-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Udh6ZiLcGl/K6StWGGEuks5MnKLzpjhHwGDplg0r50PXXIh9F7lTgidY0ExsBM81 5GejaDibRcvimnaVxs0bVQ== 0001010549-05-000434.txt : 20050613 0001010549-05-000434.hdr.sgml : 20050613 20050613124617 ACCESSION NUMBER: 0001010549-05-000434 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050228 FILED AS OF DATE: 20050613 DATE AS OF CHANGE: 20050613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITECH PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000717588 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 953819300 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12561 FILM NUMBER: 05891779 BUSINESS ADDRESS: STREET 1: 10105 E VIA LINDA #103 STREET 2: PMB 382 CITY: SCOTTSDALE STATE: AZ ZIP: 85258 BUSINESS PHONE: 4806142874 MAIL ADDRESS: STREET 1: 10105 E VIA LINDA STREET 2: 103 382 CITY: SCOTTSDALE STATE: AZ ZIP: 85258 10QSB/A 1 meditech10qsba022805.txt 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) EX-31.1 2 meditech10qsbaex311022805.txt SECTION 302 CERTIFICATION OF CEO Exhibit 31.1 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Kevin Halter, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Meditech Pharmaceuticals, Inc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any changes in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and 5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting. By: /s/ Kevin Halter, Jr. -------------------------- Kevin Halter, Jr. President and Chief Executive Officer (as of 02/28/05) June 13, 2005 EX-31.2 3 meditech10qsbaex312022805.txt SECTION 302 CERTIFICATION OF CFO Exhibit 31.2 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Kevin Halter, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Meditech Pharmaceuticals, Inc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any changes in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and 5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting. By: /s/ Kevin Halter, Jr. ----------------------- Kevin Halter, Jr. Chief Financial Officer (as of 02/28/05) June 13, 2005 EX-32.1 4 meditech10qsbex321022805.txt SECTION 906 CERTIFICATION OF CEO Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly report of Meditech Pharmaceuticals, Inc. (the "Company") on Form 10-QSB for the period ending February 28, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I , Kevin Halter, Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Kevin Halter, Jr. ------------------------ Kevin Halter, Jr. Chief Executive Officer (as of 02/28/05) June 13, 2005 EX-32.2 5 meditech10qsbex322022805.txt SECTION 302 CERTIFICATION OF CFO Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly report of Meditech Pharmaceuticals, Inc. (the "Company") on Form 10-QSB for the period ending February 28, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I , Kevin Halter, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Kevin Halter, Jr. -------------------------- Kevin Halter, Jr. Chief Financial Officer (as of 02/28/05) June 13, 2005 -----END PRIVACY-ENHANCED MESSAGE-----