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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

AMENDMENT NO. 1



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended January 1, 2005



OR



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



Commission File No. 1-15445



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DRUGMAX, INC.

(Name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|STATE OF NEVADA                                                |  | 06-1283776                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|312 Farmington Avenue Farmington, CT                           |  | 06032-1968                       
|(Address of Principal Executive Officers)                      |  | (Zip Code)                       



Issuers
telephone number: (860) 676-1222



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Securities registered pursuant to Section 12(b) of the Exchange Act: None.



Securities registered pursuant to Section 12(g) of the Exchange Act:



Common stock, Par value $.001 per share

(Title of Class)



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Indicate by check mark whether the issuer (1) filed all
reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x    No ̈



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



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b2 of the
Act).    Yes ̈No  x



The aggregate market value of the Common Stock, $.001 par value, held by
non-affiliates of the Registrant based upon the last price at which the common stock was sold as of the last business day of the Registrants most recently completed second fiscal quarter, June 30, 2004, as reported on the NASDAQ Stock Market
was approximately $28,716,032. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other purposes.



The number of shares outstanding of common stock as of March 31, 2005 was 19,708,974



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EXPLANATORY NOTE



This Form 10-K/A amends the Form 10-K annual report for the fiscal year ended January 1, 2005 filed by DrugMax, Inc. (the
Company or DrugMax) on April 19, 2005. This Form 10-K/A is being filed solely to set forth the information required by Items 10, 11, 12 and 13 of Part III of Form 10-K because a definitive proxy statement containing such
information will not be filed within 120 days after the end of the fiscal year covered by the Companys original Form 10-K filing. All other portions of the Companys original Form 10-K filing remain in effect.



Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



Set forth below is the business experience and other biographical information regarding the
Companys executive officers and directors as of April 18, 2005:



|                       |  |     |  |                                                     
|---------------------- |  | --- |  | ----------------------------------------------------
|Name                   |  | Age |  | Position                                            
|Edgardo Mercadante (3) |  | 49  |  | Co-Chairman of the Board and Chief Executive Officer
|Jugal K. Taneja        |  | 60  |  | Co-Chairman of the Board                            
|Dale Ribaudo           |  | 47  |  | Chief Financial Officer                             
|William L. LaGamba     |  | 46  |  | President and Chief Operating Officer               
|James Beaumariage      |  | 45  |  | Senior Vice President Operations, Familymeds, Inc.  
|Philip Gerbino(2)(4)   |  | 57  |  | Director                                            
|Peter Grua(1)(3)(4)    |  | 50  |  | Director                                            
|James Searson(2)       |  | 52  |  | Director                                            
|Rakesh Sharma(1)       |  | 47  |  | Director                                            
|Mark Majeske(1)        |  | 47  |  | Director                                            
|Laura Witt(2)(3)(4)    |  | 36  |  | Director                                            

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|(1) | Member of Compensation Committee.
|--- | ---------------------------------

|(2) | Member of Audit Committee.
|--- | --------------------------

|(3) | Member of Executive Committee.
|--- | ------------------------------

|(4) | Member of Nominating and Governance Committee.
|--- | ----------------------------------------------



Pursuant to the Companys bylaws, each director serves for a term of one (1) year or until his successor is duly qualified. Officers are appointed
annually by the Board of Directors (subject to the terms of any employment agreement), at the annual meeting of the Board, to hold such office until an officers successor is duly appointed and qualified, unless an officer sooner dies, resigns
or is removed by the Board. There are no family relationships among any of the Companys directors and executive officers. There are no arrangements or understandings between directors and any other person concerning service as a director.



Information regarding Directors, Nominees and Executive Officers:



Edgardo A. Mercadante has served as our Chief Executive Officer
and Co-Chairman of the Board since the merger with Familymeds Group, Inc. (FMG) on November 12, 2004. He served as FMGs Chairman of the Board, Chief Executive Officer and President since 1997. Mr. Mercadante has over twenty-five
years of experience in the prescription health care and managed care industries including significant experience in retail pharmacy. Mr. Mercadante was President of Arrow Corporation between the years of 1987 to 1996. He was President and Chief
Executive Officer of APP, a pharmacy benefit management company, which he co-founded in 1991. Mr. Mercadante is active in many national and state professional pharmacy organizations. Mr. Mercadante is a licensed pharmacist and holds a B.S. in



2



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Pharmacy from Philadelphia College of Pharmacy and Science. Mr. Mercadante served as Division Manager from 1980 to 1986 with Rite Aid Corporation. Mr.
Mercadante holds directorships with General Nutrition Centers, MediBank, and ProHealth. He holds a Trusteeship with the University of Sciences in Philadelphia.



Jugal K. Tanejahas served as the Companys Co-Chairman of the Board since November 12, 2004. Previously, since April 1996, other than from March 2000 to
October 2000, when Mr. LaGamba served as our Chief Executive Officer, Mr. Taneja served as our Chief Executive Officer. In addition to his service to DrugMax, Mr. Taneja operates several other companies. He is presently the Chairman of the Board of
Dynamic Health Products, Inc. (Dynamic), a position he has held since Dynamics inception in 1991. From November 1991 to June 1998 he served as Chief Executive Officer of Dynamic. Dynamic, a publicly traded company, is a distributor
of proprietary and nonproprietary dietary supplements, over-the-counter drugs, and health and beauty care products. Mr. Taneja has served as the Chairman of the Board of Innovative Companies, Inc., a publicly traded company that manufactures and
distributes nutritional and health products since June 1998. Mr. Taneja holds degrees in Petroleum Engineering, Mechanical Engineering, and a Masters in Business Administration from Rutgers University.



