  recognized in the
statement of operations.

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.  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.  Upon  acquisition of Dermagen,
Inc.  the Company  recorded the customer  base at $18,259.  Amortization  of the
customer base was $1,522 for the year ended December 31, 2005.



                                       27
<PAGE>


                     AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

Goodwill - Goodwill  represents  the excess of the  purchase  price of Dermagen,
Inc. over the fair value of its net assets at the date of acquisition.  Goodwill
is not amortized,  but is tested for  impairment  quarterly or when a triggering
event occurs. The testing for impairment  requires the determination of the fair
value of the asset or entity to which the goodwill relates (the reporting unit).
The fair value of a reporting  unit is determined  based upon a weighting 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.

Impairment of Long-Lived  Assets - 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,  2005,  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.

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.

Income Taxes - The Company recognizes an asset or liability for the deferred tax
consequences of operating loss carry forwards and temporary  differences between
the tax  bases of assets  or  liabilities  and  their  reported  amounts  in the
financial statements that will result in taxable or deductible amounts in future
years when the reported  amounts of the assets or  liabilities  are recovered or
settled. These deferred tax assets or liabilities are measured using the enacted
tax rates that are expected to be in effect when the differences are expected to
reverse.  Deferred tax assets are reviewed  periodically for  recoverability and
valuation allowances are provided, as necessary.

Basic  Income Per Share - Basic  income per share is computed  by  dividing  net
income  by the  weighted-average  number  of common  shares  outstanding.  As of
December 31, 2005 and 2004,  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.

Recent  Accounting  Pronouncements  - In November 2004, the FASB issued SFAS No.
151,  Inventory  Costs.  SFAS No. 151 stipulates  that abnormal  amounts of idle
facility  expense,  freight,  handling costs, and wasted material  (spoilage) be
recognized  as  current-period  charges  as opposed  to being  capitalized  into
inventory.  SFAS No. 151  further  requires  that fixed  production  overhead be
allocated to production costs on the basis of normal capacity.  The Company will
be required to apply this  statement to inventory  costs incurred after December
31,  2005.  The  adoption of this  standard  is not  expected to have a material
effect on the Company's financial position or results of operations.



                                       28
<PAGE>


                     AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

In  December  2004,  the FASB issued SFAS No. 123  (revised  2004),  Share-Based
Payment,  which is an  amendment  to SFAS No. 123,  Accounting  for  Stock-Based
Compensation.   This  new  standard   eliminates  the  ability  to  account  for
share-based  compensation  transactions using Accounting  Principles Board (APB)
No. 25,  Accounting  for Stock  Issued to Employees  (APB 25) and requires  such
transactions  to be accounted  for using a  fair-valued-based  method,  with the
resulting cost recognized in the Company's financial  statements.  As revised by
the  Securities  and Exchange  Commission,  this new  standard is effective  for
annual  periods  beginning  after June 15, 2005.  The Company has not awarded or
granted any share-based  compensation;  therefore, the adoption of this standard
is not expected to have any effect on the Company's current  financial  position
or results of operations and will not have an effect on future operations unless
share-based compensation is awarded to its employees.

In December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets.
SFAS  No.  153  amends  APB  Opinion  No.  29,   Accounting   for   Non-monetary
Transactions, to require that exchanges of non-monetary assets be recorded based
on the  fair  value  of the  assets  exchanged  unless  the  transaction  has no
commercial  substance.  The  Company  will be  required to apply SFAS No. 153 to
non-monetary exchanges after December 31, 2005. The adoption of this standard is
not expected to have a material  effect on the Company's  financial  position or
results of operations.

Reclassification - Certain previously reported amounts have been reclassified to
conform  to the 2005  presentation.  These  reclassifications  had no  effect on
previously reported net income.

NOTE 2 - ACQUISITION OF DERMAGEN, INC.

On July 22, 2005, Amexdrug  Corporation entered into an agreement to acquire all
of the capital stock of Dermagen, Inc. (Dermagen), a California corporation. The
Company  completed  its  purchase of  Dermagen on October 7, 2005 with  Amexdrug
paying $70,000 in cash to the Dermagen  shareholder.  Amexdrug  borrowed $40,000
from the wife of Amexdrug's CEO to complete the acquisition.  Amexdrug purchased
Dermagen for its customer base, its products, and its presence in the health and
beauty  products  industry,  and its  FDA  licensed  facility.  The  results  of
Dermagen's   operations  have  been  included  in  the  consolidated   financial
statements since October 7, 2005.

