FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR QUARTER ENDED AUGUST 31, 1999
COMMISSION FILE NO. 0-12561
MEDITECH PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
NEVADA 95-3819300
- ------------------------------- ------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PMB 382, 10105 E. VIA LINDA, #103, SCOTTSDALE, AZ 85258
-------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(480) 614-2874
-----------------------------
(REGISTRANT'S TELEPHONE NUMBER)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (AND FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES XX NO___
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASS OF
COMMON STOCK, AS OF THE LAST PRACTICABLE DATE.
129,353,432 SHARES OF $.001 PAR VALUE COMMON STOCK AS OF MARCH 31, 1999.
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED BALANCE SHEET
Aug. 31, May 31,
1999 1999
------------ ------------
ASSETS
Current assets:
Cash, including interest-bearing accounts $ -- $ --
Prepaid assets and other current assets 600 600
------------ ------------
Total current assets 600 600
Due from officer
Equipment and furniture, net
------------ ------------
TOTAL $ 600 $ 600
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 1,187,100 $ 1,176,100
Accrued professional fees 635,300 635,300
Accrued laboratory expenses 33,900 33,900
Accrued compensation 2,407,300 2,356,500
Advances from parent 3,369,500 3,294,800
Advances from affiliate 0 0
Current portion of long-term debt 0 0
Loan payable 71,000 71,000
------------ ------------
Total current liabilities 7,704,100 7,567,600
Long-term debt
------------ ------------
7,704,100 7,567,600
------------ ------------
Minority interest 191,300 191,300
Commitments and contingencies
Shareholders' equity (deficit):
Preferred stock - $.001 par value, 25,000,000 shares
authorized, none issued or outstanding
Common stock - $.001 par value, 400,000,000 shares
authorized: May 31, 1999, 123,816,925 shares issued and
to be issued; Aug. 31, 1999 123,816,925 shares issued
and to be issued 123,800 123,800
Additional paid-in capital 6,973,600 6,973,600
Deficit accumulated during development stage (14,992,200) (14,855,700)
------------ ------------
Total shareholders' equity (deficit) (7,894,800) (7,758,300)
------------ ------------
TOTAL $ 600 $ 600
============ ============
See accompanying notes to consolidated financial statements.
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED STATEMENT OF NET LOSS AND
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
Period from Period from Period from
Jun. 1, 1999 Jun. 1, 1998 May 4, 1982
to to (inception) to
Aug. 31, 1999 Aug. 31, 1998 Aug. 31, 1999
------------- ------------- ------------
Research and development expenditures $ 0 $ $ 489,300
------------- ------------- -------------
Clinical trials 0 1,347,800
------------- ------------- -------------
Expenses for efforts to secure inancing,
establish affiliations with clinics and
physicians and formulate a marketing strategy:
Compensation 60,500 60,900 5,162,400
Professional fees 0 30,500 1,307,100
General and administrative 1,300 110,500 3,933,400
------------- ------------- -------------
61,800 201,900 10,402,900
Organization expenses 16,300
Loss on investments 120,100
Gain on sale of fixed assets (500)
Lawsuit settlement 15,000
Write-off of uncollectible note
receivable 100,000
Interest expense 74,700 68,300 2,964,700
Interest income (298,500)
Royalty income (75,000)
Miscellaneous Income (75,100)
Aborted stock offering costs 325,400
Gain on early extinguishment of debt (10,400)
Minority interest in net loss of subsidiary (329,800)
------------- ------------- -------------
Net loss and deficit accumulated during development stage $ 136,500 270,200 $ 14,992,200
============= ============= =============
Net loss and deficit accumulated during development stage
per share of common stock $ .001 $ .002 $ .16
============= ============= =============
Weighted average number of shares outstanding 123,816,925 121,625,621 91,337,145
============= ============= =============
See accompanying notes to consolidated financial statements.