William L. LaGambahas served as our President and Chief Operating Officer since
October 2000. From March 2000 to October 2000, he served as the Companys Chief Executive Officer. From November 1999 to October 2000, he also served as the Companys Secretary and Treasurer. From June 1998 until joining the Company in
November 1999, Mr. LaGamba served as Chief Executive Officer of Dynamic. He was also a founder and the President of Becan Distributors, Inc. (Becan) from its inception in January 1997 until it was acquired by the Company in November
1999. For 14 years prior to January 1997, Mr. LaGamba served in various capacities for McKesson Drug Company, a large distributor of pharmaceuticals, health and beauty care products and services, and FoxMeyer Drug Company.



James S. Beaumariage joined Familymeds, Inc. in March 1996 and has served in a number
of executive positions, currently as its Senior Vice President of Store Operations. Prior to joining Familymeds, Mr. Beaumariage served as Manager of Third-Party Administration for CVS, from June 1994 until January 1996, and as Manager of Pharmacy
Development from February 1993 until June 1994. Mr. Beaumariage held the position of Regional Pharmacy Supervisor of CVS/Peoples Drug from May 1988 until February 1993. Mr. Beaumariage is a licensed pharmacist. Mr. Beaumariage has served as a
member of the Connecticut Department of Social Services Pharmacy Advisory Panel. Mr. Beaumariage holds a B.S. in Pharmacy from Duquesne University and has completed the J. L. Kellogg Graduate School of Management Executive Program at Northwestern
University.



Philip P. Gerbino has served on our Board of Directors
since November 12, 2004. Previously, he served as a director of FMG since December 1996. Dr. Gerbino has been President of the University of the Sciences in Philadelphia and the Philadelphia College of Pharmacy since January 1995. Dr. Gerbino is
also a past president of the American Pharmaceutical Association and is a well established consultant in the pharmaceutical and health care industry. Dr. Gerbino serves on the board of NeighborCare, Inc. He earned his PharmD. in 1970 from the
Philadelphia College of Pharmacy and Science.



Peter J. Grua has served
on our Board of Directors since November 12, 2004. Previously, he served as a director of FMG. He also is a Managing Partner of HLM Venture Partners, where he has been employed since 1992. He has over 20 years of experience as an investor focused on
the health care industry. From 1986 to 1992, he was a managing director and Senior Analyst at Alex Brown and Sons, where he led the firms health care services and managed care research efforts. Mr. Grua is also a director of Health Care REIT,
Renal Care Group, and two other private companies. Mr. Grua holds an AB degree from Bowdoin College and an MBA from Columbia University.



James Searsonhas served on our Board of Directors since February 24, 2005. A Certified Public Accountant, Mr. Searson worked at Ernst & Young from 1975
through 2004, most recently as an audit partner who managed the firms office in Hartford, CT. He also served in Ernst & Youngs offices in Chicago, IL; Zurich, Switzerland; Hamburg, Germany; and Munich, Germany. During his tenure at
Ernst & Young, Mr. Searson provided audit, accounting, financial due diligence and reporting counsel and services to multinational manufacturing, distribution and service companies. Mr. Searson has a BSBA degree in Accounting from John Carroll
University, and also has completed the International Executive Management and Executive Management programs at Northwestern University. He is a member of the American Institute of Certified Public Accountants (AICPA).



3



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Rakesh K. SharmaDr. Sharma has served on our Board of Directors since November 12, 2004. He is an
Interventional Cardiologist and is a member of the medical staff of several hospitals in the Tampa Bay area, where he has practiced for over ten years. Since August, 1999, he has been a partner and director of The Heart and Vascular Institute of
Florida, LLC. Dr. Sharma also is Chief-of-Staff Elect of Largo Medical Hospital, he serves on the board of trustees for Largo Medical Center and is the Director of Emergency Cardiac Services at Largo Medical Center. Since March, 1999, Dr. Sharma has
served on the board of directors of Dynamic Health Products, Inc., a publicly traded company. He also is a director of Eonnet Media, Inc. Currently, Dr. Sharma also serves as chairman of the Credentialing Committee at Largo Medical Hospital and is a
member of the American Association of Cardiologist of Indian Origin and the International Society of Intravascular Ultrasound.



Mark MajeskeMr. Majeske has served on our Board of Directors since November 12, 2004. From July 1996 to June 2000, Mr. Majeske served as Group President of
McKesson HBOC/Pharmaceutical Group. Prior to becoming Group President, Majeske served as Executive Vice President Customer Operations and Regional Executive Vice President for McKesson. Since leaving McKesson in 2000, he has been a private investor
and advisor to startup companies and most recently served as Chief Executive Officer of Day Runner, Inc., which was sold to MeadWestvaco Corporation in late 2003.



