PDRX PHARMACEUTICALS INC

FORM 10SB12G

(Securities Registration Statement (small business, section 12(g)))

Filed 03/01/00

Address
Telephone
CIK
Symbol
Fiscal Year

727 NORTH ANN ARBOR

OKLAHOMA CITY, OK 73127
4059423040
0001107713
PDRX
06/30

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PDRX PHARMACEUTICALS INC

FORM 10SB12G
(Securities Registration Statement (small business, section 12(g)))

Filed 3/1/2000

Address

727 NORTH ANN ARBOR

OKLAHOMA CITY, Oklahoma 73127

Telephone

405-942-3040

CIK

0001107713

Fiscal Year

06/30

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-SB
General Form For Registration of Securities of
Small Business Issuer
Under Section 12(b) or (g) of the Securities Exchange Act of 1934

PD-Rx PHARMACEUTICALS, INC.

(Name of registrant as specified in its charter)
OKLAHOMA
(State or other jurisdiction of
incorporation or organization)
727 NORTH ANN ARBOR
OKLAHOMA CITY, OKLAHOMA
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:

73-1288261
(I.R.S. Employer
Identification No.)

73127
(Zip Code)
405/942-3040

SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:

Title of each class
to be so registered
------------------None

Name of each exchange on which

each class is to be registered
-----------------------------None

SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $.01 PER SHARE
(Title of class)

PD-Rx PHARMACEUTICALS, INC.

TABLE OF CONTENTS
PART I.
Item
Item
Item
Item
Item
Item
Item
Item

1.
2.
3.
4.
5.
6.
7.
8.

Description of Business
Management Discussion and Analysis or Plan of Operation
Description of Property
Security Ownership of Certain Beneficial Owners and Management
Directors, Executive Officers, Promoters and Control Persons
Executive Compensation
Certain Relationships and Related Transactions
Description of Securities

PAGE
---1
10
13
13
14
16
17
17

PART II.
Item 1.
Item
Item
Item
Item

2.
3.
4.
5.

Market Price of and Dividends on the Registrant's Common Equity

and Other Shareholder Matters
Legal Proceedings
Changes in and Disagreements with Accountants
Recent Sales of Unregistered Securities
Indemnification of Directors and Officers

19
20
21
21
21

PART F/S.
Financial Statements

22

PART III.
Item 1.
Item 2.

Index to Exhibits
Description of Exhibits

22
22

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements under the captions in this Registration Statement constitute "forward-looking statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "may," "will," "should" or "anticipates" or other variations thereon, or by
discussions of strategies that involve risks and uncertainties. The actual results of Registrant or industry results may be materially different
from any future results expressed or implied by such forward-looking statements.

PART I.
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL.
We offer and sell pharmaceuticals and medications, as well as surgical and medical supplies. In connection with our pharmaceutical sales, we
offer pharmaceutical management strategies to physicians, patients, managed care organizations and pharmaceutical manufacturers and others
involved in the pharmaceutical healthcare industry. Our management strategies focus on the point of care, beginning with the physician's
writing of the prescription and are designed to provide physicians with valuable pharmaceutical information at the point-of-prescribing,
resulting in more informed, cost-effective prescribing decisions. We believe our strategies when incorporated into their office work flow
provide physicians with higher rates of adherence to payer formularies, improved management of patient information, lower costs and
improved quality of patient care. Also, our pharmaceutical management strategies enable physicians to capture the revenues associated with
dispensing of pharmaceuticals, which traditionally have been received by pharmacies.
Our products and services are designed to streamline the pharmaceutical healthcare delivery system. We currently offer products and services
in six categories: point of care electronic medication triage, Internet services, patient education products, medical and surgical supplies,
injectable pharmaceuticals and prepackaged medication. Our PD-Rx Net System is a software/hardware communication network that provides
physicians the capabilities to interact and network with traditional and non-traditional pharmacy delivery systems. It allows electronic
prescribing, routing of prescription information and capturing of prescription data at the point of patient care. We also sell our prepackaged
medications to physicians so they can offer their patients the convenience and confidentiality of receiving prescription medications in the
privacy of the physician's office.
INDUSTRY BACKGROUND
Healthcare expenditures in the United States totaled approximately $1.0 trillion in 1996, which represented 14% of the U.S. gross domestic
product, making it the largest single sector of the economy, according to the Health Care Financing Administration. Pharmaceutical costs is one
of the fastest growing components of healthcare expenditures, which last year totaled approximately $100 billion, according to IMS HEALTH,
a leading provider of pharmaceutical information. According to the Health Care Financing Administration, pharmaceutical expenditures are
expected to increase at an annual rate of approximately 10% through 2007. This expected increase is attributable to an aging population, the
accelerating introduction of new drugs, direct-to-consumer advertising by pharmaceutical manufacturers, and cost advantages over alternate
forms of care, most notably inpatient hospital care. It is anticipated that this expected increase will create pressure on managed care
organizations to control pharmacy costs and improve the process of managing medication treatments.
All participants in the healthcare industry, as well as the patients, have been affected by managed healthcare, which increasingly transfers the
burden of pharmaceutical costs from traditional third-party payers to physicians. This transfer has often had an adverse financial impact on
physicians. Moreover, as healthcare becomes increasingly consumer driven, patients are seeking more information, control and convenience,
placing additional time and financial pressures on physicians. These changes have caused many physicians to focus on methods and solutions
that provide improved practice efficiency and increased revenue, compliance with managed care guidelines, while continuing to address patient
needs.
Currently, the process for prescribing and delivering medications is inefficient and prone to error. Virtually all prescriptions are written by
hand, leading to errors and requiring pharmacies to contact physicians for clarification and correction. Also, when writing prescriptions,
physicians in many cases do not have ready access to pharmaceutical information that, if available, would help ensure that the prescribed
medication is clinically appropriate, least expensive and compliant with managed care organizations' pharmacy guidelines. Historically,
physicians' medication management efforts were limited to general physician education on the use of a drug, incentives for physicians to use a
particular drug, and the application of discounted fee schedules for pharmacy
1

networks and managed healthcare organizations that use a particular drug. The inability of managed care organizations to communicate with
physicians at the time of prescribing has made it difficult to manage pharmaceutical costs. The existing process further inconveniences the
patient, who must travel from the physician's office to a pharmacy and must often wait for the prescription to be filled. In addition, physicians
have a difficult time staying current on the rapidly expanding body of pharmaceutical products and knowledge.
THE PD-Rx STRATEGY
The Internet is becoming an increasingly important medium in healthcare, providing the opportunity for unprecedented communication and
access to information for all participants in the healthcare delivery process. We believe that an increasing number of physicians regularly
access the Internet, which indicates their willingness to utilize Internet technology in conjunction with a medication management system.
Consumer usage of the Internet continues to grow rapidly, and health and medical information was the second most popular subject of Webbased information retrieval searches in 1997 according to Media Metrix, an independent Internet research firm. In addition, Simba Information,
Inc., a media and information industry market research firm, estimates that electronic commerce will grow from $28 billion in 1998 to over
$100 billion by 2002.
In conjunction with our pharmaceutical repackaging sales and services, we have developed an in-office, pharmaceutical management system
that significantly streamlines the process of prescribing and delivering medications. Our PD-Rx Net System enables physicians to improve their
prescribing at the point-of-patient care by providing ready access to pharmaceutical information including potential adverse drug interactions,
patient drug history including allergies and adverse reactions. The PD-Rx Net System reduces the possibility of error and the need for
expensive and time-consuming intervention by pharmacists and pharmacy benefit managers. Utilizing our PD-Rx Net System physicians may
purchase our medications and supplies via the Internet.
We believe our strategy redesigns the pharmaceutical healthcare delivery process to benefit each participant and thereby will allow us to
maintain and increase our market share and sales. By providing ready access to information during the prescribing process, our PD-Rx Net
System:
- benefits physicians by reducing the amount of time spent clarifying and changing prescriptions;
- enables physicians to better manage the burden of pharmaceutical costs and to increase practice revenue through dispensing medications;
- provides patients with the convenience, immediacy and confidentiality of receiving prescription medications in the physician's office;
- provides patients access to valuable information that enables them to play a more active role in managing their healthcare; and
- benefits managed healthcare organizations by obtaining higher physician compliance with pharmacy guidelines, resulting in lower overall
costs.
We believe that the best way to improve the medication management process is by motivating physicians to write prescriptions electronically.
By combining electronic prescribing and dispensing, innovative product design, our proprietary software and with readily available hardware,
we believe we offer an attractive opportunity for physicians. Key advantages of our strategy include:
- EASE OF USE -- Our PD-Rx Net System is easy to use, enabling a physician to complete a prescription in minutes;
- ACCESSIBILITY -- Our PD-Rx Net System enables physicians to prescribe electronically from a variety of locations on several different
platforms, including personal computers utilizing electronic transmissions and hand-held computer devices;
2

- INFORMATION -- Our PD-Rx Net System provides valuable, objective information prior to and during the prescribing process, enabling
physicians to improve the quality and accuracy of their prescriptions;
- FINANCIAL OPPORTUNITY -- Our PD-Rx Net System offers physicians a significant financial opportunity through better management of
pharmacy risk and additional practice revenue from dispensing medications.
We believe this strategy will not only maintain our market share and current level of sales, but will also increase and broaden our market share
and result in increased sales revenues. However, there is no assurance that this strategy will achieve the anticipated results.
SERVICES AND PRODUCTS
Our principal products and services are built around the dispensing of prescribed medications by physicians at the point-of-patient care, rather
than in the traditional manner. Our services and products include the following:
PD-Rx NET SYSTEM
Our PD-Rx Net System is offered in connection with the sales and marketing of our pharmaceuticals and surgical and medical supplies and
serves as an additional channel of distribution. Our PD-Rx Net System software is provided without cost to our customers for operation on the
customer's personal computer. The PD-Rx Net System is a medication management system that assists physicians in the providing of the
improved and more cost-effective patient care. This System, utilizing personal computer hardware, provides physicians with pharmaceutical
information at the point-of-prescribing, leading to more informed and cost-effective prescribing decisions. The result is a higher rate of
adherence to managed healthcare organization formularies, improved patient information management, and lower costs. Also our PD-Rx Net
System enables physicians to become the pharmaceutical dispenser and receive the associated revenue stream. For patients, our System
achieves improved healthcare and provides patient convenience, choice, and confidentiality.
Our PD-Rx Net System is user-friendly and allows physicians to prescribe a medication in minutes. The physician enters the patient's name,
drug name, and drug directions. The prescribed drug is then selected from the physician's inventory and scanned to ensure that it is indeed the
correct medication. On-line claims adjudication and patient eligibility checks complete the fulfillment process. Complete patient counseling
sheets containing directions for use and information on possible side effects and precautions are printed for each drug and given to patients
along with their medication.
Once the prescribing process is completed, PD-Rx Net System offers a variety of fulfillment options for the patient: electronic routing to a
retail or mail order pharmacy, printing a legible hard copy or receiving the medication in the physician's office. If the patient chooses to receive
the medication in the physician's office and is carrying a pharmacy benefit card, the system can submit the pharmacy claim electronically for
immediate approval and reimbursement by the managed care organization.
Drug inventory management is fully automated, and all medication orders and receipts can be handled via the Internet using a proprietary
program. In addition, PD-Rx Net System's underlying relational database enables users to generate a variety of clinical, financial and
operational reports.
We designed PD-Rx Net System to be faster and easier for a physician to use than a prescription pad. We currently offer PD-Rx Net System
with a touch-screen interface option and remote wireless electronic hand-held device running on Microsoft(R) CE operating system.
Furthermore, the PD-Rx Net System also offers patients the alternative of receiving their medications through the traditional pharmacy method.
In addition to in-office dispensing, the Systems prints clean,
3

easy-to-read prescriptions for the patient, or, if the patient prefers, will electronically transmit new or refill prescriptions to a local retail
pharmacy or mail-order prescription service.
To meet the needs of just about any size practice, our PD-Rx Net System is scalable from single, stand-alone prescribing and dispensing
stations to multiple stations. Our PD-Rx Net System is ideal for those practices at risk for pharmacy benefits. In summary our PD-Rx Net
System offers:
- increase the utilization of generic drugs, which are four times less expensive than their name-brand equivalents,
- achieve greater compliance with managed health care plan formularies, and
- more efficiently coordinate the treatment process, reducing the frequency, intensity, and duration of patient care, as well as the overutilization of drugs and other resources.
As of the date of this registration statement, approximately 12 of our accounts (approximately 20 physicians) are using the PD-Rx Net System.
During the year ended June 30, 1999 and the six months ended December 31, 1999, we received sales revenues of $201,490 and $155,736,
respectively, from accounts utilizing the PD-Rx Net System.
INTERNET PRODUCTS AND SERVICES
As an extension of our pharmaceutical management strategies, we offer transaction-based electronic-commerce services that enhance our
business relationships with physicians. Through our Web site, www.PDRx.com, we currently sell pharmaceuticals to physicians, enabling them
to provide patients with medications in the office, and we plan to facilitate the delivery of pharmaceutical products directly to patients in the
future. We also enable healthcare professionals to purchase medical and surgical supply products online.
PATIENT EDUCATION PRODUCTS
Parson Technology Inc. and PD-Rx Pharmaceuticals, Inc. co-market a program that will provide our physician customers with critical
information on more than 11,000 prescription and non-prescription drugs.
The Parson's software, known as "Medical Drug Reference", has been integrated into the PD-Rx Net software system. The Windows based
platform allows the physicians to check for drug interactions, side affects and warnings. The information in Medical Drug Reference is
compiled from First Data Bank a leading supplier of electronic drug information for hospitals and pharmacies.
The PD-Rx Net system provides a patient education leaflet with the printing of each prescription, this information will provide the patient with
how-to information on each medication that is dispensed using the PD-Rx Net System.
PREPACKAGED MEDICATIONS
We repackage pharmaceuticals and fulfill orders for our traditional and electronic-commerce customers from our repackaging facility in
Oklahoma City, Oklahoma. We are licensed by the Food and Drug Administration for repackaging of pharmaceuticals. We purchase more than
2,000 bulk quantities of brand name and generic acute care pharmaceutical products as tablets capsules, suspensions, creams, ointments and
liquids.
UNIT-OF-USE REPACKAGING. Approximately 63% of the drugs we purchase are repackaged into the therapeutically correct quantity and
strength of a specific medication normally used in patient care to treat a particular illness. Purchasing pharmaceuticals in unit-of-use sizes is an
attractive option due to its ease of use, convenience, quality control aspect, and lower cost of packaging (versus a pharmacist filling the
prescription by hand). Therapeutically correct dosages are determined by our management team of physicians and pharmacists based upon
common prescribing practices and manufacturers' recommended dosages.
4

BULK DISTRIBUTION. Approximately 23% of the drugs we purchase are distributed on a direct basis. These quantities are sold to large
volume accounts such as chain pharmacies, hospitals, wholesalers, and institutions.
CONTRACT PHARMACEUTICAL REPACKAGING AND PRIVATE LABELING SERVICES. Contract repackaging services are provided
on a cost-plus basis to customers who purchase bulk pharmaceuticals from pharmaceutical manufacturers and have the products shipped to PDRx for repackaging into unit-of-use quantities. These accounts include state and federal agencies (including prisons and Veteran Administration
hospitals), pharmacy chains, and other large volume institutions. Private labeling is also an option offered to accounts who want to build brand
recognition. Generally, customers in this category do not have the equipment to repackage into smaller sizes, but prefer unit-of-use quantities
because of the potential for cost savings by purchasing from PD-Rx versus having pharmacists fill each prescription. We believe that contract
repackaging services provide organizations time savings and convenience for their pharmacists, which ultimately result in cost containment
measures through economies of scale.
MEDICAL SUPPLIES AND INJECTABLE PRODUCTS
In conjunction with pharmaceuticals, we offer medical supplies (including rubber gloves, paper gowns and sheets, gauze, tape, needles, and
syringes) and injectable products. We have developed a catalog describing, illustrating and promoting these products. These products
represented approximately 16% of our sales during the year ended June 30, 1999.
MEDICAL EMERGENCY KITS
Our medical emergency kits include drugs and intervenes solutions that are used for the immediate treatment of life threatening emergencies
such as allergic reaction and cardiac arrest. The shelf life of these products is between nine to 12 months. We offer a systematic updating of the
kits prior to the shelf life expiration dates. We monitor product expiration dates, and prior to these dates, we invoice and mail replacement
products to the physician's office.
CONSULTATION
Our customers have direct access to our professional staff of pharmacists, physicians, and technicians to enhance their product line. We assist
in compliance with Food and Drug Administration regulations and complete the proper documentation required for private label registration.
We also assist managed healthcare organizations design therapeutic or cost containment formularies that keep them competitive in the ever
changing pharmaceutical marketplace.
SALES AND MARKETING
We market and sell our products and services to the customer. Due to the nature of the business, there are no distributors or wholesalers
involved in our marketing and sales. There are, however, various ways in which we market our products and services depending upon the
targeted market segment. More than one product can be marketed to a particular market segment.
The main target market for our repackaged pharmaceutical products and PD-Rx Net System is the physician dispensing market segment. Direct
sales efforts to primary care physicians are conducted by our staff of eight full-time and four part-time salespersons along with in-house sales
activities. We have also used telemarketing as a means for marketing and sales to physician offices, clinics and pharmacies across the United
States promoting our prepackaged pharmaceutical products and dispensing system. Direct marketing and sales efforts to managed healthcare
organizations are handled by our management.
After the initial sale is made to a customer for physician dispensing, reorders are made either via the Internet, mail using order forms, facsimile
transmission using order forms, verbally utilizing a WATTS line, or
5

by telephone to one of the salespersons or management member. Orders are typically shipped within three working days of order receipt. In the
event a back order is necessary, we notify the purchaser of the status of the order within two days. Overnight delivery companies are used for
shipping products to customers.
Our management is primarily responsible for direct sales efforts of the contract repackaging and private label products and services to large
volume accounts, state and federal agencies, and institutional accounts. Due to the low profit margins involved, these products are not marketed
through independent commissioned salespersons. Most of the sales activity is conducted by telephone, however, management visits customers
in person when necessary to maintain good business relations with larger accounts.
Sales literature and brochures are used to convey important and specific information to prospective customers to achieve broad-spectrum
product acceptance and sales growth. This literature is an inexpensive, yet effective, promotional tool that conveys our concept and products.
GROWTH STRATEGY
Our objective is to become the leading provider of pharmaceutical management strategies. Our plan to achieve this objective includes the
following:
- Accelerating sales of our pharmaceutical management strategies through expansion of marketing efforts, conversion of traditional dispensingonly customers to PD-Rx Net System and development of strategic alliances with physician practice management system vendors, physicianoriented Internet portals and managed healthcare organizations.
- Increasing customer utilization of our medication management products to enhance the financial opportunity for physicians through a
combination of quality customer service and expansion of the number of managed care organizations that reimburse physicians for prescription
medications dispensed in their offices.
- Enhancing our product line by developing additional Internet-based products for physicians and their patients.
- Developing and marketing information products that use the data collected during the electronic prescribing process.
However, there is no assurance that we will successfully penetrate these markets or develop products or if penetrated and developed that
additional revenues and increased profitability will be achieved.
PRODUCT DEVELOPMENT AND TECHNOLOGY
As of December 31, 1999, our software development department consisted of two technology professionals. These individuals, with expertise
in application development, documentation and quality assurance, are responsible for our point-of-care and Internet strategies.
Our internal systems/networks operate on Linux, SCO, Solaris, Microsoft's NT and Windows operating systems. All software products are
developed using CORBA (ORBs) & COM/DCOM-objects, HTML/DHTML/XML, (ASP) Active Server Pages and C++/JAVA2/Perl/VB/SQL
programming languages. This allows maximum code reuse and extensibility with minimal maintenance. Our Internet applications are browserindependent and are protected by a state-of-the-art firewall system, which is a network interconnection element that polices traffic flowing
between our PD-Rx Net System and internal networks and the Internet. We also employ proxy servers and monitoring systems that provide
layered security and monitor against unauthorized access. We use secure socket layers and the industry standard 128-bit encryption system to
provide secure transfer of information over the Internet when needed. All of our systems and network components have both individual and
systemwide battery back up and spike/lighting protection as well as our voice/data telephones and ISDN/T1
6

connections to the Internet.

The PD-Rx Net System operates on Microsoft's NT and Windows operating systems. All software products are developed using com-objects,
Active Server Pages and C++ programming language. Our Internet applications are browser-independent and are protected by a state-of-the-art
firewall, which is a network interconnection element that polices traffic flowing between the PD-Rx Net System internal network and the
Internet, and proxy servers that provide layered security defenses against unauthorized access. We employ industry standard 128-bit
encryption, known as secure socket layers, to provide secure transfer of information over the Internet.
During the years ended June 30, 1999 and 1998, and the six months ended December 31, 1999, we incurred and expensed $33,747, $43,840
and $40,091 of enhancement and maintenance costs relating to our PD-Rx Net System. None of our customers paid or bore any of these costs
on our behalf.
COMPETITION
Our industry is intensely competitive, rapidly evolving and subject to rapid technological change. Many companies that offer products or
services that compete with one or more of our products or services have greater financial, technical, product development, marketing and other
resources than we have. These organizations may be better known and may have more customers than we have. We may be unable to compete
successfully against these organizations. We believe that we must gain significant market share with our products and services before our
competitors introduce alternative products and services with features similar to ours.
We believe that there are no competitors in pharmaceutical management that offer comprehensive strategies with ease of use, accessibility,
information content and financial opportunity for physicians comparable to ours. However, several organizations offer components that overlap
with certain components of our strategies and may become increasingly competitive with us in the future.
We face competition from several types of organizations, including the following:
- physician practice management systems suppliers;
- electronic medical records providers;
- healthcare electronic data interchange providers;
- point-of-care dispensing providers;
- Internet pharmacies; and
- Internet information providers.
While many of these types of organizations are potential competitors, we believe that there are opportunities to establish strategic relationships,
alliances or distribution agreements with some of them. Although we do not have any existing agreements with these types of organizations, we
intend to pursue these opportunities selectively. In addition, we expect that major software information systems companies and others
specializing in the healthcare industry may offer products or services that are competitive with our products and services.
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SOURCES AND AVAILABILITY OF PRODUCTS

Our major suppliers are Wyeth Laboratories, Inc., Teva Pharmaceuticals, Inc., Zenith/Goldline Pharmaceuticals, Inc., Mylan Pharmaceuticals,
Barr Labs, Inc., McKesson, and Bergen Brunswig. In our opinion these companies represent the largest and most reputable U.S.
pharmaceutical manufacturers. We have experienced in few instances in our history the inability to secure a pharmaceutical product to meet
customer needs due to manufacturers shortages. In general we believe the inability to obtain particular pharmaceutical products will not have a
material adverse effect on the results of our operations.
DEPENDENCE ON MAJOR CUSTOMERS
At June 30, 1998 and 1999 and December 31, 1999, we had a customer base of 704 accounts (approximately 2,100 physicians), 800 accounts
(approximately 2400 physicians) and 1155 accounts (approximately 3,460 physicians), respectively. None of our customers accounted for 10%
or more of our annual sales during the years ended June 30, 1999 and 1998 or the six months ended December31, 1999.
TRADEMARK
PD-Rx Net System is under continual update and enhancement internally. We rely on proprietary know-how to protect our software source
codes, ideas, concepts and documentation of its proprietary software. Such methods include restrictions on disclosure and transferability
contained in its software licensing agreements with its customers.
GOVERNMENTAL REGULATION
As a participant in the healthcare industry, our operations and relationships are regulated by a number of federal, state and local governmental
entities.
The use of our PD-Rx Net System by physicians to perform electronic prescribing, electronic routing of prescriptions to pharmacies and
dispensing is governed by state and federal laws. States have differing prescription format requirements, which we have programmed into PDRx Net System. Many existing laws and regulations, when enacted, did not anticipate methods of electronic commerce now being developed.
Federal law and the laws of several states neither specifically permit nor specifically prohibit electronic transmission of prescription orders.
Given the rapid growth of electronic commerce in healthcare, and particularly the growth of the Internet, we expect many states, as well as the
federal government, to directly address these areas with regulation in the near future.
Physician dispensing of medications for profit is allowed in all states except Massachusetts and Utah and is prohibited, subject to extremely
limited exceptions, in Montana and Texas. Two states, New York and New Jersey, allow physician dispensing of medications for profit, but
limit the number of days' supply that a physician can dispense. Many of the states allowing physician dispensing for profit have regulations
relating to licensure, storage, labeling, record keeping and the degree of supervision required by the physician over support personnel who
assist in the non-judgmental tasks associated with physician dispensing, like retrieving medication bottles and affixing labels. We regularly
monitor these laws and regulations, in consultation with the governing agencies, to assist our customers in understanding and complying with
these laws and regulations.
Congress enacted significant prohibitions against physician self-referrals in the Omnibus Budget Reconciliation Act of 1993. This law,
commonly referred to as "Stark II," applies to physician dispensing of outpatient prescription drugs that are reimbursable by Medicare or
Medicaid. Stark II, however, includes an exception for the provision of in-office ancillary services, including a physician's dispensing of
outpatient prescription drugs, provided that the physician meets the requirements of the exception. We believe that the physicians who use our
PD-Rx Net System or dispense drugs distributed by us are doing so in material compliance with Stark II, either pursuant to the in-office
ancillary services exception or another applicable exception.
As a repackager and distributor of drugs, we are subject to regulation by and licensure with the Food and
8