The  following  table  summarized  the  estimated  fair  values  of  assets  and
liabilities assumed of Dermagen as of October 7, 2005.



                                       29
<PAGE>


                     AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

         Assets
         Inventory                                            $20,400
         Office and computer equipment                         31,341
         Customer base                                         18,259
         Goodwill                                              17,765
         ------------------------------------------------------------
         Total Assets                                          87,765
         ------------------------------------------------------------

         Liabilities
         Deferred taxes                                        17,765
         ------------------------------------------------------------

         Net Assets                                           $70,000
         ============================================================

The goodwill was assigned to the health and beauty  products  segment.  Goodwill
will not be deductible for tax purposes.

Pro forma results of operations have not been presented as the differences  from
the Company's annual operations for 2005 and 2004 are not material.

NOTE 3 - INTANGIBLE ASSETS

Intangible  Assets - Intangible assets consist of the customer base of Dermagen,
Inc.  The  following  table  describes  the annual  future  amortization  of the
customer base.

         Years Ending December 31,
         ------------------------------------------------------------
           2006                                               $ 6,086
           2007                                                 6,086
           2008                                                 4,565
         ------------------------------------------------------------

         Total future amortization of customer base            16,737
         ============================================================

Goodwill - The change in goodwill  during the year ended  December  31, 2005 was
from the acquisition of Dermagen in the amount of $17,765.

NOTE 4 - Leases

Operating Leases --The Company leases certain of its operating  facilities under
non-cancelable  operating  leases  that  expire  during  2006.  Rent  expense is
recognized on a  straight-line  basis over the term of the leases.  Rent expense
for the  years  ended  December  31,  2005  and 2004 was  $43,871  and  $28,033,
respectively.  Future payments under the non-cancelable operating leases will be
$38,838 for the year ended  December  31, 2006.  As of December  31,  2005,  the
Company had refundable  deposits  relating to these operating leases of $11,058.
Additionally, the Company leases its executive offices on a month-to-month basis
for $1,060 per month.



                                       30
<PAGE>


                     AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

Capital  Lease  Obligations  -- Certain  equipment is leased under capital lease
agreements.  The  following  is a summary  of assets  held under  capital  lease
agreements at December 31, 2005:

         Property and equipment                             $ 115,721
         Less:  Accumulated depreciation                      (93,886)
         ------------------------------------------------------------
         Net property and equipment under capital lease     $  21,835
         ------------------------------------------------------------

During the year ended December 31, 2005 and 2004, the Company recognized $16,757
and $18,178, respectively, of depreciation relating to these leased assets.

During the year ended December 31, 2004, the Company  restructured  the terms of
its capital lease. The monthly payments were reduced from $1,274 to zero for the
first two months, $250 for the next thirty-five  months,  followed by a lump sum
payment of $17,798.  The  restructure  lease term was  extended to November  30,
2007, from the original due date of April 1, 2006. The implicit interest rate of
the lease decreased from 8.091% to 8.055%. The following is a schedule of future
minimum lease payments under capital lease obligations:

       Years Ending December 31,
       ----------------------------------------------------------------
          2006                                                  10,545
          2007                                                  20,841
       ----------------------------------------------------------------
          Total minimum lease payments                          31,386
          Less: Amount representing interest                    (3,860)
       ----------------------------------------------------------------
          Present value of net minimum lease payments           27,526
          Less: current portion of capital lease obligations    (8,190)
          Long-term portion of capital lease obligations      $ 19,336
       ----------------------------------------------------------------

NOTE 5 - Income taxes

The  provision  for income taxes for the years ended  December 31, 2005 and 2004
consisted of the following:

                                                  2005          2004
         -------------------------------------------------------------
         Current tax expense                    $  1,263      $   800
         Deferred tax benefit                     (2,719)      (1,005)
         -------------------------------------------------------------
         Benefit from Income Taxes              $ (1,456)     $  (205)
         =============================================================