Laura L. WittMs. Witt has served on the Board of Directors since November 12, 2004. Previously, she served as a director of
FMG. She is a General Partner of ABS Capital Partners, a private equity firm which she joined in 1997. Prior to joining ABS Capital Partners, Ms. Witt was a consultant with Monitor Company and with Oliver, Wyman & Company, strategy consulting
firms. Ms. Witt received a Bachelor of Arts from Princeton University and an M.B.A. from the Wharton School of the University of Pennsylvania. She currently serves as a director of Cyveillance, Inc. and of NSI Software, Inc.



Code of Ethics



We have adopted a written code of ethics that applies to our principal executive officer, principal financial officer and principal
accounting officer, responsive to Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC. A copy of our code of ethics is posted and publicly available on our internet website at www.drugmax.com. This website address is intended to
be an inactive, textual reference only; none of the material on this website is part of this report. If there are any amendments to or waivers, of the code of ethics, we intend to promptly disclose the nature of any such amendment or waiver on our
website.



Audit Committee Information



DrugMax has a separately-designated standing audit committee established in accordance with
section 3(a)(58)(A) of the Securities Exchange Act of 1934. Currently, DrugMaxs Audit Committee consists of Messrs. Searson and Gerbino and Ms. Witt. Each of the members of the Audit Committee is independent pursuant to Rule 4200(a)(15) of the
National Association of Securities Dealers listing standards. DrugMax has determined that it has at least one audit committee financial expert serving on its audit committee, as that term is defined by Item 401 of Regulation S-K. Currently,
Mr. Searson serves as the audit committees financial expert. The Audit Committee operates under a written charter adopted by the Board of Directors, a copy of which has previously been filed with the SEC.



Compliance with Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires the Companys executive
officers and directors, and persons who beneficially own more than 10% of the Companys common stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Executive officers, directors and greater
than 10% beneficial owners are required by the Securities and Exchange Commission regulations to furnish the Company with copies of all Section 16(a) forms they file.



Based solely on the Companys review of the copies of the forms furnished to it or written representations from the reporting persons
that no reports were required, the Company believes that, during its fiscal year ended January 1, 2005, all of its executive officers, directors and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements,
except as noted below:



Mark Majeske, Rakesh Sharma and James Searson were
late in filing their initial Forms 3, which forms were required to be filed within 2 days of being elected as directors of the Company. The required Forms 3 has since been filed.



4



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Item 11. EXECUTIVE COMPENSATION



Compensation to Outside Directors



Upon election to the Board of Directors, each Outside Director, receives an award of restricted stock in the amount of $50,000. Such shares vest 1/3 upon the date of
grant and 1/3 on the first and second anniversary thereafter. Further, on each year following his or her election to the Board, each Outside Director shall receive an award of restricted stock in the amount of $25,000. The foregoing shares are
granted under the Companys 2003 Restricted Stock Plan. In addition, each Outside Director shall be issued an option to purchase 10,000 shares of common stock annually each year following his or her election to the Board of Directors. Each
Outside Director who serves as a member of a committee shall be issued an option to purchase 5,000 shares of the Companys common stock annually. The chairperson of each committee, other than the Audit Committee, shall be issued an option to
purchase an additional 5,000 shares of common stock annually. The chairperson of the Audit Committee and the Chairmen of the Board shall receive an option to purchase 10,000 shares of the Companys common stock annually. The foregoing options
are granted under the Companys 1999 Stock Option Plan.



All of the
Companys Outside Directors receive $2,000 for each meeting of the Board of Directors that they attend, $5,000 per quarter and reimbursement of their reasonable out-of-pocket expenses incurred in connection with such meetings. In addition, each
Outside Director who serves on a committee receives $1,000 for each meeting attended.



5



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Compensation to Executive Officers



The following summary compensation table sets forth the cash and non-cash compensation paid during the past three fiscal years to (a) those
individuals serving as the Companys Chief Executive Officer during the fiscal year ended January 1, 2005 and (b) the four most highly compensative executive officers of the Company, receiving compensation of at least $100,000, during the
fiscal year ended January 1, 2005 (the Named Executive Officers):



|                                                                             |  |                     |  |                     |                       |                        |   |                            |  |                                 |           |                           |               |  |   |                   
|---------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | --------------------- | ---------------------- | - | -------------------------- |  | ------------------------------- | --------- | ------------------------- | ------------- |  | - | ------------------
|                                                                             |  |                     |  | Annual Compensation |                       | Long Term Compensation
|Name and Principal Position                                                  |  | Fiscal YearEnded(2) |  | Salary              |                       | Bonus                  |   | Restricted StockAwards (3) |  | SecuritiesUnderlyingOptions (#) |           | All OtherCompensation (4)
|Edgardo Mercadante, Co-Chairman of the Board and Chief Executive Officer (1) |  | 200420032002        |  | $                   | 340,157329,500293,077 |                        | $ | 30,00030,00050,000         |  | $                               | 966,348 |                           |            |  | $ | 14,82314,34114,821
|Jugal K. Taneja, Co-Chairman of the Board                                    |  | 200420032002        |  |                     | 207,692197,439144,500 |                        |   | 40,00018,50018,500         |  |                                 |        |                           | 42,50042,500 |  |   | 24,10023,85022,000
|Dale Ribaudo, Chief Financial Officer (1)                                    |  | 200420032002        |  |                     | 228,167221,019179,539 |                        |   | 50,00038,87450,000         |  |                                 | 462,500 |                           |            |  |   | 4,7957,7529,610   
|William L. LaGamba, President and Chief Operating Officer                    |  | 200420032002        |  |                     | 181,731174,469163,500 |                        |   | 30,0005,5005,500           |  |                                 |        |                           | 30,00030,000 |  |   | 24,10022,10022,600
|James Beaumariage, Senior Vice President, Familymeds, Inc. (1)               |  | 200420032002        |  |                     | 188,395182,492151,731 |                        |   | 20,00020,00030,000         |  |                                 | 185,000 |                           |            |  |   | 5,0506,3385,231   