Drug Administration, the Drug Enforcement Administration and various state agencies that regulate wholesalers or distributors. Among the
regulations applicable to our repackaging operation are the Food and Drug Administration's "good manufacturing practices." We are subject to
periodic inspections by regulatory authorities of our facilities, policies and procedures for compliance with applicable legal requirements.
Because the Food and Drug Administration's good manufacturing practices were designed to govern the manufacture, rather than the
repackaging, of drugs, we face legal and financial uncertainty concerning the application of some aspects of these regulations and of the
standards that the Food and Drug Administration will enforce. If the healthcare environment becomes more restrictive, or we do not comply
with healthcare regulations, our existing and future operations may be curtailed, and we could be subject to liability.
As a distributor of prescription drugs to physicians, we and our customers are also subject to the federal anti-kickback statute, which applies to
Medicare, Medicaid and other state and federal programs. The statute prohibits the solicitation, offer, payment or receipt of remuneration in
return for referrals or the purchase of goods, including drugs, covered by the programs. The anti-kickback law provides a number of exceptions
or "safe harbors" for particular types of transactions. We believe that our arrangements with our customers are in material compliance with the
anti-kickback statute and relevant safe harbors. Many states have similar fraud and abuse laws, and we believe that we are in material
compliance with those laws.
As part of our services provided to physicians, our system will electronically transmit claims for prescription medications dispensed by a
physician to many patients' payers for immediate approval and reimbursement. Federal law provides that it is both a civil and a criminal
violation for any person to submit a claim to any payer, including, for example, Medicare, Medicaid and all private health plans and managed
care plans, seeking payment for any services or products that overbills or bills for items that have not been provided to the patient. We believe
that we have in place policies and procedures to assure that all claims that are transmitted by our system are accurate and complete, provided
that the information given to us by our customers is also accurate and complete.
Both federal and state laws regulate the disclosure of confidential medical information, including information regarding conditions like AIDS,
substance abuse and mental illness. As part of the operation of our business, our customers may provide to us patient-specific information
related to the prescription drugs that our customers prescribe to their patients. We believe that we have policies and procedures to assure that
any confidential medical information we receive is handled in a manner that complies with all federal and state confidentiality requirements.
We incur certain costs associated with compliance with Drug Enforcement Administration and Food and Drug Administration environment
regulations. These include $442 per year for maintaining a separate "clean room" for repackaging penicillin. Future regulations will require that
the repackaging of cephalexin will require a "clean room" as well. We incur approximately $100 per year for properly disposing of outdated
pharmaceuticals.
EMPLOYEES
As of December 31, 1999, we employed 28 full-time employees. All potential new employees are required to undergo drug testing and
background checks. We are a non-union company, and, in our opinion, our employee relations are good.
HISTORY
We were organized in 1986 as an Oklahoma corporation under the name Physicians Dispensing Rx Systems, Inc. In December 1986, our name
was changed to Physicians Dispensing Rx, Inc. In 1988, we merged into Buckingham Venture Corporation, a Colorado corporation. This
merger was accounted for as though we acquired Buckingham Venture Corporation, although Buckingham Venture Corporation was the
surviving corporation. Pursuant to this merger,
- the shareholders of Physicians Dispensing Rx, Inc. acquired 85% of the outstanding shares of
9

Buckingham Venture Corporation;

- the officers and directors of Physicians Dispensing Rx, Inc. assumed management of Buckingham Venture Corporation; and
- the name of Buckingham Venture Corporation, the surviving corporation, was changed to Physicians Dispensing Rx, Inc.
In 1990, our name was changed to PD-Rx Pharmaceuticals, Inc. In 1995 our state of incorporation was changed to Oklahoma pursuant to
merger of PD-Rx Pharmaceuticals, Inc., a Colorado corporation, and our former parent, with and into PD-Rx Pharmaceuticals, Inc., an
Oklahoma corporation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Registration
Statement.
As of December 31, 1999, we operated in one segment - the repackaging and distribution of prepackaged pharmaceutical products, including
medical supplies. We believe that all current products are similar in nature, are sold to similar customers, and are sold through similar
distribution methods. Currently, our PD-Rx Net System and our Internet Products are provided to our customers to facilitate sales of our
pharmaceutical products and supplies. Nevertheless, our PD-Rx Net System and our Internet Products are central to our future operating
strategy. We anticipate that if these product and service categories begin to develop beyond facilitating sales of our current products and into
separate markets, the way our business is organized will change to reflect the increasing importance of each of these products and services. If
this occurs, we may determine that we operate in multiple segments.
RESULTS OF OPERATIONS
The following table sets forth selected results of operations for our fiscal years ended June 30, 1999 and 1998 and the six months ended
December 31, 1999 and 1998. The results of operations for the fiscal years ended June 30, 1999 and 1998 are derived from our audited
financial statements appearing elsewhere in this registration statement. The results of operations for the six months ended December 31, 1999
and 1998 are derived from our unaudited financial statements appearing elsewhere in this registration statement.

NET SALES
COST OF SALES
Gross profit
Selling, general, and
administrative expenses
Operating income
Other income (expense)
Rental and interest
Interest
Total other income
(expense)

Net earnings before income tax

Income tax expense
Net earnings

AMOUNT
----------$6,715,089
----------4,984,884
----------1,730,205

YEAR ENDED JUNE 30,

----------------------------1999
1998
------PERCENT
AMOUNT
PERCENT
------- ----------------100.0% $5,872,858
100.0%
------ ----------------74.2%
4,376,165
74.5%
------ ----------------25.8%
1,496,693
25.5%

AMOUNT
---------$3,192,126
---------2,335,973
---------856,153

SIX MONTHS ENDED DECEMBER 31,

----------------------------1999
1998
------PERCENT
AMOUNT
PERCENT
------- ---------- ------100.0% $3,273,714 100.0%
------- ---------- -----73.2% 2,472,171
75.5%
------- ---------- -----26.8%
801,543
24.5%

1,481,750
----------248,455
-----------

22.1%
1,446,530
------ ----------3.7%
50,163
------ -----------

24.6%
786,523
------- ---------.9%
69,630
------- ----------

24.6%
733,867
------- ---------2.2%
67,676
------- ----------

57,766
(42,679)
-----------

0.9%
51,198
0.6%
(38,903)
------ -----------

0.9%
28,797
0.7%
(17,063)
------- ----------

.9%
31,346
1.0%
0.5%
(21,576)
.7%
------- ---------- ------

15,087
-----------

.2%
12,295
------ -----------

0.2%
11,734
------- ----------

.4%
9,770
------- ----------

263,542
79,709
----------$
183,833
===========

3.9%

62,458

1.2%
39,400
------ ----------2.7% $
23,058
====== ===========

10

1.1%

81,364

0.7%
30,918
------- ---------0.4%
50,446
======= ==========

2.6%

22.4%
-----2.1%
------

.3%
------

77,446

2.4%

1.0%
30,115
------- ---------1.6% $ 47,331
======= ==========

.9%
-----1.5%
======

COMPARISON OF THE SIX-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998
During the six months ended December 31, 1999 (the "1999 period") our net sales decreased $81,588 (a 2.5% decrease) to $3,192,126 from
$3,273,714 during the six months ended December 31, 1998 (the "1998 period"). This decrease was primarily due to the loss of one large
multi-center account. This was partially offset, however, by 401 new individual accounts.
Total cost of sales for the 1999 period decreased $136,198 (a 5.5% decrease) to $2,335,973 from $2,472,171 during the 1998 period. This
decrease was primarily attributable to a decrease of $126,772 (a 5.1% decrease) in pharmaceutical supplies and drug costs associated with
decreased net sales. Total cost of sales as a percentage of total sales for the 1999 period decreased to 73.2% from 75.5% in the 1998 period
primarily because of the loss of a large multi-center account with a lower than average gross profit margin. As a result, our gross profit
increased $54,610 (a 6.8% increase) to $856,153 in the 1999 period from $801,543 in the 1998 period. The gross profit increased as a
percentage of total net sales to 26.8% in the 1999 period from 24.5% in the 1998 period.
Selling, general and administrative expenses for the 1999 period increased $52,656 (a 7.2% increase) to $786,523 from $733,867 during the
1998 period. Sales related payroll increased in the 1999 period by $23,886 (a 12.3% increase) to $217,849 from $193,963 during the 1998
period. The increase in sales related payroll was primarily due to increased commissioned sales volume and the addition of new sales
representatives. General payroll increased $47,864 (a 37.2% increase) to $176,339 in the 1999 period from $128,475 during the 1998 period.
These increases were partially offset by a $14,736 decrease (a 65.2% decrease) in promotion and advertising expense to $7,861 in the 1999
period from $22,597 in the 1998 period and a decrease of $14,018 (a 82.4% decrease) in equipment rental expense to $2,999 in the 1999 period
from $17,017 in the 1998 period. Overall, selling, general and administrative expenses increased as a percentage of total sales to 24.6% in the
1999 period from 22.4% in the 1998 period.
For the 1999 period operating income increased by $1,954 (a 2.9% increase) to $69,630 from $67,676 during the 1998 period. Operating
income as a percentage of total sales increased to 2.2% in the 1999 period from 2.1% in the 1998 period. The increased operating income was
primarily attributed to the decreased cost of sales as a percentage of net sales in the 1999 period as compared to the 1998 period, as noted
above.
Rental and interest income for the 1999 period decreased $2,549 (a 8.1% decrease) to $28,797 from $31,346 during the 1998 period. Interest
expense decreased $4,513 (a 20.9% decrease) to $17,063 from $21,576 during the 1998 period. Net earnings before income taxes increased
$3,918 (a 5.1% increase) to $81,364 from $77,446 during the 1998 period, and as a result, income tax expense increased to $30,918 for the
1999 period from $30,115 for the 1998 period.
Net earnings increased $3,115 (a 6.6% increase) to $50,446 during the 1999 period from $47,331 during the 1998 period. Net earnings as a
percentage of net sales increased to 1.6% during the 1999 period from 1.5% percent during the 1998 period. This increase was primarily the
result of increased revenues in selective niche markets coupled with increased sales of new product lines that include injectable medications
and medical and surgical supplies.
COMPARISON OF FISCAL 1999 AND 1998
During our 1999 fiscal year ended June 30, 1999, net sales increased $842,231 (a 14.3 % increase) to $6,715,089 from $5,872,858 during our
1998 fiscal ended June 30, 1998. The increase was primarily due to the addition of 504 new customer accounts during fiscal 1999. These new
accounts included private physician practices, physician group clinics, or physicians in managed care clinics operated by managed healthcare
organizations (health maintenance organizations or HMOs and preferred provider organizations or PPOs).
Total cost of sales for fiscal 1999 increased $608,719 (a 13.9% increase) to $4,984,884 from $4,376,165 during the fiscal 1998. This increase
was primarily attributable to an increase of $671,615 (a 16.7% increase) in
11

pharmaceutical supplies and drug costs associated with increased net sales, this increase was partially offset by a decrease in other associated
cost of sales categories. Total cost of sales as a percentage of total sales for fiscal 1999 was 74.2% compared to 74.5% in fiscal 1998, and
remained relatively constant.
Our gross profit increased $233,512 (a 15.6% increase) to $1,730,205 in fiscal 1999 from $1,496,693 in fiscal 1998. The gross profit as a
percentage of total net sales which was 25.8% in fiscal 1999 and 25.5% in fiscal 1998, remained relatively constant.
Selling, general and administrative expenses for fiscal 1999 increased $35,220 (a 2.4% increase) to $1,481,750 from $1,446,530 during the
fiscal 1998. Sales related payroll increased in fiscal 1999 by $57,758 (a 20.4% increase) to $341,463 from $283,705 during fiscal 1998. The
increase in sales related payroll was primarily due to increased commissioned sales volume. Overall, selling, general and administrative
expenses decreased as a percentage of total sales to 22.1% in fiscal 1999 from 24.6% in fiscal 1998.
For the fiscal year 1999 operating income increased by $198,292 (a 395% increase) to $248,455 from $50,163 during fiscal 1998. Operating
income as a percentage of total sales increased to 3.7% in fiscal 1999 from 0.9% in fiscal 1998. The increased operating income was primarily
attributed to the decreased cost of sales as a percentage of net sales in fiscal 1999 as compared to fiscal 1998.
Rental and interest income for fiscal 1999 increased $6,568 (a 12.8% increase) to $57,766 from $51,198 during fiscal 1998. Interest expense
increased $3,776 (a 9.7% increase) to $42,679 from $38,903 during fiscal 1998. Net earnings before income taxes increased $201,084 (a 322%
increase) to $263,542 from $62,458 during fiscal 1998.
Net earnings increased $160,775 (a 697% increase) to $183,833 during fiscal 1999 from $23,058 during fiscal 1998. Net earnings as a
percentage of net sales increased to 2.7% during fiscal 1999 from 0.4% percent during fiscal 1998. This increase was primarily the result of
increased revenues in the niche market of dermatology coupled with increased sales of injectable medications.
INCOME TAXES
The provisions for income taxes on pretax income were based on the effective combined federal and state graduated corporate income tax rates
of approximately 40% after giving effect to certain adjustments. The provisions for income taxes were $79,709 and $39,400 for the fiscal years
ended June 30, 1999 and 1998, respectively. Footnote E to the June 30, 1999 and 1998 financial statements provides a reconciliation of income
tax expense to the federal income tax rate.
YEAR 2000 COMPUTER SYSTEM COMPLIANCE
We have two primary computer systems. We have completed the implementation of a program to comply with year 2000 requirements on a
system-by-system basis including information technology ("IT") and non-IT systems (E.G., micro controllers).
Our vendor-supported IT system has been updated and certified year 2000 compliant by the vendor. Non-IT systems including all personal
computers were evaluated by a third party contractor and have been updated and certified year 2000 compliant. Our risks associated with the
year 2000 are mainly our ability to communicate with our distributors, take orders for and ship products and pay our employees, distributors
and vendors. Although our evaluation is complete and vendor certifications have been obtained, a failure of our computer systems or other
support systems to function adequately with respect to year 2000 issues could have a material adverse effect on our operations. Based on
progress to date and the limited instances of date sensitive calculations, we have concluded that there is no need for a contingency plan
therefore such plan has not been developed. We estimate that the total cost of our program to make our computer systems year 2000 compliant
was less than $25,000.
12

We have contacted our major suppliers and have received their assurances that their computer systems are year 2000 compliant. In the event we
experience product unavailability or supply interruptions due to year 2000 non-compliance by our suppliers, we believe that we will be able to
obtain alternative sources of our products. A significant delay or reduction in availability of products, however, could also have a material
adverse effect on our operations. As of the date of this registration statement, we have not experienced any computer system malfunctions or
delays or reductions in the availability of products attributable to computer systems year 2000 non-compliance.
LIQUIDITY AND CAPITAL RESOURCES
We have relied on a combination of sources, including the consistent generation of cash flows from operations, to provide liquidity and
working capital. At December 31, 1999, we had working capital of $971,403, compared to working capital of $963,662 at June 30, 1999.
During the six months ended December 31, 1999, cash flows used in operating activities was $50,040, cash flows used in investing activities
was $88,238, and net cash flows used in financing activities was $25,743. During the year ended June 30, 1999, net cash provided by operating
activities was $202,773, cash flows used in investing activities was $142,714, and net cash used in financing activities was $46,836. As of
December 31 and June 30, 1999, we did not have any capital commitments, other than related to repayment of outstanding indebtedness.
In connection with the purchase of our office-warehouse facilities, we obtained a five-year installment loan from Bank of Oklahoma N.A.,
secured by the office-warehouse facilities. This loan requires monthly installments of $4,960, including interest at the Chase Manhattan prime
rate (effective rate of 7.75% and 7.75% at December 31, 1999 and June 30, 1999, respectively). This loan matures in April 2003 and requires a
principal payment of $415,876 at maturity. At December 31 and June 30, 1999, the outstanding the principal balance of this loan was $466,840
and $477,636, respectively.
Our primary sources of liquidity are net cash provided by operating activities and a revolving line of credit. We have a revolving line of credit
with Bank of Oklahoma N.A. in the principal amount of $750,000. The line of credit is payable in monthly installments of interest only at the
Chase Manhattan prime rate (effective rate of 7.75% and 7.75% at December 31 and June 30, 1999, respectively) and is collateralized by
inventories, property and equipment, and accounts receivable. Borrowings under this line of credit are limited to established ratios of accounts
receivable and inventories as specified by the terms of the agreement. The related loan agreement requires us, among other things, to maintain a
minimum current ratio of 1.4-to-1 and a minimum net worth of $1,000,000. At December 31, and June 30, 1999 and June 30, 1998, no
advances were outstanding under this line of credit.
ITEM 3. DESCRIPTION OF PROPERTY
Our corporate offices, warehousing, and production operations are located in 27,600 square feet at 727 North Ann Arbor, Oklahoma City,
Oklahoma 73127. We own the office-warehouse facilities and lease approximately 10,720 square feet to an unrelated third party under a
month-to-month lease requiring monthly rent of $2,680. Our executive, marketing and administrative offices occupy approximately 5,000
square feet at the front of the facility.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information as to the beneficial ownership of our common stock as of the date of February 15, 2000, and
the beneficial ownership of the common stock of (i) each person who is known to us to be the beneficial owner of more than 5% thereof, (ii)
each of our directors and executive officers, and (iii) all of our executive officers and directors as a group, together with their percentage
holdings of the outstanding shares, and, as adjusted to give effect to the offering. All persons listed have sole voting and investment power with
respect to their shares unless otherwise indicated, and there are no family relationships amongst our executive officers and directors. For
purposes of the following table, the number of shares and percent of ownership of our outstanding common stock that the named person
beneficially owns includes shares of
13

our common stock that such person has the right to acquire within 60 days of February 15, 2000, pursuant to exercise of stock options and are
deemed to be outstanding, but are not deemed to be outstanding for the purposes of computing the number of shares beneficially owned and
percent of outstanding common stock of any other named person.
SHARES
BENEFICIALLY
OWNED(1)
-------

PERCENT OF
OUTSTANDING
SHARES(1)(2)
------------

331,642

19.5%

Ronald R. Tutor(3)
3920 SE 104th
Moore, OK 73156

419,906

23.4%

Diana K. Jones
12401 Rivendell Drive
Oklahoma City, OK 73170

148,418

8.8%

Robert D. Holsey, D.O., R.Ph.(4)

Rt. 1 Box 145
Gracemont, OK 73042

331,642

19.5%

22,307

1.3%

165,000

9.7%

- %

518,949

30.6%

NAME (AND ADDRESS) OF BENEFICIAL OWNER

-------------------------------------Christanna C. Holsey
Route 1, Box 145
Gracemont, OK 73042

David W. Dare, R.Ph.

Jack L. McCall, Jr.
2601 Bob White Trail
Edmond, OK 73003
Robert L. Baker
Executive Officer and Directors as a group (four persons)(4)

(1) Shares not outstanding but deemed beneficially owned by virtue of the right of a person to acquire them within 60 days of the date of this
registration statement are treated as outstanding for determining the amount and percentage of our common stock owned by such person. To
our knowledge, each named person has sole voting and sole investment power with respect to the shares shown except as noted, subject to
community property laws, where applicable.
(2) The percentages shown was rounded to the nearest one-tenth of 1%, based upon 1,694,804 common shares of common stock being
outstanding.
(3) The shares beneficially owned and percent of outstanding shares includes 100,000 of common stock issuable upon conversion of Class A
13.25% Cumulative Convertible Preferred Stock.
(4) The shares beneficially owned and percent of outstanding shares are based upon the shares of common stock owned by Christanna C.
Holsey, the wife of Dr. Holsey.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors are elected annually by the shareholders and hold office until the annual meeting of shareholders and until their successors are
elected and qualified or until retirement, removal or disqualification. Our officers are elected by, and serve at the pleasure of, the Board of
Directors. The members of our board of directors and executive officers are:
NAME
---Robert D. Holsey, D.O., R.Ph.

AGE
--47

POSITION
-------President, Chief Executive Officer, and Chairman

Jack L. McCall, Jr.

40

Executive Vice President of Marketing and Sales, Director, and

Secretary

David W. Dare, R.Ph.

47

Director and Treasurer

Robert L. Baker

51

Director

14

The following is a brief description of the business background of our executive officers and directors:
ROBERT D. HOLSEY, D.O., R.PH., is our President, Chief Executive Officer, and Chairman of the Board and a practicing physician. He has
served as a Director since our inception in 1986. He was awarded a pharmacy degree in 1977 from the University of Oklahoma, School of
Pharmacy. As a Registered Pharmacist, he owned and operated a pharmacy in Binger, Oklahoma, prior to entering medical school in 1978. Dr.
Holsey attended the Oklahoma State University College of Osteopathic Medicine and Surgery in Tulsa, Oklahoma. He was awarded a Doctor
of Osteopathy degree in 1981 and completed his post- graduate training at Fort Worth Osteopathic Medical Center. He is board certified in
family practice by the American College of Osteopathic Family Practitioners. Dr. Holsey devotes approximately 20 hours weekly to his private
medical practice in Binger, Oklahoma. Dr. Holsey devotes 30 to 40 hours weekly of his time and attention to our business and affairs. In
September 1998, Dr. Holsey filed an uncontested petition under the federal bankruptcy laws.
JACK L. MCCALL, JR., has served as our Executive Vice President since December 29, 1993, Secretary and one of our Directors since
September 18, 1996. His previous work experience with Parmed, provides valuable insight as we expand our marketing efforts into the
pharmaceutical distribution area. While at Parmed, he was involved in the sales and telemarketing departments and as a bid representative for
large accounts such as chain stores, repackagers, and federal, state and local governments. Mr. McCall was graduated in 1983 from Southern
Connecticut State University with a Bachelor of Science in Environmental and Marine Biology.
DAVID W. DARE, R.PH., is our Treasurer and has served as one of our Directors since our inception. He is a registered pharmacist and
currently the owner and operator of a retail pharmacy and drug store in Binger, Oklahoma. Mr. Dare attended Oklahoma State University and
Central State University prior to receiving his pharmacy degree in 1977 from the University of Oklahoma. From 1977 to 1978, he was
employed in Springfield, Missouri, at a community pharmacy. Mr. Dare was employed by Baptist Medical Center in Oklahoma City,
Oklahoma, from 1978 to 1982, as a staff pharmacist.
ROBERT L. BAKER has served as one of our Directors since August, 1996. Since 1987 Mr. Baker has served us in a financial consulting
capacity and has been involved in the preparation of various business plans as well as our accounting system setup and organization for the
repackaging operation. He has provided assistance since our inception in the areas of finance, tax, and cash management. Mr. Baker is a
Certified Public Accountant and currently serves as Controller and Chief Financial Officer of Jay Petroleum, Inc. He has previously served as
Controller for Fremont Energy Corporation, which was formed in 1987 and sold in 1996. Mr. Baker has an accounting degree from
Northwestern Oklahoma State University in Alva, Oklahoma. Prior to 1987, Mr. Baker was in practice as an independent consultant and also
served in various management positions in the oil and gas industry.
15

OFFICER AND DIRECTOR LIABILITY

As permitted by the provisions of the Oklahoma General Corporation Act, our Certificate of Incorporation eliminates in certain circumstances
the monetary liability of our directors for a breach of their fiduciary duty as directors. These provisions and applicable laws do not eliminate the
liability of one of our directors for
- a breach of the director's duty of loyalty to us or our shareholders,
- acts or omissions by a director not in good faith or which involve intentional misconduct or a knowing violation of law,
- liability arising under the Oklahoma General Corporation Act relating to the declaration of dividends and purchase or redemption of shares of
our common stock in violation of the Oklahoma General Corporation Act, o any transaction from which the director derived an improper
personal benefit,
- violations of federal securities laws.
Our Certificate of Incorporation and bylaws provide that we indemnify our directors and officers to the fullest extent permitted by the
Oklahoma General Corporation Act. Under such provisions, any director or officer, who in his capacity as such, is made or threatened to be
made, a party to any suit or proceeding, may be indemnified if our board of directors determines such director or officer acted in good faith and
in a manner he reasonably believed to be in or not opposed to our best interests.
Our Certificate of Incorporation and bylaws and the Oklahoma General Corporation Act further provide that such indemnification is not
exclusive of any other rights to which such individuals may be entitled under our Certificate, our bylaws, an agreement, vote of shareholders or
disinterested directors or otherwise. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our
directors and officers pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.
ITEM 6. EXECUTIVE COMPENSATION
EXECUTIVE OFFICER COMPENSATION
The following Summary Compensation Table sets forth certain information with respect to the total cash compensation, paid or accrued, of our
President and Chief Executive Officer. None of our executive officers received compensation in excess of $100,000 during the last three years
ended June 30, 1999.
SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL POSITION

