<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                   FORM 10-KSB

---------------------
/X/                     Annual Report under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934 For the fiscal year
                        ended
                                December 31, 2001


/ / Transition report under Section 13 or 15(d) of the Securities Act of 1934
for the transition period from ------------ to------------


Commission file number 0-22413


                                 UNIVEC, INC.
                 (Name of Small Business Issuer in its Charter)

            Delaware                                          11-3163455
  -------------------------------                         ------------------
  (State or Other Jurisdiction of                         (I.R.S. Employer
  Incorporation or Organization)                          Identification No.)

                              ---------------------

                                 22 Dubon Court
                              Farmingdale, NY 11735
                                 (631) 777-2000
          (Address and telephone number of principal executive office)

                              ---------------------

       Securities registered under Section 12(b) of the Exchange Act: None

              Securities registered under Section 12(g) of the Act:

                                 Title of Class
                          Common Stock, $.001 par value
                         Common Stock Purchase Warrants

                              ---------------------

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 / /

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /

     Revenues for the issuer's most recent fiscal year were $3,905,050.

     The aggregate market value of the voting stock held by non-affiliates
computed by reference to the closing price at which the stock was sold on
February 26, 2002 was $1,599,326.
                            ---------------------
                  ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes / / No / /

                   APPLICABLE ONLY TO CORPORATE REGISTRANTS

           As of February 26, 2002 the issuer had 15,107,752 shares of
                   common stock, $.001 par value, outstanding.

     Transitional Small Business Disclosure Format: Yes / / No /X/

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>
                                     Part I

Item 1. Description of Business.

      UNIVEC, Inc. (the "Company" or "UNIVEC") is an integrated licensing,
manufacturing, and marketing company dedicated to providing safer health
products to patients and caregivers worldwide. The company produces auto-disable
and safety syringes and portable units for onsite disposal of medical and sharps
waste. Univec also assists pharmaceutical companies in marketing, fulfillment,
and tracking drug samples. The Company is a Delaware corporation incorporated on
October 7, 1996, and the successor by merger to UNIVEC, Inc., a New York
corporation, incorporated on August 18, 1992.

      On December 31, 2001 Univec, Inc., acquired Physician and Pharmaceutical
Services, Inc., (PPSI) a company primarily engaged in promoting pharmaceutical
company prescription samples to physicians. PPSI reduces the cost in the
prescription-sampling channel by providing efficient fulfillment and tracking of
prescription usage. PPSI's contracted national network of pharmacies fills the
sample prescription on a discounted fee and the company's mail service
fulfillment complements additional needs. PPSI's approach conforms to
regulations requiring increased accountability and elimination of diversion of
prescription samples, consequently reducing the exposure of physicians and
pharmaceutical companies to potential liabilities and non-compliance penalties.

      On February 28, 2002 Univec, Inc., acquired Thermal Waste Technologies,
Inc. (TWT), a manufacturer of the "Demolizer," a patented medical waste disposal
unit designed to eliminate carting of red bag and sharps waste in medical
offices. The Demolizer, about the size of a small microwave oven, automatically
converts red bag and sharps waste inside a sealed container into sterilized
waste that can be discarded as ordinary solid waste. All waste is placed in a
disposable one-gallon container that sits inside the unit, which contains the
sterilizer and the anti-viral, anti-bacterial and anti-odor filtration system.
The unit meets OSHA regulations and has passed efficacy testing performed by
Stanford University, Leberco Testing Inc., and Valley Medical Laboratories under
a protocol approved by the New York State Department of Health. The unit has
also passed the "Microbial Survivability Test for Medical Waste Incinerator
Emissions." The Demolizer is approved by state boards of health and departments
of environment in 43 states, and is pending approval in two states.

      In 1997, the Company commenced production and sales of its 1cc AD-syringes
(Auto-Disable Syringes), which are designed to make accidental or deliberate
reuse difficult. The accidental or deliberate reuse of syringes is a frequent
cause of the spread of the human immunodeficiency ("HIV") and hepatitis viruses,
as well as other blood-borne pathogens. The Company has received 510(k)
clearance from the U.S. Food and Drug Administration (the "FDA") to market its
AD-Syringes in the United States.

      The Company believes that its 1cc difficult to reuse syringes are more
effective than competitive syringes and that they are competitively priced. The
Company also believes that it is the only company that markets an AD-Syringe
with a 1cc barrel, which is ideal for dispensing accurate dosages of medicine
(e.g., allergy, immunization and insulin medicines). It is more difficult to
deliver up to a .95cc dosage accurately with a syringe barrel that is greater
than 1cc. The Company does not know of any other company that offers a lcc
aspirating syringe that can be locked. Healthcare workers need aspirating
syringes to mix medications in the syringe barrel and inject medications
intravenously. Furthermore, the Company believes that aspirating syringes are
preferred by diabetes patients and needle-exchange programs. Pursuant to
programs of international relief agencies, the Company has shipped its lcc
AD-Syringes to over 80 countries.

      Univec also manufactures and markets patented Sliding Sheath Syringes
designed to protect patients and healthcare workers from needle stick injuries,
in compliance with the Federal Needlestick Safety and Prevention Act of the
United States government, and requirements of the Occupational Safety and Health
Administration (OSHA). In July 2000, the Company received FDA approval for an
extendible barrel sleeve syringe based on technology licensed by the Company in
1999.

      In addition, UNIVEC has developed a Bifurcated Needle Safety Syringe
specifically designed to comply with the Federal Needlestick Safety and
Prevention Act of the United States government. The Company has been granted
510(k) clearance by the Food and Drug Administration (FDA). The device is
intended for use in administering smallpox vaccines in response to potential
bioterrorist threats. The Needlestick Safety mandate requires all U.S.
healthcare providers to evaluate and implement safer medical devices under their
OSHA "Exposure Control Plans". All healthcare providers must now adopt safer
devices to protect workers and others from needles potentially contaminated with
bloodborne pathogens such as hepatitis B, hepatitis C, and HIV. In general, this
"safer device" rule applies in the normal course of operations, as well as in
connection with any mass immunization program authorized by the federal
government.
<PAGE>


      The Company markets its AD-Syringes and Sliding Sheath Safety Syringes to
governments of developing countries, private hospitals and health facilities in
the United States, and distributors in the United States. The Company also
licenses its patents and proprietary manufacturing processes relating to its 1cc
AD-Syringe and other syringe designs.

Problems Associated With Traditional Disposable Syringes

      In developing countries, accidental or deliberate reuse of disposable
syringes poses a serious risk of transmitting HIV-AIDS, hepatitis and other
blood-borne pathogens. Relief agencies, including UNICEF and WHO, administered
almost a billion immunizations to women and children through immunization
programs in developing countries in 1998 and anticipate administering 3.5
billion immunizations by 2005. WHO reported that surveys carried out in four of
its six regions indicated that up to a third of immunization injections were
unsterile. Immunization injections account for less than 10% of injections
administered within the health sector. The United Nations estimates that more
than half of all non-immunization injections in developing countries are unsafe.
According to WHO, an estimated 40.0 million adults and children worldwide are
infected with HIV, 90% of whom live in developing countries.

      Intravenous drug users, who share syringes or use syringes discarded by
hospitals, medical clinics and laboratories, doctors or diabetic patients, are
extremely susceptible to HIV, hepatitis and other blood-borne pathogens. An
article in the May 1996 American Journal of Public Health for Disease Control
written by an epidemiologist for the Center for Disease Control and Prevention
(the "CDC") estimates that nearly half of all new HIV infections are occurring
in intravenous drug users. In the United States, up to 30% of pregnant mothers
infected with HIV transmit the virus to their babies, according to the CDC.
Based on a study of children with HIV, who received care at Children's Hospital
of Wisconsin, researchers estimated that the mean total lifetime costs of caring
for a child with HIV was close to $1 million.

      As a result of findings in the United States and developing countries,
public health officials have encouraged the medical industry to develop safer
syringes to prevent the spread of blood-borne pathogens, such as HIV and
hepatitis. In 1995, the House of Delegates -- American Medical Association
requested "manufacturers of disposable hypodermic needles and syringes to adopt
designs to prevent reuse and to include in the packaging clear directions for
their correct disposal." In late 1995, UNICEF and WHO recommended "the use of
auto-disable syringes instead of disposable, single use syringes in order to
avoid the hazards of unsafe injection practices."

Needlestick Prevention

      Needlestick prevention devices are designed to prevent accidental puncture
injuries to health care workers and patients before, during, and after the use
of hypodermic syringes and needles. Statistics indicate that less than 1% of all
reported HIV infections in the United States are attributed to needlestick
injuries. The most prevalent needle stick prevention device, the extendible
barrel sleeve, is not a substitute for features that render a syringe difficult
to reuse; however, it can be combined with devices that make a syringe difficult
to reuse. Needlestick prevention methods include:

      Retracting Needles, which retract the needle into the barrel after use.
These devices are effective needlestick prevention devices; however, operators
must manually trigger the retraction of needles. Retracting needle devices that
automatically trigger with a single use of the syringe can render the syringe
design difficult to reuse. However, such devices are costly to manufacture due
to the complexity of the mechanics required to retract the needle.

      Self-Destruct Needles, which permit the needle to be collapsed or deformed
into a shape which cannot result in a needlestick injury. Although self-destruct
needle devices are mechanically simpler than retracting needle devices, less
prone to malfunction and less costly to manufacture, such devices are effective
only if the operator triggers the self-destruct feature.


<PAGE>

      Extendible Barrel Sleeves, which enclose the barrel of the syringe in a
second cylinder. The operator extends the sleeve before and after use to cover
the tip of the needle. The extendible barrel sleeves often lock in the extended
position after use. In virtually all designs, the operator of the syringe must
manually extend the barrel sleeve after use. The sleeve does not prevent
multiple use of the syringe before the operator encloses the barrel. However,
extendible barrel sleeves are more cost-effective than the other alternatives
and can be combined with a device that makes the syringe difficult to reuse.

UNIVEC Syringes

      The Company has developed a 1cc AD-Syringe for aspirating and
non-aspirating applications, which is ideally suited for dispensing accurate
dosages of allergy, immunization and insulin medicines. The Company's 1cc
AD-Syringe can deliver dosages of up to.95cc. With the aspirating syringe, the
UNIVEC locking clip does not limit the user's ability to withdraw and depress
("to aspirate") the plunger until the user locks the syringe voluntarily. With
the non-aspirating syringe, the UNIVEC locking clip limits the user's ability to
aspirate the plunger and locks the syringe passively.

      When the non-aspirating syringes are assembled, the syringe clip is placed
on the ratcheted plunger in the position needed to limit dosage as desired. When
the operator depresses the plunger, the clip travels down the barrel by an equal
distance. Withdrawal of the plunger by any amount embeds the prongs into the
barrel and the user cannot retract the plunger.

      The Company's 1cc non-aspirating syringe was developed for the needs of
immunization programs. Using existing components, the Company can limit its
non-aspirating syringe to any dosage between .05cc and .95cc.

      The Company's 1cc aspirating syringe works similarly to the non-aspirating
model, except that the clip prongs do not engage the barrel until the operator
withdraws the plunger completely. Once the operator does so, the clip catches a
single ratchet and travels down the barrel as the plunger is depressed and the
operator cannot withdraw the plunger.

<PAGE>

      The Company's 1cc aspirating syringe was developed for healthcare workers,
who need to mix medications in the syringe barrel and inject medicines
intravenously. Furthermore, the Company believes that aspirating syringes are
preferred by diabetes patients and needle-exchange programs. The Company does
not know of any other company that offers an aspirating syringe that can be
locked.

      The Company is continuing to develop larger size, aspirating and
non-aspirating syringes for sale to hospitals, health clinics, and relief
agencies. In general, hospitals and health clinics use more of the larger size
syringes than 1cc syringes. Hospitals and clinics will have the choice of a
syringe barrel with or without an extendible barrel sleeve.

      In October 1999, UNIVEC licensed rights to a United States patent for a
sliding sheath to function on all standard syringes. The Company believes that
its licensed design for a safety syringe will compete successfully with the
other safety syringes on the market. This design can be used on barrels of
various sizes.

Marketing of Pharmaceutical Company Drug Samples to Physicians

      The PPSI online network provides better marketing and clinical integration
information than traditional systems, and enables pharmaceutical companies to
maintain market share when competing with generic drugs. The PPSI information
system includes detailed information such as the individual sales
representative, zip codes, pharmacy and prescribing physician. The PPSI system
provides pharmaceutical companies with an easy, safe way to offer free samples
through physicians and increase their value to patients who benefit through
savings on prescriptions. In addition, the PPSI system provides incentives for
chain drug stores to stock the pharmaceutical products and for pharmaceutical
companies to keep their products on managed care formularies within hospitals,
correctional institutions, and nursing homes. The PPSI information system and
clinical integration capability also provides a necessary service aiding
government oversight. Pharmaceutical manufacturers spend over $16 billion a year
for marketing products. PPSI's strategy is to provide flexible sample programs
supported by technology to assist with distribution, dispensing, reporting, and
clinical integration that maximizes the intent of appropriate sample model for
marketing. PPSI out-sources its computer system applications to an industry
leading provider.