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|(1) | On November 12, 2004, FMG merged with and into the Company, and in connection therewith Messrs. Mercadante, Ribaudo and Beaumariage became officers of the Company. Prior to the
merger, such officers served FMG in the same capacities that they currently serve the Company. The annual, long term and other compensation shown in this table includes the amount such officers received from FMG prior to the merger.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On November 12, 2004, our board of directors converted our fiscal year end from March 31 to a 52-53 week fiscal year ending on the Saturday closest to December 31.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the value of vested restricted stock paid to the named executive officers based upon the closing prices of the Companys common stock on the grant date of the
shares. The restricted stock was granted under the Companys 2003 Restricted Stock Plan in connection with the merger between the Company and FMG on November 12, 2004 and will vest on or before June 15, 2005. Based on the closing price of the
Companys stock ($3.28) on January 1, 2005, the aggregate number and value of all restricted stock held by the named executive officers as of that date were as follows: Mr. Mercadante, 261,175 shares, $856,654; Mr. Ribaudo, 125,000 shares,
$410,000; Mr. Beaumariage, 50,000 shares, $164,000. For the restricted stock grants, the holder is not entitled to receive dividends during the vesting period.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | All Other Compensation for 2004 consists of Company-matched 401(k) plan contributions (Mr. Mercadante $4,100, Mr. Ribaudo $4,100 and Mr. Beaumariage $4,100), life insurance premiums
in 2004 (Mr. Mercadante $10,723, Mr. Ribaudo $695 and Mr. Beaumariage $950) and director compensation (Mr. Taneja, $24,100 and Mr. LaGamba, $24,100).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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OPTION GRANTS IN LAST FISCAL YEAR



The following table provides information as to options granted to each of the Named Executive Officers of the Company during fiscal year
ended January 1, 2005. All such options were granted under the 1999 Stock Option Plan.



|                   |  |                                                 |  |                                                    |   |    |                            |      |                                     |    |                |  |                                                                                                    |  |   |           |  |   |            |  |   |          
|------------------ |  | ----------------------------------------------- |  | -------------------------------------------------- | - | -- | -------------------------- | ---- | ----------------------------------- | -- | -------------- |  | -------------------------------------------------------------------------------------------------- |  | - | --------- |  | - | ---------- |  | - | ---------
|Name               |  | Number ofSecuritiesUnderlyingOptions Granted(1) |  | % of TotalOptionsGranted toEmployees inFiscal Year |   |    | ExercisePrice ($per Share) |      | MarketPrice perShare onDate ofGrant |    | ExpirationDate |  | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (2)
|                   |  |                                                 |  |                                                    |   | 5% |                            | 10%  |                                     | 0%
|Edgardo Mercadante |  | 1,221,672                                       |  | 73                                                 | % |    | $                          | 0.57 |                                     | $  | 3.60           |  | 11/22/2014                                                                                         |  | $ | 6,467,557 |  | $ | 10,710,976 |  | $ | 3,701,666
|Jugal K. Taneja    |  |                                                |  |                                                   |   |    |                            |     |                                     |    |               |  |                                                                                                   |  |   |           |  |   |            |  |   |          
|Dale Ribaudo       |  | 140,281                                         |  | 8                                                  | % |    |                            | 0.57 |                                     |    | 3.60           |  | 11/22/2014                                                                                         |  |   | 742,651   |  |   | 1,229,910  |  |   | 425,051  
|William L. LaGamba |  |                                                |  |                                                   |   |    |                            |     |                                     |    |               |  |                                                                                                   |  |   |           |  |   |            |  |   |          
|James Beaumariage  |  | 143,314                                         |  | 9                                                  | % |    |                            | 0.57 |                                     |    | 3.60           |  | 11/22/2014                                                                                         |  |   | 758,707   |  |   | 1,256,502  |  |   | 434,241  

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|(1) | The options were granted on November 12, 2004 in connection with the merger with FMG and became fully vested on the date of grant. All options may be exercised after January 4, 2006
and terminate on the tenth anniversary of the date of grant.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Potential realizable value is based on the assumption that the Common Stock appreciates at the annual rate shown (compounded annually) from the due date of grant until the
expiration of the option term. These numbers are calculated based on the requirements of the SEC and do not reflect the Companys estimate of future price growth.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR

AND FISCAL YEAR END OPTION VALUES



The following table provides information as to options exercised by each of the Named Executive Officers of the Company during the fiscal year ended January 1, 2005. The table sets forth the value of options held by
such officers at year-end measured in terms of the closing price of the Companys Common Stock on January 1, 2005.