--------------------------Robert D. Holsey, D.O., R.Ph.
President and Chief Executive Officer

YEAR
---1999
1998
1997

ANNUAL COMPENSATION(1)
---------------------SALARY(2)
BONUS(3)
---------------$53,519
$5,000
$57,934
$5,000
$53,000
$5,000

(1) The named executive officer received additional non-cash compensation, perquisites and other personal benefits; however, the aggregate
amount and value thereof did not exceed 10% of the total annual salary
16

and bonus paid to and accrued for the named executive officer during the year.
(2) Dollar value of base salary (both cash and non-cash) earned during the year.
(3) Dollar value of bonus (both cash and non-cash) earned during the year.
COMPENSATION OF DIRECTORS
Directors who are not our employees receive $500 for each board meeting attended. Directors who are also our employees receive no additional
compensation for serving as directors. We reimburse our directors for travel and out-of-pocket expenses in connection with their attendance at
meetings of our board of directors. Our bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted
by Oklahoma law. In addition, our non-employee directors have the option to receive health insurance benefits for their families. Of our two
non-employee directors, David W. Dare has elected to receive these health insurance benefits, the cost of which is $455 per month, and Robert
L. Baker is currently receiving consulting fees in the amount of $455 per month.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998, we granted a one-year stock option to Jack L. McCall, Jr., one of our executive officers and director. The stock option provided
for the purchase of 150,000 shares of our common stock at $.14 per share. This option was exercised in September 1998. The exercise price
was paid by delivery of a $21,000 non-interest-bearing promissory note, payable in three equal annual installments beginning one year from the
date of exercise. Past due installments bear interest at the rate of 18% per annum and the note is collateralized by the related common stock.
This note is reflected as a reduction of stockholders' equity in our financial statements.
This option was accounted for under Accounting Principles Board Opinion 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and
related interpretations. The quoted market price of the stock at date of grant exceeded the exercise price of the option; accordingly,
compensation cost of $30,000 was recognized for this option in 1998.
ITEM 8. DESCRIPTION OF SECURITIES
Pursuant to our Certificate of Incorporation, we are authorized to issue up to 3,000,000 shares of common stock, $.01 par value per share, and
10,000,000 shares of preferred stock, $.10 par value per share. As of December 31, 1999, our outstanding capital stock consisted of 1,694,804
shares of our common stock, 270,000 shares of Class A 13.25% Cumulative Convertible Preferred Stock, and 81,200 shares of Class C 13.25%
Cumulative Preferred Stock.
The following description of certain matters relating to our capital stock is a summary. This summary is qualified in its entirety by, the
provisions of our Certificate of Incorporation, bylaws, Designations of the Rights and Privileges of our outstanding Class A 13.25%
Cumulative Convertible Preferred Stock and Class C 13.25% Cumulative Preferred Stock, all of which are filed as exhibits to or are
incorporated by reference in this Registration Statement.
COMMON STOCK
Our authorized and outstanding shares of common stock, in general, have the rights, privileges, disabilities and restrictions as follows:
- the right to receive ratably such dividends, if any, as may be declared from time to time by the board of
17

directors out of assets legally available therefor, subject to the payment of preferential dividends with respect to our then outstanding preferred
stock;
- the right to share ratably in all assets available for distribution to our common stock shareholders after payment of our liabilities in the event
of our liquidation, dissolution and winding-up, subject to the prior distribution rights of the holders of our then outstanding preferred stock;
- the right to one vote per share on matters submitted to a vote by our common stock shareholders and, if applicable our preferred stock
shareholders;
- no preferential or preemptive right and no subscription, redemption or conversion privilege with respect to the issuance of additional shares of
our common stock or preferred stock; and
- no cumulative voting rights, which means that the holders of a majority of shares voting for the election of directors can elect all members of
our board of directors then subject to election.
In general, a majority vote of shares represented at a meeting of our shareholders at which a quorum (a majority of the outstanding shares of
stock entitled to vote) is present, is sufficient for all actions that require the vote or concurrence of shareholders.
PREFERRED STOCK
Our 10,000,000 shares of authorized preferred stock may be issued from time to time in one or more series. Our board of directors, without
further approval of our common stock shareholders, is authorized to fix the relative rights, preferences, privileges and restrictions applicable to
each series of our preferred stock. We believe that having such a class of preferred stock provides greater flexibility in financing, acquisitions
and other corporate activities. While there are no current plans, commitments or understandings, written or oral, to issue any of our preferred
stock, in the event of any issuance, our common stock shareholders will not have any preemptive or similar rights to acquire any of such
preferred stock. Issuance of preferred stock could adversely affect
- the voting power of the holders of our then outstanding common stock,
- the likelihood that such holders will receive dividend payments and payments upon liquidation, and
- could have the effect of delaying or preventing a change in shareholder and management control.
There are 270,000 shares of Class A 13.25% Cumulative Convertible Preferred Stock and 81,200 shares of Class C 13.25% Cumulative
Preferred Stock issued and outstanding. Until January 6, 2000, we had 500,000 shares of Class B 13.25% Cumulative Convertible Preferred
Stock authorized, none of which were ever issued.
CLASS A 13.25% CUMULATIVE CONVERTIBLE PREFERRED STOCK
Our board of directors has authorized 500,000 shares, par value $.10 per share, of Class A 13.25% cumulative convertible preferred stock
("Class A Preferred Stock") of which 270,000 shares are issued and outstanding.
CONVERSION PRIVILEGES. Class A Preferred Stock is convertible into common stock at the option of the preferred stockholders. Each
share of preferred stock can be converted into common stock at a conversion rate of one share of common stock for one and one-half shares of
preferred stock. There are no common shares reserved for potential conversion.
VOTING RIGHTS. Class A Preferred Stock is non-voting.
DIVIDENDS. Cash dividends are payable, when declared by our board of directors. The annual dividend is
18

computed at the stated rate as a percentage of the liquidation preference of the shares ($1.00 per share). Dividends accumulate on a daily basis
without regard to the occurrence of a dividend payment date or the declaration of any dividend. At December 31, 1999, we had approximately
$401,300 in cumulative undeclared dividends in arrears on the Class A Preferred Stock.
REDEMPTION. In the event we liquidate, dissolve or wind up our affairs, all accumulated and unpaid dividends will become due the holders
of the Class A Preferred Stock. We have the right to redeem the Class A Preferred Stock by paying the holders $1.05 per share plus
accumulated dividends.
LIQUIDATION. Class A Preferred Stock has a $1.00 preference (plus cumulative undeclared dividends in arrears) over the common stock and
is equivalent in rank to the Class C Preferred Stock in case of our liquidation or dissolution.
CLASS C 13.25% CUMULATIVE PREFERRED STOCK
Our board of directors has authorized 500,000 shares, par value $.10 per share, of Class C 13.25% Cumulative Preferred Stock ("Class C
Preferred Stock") of which 81,200 shares are issued and outstanding.
CONVERSION PRIVILEGES. Prior to January 25, 1995, Class C Preferred Stock was convertible into common stock. However, this
convertible right was not exercised and Class C Preferred Stock is no longer convertible into Common Stock.
VOTING RIGHTS. Class C Preferred Stock is non-voting.
REDEMPTION. We have the right to redeem Class C Preferred Stock by paying the holders $1.25 per share plus accumulated dividends.
DIVIDENDS. Dividends are payable monthly and if not paid within 90 days of the required payment date, become liabilities and the holders
become our creditors to the extent of the unpaid dividends. In the case of a default, the holders of not less than 51% of the Class C preferred
Stock may declare dividends immediately due payable and institute proceedings for collection. At September 30, 1999, we had approximately
$2,700 in cumulative undeclared dividends in arrears Class C Preferred Stock.
LIQUIDATION. Class C Preferred Stock has a $1.00 preference (plus cumulative undeclared dividends in arrears) over the common stock ,
and is equivalent to Class A Preferred Stock in case of our liquidation or dissolution.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER
MATTERS
Our common stock is traded in the over-the-counter market and is quoted on the Nasdaq Bulletin Board. Our outstanding preferred stock is not
traded on a market. The following table sets forth information obtained from the Trading and Market Services Division of The Nasdaq Stock
Market, Inc., and reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
COMMON STOCK
CLOSING BID PRICES
-----------------HIGH
LOW
-----1999 --CALENDAR QUARTER ENDED:
-----------------------------March 31
June 30
September 30
December 31

$0.34
0.53
0.53
0.23
19

$0.31
0.31
0.38
0.375

1998 --CALENDAR QUARTER ENDED:

-----------------------------March 31
June 30
September 30
December 31

0.50
0.38
0.41
0.34

0.31
0.31
0.34
0.30

1997--CALENDAR QUARTER ENDED:

----------------------------March 31
June 30

0.50
0.50

0.25
0.38

As of December 31, 1999, we had approximately 170 holders of record of our common stock. No dividends have been paid on our common
stock since our formation.
The holders of our outstanding Class A Preferred Stock and Class C Preferred Stock are entitled to annual dividends of $46,534. At December
31, 1999, the cumulative unpaid dividends on our outstanding Class A Preferred Stock were $401,300. The holders of the Class A Preferred
Stock and Class C Preferred Stock are entitled to receive accrued and unpaid dividends prior to the holders of the Common Stock are entitled to
receive dividends.
ITEM 2. LEGAL PROCEEDINGS
In October, 1995, Ronald Tutor, one of the holders of our outstanding Class A Preferred Stock, filed a an action against us in the District Court
of Oklahoma County, State of Oklahoma (CJ 95 6969-67) in which Mr. Tutor alleges that we have refused to allow his inspection and coping
and extraction of corporate records. Mr. Tutor is seeking an order directing us to comply with his request and to recover attorney's fees and
costs related to the action. It is our opinion that this action is without merit.
In August 1998, Ronald Tutor, one of the holders of our outstanding Class A Preferred Stock, filed an action against us in the District Court of
Oklahoma County, State of Oklahoma ( CJ 98 436-62) in which Mr. Tutor seeks payment in liquidation of his Class A Preferred Stock
($150,000) and related dividends in arrears (approximately $223,000 as of December 31, 1999). During February 2000, our motion for
summary judgment was sustained, and Mr. Tutor's claims were dismissed. Although Mr. Tutor indicated that he will appeal the court's
dismissal of his claims, formal appeal proceedings have not begun. The court's decision will not become final until Mr. Tutor's appeal rights
expire or are exhausted. It is our opinion that this action will not have a material impact on our financial condition.
We are involved in litigation incidental to our business from time to time. We are not currently involved in any litigation in which we believe
an adverse outcome would have a material adverse effect on our business, financial condition, results of operations or prospects. However, we
have been involved in litigation and are subject to certain claims as described below.
We are a defendant in numerous multi-defendant lawsuits involving the manufacture and sale of dexfenfluramine, fenfluramine and
phentermine. The plaintiffs in these cases claim injury as a result of ingesting a combination of these weight-loss drugs. These suits have been
filed in various jurisdictions throughout the United States and in each of these suits we are one of many defendants, including manufacturers
and other distributors of these drugs. We believe that we do not have any significant liability incident to the distribution or repackaging of these
drugs, and we have tendered defense of these lawsuits to our insurance carrier for handling. The lawsuits are in various stages of litigation, and
it is too early to determine what, if any, liability we will have with respect to the claims made in these lawsuits. If our insurance coverage in the
amount of $1,000,000 per occurrence and $5,000,000 per year in the aggregate is inadequate to satisfy any resulting liability, we will be
required to undertake defense of these lawsuits and be responsible for the costs and damages, if any, that we suffer as a result of these lawsuits.
We do not believe that the outcome of these lawsuits will have a material adverse effect on our business, financial condition, results of
operations or prospects.
20

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

We have not had any changes in or disagreements with our accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
We have sold and issued the securities described below pursuant to and in accordance with Regulation D under the Securities Act of 1933, as
amended (the "Act") within the past three years which were not registered under the Securities Act of 1933, as amended:

NAME
---Jack L. McCall, Jr.

DATE OF
PURCHASE
-------September 1998

PURCHASE
PRICE PER
SHARE
----$.14

NUMBER OF
COMMON
SHARES
PURCHASED
--------150,000

NET
PROCEEDS
-------$21,000 Note

We relied on Section 4(6) of the Securities Act 1933, as amended, for exemption from the registration requirements of the Act. Mr. McCall is
an executive officer and director and was furnished and had access to information concerning our operations, and had the opportunity to verify
the information supplied. Additionally, we obtained a signed representation from Mr. McCall in connection with the offer of our common stock
of his intent to acquire such stock for the purpose of investment only, and not with a view toward the subsequent distribution thereof; each of
the certificates representing our common stock was stamped with a legend restricting transfer of the securities represented thereby, and
registrant issued stop transfer instructions to its transfer agent and registrar of our common stock, with respect to all certificates representing the
common stock held by Mr. McCall.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1031 of the Oklahoma General Corporation Act permits (and Registrant's Certificate of Incorporation and Bylaws, which are
incorporated by reference herein, authorize) indemnification of directors and officers of Registrant and officers and directors of another
corporation, partnership, joint venture, trust or other enterprise who serve at the request of Registrant, against expenses, including attorneys
fees, judgments, fines and amount paid in settlement actually and reasonably incurred by such person in connection with any action, suit or
proceeding in which such person is a party by reason of such person being or having been a director or officer of Registrant or at the request of
Registrant, if he conducted himself in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of
Registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Registrant may
not indemnify an officer or a director with respect to any claim, issue or matter as to which such officer or director shall have been adjudged to
be liable to Registrant, unless and only to the extent that the court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. To the extent that an officer or director is successful on the merits or otherwise
in defense on the merits or otherwise in defense of any action, suit or proceeding with respect to which such person is entitled to
indemnification, or in defense of any claim, issue or matter therein, such person is entitled to be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by him in connection therewith.
The circumstances under which indemnification is granted with an action brought on behalf of Registrant are generally the same as those set
forth above; however, expenses incurred by an officer or a director in defending a civil or criminal action, suit or proceeding may be paid by
the Corporation in advance of final disposition upon receipt of an undertaking by or on behalf of such officer or director to repay such amount
if it is ultimately determined that such officer or director is not entitled to indemnification by Registrant.
These provisions may be sufficiently broad to indemnify such persons for liabilities arising under the Securities Act of 1933, as amended, in
which case such provision is against public policy as expressed in the 1933 Act and is therefore unenforceable.
21

PART F/S.
Audited financial statements as of and for the fiscal years ended June 30, 1999 and 1998 appear on pages F-3 through F-13. Unaudited
financial statements for the six months ended December 31, 1999 appear on pages F-14 through F-17.
PART III.
ITEMS 1 AND 2. INDEX AND DESCRIPTION OF EXHIBITS
EXHIBIT NO.
----------2.1

DESCRIPTION OF EXHIBIT
---------------------Agreement of Merger between Physicians Dispensing Rx Systems,
Inc. and Buckingham Venture Corporation, a Colorado corporation,
dated February 5, 1988.

2.2

Agreement and Plan of Merger between PD-Rx Pharmaceuticals, Inc.,

a Colorado corporation and the Registrant dated January 20, 1995.

3.1

Registrant's Certificate of Incorporation and Amended Certificate

of Incorporation.

3.2

Registrant's Bylaws.

4.1

Certificate of Designations of Class A 13.25% Cumulative

Convertible Preferred Stock.

4.2

Certificate of Designations of Class C 13.25% Cumulative

Convertible Preferred Stock.

4.3

Form of Certificate of Common Stock.

27.1 Financial Data Schedule.

SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
PD-Rx Pharmaceuticals, Inc.
(Registrant)

Date:

By: /s/ ROBERT D. HOLSEY

--------------------------Robert D. Holsey
President and Chief Executive
Officer

February 29, 2000

---

22

INDEX TO FINANCIAL STATEMENTS

PD-Rx PHARMACEUTICALS, INC.
Report of Independent Certified Public Accountants.............................F-2
Balance Sheets - June 30, 1999 and 1998........................................F-3
Statements of Earnings - Years ended June 30, 1999 and 1998....................F-4
Statement of Stockholders' Equity - Years ended June 30, 1999 and 1998.........F-5
Statements of Cash Flows - Years ended June 30, 1999 and 1998..................F-6
Notes to Financial Statements - June 30, 1999 and 1998.........................F-7
Interim Balance Sheets - December 31, 1999 (unaudited) and June 30, 1999......F-15
Interim Statements of Earnings - Six months ended December 31, 1999
and 1998 (unaudited)......................................................F-16
Interim Statements of Cash Flows - Six months ended December 31, 1999
and 1998 (unaudited)......................................................F-17
Notes to Interim Financial Statements - December 31, 1999 and 1998............F-18

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
PD-Rx Pharmaceuticals, Inc.
We have audited the accompanying balance sheets of PD-Rx Pharmaceuticals, Inc., as of June 30, 1999 and 1998, and the related statements of
earnings, stockholders' equity, 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 generally accepted auditing standards. Those standards require that we plan and perform the audit
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 financial statements referred to above present fairly, in all material respects, the financial position of PD-Rx
Pharmaceuticals, Inc., as of June 30, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
August 6, 1999
F-2

PD-Rx PHARMACEUTICALS, INC.

BALANCE SHEETS
June 30,
ASSETS

1999
-----------

CURRENT ASSETS
Cash
Accounts receivable (net of allowance for doubtful accounts of
$11,514 in 1999 and $14,264 in 1998)
Inventories
Other

Total current assets

155,270

620,735
531,860
4,103
----------

519,160
548,303
----------

1,325,191

1,222,733

941,994

949,070

----------

23,600
----------

$2,267,185
==========

$2,195,403
==========

PROPERTY AND EQUIPMENT, net

DEFERRED INCOME TAXES

168,493

1998
--------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable
Accrued liabilities
Current portion of notes payable
Current portion of obligations under capital leases
Income taxes payable

226,859
50,870
18,775
9,567
55,458
----------

Total current liabilities

LONG-TERM DEBT
Notes payable, less current portion
Obligations under capital leases, less current portion
Deferred income taxes

Total liabilities
COMMITMENTS AND CONTINGENCIES

361,529

434,199

458,861
651
---------459,512
----------

478,566
9,567
---------488,133
----------

821,041

922,332

STOCKHOLDERS' EQUITY
Preferred stock - $.10 par value; authorized, 10,000,000 shares; issued and
outstanding, 351,200 shares (aggregate liquidation
preference of $351,200)
Common stock - $.01 par value; authorized, 3,000,000 shares;
issued and outstanding, 1,694,804 shares in 1999 and 1,544,804
shares in 1998
Additional paid-in capital
Accumulated deficit
Stockholder note receivable

The accompanying notes are an integral part of these statements.

F-3

345,935
53,118
17,334
17,812
----------

35,120

16,948
1,552,541
(137,465)
(21,000)
---------1,446,144
---------$2,267,185
==========

35,120

15,448
1,533,041
(310,538)
---------1,273,071
---------$2,195,403
==========

PD-Rx PHARMACEUTICALS, INC.

STATEMENTS OF EARNINGS
Year ended June 30,

Net sales
Cost of sales

Gross profit
Selling, general, and administrative expenses

Operating income
Other income (expense)
Rental and interest
Interest

1999
--------$6,715,089

1998
---------$5,872,858

4,984,884
----------

4,376,165
----------

1,730,205

1,496,693

1,481,750
----------

1,446,530
----------

248,455

50,163

57,766
(42,679)
----------

51,198
(38,903)
----------

15,087
----------

12,295
----------

263,542

62,458

79,709
----------

39,400
----------

183,833

23,058

35,775
10,760
----------

35,775
10,760
----------

Total cumulative preferred stock dividends

46,535
----------

46,535
----------

NET EARNINGS (LOSS) AVAILABLE TO COMMON STOCKHOLDERS

$ 137,298
==========

$ (23,477)
==========

Earnings (loss) per common share - basic

$
.08
==========

$
(.02)
==========

Earnings (loss) per common share - diluted

$
.08
==========

$
(.02)
==========

Weighted average number of common shares outstanding - basic

1,669,804
==========

1,544,804
==========

Weighted average number of common shares outstanding - diluted

1,688,176
==========

1,544,804
==========

Total other income (expense)

Net earnings before income taxes

Income tax expense

NET EARNINGS
Cumulative preferred stock dividends
Class A undeclared
Class C paid

The accompanying notes are an integral part of these statements.

F-4

PD-Rx PHARMACEUTICALS, INC.

STATEMENT OF STOCKHOLDERS' EQUITY
Years ended June 30, 1999 and 1998

Balance at July 1, 1997

Preferred Stock
----------------------13.25%
Cumulative
13.25%
Common stock
convertible Cumulative
-----------Class A
Class C
Shares
Amount
----------- ---------- ----------------$ 27,000
$ 8,120
1,544,804
$ 15,448

Compensation expense related to stock

option issued

Class C preferred stock dividend paid

Net earnings

Balance at June 30, 1998

Exercise of stock options in exchange
for note receivable
Class C preferred stock dividend paid

Additional
paid-in
Accumulated
capital
deficit
---------- ----------$1,503,041 $(322,836)

30,000
-

---------

-------

---------

---------

27,000

8,120

1,544,804

15,448

1,533,041

150,000

1,500

19,500

(10,760)

23,058
---------- ---------

(310,538)

(10,760)

Stockholder
Total
note
stockholders
receivable
equity
---------- -----------$
$1,230,773

30,000

(10,760)

-------

23,058
----------

1,273,071

(21,000)
-

(10,760)

Net earnings

---------

-------

---------

---------

183,833
---------- ---------

-------

183,833
----------

Balance at June 30, 1999

$ 27,000
=========

$ 8,120
=======

1,694,804
=========

$ 16,948
=========

$1,552,541 $(137,465)
========== =========

$ (21,000)
=========

$1,446,144
==========

The accompanying notes are an integral part of these statements.

F-5

PD-Rx PHARMACEUTICALS, INC.

STATEMENTS OF CASH FLOWS
Year ended June 30,
1999
-----------

1998
------------

Increase (Decrease) in Cash

Cash flows from operating activities
Net earnings
Adjustments to reconcile net earnings to net cash provided by
operating activities
Provision for deferred income taxes
Depreciation and amortization
Loss on sale of property and equipment
Compensation expense related to stock option issued
Changes in assets and liabilities
Accounts receivable
Inventories
Other assets
Accounts payable
Accrued liabilities
Income taxes payable

Net cash provided by operating activities

Cash flows from investing activities
Purchases of property and equipment
Cash flows from financing activities
Proceeds from notes payable
Utilization of credit line
Principal payments on credit line
Principal payments on notes payable
Principal payments on obligations under capital leases
Class C preferred stock dividend paid

Net cash provided by (used in) financing activities

NET INCREASE IN CASH

$ 183,833

24,251
148,853
937
(101,575)
16,443
(4,103)
(119,076)
(2,248)
55,458
---------

23,058

39,400
136,236
30,000
36,054
55,028
7,741
189,764
10,726
-----------

202,773

528,007

(142,714)

(753,208)

100,000
(100,000)
(18,264)
(17,812)
(10,760)
---------

500,000
1,705,630
(1,855,630)
(4,100)
(24,559)
(10,760)
-----------

(46,836)
---------

310,581
-----------

13,223

85,380

Cash at beginning of year

155,270
---------

69,890
-----------

Cash at end of year

$ 168,493
=========

$
155,270
===========

Cash paid during the year for interest

$ 42,679
=========

$
38,903
===========

Cash paid during the year for income taxes

$
=========

$
===========

The accompanying notes are an integral part of these statements.