Disposal of Medical and Sharps Waste

      TWT's Demolizer(R) System consists of a computerized sterilization unit
(19 1/4" D x 13" W x 12 1/4" H) and disposable one gallon metal waste collection
containers. One container is used to collect sharps waste (i.e. syringes,
needles, scalpels); the other is used to collect red bag (soft) waste. The
containers meet all Occupational Safety and Health Administration ("OSHA")
regulations governing the collection and storage of hazardous medical waste. The
processing unit incorporates state-of the art electronic controls which assure
operation within the approved parameters. If there is any malfunction, the
system shuts down and prevents removal of any unprocessed waste. At the
completion of a successful cycle, the processing unit issues a print-out label
verifying that the correct operating parameters have been met. The print-out is
used for the facilities in-house log book which records all cycles run by the
Demolizer(R) System and verifies that the processed waste has been properly
sterilized. The pressure sensitive label replaces the cumbersome medical waste
tracking forms which are currently used by every state. In order to prevent
odors and contaminants, such as dioxins, from being released into the
environment, the Demolizer(R) System incorporates a sophisticated anti-viral,
anti-bacterial and anti-odor filtration system in conjunction with a
sophisticated air flow pattern which assures that all emissions are captured and
processed. During processing, infectious medical waste is sterilized and sealed
in the collection container using a thermal process. The sharps waste is
rendered unrecognizable and non reusable. Medical waste processed by the
Demolizer(R) System meets these criteria and may be discarded as ordinary solid
waste.

Sales, Marketing and Distribution

      The Company has shipped its lcc AD-Syringes to over 80 countries. The
Company markets its AD-Syringes and Safety-Shield syringes, as well as the
Demolizer medical waste disposal system to governments of developing countries,
private hospitals and health facilities in the United States, and distributors
in the United States. The Company also licenses its patents and proprietary
manufacturing processes relating to its 1cc AD-Syringes and other syringe
designs. To stimulate demand for its safety syringes, the Company plans to
initiate promotional and educational campaigns directed at (i) public health
officers and other government officials responsible for public health policies,
(ii) doctors and administrators of healthcare facilities responsible for
treatment of HIV-AIDS and hepatitis patients, and (iii) liability insurance
companies.

<PAGE>

      The Company also markets its drug sampling services to pharmaceutical
companies desiring to maintain or expand market position.

      The Company markets the Demolizer medical waste disposal unit to
healthcare practitioners that desire to reduce the liability for storing medical
wastes on premises and that desire to reduce the costs associated with the
carting of medical waste to central facilities for disposal. Such practitioners
include Allergists, Pediatricians, Dermatologists, Dentists, Veterinarians,
Corporate medical departments, Community Health Centers, City Health
Departments, Correctional Institutions, Nursing Homes, Assisted Living
Facilities, the U.S. Military, and U.S. and foreign Health Organization.

Production

      The Company's lcc locking syringes are being assembled by contract
manufacturers in the United States, China, Belgium, Portugal, and Korea. The
Portuguese and United States manufacturers also mold the Company's proprietary
plungers. The Company owns stamping, assembly, and molding equipment at the
Portuguese and U.S. manufacturers. The Company produces clip plunger assemblies
to produce 1cc AD-Syringes at its Farmingdale, New York production facility.
These assemblies are shipped to our contract manufacturers to produce
Auto-Disable Syringes.

      The Company's syringes consist of a standard needle, barrel, rubber
stopper, a ratcheted plunger designed by the Company, and a pronged stainless
steel locking clip designed by the Company. The locking clip and plunger can be
assembled, with minor modifications, into barrels manufactured by
Becton-Dickinson, Tyco, and other syringe manufacturers. The Company has
obtained a patent on its stainless steel locking clip, and has been granted a
patent for the design of a plunger which, when combined with the locking clip,
results in a narrow barreled difficult to reuse, locking syringe. The stainless
steel for the locking clip and the plastic for the syringe barrels and plungers
is readily available from several sources. The syringe barrels for some of the
syringes sold by the Company have been manufactured by the Portuguese contract
manufacturer. The Company has been successful through other sources worldwide in
purchasing barrels to increase the overall production capacity. In addition, the
Company continues to send clip plunger assemblies produced in the U.S. to
syringe manufacturers around the world to also increase overall production. The
Company continues to pursue alternate sources of supply for components. Should
there be a need for a certain component from an alternate supplier, there can be
no assurance that the Company will be able to obtain it on acceptable terms, and
there can be no assurance that production of certain configurations of its lcc
locking syringes will not be delayed. Delays resulting from the selection of an
alternate supplier to produce certain components could have a materially adverse
effect on the Company's business.

      The Demolizer is manufactured through a contract manufacturing facility in
Connnecticut.

Competition

      The Company's principal competition for syringes is from traditional
disposable syringes. Becton-Dickinson, Tyco and Terumo control a total of
approximately 90%, of the worldwide syringe market, and are substantially
larger, more established and have significantly greater financial, sales and
marketing, distribution, engineering, research and development and other
resources than the Company. To the Company's knowledge, only Becton-Dickinson
and Bader, a German machine tool manufacturer, distribute commercially a line of
difficult to reuse syringes, none of which allow for aspiration. The Bader
DestroJect syringe and the Becton-Dickinson SOLOSHOT syringe were designed to
dispense a dosage of .5cc only, whereas the UNIVEC 1cc locking clip syringe was
designed to dispense dosages up to .95cc. The Company believes that UNIVEC
syringes are more effective than competitors, difficult to reuse syringes and
that the UNIVEC syringes are competitively priced. There can be no assurance
that the major syringe manufacturers or others will not commence production of
1cc difficult to reuse syringes, or locking syringes which aspirate, or that the
Company will be able to successfully compete in this market.

<PAGE>


      PPSI's competition comes from traditional sampling providers that include
the actual drug samples and other promotional companies that offer various forms
of scripts and literature.

      TWT's competition comes from traditional large-scale medical waste
management systems that depend on collection of waste from a variety of sources
for disposal at a large centralized facility.

Patents, Licenses and Proprietary Rights

      In 1995, the Company was granted a United States patent for a locking clip
device not biased against the plunger. The patent is broad enough to include
several applications of the design covering the first series of products to be
marketed by the Company. The Company was granted a United States patent for a
plunger design which, in conjunction with its patented locking clip, results in
a narrow barrel difficult to reuse syringe that allows for aspiration during
use.

      The Company also has filed patent applications for its locking clip and
aspirating plunger in certain foreign countries participating in the Patent
Cooperation Treaty (Canada, Brazil, Mexico, certain European countries, Japan,
South Korea, China, Russia and Australia). However, patent applications filed in
foreign countries and patents granted in such countries are subject to laws,
rules and procedures that differ from those in the United States, and
accordingly, patent protection in such countries may be different from patent
protection provided by United States laws.

      The Company has licensed the rights to a locking device patent to develop
a 3cc locking syringe. The Company is obligated to make certain minimum annual
royalty payments in respect of the licensed rights to this locking device patent
and, to the extent the Company's products utilize the designs of the licensed
patent, to pay royalties to the owner of the licensed patent ranging from 2% to
6% of net sales (or in the case of products produced under sublicenses granted
to third parties, 25% to 40% of royalties received from those parties). This
invention has U.S. patent protection, but lacks foreign patent protection.
However, the Company has filed for patent protection in certain European
countries for this invention.

      The Company has registered trademarks UNIVEC(R), and Rx Ultra(R), Rx Plus,
The Univec Crest, and the symbol representing no second use, (i.e., the number 2
crossed out inside of a circle), with the United States Patent and Trademark
Office.

      In March 2001, the Company exercised an option to acquire a license of a
component for a period of the later of ten years or the expiration of the last
patent relating to the component and its improvements, with the right to
terminate the agreement if the Company fails to produce and ship at least ten
million of this component within three years. The Company is committed to pay a
royalty of $.001, per component sold, with an advance royalty fee of $15,000,
previously paid. As of December 31, 2001, the Company has not sold any product
subject to royalties under this agreement.

      In July 2000, the Company received FDA approval of the sliding sheath
syringe and has begun to manufacture and market this product in 2001.

      In August 2000, the Company entered into a licensing agreement providing
for the non-exclusive, worldwide use of the Company's patents for the
manufacturing, use and marketing of its auto-disable syringes through the period
any patents are still in effect, providing for royalties on sales and for the
sale of equipment necessary to manufacture the product. As of December 31, 2001,
the Company has not received any royalties.


<PAGE>

Government Regulation

      The manufacture and distribution of medical devices are subject to
extensive regulation by the FDA in the United States, and in some instances, by
foreign and state regulatory authorities. Pursuant to the Federal Food, Drug,
and Cosmetic Act, as amended, and the regulations promulgated there under
(collectively, the "FDC Act"), the FDA regulates the clinical testing,
manufacture, labeling, sale, distribution and promotion of medical devices.
Before a new device can be introduced into the market, a manufacturer must
obtain FDA permission to market through either the 510(k) pre-market
notification process or the costlier, lengthier and less certain pre-market
approval ("PMA") application process. The FDA has granted the Company 510(k)
approval to sell its 1cc locking clip syringe in the United States, subject to
compliance with other applicable FDA regulatory requirements. As a Class II
device, performance standards may be developed for the 1cc locking clip syringe
which the product would then be required to meet. Failure to meet standards for
effectiveness and safety could require the Company to discontinue the
manufacturing and/or marketing of the product in the United States. Furthermore,
manufacturers of medical devices are subject to record-keeping requirements and
required to report adverse experiences relating to the use of the device. Device
manufacturers are also required to register their establishments and list their
devices with the FDA and with certain state agencies and are subject to periodic
inspections by the FDA and certain state agencies.


      Medical devices are subject to strict federal regulations regarding the
quality of manufacturing ("Good Manufacturing Practices" or "GMP"). GMP
regulations impose certain procedural and documentation requirements upon the
Company with respect to manufacturing and quality assurance activities. The FDA
conducts periodic audits and surveillance of the manufacturing, sterilizing and
packaging facilities of medical device manufacturers to determine compliance
with GMP requirements. These procedures may include a product recall of a
product or a "cease distribution" order which would require the manufacturer to
direct its distributors and sales agents to stop selling products, as well as
other enforcement sanctions. The Company's manufacturing facilities have not
been certified as satisfying GMP requirements. The Company's facilities will be
subject to extensive audits in the future, pursuant to standard FDA procedure.
No assurance can be given that when the Company is audited that it will be found
to be in compliance with GMP requirements, or that if it is not found in
compliance, what penalties, enforcement procedures or compliance effort will be
levied on or required of the Company. To date, the Company has not been audited
by the FDA. The FDA also has the authority to request repair, replacement or
refund of the cost of any device manufactured or distributed by the Company, and
the failure to meet standards for safety and effectiveness could require the
Company to discontinue marketing and/or manufacturing its product in the United
States.

      The introduction of the Company's products in foreign markets will also
subject the Company to foreign regulatory clearances which may impose additional
substantive costs and burdens. International sales of medical devices are
subject to the regulatory requirements of each country. The regulatory review
process varies from country to country. Many countries also impose product
standards, packaging requirements, labeling requirements and import restrictions
on devices. In addition, each country has its own tariff regulations, duties and
tax requirements. The Company's products are required to satisfy international
manufacturing standards for sale in certain foreign countries. The Company's
Portuguese contract manufacturer received final ISO 9002 Certification in March,
1999.

      Obtaining the ISO 9002 facilitates sales to certain export accounts,
particularly in Europe. Currently, sales to international relief agencies, the
Company's primary market, are not affected by ISO certification or other foreign
regulations other than those regulations which have been imposed by the
international relief agencies, with which the Company has been in compliance.

<PAGE>

      The approval by the FDA and foreign government authorities is
unpredictable and uncertain, and no assurance can be given that the necessary
approvals or clearances for the Company's products will be granted on a timely
basis or at all. Delays in receipt of, or a failure to receive, such approvals
or clearances, or the loss of any previously received approvals or clearances,
could have a materially adverse effect on the business, financial condition and
results of operations of the Company. Furthermore, approvals that have been or
may be granted are subject to continual review, and later discovery of
previously unknown problems may result in product labeling restrictions or
withdrawal of the product from the market. Moreover, changes in existing
requirements or adoption of new requirements or policies could adversely affect
the ability of the Company to comply with regulatory requirements. There can be
no assurance that the Company will not be required to incur significant costs to
comply with applicable laws and regulations in the future. Failure to comply
with applicable laws or regulatory requirements could have a materially adverse
effect on the Company's business, financial position and results of operations.

Research and Development

      For the years ended December 31, 2001 and 2000, the Company expended
approximately $84,047 and $78,885, respectively, on product development
expenses.

Employees

      As of March 5, 2002, the Company employed 10 persons, including four in
sales and marketing, one in research and development, two in financial
administration, and three in production. None of the Company's employees is
covered by a collective bargaining agreement.

      As of March 5, 2002, PPSI had no employees, but utilizes outside
consultants for marketing and employees of affiliated companies, owned by a
stockholder/officer of the Company, to provide certain administrative services.
These expenses, together with other expenses, have not been allocated between
these companies.


Item 2. Description of Property.

      The Company occupies a manufacturing facility and administrative, and
executive office in Farmingdale, New York (comprised of approximately 10,000
square feet of space) pursuant to a lease that expires in September 2003. Rental
expense for the space is $75,289 per annum plus certain common charges and real
estate tax escalations, subject to an increase of 3% per annum in each
subsequent year.

      PPSI shares office space with affiliated companies, owned by a
stockholder/ officer of the Company. The expenses of the space, together with
other expenses, have not been allocated between these affiliated companies.


Item 3. Legal Proceedings.

      On February 11, 1998, the Company commenced a lawsuit against Sherwood and
its former corporate parent, American Home Products Corporation, in the Supreme
Court of the State of New York, Nassau County (Index No 98-003963) seeking money
damages. This litigation has been settled during February 2002 for an immaterial
amount after considering legal expenses, and is subject to a Confidential
Settlement Agreement.