|                   |  |                           |             |               |               |                                                                      |             |                                                             |               |  |   |        |  |   |          
|------------------ |  | ------------------------- | ----------- | ------------- | ------------- | -------------------------------------------------------------------- | ----------- | ----------------------------------------------------------- | ------------- |  | - | ------ |  | - | ---------
|Name               |  | SharesAcquired onExercise |             | ValueRealized |               | Number of Securities UnderlyingUnexercised Options at Fiscal YearEnd |             | Value of Unexercised In-The-MoneyOptions at Fiscal Year End
|                   |  |                           | Exercisable |               | Unexercisable |                                                                      | Exercisable |                                                             | Unexercisable
|Edgardo Mercadante |  |                          |             | $             |              |                                                                      |            |                                                             | 1,221,672     |  | $ |       |  | $ | 3,310,731
|Jugal K. Taneja    |  |                          |             |               |              |                                                                      | 217,500     |                                                             |              |  |   | 85,850 |  |   |         
|Dale Ribaudo       |  |                          |             |               |              |                                                                      |            |                                                             | 140,281       |  |   |       |  |   | 380,162  
|William L. LaGamba |  |                          |             |               |              |                                                                      | 160,000     |                                                             |              |  |   |       |  |   |         
|James Beaumariage  |  |                          |             |               |              |                                                                      |            |                                                             | 143,314       |  |   |       |  |   | 388,381  



Equity Compensation Plan
Information



The following table summarizes the Companys equity
compensation plan information as of January 1, 2005. Information is included for both equity compensation plans approved by the Companys shareholders and equity compensation plans not approved by the shareholders.



|                                                              |  |                                                                                         |  |                                                                         |      |                                                                                                                                         |          
|------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                                 |  | Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights |      | Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected
incolumn (a))(1)
|                                                              |  | (a)                                                                                     |  | (b)                                                                     |      | (c)                                                                                                                                    
|Equity compensation plan approved by securities holders (2)   |  | 3,969,940                                                                               |  | $                                                                       | 1.91 |                                                                                                                                         | 5,235,738
|                                                              |  |                                                                                         |  |                                                                         |      |                                                                                                                                         |          
|Equity compensation plan not approved by security holders (3) |  | 294,322                                                                                 |  | $                                                                       | 3.28 |                                                                                                                                         |         
|                                                              |  |                                                                                         |  |                                                                         |      |                                                                                                                                         |          
|Total                                                         |  | 4,264,262                                                                               |  |                                                                         | 2.16 |                                                                                                                                         | 5,235,738
|                                                              |  |                                                                                         |  |                                                                         |      |                                                                                                                                         |          



|1. | Equity compensation plans approved by shareholders include the 1999 Stock Option Plan and the 2003 Restricted Stock Plan. All shares to be issued upon exercise in column (a) and the
weighted average exercise price in column (b) represent shares to be issued upon the exercise of options granted under the 1999 Stock Option Plan.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | The number of securities available for future issuance in column (c) were: 2,391,785 shares under the 1999 Stock Option Plan and 2,843,953 shares under the 2003 Restricted Stock
Plan.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | Reflects options to purchase shares of the Companys common stock issued to a non-management employee. This was a one time grant of options.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------



7



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Employment Agreements and Other Arrangements



Edgardo Mercadante On November 12, 2004, FMG merged with and into the Company, and in connection therewith Mr. Mercadante
became the Co-Chairman of the Board and Chief Executive Officer of the Company. The Company is currently negotiating a new employment agreement with Mr. Mercadante to replace Mr. Mercadantes employment agreement with Familymeds, Inc. Mr.
Mercadante entered into his employment agreement with Familymeds, Inc. in June 1998, as amended on June 30, 2000 and August 1, 2002. The amended agreement provides for a two-year term, and a minimum annual base salary, plus bonuses and stock options
as determined by the Board of Directors. Mr. Mercadantes employment agreement contains standard termination provisions for disability, for cause, and for good reason, and it also contains non-compete and confidentiality provisions that
prohibit him from disclosing certain information belonging to the Company. DrugMax expects to negotiate a new employment agreement with Mr. Mercadante as required by, and in accordance with, the merger agreement between FMG and the Company.



Jugal K. Taneja Mr. Taneja is DrugMaxs Co-Chairman of the
Board. In April 2003, DrugMax entered into a new employment agreement with Mr. Taneja for an initial three-year term, and an initial annual base salary of $200,000, plus bonuses and stock options as determined by the Board of Directors in its sole
discretion. Mr. Tanejas employment agreement contains standard termination provisions for disability, for cause, and for good reason, and it also contains confidentiality provisions that prohibit him from disclosing certain information
belonging to DrugMax. If the employment agreement is terminated other than for good reason or cause, Mr. Taneja is entitled to receive his base salary through the date of termination and for one year thereafter. DrugMax expects to negotiate a new
employment agreement with Mr. Taneja as required by, and in accordance with, the merger agreement between FMG and the Company.