F-6

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
PD-Rx Pharmaceuticals, Inc. (the Company) is involved principally in the repackaging and distribution of prepackaged pharmaceutical
products. The Company's customers consist primarily of physicians and medical clinics located in the south-central, southeastern, and western
United States.
A summary of significant accounting policies consistently applied in the preparation of the accom-panying financial statements follows.
1. CASH
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed to any significant credit risk on such accounts.
2. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by the average cost method.
3. PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. The
estimated useful lives used in computing depreciation are:
Building and components
Equipment
Computer software costs
Furniture and fixtures
Automobiles

7 to 39 years
5 to 8 years
3 years
7 years
5 years

Equipment under capital lease is recorded at the present value of future minimum lease payments and amortized over the initial term of the
lease. Accumulated amortization related to equipment under capital lease is $74,246 and $73,386 as of June 30, 1999 and 1998, respectively.
4. EARNINGS (LOSS) PER SHARE
Earnings (loss) per common share are computed based upon net earnings, after deducting the dividend requirements of preferred stock, divided
by the weighted average number of common shares outstanding during each period. The cumulative convertible preferred stock (see Note D) is
antidilutive for 1999 and 1998 and the stock option (see Note H) was antidilutive for 1998.
F-7

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED
4. EARNINGS (LOSS) PER SHARE - CONTINUED
The following is a summary of the weighted average number of common shares outstanding for the years ended June 30:

Weighted average number of common shares outstanding - basic

Effect of dilutive stock option

Weighted average number of common shares outstanding - diluted

1999
----------1,669,804
18,372
---------

1998
----------1,544,804
---------

1,688,176
=========

1,544,804
=========

5. REVENUE RECOGNITION
Revenue is recognized on sales of products at the time of shipment. Sales are recorded net of sales returns. The Company's policy on returned
products is to accept returns without charge within fifteen days of shipment. Products returned between fifteen and thirty days are assessed a
25% restocking charge. Returned products are not accepted after thirty days.
6. INCOME TAXES
The Company utilizes an asset and liability approach for accounting for income taxes. Deferred income taxes are recognized for the tax
consequences of temporary differences and carryforwards by applying enacted tax rates applicable to future years to differences between the
financial statement amounts and the tax bases of existing assets and liabilities. A valuation allowance is established if it is more likely than not
that some portion of the deferred tax asset will not be realized.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash approximates fair value because of the highly liquid nature of this instrument.
The carrying amounts of notes payable approximate fair value because of the floating interest rates relating to these obligations.
8. USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and
assumptions that affect certain reported amounts and disclosures; accordingly, actual results could differ from those estimates.
F-8

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30:

Building and components

Equipment
Computer software costs
Equipment under capital lease
Furniture and fixtures
Automobiles

Less accumulated depreciation and amortization

Land

1999
----------$
497,684
433,131
175,429
80,986
54,776
56,554
----------1,298,560
512,326
---------786,234
155,760
----------

1998
----------$
490,899
396,265
174,254
96,446
48,765
48,155
----------1,254,784
461,474
---------793,310
155,760
----------

$
941,994
===========

$
949,070
===========

Unamortized computer software costs totaled $44,000 and $68,000 at June 30, 1999 and 1998, respectively. Amortization of such costs totaled
$24,000 and $23,000 for 1999 and 1998, respectively.
NOTE C - NOTES PAYABLE
Notes payable consist of the following at June 30:
1999
----------Note payable to a bank, maturing April 2003, payable in monthly
installments of $4,960, including interest at Chase Manhattan prime rate
(effective rate of 7.75% at June 30, 1999), collateralized by real estate
Less current portion

Future minimum debt payments at June 30, 1999 are as follows:

Year ending June 30
2000
2001
2002
2003

$ 18,775
20,572
22,413
415,876
------$477,636
========

F-9

1998
-----------

$477,636
18,775
--------

$495,900
17,334
--------

$458,861
========

$478,566
========

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE C - NOTES PAYABLE - CONTINUED
The Company also has a $750,000 revolving line of credit with a bank, maturing February 2000. The line of credit is payable in monthly
installments of interest only at the Chase Manhattan prime rate (effective rate of 7.75% at June 30, 1999), and is collateralized by inventories,
property and equipment, and accounts receivable. Borrowings under the line are limited to established ratios of accounts receivable and
inventories as specified by the terms of the agreement. The related loan agreement requires the Company, among other things, to maintain a
minimum current ratio of 1.4-to-1 and a minimum net worth of $1,000,000. At June 30, 1999 and 1998, no advances were outstanding under
this line of credit.
NOTE D - STOCKHOLDERS' EQUITY
There are 270,000 shares of Class A 13.25% cumulative convertible preferred stock and 81,200 shares of Class C 13.25% cumulative preferred
stock issued and outstanding, of which 250,000 shares of Class A were issued to certain of the Company's principal common stockholders.
Class A 13.25% cumulative convertible preferred stock is convertible into common stock at the option of the preferred stockholders. Each
share of preferred stock can be converted into common stock at a conversion rate of one share of common stock for one and one-half shares of
preferred stock. There are no common stock shares reserved for potential conversion. The preferred shares are nonvoting and are equivalent in
rank to the Class C stock but have preference over the common stock in the event of any liquidation or dissolution. Cash dividends shall be
payable when, as, and if declared by the Board of Directors. The annual dividend is computed at the stated rate as a percentage of the
liquidation preference of the shares ($1.00 per share). Dividends accumulate on a daily basis without regard to the occurrence of a dividend
payment date or the declaration of any dividend. At June 30, 1999, the Company had approximately $383,400 in cumulative undeclared
dividends in arrears on the Class A preferred stock ($347,625 at June 30, 1998). In the event of any liquidation, dissolution, or winding up of
the affairs of the Company, as defined, the sum of all accumulated and unpaid dividends would be due the stockholders. The Company may, at
its sole option, redeem for cash the Class A preferred stock by paying the preferred stockholders $1.05 per share plus all accumulated and
unpaid dividends.
The Company has authorized 500,000 shares of Class B 13.25% cumulative convertible preferred stock. No shares of this stock have been
issued.
Class C 13.25% cumulative preferred stock is nonvoting and has preference over the common stock in case of liquidation or dissolution. The
Company may, at its sole option, redeem for cash the Class C preferred stock by paying the preferred stockholders $1.25 per share plus all
accumulated and unpaid dividends. The preferred stock dividend shall be payable monthly and, if not paid within ninety days of the required
payment date, the dividends become liabilities of the Company, and the stockholders become creditors of the Company to the extent of the
unpaid dividends. In the case of a default, as defined, the dividends due on each share of the stock may be declared due and payable
immediately by the holders of not less than 51% of the stock and such holders shall be empowered to institute proceedings for collection. As of
June 30, 1999, the Company has paid all dividends due to that date on the Class C preferred stock. In the event of any liquidation, dissolution,
or winding up of the affairs of the Company, as defined, the sum of all accumulated and unpaid dividends would be due the stockholders.
F-10

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE E - INCOME TAXES
The provision for income taxes consists of the following for the years ended June 30:

Current
Deferred

1999
---------$ 55,458
24,251
--------

1998
---------$
39,400
--------

$ 79,709
========

$ 39,400
========

The income tax expense reflected in the accompanying statements of earnings for the years ended June 30, 1999 and 1998 differs from the
expected federal income tax rates for the following reasons:

Computed at 34%
Increase (decrease) in income taxes
Adjustment of prior year estimates
State income tax expense
Graduated rates
Nondeductible expenses
Other

1999
---------$ 90,000

1998
---------$ 21,000

(13,600)
12,300
(8,800)
(191)
--------

5,400
3,000
10,000
--------

$ 79,709
========

$ 39,400
========

The temporary differences that give rise to the net deferred tax asset (liability) at June 30 include the following:

Net operating loss carryforwards

Allowance for doubtful accounts
Charitable contributions carryforward
Excess of book basis over tax basis of
property and equipment

F-11

1999
---------$
4,345
7,501

1998
---------$ 45,400
5,400
-

(12,497)
---------

(27,200)
--------

$
(651)
=========

$ 23,600
========

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE F - LEASES
Future minimum lease payments under capital leases at June 30, 1999 are as follows:
Year ending June 30, 2000
Less amount representing interest

Present value of minimum lease payments

Less current portion

9,567
9,567
---------$
==========

Long-term portion

9,898
331
----------

The Company has operating leases for certain office equipment and, prior to February 1998, month-to-month operating leases for office and
warehouse facilities. Rental expense under the operating leases was $11,983 and $36,621 in 1999 and 1998, respectively.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company is subject to various federal, state, and local government regulations. Matters subject to regulation include the distribution and
recordkeeping of certain pharmaceutical products. From time to time, the Company is subject to review by these regulating entities to ensure
compliance with laws and regulations. Management has developed policies and procedures designed to ensure that the Company complies with
laws and regulations. Management is not aware of any regulatory fines or assessments for which the Company is liable.
The Company is the subject of two lawsuits filed by a stockholder. One suit, which is pending but inactive, seeks to force the Company to
release certain corporate records, board minutes, all corporate transactions, and stockholder records. The other suit seeks payment in liquidation
of the stockholder's Class A preferred stock ($150,000) and related dividends in arrears (approximately $213,000). The Company does not
believe these matters will have any material impact on the Company's financial statements.
Additionally, the Company is a defendant in numerous multi-defendant lawsuits involving the manufacture and sale of dexfenfluramine,
fenfluramine, and phentermine. The plaintiffs in these cases claim injury as a result of ingesting a combination of these weight-loss drugs.
These suits have been filed in various jurisdictions throughout the United States and in each of these suits the Company is one of many
defendants, including manufacturers and other distributors of these drugs. Management believes that the Company does not have any
significant liability incident to the distribution or repackaging of these drugs, and the Company has tendered defense of these lawsuits to its
insurance carrier for handling. The lawsuits are in various stages of litigation, and it is too early to determine what, if any, liability the
Company will have with respect to the claims made in these lawsuits. If the Company's insurance coverage of $1,000,000 per occurrence and
$5,000,000 per year in the aggregate is inadequate to satisfy any resulting liability, the Company will be required to undertake defense of these
lawsuits and be responsible for the costs and damages, if any, that the Company suffers as a result of these lawsuits. Management does not
believe that the outcome of these lawsuits will have a material adverse effect on the Company's business, financial condition, results of
operations, or prospects.
F-12

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1999 and 1998
NOTE H - STOCK OPTION
In June 1998, the Company issued a stock option to an officer and director. The stock option provided for the purchase of 150,000 shares of
common stock at $.14 per share. The option, exercisable from June 30, 1998 through June 30, 1999, was exercised in September 1998 on
execution of a $21,000 noninterest-bearing promissory note payable in three equal annual installments beginning one year from the date of
exercise. Past due installments bear interest at the rate of 18% per annum and the note is collateralized by the related common stock. This note
receivable has been reflected as a reduction of stockholders' equity in the accompanying financial statements.
The Company applied APB Opinion 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related Interpretations, in accounting
for this option. The quoted market price of the stock at date of grant exceeded the exercise price of the option; accordingly, compensation cost
of $30,000 has been recognized for this option for 1998. Had compensation cost for the plan been determined based on the fair value of the
option at the grant date consistent with the method of Statement of Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, the Company's net earnings and loss per share for 1998 would have been reduced to the pro forma
amounts indicated below.
Net earnings
As reported
Pro forma

$
$

23,058
21,213

Basic and diluted loss per share

As reported
Pro forma

$
$

(.02)
(.02)

The fair value of the option ($.21 per share) was estimated on the date of grant using the Black-Scholes options-pricing model with the
following assumptions used: no dividend yield; expected volatility of 133 percent; risk-free interest rate of 5.3 percent; and expected life of 100
days.
F-13

PD-Rx PHARMACEUTICALS, INC.

BALANCE SHEETS
December 31,
1999
-----------(unaudited)

ASSETS

CURRENT ASSETS
Cash
Accounts receivable, net
Inventories
Other

104,552
624,744
650,732
11,737
----------

Total current assets

PROPERTY AND EQUIPMENT, net

June 30,
1999
--------

168,493
620,735
531,860
4,103
----------

1,391,765

1,325,191

970,386
----------

941,994
----------

$2,362,151
==========

$2,267,185
==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable
Accrued liabilities
Current portion of notes payable
Current portion of obligations under capital leases
Income taxes payable

309,627
63,745
16,914
30,076
----------

Total current liabilities

226,859
50,870
18,775
9,567
55,458
----------

420,362

361,529

449,926

458,861

DEFERRED INCOME TAXES

651

651

COMMITMENTS AND CONTINGENCIES

LONG-TERM DEBT
Notes payable, less current portion

STOCKHOLDERS' EQUITY
Preferred stock - $.10 par value; authorized, 10,000,000 shares; issued and
outstanding, 351,200 shares (aggregate liquidation
preference of $351,200)
Common stock - $.01 par value; authorized, 3,000,000 shares;
issued and outstanding, 1,694,804 shares in December 1999 and
June 1999
Additional paid-in capital
Accumulated deficit
Stockholder note receivable

The accompanying notes are an integral part of these statements.

F-14

35,120

35,120

16,948
1,552,541
(92,397)
(21,000)
---------1,491,212
----------

16,948
1,552,541
(137,465)
(21,000)
---------1,446,144
----------

$2,362,151
==========

$2,267,185
==========

PD-Rx PHARMACEUTICALS, INC.

STATEMENTS OF EARNINGS
For the six months ended December 31,
1999
1998
-------------------(unaudited)
$3,192,126
$3,273,714

Net sales
Cost of sales

Gross profit
Selling, general, and administrative expenses

Operating income
Other income (expense)
Rental and interest
Interest

2,335,973
----------

2,472,171
----------

856,153

801,543

786,523
----------

733,867
----------

69,630

67,676

28,797
(17,063)
----------

31,346
(21,576)
----------

11,734
----------

9,770
----------

81,364

77,446

30,918
----------

30,115
----------

50,446

47,331

17,888
5,380
----------

17,888
5,380
----------

Total cumulative preferred stock dividends

23,268
----------

23,268
----------

NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS

$
27,178
==========

$
24,063
==========

Earnings per common share - basic

$
.02
==========

$
.01
==========

Earnings per common share - diluted

$
.02
==========

$
.01
==========

Weighted average number of common shares outstanding - basic

1,694,804
==========

1,632,304
==========

Weighted average number of common shares outstanding - diluted

1,694,804
==========

1,669,068
==========

Total other income (expense)

Net earnings before income taxes

Income tax expense

NET EARNINGS
Cumulative preferred stock dividends
Class A undeclared
Class C paid

The accompanying notes are an integral part of these statements.

F-15

PD-Rx PHARMACEUTICALS, INC.

STATEMENTS OF CASH FLOWS
For the six months ended December 31,
1999
1998
-------------------(unaudited)
Increase (Decrease) in Cash
Cash flows from operating activities
Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities
Provision for deferred income taxes
Depreciation and amortization
Changes in assets and liabilities
Accounts receivable
Inventories
Other assets
Accounts payable
Accrued liabilities
Income taxes payable

50,446

59,848
(4,009)
(118,872)
(7,634)
82,768
12,875
(25,382)
---------

Net cash provided by operating activities

Cash flows from investing activities
Purchases of property and equipment
Cash flows from financing activities
Principal payments on notes payable
Principal payments on obligations under capital leases
Class C preferred stock dividend paid

Net cash provided by (used in) financing activities

NET INCREASE/(DECREASE) IN CASH

47,331

23,600
75,160
(31,036)
89,079
(167,991)
16,375
6,515
---------

50,040

59,033

(88,238)

(13,341)

(10,796)
(9,567)
(5,380)
---------

(8,367)
(5,380)
---------

(25,743)
---------

(13,747)
---------

(63,941)

31,945

Cash at beginning of period

168,493
---------

155,270
---------

Cash at end of period

$ 104,552
=========

$ 187,215
=========

The accompanying notes are an integral part of these statements.

F-16

PD-Rx PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
PD-Rx Pharmaceuticals, Inc. (the Company) is involved principally in the repackaging and distribution of prepackaged pharmaceutical
products. The Company's customers consist primarily of physicians and medical clinics located in the south-central, southeastern, and western
United States. The Company's fiscal year ends on June 30th.
NOTE 2 - SUMMARY SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included.
The financial data at June 30, 1999 is derived from audited financial statements which are included in the Company's Form 10 and should be
read in conjunction with the audited financial statements and notes thereto. Interim results are not necessarily indicative of results for the full
year.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those
estimates.
NOTE 3 - NET EARNINGS PER COMMON SHARE
Earnings per common share are computed based upon net earnings, after deducting the dividend requirements of preferred stock, divided by the
weighted average number of common shares outstanding during each period. The cumulative convertible preferred stock is antidilutive.
F-17

EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is entered into this 5th day of February, 1988, by and between BUCKINGHAM VENTURE
CORP., a Colorado corporation, (hereinafter referred to as "Acquiror") and PHYSICIANS DISPENSING RX, INC., an Oklahoma corporation,
(hereinafter referred as "Acquiree") and the undersigned Stockholders of the Acquiree (hereinafter referred to as "Stockholders"), as indicated
on Exhibit A, and the directors of Acquiror.
RECITALS
Stockholders of Acquiree own a majority of the issued and outstanding common stock of Acquiree. Acquiror desires to acquire all of the issued
and outstanding stock of Acquiree, making Acquiree a wholly-owned subsidiary of Acquiror, and Stockholders desire to make a tax free
exchange solely of their shares in Acquiree for shares of Acquiror's $0.0001 par value common stock to be exchanged as set out herein with
said Stockholders
NOW THEREFORE for the mutual consideration set out herein, the parties agree as follows
AGREEMENT
1. PLAN OF REORGANIZATION. Stockholders of Acquiree are the owners of a majority of the issued and outstanding common stock of said
Acquiree. It is the intention of the parties hereto that one hundred percent of the issued and outstanding capital stock of Acquiree shall be
acquired by Acquiror in exchange for stock in the Acquiror, provided that, if less than all of the shares of Acquiree are acquired, then the
number of shares delivered to Acquiree shall be proportionately reduced. It is the intention of the parties hereto that this transaction qualify as a
tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and related sections thereunder.
2. TRANSFER OF SHARES. Acquiror and Stockholders agree that all of the issued and outstanding shares of common stock of Acquiree shall
be transferred to the Acquiror in consideration for which Acquiror shall transfer to Stockholders 101,433,633 shares of common stock of
Acquiror, or if less than all of the shares, then a pro-rata number of shares. Acquiror represents that the 101,433,633 shares transferred to
Shareholders of Acquiree at closing will represent eighty-five percent (85%) of the issued and outstanding shares of Acquiror on the Closing
Date without giving effect to the contemplated transfer of the insider shares as set forth below. Acquiror shares will, on the Closing Date, as
hereafter defined, be delivered to the Stockholders in exchange for their shares in Acquiree. Stockholders represent and warrant that they and
other stockholders will hold such shares of common stock of Acquiror for investment purposes and not for further public distribution and agree
that the shares shall be appropriately restricted. The Stockholders of Physicians Dispensing Rx, Inc. shall purchase eighty-five percent (85%) of
the insider shares or 8,500,000 shares of the Acquiror for Forty Thousand Dollars ($40,000.00), payable at closing.
3. DELIVERY OF SHARES. Within ten days after the Closing Date, Stockholders will deliver certificates or stock powers representing a
majority of the shares of Acquiree duly endorsed so as to make Acquiror the sole holder thereof, free and clear of all claims and encumbrances;
and on such Closing Date, delivery of the Acquiror shares, which will be appropriately restricted as to transfer, will be made to the
Stockholders as set forth herein. The transaction contemplated herein shall not close unless a majority of the shares of Acquiree are delivered at
Closing and the Stockholders of Acquiree owning such shares execute this Agreement. The Acquiror shall deliver 101,433,633 shares of its
common stock to the stockholders at closing.
4. REPRESENTATIONS OF_STOCKHOLDERS AND ACQUIREE. The Stockholders and Acquiree, hereby represent and warrant that, with
respect to their own shares and as to Acquiree, effective this date and the Closing Date, the representations listed below are true and correct.
(a) The Stockholders are the owners of a majority of the issued and outstanding shares of common stock of Acquiree or certain options to
encumbrances; and Stockholders have the unqualified right to transfer Inc. shareholders were issued pursuant to a 504 offering and are
therefore restricted securities
1

(b) The shares constitute validly issued shares of Acquiree are fully-paid and nonassessable.
(c) The unaudited nine month financial statements as of October 31, 1987, Exhibit B hereto, which have been delivered to Acquiror are
complete, accurate and fairly present the financial condition of Acquiree as of the date thereof and the results of its operations for the periods
covered. There are no liabilities, either fixed or contingent, not reflected in such financial statements other than contracts or obligations in the
ordinary and usual course of business constituting liens or other liabilities which, if disclosed, would not alter substantially the financial
condition of such Acquiree as reflected in such financial statements. The Acquiree agrees to supply unaudited financial statements within thirty
days of closing, which will be as of January 31, 1988. These financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated therein. Said October 31, 1987 financial statements reflect a net worth of
no less than $100,000
(d) Prior to the Closing Date there will be no negative material changes in the financial position of Acquiree, except changes arising in the
ordinary course of business, which changes will in no event materially adversely affect the financial position of said Acquiree
(e) Acquiree is not involved in any material pending litigation or governmental investigation or proceeding not reflected in such financial
statement, or otherwise disclosed in writing to Acquiror and, to the best knowledge of Acquiree and Stockholders, no material litigation, claims
assessments or governmental investigation or proceeding is threatened against Acquiree, its principal Stockholders or properties
(f) As of the Closing Date, Acquiree will be in good standing in its state of incorporation, and will be in good standing and duly qualified to do
business in each state where required to be so qualified.
(g) Acquiree, to its knowledge, has complied with all state, federal and local laws in connection with its formation, issuance of securities,
organization, operations, and capitalization, and no contingent liabilities have been threatened or claims made, and to its knowledge, no basis
for the same exists with respect to said operations, formation or capitalization including claims for violation of any state or federal securities
laws.
(h) Acquiree, to its knowledge, has filed all governmental, tax or related returns and reports due or required to be filed and has paid all taxes or
assessments which have become due as of the Closing
Acquiree, to its knowledge, has not materially breached any agreement to which it is a party.
(j) The corporate financial records, minute books, tax returns, and other documents and records of Acquiree are to be available to present
management of Acquiror prior to the Closing Date
(k) The execution of this Agreement will not violate or breach any agreement, contract or commitment to which Acquiree or its Stockholders
are a party and has been duly authorized by all appropriate and necessary action
(1) At the date of this Agreement, Stockholders have, and at the Closing Date will have to the best of their knowledge, disclosed all events,
conditions and facts materially affecting the business and prospects of Acquiree. Stockholders have not now and will not have, at the Closing
Date, withheld knowledge of any such events, conditions, and facts which he knows or has reasonable grounds to know, may materially affect
the business and prospects of Acquiree
(m) Stockholders hereby state that the materials, including current financial statement, current
2

income tax returns, prepared and delivered by Acquiror to Stockholders, have been read and understood by Stockholders, and that they are
familiar with the business of Acquiror, that they are acquiring the Acquiror shares under Section 4(2), commonly known as the private offering
exemption of the Securities Act of 1933
5. REPRESENTATIONS OF ACQUIRING CORPORATION. Acquiror and its shareholders hereby represent and warrant as follows
(a) As of the Closing Date, the Acquiror's shares to be delivered to the Stockholders will constitute valid and legally issued shares of Acquiror,
fully-paid and nonassessable, and will be legally equivalent in all respects to the common stock of Acquiror issued and outstanding as of the
date thereof.
(b) The officers of Acquiror are duly authorized to execute this Agreement and have taken all action required by law and agreements, charters,
and by-laws, to properly and legally execute this Agreement.
(c) Acquiror represents that, as of the Closing Date, it will have no liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) except as otherwise expressly stated herein.
(d) Since the completion of the Company's public offering there have not been, and as of the Closing Date there shall not be, any material
changes in the financial position of Acquiror, except changes arising in the ordinary course of business, which changes shall in no event
adversely affect the financial condition of the Acquiror.
(e) Acquiror is not involved in any pending litigation, claims or governmental investigation or proceeding not reflected in such financial
statements or otherwise disclosed in writing to the Stockholders and there are no lawsuits, claims, assessments, investigations or similar
matters, to be the best knowledge of management, threatened or contemplated against Acquiror, its management or properties.
(f) As of the Closing Date and the date hereof Acquiror is duly organized, validly existing and in good standing under the laws of the State of
Colorado; it has the corporate power to own its property and to carry on its business as now being conducted and is duly qualified to do
business in any jurisdiction where so required.
(g) Acquiror has not breached, nor is there any pending or threatened claims or any legal basis for a claim that Acquiror has breached, any of
the terms or conditions of any agreements, contracts or commitments to which it is a party or is bound and the execution and performance
hereof will not violate any provisions of applicable law of any agreement to which Acquiror is subject.
(h) The capitalization of Acquiror comprises authorized common stock of 300,000,000 shares, $0.0001 par value, of which 17,899,000 shares
are issued and outstanding as of the date hereof. All outstanding shares have been duly authorized, warrants, options or related commitments of
any nature not reflected in the current financial statements of Acquiror.
Acquiror has no subsidiary corporation.
(ii)
(j) The shares of restricted common stock of Acquiror to be issued to Stockholders at Closing will be validly issued, nonassessable and fully
paid under Colorado corporation law and will be issued in a non-public offering and isolated transaction under federal and state securities laws.
(k) The corporate financial records, minute books, tax returns, and other documents and records
3

of Acquiror are to be available to present management of Acquiree prior to the Closing Date and turned over to new management in their
entirety at Closing or as soon thereafter as practicable.
(l) Acquiror has filed all governmental, tax or related returns and reports due or required to be filed and has paid all taxes or assessments which
have become due as of the Closing.
(m) The execution of this Agreement will not violate or breach any agreement, contract or commitment to which Acquiror is a party and has
been duly authorized by all appropriate and necessary action..
(n) At the date of this Agreement, Acquiror has, and at the Closing Date will have to the best of its knowledge, disclosed all events, conditions
and facts materially affecting the business and prospects of Acquiror. Acquiror has not now and will not have, at the Closing Date, withheld
knowledge of any such events, conditions, and facts which Acquiror knows or has reasonable grounds to know, may materially affect the
business and prospects of Acquiror.
(o) Acquiror shall have a minimum of $130,000 in its bank accounts and certificates of deposit on the Closing Date, and will take all steps
necessary at closing so as to allow the new directors of the Acquiror as contemplated by Section 14 of this agreement to have immediate access
to such funds. Acquiror's only liability or obligation of any type at closing shall be to American Financial Group, which obligation is payable at
$1,000.00 per month for a period of ten (10) months subsequent to closing. American Financial Group has assisted in evaluating a merger
candidate.
(p) Acquiror is aware that the Physicians Dispensing Rx, Inc. shares involved in the exchange were issued pursuant to an exemption from
registration under the securities laws, and, therefore, are subject to restrictions on transfers. Acquiror is acquiring the shares solely for its own
account for investment and not for the purpose of resale, distribution, subdivision or fractionalization thereof..
6. CLOSING DATE. The Closing Date herein referred to shall be upon such date as the parties hereto may mutually agree upon but is expected
to be on or about February 5, 1988. At the Closing the Stockholders will be deemed to have accepted delivery of the certificate of stock to be
issued in their names, and in connection therewith will make delivery of their stock in Acquiree to Acquiror. Certain opinions, exhibits, etc.
may be delivered subsequent to the Closing Date upon the mutual agreement of the parties hereto.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE. All obligations of Acquiree and Stockholders under this
Agreement are subject to the fulfillment, prior to or as of the Closing Date, of each of the following conditions.
(a) The representations and warranties by or on behalf of Acquiror contained in this Agreement or in any certificate or documents delivered to
Acquiree pursuant to the provisions hereof shall be true in all material respects at and as of the time of Closing as though such representations
and warranties were made at and as of such time.
(b) Acquiror shall have performed and complied with all covenants, agreements, and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing on the Closing Date.
(c) The present directors of Acquiror will cause the appointment of all of Acquiree's nominees to the Board of Directors of Acquiror as directed
by Acquiree and will have arranged for the resignation of the existing officers and directors of Acquiror.
(d) All instruments and documents delivered to Stockholders pursuant to the provisions hereof shall be reasonably satisfactory to legal counsel
for Stockholders.
4