      In February 2000, a former consultant commenced an action against the
Company and its directors in the Supreme Court, County of Nassau, alleging
breach of contract and fiduciary duty, and is seeking consulting fees in the
amount of: (1) 250,000 shares of common stock, (2) $192,000 and (3) cost of this
action. The Company and counsel do not believe the fees are due and will
vigorously defend this action.

      In April 2000, the Company commenced a collection action against a former
consultant for the repayment of a loan of $35,000. The loan has been fully
reserved. The former consultant has contested the claim and filed a counterclaim
in the Circuit Court of the 15th Judicial Circuit, Palm Beach, Florida, General
Jurisdiction Division, for unpaid consulting fees of $400,000, plus interest,
costs and expenses. The Company believes the counterclaim is without merit, is
defending the matter, and, together with counsel, does not believe the outcome
of this matter will have a material effect on the Company.


<PAGE>

Item 4  Submission of Matters to Vote of Security Holders.

      The Annual Meeting of Stockholders of Univec, Inc. for the year ending
December 31, 2000, was held on December 6, 2001, to consider and vote upon (i) a
proposal to elect Joel Schoenfeld, Dr. Alan Gold, John Frank, Richard Mintz,
Marla Manowitz, and Dr. Andrew Rosenberg as directors, (ii) to ratify the
appointment of Most Horowitz & Co., LLP, as the Company's auditors for the year
ending December 31, 2001. The number of votes cast for and against each of the
foregoing proposals and the number of abstentions are set forth below.

(i)   Proposals to Elect Directors:
                                                  For        Withhold Authority
           Joel Schoenfeld                    4,984,413                  16,270
           Alan H. Gold, M.D.                 4,984,413                  16,270
           John Frank                         4,984,413                  16,270
           Marla Manowitz                     4,984,413                  16,270
           Richard Mintz                      4,984,413                  16,270
           Andrew Rosenberg, M.D.             4,984,413                  16,270

(ii)  Proposal to Ratify the Selection of Most Horowitz & Company, LLP as
the Company's Auditors.

         For                   Against                 Abstain
      4,987,863                12,000                    820

Item 5. Market for Common Equity and Related Stockholder Matters.

      (a)(1) Prior to July 2, 1999, the Company's Common Stock and redeemable
Common Stock Purchase Warrants ("Warrants") traded on the Nasdaq SmallCap
Market. Following that date, the common stock and warrants have been quoted on
the over-the-counter bulletin board under the symbols "UNVC" and "UNVCW",
respectively.

      Set forth below are the high and low closing sale prices for the Common
Stock and Warrants on the over-the-counter bulletin board from January 1, 2000
through December 31, 2001

<TABLE>
<CAPTION>
                                                           Common Stock                  Warrants
                                                             ("UNVC")                    ("UNVCW")
                                                    --------------------------   -------------------------
                  Quarter Ended                         High           Low           High          Low
-------------------------------------------------   ------------   -----------   -----------   -----------
<S>                                                 <C>            <C>           <C>           <C>
March 31, 2000                                      $  1.219       $ 0.313       $   0         $   0
June 30, 2000                                       $  1.000       $ 0.531       $   0         $   0
September 30, 2000                                  $  0.781       $ 0.391       $   0         $   0
December 31, 2000                                   $  0.563       $ 0.156       $   0         $   0
March 31, 2001                                      $  0.250       $ 0.125       $   0         $   0
June 30, 2001                                       $  0.240       $ 0.120       $   0         $   0
September 30, 2001                                  $  0.190       $ 0.110       $   0         $   0
December 31, 2001                                   $  0.240       $ 0.060       $   0         $   0
</TABLE>
<PAGE>

      (2) As of December 31, 2001, there were 93 holders of record of the Common
Stock and there were over 766 beneficial owners of the Common Stock as of that
date.

      (3) During the fiscal year ended December 31, 2001, the Company sold
unregistered securities to a limited number of persons in transactions exempt
from the registration requirements of the Securities Act, as described below.
Except as indicated, there were no underwriters involved in the transactions,
and there were no underwriting discounts or commissions paid in connection
therewith. The purchasers of securities in each such transaction represented
their intention to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the certificates for the securities issued in such
transactions. All purchasers of securities in each such transaction had adequate
access to information about the Company, and in the case of transactions exempt
from registration under Section 4(2) of the Securities Act, were sophisticated
investors.

1. In February 2001, the Company issued 120,000 shares of common stock at $.125,
per share, to an employee as additional compensation for marketing and
consulting services.

2. In December 2001, the Company sold to a Board Member and Officer of the
Company, 555,556 shares of its common stock at $.09, per share, for $50,000.

3. In December 2001, the Company issued 2,567,000 shares of its common stock at
$.24, per share, and 3,955,000 options exercisable at $.01, per share, in
connection with the acquisition of all the outstanding common shares of PPSI.
These options were exercised during January 2002.

4. In December 2001, the Company issued an aggregate of 250,000 shares of common
stock to consultants of the Company for services valued at $25,000.


Item 6. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

      The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements, including the notes thereto,
appearing elsewhere in this report.

Results of Operations

                  Condensed Consolidated Results of Operations

                                      2001             2000            Change
                                   -----------      -----------      ----------

Net Sales                           $3,905,050       $3,078,151           27%
Cost of Sales                        3,075,613        2,607,194           18%
                                    ----------       ----------

Gross Margin                           829,437          470,957           76%
Marketing and Selling
  Expense                              735,092          709,884            4%
Product Development                     84,047           78,885            7%
General and
  Administrative                       745,754        1,074,963          (31%)
Interest Expense, Net                  158,324          108,664           46%
                                    ----------       ----------
Operating Loss                     (   893,780)     ( 1,501,439)         (40%)

Loss on Sale of Assets                                 (794,244)
                                    ----------       ----------
Net Loss                           ($  893,780)     ($2,295,683)         (61%)
                                    ==========       ==========
<PAGE>

      As illustrated in the table above, overall net sales, including the sales
of technology, for the year ended December 31, 2001 increased by $826,899 (27%)
as compared to the previous year. Product sales alone for the year ended
December 31, 2001 showed an increase of $22,899 as compared to the year ended
December 31, 2000. The primary focus of management's efforts during the fourth
quarter of 2000 and the first quarter of 2001 was concentrated on the licensing
agreements and sale of equipment and technology. The sales of technology
accounted for 21% of the revenue for 2001. As of December 31, 2001, the licensee
commenced production utilizing the equipment and technology and the Company
expects to receive the first royalties on the sales of product by the licensee
during the second quarter of 2002.

      Product sales for the fourth quarter of 2001 were approximately
$1,100,000, an increase of 16% over the comparable period for 2000, and
comprised approximately 35% of product sales for the year ended December 31,
2001. Product sales for the fourth quarter of 2001 consisted of contracts for
product with new customers of which approximately $350,000 of the 2001 sales
orders were completed and shipped in the first quarter of 2002. The increase in
both product sales and new customers and the demand for improved syringe
technology may be the result of the recent creation of the Immunization Safety
Priority Project by the World Health Organization. The program targets countries
with the goal of establishing a comprehensive system to insure the safety of all
immunizations given in national immunization programs by the year 2003. The
Priority Project includes UNICEF, UNAIDS, the World Bank, PATH, and the Bill and
Melinda Gates Children's Vaccine Program and has appeared to have a substantial
impact on the industry, professional organizations, and procurement requirements
of development agencies.

      Product sales consisted primarily of the 1cc Auto-Disable Syringe. The
majority of syringes sold were produced by the Company's contract manufacturers.
The Company is concentrating on both sales of product and on licensing of the
technology of its proprietary locking clip syringe. In addition, the Company is
focusing on the marketing of a sliding sheath syringe designed to protect health
care workers from accidental needle-stick injury. As a result of the Federal
Needlestick Safety and Prevention Law signed into law in November 2000, the
Company anticipates a substantial domestic market for the sliding sheath
syringe. The law revises the Bloodborne Pathogens Standard under the
Occupational Safety and Health Act of 1970 to include safer medical devises,
such as syringes or sharps with engineered sharps injury protections designed to
eliminate or minimize occupational exposure to bloodborne pathogens through
needlestick injuries. It requires certain parties to adopt plans and changes in
technology that eliminate or reduce exposure to needlestick injury. The
effective compliance date for the law was April 18, 2001, and the Company
expects a positive impact on sales for this product by the second quarter of
2002.

      Gross margin for the year ended December 31, 2001 increased to
21% from 15% in 2000, resulting primarily from the sales of technology. Gross
profit based on product sales for the year ended December 31, 2001 decreased to
9% from 15% as compared to 2000. Considered separately, gross margin for each of
the first three quarters of 2001 evidenced a favorable increase, resulting from
the increased utilization of contract manufacturers for the production of
syringes in combination with general decreases in direct labor and depreciation
expense. Although fourth quarter sales comprised approximately 35% of product
sales for the year ended 2001, the nature and timing (including delays in
shipments due to the impact of the September 11, 2001 attack on the United
States) of the contracts required additional freight and air freight charges
resulting in an increase in freight-in for the year. These large contracts were
concentrated in the fourth quarter of 2001, and therefore, freight-in for that
quarter was 45% of the total freight cost for the year 2001. This increase is
unique to the sales contracts of the period and when combined with a reduction
in selling price to a more competitive price, resulted in a significant
reduction in gross margin. As the Company continues to increase sources of
production at a more favorable cost and simultaneously eliminates the
requirement for additional freight, gross margin will should continue to
improve.
<PAGE>

      Marketing and selling costs in 2001 increased $25,208 (4%) from 2000. This
increase is due to an increase in shipping costs and commissions on sales,
offset primarily by decreases in inventory storage and freight out expenses.
Marketing costs also included increases in travel expense necessary to generate
new sales contracts and markets and increases in expenses associated with trade
shows, offset in part by decreases in printing and reproduction expenses and
marketing consulting.

      Product development expense for the year ended December 31, 2001 increased
by $5,162 (7%) as compared to 2000. This increase was the result of increased
expenditures for patent legal costs and factory supplies, offset in part by a
decrease in engineering consulting expense.

      General and administrative expenses for the year ended December 31, 2001
decreased $329,209 (31%) as compared to 2000. This decrease is due primarily to
decreases in consulting and professional fees, and payroll, offset in part by
increases in bank charges associated with letters of credit and the settlements
of certain payables.

      Interest expense for the year ended December 31, 2001 increased by $49,660
(46%) as compared to 2000 as a result of increases in loans to the Company for
insurance financing, equipment financing, and for purchase order financing.

      The operating loss for the year ended December 31, 2001 decreased $607,659
(40%) as compared to 2000 primarily from the aforementioned sales of technology
during the first quarter of 2001, in combination with an increase in product
sales and decrease in general and administrative expenses.

      The net loss for 2001 decreased $1,401,903 (61%) as compared to 2000
primarily from the increase in sales substantially related to the sales of
technology. The year 2000 included $794,244 loss on the sale of assets.

Liquidity and Capital Resources

      The Company's working capital deficit increased from $833,940 at December
31, 2000 to $1,452,872 at December 31, 2001, primarily resulting from an
increase in accounts receivable of $192,190, offset by increases in accounts
payable, accrued expenses, and deferred payroll of $900,252, and increase of
loans payable, current of $265,320.

      Net cash used in operating activities decreased by $46,255 from $179,987
to $133,732 for the years ended December 31, 2001 and 2000, respectively,
primarily due to decreases in the net loss and due from factor and the increases
in accounts payable and accrued expenses and deferred payroll, offset in part by
the increases in accounts receivable and inventory.

      Net cash provided by investing activities decreased primarily from not
having any proceeds from the sales of equipment in 2001.

      Net cash provided by financing activities increased by $298,333 from a use
of $167,342 to a source of $130,991 for the years ended December 31, 2001 and
2000, respectively, resulting from the proceeds of notes and loans of $422,806
and sale of common stock of $50,000, offset in part by repayment increases of
$174,473.

      With the marketing and sales of existing safety syringes and the
demolizer, including sales of technology, license royalties, and marketing
services for pharmaceutical companies in the United States, the Company
anticipates that operating activities will generate a positive cash flow in the
year 2002. However, as a result of the operating losses for the year 2001, the
Company is seeking additional equity financing which will dilute existing
shareholders. See Note 15 to the Financial Statements for additional information
regarding the sale of Series D Convertible Preferred Stock. The continued
delisting of the Company's common stock from the Nasdaq Smallcap Market may
hamper the Company's ability to raise equity.


<PAGE>

Forward Looking Statements

      Except for the historical information contained herein, the matters
discussed in this report are forward-looking statements that involve risks and
uncertainties, including market acceptance of the Company's products, timely
development and acceptance of new products, impact of competitive products,
development of an effective organization, interruptions to production, and other
risks detailed from time to time in the Company's SEC reports and its Prospectus
dated April 24, 1997 (as supplemented by the Prospectus Supplement dated April
29, 1997) forming a part of its Registration Statement on Form SB-2 (File No.
333-20187), as amended, which was declared effective by the Commission on April
24, 1997.

Item 7. Financial Statements.

The financial statements follow Item 12 of this report.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

      The Company did not have any changes or disagreements with its independent
accountants on accounting or financial disclosures.

                                    Item III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.

