SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF
1934
For the quarterly period ended February 28, 2005.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-12561
MEDITECH PHARMACEUTICALS, INC.
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 95-3819300
- --------------- -------------------
(STATE OR OTHER (I.R.S.EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
ORGANIZATION)
2591 Dallas Parkway, Suite 102
Frisco, TX 75034
-------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(469) 633-0100
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $ .001 PAR VALUE
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 (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- -----
ON FEBRUARY 28, 2005, THERE WERE 2,156,855 SHARES OF THE ISSUER'S COMMON STOCK
OUTSTANDING.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES NO X
----- -----
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
INDEX
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at
February 28, 2005 (Unaudited) and May 31, 2004 F-1
Statements of Operations
for the three months ended February 28, 2005 and
2004 (Unaudited) F-2
Consolidated Statements of Cash Flows
for the three months ended February 28, 2005 and
2004 (Unaudited) F-3
Notes to Financial Statements F-4-F-9
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Control and Procedures
Item 4. Other Information
MEDITECH PHARMACEUTICALS, INC
(Development Stage Companies)
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
- --------------------------------------------------------------------------------
ASSETS
February 28, 2005 May 31, 2004
----------------- -----------------
Current assets:
Cash and cash equivalents $ -- $ 58,964
Other current assets -- --
----------------- -----------------
Total current assets -- 58,964
----------------- -----------------
Property and equipment
Property and equipment -- 5,366
Less: Accumulated depreciation -- (4,508)
----------------- -----------------
Total property and equipment, net -- 858
----------------- -----------------
Other assets -- 7,448
----------------- -----------------
TOTAL ASSETS -- 67,270
================= =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts Payable and accrued expenses $ -- $ 257,893
Accrued compensation -- 3,493,187
Advances from affilitates -- 4,509,346
----------------- -----------------
Total current liabilities -- 8,260,426
----------------- -----------------
Minority interest in consolidated subsidiary -- 191,300
----------------- -----------------
Commitments and contigencies
Stockholders' deficit:
Preferred stock, $0.001 par value; 25,000,000 shares
authorized; no shares issued and outstanding -- --
Common stock, $0.001 par value; 400,000,000 shares
authorized; 2,156,855 shares issued and outstanding 380,697 198,672
Subscription receivable -- (165,000)
Additional paid-in-capital 12,591,186 8,963,610
Deficit accumulated during development stage (12,971,883) (17,381,738)
----------------- -----------------
Total stockholders' deficit -- (8,384,456)
----------------- -----------------
Total liabilities and stockholders' deficit $ -- $ 67,270
================= =================
F-1
MEDITECH PHARMACEUTICALS, INC
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------------------
For the Three For the period
Months Ended May 14, 1982
February 28, (Date of inception)
2005 February 28, 2005
------------------- -------------------
Revenue $ -- $ 152,132
------------------- -------------------
Operating expenses
Research and development -- 1,899,450
General and administrative 34,424 14,121,194
General -- 325,400
------------------- -------------------
Total operating expenses 34,424 16,346,044
------------------- -------------------
Loss before other income (expense) (34,424) (16,193,912)
------------------- -------------------
Other income (expense)
Interest expense -- (3,439,382)
Interest income 23 305,944
Other income -net -- 81,612
Gain on write-down of accounts payable -- 1,405,232
------------------- -------------------
Total other income (expense) 23 (1,646,594)
------------------- -------------------
Loss before minority interes in losses of subsidiary (34,401) (17,840,506)
Minority interest in losses of subsidiary -- 329,800
------------------- -------------------
Net (loss) income $ (34,401) $ (17,510,706)
=================== ===================
Net (loss) income available to common stockholders;
per common share: (0.034)
===================
Net (loss) income per common share - basic and diluted (0.034)
===================
Weigted average shares oustanding:
Basic 1,024,271
===================
Diluted 1,024,271
===================
F-2
MEDITECH PHARMACEUTICALS, INC
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
For the Three For the period
Months Ended May 14, 1982
February 28, (Date of inception)
2005 February 28, 2005
------------------- -------------------
Cash flows from operating activities:
Net loss $ (34,401) $ (17,510,724)
Adjustment to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 212 142,228