(e) Acquiror, to its knowledge, has complied with all state, federal and local laws in connection with its formation, issuance of securities,
organization, operations, and capitalization, and no contingent liabilities have been threatened or claims made, and to its knowledge, no basis
for the same exists with respect to said operations, formation or capitalization including claims for violation of any state or federal securities
laws.
(f) All state and federal securities filings, notices and/or any other necessary steps associated with the Regulation A offering of Buckingham
have been taken as of the date of closing, and the directors, officers, principal shareholders and counsel for Buckingham agree to assist
Acquiree in complying with any requirements associated with the Regulation A offering subsequent to Closing. Counsel's professional
assistance in such matters shall be compensable at his normal and customary fee.
(g) Acquiror shall have delivered to Stockholders and Acquiree an opinion of its counsel dated the Closing Date to the effect that.
( i) Acquiror is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.
( ii) Acquiror has the corporate power to carry on its business as now being conducted, and is duly qualified to do business in any jurisdiction
where so required.
(iii) This Agreement has been duly authorized, executed and delivered by Acquiror and is a valid and binding obligation of Acquiror
enforceable in accordance with its terms.
( iv) Acquiror through its Board of Directors has taken all corporate action necessary for performance under this Agreement.
( v) The documents executed and delivered to Acquiree and Stockholders hereunder are valid and binding in accordance with their terms and
vest in Stockholders all right, title and interest in and to the stock of Acquiror and said stock when issued will be duly and validly issued, fullypaid and nonassessable.
( vi) Except as referred to herein such counsel knows of (a) no actions, suit or other legal proceedings or investigations pending or threatened
against or relating to or materially adversely affecting Acquiror; and (b) no unsatisfied judgments against Acquiror.
(vii) Counsel has no reason to doubt the accuracy or completeness of any representation or warranty made by the Acquiror herein.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR. All obligations of Acquiror under this Agreement are subject to
the fulfillment, prior to or as of the Closing Date, of each of the following conditions.
(a) The representations and warranties by Acquiree and Stockholders contained in this Agreement or in any certificate or document delivered to
Acquiror pursuant to the provisions hereof shall be true at and as of the time of Closing as though such representations and warranties were
made at and as of such time.
(b) Acquiree and Stockholders shall have performed and complied with all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing; including the delivery of all of the outstanding stock, either stock certificates
or stock powers, of Acquiree within ten days after closing.
(c) The Stockholders shall deliver within twenty days after closing to Acquiror a letter commonly known as an "investment letter" agreeing that
the shares of stock in Acquiror are being acquired
5

for investment purposes, and not with a view to public resale.

(d) Acquiree, through its counsel, shall deliver to Acquiror an opinion to the effect that
( i) Acquiree is a corporation duly organized, validly existing and in good standing under the laws of the State of Oklahoma and is duly
qualified to do business in any jurisdiction where so required.
( ii) Acquiree has the corporate power to carry on its business as now being conducted.
(iii) This Agreement has been duly authorized, executed and delivered by Acquiree and is a valid and binding obligation of Acquiree and is
enforceable in accordance with its terms.
( iv) Acquiree, through its Board of Directors, has taken all corporate action necessary for performance under this Agreement.
( v) To the best knowledge of Counsel, the documents executed and delivered to Acquiror hereunder are valid and binding in accordance with
their terms and vest in Acquiror all right, title and interest in and to the stock of Acquiree and said stock is duly and validly issued, fully-paid
and nonassessable.
( vi) To the best knowledge of Counsel, except as referred to herein the officers know of (a) no actions, suit or other legal proceedings or
investigations pending or threatened against or relating to or materially adversely affecting Acquiree; and (b) no unsatisfied judgments against
Acquiree.
(vii) Counsel has no reason to doubt the accuracy or completeness of any representation or warranty made by the Acquiree herein.
9. INDEMNIFICATION. Within the period provided in paragraph herein and in accordance with the terms of that paragraph, each party to this
Agreement shall indemnify and hold harmless each other party at all times after the date of this Agreement against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands, assessments, judgments, costs and expenses including attorney's fees
incident to any of the foregoing, resulting from any misrepresentations, breach of covenant or warranty or nonfulfillment of any agreement on
the part of such party under this Agreement or from any misrepresentation in or omission from any certificate furnished or to be furnished to a
party hereunder. Subject to the terms of this Agreement, the defaulting party shall reimburse the other party or parties on demand, for any
reasonable payment made by said parties at any time after the Closing, in respect of any liability of claim to which the foregoing indemnity
relates, if such payment is made after reasonable notice to the other party to defend or satisfy the same and such party failed to defend or satisfy
the same.
10. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations, warranties and covenants made by any party in this
Agreement shall survive the Closing hereunder and the consummation of the transactions contemplated hereby for two years from the date
hereof. All of the parties hereto are executing and carrying out the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement or at the Closing of the transactions herein provided for and not upon
any representations, warranty, agreement, promise or information, written or oral, made by the other party or any other person other than as
specifically set forth herein.
11. DOCUMENTS AT CLOSING. At the Closing, the following transactions shall occur, all of such transactions being deemed to occur
simultaneously:
(a) Stockholders will deliver, or cause to be delivered, to Acquiror the following:
6

( i) Within ten days after closing, stock certificates or stock powers for the stock of Acquiree being tendered hereunder, duly endorsed and
guaranteed or notarized in blank.
( ii) All corporate records of Acquiree, including without limitation corporate minute books (which shall contain copies of the Articles of
Incorporation and By-Laws, as amended to the Closing), stock books, corporate seals, and other such corporate books and records as may
reasonably be requested for review by Acquiror and its counsel.
(iii) The opinion of counsel as set forth herein.
( iv) Such other instruments, documents and certificates, if any, as are required to be delivered pursuant to the provisions of this Agreement or
which may be reasonably requested in furtherance of the provision of this Agreement.
(b) Acquiror will deliver or cause to be delivered to Stockholders and Acquiree:
( i) Stock certificates for common stock to be issued as a part of the exchange as listed on Exhibit A.
( ii) A certificate of the President and Secretary of Acquiror to the effect that all representations and warranties of Acquiror made under this
Agreement are reaffirmed on the Closing Date, the same as though originally given to Stockholders on said date.
(iii) The opinions of Acquiror's counsel set forth herein.
( iv) Copies of resolutions by Acquiror's Board of Directors authorizing this transaction.
( v) Such other instruments and documents as are required to be delivered pursuant to the provisions of this Agreement.
12. MISCELLANEOUS. The Acquiror's name shall be changed to Physicians Dispensing Rx, Inc.
13. FINDERS FEES. Edmond Pistone shall receive 2,000,000 shares of the Acquiror as a consultant to this transaction. Mr. Travis shall receive
his shares out of the 101,433,633 referred to in Section 2 but not with respect to the costs relating to the registration of said shares. No other
party has dealt with any broker or agent in connection with the execution of this Agreement other than Messrs. Pistone and Travis. No
additional compensation of any kind is due to any parties besides Messrs. Pistone and Travis. Messrs. Pistone and Travis will receive restricted
shares.
14. BOARD OF DIRECTORS. New directors for the Acquiror shall be Robert D. Holsey, D.O., C.T. Jones, D.O., Ronald R. Tutor, David W.
Dare and Bryce 0. Bliss.
15. PIGGY BACK RIGHTS. The Acquiree's officers and directors agree to give "piggy back" registration rights to all restricted shareholders
of the Acquiror after the merger. Such rights are as follows:
REGISTRATION RIGHTS: If, during the 24-month period following the Closing Date, the Acquiror files a registration statement with the
Securities and Exchange Commission (the "SEC") on Forms S-1, S-2 or S-3 for the purpose of registering any of its common stock pursuant to
the Securities Act of 1933, the Acquiror agrees to notify all persons who hold stock which is, as of the Closing Date, restricted from resale
("'Restricted Stock") of its intent to file such registration and, if requested within five (5) days from the date of such notification, to include the
Restricted Stock in such registration statement. The provisions hereof shall not impose any obligation on the Acquiror to file any registration
statement nor shall any statement contained herein be construed as a representation of any intent by the Acquiror or the Acquiree to file any
registration statement. The Acquiror's obligation to include shares of the Restricted Stock in any registration statement shall cease 24 months
from the Closing Date.
7

The holders of any Restricted Stock shall bear all of their own expenses, if any, incurred in connection with the offering and sale of their
Restricted Stock, but not with respect to the cost relating to the registration of said shares. In the event any information is furnished in writing
to the Acquiror by or on behalf of the seller of any Restricted Stock for inclusion in a registration statement, and any such information contains
any untrue statements or allegedly untrue statements of material fact or fails to state any material facts required to be stated to make the
statements made not misleading, the seller who furnished such information or on his behalf such information is furnished, shall agree to
indemnify the Acquiror, its directors and such of its officers as shall have signed any registration statement for such sale of common stock and
each person who controls the Acquiror within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange
Act of 1934 for all losses, claims, damages or liabilities to which they or any of them may become subject under the Securities Act, under any
other statute, at common law, or otherwise, and shall reimburse such persons for any legal or other expenses (including the cost of any
investigation and preparation) reasonably incurred by them or any of them in connection with the investigating or defending against any such
losses, claims, damages or liabilities.
16. ADDITIONAL PROVISIONS.
(a) FURTHER ASSURANCES. At any time and from time to time, after the effective date, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
(b) WAIVER. Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
(c) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered in
person or sent by pre-paid first class registered or certified mail, return receipt requested.
(d) HEADINQS. The section and subsection heading in this Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(e) COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
(f) GOVERNING LAW. This Agreement was negotiated and is being contracted for in the State of Colorado and shall be governed by the laws
of the State of Colorado, and the securities being issued herein are being issued and delivered in the State of Colorado in accordance with
isolated transaction and non-public offering exemption.
(g) BINDING EFFECT. This Agreement shall be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(h) ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties hereto and supersedes any and all prior
agreements, arrangements or understandings between the parties relating to the subject matter hereof. No oral understandings, statements,
promises or inducements contrary to the terms of this Agreement exist. No representations, warranties, covenants or conditions, express or
implied, other than as set forth herein, have been made by any party.
(i) TIME. Time is of the essence.
(j) SEVERABILITY. If any part of this Agreement is deemed to be unenforceable the balance of the
8

Agreement shall remain in full force and effect.

(k) DEFAULT COSTS. In the event any party hereto has to resort to legal action to enforce any of the terms hereof, such party shall be entitled
to collect attorney's fees and other costs from the party in default.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.
BUCKINGHAM VENTURE CORP. PHYSICIANS DISPENSING RX, INC.
BY

TITLE

/s/ A. Herbert Cohen

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

BY

President
------------------

TITLE

/s/ A. Herbert Cohen

-------------------A. Herbert Cohen
On behalf of the Board of
Directors of the Company

/s/ Robert D. Holsey

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

President
------------------

EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER made the 20 day of January, 1995, between PD-Rx Pharmaceuticals, Inc., an Oklahoma
corporation, hereinafter called the Oklahoma Company, and a majority of the directors thereof, and PD-Rx Pharmaceuticals, Inc., a Colorado
corporation, hereinafter called the Colorado Company, and a majority of the directors thereof.
WHEREAS, the Oklahoma Company was formed as a wholly owned subsidiary of the Colorado Company to be the vehicle through which the
Colorado Company would reincorporate itself under the laws and jurisdiction of the State of Oklahoma.
WHEREAS, the Oklahoma Company has an authorized capital stock consisting of (i) 3,000,000 shares of Common Stock, par value $.01
("Common Stock"), of which Five Hundred (500) shares have been duly issued and are now outstanding; and (ii) 9,000,000 shares of Preferred
Stock, par value $.10 per share ("Preferred Shares"), of which no shares have been duly issued or are outstanding; 500,000 shares each of Class
A 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Class A Preferred Stock"), of which no shares have been duly
issues or are outstanding; and 500,000 shares of Class C 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Class C
Preferred Stock") of which no shares have been duly issued or are outstanding.
WHEREAS, the principal office of the Oklahoma Company in the State of Oklahoma is located at 6000 NW 2nd, Suite 800, City of Oklahoma
City, County of Oklahoma, and Dr. Robert D. Holsey, D.O. is the agent in charge thereof upon whom process against the Oklahoma Company
may be served within the State of Oklahoma;
WHEREAS, the Colorado Company, as of December 31, 1993, has authorized capital consisting of (a) 3,000,000 shares of Common Stock, par
value $.01 per share ("Common Share"), (i) of which 1,544,804 shares were duly issued and outstanding, (ii) _____ shares were reserved for
issuance upon exercise of outstanding options, and (iii) 351,200 shares were reserved for conversion of the Series A Preferred Stock and Series
C Preferred Stock; (b) 9,000,000 shares of Preferred Stock, par value $.10 per share ("Preferred Stock"), of which no shares were issued or
outstanding; (c) 500,000 shares of Class A 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Series A Preferred
Stock"), of which 270,000 shares were duly issued and outstanding, and
(d) 500,000 shares of Class C 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Series C Preferred Stock"), of which
81,200 shares were duly issued and outstanding;

WHEREAS, the principal office of the Colorado Company in the State of Colorado is located at 5600 S. Quebec, Suite 148-B, City of
Englewood, Colorado 80111 and Mr. Louis J. Davis, Esquire, is the agent in charge thereof upon whom process against the Colorado Company
may be served within the State of Colorado;
WHEREAS, the holders of the outstanding capital stock of the Colorado Company entitled to vote thereon approved the reincorporation of the
Colorado Company under the laws and jurisdiction of the State of Colorado at the Corporation's annual shareholders meeting on December 29,
1993; and
WHEREAS, the Boards of Directors of the Oklahoma Company and of the Colorado Company, respectively, deem it advisable and generally
to the advantage and welfare of the two corporate parties and their respective shareholders that the Colorado Company merge with and into the
Oklahoma Company under and pursuant to the provisions of Section 1083 of the Oklahoma General Corporation Act.
NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained and of the mutual benefits hereby
provided, it is agreed by and between the parties hereto as follows:
1. MERGER. The Colorado Company shall be and it hereby is merged into the Oklahoma Company.
2. EFFECTIVE DATE. This Agreement and Plan of Merger shall become effective immediately upon compliance with the laws of the States
of Colorado and Oklahoma, the time of such effectiveness being hereinafter called the Effective Date. The Effective Date shall be the
happening of whichever of the following events happens last:
(a) the filing in the office of the Secretary of State of the State of Colorado, the Articles of Merger of PD-Rx Pharmaceuticals, Inc, the
Colorado corporation, into PD-Rx Pharmaceuticals, Inc., the Oklahoma corporation, pursuant to Sections 7-111-104 and 105 of the Colorado
Business Corporation Act; or
(b) the filing of the Certificate of Ownership and Merger in the office of the Secretary of State of the State of Oklahoma.
3. SURVIVING CORPORATION. The Oklahoma Company shall survive the merger herein contemplated and shall continue to be governed
by the laws of the State of Oklahoma, but the separate corporate existence of the Colorado Company shall cease forthwith upon the Effective
Date.

4. AUTHORIZED CAPITAL. The authorized capital stock of the Oklahoma Company following the Effective Date shall be (i) 3,000,000
shares of Common Stock, par value $.01 per share, (ii) 9,000,000 shares of Preferred stock, par value $.10 per share, (ii) 500,000 shares of
Class A Cumulative Convertible Preferred Stock, par value $.10 per share, and (iii) 500,000 shares of Class C Cumulative Convertible
Preferred Stock, par value $.10 per share, unless and until the same shall be changed in accordance with the laws of the State of Oklahoma.
5. CERTIFICATE OF INCORPORATION. (a) The Certificate of Incorporation of the Oklahoma Company which is set forth as Appendix A
hereto shall be the Certificate of Incorporation of the Oklahoma Company following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof, which power to amend or repeal is hereby expressly reserved, and all rights or
powers of whatsoever nature conferred in such Certificate of Incorporation or herein upon any shareholder or director or officer of the
Oklahoma Company or upon any other person whomsoever are subject to this reserve power. Such Certificate of Incorporation shall constitute
the Certificate of Incorporation of the Oklahoma Company separate and apart from this Agreement and Plan of Merger and may be separately
certified as the Certificate of Incorporation of the Oklahoma Company.
(b) The Certificates of Designations setting forth the rights, priorities, preferences and powers of the Class A Preferred Stock and Class C
Preferred Stock which are set forth as Appendix B and C, respectively, shall be the same rights, priorities, preferences and powers of the Series
A Preferred Stock and Series C Preferred Stock as authorized and issued by the Colorado Company following the Effective Date unless and
until the same shall be amended or repealed in accordance with the provisions thereof, which power to amend or repeal is hereby expressly
reserved, and all rights or powers of whatsoever nature conferred in such Certificate of Designations or herein upon any shareholder or director
or officer of the Oklahoma Company or upon any other person whomsoever are subject to this reserve power.
6. BYLAWS. The Bylaws of the Colorado Company which is set forth as Appendix D hereto shall be the Bylaws of the Oklahoma company
following the Effective Date unless and until the same shall be amended or repealed in accordance with the provisions thereof.
7. FURTHER ASSURANCE OF TITLE. If at any time the Oklahoma Company shall consider or be advised that any acknowledgments or
assurances in law or other similar actions are necessary or desirable in order to acknowledge or confirm in and to the Oklahoma Company any
right, title, or interest of the Colorado Company held immediately prior to the Effective Date, the Colorado Company and its proper officers
and directors shall and will execute and deliver all such acknowledgements or assurances in law and do all things necessary to carry out the
purposes of this Agreement and Plan of Merger, and the Oklahoma Company and the proper officers and

directors thereof are fully authorized to take any and all such action in the name of the Colorado Company or otherwise.
8. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the Effective Date, each of the 500 shares of the Common Stock of the
Oklahoma Company presently issued and outstanding shall be retired, and no shares of Common Stock or other securities of the Oklahoma
Company shall be issued in respect thereof.
9. CONVERSION OF OUTSTANDING STOCK.
(a) Common Stock. Upon the Effective Date, each of the issued and outstanding shares of Common Share of the Colorado Company and all
rights in respect thereof shall be converted into one fully paid and nonassessable share of Common Stock of the Oklahoma Company, and each
certificate nominally representing shares of Common Share of the Colorado Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the Oklahoma Company. The holders of such certificates shall not be required
immediately to surrender the same in exchange for certificates of Common Stock of the Oklahoma Company; provided, however, that as
certificates nominally representing shares of Common Share of the Colorado Company are surrendered for transfer, the Oklahoma Company
will cause to be issued certificates representing shares of Common Stock of the Oklahoma Company and, at any time upon surrender by any
holder of certificates nominally representing shares of Common Share of the Colorado Company, the Oklahoma Company will cause to be
issued therefor certificates for a like number of shares of Common Stock of the Oklahoma Company.
(b) Class A 13.25% Cumulative Convertible Preferred Stock. Upon the Effective Date, each of the issued and outstanding shares of Series A
Preferred Stock of the Colorado Company and all rights in respect thereof shall be converted into one fully paid and nonassessable share of
Class A Preferred Stock of the Oklahoma Company, and each certificate nominally representing shares of Series A Preferred Stock of the
Colorado Company shall for all purposes be deemed to evidence the ownership of a like number of shares of Class A Preferred Stock of the
Oklahoma Company. The holders of such certificates shall not be required immediately to surrender the same in exchange for certificates of
Class A Preferred Stock of the Oklahoma Company; provided, however, that as certificates nominally representing shares of Series A Preferred
Stock of the Colorado Company are surrendered for transfer, the Oklahoma Company will cause to be issued certificates representing shares of
Class A Preferred Stock of the Oklahoma Company and, at any time upon surrender by any holder of certificates nominally representing shares
of Series A Preferred Stock of the Colorado Company, the Oklahoma Company will cause to be issued therefor certificates for a like number of
shares of Class A Preferred Stock of the Oklahoma Company.
(c) Class C 13.25% Cumulative Convertible Preferred Stock. Upon the Effective Date, each of the issued and outstanding shares of Series C
Preferred Stock of the Colorado Company and all rights in respect

thereof shall be converted into one fully paid and nonassessable share of Class C Preferred Stock of the Oklahoma Company, and each
certificate nominally representing shares of Series C Preferred Stock of the Colorado Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Class C Preferred Stock of the Oklahoma Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for certificates of Class C Preferred Stock of the Oklahoma Company; provided,
however, that as certificates nominally representing shares of Series C Preferred Stock of the Colorado Company are surrendered for transfer,
the Oklahoma Company will cause to be issued certificates representing shares of Class C Preferred Stock of the Oklahoma Company and, at
any time upon surrender by any holder of certificates nominally representing shares of Series C Preferred Stock of the Colorado Company, the
Oklahoma Company will cause to be issued therefor certificates for a like number of shares of Class C Preferred Stock of the Oklahoma
Company.
10. OUTSTANDING STOCK OPTIONS. Forthwith upon the Effective Date, each outstanding option to purchase shares of Common Shares of
the Colorado Company shall be converted into and become an option to purchase the same number of shares of Common Stock of the
Oklahoma Company, upon the same terms and subject to the same conditions as set forth in such option. The same number of shares of
Common Stock of the Oklahoma Company shall be reserved for issuance upon the exercise of restricted stock options as were so reserved for
issuance by the Colorado Company immediately prior to the Effective Date.
11. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors and the officers of the surviving corporation
immediately after the Effective Date of the merger shall be those persons who were the members of the Board of Directors and the officers,
respectively, of the Colorado Company immediately prior to the Effective Date of the merger, and such persons shall serve in such offices,
respectively, for the terms provided by law or in the Bylaws, or until their respective successors are elected and qualified.
12. VACANCIES. If, upon the Effective Date, a vacancy shall exist in the Board of Directors or in any of the offices of the Oklahoma
Company as the same are specified above, such vacancy shall thereafter be filled in the manner provided by law and the Bylaws of the
Oklahoma Company.
13. TERMINATION. Anything herein to the contrary notwithstanding, this Agreement and Plan of Merger may be terminated and abandoned
by action of the Board of Directors of the Colorado Company at any time prior to the Effective Date, whether before or after approval by
holders of the outstanding capital stock of the Colorado Company.
14. PLAN OF REORGANIZATION. The Agreement and Plan of Merger constitutes a Type F Plan of Reorganization as defined under the
Internal Revenue Code, 1986 as amended, to be carried forth in the manner,

on the terms and subject to the conditions herein set forth, and as set forth in the Proxy Statement dated December 9, 1993 delivered to the
Colorado Company holders of capital stock outstanding as of the record date.
15. BOOK ENTRIES. The merger contemplated hereby shall be treated as a pooling of interests and as of the Effective Date entries shall be
made upon the Books of the Oklahoma Company in accordance with the following:
(a) The assets and liabilities of the Colorado Company shall be recorded at the amounts at which they are carried on the books of the Colorado
Company immediately prior to the Effective Date with appropriate adjustment to reflect the retirement of the 500 share of Common Stock of
the Oklahoma Company presently issued and outstanding.
(b) There shall be credited to Capital Account the aggregate amount of the par value per share of all of the Common Stock of the Oklahoma
Company resulting from the conversion of the outstanding Common Shares of the Colorado Company. There shall also be credited to the
Capital Account the aggregate amount of the par value per share of all of the Class A Preferred Stock of the Oklahoma Company resulting from
the conversion of the outstanding Series A Preferred Stock of the Colorado Company along with a credit of the aggregate amount of the par
value per share of all of the Class C Preferred Stock of the Oklahoma Company resulting from the conversion of the outstanding Series C
Preferred Stock of the Colorado Company.
(c) There shall be credited to Additional Paid-in Capital an amount equal to that carried on the Additional Paid-in Capital of the Colorado
Company immediately prior to the Effective Date.
(d) There shall be credited or debited to Accumulated Deficit an amount equal to that carried on the Accumulated-Deficit of the Colorado
Company immediately prior to the Effective Date.
16. EXPENSES AND RIGHTS OF DISSENTING SHAREHOLDERS. The Oklahoma Company shall pay all expenses of carrying this
Agreement and Plan of Merger into effect and of accomplishing the merger, including amounts, if any, to which dissenting shareholders of the
Colorado Company may be entitled by reason of this merger. The Oklahoma Company will, in the manner prescribed in
Section 7-111-104 of the Colorado Business Corporation Act (the "Act"), within ten days after the filing and recording of the Articles of
Merger pursuant to Section 7-111-105 of the Act, notify every shareholder of the Colorado Company whose shares were not voted in favor of
the reincorporation and who before the taking of the vote filed with the Colorado Company a written objection to the reincorporation, that the
Articles of Merger have been so filed and recorded. If any such shareholder shall, within 30 days after the date of mailing of such notice,
demand in writing from the Oklahoma Company payment for his stock, the Oklahoma Company shall, pay to him the value of his stock on the
date of the

recording of the Articles of Merger, exclusive of any element of value arising from the expectation or accomplishment of the merger. Such
appraisal proceedings and the rights thereunder of such shareholders and the surviving corporation shall in all respects be subject to and
governed by the provisions of the Colorado Business Corporation Act.
IN WITNESS WHEREOF, each of the corporate parties hereto, pursuant to authority duly granted by the Board of Directors, has caused this
Agreement and Plan of Merger to be executed by a majority of its directors and its corporate seal to be hereunto affixed.
PD-Rx PHARMACEUTICALS, INC.
(Colorado)
ATTEST:
(CORPORATE SEAL)
-------------------------Name:
-------------------Title: Secretary