Directors, Executive Officers and Key Employees

      The directors, executive officers and key employees of the Company are as
follows:


Name                 Age               Position
----------------    -----    ---------------------------------------
Dr. David Dalton     53      Chief Executive Officer, President and a Director
Joel Schoenfeld      57      Chairman of the Board of Directors
Richard Hershman     52      Chief Financial Officer
Edward Kalbaugh      66      Vice President of Corporate & Business Development
Alan Gold            55      Director and Secretary
John Frank           62      Director
Marla Manowitz       49      Director and Treasurer
Richard Mintz        57      Director
Andrew Rosenberg     49      Director
S. Robert Grass      68      Director

      Dr. David Dalton assumed the position of President and Chief Executive
Officer of the Company on January 1, 2002, concurrent with the acquisition by
Univec, Inc. of PPSI (Physician and Pharmaceutical Services, Inc.), a Baltimore
based company founded by Dr. Dalton. Dr. Dalton has over 35 years experience in
the healthcare industry, including 18 years with Rite-Aid where he served as
Corporate Vice President.

      Dr. Dalton founded Health Resources, Inc., in 1983, a pharmacy service
provider having contracts with over 50,000 retail pharmacies for billing and
payment of prescription orders through plan providers. HRI is recognized as one
of the leading Black Enterprises in the United States. Dr. Dalton also founded
Pharmacy Services, Inc., a pharmacy fulfillment center for correctional and
other institutions, with facilities in Maryland and Tennessee.

      Joel Schoenfeld, the founder of the Company, had been Chief Executive
Officer of the Company from its inception in August 1992 until November 30,
1999, and also served as Chairman of the Board of Directors until Dr. Alan
Gold's election to the position on March 18, 1999. Since November, 1999, Mr.
Schoenfeld has again served as Chairman of the Board of Directors. Mr.
Schoenfeld was the founder and President of J&B Schoenfeld, a global trading
company whose main focus was on the import, export and processing of pelts and
hides, specializing in trade with the USSR and Europe.

      In 1988, Mr. Schoenfeld formed the American-Russian International Trading
Company ("AMRU"), which advised on trade agreements between the USSR and United
States. AMRU's broad base of interest and expertise enabled it to take on such
diverse projects as a joint venture with the Soviet government and military
known as AMRU-STAR, the representation of the Soviet Space Agency to Washington,
D.C., the introduction of western advertising to the USSR in conjunction with
another American company, Transportation Displays, Inc. ("TDI"), and the
construction of a studio producing children's films for international
distribution.

<PAGE>


      As a result of the political changes in the former USSR, Mr. Schoenfeld
sought to further his business strategies. In 1990, he founded Joel Schoenfeld &
Associates in Garden City, New York. With affiliate offices in Moscow, San Jose,
London, and Boston, to originate, structure, capitalize, negotiate and advise on
the implementation of import and export trade transactions, projects and
programs.

      Mr. Schoenfeld has been a commercial attache and a consultant to a number
of foreign and multinational governments. Recently, Mr. Schoenfeld was an
advisor to United Nations Development Programs ("UNDP"). Previously, he served
as:

   o Senior Advisor to the Costa Rican Ambassador to the United Nations

   o Senior Advisor and Coordinator, Chief of Staff to the Chairman of the
     Committee of States Parties to the International Covenant on Civil and
     Political Rights to the United Nations

   o Senior Economic and Trade Advisor to the United Nations Commission on
     Transnational Corporations

      Mr. Schoenfeld was named in February, 1999 in a Federal Grand Jury
Indictment filed in the United States District Court for the Southern District
of Ohio, Western Division. The indictment alleges that Mr. Schoenfeld engaged in
certain activities in connection with a commercial transaction in 1991. In
February 2001, a motion to dismiss was filed and Mr. Schoenfeld believes the
court will dismiss the matter.

      Alan H. Gold, M.D., served as Chief Executive Officer of the Company from
November 30, 1999 until December 31, 2001, and a Director of the Company since
inception in August 1992. Prior to November, 1999, Dr. Gold served as President
of the Company since July 1996, and as Chairman of the Board of Directors since
March 18, 1999 to November 1999. On March 15, 2002 Dr. Gold was elected
Secretary of the Company. Dr. Gold has been a plastic surgeon since 1972, and is
currently in private practice. Dr. Gold is a medical advisor to the UNDP.

      Richard H. Hershman was appointed Chief Financial Officer of the Company
on January 1, 2002 through a Services Agreement effective January 1, 2002
between Allegent Growth Strategies International and the Company. Mr. Hershman
is a co-founder and Managing Partner of Allegent Growth Strategies
International, a financial consulting firm assisting clients with setting
strategic direction and policy.

      Mr. Hershman's 30-year career includes positions as Executive Vice
President, Chief Executive Officer and Chief Administrative Officer of Decision
Strategies Fairfax International, a world leader in investigative and security
consulting firms. Mr. Hershman has served as Chief Financial Officer for a
number of insurance companies, including Risk Enterprise Management owned by
Zurich Insurance Company. He was also a partner with KPMG Peat Marwick,
servicing insurance enterprises, including several multi-billion dollar public
insurance companies.

      Mr. Hershman is a Certified Public Accountant with a BS in Accounting and
an MBA in taxation. He is a member of the AICPA, New York Society of CPAs and
the Society of Insurance Financial Management.

      Mr. Kalbaugh was named Executive Vice President of Corporate and Business
Development on January 1, 2002. Mr. Kalbaugh is a co-founder and partner of
Allegent Growth Strategies International, a financial consulting firm assisting
clients with setting strategic direction and policy.

      Mr. Kalbaugh's 35-year career includes his position as President of
Business Transition Services, a company he founded in 1986 to assist Fortune
1000 companies in achieving organizational redirection and business turnarounds.
Mr. Kalbaugh also served as Regional President of SIAA, the largest insurance
agency network in the U.S. Prior to BTS he was a Senior VP with NatWest Bank,
where he led the acquisition of Bankers Trust Retail Bank as well as one of the
largest multi-bank systems development consortiums in the U.S. Mr. Kalbaugh
began his career with Rockwell International.

<PAGE>

      Marla Manowitz, an independent certified public accountant, served as
Chief Financial Officer of the Company from March 18, 1999, until December 31,
2001. She was appointed a director on April 30, 1999 and served as head of the
Company's internal accounting department since March, 1998. As of January 1,
2001, she serves as Vice President and Controller to the Company. On March 15,
2002 Ms. Manowitz was elected as Treasurer of the Company. Prior thereto for
more than the past five years she was principally engaged as an accountant in
her own private practice.

      Flora Schoenfeld served as Treasurer and Secretary of the Company since
its inception in August 1992 until her resignation from both positions on March
15, 2002. Since March 1992, she also has been Treasurer and Secretary of Joel
Schoenfeld & Associates. From 1980 to 1992, she was Treasurer and Secretary of J
& B Schoenfeld, Inc. Flora Schoenfeld is the wife of Joel Schoenfeld.

      John Frank has been a consultant to the Company in the areas of corporate
development and strategic planning since its inception in August 1992. Mr. Frank
served as Chief Information Officer of The Hartford Steam Boiler Inspection and
Insurance Co. from August, 1996 through February, 2000, and as Vice President,
Strategy and Corporate Development from February, 2000 until his retirement in
November 2001. Mr. Frank is currently self-employed as a consultant.

      From October 1994 to August 1996, he was Special Projects Manager for
Electronic Data Systems Corporation. From August 1993 to September 1994, he was
the chief auditor of Travelers Insurance Companies. From September 1991 to July
1993, he was a principal of Lipera Frank Inc., of which he was a co-founder.
From January 1982 to September 1991, Mr. Frank was a partner of Coopers &
Lybrand, where he managed strategic planning and financial management
engagements for Fortune 500 clients. Mr. Frank is a CPA.

      Richard Mintz has been a director of the Company since March 18, 1999. Mr.
Mintz is also President of Peristaltic Technologies, Inc., a manufacturer of
medical infusion pumps and plastic disposable catheters, and Vice President and
General Manager of A.K. Allen & Co., Inc./Allen Avionics, Inc., a manufacturer
of electronic components and fluid power products, positions he has held for
more than the past five years.

      Dr. Andrew Rosenberg has been a director of the Company since November 30,
1999. Dr. Rosenberg serves as Chairman of the Department of Anesthesiology,
Hospital for Joint Diseases, Orthopedic Institute and has acted as a consultant
to the Company since 1998.

      On March 15, 2002 S. Robert Grass was elected a director of the Company.
Mr. Grass has been associated with the pharmaceutical and medical device
industry for over thirty two years. Mr. Grass developed a chain of pharmacies
known as White Shield Drugstores in Pennsylvania, serving as President, Chief
Executive Officer and Chairman of the Board from 1970 to 1996. Mr. Grass also
served as Chief Executive Officer and Chairman of the Board of Managed Care RX,
a drug fulfillment and mail order business from 1994 to 1999.

      All directors hold office until the annual meeting of stockholders of the
Company following their election or until their successors are duly elected and
qualified. Officers are appointed by the Board of Directors and serve at its
discretion.

Meetings of the Board of Directors and Information Regarding Committees

      The Board of Directors has two standing committees, an Audit Committee and
a Compensation Committee. On March 15, 2002, Mr. Mintz, Mr. Frank, and Mr. Grass
were elected to the Audit Committee. The duties of the Audit Committee include
recommending the engagement of independent auditors, reviewing and considering
actions of management in matters relating to audit functions, reviewing with
independent auditors the scope and results of its audit engagement, reviewing
reports from various regulatory authorities, reviewing the system of internal
controls and procedures of the company, and reviewing the effectiveness of
procedures intended to prevent violations of law and regulations. The Audit
Committee held three meetings in 2001. The Compensation Committee was formed in
March 2002 and is composed of Mr. S. Robert Grass, Dr. Alan Gold, and Dr. Andrew
Rosenberg.


<PAGE>

      The Board of Directors held three meetings in 2001, which include special
telephonic meetings in addition to one Unanimous Written Consent. All Directors
attended at least 75% of the total number of Board meetings and meetings of
committees on which they served during the period they served thereon during
2001.

Section 16(a) Beneficial Ownership Reporting

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers, Directors and persons who own more than ten percent of a registered
class of the Company's equity securities within specified time periods to file
certain reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "Commission"). Officers, Directors and ten percent
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on a review of copies of such
reports received by the Company and written representations from such persons
concerning the necessity to file such reports, the Company is not aware of any
failures to file reports or report transactions in a timely manner during the
fiscal year ended December 31, 2001, except for one failure to file a timely
Form 4 on one transaction by Dr. Alan Gold.


Item 10. Executive Compensation.

      The following table sets forth the compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each other executive officer
of the Company whose salary and bonus for the two years ended December 31, 2001
exceeded $100,000.

<TABLE>
<CAPTION>
                                Annual Compensation          Long-Term Compensation
                              ------------------------   ----------------------------------
                                                          Other Annual       Securities
Name and Principal Position    Year    Salary             Compensation   Underlying Options
--------------------------------------------------------------------------------------------
<
<S>                            <C>    <C>                 <C>            <C>
Joel Schoenfeld, Chairman      2001   $  261,744(1)
Joel Schoenfeld, Chairman      2000   $  254,507(1)                          2,430,000 (2)
</TABLE>


(1) The Company accrues compensation expense for Joel Schoenfeld at a rate of
    approximately $232,000 per annum, plus benefits, which include a car
    allowance (approximately $7,188 in 2001 and $7,193 in 2000) and
    life/disability/health and car insurance (approximately $29,424 in 2001 and
    $43,307 in 2000).

(2) Represents the following stock options: (a) options expiring February 13,
    2003 to purchase 2,130,000 shares at an exercise price of $.59, per share,
    and (b) options expiring June 13, 2003 to purchase 300,000 shares at an
    exercise price of $.675, per share. "Management - Stock Option Plan."
<PAGE>

Employment Agreements

      Effective January 1, 2002, Mr. Schoenfeld will continue to serve as
Chairman of the Board of Directors and as an employee of the Company pursuant to
a new employment contract. The contract provides Mr. Schoenfeld with a salary of
$200,000 per annum in addition to a bonus at a rate determined by the agreement
of the Executive and the Compensation Committee. On each January 1, during the
term of three years, the base salary shall be increased by an amount agreed upon
by the Executive and the Compensation Committee. The compensation shall include
options to purchase 1,000,000 shares of the common stock of the Company at $.24,
per share, vesting at 25% on the first anniversary of the contract, and 20,833
each month following the Initial Vesting Date. The unexpired term of the
Agreement will be extended automatically by one year on each January 1 following
the date of the Agreement, such that the unexpired term of the Agreement will at
all times be not less than two years following each extension. The Agreement
provides for payment by the Company of annual premiums on a term life insurance
policy with a face amount of $2 million. Health and disability benefits, as well
as an automobile lease and insurance allowance equal to $12,000, per year, are
provided for. The Agreement provides that the Company will incur a severance
payment equal to the highest annual base salary during the term, for the
remainder of the term if the Agreement is terminated by the Executive for good
reason, or in the event of a change in control of the Company.

      Effective January 1, 2002, Dr. David Dalton will serve as Chief Executive
Officer and as an employee of the Company pursuant to an employment contract of
the same date. The contract provides Dr. Dalton with a salary of $200,000 per
annum in addition to a bonus at a rate determined by the agreement of the
Executive and the Compensation Committee. On each January 1, during the term of
three years, the base salary will be increased by an amount agreed upon by the
Executive and the Compensation Committee. The compensation shall include options
to purchase 2,000,000 shares of the common stock of the Company at $.24, per
share, vesting at 25% on the first anniversary of the contract, and 41,667 each
month following the initial vesting date. The unexpired term of the Agreement
will be extended automatically by one year on each January 1 following the date
of the Agreement, such that the unexpired term of the Agreement will at all
times be not less than two years following each extension. The Agreement
provides for payment by the Company of annual premiums on a term life insurance
policy with a face amount of $2 million. Health and disability benefits, as well
as an automobile lease and insurance allowance equal to $12,000, per year, are
provided for. The Agreement provides that the Company will incur a severance
payment equal to the highest annual base salary during the term, for the
remainder of the term if the Agreement is terminated by the Executive for good
reason, or in the event of a change in control of the Company.