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
May 4, 1982 (Inception) to Aug. 31, 1999
Common stock Additional
------------------ paid-in
Shares Amount capital
------ ------ ------------
(000's)
Balance at May 31, 1983 48,000 $ 48,000 $ 295,000
Balance at May 31, 1984 66,115 66,100 4,182,000
Balance at May 31, 1985 66,015 66,000 4,153,400
Balance at May 31, 1986 74,015 $ 74,000 $ 5,753,600
Balance at May 31, 1987 76,325 $ 76,300 $ 5,470,700
Balance at May 31, 1988 78,231 $ 78,200 $ 5,909,800
Balance at May 31, 1989 88,988 89,000 6,129,000
Balance at May 31, 1990 89,088 89,100 6,139,500
Balance at May 31, 1991 92,088 92,100 6,177,800
Change in equity of subsidiary due to
issuance of common stock -- -- --
Common stock granted for services
during Fiscal 1992 -- -- --
Sale of stock, February 1992 2,000 2,000 29,400
Net Loss, year ended May 31, 1992 -- -- --
------------ ------------ ------------
Balance at May 31, 1992 94,088 94,100 6,207,200
Net Loss, year ended May 31, 1993 (449,400) (449,400)
------------ ------------ ------------
Balance at May 31, 1993 94,088 94,100 6,207,200
Common stock granted for services
during Fiscal 1994 7,105 7,100 195,000
Sale of Stock, April 1994 1,400 1,400 12,300
Net Loss, year ended May 31, 1994 -- -- --
------------ ------------ ------------
Balance at May 31, 1994 102,593 102,600 6,414,500
Sale of Stock, Fiscal 1995 1,088 1,100 12,500
Net Loss, year ended May 31, 1995 -- -- --
------------ ------------ ------------
Balance at May 31, 1995 103,681 103,700 6,427,000
Net Loss, year ended May 31, 1996 (501,600) (501,600)
------------ ------------ ------------
Balance at May 31, 1996 103,681 103,700 6,427,000
Common stock granted for services
during Fiscal 1997 15,335 15,300 412,000
Common stock subscriptions 5,000 5,000
Net Loss, year ended May 31, 1997 -- -- --
------------ ------------ ------------
Balance at May 31, 1997 119,016 119,000 6,839,000
Net Loss, year ended May 31, 1998 (555,200) (555,200)
------------ ------------ ------------
Balance at May 31, 1998 119,016 119,000 6,839,000
Common stock granted for services
during Fiscal 1999 4,800 4,800 134,600
Net Loss, year ended May 31, 1999 (721,500) (721,500)
------------ ------------ ------------
123,816 123,800 6,973,600
Net Loss for period ended Aug. 31, 1999 (136,500) (136,500)
------------ ------------ ------------
Balance at Aug. 31, 1999 123,816 123,800 6,973,600
============ ============ ============
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Continued)
May 4, 1982 (Inception) to Aug. 31, 1999
Deficit
accumulated
Common during Note
stock development receivable
subscribed stage from officer Total
------------ ----------- ------------- ------------
Balance at May 31, 1983 $ 234,400 $ (1,022,600) $ -- $ (445,200)
Balance at May 31, 1984 -- (2,361,000) -- 1,887,100
Balance at May 31, 1985 -- (4,155,100) -- 64,300
Balance at May 31, 1986 $ -- $ (5,688,900) $ (1,440,000) $ (1,301,300)
Balance at May 31, 1987 $ -- $ (7,395,200) $ 0 $ (1,848,200)
Balance at May 31, 1988 $ 0 $ (8,275,400) $ 0 $ (2,287,400)
Balance at May 31, 1989 0 (8,916,800) 0 (2,698,800)
Balance at May 31, 1990 0 (9,438,900) 0 (3,210,300)
Balance at May 31, 1991 0 (9,918,000) 0 (3,648,100)
Change in equity of subsidiary due to
issuance of common stock -- -- -- 0
Common stock granted for services
during Fiscal 1992 -- -- -- 0
Sale of stock, February 1992 -- -- -- 31,400
Net Loss, year ended May 31, 1992 -- (483,100) -- (483,100)
------------ ------------ ------------ ------------
Balance at May 31, 1992 0 (10,401,100) 0 (4,099,800)
Net Loss, year ended May 31, 1993
------------ ------------ ------------ ------------
Balance at May 31, 1993 0 (10,850,500) 0 (4,549,200)
Common stock granted for services
during Fiscal 1994 -- -- -- 202,100
Sale of Stock, April 1994 -- -- -- 13,700
Net Loss, year ended May 31, 1994 -- (753,900) -- (753,900)
------------ ------------ ------------ ------------
Balance at May 31, 1994 0 (11,604,400) 0 (5,087,300)
Sale of Stock, Fiscal 1995 -- -- -- 13,600
Net Loss, year ended May 31, 1995 -- (515,600) -- (515,600)
------------ ------------ ------------ ------------