By:
-------------------------------Name:
-----------------------------Title: Director

By:

By:

-------------------------------Name:
-----------------------------Title: Director

-------------------------------Name:
-----------------------------Title: Director

PD-Rx PHARMACEUTICALS, INC.

(Oklahoma)
ATTEST:
(CORPORATE SEAL)
-------------------------Name:
-------------------Title: Secretary

By:
-------------------------------Name:
-----------------------------Title: Director

By:

By:

-------------------------------Name:
-----------------------------Title: Director

-------------------------------Name:
-----------------------------Title: Director

EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
PD-RX PHARMACEUTICALS, INC.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
The undersigned incorporator, whose name and address is shown below, being a person legally competent to enter into contracts, under the
provisions of the Oklahoma General Corporation Act, does hereby adopt the following Certificate of Incorporation:
ARTICLE I
NAME
The name of this Corporation is: PD-Rx Pharmaceuticals, Inc.
ARTICLE II
REGISTERED AGENT
The address of the registered office of the Corporation in the State of Oklahoma is 6000 N.W. 2nd, Suite 800, Oklahoma City, Oklahoma
County, Oklahoma 73127, and the name of the registered agent of the Corporation at such address is Dr. Robert D. Holsey, D.O.
ARTICLE III
DURATION
The duration of the Corporation is perpetual.
ARTICLE IV
PURPOSES
The objectives and purposes for which the Corporation is organized are for any lawful act or activity for which a corporation may be organized
under the general corporation law of the State of Oklahoma, now or hereafter in effect, and to do any of such things as fully and to the same
extent as natural persons might or could do.
ARTICLE V
INCORPORATOR
The name and address of the Incorporator is Dr. Robert D. Holsey, 6000 NW 2nd, Suite 800, Oklahoma City, Oklahoma 73127.
ARTICLE VI
AUTHORIZED CAPITAL
The total number of shares of capital stock of all classes which the Corporation shall have authority to issue is 13,000,000 , which shall consist
of
(1) 10,000,000 shares of preferred stock, par value $.10 per share
1

("Preferred Stock"); and (ii) 3,000,000 shares of common stock, par value $.01 par value ("Common Stock").
The following is a statement of the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of the
classes of stock of the Corporation, and of the authority with respect thereto expressly granted to the Board of Directors of the Corporation:
A. PREFERRED STOCK.
The Board of Directors is hereby expressly vested with the authority to adopt a resolution or resolutions providing for the issuance of
authorized but unissued shares of Preferred Stock, which shares may be issued from time to time in one or more series, and in such amount as
may be determined by the Board of Directors in such resolution or resolutions. Each such series shall have such powers, designations,
preferences and relative, participating, optional or other rights, if any, and such qualifications, limitations or restrictions thereof, if any
(collectively, the "Class Terms"), as are stated and expressed in a resolution or resolutions providing for the creation of such series, or the
revision of the Class Terms of such series, adopted by the Board of Directors. The powers of the Board of Directors with respect to the Class
Terms of a particular series shall include, but not be limited to determination of the following:
(1) the number of shares constituting that series and the distinctive designation of that series or any increase or decrease (but not below the
number of shares thereof then outstanding) in such number;
(2) the dividend rate on the shares of that series, if any, whether such dividends shall be cumulative, and, if so, the date or dates from which
dividends payable on such shares shall accumulate and the relative rights of priority, if any, of payment of dividends on shares of that series;
(3) whether that series shall have voting rights in addition to the voting rights provided by law, and, if so, the terms and conditions of such
voting rights;
(4) whether that series shall have conversion privileges with respect to shares of any other class or classes of stock or shares of any other series
of any class of stock, and, if so, the terms and conditions of such conversion privileges, including the conversion price or rate and the method,
if any, of adjusting such conversion price or rate upon occurrence of such events as the Board of Directors shall determine;
(5) whether shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including their relative rights of
priority of redemption, if any, the date or dates upon or after which they shall be redeemable, provisions regarding redemption notices and the
redemption price per share, which price may vary under different conditions and at different redemption dates;
(6) whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(7) the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, and the relative rights of priority, if any, of payment of shares of that series;
(8) the conditions or restrictions upon the creation of indebtedness of the Corporation or upon the issuance of additional Preferred Stock or
other capital stock ranking PARI PASSU therewith or prior thereto with respect to dividends or distributions of assets upon liquidation;
(9) the conditions or restrictions with respect to the issuance of, payment of dividends upon, or the making of other distributions to, or the
acquisition or redemption of, shares ranking junior to the Preferred Stock or to any series thereof with respect to dividends or payment or
distributions of assets upon liquidation, dissolution or winding up of the affairs of the Corporation; and
(10) any other designations, powers, preferences and rights, including without limitation, any qualifications, limitations or restrictions thereof.
2

Any of the Class Terms, including voting rights, of any series may be made dependent upon facts ascertainable outside this Certificate of
Incorporation and the resolution or resolutions designating that series of Preferred Stock, provided that the manner in which such facts shall
operate upon such Class Terms is clearly and expressly set forth in this Certificate of Incorporation or in the resolution or resolutions
designating that series of Preferred Stock.
Subject to the provisions of this Article VI, shares of one or more series of Preferred Stock may be authorized or issued from time to time as
shall be determined by and for such consideration as shall be fixed by the Board of Directors or a designated committee thereof, in an aggregate
amount not exceeding the total number of shares of Preferred Stock authorized by this Certificate of Incorporation. Except as fixed by the
Board of Directors in a resolution or resolutions designating any series of Preferred Stock, all shares of Preferred Stock shall be of equal rank
and shall be identical in all respects. All shares of any one series of Preferred Stock so designated by the Board of Directors shall be identical in
all respects, except that shares of any one series issued at different times may differ as to the date from which dividends thereon shall
accumulate.
Except as expressly set forth herein or in the resolution or resolutions of the Board of Directors designating any series of Preferred Stock, the
holders of shares of any series of Preferred Stock shall have no other rights other than those provided by applicable law.
B. COMMON STOCK.
(1) The Common Stock may be issued by the Corporation from time to time for such consideration and upon such terms as may be fixed from
time to time by the Board of Directors and as may be permitted by law, without action by any stockholders. Each share of Common Stock shall
have the same powers and rights, shall rank PARI PASSU and share equally, share for share, in any dividends or other distributions thereon
and shall be identical in all respects.
(2) Subject to any voting rights (inclusive or exclusive) which may vest in holders of Preferred Stock under the provision of any series of
Preferred Stock fixed by the Board of Directors pursuant to the authority herein provided (whether now existing or hereafter created), each
holder of Common Stock shall be entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation
on all matters submitted to a vote of the stockholders of the Corporation (except that in the election of directors he shall have the right to vote
such number of shares for as many persons as there are directors to be elected). At any meeting of stockholders at which the holders of such
capital stock are entitled to vote on any such transaction, the affirmative vote of a majority of the votes cast by the holders of the outstanding
shares of all such stock present in person or represented by proxy and entitled to vote shall be required to approve such transaction and a
majority of the shares entitled to vote as such meeting, represented in person or by proxy, shall constitute a quorum.
(3) No stockholder of the Corporation shall have any preemptive or other right to subscribe for any additional shares of stock, or for other
securities of any class, or for rights, warrants or options to purchase stock or for script, or for securities of any kind convertible into stock or
carrying stock purchase warrants or privileges, subject to rights (inclusive or exclusive) which may vest in holders of Preferred Stock under the
provision of any series of Preferred Stock fixed by the Board of Directors pursuant to the authority herein provided (whether now existing or
hereafter created).
(4) The Board of Directors may from time to time distribute to the stockholders in partial liquidation, out of stated capital or capital surplus of
the Corporation, a portion of its assets, in cash or property, subject to the limitations contained in Oklahoma law. The holders of Common
Stock shall be entitled to dividends only if, when and as the same shall be declared by the Board of Directors and my be permitted by
Oklahoma law.
ARTICLE VII
BOARD OF DIRECTORS
The number of directors of this Corporation shall be as specified in the Bylaws, and such number may
3

from time to time be increased or decreased under the Bylaws or any amendment, or change thereof, upon resolution of the Board of Directors.
The names and mailing addresses of the persons who are to serve as initial Directors of the Corporation until the first annual meeting of the
Stockholders or until their successors are elected and qualify are as follows:
NAME

ADDRESS

Robert D. Holsey, D.O.

Rt. 1, Box 145

Gracement, OK 73042

David Dare, Vice Chairman

Rt. 1, Box 142A

Gracement, OK 73042

Vicki Carpenter Clingenpeel

4625 NW 33rd Terrace

Oklahoma City, OK
73122

Carl Ennis

711 Stanton L. Young Blvd., Suite 101

Oklahoma City, OK 73104

Bryce O. Bliss, M.D.

3105N.W. 63rd
Oklahoma City, OK

73116

ARTICLE VIII
BYLAWS
The Bylaws for the governing of this Corporation may be adopted, amended, altered, repealed, or readopted by the Board of Directors at any
stated or special meeting of such Board. The powers of such Directors in this regard shall at all times be subject to the rights of the
Stockholders to alter or repeal such Bylaws at any annual meeting of Stockholders.
ARTICLE IX
REGULATION OF DIRECTORS AND STOCKHOLDERS
The following provisions are hereby adopted for the purpose of defining, and regulating the powers of the Corporation and of the Directors and
Stockholders.
(1) The Board of Directors of the Corporation is hereby empowered to withdraw to authorize the issuance from time to time of shares of its
stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class or classes, whether now or
hereafter authorized.
(2) The Board of Directors shall have power, if authorized by the Bylaws, to designate by resolution or resolutions adopted by a majority of the
whole Board of Directors, one or more committees, each committee to consist of two or more of the Directors of the corporation, which, to the
extent provided in said resolutions or in the Bylaws of the Corporation and permitted by the Oklahoma General Corporation Act, shall have and
may exercise any or all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to all instruments and documents which may require it.
(3) The Board of Directors shall have power to borrow or raise money, from time to time and without limit, and upon any terms, for any
corporate purposes; and, subject to the Oklahoma General Corporation Act, to authorize the creation, issue, assumption or guaranty of bonds,
notes or other evidences of indebtedness for moneys so borrowed, to include therein such provisions as to redeemability, convertibility or
otherwise, as the Board of Directors, in its sole discretion, may determine and to secure the payment of principal, interest or sinking fund in
respect thereof by mortgage upon, or the pledge of, or the conveyance or assignment in trust of,
4

the whole or any part of the properties, assets and goodwill of the Corporation then owned or thereafter acquired.
(4) No contract or other transaction of the Corporation with any other person, firm or corporation or in which the Corporation is interested,
shall be affected or invalidated by: (i) the fact that any one or more of the directors or officers of the Corporation is interested in or is a director
of or officer of another corporation; or (ii) the fact that any director of officer, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction. Each person who may become a director or officer of the Corporation is hereby relieved from any
liability that might otherwise arise by reason of his contracting with the Corporation for the benefit of himself or any firm or corporation in
which he may be in any way interested.
(5) The Corporation shall be entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes,
including all rights deriving from such share, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or
rights deriving from such shares, on the part of any other person including but without limiting the generality hereof, a purchaser, assignee or
transferee of such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or the person becomes the
registered holder of such shares, whether or not the corporation shall have either actual or constructive notice of the interest of such purchaser,
assignee, transferee or other person. The purchaser, assignee or transferee or any of the shares of the Corporation shall not be entitled: to
receive the shares of the Corporation shall not be entitled; to receive notice of the meetings of the shareholders; to vote as such meeting; to
examine a list of shareholders; to be paid dividends or other sums payable to shareholder; or to own, enjoy and exercise any other property or
rights deriving from such shares against the Corporation until such purchaser, assignee, or transferee has become the registered holder of such
shares.
The enumeration and definition of a particular power of the Board of Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any other section of the Certificate of Incorporation, or construed as or
deemed by inference or otherwise in any manner to exclude or limit any powers conferred upon the Board of Directors under the Laws of the
State of Oklahoma now or hereafter in force, as the same are in furtherance of and not in limitation or exclusion of the powers conferred by
law.
ARTICLE X
INDEMNIFICATION
Any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or in the right of the Corporation) by reason of the fact that he is or
was a director, officer, incorporator, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director,
officer, incorporator, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the Corporation to the full extent then permitted by law against expenses (including
attorneys' fees), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan), and amounts paid in
settlement incurred by him in connection with such action, suit, or proceeding; provided, however, that the Corporation shall not indemnify any
such person in relation to matters as to which he shall be adjudged in such action, suit or proceeding to be liable for gross negligence or willful
misconduct, or to have not acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the
Corporation. Such right of indemnification shall inure whether or not the claim asserted is based on matters which antedate the adoption of this
Article X. Such right of indemnification shall continue as to a person who has ceased to be a director, officer, incorporator, employee, or agent
and shall inure to the benefit of the heirs and personal representatives of such a person. The indemnification provided by this Article X shall not
be deemed exclusive of any other rights which may be provided now or in the future under any provisions currently in effect or hereafter
adopted by the Bylaws, by any agreement, by vote of Stockholders, by resolution of disinterested directors, by provision of law, or otherwise.
5

ARTICLE XI
EXCULPATORY PROVISIONS
No Director of the Corporation shall be liable to the Corporation or any of its Stockholders for monetary damages for breach of fiduciary duty
as a Director, provided that this provision does not eliminate the liability of the Director (i) for any breach of the Director's duty of loyalty to
the Corporation or its Stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under
Section 1053 of the Oklahoma General Corporation Act, or (iv) for any transaction from which the Director derived an improper personal
benefit. For purposes of the prior sentence, the term "damages" shall, to the extent permitted by law, include without limitation, any judgment,
fine, amount paid in settlement, penalty, punitive damages, excise or other tax assessed with respect to an employee benefit plan, or expense of
any nature (including, without limitation, counsel fees and disbursements). Each person who serves as a Director of the Corporation while this
Article XI is in effect shall be deemed to be doing so in reliance on the provisions of this Article XI, and neither the amendment or repeal of
this Article XI, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article XI, shall apply to or have any
effect on the liability or alleged liability of any Director or the Corporation for, arising out of, based upon, or in connection with any acts or
omissions of such Director occurring prior to such amendment, repeal, or adoption of an inconsistent provision. The provisions of this Article
XI are cumulative and shall be in addition to and independent of any and all other limitations on or eliminations of the liabilities of Directors of
the Corporation, as such, whether such limitations or eliminations arise under or are created by any law, rule, regulation, bylaw, agreement,
vote of Stockholders or disinterested Directors, or otherwise.
If the Oklahoma General Corporation Act is amended to further limit or eliminate liability of this Corporation's Directors for breach of
fiduciary duty, then a Director of this Corporation shall not be liable for any such breach to the fullest extent permitted by the Oklahoma
General Corporation Act as so amended. If the Oklahoma General Corporation Act is amended to increase or expand liability of the
Corporation's Directors for breach of fiduciary duty, no such amendment shall apply to or have any effect on the liability or alleged liability of
any Director of this Corporation for or with respect to any acts or omissions of such Director occurring prior to the time of such amendment or
otherwise adversely affect any right or protection of a Director of this Corporation existing at the time of such amendment.
ARTICLE XII
COMPROMISE OR ARRANGEMENT BY
CORPORATION WITH CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this
Corporation and its Stockholders or any class of them, any court of equitable jurisdiction within the State of Oklahoma, on the application in a
summary way of this Corporation or of any creditor or shareholder thereof or on the application of any receiver or receivers appointed for this
Corporation under the provisions of Section 1106 of the Oklahoma General Corporation Act or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under the provisions of Section 1100 of the Oklahoma General Corporation Act,
may order a meeting of the creditors or class of creditors, and/or of the Stockholders or class of Stockholders of this Corporation, as the case
may be, to be summoned in such manner as the court directs. If a majority in number representing three-fourths (3/4) in value of the creditors
or class of creditors, and/or of the Stockholders or class of Stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the compromise or
arrangement and the reorganization, if sanctioned by the court to which the application has been made, shall be binding on all the creditors or
class of creditors, and/or on all the Stockholders or class of Stockholders, of this Corporation, as the case may be, and also on this Corporation.
6

IN WITNESS WHEREOF, I have signed this Certificate of Incorporation this 19th day of January, 1995 and I acknowledge the same to be my
act.
/S/ROBERT D. HOLSEY
-----------------------------Dr. Robert D. Holsey
6000 NW 2nd, Suite 800
Oklahoma City, Oklahoma 73127
STATE OF OKLAHOMA

)
)
)

COUNTY OF OKLAHOMA

SS:

BEFORE ME, the undersigned, a Notary Public in and for said County and State, personally appeared the foregoing incorporator to me known
to be the identical person who executed the foregoing Certificate of Incorporation, and acknowledged to me that he executed the same as his
free and voluntary act and deed for the uses and purposes therein set forth, on this 19th day of January, 1995.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year first above written.

Notary Public
(SEAL)
Notary Public
My Commission Expires:
7

EXHIBIT 3.2
BYLAWS
OF
PD-Rx PHARMACEUTICALS, INC.
ARTICLE I.
Section 1.1 REGISTERED OFFICE. The registered office of 6000 N.W. Second Street Suite 800 (hereinafter referred to as the "Corporation")
shall be located in Oklahoma City, Oklahoma.
Section 1.2 OFFICES. The Corporation may establish or discontinue, from time to time, such other and places of business within or without the
State of Oklahoma as may be deemed proper for the conduct of the Corporation's business.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.1 ANNUAL MEETING. An annual meeting of shareholders for the purpose of electing directors and transacting such other business
as may come before it shall be held at such place, within or without the State of Oklahoma, on such date and at such time as shall be designated
by the Board of Directors. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding
business day.
Section 2.2 SPECIAL MEETINGS. Special meetings of the shareholders, unless otherwise prescribed by statute or by the Certificate of
Incorporation, shall be called by the President or Secretary at the request in writing of a majority of the directors or shareholders entitled to
vote. Such request shall state the purpose of the meeting of the shareholders shall be limited to the purpose stated in the notice.
Section 2.3 NOTICE OF MEETINGS. Written notice of each meeting of shareholders shall be giving to each shareholder of record entitled to
vote at the meeting at his/her address as it appears on the stock books of the Corporation. Notice of each meeting of shareholders shall state the
purpose or purposes for which the meeting is called, and the time and the place it is to be held, and shall be delivered or mailed not less than ten
(10) nor more than sixty (60) days before the day of the meeting.
Section 2.4 INSPECTORS. Expect as otherwise provided by law or by the Certificate of Incorporation, all votes by ballot at any meeting of the
shareholders shall be conducted by two inspectors who shall be appointed by the chairman of the meeting. The inspectors shall decide upon the
qualifications of voters, count the votes and declare the results.
Section 2.5 LIST OF SHAREHOLDERS ENTITLED TO VOTE. At least ten days before every meeting of shareholders a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of
share registered in the name of each shareholder, shall be prepared by or for the Secretary and shall be open to the examination of any
shareholder for any purpose germane to the meeting, during ordinary business hours, for a period of at lease ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, with place shall be specified in the notice of the meeting, or, it not so specified,
at the place where the meeting is to be held. Such list shall be available for inspection at the meeting.
Section 2.6 FIXING OF RECORD DATE. In order that the Corporation may determine to shareholders entitled to notice of or to vote at any
meeting of the shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change,
conversion or
1

exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is
fixed, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be close of business on the
day next preceding the day on which the notice is given or, if notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. The record date for determining shareholders entitled to express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall by the day on which the first written consent is expressed. The
record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholder shall
apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 2.7 QUORUM AND ADJOURNMENT. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws,
the presence in person or by proxy, of the holders of a majority of the shares of stock entitled to vote on every matter that is to be voted on
without regard to class or series shall constitute a quorum at all meetings of the shareholders. In the absence of a quorum, the holders of a
majority of such shares of stock present in person or by proxy may adjourn such meeting, from time to time, without notice other than
announcement at the meeting, until a quorum shall attend. At any such adjourned meeting at which a quorum may be present, any business may
be transacted with might have been transacted at the meeting as originally called; but only those shareholders entitled to vote at any
adjournment or adjournments thereof. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote.
Section 2.8 VOTING; PROXIES. Except as otherwise provided by law or the Certificate of Incorporation, and subject to the provisions of
Section 2.
(a) Each Shareholder shall at every meeting of the shareholders be entitled to one vote for each share of capital stock having voting rights held
by him/her.
(b) Each shareholder entitled to vote at a meeting of shareholders or to express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons to act for him/her by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(c) Each matter properly presented to any meeting shall decide by a majority of the votes cast on the matter.
(d) Upon demand of any shareholder, the election of directors and the vote on any other matter present to a meeting shall be by written ballot.
In a vote by ballot each ballot shall state the number of shares voted and the name of the shareholder of proxy voting.
Section 2.9 CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any action that may be taken at any annual or special meeting of
shareholders may be taken without a meeting, without a prior notice and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of such action
without a meeting by less than unanimous written consent shall be given to each shareholder who did not consent thereto in writing.
2

