SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[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 1
Statements of Operations
for the three months ended February 28, 2005 and
2004 (Unaudited) 2
Consolidated Statements of Cash Flows
for the three months ended February 28, 2005 and
2004 (Unaudited) 3
Notes to Financial Statements 4-8
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Control and Procedures 11
Item 4. Other Information 12
This amended 10QSB for the quarter ended February 28, 2005 includes revised
footnotes and revised Statements of Operations and Cash Flows. None of the
changes are deemed to be material.
MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
- --------------------------------------------------------------------------------
February 28, 2005 May 31, 2004
----------------- -----------------
ASSETS
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 affiliates -- 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 and 171,685,487 shares issued
and outstanding at February 28, 2005 and May 31, 2004,
respectively 2,157 171,672
Subscriptions receivable -- (165,000)
Additional paid-in capital 15,048,708 8,990,610
Deficit accumulated during the development stage (15,050,865) (17,381,738)
----------------- -----------------
Total stockholders' deficit -- (8,384,456)
----------------- -----------------
Total liabilities and stockholders' deficit $ -- $ 67,270
================= =================
"See Accompanying Notes and Accountant's Report"
1
MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------------------
For the Period
May 14,1982
For The Three For The Three For The Nine For The Nine (Date of
Months Ended Months Ended Months Ended Months Ended Inception) to
February 28, February 29, February 28, February 29, February 28,
2005 2004 2005 2004 2005
------------- ------------- ------------- ------------- -------------
Revenue $ -- $ -- $ -- $ -- $ 152,132
------------- ------------- ------------- ------------- -------------
Operating expenses:
Research and development -- -- -- -- 1,899,450
General and administrative 44,041 69,426 138,626 223,403 14,130,760
General -- -- -- -- 325,400
------------- ------------- ------------- ------------- -------------
Total Operating expenses 44,041 69,426 138,626 223,403 16,355,610
------------- ------------- ------------- ------------- -------------
Loss before other income (expense) (44,041) (69,426) $ (138,626) (223,403) (16,203,478)
------------- ------------- ------------- ------------- -------------
Other income (expense):
Interest expense -- -- (15) 65 (3,439,389)
Interest income 23 4 56 -- 305,899
Other income, net -- -- -- -- 81,612
Gain on forgiveness of debt 2,278,158 -- 2,278,158 -- 2,278,158
Gain on write-down of accounts payable -- -- -- -- 1,405,232
------------- ------------- ------------- ------------- -------------
Total other income (expenses) 2,278,181 4 2,278,199 65 631,513
------------- ------------- ------------- ------------- -------------
Loss before minority interest in losses
of subsidiary 2,234,140 (69,421) 2,139,573 (223,338) (15,571,965)
------------- ------------- ------------- ------------- -------------
Minority interest in losses of subsidiary 191,300 -- 191,300 -- 521,100
------------- ------------- ------------- ------------- -------------
Net (loss) income $ 2,425,440 $ (69,421) $ 2,330,873 $ (223,338) $ (15,050,865)
============= ============= ============= ============= =============
Net (loss) income available to common
stockholders per common share: $ 0.7 $ -- $ 0.8 $ --
============= ============= ============= =============
Net (loss) income per common share -
basic and diluted $ 0.3 $ -- $ 0.2 $ --
============= ============= ============= =============
Weighted average shares outstanding:
Basic 834,525 161,980,378 413,656 160,214,449
============= ============= ============= =============
Diluted 834,525 161,980,378 413,656 160,214,449
============= ============= ============= =============
"See Accompanying Notes and Accountant's Report"
2
MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005 AND 2004
- --------------------------------------------------------------------------------
For The Nine For The Nine
Months Ended Months Ended
February 28, February 28,
2005 2005
------------ ------------
Cash flows from operating activities:
Net income $ 2,330,873 $ (223,338)
Adjustments to reconcile (net loss) income to
net cash used in operating activities:
Depreciation and amortization 858 372
Forgiveness of debt 2,278,158 --
Stock issued in exchange for debt 3,775,425 --
Minority interest in losses of subsidiary (191,300) --
Changes in operating assets and liabilities:
Other current assets -- (2,379)
Other assets 7,448 9,587
Accounts payable and accrued expenses (257,893) (38,556)
Advances from affiliates (4,509,346) (10,000)
Accrued compensation (3,493,187) 240,000
------------ ------------
Net cash used in operating activities (58,964) (24,314)
Cash flows from investing activities:
Purchase of furniture and fixtures -- (1,724)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock -- 82,000
------------ ------------
Net change in cash and cash equivalents (58,964) 55,962
Cash and cash equivalents, beginning of period 58,964 20,418
------------ ------------
Cash and cash equivalents, end of period $ -- $ 76,380
============ ============
"See Accompanying Notes and Accountant's Report"
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.
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 of 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
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 February 29, 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.