Warrants and options issued to employees,
vendors and consultants (6,045) 877,455
Minority interest in losses of subsidiary (191,300) (329,800)
Stock issued to employees, vendors and
consultants 26,500 1,708,800
Contributed services -- 463,050
Accrued interest on advances from affiliates -- 3,439,346
Gain on write-down of accounts payable (99,530) (1,504,762)
Changes in operating assets and liabilities:
Other receivables -- (2,545)
Trademark 166 (23)
Other assets -- (9,365)
Accounts payable and acrrued expenses (237,516) 1,325,057
Accrued compensation (3,448,751) 102,352
------------------- -------------------
Net cash used in operating activities (3,990,665) (11,298,931)
Write off of Assets and Liabilities 4,538,823 4,538,823
Cash flows used in investing activities
Purchases of furniture and equipment 5,366 (135,600)
Cash flows from financing activities
Proceeds from advances from affiliates, net -- 2,280,800
Proceeds from notes payable 155,000 236,000
Proceeds from sale of stock and exercise options, net -- 5,384,568
Cost incurred to register securities (726,247) (788,583)
Principal payments on advances from stockholder -- (43,500)
------------------- -------------------
Net cash provided by financing activities (571,247) 7,069,285
------------------- -------------------
Net change in cash and cash equivalent (17,723) 173,577
Cash and cash equivalent, beginning of period 17,723 17,723
------------------- -------------------
Cash and cash equivalent, end of period $ -- $ --
=================== ===================
Supplemental disclosure of cash and cash flow information:
Cash paid during the period for:
Interest $ -- $ --
=================== ===================
Noncash financing transactions:
Conversion of debt to equity
Conversion of restricted common stock $ 1,500,000
Additional paid-in capital 918,304
-------------------
Total advances converted to equity $ 2,418,304
===================
F-3
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
February 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business activity (Company and Subsidiaries)
Meditech Pharmaceuticals, Inc. ("Meditech") is a drug development company,
which is focused in the areas of research, development, and marketing in
the biomedical industry, with an emphasis on anti-infective drugs. Meditech
was incorporated in Nevada on March 21, 1983. Since then, it has been
engaged in research and development activities associated with bringing its
products to market.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by
Development Stage Enterprises." The Company is devoting substantially all
of its present efforts to establish a new business, and its planned
principal operations have not yet commenced.
The Company has not generated significant revenues from operations and has
no assurance of any future revenues. All losses accumulated since inception
have been considered as part of the Company's development stage activities.
The Company will require substantial additional funding for
commercialization of its products. There is no assurance that the Company
will be able to obtain sufficient additional funds when needed, or that
such funds will be obtainable on terms satisfactory to the Company. The
Company's products, to the extent that they may be deemed medical devices
or biologics, are governed by the Federal Food, Drug and Cosmetics Act and
by the regulations of state agencies and various foreign government
agencies. There can be no assurance that the Company will maintain or
obtain the regulatory approvals required to market its products.
Basis of Presentation
The accompanying financial statements have been prepared by Meditech
pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and adjustments) which are, in the
opinion of managements, necessary to fairly represent the operating results
for the respective periods. Certain information and footnote disclosures
normally present in the annual consolidated financial statements prepared
in accordance with accounting principles generally accepted in the United
States of America have been omitted pursuant to such rules and regulations.
The results of the three months ended February 28, 2005 are not necessarily
indicative of the results to be expected for the full year ending May 31,
2005.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
F-4
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
Revenue
Revenue represents license fees that are recognized when earned over the
period of the applicable license agreement.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the assets to future net
cash flows expected to be generated by the assets. If the assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount exceeds the fair value of the
assets. Based on its analysis, the Company believes that no impairment of
the carrying value on its long-lived assets exists at February 28, 2005.
There can be no assurance, however, that market conditions will not change
which could result in impairment on long-lived assets in the future.