Dale Ribaudo On November 12, 2004, FMG merged with and into the Company, and in connection therewith Mr. Ribaudo became the Chief Financial Officer of the
Company. The Company is currently negotiating a new employment agreement with Mr. Ribaudo to replace his employment agreement with Familymeds, Inc. Mr. Ribaudo entered into his employment agreement with Familymeds, Inc. in November 2000, as amended
on August 8, 2002 and August 13, 2004. The amended agreement provides for a two-year term, and a minimum annual base salary of $232,399, plus bonuses and stock options as determined by the Board of Directors. Mr. Ribaudos employment agreement
contains standard termination provisions for disability, for cause, and for good reason, and it also contains confidentiality provisions that prohibit him from disclosing certain information belonging to the Company. DrugMax expects to negotiate a
new employment agreement with Mr. Ribaudo as required by, and in accordance with, the merger agreement between FMG and the Company.



William L. LaGamba Mr. LaGamba is DrugMaxs President and Chief Operating Officer. In April 2003, DrugMax entered into a new employment agreement with
Mr. LaGamba for an initial three-year term and an initial annual base salary of $175,000, plus bonuses and stock options as determined by the Board of Directors in its sole discretion. Mr. LaGambas employment agreement contains standard
termination provisions for disability, for cause, and for good reason, and it also contains confidentiality provisions that prohibit him from disclosing certain information belonging to DrugMax. If the employment agreement is terminated other than
for good reason or cause, Mr. LaGamba is entitled to receive his base salary through the date of termination and for one year thereafter. DrugMax expects to negotiate a new employment agreement with Mr. LaGamba as required by, and in accordance
with, the merger agreement between FMG and the Company.



James
BeaumariageMr. Beaumariage is the Senior Vice President of Operations for Familymeds, Inc. In May 1998, Familymeds, Inc. entered into an employment agreement with Mr. Beaumariage which was amended on August 8, 2002 and August 13, 2004. The
amended agreement provides for a two-year term, and a minimum annual base salary of $191,889, plus bonuses and stock options as determined by the Board of Directors. Mr. Beaumariages employment agreement contains standard termination
provisions for disability, for cause, and for good reason, and it also contains non-compete and confidentiality provisions that prohibit him from disclosing certain information belonging to the Company.



8



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PERFORMANCE GRAPH



The following graph shows a comparison of cumulative five-year total stockholder returns for DrugMaxs Common Stock, with the
cumulative return of the Nasdaq Stock MarketU.S. Index and an industry peer group. The industry peer group of companies selected by DrugMax is made up of DrugMaxs publicly-held competitors in the specialty pharmacy and drug distribution
industry: Accredo Health, Inc., BioScrip, Inc., Curative Health Services, Inc. and Priority Healthcare Corp. The graph assumes the investment of $100 on December 31, 2000. The comparisons reflected in the table and graph, however, are not intended
to forecast the future performance of the Common Stock and may not be indicative of such future performance. Further, the comparability of DrugMax against the peer group should be considered in light of DrugMaxs recent merger. On November 12,
2004, FMG, a private specialty pharmacy Company, merged with and into the DrugMax, a public full-line wholesale distributor of pharmaceuticals and related products. For accounting purposes, FMG was deemed to be the acquirer. The industry peer group
against which DrugMax is compared below includes companies that maintain pharmacy operations. However, prior to the merger on November 12, 2004, DrugMax did not have pharmacy operations.



COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

AMONG THE COMPANY, THE NASDAQ STOCK MARKET (U.S.) INDEX

AND A PEER GROUP



LOGO



9



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Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.



To the knowledge of the Company, the following table sets forth, as of March 31, 2005,
information as to the beneficial ownership of the Companys voting securities by (i) each person known to the Company as having beneficial ownership of more than 5% of the Companys voting securities, (ii) each person serving the Company
as a director on such date, (iii) each person serving the Company as an executive officer on such date who qualifies as a Named Executive Officer, as defined in Item 403(a)(3) of Regulation S-K under the Securities Exchange Act of 1934, and (iv) all
of the directors and executive officers of the Company as a group.