As of December 31, 2005, the Company had state  operating loss carry forwards of
$12,945,  which will expire beginning in 2015. The following is a reconciliation
of the income  tax at the  federal  statutory  tax rate with the  provision  for
income taxes for the years ended December 31, 2005 and 2004:



                                       31
<PAGE>


                      AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

                                                               2005       2004
--------------------------------------------------------------------------------
Income tax at statutory rate (34%)                          $  4,320   $  3,484
Non-taxable items                                              1,633      1,871
Allowance for doubtful accounts from prior years                   -    (33,289)
Change in valuation allowance                                 (6,933)    27,135
Effect of lower taxes                                         (1,218)         -
State (tax) benefit net of federal tax                           742        594
--------------------------------------------------------------------------------
Benefit from Income Taxes                                   $ (1,456)  $   (205)
================================================================================

The components of the net deferred tax asset (liability) as of December 31, 2005
and 2004 are as follows:
                                                               2005       2004
--------------------------------------------------------------------------------
Operating loss carry forwards                              $     755   $  1,144
Allowance for bad debts                                        7,768     15,732
Valuation allowance                                                -    (10,112)
--------------------------------------------------------------------------------
Total Deferred Tax Assets                                      8,523      6,764
--------------------------------------------------------------------------------
Amortization                                                  (6,668)         -
Depreciation                                                 (16,901)    (6,764)
--------------------------------------------------------------------------------
Total Deferred Tax Liabilities                               (23,569)    (6,764)
--------------------------------------------------------------------------------
Net Deferred Tax Liability                                 $ (15,046)  $      -
--------------------------------------------------------------------------------

The net change in the valuation  allowance  during the years ended  December 31,
2005  and  2004  was  a  decrease   of  $10,112  and  an  increase  of  $10,112,
respectively.  The decrease in the valuation allowance during 2005 was primarily
the result of the offset of the  deferred tax assets of Amexdrug by the deferred
tax liabilities recognized in connection with the acquisition of Dermagen.

NOTE 6 - RELATED PARTY TRANSACTIONS

During the year  ended  December  31,  2004,  the  Company  purchased  inventory
totaling $34,304 from Amrx Corporation,  a corporation owned by the president of
the Company.  No inventory was purchased from this company during the year ended
December 31, 2005.  Accounts  payable to Amrx totaled $13,140 as of December 31,
2005 and 2004.

In December 2004, the Company borrowed $16,534 from the wife of the president of
the Company.  In January 2005, the Company  borrowed an additional  $59,260 from
this person.  On March 15, 2005, the loans were converted into 421,083 shares of
common stock at the market price of $0.18 per share;  accordingly,  there was no
beneficial conversion feature relating to this transaction.  In October of 2005,
the Company  borrowed  $40,000  from this person to  facilitate  the purchase of
Dermagen.  The  $40,000  note  matures in October of 2006 and  carries an annual
interest rate of 8%, payable every 6 months.

NOTE 7 -- CONTINGENCIES

On June 9,  2003 a  lawsuit  was  filed in the  Superior  Court of the  State of
California,   County  of  Los  Angeles  against  the  Company,  its  predecessor
corporation,  Harlyn  Products,  Inc., a California  corporation,  the Company's



                                       32
<PAGE>


                     AMEXDRUG CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

wholly  owned  subsidiary,   Allied  Med,  Inc.,  and  the  Company's  principal
shareholder, Jack Amin. The plaintiffs alleged in the complaint that the parties
entered into a one page  finder's  agreement  on April 10, 2000  relating to the
acquisition of Harlyn  Products,  Inc., and that the plaintiffs were entitled to
receive a finder's fee equal to 7.5% of the fully diluted  shares of the Company
(approximately  603,959  shares)  with  a  value  not  less  than  $600,000  and
unspecified  lost profits.  The  plaintiffs'  alleged  causes of action were for
breach of contract,  for  specific  performance,  for services  rendered and for
unjust enrichment.  The plaintiffs sought compensation for damages,  legal fees,
costs and interest.  Although management had determined,  with the advice of its
legal  counsel,  that there was some  likelihood  that a loss from the claim may
have been  incurred,  on October 26, 2004, the trial court entered a decision in
favor of the Company  disallowing the plaintiffs'  claim. The plaintiffs filed a
notice  of  intent of move for a new  trial,  which  was  denied by the court on
December 13, 2004. The plaintiffs then filed a notice of appeal.  Effective June
7, 2005, both parties executed a settlement  agreement  whereby the Company paid
$10,000 in exchange for a release of all claims and dismissal of the plaintiff's
appeal.