    Stock Options

      The following table contains information concerning the grant of stock
options to Joel Schoenfeld ( the "Named Executive Officers") during the fiscal
year ended December 31, 2001.

<TABLE>
<CAPTION>
                     Number of Shares       Percent of Total Options
                     Underlying Options     Granted to Employees in     Exercise Price    Expiration
Name                       Granted                Fiscal Year              Per Share        Date
<S>                 <C>                    <C>                         <C>                <C>
Joel Schoenfeld            None
</TABLE>


<PAGE>

The following table summarizes for each of the Named Executive Officers the
total number of unexercised options, if any, held at December 31, 2001, and the
aggregate dollar value of in-the-money, unexercised options, held at December
31, 2001. The value of the unexercised, in-the-money options at December 31,
2001, is the difference between their exercise or base price and the fair market
value of the underlying Common Stock on December 31, 2001. The closing bid price
of the Common Stock on December 31, 2001 was $.24.

                AGGREGATED OPTION EXERCISES -- JANUARY 1, 2001 --
             DECEMBER 31, 2001 AND DECEMBER 31, 2001 OPTION VALUES


<TABLE>
<CAPTION>
                                                                                         Value of Unexercised
                       Shares Acquired Upon            Number of Securities                  In-The-Money
                        Exercise of Options           Underlying Unexercised                  Options at
                        During Fiscal 2001         Options at December 31, 2001           December 31, 2001
                    ---------------------------   -------------------------------   ------------------------------
Name                 Number     Value Realized     Exercisable     Unexercisable     Exercisable   Unexercisable
---------------     --------   ----------------   -------------   ---------------   -------------   --------------
<S>                <C>        <C>                <C>             <C>               <C>             <C>
Joel Schoenfeld      None           None            6,458,858          None          $ 178,063          None
</TABLE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth certain information concerning the
beneficial ownership of the Common Stock as of February 26, 2002 by (i) each
stockholder known by the Company to be a beneficial owner of more than five
percent of the outstanding Common Stock, (ii) each director of the Company and
each Named Executive Officer and (iii) all directors and officers as a group.


<TABLE>
<CAPTION>
                                                          Amount and             Percentage of Common
                                                     Nature of Beneficial         Stock Beneficially
                      Name                               Ownership(1)                 Owned (2)
-------------------------------------------------  ----------------------------  -----------------------

<S>                                                <C>                           <C>
Joel and Flora Schoenfeld(4) ..................            7,526,612 (5)(6)             34.22%  (7)
David Dalton (4)...............................            6,522,000 (3)                43.20%
Alan H. Gold, M.D.(4) .........................            2,335,444 (5)(8)             14.18%  (9)
John Frank(4) .................................            2,099,375(10)                12.65% (11)
Richard Hershman(4)............................              346,250(12)                 2.25% (13)
Edward Kalbaugh(4).............................              346,250(12)                 2.25% (13)
S. Robert Grass(4).............................              315,951(19)                 2.05% (20)
Andrew Rosenberg(4)............................              232,000(14)                 1.52% (15)
Marla Manowitz(4)..............................              210,600(16)                 1.38% (17)
Richard Mintz(4)...............................              118,000(18)                  .01%
All directors and executive officers as a group
 (11 persons) ..................................          20,052,482(21)(22)            92.75% (23)
</TABLE>

* Less than 1%

 (1) Unless otherwise indicated, each person has sole investment and voting
     power with respect to the shares indicated, subject to community property
     laws, where applicable. For purposes of computing the percentage of
     outstanding shares held by each person or group of persons named above as
     of February 26, 2002, any security which such person or group of persons
     has the right to acquire within 60 days after such date is deemed to be
     outstanding for the purpose of computing the percentage ownership for such
     person or persons, but is not deemed to be outstanding for the purpose of
     computing the percentage ownership of any other person.

 (2) Except as otherwise stated, calculated on the basis of 15,097,752 shares of
     Common Stock issued and outstanding on February 26, 2002.

 (3) Includes 3,955,000 options exercised January 8, 2002.
<PAGE>
 (4) Address is c/o the Company, 22 Dubon Court, Farmingdale, New York
     11735.

 (5) All of the shares owned by Dr. Gold have been pledged to secure certain
     indebtedness to Joel Schoenfeld. Dr. Gold retains voting and dispositive
     power with respect to the pledged shares until the occurrence of a default
     in the payment of the indebtedness secured by the pledged shares.
     Accordingly, the pledged shares have been included in the number of shares
     beneficially owned by Dr. Gold and excluded from the number of shares
     beneficially owned by Mr. Schoenfeld.

 (6) Includes 6,458,858 shares upon exercise of presently exercisable options,
     432,885 shares issuable upon conversion of Series A Preferred Stock, and
     4,000 shares issuable upon exercise of the Company's Redeemable Common
     Stock Purchase Warrants

 (7) Calculated on the basis of 21,993,495 of Common Stock issued and
     outstanding.

 (8) Includes 1,345,000 shares upon exercise of presently exercisable options
     and 27,555 shares issuable upon conversion of Series A Preferred Stock.

 (9) Calculated on the basis of 16,470,307 shares of Common Stock issued and
     outstanding.

(10) Includes 1,328,236 shares issuable upon exercise of options, and 166,000
     shares issuable upon exercise of the Company's Redeemable Common Stock
     Purchase Warrants.

(11) Calculated on the basis of 16,591,988 shares of Common Stock issued and
     outstanding.

(12) Includes 35,000 shares upon exercise of presently exercisable options,
     256,250 shares upon exercise of presently exercisable options owned by a
     limited liability company of which the reporting person is a partner, and
     disclaims beneficial ownership except to the extent of his pecuniary
     interest therein.

(13) Calculated on the basis of 15,389,002 shares of Common Stock issued and
     outstanding.

(14) Includes 188,000 shares upon exercise of presently exercisable options.

(15) Calculated on the basis of 15,285,752 share of Common Stck issued and
     outstanding.

(16) Includes 200,000 shares upon exercise of presently exercisable options.

(17) Calculated on the basis of 15,297,752 shares of Common Stock issued and
     outstanding.

(18) Includes 50,000 shares upon exercise of presently exercisable options.

(19) Includes 312,501 shares issuable upon conversion of Series D Preferred
     Stock.

(20) Calculated on the basis of 15,410,253 shares of Common Stock issued and
     outstanding.

(21) For purposes of this calculation, shares of Common Stock beneficially owned
     by more than one person have only been included once.

(22) Includes 20,052,482, shares issuable upon exercise of presently exercisable
     options. See footnotes (6)(8)(10)(12)(14)(16) (18) and (19).

(23) Calculated on the basis of 21,620,108 shares of Common Stock issued and
     outstanding.

Item 12. Certain Relationships and Related Transactions

      In January 2002, the Company borrowed $30,200 from a Director/Shareholder,
payable on demand with interest at 6%, per annum. As of March 13, 2002, $5,200
has been repaid.

      In January and February 2002, the Company borrowed a total of $101,450
from Dr. David Dalton, an officer/director of the Company, without specific
payment terms or interest.

      PPSI shares office space and other administrative expenses with affiliated
companies owned by Dr. David Dalton, a stockholder/officer. Certain expenses
have not been allocated between the companies and PPSI's portion of these
expenses has not been determined.
<PAGE>

Item l3. Exhibits and Reports on Form 8-K.

     (a) Exhibits


Exhibit     Description
------     -------------

2.1(1)      Stock Purchase Agreement and Plan of Reorganization made and entered
            into as of December 31, 2001, by and among Physician and
            Pharmaceutical Services, Inc. ("PPSI"), the stockholder of PPSI and
            the Registrant.

2.2(2)      Stock Purchase Agreement made and ehtered into as of February 28,
            2002, by and among Thermal Waste Technologies, Inc. ("TWT"), the
            stockholders of TWT and the Registrant.

3.1(4)      Restated Certificate of Incorporation of the Registrant, as amended.

3.2(3)      By-laws of the Registrant, as amended.

4.1(3)      Agreement and Plan of Merger dated as of October 7, 1996 between the
            Registrant and UNIVEC, Inc., a New York corporation.

4.3(3)      Form of Warrant Agreement between the Registrant and the
            underwriters of the Registrant's initial public offering.

4.4(3)      Specimen common stock Certificate.

4.5(3)      Specimen Warrant Certificate (included as Exhibit A to Exhibit 4.3
            herein).

4.6(3)      Registration Rights Agreement among the Registrant and the holders
            of bridge warrants.

4.7(5)      Certificate of Designation of Series B Preferred Stock.

4.8(6)      Certificate of Amendment of Certificate of Designation of Series B
            Preferred Stock.

4.9(5)      Form of Warrant Agreement dated July 27, 1998, between Company and
            selling securityholder.

4.10(6)     Form of Amended and Restated Warrant Agreement, amending and
            restating the Warrant Agreement dated July 27, 1998, between the
            Company and the selling securityholder.

4.11(5)     Registration Rights Agreement dated July 27, 1998, between Company
            and selling securityholder.

4.12(6)     Registration Rights Agreement, dated February 8, 1999, between the
            Company and the selling securityholder.

4.13(6)     Certificate of Designation of Series C Preferred Stock.

4.14(6)     Form of Warrant Agreement dated February 8, 1999, between the
            Company and selling securityholder.

10.1(3)     Amended 1996 Stock Option Plan of the Registrant.

10.2(7)     1998 Stock Option Plan of the Registrant.

10.3(8)     2000 Stock Option Plan of the Registrant.

10.4(7)     Employment Agreement dated as of September 4, 1998 between the
            Registrant and Joel Schoenfeld.

10.5(9)     Patent License Agreement dated August 16, 2000, by and between the
            Company and Terumo Europe N.V.

10.6(9)     Manufacturing Agreement dated August 16, 2000, by and between the
            Company and Terumo Europe N.V.

10.7(9)     Equipment Purchase Agreement dated August 16, 2000, by and between
            the Company and Terumo Europe N.V.

10.10(10)   Employment Agreement dated as of January 1, 2002, between the
            Registrant and David L. Dalton.

10.11(10)   Employment Agreement dated as of December 31, 2001, between the
            Registrant and Joel Schoenfeld.

21.1(3)     List of Subsidiaries.

23.1(10)    Consent of Most, Horowitz & Company, LLP, as Independent
            Accountants.


- -----------------------

(1)      Incorporated by reference to the Registrant's Form 8-K filed January 4,
         2002.

(2)      Incorporated by reference to the Registrant's Form 8-K filed March 11,
         2002.

(3)      Incorporated by reference from the Registrant's Registration Statement
         on Form SB-2 (File No. 333-20187) declared effective on April 24, 1997.

(4)      Incorporated by reference from the Registrants Periodic Quarterly
         Report on Form 10-QSB for the fiscal quarter ended September 30, 2000.

(5)      Incorporated by reference from the Registrant's Registration Statement
         on Form S-3 (File No. 333-62261) declared effective on December 11,
         1999.

(6)      Incorporated by reference from Amendment No. 2 to the Registrant's
         Registration Statement on Form S-3 (File No. 333-74199).

(7)      Incorporated by reference to the Registrant's Annual Report on Form
         10-KSB for the year ended December 31, 1998 (File No. 0-22413).

(8)      Incorporated by reference from the Registrant's Post- Effective
         Amendment No. 1 on Form S-2 to Form S-3 (File No. 333-74199) declared
         effective on January 26, 2001.

(9)      Incorporated by reference to the Registrant's Annual Report on Form
         10-KSB for the year ended December 31, 2000 (File No. 0-22413).

(10)     Filed herewith.


(b)    Reports on Form 8-K.

       A Form 8-K was filed on January 3, 2002, reporting the acquisition by the
Company of PPSI pursuant to a Stock Purchase Agreement effective December 31,
2001.

       A Form 8-K was filed March 11, 2002 reporting the acquisition by the
Company of Thermal Waste Technology ("TWT") pursuant to a Stock Purchase
Agreement effective February 28, 2002.

       A Form 8-KA was filed March 18, 2002 including the audited financial
statements of PPSI and the pro forma consolidated condensed financial statement
required pursuant to the PPSI acquisition.
<PAGE>


                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:  March 29, 2002


                                        UNIVEC, INC.



                                        By: s/ Dr. David Dalton
                                            --------------------------------
                                            Dr. David Dalton
                                            Chief Executive Officer
                                            (Principal Executive Officer)



      In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant on March
29, 2001 in the capacities indicated.


<TABLE>
<CAPTION>
       Signatures                                                 Title
       ---------                                                 -------
<S>                                                      <C>
/s/ Dr. David Dalton                                     Chief Executive Officer and a Director
------------------------                                 (Principal Executive Officer)
Dr. David Dalton

/s/ Richard H. Hershman                                  Chief Financial Officer
------------------------                                 (Principal Financial and Accounting Officer
Richard H. Hershman                                      through the Services Agreement with
                                                         Allegent Growth Strategies International)

/s/ Joel Schoenfeld                                      Chairman and a Director
------------------------
Joel Schoenfeld.

/s/ John Frank                                           Director
------------------------
John Frank

/s/ Richard Mintz                                        Director
------------------------
Richard Mintz

/s/ Andrew Rosenberg                                     Director
------------------------
Andrew Rosenberg, M.D.