Stock-Based Compensation
The Company accounts for non-employee stock-based compensation under
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation." SFAS 123 defines a fair value
based method of accounting for stock-based compensation. However, SFAS 123
allows an entity to continue to measure compensation cost related to stock
and stock options issued to employees using the intrinsic method of
accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock Issued to Employees." Under APB 25,
compensation cost, if any, is recognized over the respective vesting period
based on the difference, on the date of grant, between the fair value of
the Company's common stock and the grant price. Entities electing to remain
with the accounting method of APB 25 must make pro forma disclosures of net
income (loss) and earnings per share, as if the fair value method of
accounting defined in SFAS 123 had been applied. The Company has elected to
account for its stock-based compensation to employees under APB 25.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option vesting period. Adjustments
are made for options forfeited prior to vesting. The effect on compensation
expense and net (loss) income had compensation cost for the Company's stock
option issues been determined based on fair value on the date of grant
consistent with the provisions of SFAS 123 is as follows for the years
ended May 31:
2004 2003
--------- ---------
Net (loss) income, as reported (612,896) (612,896)
Additional compensation expense under SFAS 123 -- --
--------- ---------
Pro forma net (loss) income $(612,896) (612,896)
========= =========
Pro forma net (loss) income per share $ -- $ --
========= =========
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting
amounts at each period end based on enacted tax laws and statutory tax
F-5
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
rates applicable to the periods in which the differences are expected to
affect taxable income. A valuation allowance is provided for significant
deferred tax assets when it is more likely than not those assets will not
be recovered.
Loss Per Share
Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were dilutive.
For the three months ended February 28, 2005 and 2004, the Company incurred
net losses; therefore, potential common shares are ignored as their effect
would be anti-dilutive.
Comprehensive Income
Comprehensive income is not presented in the Company's consolidated
financial statements since the Company did not have any items of
comprehensive income in any period presented.
Segments of an Enterprise and Related Information
As the Company operates in one segment, the Company has not made segment
disclosures in the accompanying consolidated financial statements.
New Accounting Standard
In April 2002, the Financial Accounting Standards Board (FASB) issued the
Statement of Financial Accounting Standards (SFAS) No. 145, Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement 13, and
Technical Corrections. SFAS No. 145 permits the recognition of an
extraordinary gain or loss from extinguishments only when it meets the
criteria of Accounting Principles Board (APB) Opinion No. 30. APB No. 30
states that extraordinary items are events and transactions that are
distinguishable by both their unusual nature and by the frequency of their
occurrence. This provision of SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002, with earlier application encouraged. Any
extraordinary gain or loss from the extinguishments of debt in prior
periods presented that do not meet conditions of APB No. 30 must be
reclassified. Upon adoption of SFAS No.145 in 2002, the Company
reclassified the extraordinary gain on loan forgiveness in 2001 as a
separate component of other income and presented as a component of
continuing operations.
On April 30, 2003, the FASB issued a Financial Interpretation No. 45,
"Disclosure Requirements Mandate Fair Value at Inception." FIN 45 states
that "a guarantor is required to recognize, at the inception of a
guarantee, a liability for the obligations it has undertaken in issuing the
guarantee, including its ongoing obligations to stand ready to perform over
the term of the guarantee of the event that the specified triggering events
or conditions occur. The objective of the initial measurement of that
liability is the fair value of the guarantee at its inception." FIN 45
covers guarantee contracts such as financial and market value guarantees,
performance guarantees, and indirect guarantees of the indebtedness of
others. As of November 30, 2004, the Company does not have any guarantee
contracts affected by this interpretation.
In April 2003, the FASB issued SFAS No.149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," ("SFAS No. 149"), which
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities under SFAS No. 133. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003 except
for the provisions that were cleared by the FASB in prior pronouncements.
As of November 30, 2004, the Company does not have any contracts affected
by this interpretation.
On May 31, 2003 the FASB issued Statement of Financial Accounting Standards
No. 150, "Accounting for Certain Financial Instruments with Characteristics
F-6
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
of Both Liabilities and Equity." This statement establishes standards for
how an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously
classified as equity. Some of the provisions of this Statement are
consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions
of this statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or
must settle by issuing its own equity shares, depending on the nature of
the relationship established between the holder and the issuer. Application
of the provisions of SFAS 150 is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material impact on the Company's financial position or
results of operations.
Reclassifications
Certain reclassifications have been made to prior year amounts in the
consolidated financial statements in order to conform to the current year
presentation. These reclassifications have no effect on previously reported
results of operations.