ARTICLE III.
DIRECTORS
Section 3.1 NUMBER AND TERM OF OFFICE. The business and affairs of the Corporation shall be managed by or under the direction of a
Board of Directors. The number of directors that shall constitute a whole Board may be fixed from time to time by resolution of the Board of
directors and shall consist of one or more members. Directors shall be elected at the annual meeting of shareholders to hold office until the next
annual meeting of shareholders and until their respective successors are elected and have qualified.
Section 3.2 PLACE OF MEETINGS. Meetings of the Board of Directors may be held at any place, within or without the State of Oklahoma,
from time to time designated by the Chairman of the Board or by the body or person calling such meeting.
Section 3.3 ANNUAL MEETINGS. A newly elected Board of Directors shall meet and organize as soon as practicable after each annual
meeting of shareholders took place, without notice of such meeting, provided a majority of the whole Board of Directors is present. If such a
majority is not present, such organizational meeting may be held at any other time or place which may be specified in a notice given in the
manner provided for special meetings of the Board of Directors, or in a waiver of notice thereof.
Section 3.4 REGULAR MEETINGS. Regular meeting of the Board of Directors shall be held at such times as may be determined by resolution
of the Board of Directors and not notice shall be required for any regular meeting. Except as otherwise provided by law, any business may be
transacted at any regular meeting of the Board of Directors.
Section 3.5 SPECIAL MEETINGS; NOTICE AND WAIVER OF NOTICE. Special meetings of the Board of Directors shall be called by the
Secretary on the request of the Chairman of the Board or the President, or on the request in writing signed by at lease two directors stating the
purpose or purposes of such meeting. Notice of any special meeting shall be in form approved by the Chairman of the Board or the President,
as the case may be, or if the meeting is approved by them. Notices of special meeting shall be mailed to each director, addressed to him/her at
his/her residence or usual place of business, not later than three days before the day on which the meeting is to be held, or shall be sent to
him/her at such place by telegraph, or be delivered personally or by telephone, or not later than forty-eight hours before the time of such
meeting. Notice of any meeting of the Board of Directors need not be given to any director if he/she shall sign a written waiver thereof either
before or after the time stated therein, or if he/she shall be present at the meeting and participate in the business transacted; and any meeting of
the Board of Directors shall be a legal meeting without notice thereof having been given, if all members shall be present. Unless otherwise
restricted by the Certificate of Incorporation, or by the terms of the notice thereof, any and all business may be transacted at any special
meeting.
Section 3.6 ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board
of Directors or of such committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or of such committee.
Section 3.7 PRESIDING OFFICER AND SECRETARY AT MEETINGS. Each meeting of the Board of Directors shall be presided over by
the Chairman of the Board of Directors, or in his/her absence by the President, of if neither is present by such member of the Board of
Directors as shall be chosen by the meeting. The Secretary, or in his/her absence an Assistant Secretary, shall act as secretary of the meeting, or
if no such officer is present, a secretary of the meeting shall be designated by the person presiding over the meeting.
Section 3.8 QUORUM. A majority of the total number of Directors shall constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of those present (or if only one present, then that one) may adjourn the meeting, without notice other than announcement at
the meeting, until such time as a quorum is present. Except as otherwise required by the Certificate of Incorporation or the Bylaws, the vote of
the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
3

Section 3.9 MEETING BY TELEPHONE. Members of the Board of Directors or of any committee thereof may participate in a meeting of the
Board of Directors or of such committee by means of conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.
Section 3.10 COMPENSATION. Directors shall not receive any stated salary for their services as directors or as members of committees, but
by resolution of the Board of Directors a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.
Section 3.11 RESIGNATIONS. Any director, member of a committee or other officer may resign at any time. Such resignation shall be make
be giving written notice thereof to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation, and
shall be effective at the time of its receipt by the Chairman of the Board, the President or the Secretary, unless a date certain is specified for it to
take affect. Acceptance of any resignation shall not be necessary to make it effective.
Section 3.12 REMOVAL OF DIRECTORS. Except as otherwise provided by law, any director may be removed, with or without cause, at any
time, by affirmative vote of the holders of record of a majority of the outstanding shares of stock entitled to vote at an election of directors at a
special meeting of the shareholders called for that purpose. The vacancy thus created may be filled by affirmative vote of the majority of
shareholders at such meeting, or at any subsequent meeting.
Section 3.13 FILLING OF VACANCIES NOT CAUSED BY REMOVAL. Except as otherwise provided by law, in case of any increase in the
number of directors, or of any vacancy created by death or resignation, at the additional director or directors may be elected, or, as the case may
be, the vacancy or vacancies may be filled, either (a) by the Board of Directors at any meeting by affirmative vote of a majority of the
remaining directors though the remaining directors be less than a quorum, or (b) by the holders of voting stock of the Corporation either at an
annual meeting of shareholders or at a special meeting of such holders called for that purpose. The directors so chosen shall hold office until
the next annual meeting of shareholders and until their successors are elected and qualify.
ARTICLE IV.
COMMITTEES
The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each such
committee to consist of one or more directors of the Corporation. In the absence or disqualifications of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting, whether or not he/she or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in such resolution or resolutions, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have such power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to the shareholders the sale, lease, or exchange of all or
substantially all of the Corporation's property and assets, recommending to the shareholders a dissolution of the Corporation or a revocation of
a dissolution, or amending the Bylaws; and, unless the resolution expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
ARTICLE V.
THE OFFICERS
Section 5.1 DESIGNATION. The Corporation shall have such officers with such titles and duties as set forth in these Bylaws or in a resolution
of the Board of Directors adopted on or after the effective date of these Bylaws which is not inconsistent with these Bylaws and as may be
necessary to enable the Corporation to sign
4

instruments and stock certificates as required by law.

Section 5.2 ELECTION; QUALIFICATIONS. The officers of the Corporation shall, at a minimum, consist of a President and a Secretary, each
of whom shall be elected by the Board of Directors. The Board of Directors also may elect a Chairman of the Board, one or more Vice
Presidents, a Treasurer, one or more Assistant Secretaries and/or Treasurers, and such officers and agents as it may deem advisable. None of
the officers of the Corporation need be directors. Two or more offices may be held by the same person.
Section 5.3 TERM OF OFFICE. Officers shall be chosen in such manner and shall hold their offices for such term as determined by the Board
of Directors. Each officer shall hold office from the time of his/her election and qualifications to the time at which his/her successor is elected
and qualified, or until his/her earlier resignation, removal or death.
Section 5.4 RESIGNATION. Any officer of the Corporation may resign at any time by giving written notice of such resignation to the Board of
Directors, the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if no time be
specified, upon receipt thereof by the Board of Directors or one of the above-named officers. Unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5.5 REMOVAL. Any officer may be removed at any time, with or without cause, by the vote of a majority of the whole Board of
Directors.
Section 5.6 VACANCIES. Any vacancy however caused in any office of the Corporation may be filled by the Board of Directors.
Section 5.7 COMPENSATION. The compensation of each officer shall be such as the Board of Directors may from time to time determine.
Section 5.8 THE CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of
the Board of Directors and shall have and perform such duties as shall be determined from time to time by the Board of Directors.
Section 5.9 THE PRESIDENT. The President shall be the chief executive officer of the Corporation and, subject to the control of the Board of
Directors, shall have general and active charge, control and supervision of all of the business and affairs of the Corporation. The President shall
report to the Board of Directors, and shall direct the implementation of the decisions, policies and procedures established by the Board of
Directors. He/She shall have general authority to execute bonds, deeds and contracts in the name and on behalf of the Corporation, and in
general to exercise all the powers generally appertaining to the chief executive officer of a corporation.
Section 5.10 VICE PRESIDENT. Each Vice President shall have such powers and shall perform such duties as shall be assigned to him/her by
the Board of Directors. During the absence of the President or his/her inability to act, the Vice President, or if there shall be more than one Vice
President, subject to the direction of the Board of Directors.
Section 5.11 SECRETARY. The Secretary shall keep the minutes of all meetings of shareholders and of the Board of Directors in a book to be
kept for that purpose. He/She shall be custodian of the corporate seal and, when authorized by the Board of Directors, shall affix the same to
any instruments requiring it, and when so affixed, it shall be attested by his/her signature or by the signature of any assistant secretary. He/She
shall exercise the powers and shall perform the duties incident to the office of Secretary, and those that might otherwise from time to time be
assigned to him/her, subject to the direction of the Board of Directors.
Section 5.12 TREASURE. The Treasure shall have custody of all corporate funds and securities, and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. He/She shall deposit all moneys and other valuables in the name and to the
credit of the Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors,
5

or the President, making proper vouchers for such disbursements. He/She shall render to the President and Board of Directors at the regular
meetings of the Board of Directors, or whenever they may request it, an account of all his/her transactions as Treasure and of the financial
condition of the Corporation. If required by the Board of Directors, he/she shall give the Corporation a bond for faithful discharge of his/her
duties in such amount and with such surety as the Board of Directors shall prescribe.
Section 5.13 OTHER OFFICERS. Each other officer of the Corporation shall have such powers and shall perform such duties as shall be
assigned to him/her by the Board of Directors.
ARTICLE VI.
CERTIFICATES OF STOCK,
TRANSFERS OF STOCK AND
REGISTERED SHAREHOLDERS
Section 6.1 STOCK CERTIFICATES. The interest of each holder of stock of the Corporation shall be evidenced by a certificate or certificates
signed by, or in the name of the Corporation by the Chairman of the Board of Directors, or the President or the Vice President, and by the
Treasure or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation certifying the number of shares owned by
him/her in the Corporation. Any of or all of the signatures on the certificate may be facsimile. If any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon certificate shall have ceased to be such officer, transfer agent or registrar before such
certificate is issue, the certificate may be issued by the Corporation with the same effect as if he/she were such officer, transfer agent or
registrar at the date of issuance.
Section 6.2 CLASSES/SERIES OF STOCK. The Corporation may issue one or more classes of stock or one or more series of stock within any
class thereof, as stated and expressed in the Certificate of incorporation or of any amendment thereto, any or all of which classes may be stock
with par value or stock without par value. The powers, designations, preferences and relative, participating, optional or other special rights of
each class of stock or series thereof the qualifications, limitations or restrictions of such preferences and/or rights shall be set froth in full or
summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, the
Oklahoma General Corporation Act, in lieu of the foregoing requirements, there may be set forth in the face or back of the Corporation will
furnish without charge to each shareholder who so requests the powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Section 6.3 TRANSFER OF STOCK. Subjected to the transfer restrictions permitted by Section 1005 of Title 18 of the Oklahoma Statutes and
to stop transfer orders directed in good faith by the Corporation to any transfer agent to prevent possible violations of federal or state securities
laws, rules or regulations, the shares of stock of the Corporation shall be transferable upon its books by the holders thereof or by their duly
authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or to such other persons as the directors may designate, by who they
shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.
Section 6.4 HOLDERS OF RECORDS. Prior to due presentment for registration of transfer, the Corporation may treat the holder of record of a
share of its stock as the complete owner thereof exclusively entitled to vote, to receive notifications and otherwise entitled to vote, to receive
notifications and otherwise entitled to all the rights and powers of a complete owner thereof, notwithstanding notice of the contrary.
Section 6.5 LOST, STOLEN, DESTROYED, OR MUTILATED CERTIFICATES. A new certificate of stock may be issued to replace a
certificate theretofore issued by the Corporation, alleged to have been lost, stolen, destroyed or mutilated, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate or his/her legal representatives, to give the sum as they may direct, not
exceeding double the value of the stock, to indemnify the Corporation against it on account of the alleged loss of such new certificate.
Section 6.6 DIVIDENDS. Subject to the provisions of the Certificate of Incorporation the directors may, out of funds legally available
therefore at any regular or special meeting, declare dividends upon the capital stock of the Corporation as and when they seem expedient.
Before declaring any dividends there may be set
6

apart out of any funds of the Corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem
proper working capital to serve as a reserve fund to meet contingencies or as equalizing dividends or for such other purposes as the directors
shall deem conducive to the interest of the Corporation.
ARTICLE VII.
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
Section 7.1 INDEMNIFICATION. To the extent and in the manner permitted by the laws of the State of Oklahoma and specifically as is
permitted under Section 1031 of Title 18 of the Oklahoma Statutes, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation, by reason of the fact that such person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the Corporation as director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement.
Section 7.2 OTHER INDEMNIFICATION. The indemnification herein provided shall not limit the Corporation from providing any other
indemnification permitted by law nor shall it be deemed exclusive of any other rights to which those seeking indemnification may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his/her official capacity and as to
action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 7.3 INSURANCE. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him/her and incurred by him/her in any
such capacity, or arising out of his/her status as such, whether or not the Corporation would have the power to indemnify him/her against such
liability under these provisions.
Section 7.4 OTHER ENTITIES. For the purposes of this section, references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent) absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors, officers, and employees or agents so that any person who is a
director, officer, and employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a
director, officer, and employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this section with respect to the resulting or surviving corporation as he/she would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1 FISCAL YEAR. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.
Section 8.2 CORPORATE SEAL. The corporate seal shall be in such form as the Board of Directors may from time to time prescribe and the
same may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Section 8.3 REFERENCES. Whenever in the Bylaws reference is made to an Article or Section number, such reference is to the number of an
Article or
Section of the Bylaws. Whenever in the Bylaws reference is made to the Bylaws, such reference is to these Bylaws of the Corporation, as the
same may from time
7

to time be amended, and whenever reference is amended to the Certificate of Incorporation, such reference is to the Certificate of Incorporation
of the Corporation, as the same may from time to time be amended.
ARTICLE IX.
AMENDMENT OF BYLAWS
These Bylaws may be made, altered, or repealed at any meeting of shareholders by the affirmative vote of a majority of the stock issued and
outstanding or entitled to vote thereat; or at any meeting of the Board of Directors by a majority vote of the whole Board.
APPROVAL OF DIRECTORS
The foregoing Bylaws, after being read section by section, were adopted by the Directors of PD-Rx Pharmaceuticals, Inc. on the 20th day of
January, 1995.
/S/ROBERT D. HOLSEY
-----------------------Chairman

/S/ VICKI CLINGENPEEL

----------------------Secretary

EXHIBIT 4.1
PD-RX PHARMACEUTICALS, INC.
CERTIFICATE OF DESIGNATIONS
OF
CLASS A 13.25% CUMULATIVE CONVERTIBLE PREFERRED STOCK
Pursuant to Section 1032 of the
General Corporation Act of the State of Oklahoma
PD-Rx Pharmaceuticals, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Act of the State of
Oklahoma (the "Act"), does hereby certify that, pursuant to (i) the authority conferred upon the Board of Directors of the Corporation by its
Certificate of Incorporation, and (ii) the provisions of Section 1032 of the Act, the Board of Directors of the corporation, on January 20th,
1995, duly approved and adopted the following resolutions:
RESOLVED, that pursuant to the authority vested in the board of Directors by its Certificate of Incorporation (as the same may be further
amended from time to time, the "Certificate of Incorporation"), the Board of Directors does hereby create, authorized and provide for the issue
of a series of preferred stock of the Corporation, par value $.10 per share, designated as Class A 13.25% Cumulative Convertible Preferred
Stock, having the designations, preferences, relative, participating, optional and other special rights and the qualifications, limitations and
restrictions thereof that are set forth in the Certificate of Incorporation and in this Resolution as follows:
1. DESIGNATION AND NUMBER. The distinctive designation of such series is "Class A 13.25% Cumulative Convertible Preferred
Stock" ("Class A Preferred Stock"), and such series shall consist initially of 500,000 shares.
2. RANK. Except as otherwise provided herein or in the Certificate of Incorporation the Class A Preferred Stock shall, with respect to rights
upon liquidation, dissolution or winding up of the affairs of the Corporation and with respect to dividend and redemption rights, rank equal to
the Corporation's Class C 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Class C Preferred Stock") and rank
senior to the Corporation's Common Stock, par value $.01 per share ("Common Stock").
3. DIVIDENDS.
(a) From the date of such shares issuance, holders of outstanding shares of Class A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor, cash dividends at a rate per annum equal to 13.25% of the
Liquidation Preference (as defined in Section 4 hereof) of such shares, payable in arrears on March 1, June 1, September 1 and December 1 of
each year (each such date is hereinafter referred to as a "Dividend Payment Date"), with the first such payment to be made on March 1, 1995;
provided, however, that if any such date is a Saturday, Sunday or legal holiday in the State of Oklahoma, then such dividend shall be payable
on the first immediately succeeding day which is not a Saturday, Sunday or legal holiday in the State of Oklahoma (a "business day"). Each
such quarter dividend shall be fully cumulative and shall accrue commencing immediately, whether or not declared and whether or not the
Corporation shall have funds legally available for the payment of such dividends, without interest. Dividends shall accumulate on a daily basis
without regard to the occurrence of a Dividend Payment Date or the declaration of any dividend.
(b) Dividends on Class A Preferred Stock shall be paid to holders of record as they appear on the stock register of the Corporation at the close
of business five (5) business days prior to the Dividend Payment Date. All dividends paid with respect to outstanding shares of Class A
Preferred Stock shall be paid pro
1

rata to such holders of record based upon the Liquidation Preference of such outstanding shares. If the funds of the Corporation legally
available for the payment of dividends shall be insufficient for the payment of the entire amount of the dividends payable on any Dividend
Payment Date with respect to the outstanding shares of Class A Preferred Stock, the amount of such legally available funds shall be allocated
for the payment of dividends with respect to the outstanding shares of Class A Preferred Stock pro rata based upon the Liquidation Preference
of such outstanding shares.
(c) Dividends on the Class A Preferred Stock shall be entitled to receive the dividends provided for in section 3(a) hereof in preference to and
in priority over all dividends upon the Common Stock.
4. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, the holders of
the issued and outstanding Class A Preferred Stock shall be entitled to receive for each share of Class A Preferred Stock, before any
distribution of the assets of the Corporation shall be made to the holders of the Common Stock an amount in cash equal to the sum of (i) $1.00
for each outstanding share of Class A Preferred Stock held by such holder (such per share amount is referred to herein as the "Liquidation
Preference") plus (ii) an amount in cash equal to the sum of all accumulated and unpaid dividends on each such share to the date fixed for such
distribution. A consolidation or merger of the Corporation, a share exchange, a sale, lease, exchange or transfer of all or substantially all of its
assets as an entirety, or any purchase or redemption of stock of the Corporation of any class, shall not be regarded as a "liquidation, dissolution,
or winding-up of the affairs of the Corporation" within the meaning of this Section 4. If the assets of the Corporation are insufficient to permit
payment in full to the holders of the Class A Preferred Stock of the amount thus distributable, then the entire assets of the Corporation shall be
distributed ratably among the holders of the Class A Preferred Stock. After such payment shall have been made in full to the holders of the
Class A Preferred Stock or funds necessary for such payment shall have been set aside by the Corporation in trust for the account holders of the
Class A Preferred Stock so as to be available for such payment, holders of the Class A Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation and shall have no further rights, and the remaining assets available for
distribution shall be distributed ratably among the holders of the Common Stock.
5. VOTING RIGHTS. Holders of Class A Preferred Stock shall not be entitled to any voting rights, other than voting rights expressly provided
by the applicable Oklahoma law or in the Certificate of Incorporation.
6. CONVERSION PRIVILEGE. Class A Preferred Stock shall be convertible into Common Stock as hereinafter provided and, when so
converted, shall be cancelled and retired and shall not be reissued as such:
(a) Any holder of the Class A Preferred Stock may at any time or from time to time, convert such stock into the Common Stock of the
Corporation on presentation and surrender to the Corporation of the Certificates of the Class A Preferred Stock to be so converted.
(b) Each share of Class A Preferred Stock shall be converted into Common Stock at the conversion rate (the "Conversion Rate") of one share of
Common Stock for each one and one-half shares of Class A Preferred Stock; and
(c) To convert Preferred Stock into Common Stock, the holder thereof shall on any business day surrender to the Corporation the certificate or
certificates representing such shares, duly endorsed to the Corporation or in blank, and give written notice to the Corporation at said office of
the number of said shares which such holder elects to convert, along with a cash payment for the costs of issuing the new certificates. Class A
Preferred Stock shall be deemed to have been converted immediately prior to the close of business on the day of such surrender for conversion
and payment of funds to effect the conversion, and the person or persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the
date of any conversion, the Corporation shall issue and deliver a certificate or certificates representing the number of shares of Common Stock
issuable upon such conversion. In case of the conversion of only a part of the shares of any holder of Class A Preferred Stock, the Corporation
shall also issue and deliver to such holder a new certificate of Preferred Stock representing the number of shares of such Class A Preferred
Stock not converted by such holder.
2

7. REDEMPTION.
(a) The Corporation may, at its sole option, upon the terms and subject to the conditions set forth herein (including, without limitation, the right
to convert option set forth in section 6 hereof), redeem for cash, at any time and from time to time, all or part of the outstanding shares of Class
A Preferred Stock, at a redemption price of $1.05 per share, plus, in each case, a cash payment of an amount equal to the sum of all
accumulated and unpaid dividends on such shares to the date fixed for redemption by the Board of Directors (a "Redemption Date").
(b) With respect to any redemption of outstanding shares of Class A Preferred Stock, the aggregate number of shares to be redeemed shall be
determined by the Board of Directors, but shall be not less than 20% of the Class A Preferred Stock outstanding at that time. In the case of a
redemption of any part of the Class A Preferred Stock, such redemption will be made pro rata among all holders of record of shares of Class A
Preferred Stock outstanding on the Redemption Date.
(c) If the Corporation shall elect to redeem shares of Class A Preferred Stock pursuant to this Section 7, the Corporation will give notice of
such redemption by first class mail or expedited delivery service, postage prepaid, mailed not less than 40 nor more than 60 days prior to the
applicable Redemption Date, to each holder of record of shares of Class A Preferred Stock at such holder's address appearing on the stock
register of the Corporation; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the
proceedings for the redemption of any shares of Class A Preferred Stock to be redeemed, except as to the holder to whom the Corporation
failed to give such notice or except as to the holder whose notice was defective. Each such notice or redemption shall state: (i) the Redemption
Date; (ii) the total number of shares of Class A Preferred Stock to be redeemed; (iii) the redemption price per share;
(iv) the place, time and manner in which certificates for such shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed shall cease to accumulate upon such Redemption Date.
(d) If the Corporation redeems such shares of Class A Preferred Stock, prior to January 25, 1994, holders of Class A Preferred Stock shall have
30 days from date of receipt of redemption notice by which to notify the Corporation of his election to exercise the conversion rights set forth
in
Section 6.
8. CHANGES IN TERMS OF CLASS A PREFERRED STOCK. The terms of the Class A Preferred Stock may not be amended, altered, or
repealed.
9. ADJUSTMENT OF CONVERSION RATE. The Conversion Rate shall be subject to the following adjustments:
(a) If the Corporation shall at any time pay a dividend or distribution on all outstanding shares of Common Stock in shares of Common Stock,
subdivide all of the outstanding shares of Common Stock into a larger number of shares or combine all of the outstanding shares of Common
Stock into a smaller number of shares, the Conversion Rate in effect immediately prior to the record date for any such stock dividend or
distribution or the effective date of any such other event shall be proportionately adjusted so the holder of each share of Class A Preferred
Stock shall thereafter be entitled to receive upon the conversion of such shares the aggregate number of shares of Common Stock that such
holder would have been entitled to receive after the happening of any of the events described above had such shares of Class A Preferred Stock
been converted immediately prior to the close of business on such record date or effective date. Such adjustments shall be made successively
whenever any event described above shall occur. The adjustments herein provided for shall become effective immediately following the record
date for any such stock dividend or distribution or the effective date of any such other event. An adjustment made pursuant to this section 9(a)
shall become effective retroactively to the record date in the case of such stock dividend or distribution and shall become effective on the
effective date in the case of such subdivision or combination.
(b) In the event of any capital reorganization of the Corporation or any reclassification or similar change of outstanding shares of Common
Stock (other than as set forth in section 9(a) above), or in the event of the consolidation or merger of the Corporation with or into another
corporation or other entity (other than a merger which does not result in any reclassification, conversion, exchange or redemption of
outstanding shares of Common Stock), each share of Class A Preferred Stock shall, after such capital reorganization, reclassification, change,
consolidation or merger be convertible only into the number of shares of stock or other
3

securities or property, including cash, to which a holder of the number of shares of Common Stock deliverable upon conversion of such share
of Class A Preferred Stock would have been entitled upon such capital reorganization, reclassification, change, consolidation or merger had
such share of Class A Preferred Stock been converted immediately prior to the effective date of such event; and in any case, appropriate
adjustments (as determined by the Board of Director), shall be made in the application of the provision herein set forth with respect to the rights
and interests thereafter of the holders of the share of the Class A Preferred Stock to the end that the provision set forth herein (including
provisions with respect to changes in and other adjustments of the Conversion Rate) shall thereafter be applicable, so nearly as may reasonable
be, in relation to any shares of stock or other securities thereafter deliverable upon the conversion of shares of the Class A Preferred Stock.
(c) Whenever the Conversion Rate or terms of conversion are adjusted as herein provided, the Corporation shall forthwith file with the transfer
agent for the Class A Preferred Stock a certificate signed by the chief financial officer of the Corporation, stating the adjusted Conversion Rate
determined as provide herein. Such certificate shall show in reasonable detail the method of calculation of such adjustment and the facts
requiring such adjustment. Whenever the Conversion Rate is adjusted, the Corporation will cause a notice stating the adjustment and the
Conversion Rate to be sent by first class mail, postage prepaid, to each holder of record of shares of Class A Preferred Stock at its address
appearing on the stock register of the Corporation.
10. NO IMPLIED LIMITATION. Except as otherwise provided by express provision of the Certificate of Designation, nothing herein shall
limit, by inference or otherwise, the discretionary right of the Board of Directors to classify and reclassify and issue any shares of Preferred
Stock and to fix or alter all terms thereof to the full extent provided in the Certificate of Incorporation of the Corporation.
11. GENERAL PROVISIONS. In addition to the above provisions with respect to the Class A Preferred Stock, such Class A Preferred Stock
shall be subject to, and entitled to the benefits of, the provisions set forth in the Corporation's Certificate of Incorporation, as may be amended,
with respect to Preferred Stock generally.
12. NOTICES. All notices required or permitted to be given by the Corporation with respect to the Class A Preferred Stock shall be in writing,
and if delivered by first class United States Mail, postage prepaid, to the holders of the Class A Preferred Stock, at their last addresses as they
shall appear upon the books of the Corporation, such notice shall be conclusively presumed to have been duly given, whether or not the
shareholder actually receives such notice; provided, however, that failure to duly give such notice by mail, or any defect in such notice, to the
holders of any stock designated for redemption, shall not affect the validity of the proceeding for the redemption of any other shares of Class A
Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations of Class A Cumulative Convertible 13.25% Preferred
Stock to be duly executed by its President and attested to by its Secretary, dated as of 20th of January, 1995.
ATTEST:

PD-Rx Pharmaceuticals, Inc.