On October 9, 2004 a vendor filed suit to collect on an account in the amount of
$32,234  from the  Company.  The Company  reached a  settlement  whereby it paid
$5,000  for a full and  broad  release  of all  claims.  A gain of  $27,234  was
recognized upon payment.

NOTE 8 - SEGMENT INFORMATION

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

The following tables describe information regarding the operations and assets of
these reportable business segments: [GRAPHIC OMITTED]

                                                         Health and
                                                           Beauty
For the year ended December 31, 2005       Distribution   Products      Total
--------------------------------------------------------------------------------
Sales to external customers                $  4,926,511  $   24,449  $ 4,950,960
Depreciation and amortization                    19,969       4,134       24,103
Segment income (loss)                            15,428      (2,721)      12,707
Segment assets                                  372,725      94,979      467,704


December 31, 2005
-------------------------------------------------------
Total assets for reportable segments       $    467,704
Elimination of intersegment assets               (6,000)
-------------------------------------------------------
Consolidated Total Assets                  $    461,704
=======================================================



                                       33
<PAGE>


--------------------------------------------------------------------------------

            ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUNTING AND FINANCIAL DISCLOSURE

--------------------------------------------------------------------------------

Amexdrug has had no changes in its independent registered public accounting firm
or experienced other matters required to be disclosed pursuant to Item 304 of
Regulation S-B during the two most recent fiscal years or any later interim
period.

--------------------------------------------------------------------------------

                        ITEM 8A. CONTROLS AND PROCEDURES

--------------------------------------------------------------------------------

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.

As required by Rule 13a-15 under the Exchange Act, we have completed an
evaluation, under the supervision and with the participation of our management,
including the Chief Executive Officer and Principal Financial Officer, of the
effectiveness and the design and operation of our disclosure controls and
procedures as of December 31, 2005. Based upon this evaluation and as a result
of the material weakness discussed below, our management, including the Chief
Executive Officer and Principal Financial Officer, has concluded that our
disclosure controls and procedures were not effective as of December 31, 2005.
Management nevertheless has concluded that the consolidated financial statements
included in this Form 10-KSB present fairly, in all material respects, the
results of our operations and our financial position for the periods presented
in conformity with generally accepted accounting principles.

A material weakness is a control deficiency, or combination of control
deficiencies, that result in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected in a timely basis by management or employees in the normal course of
performing their assigned functions. As of December 31, 2005, we identified the
following material weakness in our internal controls:

     *    We have a material weakness in the adequacy of our closing process and
          our preparation of adjusting entries to effectively prepare accurate
          financial statements with the necessary level of review and
          supervision.

There were no changes to any reported financial results that have been released
by us in this or any other filings as a result of the above-described material
weakness; however, the following actions have been commenced since December 31,
2005 in response to the inadequacies noted above:



                                       34
<PAGE>


     *    Initiation of an evaluation and remediation process with respect to
          internal controls over financial reporting and related processes
          designed to identify internal controls that mitigate financial
          reporting risk and identify control gaps that may require further
          remediation.

     *    Evaluation of the staffing, organizational structure, systems,
          policies and procedures, and other reporting processes, to improve the
          accuracy of closing and adjusting these accounts and to enhance the
          level of review and supervision.

Other than as described above, since the evaluation date, 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.


--------------------------------------------------------------------------------

                           ITEM 8B. OTHER INFORMATION

--------------------------------------------------------------------------------

None.


                                    PART III

--------------------------------------------------------------------------------

        ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

--------------------------------------------------------------------------------

Identification of directors and executive officers

The following table as of April 13, 2005, 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           47     President, Secretary,            April 2000
                           Treasurer and Director

Rodney S. Barron,   53     Director                        December 2001
M.D.