NOTE B - COMMITMENTS AND CONTINGENCIES
Leases
Currently, the Company uses its operating facilities provided by its Chief
Executive Officer, without a license agreement. During the six months ended
February 28, 2005, and the year ended May 31, 2004, the Company incurred
approximately $4,500 and $18,000, respectively, of rent expense related to
this lease. There is no guarantee the officer will be willing to provide
these facilities in the future.
Employment Agreements
There are no employment agreements in effect as of February 28, 2005.
Litigation
The Company may become involved in various legal proceedings and claims
which arise in the ordinary course of its business. Management does not
believe that these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.
License Agreement
On February 3, 2000, the Company received $25,000 from Immune Network
Research, Ltd. ("INR"), a Canadian pharmaceutical development company,
under a letter of intent. The payment was made for a one-year irrevocable
option granting INR the right to negotiate for an exclusive license for
pharmaceutical applications worldwide outside of the United States. The
Company then received an additional $100,000 from INR in anticipation of a
definitive agreement. Under the terms of the letter, if an agreement is
reached, the Company will issue an option to INR for up to 10,000,000
shares of common stock, exercisable at $0.03 per share. In return, the
Company will receive royalties equal to 7% of net sales for all MTCH-24
(TM) products sold and 4% of net sales for all Viraplex (R) products sold
by INR. The option was valued at $400,000 using the Black-Scholes
option-pricing model, which was recorded as an operating expense on the
date granted.
On May 25, 2001, the Company and INR entered into a definitive licensing
agreement, which terminated the letter of intent. Under this licensing
agreement the Company assigned its rights and interests in two applications
of its proprietary products. In consideration of the assignment, INR agreed
to pay a royalty equal to 2% of the gross worldwide sales of each of the
products. The term of the royalty is the longer of 10 years or the life of
any patent based on the products. The Company has not yet recognized any
royalty revenue related to this agreement.
F-7
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
NOTE C - STOCKHOLDERS' DEFICIT
During the three months ended February 28, 2005, the Company issued a total
of 1,805,000 shares of restricted common stock as follows: 25,000 shares in
repayment of a $25,000 note payable; 280,000 shares as stock incentive
compensation for $280.00; and 1,500,000 shares for conversion of
$2,418,303.90 debt to equity.
NOTE D - RELATED PARTY TRANSACTIONS
Since inception, the Company has received advances from Petro-Med, Inc., an
affiliate, to fund its working capital requirements. At May 31, 2004, the
Company maintained short-term advances from affiliates of $4,509,346 which
are due on demand. Accrued interest is attributed to and included in the
outstanding balance as incurred. The advances bear interest at 9% per annum
on any outstanding balance. During fiscal year ended May 31, 2003, both
partners agreed to stop accruing interest on these advances. On October 25,
2004, the Company and Petro-Med entered into a debt exchange agreement,
thereby, paying in full the advances due to Petro-Med.
The Company maintains its primary place of business in facilities owned by
the Chief Executive Office, for which it is charged rent expense (see Note
B).
NOTE E - STOCK SPLIT
On January 12, 2005 the Company effected a 1 for 1000 reverse split of its
common Stock.
NOTE F - SUBSEQUENT EVENT
In March 2005, Registrant underwent a change of control when it issued
9,853,740 shares of common stock in exchange for $5,748,015 and the
contribution of a Chinese operating company. Details of the transaction and
the new company has been set forth in a Form 8K filed by the Company.
Registrant's pharmaceutical development business was transferred to its
subsidiary East West Distributors, Inc., which will be distributed to the
company's shareholders after East West provides disclosure information
about the new company.
F-8
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
You should read the following discussion of our financial condition and
operations in conjunction with the condensed consolidated financial statements
and the related notes included elsewhere in this filing. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of many factors.
Overview
We are a drug development company, founded in 1982, focused in the areas of
research, development, and marketing in the biomedical industry, with an
emphasis on anti-infective drugs. The Company has completed various stages of
planning and developing products containing its proprietary drugs Viraplex (R)
and MTCH-24(TM).
Our development activities since inception (May 4, 1982) have included efforts
to secure financing, create a management and business structure, and develop and
test Viraplex (R) and MTCH-24(TM) for release as both over-the-counter (OTC) and
ethical products. These activities have produced very little in operating
revenues.