Balance at May 31, 1995 0 (12,120,000) 0 (5,589,300)
Net Loss, year ended May 31, 1996
------------ ------------ ------------ ------------
Balance at May 31, 1996 0 (12,621,600) 0 (6,090,900)
Common stock granted for services
during Fiscal 1997 (5,000) 422,300
Common stock subscriptions
Net Loss, year ended May 31, 1997 -- (957,400) -- (957,400)
------------ ------------ ------------ ------------
Balance at May 31, 1997 0 (13,579,000) 0 (6,621,000)
Net Loss, year ended May 31, 1998
------------ ------------ ------------ ------------
Balance at May 31, 1998 0 (14,134,200) 0 (7,176,200)
Common stock granted for services
during Fiscal 1999 139,400
Net Loss, year ended May 31, 1999
------------ ------------ ------------ ------------
0 (14,855,700) 0 (7,758,300)
Net Loss for period ended Aug. 31, 1999
------------ ------------ ------------ ------------
Balance at Aug. 31, 1999 0 (14,992,200) 0 (7,894,800)
============ ============ ============ ============
See accompanying notes tconsolidated financial statements.
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
Period from Period from From
Jun. 1, 1999 Jun. 1, 1998 May 4, 1982
to to (inception) to
Aug. 31, 1999 Aug. 31, 1998 Aug. 31, 1999
------------- ------------- --------------
Cash provided by:
Financing activities --
Proceeds from long-term debt $ $ $ 27,300
Advances from (repayments to)
parent and affiliates 74,700 68,300 3,266,500
Issuance of (retirement of)
common stock 4,800 123,800
Additional paid-in capital 134,600 5,767,500
Increase in paid-in capital due
to increase in equity
of subsidiary due to issuance
of common stock 274,100
Proceeds from sale of warrants 100
Proceeds from sale of fixed assets 3,400
Proceeds from minority investmen
in subsidiary 300,000
Issuance of common stock for
repayment of debt to parent (559,900)
----------- ----------- -----------
74,700 207,700 9,202,800
Add (subtract) changes in
components of working capital
other than cash -
Current portion of long-term debt 0
Note payable 0
Advances from parent 717,400
Accounts payable 11,000 12,100 1,187,100
Accrued professional fees 635,300
Accrued laboratory expenses 33,900
Accrued compensation 50,800 50,400 2,407,300
Stock subscription proceeds refundable 0
Advances (to) from affiliates 0
Prepaid and other current assets (600)
Proceeds from loan payable 71,000
----------- ----------- -----------
136,500 270,200 14,254,200
----------- ----------- -----------
Net increase (decrease) in cash 0 0 0
Cash at the beginning of the period 0 0 --
----------- ----------- -----------
Cash at the end of the period $ 0 $ 0 $ 0
=========== =========== ===========
See accompanying notes to consolidated financial statements.
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
Period from Period from From
Jun. 1, 1999 Jun. 1, 1998 May 4, 1982
to to (inception) to
Aug. 31, 1999 Aug. 31, 1998 Aug. 31, 1999
------------- ------------- --------------
Cash used for:
Net loss $ (136,500) $ (270,200) $(14,992,200)
Less items not affecting
working capital -
Loss on investments 120,100
Depreciation and amortization 174,100
Common stock options issued
below market price 726,200
Stock grants 213,500
Loss on disposal of fixed assets 37,600
Minority interest in loss of subsidiary (329,800)
Subsidiary stock issued to minority 284,600
Subsidiary common stock options issued to
minority issued below market price 202,700
Allocation to parent of additional paid-in capital
from issuance of minority stock options and grants (274,000)
Write-off Deferred stock offering costs 154,300
------------ ------------ ------------
Cash used for development
stage activities (136,500) (270,200) (13,682,900)
Long-term debt becoming current (1,500)
Repayment of long-term debt (25,800)
Purchase of equipment, furniture
and leasehold improvements (215,100)
Investments (120,100)
Reclassification of long-term
advances from (repayments to)
parent to short-term advances (54,500)
Deferred offering costs (154,300)
Advances from (to) officer 0
------------ ------------ ------------
(136,500) (270,200) (14,254,200)
============ ============ ============
See accompanying notes to consolidated financial statements.
