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 November 30, 1999
Commission File No. 0-12561
Meditech Pharmaceuticals, Inc.
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(Exact name of Registrant as specified in its charter)
Nevada 95-3819300
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
PMB 382, 10105 E. Via Linda, #103, Scottsdale, AZ 85258
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(Address of principal executive offices and zip code)
(480) 614-2874
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(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 lasts practicable date.
129,353,432 shares of $.001 par value common stock, as of November 30, 1999
MEDITECH PHARMACEUTICALS, INC.
(A Development-Stage Enterprise)
CONSOLIDATED BALANCE SHEET
Nov. 30, May 31,
1999 1999
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ASSETS
Current assets:
Cash, including interest-bearing accounts $ -- $
Prepaid assets and other current assets 600 600
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Total current assets 600 600
Due from officer
Equipment and furniture, net
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TOTAL $ 600 $ 600
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 1,196,500 $ 1,176,100
Accrued professional fees 635,300 635,300
Accrued laboratory expenses 33,900 33,900
Accrued compensation 2,459,100 2,356,500
Advances from parent 3,445,800 3,294,800
Advances from affiliate 0 0
Current portion of long-term debt 0 0
Loan payable 71,000 71,000
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Total current liabilities 7,841,600 7,567,600
Long-term debt
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7,841,600 7,567,600
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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; Nov. 30, 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 (15,129,700) (14,855,700)
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Total shareholders' equity (deficit) (8,032,300) (7,758,300)
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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 Period from From
Sep. 1, 1999 Sep. 1, 1998 Jun. 1, 1999 Jun. 1, 1998 May 4, 1982
to to to to (inception) to
Nov. 30, 1999 Nov. 30, 1998 Nov. 30, 1999 Nov. 30, 1998 Nov. 30, 1999
------------- ------------- ------------- ------------- -------------
Research and development expenditures $ -- $ -- $ -- $ -- $ 489,300
------------ ------------ ------------ ------------ ------------
Clinical trials -- -- -- -- 1,347,800
------------ ------------ ------------ ------------ ------------
Expenses for efforts to secure financing,
establish affiliations with clinics and
physicians and formulate a marketing
strategy:
Compensation 59,500 58,900 120,000 119,800 5,221,900
Professional fees 0 0 0 30,500 1,307,100
General and administrative 1,700 2,500 3,000 113,000 3,935,100
------------ ------------ ------------ ------------ ------------
61,200 61,400 123,000 263,300 10,464,100
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 76,300 70,200 151,000 138,500 3,041,000
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 $ 137,500 $ 131,600 $ 274,000 401,800 $ 15,129,700
============ ============ ============ ============ ============
Net loss and deficit accumulated during development
stage per share of common stock $ .001 $ .001 $ .002 $ .003 $ .16
============ ============ ============ ============ ============
Weighted average number of shares outstanding 123,816,925 123,816,925 123,816,925 122,715,286 91,821,838
============ ============ ============ ============ ============
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 Nov. 30, 1999
Deficit
accumulated
Additional Common during
paid-in stock development
Common stock capital subscribed stage
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Shares Amount
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(000's)
Balance at May 31, 1983 48,000 $ 48,000 $ 295,000 $ 234,400 $ (1,022,600)
Balance at May 31, 1984 66,115 66,100 4,182,000 -- (2,361,000)
Balance at May 31, 1985 66,015 66,000 4,153,400 -- (4,155,100)
Balance at May 31, 1986 74,015 $ 74,000 $ 5,753,600 $ -- $ (5,688,900)
Balance at May 31, 1987 76,325 $ 76,300 $ 5,470,700 $ -- $ (7,395,200)
Balance at May 31, 1988 78,231 $ 78,200 $ 5,909,800 $ 0 $ (8,275,400)
Balance at May 31, 1989 88,988 89,000 6,129,000 0 (8,916,800)
Balance at May 31, 1990 89,088 89,100 6,139,500 0 (9,438,900)
Balance at May 31, 1991 92,088 92,100 6,177,800 0 (9,918,000)
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 -- -- -- -- (483,100)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1992 94,088 94,100 6,207,200 0 (10,401,100)
Net Loss, year ended May 31, 1993 -- -- -- -- (449,400)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1993 94,088 94,100 6,207,200 0 (10,850,500)
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 -- -- -- -- (753,900)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1994 102,593 102,600 6,414,500 0 (11,604,400)
Sale of Stock, Fiscal 1995 1,088 1,100 12,500 -- --
Net Loss, year ended May 31, 1995 -- -- -- -- (515,600)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1995 103,681 103,700 6,427,000 0 (12,120,000)
Net Loss, year ended May 31, 1996 (501,600)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1996 103,681 103,700 6,427,000 0 (12,621,600)
Common stock granted for services
during Fiscal 1997 15,335 15,300 412,000 (5,000)
Common stock subscriptions 5,000
Net Loss, year ended May 31, 1997 -- -- -- -- (957,400)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1997 119,016 119,000 6,839,000 0 (13,579,000)
Net Loss, year ended May 31, 1998 (555,200)
------------ ------------ ------------ ------------ ------------
Balance at May 31, 1998 119,016 119,000 6,839,000 0 (14,134,200)
Common stock granted for services