Since we became a public company, our operations have related primarily to
securing patents, initiating and continuing clinical tests, recruiting personnel
and raising capital. Through May 31, 2003, we have derived our revenues from the
sale of a license option to INR to develop and market new patented products.
Going Concern
Our financial statements for the six months ended February 28, 2005, and the
fiscal year ended May 31, 2004 were prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the consolidated financial
statements, we experienced a loss of $34,401 during the three months ended
February 28, 2005, had a cash balance of $0, and an accumulated deficit of
$12,971,883 as of February 28, 2005. These factors, among others, raise
substantial doubt about our ability to continue as a going concern.
We must raise additional funds in order to actively reinstate our research and
development efforts, to complete existing product testing which was suspended in
1987, or commence new testing on such products, and to conduct additional
testing on our products. We must raise additional capital in order to continue
and complete our research and development and testing. Our future success is
dependent upon raising additional money to provide for the necessary operations
of the Company. If we are unable to obtain such additional financing, there
would be a material adverse effect on our business, financial position, and
results of operations. Our continuation as a going concern is dependent on our
ability to generate sufficient capital to meet our obligations on a timely
basis, and to continue and complete our research and development and testing
efforts. However, no assurance can be given that additional capital, if needed,
will be available when required or upon terms acceptable to the Company.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED FEBRUARY 28,
2005 AND 2004.
Revenues
There were no revenues for the three months and six months ended February 28,
2005 and 2004.
Operating Expenses
Our expenses include research and development and general and administrative.
Research and development consists of laboratory expenses, consulting expenses,
test expenses, and other costs associated with the development of products not
yet being marketed. General and administrative expenses include the salaries and
benefit costs of management and other non-manufacturing employees, sales and
marketing expenses, rent, accounting, legal and operational costs. Personnel
compensation and facilities costs represent a high percentage of our operating
expenses and are relatively fixed in advance of each quarter.
Research and Development Costs
There were no research and development costs for the three months and six months
ended February 28, 2005 and 2004.
General and Administrative Expenses
Direct costs were $34,424 for the three months ended February 28, 2005, as
compared with $69,426 for the three months ended February 28, 2004. The decrease
was primarily due to lower miscellaneous expenses, accounting fees, and accrual
of interest charged on accounts payable.
Net Loss
Net loss was approximately $34,401 for the three months ended February 28, 2005
as compared to $69,422 for the three months ended February 28, 2004. The
decrease in the net loss is due primarily to the decrease in general and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have funded our operations and investments in property and
equipment through cash from equity financings and cash from licensing fees.
Our cash and cash equivalents were $0 at February 28, 2005.
We have incurred recurring operating losses and negative cash flows from
operating activities and have negative working capital. We believe that our
available equity financing arrangement with Swartz will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
two years. However, there can be no assurance that we will receive financing
from Swartz, that we will not require additional financing within this time
frame or that such additional financing, if needed, will be available on terms
acceptable to us, if at all.
Item 3. Controls and Procedures
- --------------------------------
As of the end of the period covered by this Form 10-Q, the Company carried out
an evaluation, under the supervision and with the participation of its chief
executive officer and chief financial officer, of the effectiveness of the
design and operation of its disclosure controls and procedures (as defined in
Rule 13-a-15-e or 15-d-15-e under the Securities Exchange Act of 1934).
Based on this evaluation, the Company's chief executive officer and chief
financial officer concluded that as of the evaluation date, such disclosure
controls and procedures were reasonably designed to ensure that information
required to be disclosed by the Company in reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission.
Item 4. Other Information
- --------------------------
Item 1. Legal Proceedings
Not applicable.
Item 2. Change in Securities
During the six months ended February 28, 2005, we issued 1,985,500
shares of restricted common stock. On January 12, 2005 the Company effected a 1
for 1000 share reverse split of its common stock.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Exhibits
The following exhibits are included herein:
31.1 Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.1 Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
32.2 Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Meditech Pharmaceuticals, Inc.
By: /s/ Kevin Halter, Jr.
- ---------------------------
Kevin Halter, Jr., Director
Dated: 04/13/05
------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and/or the class indicated.
/s/ Kevin Halter, Jr. Dated: 04/13/05
- ---------------------------
Kevin Halter, Jr., Director