Behrooz Meimand     57     Director                        December 2001

Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the board of directors, for a term of one year and
until his successor is elected at the annual meeting of the board of directors
and is qualified.

Included below is certain biographical information regarding each of the
Company's executive officers and directors.

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



                                       35
<PAGE>


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.
Members of management are the only persons who may be deemed to be promoters of
Amexdrug.

Family relationships

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

Involvement in certain legal proceedings

During the past five years, no present or former director, person nominated to
become a director, executive officer, promoter or control person of Amexdrug:

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

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

                  (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, barring, suspending
         or otherwise limiting his involvement in any type of business,
         securities or banking activities; or

                  (4) was found by a court of competent jurisdiction (in a civil
         action), the Securities and Exchange Commission or the Commodity



                                       36
<PAGE>


         Futures Trading Commission to have violated a federal or state
         securities or commodities law, and the judgment has not been reversed,
         suspended or vacated.

Section 16(a) beneficial ownership reporting compliance

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

--------------------------------------------------------------------------------

                         ITEM 10. EXECUTIVE COMPENSATION

--------------------------------------------------------------------------------

Cash compensation

The following table sets forth the aggregate compensation paid by Amexdrug
and/or its subsidiaries to the Company's Chief Executive Officer and to any
other officer, director or employee who received $100,000 or more during any of
the last three fiscal years:

                           SUMMARY COMPENSATION TABLE

                                                 Long Term Compensation
                         Annual Compensation     Awards         Payouts
                        ---------------------    ------         -------

(a)            (b)        (c)     (d)    (e)     (f)     (g)      (h)     (i)

                                                        Secur-
                                                        ities            All
Name and     Year or                    Other   Rest-   Under-    LTIP   Other
Principal    Period     Salary   Bonus  Annual  ricted  lying     Pay-   Compen-
Position     Ended        ($)     ($)   Compen- Stock   Options   outs   sation
--------------------------------------------------------------------------------

Jack Amin    12/31/03   $24,000    0       0      0        0        0      0
President/   12/31/04   $     0    0       0      0        0        0      0
Director     12/31/05   $36,000    0       0      0        0        0      0

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, 2005 and 2004. 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.

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



                                       37
<PAGE>


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 will provide for a salary of $150,000 per year retroactive to
January 1, 2006, and possible bonuses as the board of directors may determine
are appropriate. In the event Amexdrug is unable to pay the full $150,000 per
year annual salary to Mr. Amin, he has indicated that he may accept a portion of
the salary in the form of Amexdrug common stock.

Compensation pursuant to plans; pension table

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

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

Other compensation

None.

--------------------------------------------------------------------------------

     ITEM 11. 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 April 13, 2006. Each of these persons has sole investment and
sole voting power over the shares indicated.



                                       38
<PAGE>


                                         Number                  Percent
Name and Address               of Shares Beneficially Owned      of Class
----------------               ----------------------------      --------

Jack Amin                               7,775,000                  91.7%
8909 West Olympic Blvd.
Suite 208
Beverly Hills, CA 90211

Security ownership of management

The following table sets forth the share holdings of Amexdrug's directors and
executive officers as of April 13, 2006. Each of these persons has sole
investment and sole voting power over the shares indicated.

                                         Number                  Percent
Name and Address                of Shares Beneficially Owned     of Class
----------------                ----------------------------     --------

Jack Amin                               7,775,000                  91.7%
Rodney Barron, M.D.                             0                   0.0%
Behrooz Meimand                                 0                   0.0%

All directors and executive
officers as a group (3)                 7,775,000                   91.7%

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 one year holding period has been met.
Mr. Amin disclaims beneficial ownership of 421,083 shares of common stock
acquired by his wife during 2005 that are not included in the foregoing tables.

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.

--------------------------------------------------------------------------------

             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

--------------------------------------------------------------------------------

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, 2005, or since December 31, 2005, or any currently
proposed transactions, or series of similar transactions, to which the Company
was or is to be party, in which the amount involved exceeds $60,000, and in



                                       39
<PAGE>


which any director or executive officer, or any security holder who is known by
the Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, has an interest, other than the following:

         1. Amexdrug anticipates that it will enter into an employment agreement
with Jack Amin in the near future. It is expected that the employment agreement
will be retroactive to January 1, 2006, and that it will provide for an annual
salary of $150,000 and possible bonuses as the board of directors may determine
are appropriate. The employment agreement may give Mr. Amin the option to take a
portion of the salary in shares of the Company's common stock.