/s/ Dr. Alan Gold                                        Director
------------------------
Dr. Alan Gold

/s/ S. Robert Grass                                      Director
------------------------
Robert Grass

/s/ Marla Manowitz                                       Director
------------------------
Marla Manowitz
</TABLE>

<PAGE>

                         UNIVEC, INC. AND SUBSIDIARIES
                       CONSOLIDATED FINANCIAL STATEMENTS
                 DECEMBER 31, 2001 AND FOR THE TWO YEARS THEN ENDED

                   Index to Consolidated Financial Statements



                                                                    Page
                                                                 ----------
Report of Independent Accountants............................       F--2
Consolidated Balance Sheet  -  December 31, 2001                    F--3
Consolidated Statements of Operations -  years ended
 December 31, 2001 and 2000..................................       F--4
Consolidated Statements of Stockholders' Equity - years
 ended December 31, 2001 and 2000............................       F--5
Consolidated Statements of Cash Flows - years ended
 December 31, 2001 and 2000..................................       F--6
Notes to Consolidated Financial Statements...................   F--7 to F--19




                                       F-1

<PAGE>



Report of Independent Accountants

To the Board of Directors and Stockholders of Univec, Inc.:

We have audited the accompanying consolidated balance sheet of Univec, Inc. and
Subsidiaries as of December 31, 2001 and the related consolidated statements of
operations, stockholders' equity and cash flows for the two years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Univec,
Inc. and Subsidiaries as of December 31, 2001 and the consolidated results of
their operations and their consolidated cash flows for the two years then ended
in conformity with accounting principles generally accepted in the United
States.


New York, New York                     /s/ Most Horowitz & Company, LLP
March 7, 2002                          ---------------------------------
                                       Most Horowitz & Company, LLP










                                       F-2
<PAGE>


                          Univec, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                                December 31, 2001


<TABLE>
<S>                                                                                                <C>
ASSETS:
Cash .....................................................................................         $        22,203
Accounts receivable ......................................................................                 662,444
Inventory ................................................................................                 442,782
Equipment for sale .......................................................................                 285,440
Other current assets .....................................................................                  94,722
                                                                                                   ---------------
 Total current assets ....................................................................               1,507,591

Fixed assets, net ........................................................................                 939,367
Goodwill .................................................................................               1,774,119
Other assets .............................................................................                  41,140
                                                                                                   ---------------
 Total assets ............................................................................         $     4,262,217
                                                                                                   ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses ....................................................         $     1,838,470
Due to affiliated company ................................................................                  15,287
Deferred payroll-officers ................................................................                 519,021
Current portion of capitalized lease obligation ..........................................                 108,750
Notes and loans payable-current ..........................................................                 468,935
Escrow deposit ...........................................................................                  10,000
                                                                                                   ---------------
 Total current liabilities ...............................................................               2,960,463

Capitalized lease obligation .............................................................                 139,976
Notes and loans payable ..................................................................                 243,352
                                                                                                   ---------------
 Total Liabilities .......................................................................               3,343,791
                                                                                                   ---------------
Commitments and contingencies (Notes 2,8,11, and 15)

Stockholders' equity:
 Preferred stock $.001 par value; 4,995,500 shares authorized;
   none issued and outstanding ...........................................................
 Series A 8% cumulative convertible preferred stock-$.001 par
   value; authorized:  2,500 shares;  issued and outstanding:
   2072 shares (aggregate liquidation value:  $2,760,420) ................................                       2
 Series B 5% cumulative convertible preferred stock- $.001 par
   value;  authorized: 1,000 shares; issued and outstanding:
   198.5 shares (aggregate liquidation value:  $276,886) .................................                       1
 Series C 5% cumulative convertible preferred stock- $.001 par
   value;  authorized:  1000 shares, issued and outstanding:
   250 shares (aggregate liquidation value $286,181) .....................................                       1
 Common stock $.001 par value;  authorized:  75,000,000 shares;
   issued and outstanding:  10,524,573 shares ............................................                  10,525
 Additional paid-in capital ..............................................................               9,246,152
 Accumulated deficit .....................................................................              (8,338,255)
                                                                                                   ---------------
 Total stockholders' equity ..............................................................                 918,426
                                                                                                   ---------------
 Total liabilities and stockholders' equity ..............................................         $     4,262,217
                                                                                                   ===============
</TABLE>
               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       F-3
<PAGE>

                          Univec, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                     Years ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                               2001                2000
                                                                                         ---------------     ---------------
<S>                                                                                      <C>                 <C>
Revenues:
 Product sales                                                                           $     3,101,050     $     3,078,151
 Sales of technology                                                                             804,000
                                                                                         ---------------     ---------------
    Total Revenues                                                                             3,905,050           3,078,151
                                                                                         ---------------     ---------------

Expenses:
 Cost of sales                                                                                 3,075,613           2,607,194
 Marketing and selling                                                                           735,092             709,884
 Product development                                                                              84,047              78,885
 General and administrative                                                                      745,754           1,074,963
 Interest expense, net                                                                           158,324             108,664
                                                                                         ---------------     ---------------
   Total expenses                                                                              4,798,830           4,579,590
                                                                                         ---------------     ---------------
   Operating loss                                                                               (893,780)         (1,501,439)

 Loss on sale of equipment                                                                                          (794,244)
                                                                                         ---------------     ---------------
   Net loss                                                                                     (893,780)         (2,295,683)

Dividends attributable to preferred stock                                                       (189,379)           (198,020)
                                                                                         ---------------     ---------------
   Loss attributable to common stockholders                                              $    (1,083,159)    $    (2,493,703)
                                                                                         ===============     ===============

Share information:
   Basic and diluted loss per common share                                               $          (.16)    $          (.45)
                                                                                         ===============     ===============
   Weighted average number of
    common shares outstanding                                                                  6,627,281           5,492,171
                                                                                         ===============     ===============
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       F-4
<PAGE>

                          Univec, Inc. and Subsidiaries
                 Consolidated Statement of Stockholders' Equity
                     Years ended December 31, 2001 and 2000

<TABLE>
<CAPTION>

                                              Series A Preferred    Series B Preferred    Series C Preferred        Common Stock
                                             --------------------   ------------------    ------------------     -------------------
                                              Shares      Amount    Shares     Amount     Shares     Amount      Shares      Amount
                                             --------   ---------  --------   --------   --------   --------     --------   -------

<S>                                          <C>          <C>      <C>          <C>       <C>       <C>      <C>            <C>
Balance, January 1, 2000                       2,072     $    2      612     $     1         250   $    1      4,058,653    $ 4,059

Issuance of stock options
Common Stock issued:
  Consulting fees and compensation                                                                               566,680        567
  Conversion of Series B Preferred
    Stock                                                           (385)                                      1,020,147      1,020
  Exercise of options                                                                                             80,000         80
  Conversion of loan payable by director                                                                         223,600        224
  Conversion of accrued payroll by officer                                                                       416,666        416
Net Loss
                                             -------     ------   ------     -------      ------    ------    ----------    -------
Balance, December 31, 2000                     2,072          2      227         1           250         1     6,365,746      6,366

Issuance of stock options
Common stock issued:
  Consulting fees and compensation                                                                               370,000        370
  Conversion of Series B
   Preferred Stock                                                 (28.5)                                        526,271        526
  Exercise of options                                                                                            140,000        140
  Purchase of stock by officer                                                                                   555,556        556
  Acquisition of subsidiary                                                                                    2,567,000      2,567
Net loss
                                             -------     ------   ------     -------      ------    ------    ----------    -------
Balance, December 31, 2001                     2,072     $    2    198.5     $     1         250    $    1    10,524,573    $10,525
                                             =======     ======   ======     =======      ======    ======    ==========    =======
</TABLE>


<TABLE>
<CAPTION>

                                                          Additional                                Total
                                                           Paid-in            Accumulated       Stockholders'
                                                           Capital              Deficit             Equity
                                                       ---------------     ---------------     ---------------
<S>                                                    <C>                 <C>                 <C>
Balance, January 1, 2000                               $     7,129,574     $    (5,148,792)    $     1,984,845

Issuance of stock options                                       82,406                                  82,406
Common Stock issued:
  Consulting fees and compensation                             306,042                                 306,609
  Conversion of Series B Preferred
    Stock                                                       (1,020)
  Exercise of options                                           11,920                                  12,000
  Conversion of loan payable by director                        26,608                                  26,832
  Conversion of accrued payroll by officer                      49,584                                  50,000
Net Loss                                                                        (2,295,683)         (2,295,683)
                                                       ---------------     ---------------     ---------------
Balance, December 31, 2000                                   7,605,114          (7,444,475)            167,009

Issuance of stock options                                      918,117                                 918,117
Common stock issued:
  Consulting fees and compensation                              39,630                                  40,000
  Conversion of Series B
   Preferred Stock                                                (526)
  Exercise of options                                           20,860                                  21,000
  Purchase of stock by officer                                  49,444                                  50,000
  Acquisition of subsidiary                                    613,513                                 616,080
Net loss                                                                          (893,780)           (893,780)
                                                       ---------------     ---------------     ---------------
Balance, December 31, 2001                             $     9,246,152     $    (8,338,255)    $       918,426
                                                       ===============     ===============     ===============
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       F-5
<PAGE>

                          Univec, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                                 2001                2000
                                                                                         ---------------     ---------------
<S>                                                                                      <C>                 <C>
 Cash flows from operating activities:
 Net loss                                                                                $      (893,780)    $    (2,295,683)
 Adjustments to reconcile net loss to net cash used in operating
   activities:
   Depreciation                                                                                  240,716             284,233
   Issuance of shares and options for services                                                    48,467             358,314
   Write-off of inventory                                                                         32,330
   Write-off of accounts payable                                                                 (43,605)
   Loss on sale of equipment                                                                                         794,244
Changes in assets and liabilities, net of effects from acquisition of PPSI:
   Accounts receivable                                                                          (379,383)            377,937
   Due from factor                                                                               211,535            (211,535)
   Inventory                                                                                        (176)            157,966
   Other current assets and other assets                                                         (40,516)             52,232
   Accounts payable and accrued expenses                                                         634,764              59,777
   Due to affiliated company                                                                      15,287
   Deferred payroll-officers                                                                     200,629              82,528
   Deposit payable                                                                              (160,000)            160,000
                                                                                         ---------------     ---------------
      Net cash used in operating activities                                                     (133,732)           (179,987)
                                                                                         ---------------     ---------------
Cash flows from investing activities:
 Proceeds from sale of equipment (net of cash expenses of $74,223 in 2000)                                           360,777
 Decreases in (Purchases of) fixed assets (net of cost of sales in 2001
   and capital lease obligations of $435,000 in 2000)                                             87,517            (114,911)
 Investment in PPSI (net of cash acquired of $19,479 and loan
   payable of $113,276)                                                                          (90,750)
                                                                                         ---------------     ---------------
      Net cash (used in) provided by investing activities                                         (3,233)            245,866
                                                                                         ---------------     ---------------

Cash flows from financing activities:
   Proceeds from notes and loans payable                                                         422,806
   Proceeds from sale of common stock                                                             50,000
   Payments of notes and loans payable                                                          (211,509)           (107,683)
   Payments of capital lease obligation                                                         (130,306)            (59,659)
                                                                                         ---------------     ---------------
      Net cash provided by (used in) financing activities                                        130,991            (167,342)
                                                                                         ---------------     ---------------
      Net decrease in cash                                                                        (5,974)           (101,463)

Cash, beginning of period                                                                         28,177             129,640
                                                                                         ---------------     ---------------
Cash, end of period                                                                      $        22,203     $        28,177
                                                                                         ===============     ===============

Supplemental disclosure of cash flow information:
   Cash paid for interest                                                                $       135,964     $       114,742

Supplemental disclosures of noncash activity:
   Common stock and warrants issued for loans payable, accrued payroll
      and expenses for the sale of equipment                                                                 $       119,533
   Options issued in payment of loan payable                                             $        21,000     $        12,000
   Common stock issued for acquisition                                                   $     1,525,730
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       F-6
<PAGE>
                          Univec, Inc. and Subsidiaries

                  Notes to Consolidated Financial Statements

1.    Nature of Operations

      Univec, Inc. (Company) produces, licenses and markets medical products,
primarily syringes, and sells medical devices on a global basis. Physician and
Pharmaceutical Services, Inc. (PPSI) provides marketing and fulfillment services
of pharmaceutical samples to pharmaceutical manufacturers.

2.    Significant Accounting Policies

      Basis of Presentation

      The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Physician and Pharmaceutical Services, Inc.
(PPSI) and Rx Ultra, Inc. (inactive). All material intercompany balances and
transactions have been eliminated.

      Inventory

      Inventory is valued at the lower of cost, determined by the first-in,
first-out method, or market.

      Fixed Assets

      Fixed assets are stated at cost less accumulated depreciation. Fixed
assets are depreciated on a straight-line basis over the estimated useful lives
of the asset. Leasehold improvements are amortized over the estimated useful
life of the improvement or the term of the lease, whichever is shorter.
Maintenance and repairs are charged to expense as incurred; renewals and
improvements which extend the life of assets are capitalized. Upon retirement or
disposal, the asset cost and related accumulated depreciation and amortization
are eliminated from the respective accounts and the resulting gain or loss, if
any, is included in the results of operations.

      Patent Rights and Royalties

      Patent rights acquired were capitalized and amortized on a straight-line
basis over an estimated useful life of seven years. Royalties based on future
revenues will be charged to operations when and if they are incurred.

      Shipping Income and Expense

      Shipping income is included in product sales and shipping expenses are
included in marketing and selling.

      Product Development

      Research and development costs are expensed as incurred.

      Income Taxes

      Deferred income taxes have been provided for temporary differences between
consolidated financial statements and income tax reporting.

      Loss per Share

      Net loss per common share was computed based on the weighted average
number of common shares outstanding during the year.