6
MEDITECH PHARMACEUTICALS, INC
AND SUBSIDIARY
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2005 (Unaudited)
- --------------------------------------------------------------------------------
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 lease agreement. During the nine months ended
February 28, 2005, and the year ended May 31, 2004, the Company incurred
approximately $13,500 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.
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 Officer, 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.
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 income of $2,425,440 during the three months ended
February 28, 2005, had a cash balance of $0, and an accumulated deficit of
$15,050,865 as of February 28, 2005. If not for the gain on forgiveness of debt,
the loss for the quarter would have been $138,585. 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 NINE MONTHS ENDED FEBRUARY 28,
2005 AND FEBRUARY 29, 2004.
Revenues
There were no revenues for the three months and nine months ended February 28,
2005 and February 29, 2004.
9
The write-off of assets, liabilities and stockholders' deficit.
During the quarter ended February 28, 2005, we wrote off all of the assets,
liabilities and stockholders' deficit previously recorded.
The bulk of Meditech's debt was in the form of accrued salaries and expenses
owed to an affiliate and also to corporate officers and employees. During this
quarter, all of that debt was converted to stock or options in Meditech and/or
in Meditech's newly formed subsidiary, East West Distributors, Inc.
Specifically, Meditech owed Petro-Med, Inc. $3,610,000 in principal, plus
accrued interest Of $899,346 through September 30, 2004. On October 25, 2004,
pursuant to a Debt Exchange Agreement by and between Meditech and Petro-Med,
Meditech and Petro-Med agreed that the principal amount of debt owed to
Petro-Med would be exchanged for 180,500,000 pre-split restricted shares of
Meditech common stock. Interest was agreed to be forgiven.
Meditech also owed Gerald N. Kern $1,882,440.40 in accrued salary plus interest
through December 31, 2004. On January 12, 2005, pursuant to a Debt Exchange
Agreement by and between Meditech and Mr. Kern, Meditech and Mr. Kern agreed
that this principal amount of accrued salary owed to Mr. Kern would be exchanged
for non-qualified stock options to purchase 750,000 shares of Meditech common
stock at an exercise price of $.001 per share. Interest was agreed to be
forgiven.
Meditech owed Cynthia S. Kern $535,863.50 in accrued salary plus interest
through December 31, 2004. On January 12, 2005, pursuant to a Debt Exchange
Agreement by and between Meditech and Mrs. Kern, Meditech and Mrs. Kern agreed
that this principal amount of accrued salary owed to Mrs. Kern was to be
exchanged for non-qualified stock options to purchase 750,000 shares of Meditech
common stock at an exercise price of $.001 per share. Interest was agreed to be
forgiven.
Meditech owed Gumersinda Nave $303,724.18 in accrued salary plus interest
through December 31, 2004. On January 12, 2005, pursuant to a Debt Exchange
Agreement by and between Meditech and Ms. Nave, Meditech and Ms. Nave agreed
that this principal amount of accrued salary was to be exchanged for 150,000
restricted shares of East West Distributors, Inc. common stock. Interest was
agreed to be forgiven.
Meditech owed Steven Kern $175,000 in accrued salary plus interest through
December 31, 2004. On January 12, 2005, pursuant to a Debt Exchange Agreement by
and between Meditech and Mr. Steven Kern, Meditech agreed that this principal
amount of accrued salary owed to Mr. Steven Kern was to be exchanged for 150,000
restricted shares of East West Distributors, Inc. common stock. Interest was
agreed to be forgiven.
The above referenced debt exchanges accounted for approximately 96% of the debt
reduction. The balance of the debt, some of which was disputed, was in form of
items that expired under the statute of limitations, and thus were written off.
East West Distributors, Inc. was formed and incorporated by Meditech as a wholly
owned subsidiary on December 13, 2004. Meditech's pharmaceutical development
business was transferred to this new subsidiary and will continue its efforts
toward receiving regulatory approvals for new pharmaceuticals and to seek
diversification of its business beyond the pharmaceutical industry under its old
management. The stock of East West Distributors, Inc. will be distributed in
form of a stock dividend to Meditech shareholders of record as of February 17,
2005 as soon as such distribution is approved by the Securities and Exchange
Commission.
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.
10
Research and Development Costs
There were no research and development costs for the three months and nine
months ended February 28, 2005 and February 29, 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 29, 2004. The decrease
was primarily due to lower miscellaneous expenses, accounting fees, and accrual
of interest charged on accounts payable.
Net Income/Loss
Net income was approximately $2,425,440 for the three months ended February 28,
2005 as compared to a loss of $69,422 for the three months ended February 29,
2004. The increase in income was due primarily due to debt forgiveness and also
to the decrease in general and administrative expenses. If not for the
forgiveness of debt, the loss for the current quarter would have been $138,585.
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-QSB, 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.
11
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.
12
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
(as of 02/28/05)
Dated: 06/13/05
------------
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: 06/13/05
- ---------------------------
Kevin Halter, Jr., Director
(as of 02/28/05)