|                         |  |                                                                                                  |  |                                        |  |                     |      |  
|------------------------ |  | ------------------------------------------------------------------------------------------------ |  | -------------------------------------- |  | ------------------- | ---- | -
|Title of Class           |  | Name and Address of Beneficial Owner (1)                                                         |  | Amount andNature ofBeneficialOwnership |  | Percent ofClass (2) |     
|Common Stock             |  | ABS Capital Partners III, LP, 400 EAST PRATT ST STE 910 , BALTIMORE MD 21202 (3)                 |  | 6,166,583                              |  |                     | 26.1 | %
|Common Stock             |  | UNITED HEALTHCARE SERVICES INC., 9900 BREN ROAD E, MINNETONKA MN 55343 (4)                       |  | 3,256,730                              |  |                     | 13.8 | %
|Common Stock             |  | Laura Witt (5)                                                                                   |  | 6,179,583                              |  |                     | 26.1 | %
|Common Stock             |  | Peter Grua (6)                                                                                   |  | 1,569,325                              |  |                     | 6.6  | %
|Common Stock             |  | Jugal K. Taneja (7)                                                                              |  | 1,720,207                              |  |                     | 7.3  | %
|Common Stock             |  | William J. LaGamba (8)                                                                           |  | 678,432                                |  |                     | 2.9  | %
|Common Stock             |  | Ed Mercadante (9)                                                                                |  | 261,175                                |  |                     | 1.1  | %
|Common Stock             |  | Dale Ribaudo (10)                                                                                |  | 125,000                                |  |                     |      | *
|Common Stock             |  | James Beaumariage (11)                                                                           |  | 50,000                                 |  |                     |      | *
|Common Stock             |  | Phil Gerbino                                                                                     |  | 18,000                                 |  |                     |      | *
|Common Stock             |  | James Searson                                                                                    |  |                                       |  |                     |      | *
|Common Stock             |  | Mark Majeske                                                                                     |  |                                       |  |                     |      | *
|Common Stock             |  | Rakesh Sharma                                                                                    |  |                                       |  |                     |      | *
|Common Stock             |  | All Directors and Executive Officers as a group                                                  |  | 10,479,260                             |  |                     | 44.3 | %
|Series A Preferred Stock |  | Midsummer Investment, Ltd., 485 Madison Avenue, 23rd Floor, New York, NY 10022                   |  | 6,000                                  |  |                     | 35.3 | %
|Series A Preferred Stock |  | Islandia L.P., 485 Madison Avenue, 23rd Floor, New York, NY 10022                                |  | 4,000                                  |  |                     | 23.5 | %
|Series A Preferred Stock |  | Casing & Co. c/o Wasatch Advisors, 150 Social Hall Avenue, 4th Floor, Salt Lake City, Utah 84111 |  | 3,200                                  |  |                     | 18.8 | %
|Series A Preferred Stock |  | Bristol Capital Advisors, LLC, 10990 Wilshire Blvd, Suite 1410, Los Angeles, California 90024    |  | 880                                    |  |                     | 5.2  | %

---

|* | Less than 1%.
|- | -------------



10



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|(1) | Unless otherwise indicated, the address of each of the beneficial owners identified is 312 Farmington Avenue, Farmington, CT, 06032-1968.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(2) | Based on 23,670,853 shares of Common Stock outstanding. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Pursuant to the
rules of the Securities Exchange Commission, certain shares of Common Stock which a person has the right to acquire within 60 days of the date hereof pursuant to the exercise of stock options are deemed to be outstanding for the purpose of computing
the percentage ownership of such person but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. To the Companys knowledge, the persons named in this table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and except as indicated in the other footnotes to this table. Unless otherwise indicated, the business address of
each of the beneficial owners named above is: c/o DrugMax, Inc., 312 Farmington Avenue, Farmington, CT 06032
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 1,544,930 shares issuable upon the exercise of warrants to acquire common stock that are currently exercisable.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 815,917 shares issuable upon the exercise of warrants to acquire common stock that are currently exercisable.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(5) | Includes 4,621,653 common shares and 1,544,930 warrants held by ABS Capital Partners III, LP. Ms. Witt is a general partner of ABS Capital Partners III, LP. She disclaims beneficial
ownership of all such securities held by ABS Capital Partners III, L.P., except to the extent of her proportionate pecuniary interests therein.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes the following shares and warrants beneficially owned by: HLM/CB Fund L.P., 241,802 common shares and 80,830 warrants; HLM/UH Fund L.P., 331,796 common shares and 110,913
warrants; and Validus L.P., 602,560 common shares and 201,424 warrants. Excludes 5,252 options issued to Peter Grua, as these options are not exercisable within 60 days. Ms. Grua is a general partner of all such limited partnerships. He disclaims
beneficial ownership of all such securities held by all of such limited partnerships, except to the extent of her proportionate pecuniary interests therein.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes the following shares and warrants beneficially owned: 21stCentury Healthcare Fund LLC, 300,000; Carnegie Capital, 422,555; Dynamic Health Products, 122,462; First Delhi Trust, 48,378; Manju Taneja, his spouse, 469,510 and exercisable stock options, 217,500. Mr. Taneja disclaims
beneficial ownership of all such securities held by his wife.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes the following shares and warrants beneficially owned: Dynamic Health Products, 122,462; Michelle LaGamba, his spouse 122,868; 78,987 by his minor children and 160,000
exercisable stock options. Mr. LaGamba disclaims beneficial ownership of all such securities held by his wife.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Excludes 1,221,672 stock options, as these options are not exercisable within 60 days.
|--- | --------------------------------------------------------------------------------------

|(10) | Excludes 140,281 stock options, as these options are not exercisable within 60 days.
|---- | ------------------------------------------------------------------------------------

|(11) | Excludes 143,314 stock options, as these options are not exercisable within 60 days.
|---- | ------------------------------------------------------------------------------------



11



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Shares of the common stock of the Company are listed and traded on the Nasdaq Small Cap Market (Nasdaq) under
the symbol DMAX.



Item 13.CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.



The information set forth herein briefly describes
certain relationships and related transactions during the last three fiscal years between the Company and its Directors, officers and stockholders owning 5% or more of the Companys Common Stock. These relationships and transactions have been
and will continue to be reviewed and approved by a majority of the Companys independent Directors and the Audit Committee.