                                       F-7
<PAGE>

      Product Revenue Recognition

      Product sales are recognized when products are shipped. Although the
Company warrants its products, it is unable to estimate the future costs
relating to warranty expense and, as such, recognizes warranty expenses as
incurred. Fees and costs of fees for PPSI are primarily recognized upon the
Company's fulfillment of the pharmaceutical sample to the user.

      Stock Based Compensation

      Compensation cost for stock, stock options, warrants, etc., issued to
employees and non-employees is based on the fair value method.

      Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

3.    Accounts Receivable

      In March 2001, the Company modified and extended its agreement to sell
selected accounts receivable to a factor. Under the agreement, the Company shall
receive 80% of sold accounts as a deposit and the balance upon payment. These
sales are subject to a 10% discount, but will receive a rebate of 6% if payment
is made within 30 days, decreasing to 2% if payment is within 90 days. All
accounts not paid within 90 days will be charged back to the Company. In
addition, the Company has collateralized all accounts receivable and certain
intangibles.

      During the year ended December 31, 2001, the Company sold accounts
receivable of $744,346, all of which have been collected.

      In May 2001, the Company entered into a purchase order financing agreement
with a finance company to finance up to $500,000 of outstanding purchase orders.
During the year ended December 31, 2001, purchase orders of $54,400 were
financed and paid.

4.    Inventories

      Inventories consisted of the following:
         Raw materials                            $ 361,173
         Work-in-process                             33,203
         Finished goods                              48,406
                                                  ---------
                                                  $ 442,782
                                                  =========

5.    Fixed Assets

      Fixed assets consisted of the following:

<TABLE>
<CAPTION>
                                                             Estimated
                                                            useful lives
                                                              in years
                                                           -------------
<S>                                                        <C>              <C>
         Factory equipment .............................         7          $  1,730,316
         Office equipment ..............................         5                13,886
         Leasehold improvements ........................         5                15,672
         Furniture & Fixtures                                    5                 1,744
                                                                            ------------
                                                                               1,761,618
         Less accumulated depreciation .................                         822,251
                                                                            ------------
                                                                            $    939,367
                                                                            ============
</TABLE>

                                       F-8
<PAGE>

      As of December 31, 2001, factory equipment included capitalized leased
assets of $435,000.

      Depreciation expense was $240,716 and $284,233 in 2001 and 2000,
respectively.

      In March 2000, the Company sold equipment for an aggregate sales price of
$360,777, net of expenses of $74,223, which resulted in a loss of $794,244. The
Company then leased back the equipment from the purchaser for three years. The
lease provides for monthly rent of $9,063, plus an amount equal to 2% above the
lessor's prime rate, per annum, of the unpaid lease obligation and, at the end
of the lease term, a purchase option of $1.00.

      The Company has capitalized the lease. The capitalized lease obligation
and related assets were recorded at the lower of the present value of the net
minimum lease obligations or the fair value of the related asset.

      As of December 31, 2001, capitalized lease obligations consisted of the
following:

                             Current                   $  108,750
                             Noncurrent                   139,976
                                                       ----------
                                                       $  248,726
                                                       ==========


6.    Notes and Loans Payable

      As of December 31, 2001, notes and loans payable consisted of:

<TABLE>
<S>                                                                                                <C>
Loan payable to a vendor without specific
   payment terms or interest (1) .........................................................         $       216,352
Note payable to a vendor on demand,
   with interest at 10%, per annum (2)(3) ................................................                  85,000
Loan payable to a vendor without specific
   payment terms or interest .............................................................                 113,276
Note payable to a vendor on demand,
   with interest at 15%, per annum .......................................................                  64,000
Loan payable to officer on demand, with interest
   at 6%, per annum ......................................................................                  18,005
Notes payable to a director's trusts on
   April 2004, with interest at 12%, per annum (Note 9) ..................................                  27,000
Note payable to a vendor (Note 8) ........................................................                 111,894
Note payable to a director without specific payment
   terms with interest at 6%, per annum ..................................................                  40,000
Notes payable to finance insurance March to June 2002,
   with interest at 8% to 10%, per annum .................................................                  36,760
                                                                                                   ---------------
                                                                                                           712,287
Less:  Current portion of notes and loans payable ........................................                 468,935
                                                                                                   ---------------

                                                                                                   $       243,352
                                                                                                   ===============
</TABLE>

(1)   Subject to forgiveness upon the vendor's sale of shares of the Company's
      common stock
(2)   Collateralized by certain patents
(3)   Guaranteed by a stockholder/officer up to $50,000


                                       F-9
<PAGE>

7.    Income Taxes

      Commencing January 1, 2002, the Company will file consolidated income tax
returns with its subsidiaries. Prior to January 1, 2002, PPSI was an S
Corporation.

      For the years ended December 31, 2001 and 2000, the Company's deferred tax
benefits (expenses) were as follows:

<TABLE>
<CAPTION>
                                                                 2001                2000
                                                            ---------------     ---------------
<S>                                                         <C>                 <C>
         Net operating loss carryforwards                   $       243,000     $       868,000
         Capitalized costs                                                             (122,000)
         Depreciation                                                (2,000)              8,000
         Compensation                                                79,000              11,000
         Patent                                                                         (28,000)
         Valuation allowance                                       (320,000)           (737,000)
                                                            ---------------     ---------------
                                                                       None                None
                                                            ===============     ===============
</TABLE>

      As of December 31, 2001, the tax effects of the components of deferred tax
assets and liabilities were as follows:

        Deferred tax assets
           Net operating loss carryforwards ............     $     3,685,000
           Compensation ................................             200,000
                                                             ---------------
               Total deferred tax asset ................           3,885,000

        Deferred tax liabilities
           Depreciation ................................            (285,000)
                                                             ---------------
               Net deferred tax asset ..................           3,600,000
               Valuation allowance .....................          (3,600,000)
                                                             ---------------
                                                                        None
                                                             ===============

      As of December 31, 2001, realization of the Company's net deferred tax
asset of approximately $3,600,000 was not considered more likely than not, and,
accordingly, a valuation allowance of $3,600,000 was provided.

     The following is a reconciliation of expected income tax benefit utilizing
the Federal statutory tax rate to income tax benefit reported on the statement
of operations.

<TABLE>
<CAPTION>
                                                                                               2001                2000
                                                                                         ---------------     ---------------
<S>                                                                                      <C>                 <C>
Expected income tax benefit ......................................................       $      (304,000)    $      (781,000)
Change in valuation allowance arising in current year ............................               320,000             737,000
State income tax benefit, net of federal income tax effect .......................               (16,000)             44,000
                                                                                         ---------------     ---------------
                                                                                                    None                None
                                                                                         ===============     ===============
</TABLE>

      As of December 31, 2001, the Company had net operating loss carryforwards
of approximately $10,400,000 to reduce future taxable income expiring through
2016.



                                       F-10
<PAGE>

8.    Commitments and Contingencies

      License Agreements

      The Company is committed under an exclusive license agreement with two
inventors for a patent for an insertable element that prevents reuse of a
plastic syringe. To maintain this license agreement, the Company is required to
pay an annual minimum licensing fee of $10,000. To maintain exclusivity, the
Company is required to pay an annual minimum license fee of $50,000. In
addition, the license requires royalty payments of 6% of net sales of products
manufactured and 40% of sublicense royalties received for products that use the
specific insertable element. Through March 7, 2002, the Company has not and does
not have immediate plans to manufacture or sublicense using this patent. During
both 2001 and 2000, the Company paid only minimum royalties of $60,000 under
this agreement.

      In March 2001, the Company exercised an option to acquire a license of a
component for a period of the later of ten years or the expiration of the last
patent relating to the component and its improvements, with the right to
terminate the agreement if the Company fails to produce and ship at least ten
million of this component within three years. The Company is committed to pay a
royalty of $.001, per component sold, with an advance royalty fee of $15,000,
previously paid. As of December 31, 2001, the Company has not sold any product
subject to royalties under this agreement.

      Marketing Agreement

      PPSI is committed under a marketing agreement through January 31, 2003,
for a share of future revenue from referrals.

      Lease

      The Company is committed under a lease for production, storage and office
space through September, 2003. The lease provides for annual minimum rent and
additional rents for the Company's pro rata share of real estate taxes,
liability insurance, maintenance, etc. In addition, the lease is renewable for
an additional five years.

      Total rent expense for 2001 and 2000 was $73,644 and $71,499,
respectively.

      As of December 31, 2001, the minimum future rent payments, exclusive of
the renewal, was:

                 Years Ended
                 December 31,
                -------------
                    2002                                   $   75,852
                    2003                                       58,168
                                                           ----------
                                                           $  134,020
                                                           ==========

      Employment Agreement

      The Company is committed under an employment agreement with an officer
through February 2003, requiring annual compensation of $55,370, plus annual
increases of 10%.

      Purchase Commitment

      In August 2001, the Company entered into an agreement with a vendor to
purchase a minimum of $152,000, per year, of components, subject to price
adjustments, over a period of five years. In addition, the Company borrowed
$150,000 to purchase molding equipment to be utilized to manufacture the
components. The note is payable over three years based on the purchase of the
components, with interest at 8%, per annum.


                                      F-11
<PAGE>

9.    Stockholders' Equity

      Common Stock

      In August 2000, the Company's shareholders amended the Certificate of
Incorporation of the Company to increase the authorized common stock of the
Company from 25,000,000 to 75,000,000 shares.

      In January 2000, the Company issued 223,600 shares of common stock at
$.12, per share, to a director in exchange for debt and a loan owed to the
director of $26,832.

      In January 2000, an officer/director converted deferred payroll of $50,000
into 416,666 shares of common stock at $.12, per share, and resold 250,000
shares of such stock to another director for $30,000.

      In May and June 2000, the Company issued 381,680 shares of common stock to
four consultants for services and accounts payable valued at $245,790.

      In August 2000, the Company issued 30,000 shares of common stock to a
marketing consultant, valued at $15,000.

      In September 2000, the Company issued 15,000 shares of common stock to a
consultant to provide financial marketing services valued at $6,750.

      In September 2000, the Company issued 30,000 shares of common stock to an
employee as additional compensation valued at $15,000.

      In December 2000, the Company issued 110,000 shares of common stock to
consultants for financial services valued at $24,069.

      In February 2001, the Company issued 120,000 shares of common stock to an
employee of the Company as additional compensation for consulting services
performed valued at $15,000.

      In December 2001, the Company issued 555,556 shares of common stock to an
officer/director of the Company in exchange for $50,000.

      In December 2001, the Company issued an aggregate of 250,000 shares of
common stock to consultants of the Company for services valued at $25,000.

      Preferred Stock

      Series A 8% Cumulative Convertible Preferred Shares (Series A) are
entitled to receive, prior to the payment of cash dividends to the common stock,
a cumulative dividend of $80, per share, per annum, and may be redeemed by the
Company, at $1,000, per share. In addition, Series A stockholders are entitled
to a liquidation preference of $1,000 per share, plus accrued and unpaid
dividends. Further, each share of Series A is convertible into 222.22 shares of
common stock.

      Series B 5% Cumulative Convertible Preferred Shares (Series B) are
entitled to receive, prior to the payment of dividends to the Series A and
common stock, cumulative dividends of $50, per share, per annum, and may be
redeemed at the option of the Company, at $1,000, per share. In addition, Series
B stockholders are entitled to a liquidation preference of $1,000, per share,
plus accrued and unpaid dividends. Each share of Series B, having a value of
$1,000, is convertible into shares of common stock at the lesser of $1.10, as
amended, or 75% of market value. The mandatory conversion date of the Agreement
has been extended to February 2003.


                                      F-12
<PAGE>

      In March 2000, 160 shares of Series B were converted to 372,610 shares of
common stock at an average price of $.43, per share.

      In June 2000, 50 shares of Series B were converted to 125,000 shares of
common stock at a price of $.40, per share.

      In July 2000, 50 shares of Series B were converted to 118,511 shares of
common stock at a price of $.42, per share.

      In August 2000, 50 shares of Series B were converted to 175,438 shares of
common stock at a price of $.285, per share.

      In September 2000, 75 shares of Series B were converted to 228,588 shares
of common stock at a price of $.328, per share.

      In July 2001, 10 shares of Series B were converted to 103,896 shares of
common stock at a price of $.0963, per share.

      In December 2001, an aggregate of 18.5 shares of Series B was converted to
422,375 shares of common stock at a price of $.0438, per share.

      Series C 5% Cumulative Convertible Preferred Shares (Series C) are
entitled to receive, prior to the payment of dividends to the Series B, Series A
and common stock, cumulative dividends of $50, per share, per annum, and may be
redeemed at the option of the Company, at $1,000, per share. In addition, Series
C stockholders are entitled to a liquidation preference of $1,000, per share,
plus accrued and unpaid dividends. Each share of Series C, having a value of
$1,000, is convertible into shares of common stock at the lesser of $1.10 or 75%
of market value, as defined.

      Holders of preferred shares have no voting rights.

      As of December 31, 2001, cumulative dividends in arrears on preferred
stock were:

                  Series A                         $  688,420
                  Series B                             78,386
                  Series C                             36,181
                                                   ----------
                                                   $  802,987
                                                   ==========

      Redeemable Common Stock Purchase Warrants

      The Company has 2,587,500 Redeemable Common Stock Purchase Warrants
(Redeemable Warrants) outstanding entitling each holder to purchase one share of
common stock at an exercise price of $4.50, per share, through April 23, 2002.
The Redeemable Warrants are subject to redemption, at any time, by the Company
at $.05, per share, through April 23, 2002, provided the closing bid price of
the common stock has been at least $8.00 for 20 consecutive trading days.