         2. During the year ended December 31, 2004 Amexdrug purchased inventory
totaling $34,304 from Amrx Corporation, a corporation owned by Jack Amin, the
Company's president. No inventory was purchased from this company during the
year ended December 31, 2005. As of December 31, 2005 and 2004, accounts payable
to Amrx Corporation totaled $13,140.

         3. In December 2004, the Company borrowed $16,534 from the wife of the
President of the Company. The loan bore no interest, was unsecured and due upon
demand. In January 2005, the Company borrowed an additional $59,261 from the
same person. On March 15, 2005, the loans were converted into 421,083 shares of
common stock at the market price of $0.18 per share. In October 2005, the
Company borrowed $40,000 from this person to facilitate the purchase of
Dermagen, Inc. The $40,000 note matures in October 2006 and carries an annual
interest rate of 8.0%, payable every six months.

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 11 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.

--------------------------------------------------------------------------------

                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

--------------------------------------------------------------------------------

(a) Exhibits

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

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

 2.2           Agreement and Plan of Reorganization
               (to acquire Allied Med, Inc.)**



                                      40
<PAGE>


 3.1           Articles of Incorporation***

 3.2           By-Laws***

 21.1          List of Subsidiaries of Amexdrug Corporation***

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

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

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

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

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

          *    Exhibit 2.1 is incorporated by reference from Amexdrug's Form 8-K
               Current Report filed December 31, 2001 as Exhibit 10.01

          **   Exhibit 2.2 is incorporated by reference from Amexdrug's Form 8-K
               Current Report filed January 15, 2002 as Exhibit 10.01

          ***  Exhibits 3.1, 3.2 and 21.1 are incorporated by reference from
               Amexdrug's 2001 Form 10-KSB filed April 1, 2002.

(b) Reports on Form 8-K

Amexdrug filed no reports on Form 8-K during the last quarter of the period
covered by this report:

--------------------------------------------------------------------------------

                 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

--------------------------------------------------------------------------------


Audit Fees

For the fiscal years ended December 31, 2005 and 2004, our principal accountant
billed $17,000 and $15,000, respectively, for the audit of our annual financial
statements and review of financial statements included in our Form 10-QSB
filings.



                                       41
<PAGE>


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,
2005 and 2004.

Tax Fees

For the fiscal years ended December 31, 2005 and 2004, our principal accountant
billed us $1,000 and $866, 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, 2005 and 2004.

Pre-Approved Policies and Procedures

Prior to engaging our accountants to perform a particular service, our board of
directors obtains an estimate for the service to be performed. All of the
services described above were approved by the board of directors in accordance
with its procedures.













                                       42
<PAGE>


--------------------------------------------------------------------------------

                                   SIGNATURES

--------------------------------------------------------------------------------

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                AMEXDRUG CORPORATION



Date: April 17, 2006            By /s/Jack Amin
                                  ------------------------------------------
                                  Jack Amin, Director, President and
                                  Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.



Date: April 17, 2006            By /s/Jack Amin
                                  ------------------------------------------
                                  Jack Amin, Director, President and
                                  Chief Executive Officer, Chief
                                  Financial Officer and Chief
                                  Accounting Officer



Date: April __, 2006            By
                                  ------------------------------------------
                                  Rodney Barron, M.D., Director



Date: April 17, 2006            By /s/Behrooz Meimand
                                  ------------------------------------------
                                  Behrooz Meimand, Director














                                       43
<PAGE>


                                  EXHIBIT INDEX

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

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

 2.2              Agreement and Plan of Reorganization             **

 3.1              Articles of Incorporation                        ***

 3.2              By-Laws                                          ***

21.1              List of Subsidiaries of Amexdrug                 ***
                  Corporation

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

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

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

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

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

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

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

            ***   Exhibit 3.1, 3.2 and 21.1 are incorporated by
                  reference from Amexdrug's 2001 Form 10-KSB filed on
                  April 1, 2002.








                                       44