MEDITECH PHARMACEUTICALS, INC.
(A MINORITY OWNED DEVELOPMENT-STAGE ENTERPRISE
OF PETRO-MED INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENATION
THE ACCOMPANYING BALANCE SHEET, AS OF AUGUST 31, 1999, AND THE STATEMENTS OF
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE, OF SHAREHOLDER'S EQUITY (DEFICIT)
AND OF CHANGES IN FINANCIAL POSITION FOR THE PERIOD FROM MAY 4, 1982,
(INCEPTION) THROUGH AUGUST 31, 1999, AND THE RELATED STATEMENT OF SHAREHOLDERS'
DEFICIT FOR THE PERIOD FROM MAY 4, 1982 (INCEPTION) TO AUGUST 31, 1999, ARE
UNAUDITED, BUT IN THE OPINION OF MANAGEMENT INCLUDE ALL ADJUSTMENTS NECESSARY
FOR THE FAIR PRESENTATION OF THE FINANCIAL POSITION, RESULTS OF OPERATIONS AND
THE DEFICIT ACCUMULATED FOR THE INTERIM PERIODS PRESENTED. ALL ADJUSTMENTS ARE
OF A NORMAL AND RECURRING NATURE.
PROFESSIONAL FEES INCLUDE LEGAL FEES, ACCOUNTING FEES AND LEGAL PRINTING FEES.
THOSE FEES WHICH ARE NOT SUBJECT TO DISPUTE WILL BE PAID, IN WHOLE OR IN PART,
UPON REFINANCING OF THE COMPANY, IF ANY.
NOTE 2 - INCOME TAXES
NO PROVISION FOR STATE AND FEDERAL INCOME TAXES IS REQUIRED FOR THE PERIOD MAY
4, 1982 (INCEPTION) THROUGH AUG. 31, 1999, AS THE COMPANY'S OPERATIONS DID NOT
GENERATE TAXABLE INCOME FOR TAX OR FINANCIAL REPORTING PURPOSES.
NOTE 3 - ADVANCES TO PARENT
AT AUG. 31, 1999, THE COMPANY WAS INDEBTED TO PETRO-MED INC. IN THE AMOUNT OF
$3,369,500. THESE ADVANCES ARE REPAYABLE WITH INTEREST AT 9% PER ANNUM AS
FOLLOWS: $36,000 ON THE SECOND ANNIVERSARY OF THE COMPLETION OF REFINANCING OF
THE COMPANY, IF ANY (SEE NOTE 4), AND THE BALANCE ON DEMAND. PETRO-MED HAS FILED
A CHAPTER XI BANKRUPTCY PETITION, WHICH WAS CONVERTED TO A CHAPTER VII ON AUGUST
26, 1992.
NOTE 4 - NEED FOR ADDITIONAL FINANCING
FOR THE PERIOD MAY 4, 1982, (INCEPTION) THROUGH AUGUST 31, 1999, THE COMPANY HAD
AN ACCUMULATED DEFICIT OF $14,992,200. THE COMPANY IS CURRENTLY EXPERIENCING
SEVERE CASH FLOW DIFFICULTIES, AND ANTICIPATES SUBSTANTIAL ADDITIONAL CASH
EXPENDITURES WILL BE REQUIRED TO CONTINUE ITS RESEARCH AND DEVELOPMENT
ACTIVITIES.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DEVELOPMENT STAGE ACTIVITIES
THE COMPANY IS IN THE DEVELOPMENT STAGE AND ACCORDINGLY HAS HAD NO SIGNIFICANT
REVENUES. ITS PRINCIPAL DEVELOPMENT ACTIVITIES FROM MAY 4, 1982 (INCEPTION)
THROUGH AUG. 31, 1999, HAVE BEEN EFFORTS TO SECURE FINANCING, CREATE A
MANAGEMENT AND BUSINESS STRUCTURE, AND DEVELOP AND TEST VIRAPLEX(R) AND
MTCH-24(TM).