-------------------------------Name: Vicki Clingenpeel

Title: Secretary

------------------------------Name: Dr. Robert D. Holsey, D.O.

Title: President

EXHIBIT 4.2
PD-RX PHARMACEUTICALS, INC.
CERTIFICATE OF DESIGNATIONS
OF
CLASS C 13.25% CUMULATIVE CONVERTIBLE PREFERRED STOCK
Pursuant to Section 1032 of the
General Corporation Act of the State of Oklahoma
PD-Rx Pharmaceuticals, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Act of the State of
Oklahoma (the "Act"), does hereby certify that, pursuant to (i) the authority conferred upon the Board of Directors of the Corporation by its
Certificate of Incorporation, and (ii) the provisions of Section 1032 of the Act, the Board of Directors of the corporation, on January 20th,
1995, duly approved and adopted the following resolutions:
RESOLVED, that pursuant to the authority vested in the board of Directors by its Certificate of Incorporation (as the same may be further
amended from time to time, the "Certificate of Incorporation"), the Board of Directors does hereby create, authorized and provide for the issue
of a series of preferred stock of the Corporation, par value $.10 per share, designated as Class C 13.25% Cumulative Convertible Preferred
Stock, having the designations, preferences, relative, participating, optional and other special rights and the qualifications, limitations and
restrictions thereof that are set forth in the Certificate of Incorporation and in this Resolution as follows:
1. DESIGNATION AND NUMBER. The distinctive designation of such series is "Class C 13.25% Cumulative Convertible Preferred
Stock" ("Class C Preferred Stock"), and such series shall consist initially of 500,000 shares.
2. RANK. Except as otherwise provided herein or in the Certificate of Incorporation the Class C Preferred Stock shall, with respect to rights
upon liquidation, dissolution or winding up of the affairs of the Corporation and with respect to dividend and redemption rights, rank equal to
the Corporation's Class A 13.25% Cumulative Convertible Preferred Stock, par value $.10 per share ("Class A Preferred Stock") and rank
senior to the Corporation's Common Stock, par value $.01 per share ("Common Stock").
3. DIVIDENDS.
(a) From the date of such shares issuance, holders of outstanding shares of Class C Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor, cash dividends at a rate per annum equal to 13.25% of the
Liquidation Preference (as defined in Section 4 hereof) of such shares, payable in arrears on the first day of each month (each such date is
hereinafter referred to as a "Dividend Payment Date"); provided, however, that if any such date is a Saturday, Sunday or legal holiday in the
State of Oklahoma, then such dividend shall be payable on the first immediately succeeding day which is not a Saturday, Sunday or legal
holiday in the State of Oklahoma (a "business day"). Each such monthly dividend shall be fully cumulative and shall accrue commencing
immediately, whether or not declared and whether or not the Corporation shall have funds legally available for the payment of such dividends,
without interest. Dividends shall accumulate on a daily basis without regard to the occurrence of a Dividend Payment Date or the declaration of
any dividend.
(b) Dividends on Class C Preferred Stock shall be paid to holders of record as they appear on the stock register of the Corporation at the close
of business one (1) week prior to the Dividend Payment Date. All dividends paid with respect to outstanding shares of Class C Preferred Stock
shall be paid pro rata to such holders of record based upon the Liquidation Preference of such outstanding shares. If the funds of the
Corporation legally available for the payment of dividends shall be insufficient for the payment of the entire amount of the dividends payable
on any Dividend Payment Date with respect to the outstanding shares of Class C Preferred Stock, the amount of such legally available funds
shall be allocated for the payment of
1

dividends with respect to the outstanding shares of Class C Preferred Stock pro rata based upon the Liquidation Preference of such outstanding
shares.
(c) Dividends on the Class C Preferred Stock shall be entitled to receive the dividends provided for in section 3(a) hereof in preference to and
in priority over all dividends upon the Common Stock.
4. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, the holders of
the issued and outstanding Class C Preferred Stock shall be entitled to receive for each share of Class C Preferred Stock, before any distribution
of the assets of the Corporation shall be made to the holders of the Common Stock an amount in cash equal to the sum of (i) $1.00 for each
outstanding share of Class C Preferred Stock held by such holder (such per share amount is referred to herein as the "Liquidation Preference")
plus (ii) an amount in cash equal to the sum of all accumulated and unpaid dividends on each such share to the date fixed for such distribution.
A consolidation or merger of the Corporation, a share exchange, a sale, lease, exchange or transfer of all or substantially all of its assets as an
entirety, or any purchase or redemption of stock of the Corporation of any class, shall not be regarded as a "liquidation, dissolution, or windingup of the affairs of the Corporation" within the meaning of this Section 4. If the assets of the Corporation are insufficient to permit payment in
full to the holders of the Class C Preferred Stock of the amount thus distributable, then the entire assets of the Corporation shall be distributed
ratably among the holders of the Class C Preferred Stock. After such payment shall have been made in full to the holders of the Class C
Preferred Stock or funds necessary for such payment shall have been set aside by the Corporation in trust for the account holders of the Class C
Preferred Stock so as to be available for such payment, holders of the Class C Preferred Stock shall be entitled to no further participation in the
distribution of the assets of the Corporation and shall have no further rights, and the remaining assets available for distribution shall be
distributed ratably among the holders of the Common Stock.
5. VOTING RIGHTS. Holders of Class C Preferred Stock shall not be entitled to any voting rights, other than voting rights expressly provided
herein or by the applicable Oklahoma law. Holders of Class C Preferred Stock will not have the right to vote towards the merger or
consolidation of the Corporation provided the surviving or successor company assumes all the obligations of the Class C Preferred Stock;
provided, however a vote of 51% of the then outstanding shares of Class C Preferred Stock is required to (i) amend, alter or repeal the
preferences or rights of the holders of the Class C Preferred Stock in a manner which adversely affects their rights, (ii) create a Preferred Stock
which ranks senior to the Class A Preferred Stock or Class C Preferred Stock, or (iii) create a Preferred Stock ranking on a parity with the Class
A Preferred Stock or Class C Preferred Stock as to liquidation rights or dividends unless the consideration received by the Corporation upon
the stock's issuance (after payment of all expenses including without limitation underwriting commissions) is equal to or greater than 100% of
the liquidation preference of such stock.
6. CONVERSION PRIVILEGE. Class C Preferred Stock shall be convertible into Common Stock as hereinafter provided and, when so
converted, shall be cancelled and retired and shall not be reissued as such:
(a) Any holder of the Class C Preferred Stock may at any time or from time to time prior to January 25, 1995, convert such stock into the
Common Stock of the Corporation on presentation and surrender to the Corporation of the certificates of the Class C Preferred Stock to be so
converted. In no event can Class C Preferred Stock be converted into Common Stock after January 25, 1995. All shares of Common Stock
issued upon conversion shall bear a restrictive legend against the public sale or transfer without an effective registration statement or other
applicable exemption from the appropriate security laws.
(b) Each share of Class C Preferred Stock shall be converted into Common Stock at the conversion rate (the "Conversion Rate") calculated as
follows:
---------------------------Years Since
Class C Preferred Stock
Was Initially Issued
---------------------------1
---------------------------2
----------------------------

------------------------------------------------Conversion Ratio of Class C Preferred Stock to

Common Stock
------------------------------------------------1.5 to 1
------------------------------------------------2 to 1
-------------------------------------------------

3
---------------------------4
---------------------------5
----------------------------

3 to 1
------------------------------------------------4 to 1
------------------------------------------------5 to 1
-------------------------------------------------

(c) To convert Class C Preferred Stock into Common Stock, the holder thereof shall on any business day surrender to the Corporation the
certificate or certificates representing such shares, duly endorsed to the Corporation or in blank, and give written notice to the Corporation at
said office of the number of said shares which such holder elects to convert along with a cash payment for the costs of issuing the new
certificates. Class C Preferred Stock shall be deemed to have been converted immediately prior to the close of business on the day of such
surrender for conversion, and the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the date of any conversion,
the Corporation shall issue and deliver a certificate or certificates representing the number of shares of Common Stock issuable upon such
conversion. In case of the conversion of only a part of the shares of any holder of Class C Preferred Stock, the Corporation shall also issue and
deliver to such holder a new certificate of Class C Preferred Stock representing the number of shares of such Class C Preferred Stock not
converted by such holder.
7. REDEMPTION.
(a) The Corporation may, at its sole option, upon the terms and subject to the conditions set forth herein (including, without limitation, the right
to convert option set forth in section 6 hereof), redeem for cash, at any time and from time to time, all or part of the outstanding shares of Class
C Preferred Stock, at the a redemption price of $1.25 per share, plus, in each case, a cash payment of an amount equal to the sum of all
accumulated and unpaid dividends on such shares to the date fixed for redemption by the Board of Directors (a "Redemption Date"); provided,
however, in no event shall redemption occur if there are outstanding and unpaid cumulative dividends on Class C Preferred Stock.
(b) With respect to any redemption of outstanding shares of Class C Preferred Stock, the aggregate number of shares to be redeemed shall be
determined by the Board of Directors, but shall be not less than 20% of the Class C Preferred Stock outstanding at that time. In the case of a
redemption of any part of the Class C Preferred Stock, such redemption will be made pro rata among all holders of record of shares of Class C
Preferred Stock outstanding on the Redemption Date.
(c) If the Corporation shall elect to redeem shares of Class C Preferred Stock pursuant to this Section 7, the Corporation will give notice of
such redemption by first class mail or expedited delivery service, postage prepaid, mailed not less than 90 nor more than 120 days prior to the
applicable Redemption Date, to each holder of record of shares of Class C Preferred Stock at such holder's address appearing on the stock
register of the Corporation; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the
proceedings for the redemption of any shares of Class C Preferred Stock to be redeemed, except as to the holder to whom the Corporation
failed to give such notice or except as to the holder whose notice was defective. Each such notice or redemption shall state: (i) the Redemption
Date; (ii) the total number of shares of Class C Preferred Stock to be redeemed;
(iii) the redemption price per share; (iv) the place, time and manner in which certificates for such shares are to be surrendered for payment of
the redemption price; and (v) that dividends on the shares to be redeemed shall cease to accumulate upon such Redemption Date.
(d) If the Corporation redeems such shares of Class C Preferred Stock, prior to January 25, 1995, holders of Class C Preferred Stock shall have
at least 30 days and no more than 90 days from the Redemption Date by which to notify the Corporation of his election to exercise the
conversion rights set forth in Section 6. Such conversion rights on redeemed shares will expire at the close of business on the seventh day
preceding the Redemption Date, provided, there is no default in the payment of the redemption price.
(e) From and after the later of (i) the Redemption Date or
(ii) 30 days from the date the Corporation gave notice of Redemption Date, no shares of Class C Preferred Stock subject to redemption shall be
entitled to any further accrual of any dividends pursuant to Section 3 hereof or to the conversion provisions
3

set forth in Section 4 hereof.

8. CHANGES IN TERMS OF CLASS C PREFERRED STOCK. The terms of the Class C Preferred Stock may not be amended, altered, or
repealed.
9. ADJUSTMENT OF CONVERSION RATE. The Conversion Rate shall be subject to the following adjustments:
(a) If the Corporation shall at any time pay a dividend or distribution on all outstanding shares of Common Stock in shares of Common Stock,
subdivide all of the outstanding shares of Common Stock into a larger number of shares or combine all of the outstanding shares of Common
Stock into a smaller number of shares, the Conversion Rate in effect immediately prior to the record date for any such stock dividend or
distribution or the effective date of any such other event shall be proportionately adjusted so the holder of each share of Class C Preferred Stock
shall thereafter be entitled to receive upon the conversion of such shares the aggregate number of shares of Common Stock that such holder
would have been entitled to receive after the happening of any of the events described above had such shares of Class C Preferred Stock been
converted immediately prior to the close of business on such record date or effective date. Such adjustments shall be made successively
whenever any event described above shall occur. The adjustments herein provided for shall become effective immediately following the record
date for any such stock dividend or distribution or the effective date of any such other event. An adjustment made pursuant to this section 9(a)
shall become effective retroactively to the record date in the case of such stock dividend or distribution and shall become effective on the
effective date in the case of such subdivision or combination.
(b) In the event of any capital reorganization of the Corporation or any reclassification or similar change of outstanding shares of Common
Stock (other than as set forth in section 9(a) above), or in the event of the consolidation or merger of the Corporation with or into another
corporation or other entity (other than a merger which does not result in any reclassification, conversion, exchange or redemption of
outstanding shares of Common Stock), each share of Class C Preferred Stock shall, after such capital reorganization, reclassification, change,
consolidation or merger be convertible only into the number of shares of stock or other securities or property, including cash, to which a holder
of the number of shares of Common Stock deliverable upon conversion of such share of Class C Preferred Stock would have been entitled upon
such capital reorganization, reclassification, change, consolidation or merger had such share of Class C Preferred Stock been converted
immediately prior to the effective date of such event; and in any case, appropriate adjustments (as determined by the Board of Director), shall
be made in the application of the provision herein set forth with respect to the rights and interests thereafter of the holders of the share of the
Class C Preferred Stock to the end that the provision set forth herein (including provisions with respect to changes in and other adjustments of
the Conversion Rate) shall thereafter be applicable, so nearly as may reasonable be, in relation to any shares of stock or other securities
thereafter deliverable upon the conversion of shares of the Class C Preferred Stock.
(c) Whenever the Conversion Rate or terms of conversion are adjusted as herein provided, the Corporation shall forthwith file with the transfer
agent for the Class C Preferred Stock a certificate signed by the chief financial officer of the Corporation, stating the adjusted Conversion Rate
determined as provide herein. Such certificate shall show in reasonable detail the method of calculation of such adjustment and the facts
requiring such adjustment. Whenever the Conversion Rate is adjusted, the Corporation will cause a notice stating the adjustment and the
Conversion Rate to be sent by first class mail, postage prepaid, to each holder of record of shares of Class C Preferred Stock at its address
appearing on the stock register of the Corporation.
10. REGISTRATION RIGHTS.
(a) If, at any time and from time to time, the Corporation proposes to register any of its securities on Forms S-1, S-2, S-3, or S-18, or any
Forms SB, or any successor forms, under the Securities Act of 1933 (the "Act") and applicable state securities laws (the "State Acts"), the
Corporation shall give prompt written notice to each holder of Class C Preferred Stock (or Common Stock into which it has been converted) of
the Corporation's intention to do so, and, upon the written request of any such holder made within 30 days after the receipt of any such notice,
which written request shall specify the number of shares such holder desires to be registered, the Corporation shall use its reasonable efforts to
cause all such shares of such holder to be registered under the Act and State Acts to permit the sale of such shares. Notwithstanding anything
contained herein to the
4

contrary, the Corporation shall have the right to discontinue any registration of holder's shares at any time prior to the effective date of such
registration if the registration of other securities giving rise to such registration is discontinued.
(b) If any holder of Class C Preferred Stock shall request inclusion of any shares held by such holder in the registration of other securities of
the Corporation and such proposed registration by the Corporation is, in whole or in part, an underwritten Public Offering, and if the managing
underwriter determines and advises the Corporation in writing that inclusion in such registration of all proposed securities (including securities
being offered by or on behalf of the Corporation and securities covered by requests for registration) would adversely affect the marketability of
the offering of the securities proposed to be registered by the Corporation, then the holder of Class C Preferred Stock shall be entitled to
participate pro rata with the other holders having similar incidental registration rights with respect to such registration to the extent the
managing underwriter determines that such shares may be included without such adverse effect.
(c) The Corporation shall pay all expenses incident to its performance of or compliance with the provisions of this Section 9, including without
limitation, all registration and filing fees, fees and expenses of compliance with the Act and State Acts, printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Corporation and all independent public accountants and other persons retained by
the Corporation, and any fees and disbursements of underwriters customarily paid by issuers or sellers of securities (excluding underwriting
commissions and discounts).
11. NO IMPLIED LIMITATION. Except as otherwise provided by express provision of the Certificate of Designation, nothing herein shall
limit, by inference or otherwise, the discretionary right of the Board of Directors to classify and reclassify and issue any shares of Preferred
Stock and to fix or alter all terms thereof to the full extent provided in the Certificate of Incorporation of the Corporation.
12. GENERAL PROVISIONS. In addition to the above provisions with respect to the Class C Preferred Stock, such Class C Preferred Stock
shall be subject to, and entitled to the benefits of, the provisions set forth in the Corporation's Certificate of Incorporation, as may be amended,
with respect to Class C Preferred Stock generally.
13. NOTICES. All notices required or permitted to be given by the Corporation with respect to the Class C Preferred Stock shall be in writing,
and if delivered by first class United States Mail, postage prepaid, to the holders of the Class C Preferred Stock, at their last addresses as they
shall appear upon the books of the Corporation, such notice shall be conclusively presumed to have been duly given, whether or not the
shareholder actually receives such notice; provided, however, that failure to duly give such notice by mail, or any defect in such notice, to the
holders of any stock designated for redemption, shall not affect the validity of the proceeding for the redemption of any other shares of
Preferred Stock.
14. DEFAULT.
(a) Default is defined in this Section 13 as: (i) the failure by the Corporation for a period of 90 continuous days to make a payment of any
dividends on the Class C Preferred Stock, or (ii) events wherein the Corporation itself is involved in or subject to a bankruptcy insolvency,
liquidation or reorganization proceeding.
(b) Upon the Corporation's default, the holder's of Class C Preferred Stock shall become creditors of the Corporation in an amount equal to the
unpaid dividends on the Class C Preferred Stock without further action on their part.
(c) The holders of the Class C Preferred Stock may by a 51% vote of the then outstanding shares of Class C Preferred Stock declare the entire
unpaid and accumulated dividends due and payable with the power to institute proceedings for collection thereof. The payment by the
Corporation of such unpaid and accumulated dividends prior to the rendering of a judgment or decree shall be deemed a waiver by the holders
of the Class C Preferred Stock of the default and shall be grounds for dismissal of the collection proceedings.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations of Class C
5

Cumulative Convertible 13.25% Preferred Stock to be duly executed by its President and attested to by its Secretary, dated as of 20th of
January, 1995.
ATTEST:
/s/ VICKI CLINGENPEEL
Name: Vicki Clingenpeel
-------------------------Title: Secretary

PD-Rx Pharmaceuticals, Inc.

/s/ ROBERT D. HOLSEY
Name: Dr. Robert D. Holsey, D.O.
------------------------------Title: President

EXHIBIT 4.3
PD-RX PHARMACEUTICALS, INC.
---------- Incorporated Under the Laws of State of Oklahoma ---------- NUMBER 3,000,000 Authorized Shares, $.01 Par Value SHARES --------- 10,000,000 Preferred Shares, Par Value $.10 Per Share ---------CUSIP 693298 10 1
SEE REVERSE
FOR CERTAIN DEFINITIONS
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF $.01 PAR VALUE COMMON STOCK OF
PRECIS SMART CARD, INC.
transferable only on the books of the Corporation by the holder hereof in person or by attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized officers
and to be sealed with the facsimile seal of the Corporation.
Dated:

[corporate seal]

Secretary
President

COUNTERSIGNED AND REGISTERED

American Securities Transfer, Inc.
P.O. Bos 1596
By
Transfer Agent & Registrar Authorized Signature

PD-RX PHARMACEUTICALS, INC.

The Company is authorized to issue more than one class, namely, 3,000,000 Common Shares and 10,000,000 Preferred Shares. The Company
will furnish to any shareholder upon request (addressed to the attention of the Secretary of the Company) and without charge a full statement of
the designations, preferences, limitations and relative rights of the shares of each class of stock authorized to be issued by the Company and of
the variations in the relative rights and preferences between the shares of each series of the Preferred Shares of the Company insofar as any
such series has been fixed and determined, and a statement of the authority of the Board of Directors of the Company to fix and determine the
relative rights and preferences of subsequent series of the Preferred Shares.
The following abbreviations when used in the inscription on the face of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right
of survivorship and not as
tenants in common

UNIF GIFT
MIN ACT-_______ Custodian ______________
(Cust)
(Minor)
Under Uniform Gifts to Minors Act________
(State)

Additional abbreviations may also be used though not in the above list.
For Value received,___________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

________________________________________________________________________Shares of the Common Stock represented by the
within Certificate, and do hereby irrevocably constitute and appoint
_____________________________________________________________attorney-in-fact to transfer the said stock on the books of the
within-named Corporation, with full power of substitution in the premises.
Dated
----------____________________________________________
____________________________________________
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED BY:
_____________________________

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

ARTICLE 5

PERIOD TYPE
FISCAL YEAR END
PERIOD START
PERIOD END
CASH
SECURITIES
RECEIVABLES
ALLOWANCES
INVENTORY
CURRENT ASSETS
PP&E
DEPRECIATION
TOTAL ASSETS
CURRENT LIABILITIES
BONDS
PREFERRED MANDATORY
PREFERRED
COMMON
OTHER SE
TOTAL LIABILITY AND EQUITY
SALES
TOTAL REVENUES
CGS
TOTAL COSTS
OTHER EXPENSES
LOSS PROVISION
INTEREST EXPENSE
INCOME PRETAX
INCOME TAX
INCOME CONTINUING
DISCONTINUED
EXTRAORDINARY
CHANGES
NET INCOME
EPS BASIC
EPS DILUTED

YEAR
JUN 30 1999
JUL 01 1998
JUN 30 1999
168,493
0
632,249
11,514
531,860
1,325,191
941,994
0
2,267,185
361,529
458,861
0
351,200
16,948
1,394,076
2,267,185
6,715,089
6,730,176
4,984,884
1,481,750
0
0
42,679
263,542
79,709
183,833
0
0
0
183,833
.08
.08

YEAR
JUN 30 1998
JUL 01 1997
JUN 30 1998
155,270
0
533,424
14,264
548,303
1,222,733
949,070
0
2,195,403
434,199
488,566
0
351,200
15,448
1,222,503
2,195,403
5,872,858
5,895,916
4,376,165
1,446,530
0
0
38,903
62,458
39,400
23,058
0
0
0
23,058
(.02)
(.02)

End of Filing
2005 | EDGAR Online, Inc.

6 MOS
DEC 31 1999
JUL 01 1999
DEC 31 1999
104,552
0
624,744
0
650,732
1,391,765
970,386
0
2,362,151
420,362
449,926
0
351,200
16,948
1,439,144
2,362,151
3,192,126
3,203,189
2,335,973
786,523
0
0
17,063
81,364
30,918
50,446
0
0
0
50,446
.02
.02

6 MOS
DEC 31 1998
JUL 01 1998
DEC 31 1998
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,273,714
3,283,489
2,472,171
733,867
0
0
21,576
77,446
30,115
47,331
0
0
0
47,331
.01
.01