River Road Real Estate In October 2001, prior to the Merger, the Company executed a commercial lease agreement with River Road Real Estate, LLC, an entity
controlled by certain directors and officers of the Company at the time, to house the operations of Valley Drug Company South, the Companys subsidiary in St. Rose, Louisiana. The lease is for an initial period of five years with a base monthly
lease payment of $15,000, and an initial deposit of $15,000. During the period from November 12, 2004 to January 1, 2005, the Company recorded rent expense of $28,183 related to the lease. Management believes the terms of this agreement are
comparable to those that the Company would have received from an unrelated, third party.



Becan Development LLC  In January 2004, prior to the Merger, the Company executed a second commercial lease agreement (the Second Lease) with Becan Development, LLC, an entity controlled by
certain directors and officers of the Company at the time. The Second Lease is for an initial period of fifteen years with a base monthly lease payment of $17,000. During the period from November 12, 2004 to January 1, 2005, the Company recorded
rent expense of $25,500 related to the Second Lease. Management believes the terms of this agreement are comparable to those that the Company would have received from an unrelated, third party.



Item 14.PRINCIPAL ACCOUNTING FEES AND SERVICES



Audit and Related Fees



On November 12, 2004, FMG merged with and into the DrugMax. For accounting purposes,
however, FMG was deemed to be the acquirer and therefore its financial results are included in the Form 10-K for the period ended January 1, 2005. In connection with the merger, the merged company retained FMGs auditor (i.e., Deloitte &
Touche LLP) and changed its fiscal year end to reflect FMGs year end. The following tables set forth the aggregate fees billed by Deloitte & Touche LLP for the services indicated for the years ended January 1, 2005 and December 28, 2003.
It does not include fees billed by BDO Seidman, LLP, DrugMaxs auditor prior to the merger.



|              |  |      |         |      |   |        
|------------- |  | ---- | ------- | ---- | - | -------
|              |  | 2004 |         | 2003
|Audit         |  | $    | 365,087 |      | $ | 194,798
|Audit Related |  |      | 551,066 |      |   |       
|              |  |      |         |      |   |        
|Total         |  | $    | 916,153 |      | $ | 194,798
|              |  |      |         |      |   |        



12



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Audit Fees.Audit fees were for professional services rendered for the audits of DrugMaxs consolidated
financial statements and benefit plan audit for the years ended January 1, 2005 and December 28, 2003. Audit fees do not include fees related to services provided in connection with the FMG merger.



Audit Related Fees. Audit related fees for the year ended January 1, 2005 consist of
fees for services provided in connection with the FMG merger and limited reviews of its unaudited condensed consolidated interim financial statements, issuance of consents and assistance with review of documents filed with the SEC.



DrugMaxs audit committee pre-approves all non-audit services provided to DrugMax by its
independent accountants. According to its revised audit committee charter, a copy of which was previously filed with the SEC, this pre-approval authority may be delegated to a single member of the audit committee and then reviewed by the entire
audit committee at the committees next meeting. Approvals of non-audit services will be publicly disclosed in DrugMaxs periodic reports filed with the SEC. For the fiscal year 2004, all non-audit services were pre-approved by the audit
committee. The audit committee determined the rendering of the audit related work, listed above, by Deloitte & Touche LLP is compatible with maintaining the auditors independence.



13



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PART IV



Item 15.EXHIBITS



|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|10.1 |  | Employment Agreement, as amended by and between Familymeds, Inc. and Edgardo Mercadante, effective as of June 8, 1998.*
|     | 
|10.2 |  | Employment Agreement, as amended by and between Familymeds, Inc. and Dale Ribaudo, effective as of November 2000. *    
|     | 
|10.3 |  | Employment Agreement, as amended by and between Familymeds, Inc. and James Beaumariage effective as May 29, 1998. *    

---

|* | Filed herewith.
|- | ---------------



14



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SIGNATURES



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



|                      |  |               |  |                                                                         
|--------------------- |  | ------------- |  | ------------------------------------------------------------------------
|                      |  | DRUGMAX, INC.
|                      |  |              
|Dated: April 29, 2005 |  | By            |  | /s/ Edgardo Mercadante                                                  
|                      |  |               |  | Edgardo Mercadante, Chief Executive Officer and Co-Chairman of the Board



15



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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant in the capacities and on the dates indicated.



|                                             |  |                                                                |  |               
|-------------------------------------------- |  | -------------------------------------------------------------- |  | --------------
|Signatures                                   |  | Title                                                          |  | Date          
|                                             |  |                                                               
|By: /s/ Edgardo MercadanteEdgardo Mercadante |  | Co-Chairman of the Board, Chief Executive Officer and Director |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ William L. LaGambaWilliam L. LaGamba |  | President, Chief Operating Officer                             |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Dale RibaudoDale Ribaudo             |  | Chief Financial Officer, Principal Accounting Officer          |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Jugal K. TanejaJugal K. Taneja       |  | Co-Chairman of the Board and Director                          |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Laura WittLaura Witt                 |  | Director                                                       |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Philip GerbinoPhilip Gerbino         |  | Director                                                       |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Peter GruaPeter Grua                 |  | Director                                                       |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Rakesh SharmaRakesh Sharma           |  | Director                                                       |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ James SearsonJames Searson           |  | Director                                                       |  | April 29, 2005
|                                             |  |                                                               
|By: /s/ Mark MajeskeMark Majeske             |  | Director                                                       |  | April 29, 2005



16