during Fiscal 1999 4,800 4,800 134,600
Net Loss, year ended May 31, 1999 (721,500)
------------ ------------ ------------ ------------ ------------
123,816 123,800 6,973,600 0 (14,855,700)
Net Loss for period ended
Nov. 30, 1999 (274,000)
------------ ------------ ------------ ------------ ------------
Balance at Nov. 30, 1999 123,816 123,800 6,973,600 0 (15,129,700)
============ ============ ============ ============ ============
(Table Continues on Following Page)
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 Nov. 30, 1999
(Continued)
Note
receivable
from officer Total
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Balance at May 31, 1983 $ -- $ (445,200)
Balance at May 31, 1984 -- 1,887,100
Balance at May 31, 1985 -- 64,300
Balance at May 31, 1986 $ (1,440,000) $ (1,301,300)
Balance at May 31, 1987 $ 0 $ (1,848,200)
Balance at May 31, 1988 $ 0 $ (2,287,400)
Balance at May 31, 1989 0 (2,698,800)
Balance at May 31, 1990 0 (3,210,300)
Balance at May 31, 1991 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)
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Balance at May 31, 1992 0 (4,099,800)
Net Loss, year ended May 31, 1993 -- (449,400)
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Balance at May 31, 1993 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)
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Balance at May 31, 1994 0 (5,087,300)
Sale of Stock, Fiscal 1995 -- 13,600
Net Loss, year ended May 31, 1995 -- (515,600)
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Balance at May 31, 1995 0 (5,589,300)
Net Loss, year ended May 31, 1996 (501,600)
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Balance at May 31, 1996 0 (6,090,900)
Common stock granted for services
during Fiscal 1997 422,300
Common stock subscriptions 5,000
Net Loss, year ended May 31, 1997 -- (957,400)
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Balance at May 31, 1997 0 (6,621,000)
Net Loss, year ended May 31, 1998 (555,200)
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Balance at May 31, 1998 0 (7,176,200)
Common stock granted for services
during Fiscal 1999 139,400
Net Loss, year ended May 31, 1999 (721,500)
------------ ------------
0 (7,758,300)
Net Loss for period ended
Nov. 30, 1999 (274,000)
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Balance at Nov. 30, 1999 0 (8,032,300)
============ ============
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
Nov. 30, 1999 Nov. 30, 1998 Nov. 31, 1999
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Cash provided by:
Financing activities --
Proceeds from long-term debt $ -- $ -- $ 27,300
Advances from (repayments to)
parent and affiliates 151,000 138,600 3,342,800
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 investment in subsidiary -- -- 300,000
Issuance of common stock for
repayment of debt to parent -- -- (559,900)
------------ ------------ ------------
151,000 278,000 9,279,100
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 20,400 21,000 1,196,500
Accrued professional fees 635,300
Accrued laboratory expenses -- -- 33,900
Accrued compensation 102,600 102,800 2,459,100
Stock subscription proceeds refundable -- -- 0
Advances (to) from affiliates -- -- 0
Prepaid and other current assets -- -- (600)
Proceeds from loan payable -- -- 71,000
------------ ------------ ------------
274,000 401,800 14,391,700
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Net increase (decrease) in cash 0 0 0
Cash at the beginning of the period 0 0 --
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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
Nov. 30, 1999 Nov. 30, 1998 Nov. 31, 1999
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Cash used for:
Net loss $ (274,000) $ (401,800) $(15,129,700)
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 (274,000) (401,800) (13,820,400)
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
------------ ------------ ------------
(274,000) (401,800) (14,391,700)
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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 Presentation
The accompanying balance sheet, as of November 30, 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 November 30, 1999, and the related statement of shareholders' deficit
for the period from May 4, 1982, (inception) to November 30, 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 and 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 November 30, 1999, as the company's operations did
not generate taxable income for tax or financial reporting purposes.
Note 3 - Advances to Parent
At November 30, 1999, the company was indebted to Petro-Med Inc. In the amount
of $3,445,800. 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 November 30, 1999, the company
had an accumulated deficit of $15,129,700. 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 November 30, 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 November 30, 1999, approximately $12,301,200 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, $5,221,900 for compensation,
$1,307,100 for professional fees, and $3,935,100 for general and administrative
expenses, including fees to consultants.
Liquidity and Capital Resources
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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
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The company has no experience with respect to the effect of inflation on its
business. However, the pharmaceutical industry is well developed and based upon
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 be signed on its behalf by the
undersigned thereunto duly authorized.
Meditech Pharmaceuticals, Inc.
(Registrant)
By: /s/ Cynthia S. Kern Dated January 5, 2000
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Cynthia S. Kern, President
and Acting Chief Financial Officer