AS OF AUGUST 31, 1999, APPROXIMATELY $12,240,000 HAD BEEN EXPENDED BY THE
COMPANY IN CARRYING OUT ACTIVITIES RELATING TO THE DEVELOPMENT AND TESTING OF
VIRAPLEX(R) AND MTCH-24(TM). THIS TOTAL INCLUDES $1,347,800 FOR CLINICAL TRIALS,
$489,300 FOR RESEARCH AND DEVELOPMENT, $5,162,400 FOR COMPENSATION, $1,307,100
FOR PROFESSIONAL FEES, AND $3,933,400 FOR GENERAL AND ADMINISTRATIVE EXPENSES,
INCLUDING FEES TO CONSULTANTS.
LIQUIDITY AND CAPITAL RESOURCES
INITIALLY THE COMPANY FUNDED ITS ACTIVITIES THROUGH A NOTE PAYABLE TO A BANK,
ADVANCES FROM PRINCIPAL SHAREHOLDERS AND SUBORDINATED DEBT. IN EARLY 1983, A
PRIVATE OFFERING WAS UNDERTAKEN YIELDING NET PROCEEDS OF $531,400. SINCE THAT
TIME, THE COMPANY HAS FINANCED ITS DEVELOPMENT ACTIVITIES FROM THE $3,413,000
NET PROCEEDS OF ITS JULY 11, 1983, PUBLIC OFFERING, LOANS, SALE OF ITS COMMON
STOCK, ROYALTY PAYMENTS AND ADVANCES FROM PETRO-MED INC.
THE COMPANY NEEDS ADDITIONAL FUNDING TO CONTINUE ITS DEVELOPMENT STAGE
ACTIVITIES. MANAGEMENT ESTIMATES THAT THE COMPANY WILL NEED APPROXIMATELY
$2,000,000 IN ORDER TO CONTINUE ITS EVALUATIONS OF VIRAPLEX(R) AND MTCH-24(TM).
WITHOUT THIS ADDITIONAL FUNDING, IT IS UNCERTAIN WHETHER THE COMPANY MAY
CONTINUE AS A GOING CONCERN. MANAGEMENT LACKS SUFFICIENT INFORMATION AT THIS
TIME TO DETERMINE THE EFFECT, IF ANY, OF LEGAL ACTION BY SERGEI GIVOTOVSKY
AGAINST THE COMPANY, PETRO-MED INC., AND GERALD N. KERN. NO ACTION HAS BEEN
TAKEN BY ANY PARTY IN THAT MATTER FOR OVER THREE YEARS.
UPON COMPLETION OF ITS DEVELOPMENT ACTIVITIES AND REFINANCING, IF ANY, THE
COMPANY PLANS TO CONTRACT WITH ONE OR MORE PHARMACEUTICAL COMPANIES TO
MANUFACTURE AND DISTRIBUTE VIRAPLEX(R) AND MTCH-24(TM). UNDER THIS ARRANGEMENT,
THE COMPANY DOES NOT EXPECT TO INCUR SIGNIFICANT MANUFACTURING OR DISTRIBUTION
COSTS AND ACCORDINGLY DOES NOT ANTICIPATE THE NEED FOR ADDITIONAL FINANCING TO
FUND THE MANUFACTURING AND MARKETING OF ITS PRODUCTS.
INFLATION
THE COMPANY HAS NO EXPERIENCE WITH RESPECT TO THE EFFECT OF INFLATION ON ITS
BUSINESS. HOWEVER, THE PHARMACEUTICAL INDUSTRY IS WELL DEVELOPED AND BASED ON
MANAGEMENT'S UNDERSTANDING OF INDUSTRY EXPERIENCE, IT BELIEVES THAT INFLATION
WILL NOT HAVE A SIGNIFICANT IMPACT ON THE RESULTS OF THE COMPANY'S OPERATIONS IN
THE FUTURE.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
NOT APPLICABLE.
ITEM 2 - CHANGE IN SECURITIES
NOT APPLICABLE.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NOT APPLICABLE.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NOT APPLICABLE.
ITEM 5 - OTHER INFORMATION
NOT APPLICABLE.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
NOT APPLICABLE.
SIGNATURE(S)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO THE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
MEDITECH PHARMACEUTICALS, INC.
(REGISTRANT)
DATED AUGUST 13, 1999 BY: /S/ CYNTHIA S. KERN
-----------------------------------------
CYNTHIA S. KERN, PRESIDENT
AND ACTING CHIEF FINANCIAL OFFICER