      In addition, both the exercise price and number of shares issuable upon
exercise of the Redeemable Warrants are subject to adjustment for certain
dilutive events. As of December 31, 2001, the exercise price has been decreased
to $1.01, per share, and the number of shares issuable upon exercise of the
Redeemable Warrants has been increased to 18,432,219.

      Underwriter's Warrants

      The Company has an outstanding Underwriter's Warrant to purchase 150,000
shares of common stock and 225,000 Redeemable Warrants, exercisable at $5.78,
per share, and $.17,per warrant, respectively, commencing April 1998 through
April 2003. Both the exercise price and number of shares issuable upon exercise
of the Underwriter's Warrant are subject to adjustment for certain dilutive
events. As of December 31, 2001, the exercise price has been decreased to $3.54,
per share, and the number of shares issuable upon the exercise of the
Underwriter's Warrant has been increased to 244,704.

                                      F-13
<PAGE>



      Options

      In February 2000, the Company granted options to purchase an aggregate of
3,430,000 shares of common stock, outside the Plan, at $.59, per share,
exercisable through February 2003, to officers and directors and 55,941 options
to purchase common stock exercisable through February 2003, at $.59, per share,
to a consultant.

      In March 2000, the Company granted warrants to purchase 30,000 shares of
common stock at $.39, per share, through March 2003 in connection with the sale
and leaseback.

      In August 2000, the Company granted 150,000 options to purchase common
stock exercisable at $.43, per share through August 2005 to a consultant to
provide marketing services valued at $2,500.

      In December 2000, the Company to granted 70,000 options to purchase common
stock exercisable at $.20, per share, through December 2003 to two consultants
to provide financial services valued at $1,200.

      In March 2001, the Company granted 100,000 options to purchase common
stock exercisable at $.25, per share, through March 2006 to two consultants to
provide financial services.

      In March 2001, the Company granted a warrant to purchase 108,000 shares of
common stock exercisable at $.25, per share, expiring on April 23, 2004, in
consideration of a loan from a director/shareholder.

      In March 2001, a vendor exercised options to purchase 50,000 shares of
common stock at $.15, per share, in exchange for reductions in a loan payable to
the vendor. An additional aggregate of 90,000 options were exercised by the
vendor to purchase common stock at $.15, with 30,000 exercised in June 2001,
20,000 in August 2001, 20,000 in October 2001, and 20,000 in December 2001.

      Reserved Shares

      As of December 31, 2001, the Company has reserved shares of common stock
as follows:

         Redeemable Warrants (a)                     18,432,219
         Underwriter's warrant                          469,704
         Options under the Plan                       7,259,219
         Other options and warrants                   8,120,596
         Loans payable and deferred payroll           1,483,858
         Series A conversions                           460,440
         Series B conversions (b)                     1,260,317
         Series C conversions (b)                     1,587,302
         Series B warrants (c)                          112,500
         Series C warrants (c)                           37,500
         Litigation reserve                             250,000
                                                    -----------
                                                     39,473,655
                                                    ===========


         (a)  the exercise price for the redeemable warrants has been adjusted
              as of March 26, 2002, to $.94, per share, and the number of shares
              issuable upon the exercise has been increased to 19,684,514.
         (b)  assumes conversions as of December 31, 2001 at $.1575, per share.
         (c)  150,000 warrants issued with the Series B and C preferred stock
              expired February 8, 2002


                                      F-14
<PAGE>

10.   Stock Option Plans

      The 1996 Stock Option Plan (Plan) is administered by the Board of
Directors or a committee thereof and options to purchase 4,709,219 shares of
common stock may be granted under the Plan to directors, employees (including
officers) and consultants to the Company. The Plan authorizes the issuance of
incentive stock options (ISO's), as defined in Section 422A of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options (NQSO's).
Consultants and directors who are not also employees of the Company are eligible
for grants of only NQSOs. The exercise price of each ISO may not be less than
100% of the fair market value of the common stock at the time of grant, except
that in the case of a grant to an employee who owns 10% or more of the
outstanding stock of the Company or a subsidiary or parent of the Company, the
exercise price may not be less than 110% of the fair market value on the date of
grant. The aggregate fair market value of the shares covered by ISO's granted
under the Plan that become exercisable by a Plan participant for the first time
in any calendar year is subject to a $100,000 limitation. The exercise price of
each NQSO is determined by the Board, or committee thereof, in its discretion;
provided that NQSO's granted a 10% Stockholder be no less than 110% of the fair
market value on the date of grant.

      Under the Plan, the Company has set aside options to purchase 4,500,000
shares of common stock based on the criteria listed below. These options will
become exercisable commencing upon the earlier of April 2006, or (y) two years
after the effective date of the option, provided that in the case of clause (y),
the Company shall have obtained: (i) at least $30,000,000 in gross revenues and
after tax net income of at least $2,000,000 in the second full fiscal year
following the effective date, or (ii) at least $45,000,000 in gross revenues and
$3,000,000 in after-tax net income in the third full fiscal year following the
effective date, or (iii) at least $60,000,000 in gross revenues and $4,000,000
in after-tax net income in the fourth full fiscal year following the effective
date.

      Under the 1998 Stock Option Plan (98 Plan), the Company may grant options
to purchase 300,000 shares of common stock to employees, directors, independent
contractors and consultants of the Company. The 98 Plan is similar to the Plan
and authorizes the issuance of ISO's, NQSO's and Stock Appreciation Rights.

      In August 2000, the Company adopted the 2000 Stock Option Plan (2000
Plan), under which the Company may grant options to purchase 2,000,000 shares of
common stock to employees, directors, independent contractors and consultants of
the Company. The Plan includes options to purchase an addition 250,000 shares of
common stock, reserved for an Industrial and Scientific Advisory Committee to be
formed as necessitated by the Company.

      In June 2000, the Company granted five year options to purchase 300,000
shares, each, to three board members of the Company at $.675, per share, under
the Plan.

      In June 2000, the Company granted options to purchase an aggregate of
100,000 shares of common stock under the Plan to two officers, exercisable at
$.675, per share, through June 2005.

      In March 2001, the Company granted options, under the 2000 Plan, to
purchase 100,000 shares of common stock at $.50, per share, exercisable through
March 2011, as a contribution to a medical foundation.


                                      F-15
<PAGE>

      In September 2001, the Company granted options to purchase 60,000 shares
of common stock under the Plan to a consultant for services rendered,
exercisable at $.20, per share, through September 2006.

      In September 2001, the Company granted an aggregate of 105,000 options to
purchase common stock at $.15, per share, exercisable through September 2011,
and, in December 2001, granted an additional aggregate of 35,000 options to
purchase common stock at $.24, per share, exercisable through December 2011,
under the Plan.

      The following table summarizes the activity of the Plans for 2001 and
2000.

<TABLE>
<CAPTION>
                                                                      2001                                   2000
                                                      -----------------------------------     -----------------------------------
                                                                             Weighted                                Weighted
                                                                              Average                                 Average
                                                                             Exercise                                Exercise
                                                          Shares               Price              Shares               Price
                                                      ---------------     ---------------     ---------------     ---------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Options outstanding, beginning of year                      5,349,000     $          1.50           4,349,000     $         1.79
Granted                                                       300,000     $           .29           1,000,000     $          .675
Canceled or lapsed                                           (235,000)    $          3.46
                                                      ---------------     ---------------     ---------------     ---------------
Options outstanding, end of year                            5,414,000,    $          1.35           5,349,000     $         1.50
                                                      ===============     ===============     ===============     ===============
Options exercisable, end of year                            5,149,000     $          1.37           4,754,000     $         1.46
                                                      ===============     ===============     ===============     ===============
Options available for grant, end of year                    1,845,219                               1,910,219
                                                      ===============                         ===============
Weighted-average fair value of options granted
 during the year                                      $           .29                         $          .675
                                                      ===============                         ===============
</TABLE>
      The following table summarizes information about stock options outstanding
under the Plan at December 31, 2001:

<TABLE>
<CAPTION>
                                                         Weighted
                                                          Average                                Weighted
                                                         Remaining                                Average
   Range of                         Outstanding         Contractual         Exercisable         Exercisable
Exercise Prices                       Options               Life              Options              Price
---------------                   ---------------     ---------------     ---------------     ---------------
<S>                               <C>                 <C>                 <C>                 <C>
$3.50                                      65,000                5.50                         $          3.50
$2.00                                     170,000                3.09             170,000     $          2.00
$1.75                                   3,330,000                1.25           3,330,000     $          1.75
$1.50                                      49,000                2.00              49,000     $          1.50
$0.675                                  1,000,000                3.50           1,000,000     $          0.675
$0.50                                     100,000                9.25             100,000     $          0.50
$0.24                                      35,000               10.00              35,000     $          0.24
$0.20                                      60,000                4.75              60,000     $          0.20
$0.15                                     605,000                8.10             405,000     $          0.15
                                  ---------------     ---------------     ---------------     ---------------
$0.15 to $3.50                          5,414,000                2.73           5,149,000     $          1.37
                                  ===============     ===============     ===============     ===============
</TABLE>


                                      F-16
<PAGE>
11.   Litigation

      In February 1998, the Company commenced an action against a former
supplier seeking punitive damages, alleging fraud, breach of contract, et.al.
This litigation has been settled for an immaterial amount after legal fees.

      In February 2000, a former consultant commenced an action against the
Company and its directors alleging breach of contract and fiduciary duty, and is
seeking consulting fees in the amount of: (1) 250,000 shares of common stock,
(2) $192,000 and (3) costs of this action. The Company and counsel do not
believe the fees are due and will vigorously defend this action.

      In April 2000, the Company commenced a collection action against a former
consultant for the repayment of a loan of $35,000. The loan has been fully
reserved. The former consultant has contested the claim and filed a counterclaim
for unpaid consulting fees of $400,000, plus interest, costs and expenses. The
Company believes the counterclaim is without merit, is defending the matter and,
together with counsel, does not believe the outcome of this matter will have a
material effect on the Company.

12.   Sales of Licenses and Equipment

      In August 2000, the Company entered into a license agreement providing for
the non-exclusive, worldwide use of the Company's patents for the manufacture,
use and marketing of its auto-disable syringes through the period any patents
are still in effect, providing for royalties on sales. The Company has warranted
the equipment sold as part of the agreement for one year from acceptance and is
required to provide continuing technical assistance throughout the license and
manufacturing periods.

      During the year ended December 31, 2001, the equipment was inspected,
delivered, installed and commenced production.

      In August 2000, the Company entered into a license agreement and proposed
sale of certain equipment. During the year ended December 31, 2000, the Company
received a deposit of $160,000, but the sale of the equipment was never
completed. In 2001, the Company and the licensee have agreed to apply the
deposit to a non refundable advance royalty and the Company recognized the
income.

13.   Concentrations

      The Company maintains cash in financial institutions in excess of insured
limits. In assessing its risk, the Company's policy is to maintain funds only
with reputable financial institutions.

      During 2001, and 2000, product sales to four customers were approximately
82% and 89% of total product sales, respectively. As of December 31, 2001, one
customer accounted for 64% of total accounts receivable.

      During 2001 and 2000, purchases from two suppliers were approximately 86%
and 79% of total purchases, respectively. As of December 31, 2001, accounts
payable to three vendors were 41% of total accounts payable.


                                      F-17
<PAGE>

14.   Acquisition of Physicians and Pharmaceutical Services, Inc.

      On December 31, 2001 the Company acquired all of the outstanding shares of
Physicians and Pharmaceutical Services, Inc. As a result of the acquisition, the
Company expects to broaden its marketing base, increase sales and services, and
enhance product distribution systems.

      The aggregate purchase price was $1,749,235, consisting of 2,567,000
shares of common stock, warrants to purchase 3,955,000 shares of common stock of
the Company and expenses of $223,505. The warrants were exercisable at $.01, per
share, and were subsequently exercised. The value of the common shares and
warrants issued were determined based on the market price of the Company's
common shares on the date of the acquisition, less the exercise price of the
warrants.

      The acquisition was accounted for under the purchase method of accounting
as required under the recently issued Statement of Financial Accounting
Standards No. 141, Business Combinations. Under purchase accounting, the total
purchase price was allocated to the tangible and intangible assets and
liabilities of PPSI at their respective fair values as of the closing date,
based on preliminary valuations. The estimated fair values of the assets
acquired and liabilities assumed were as follows:

                  Cash                                        $        19,479
                  Accounts receivable                                  24,342
                  Other asset                                          15,000
                  Goodwill                                          1,774,119
                  Accounts payable and accrued expenses               (73,705)
                  Escrow deposit payable                              (10,000)
                                                              ---------------

                           Purchase price                     $     1,749,235
                                                              ===============

      Goodwill has been accounted for under the recently issued Statement of
Financial Accounting Standards, No. 142, Goodwill and Other Intangibles.

      The operations of PPSI have not been included in the statement of
operations.

      Certain common expenses of PPSI and its affiliated companies, owned by a
stockholder/officer, have not been allocated.

15.   Subsequent Events

      Employment Agreements

      As of January 1, 2002, the Company entered into employment agreements with
five officers through January 2004, requiring aggregate annual compensation of
$565,000, per annum. The agreements also provide for bonuses, life, disability
and health insurance. In addition, two officers of the Company received
2,000,000 and 1,000,000 options to purchase common stock exercisable at $.24,
per share, through 2012. The options vest 25% on January 1, 2002 and 41,667 and
20,833, respectively, each subsequent month.

      Management Agreement

      Effective January 1, 2002, the Company entered into a management services
and corporate development consulting agreement through June 2002, replacing a
previous consulting agreement dated March 21, 2001, requiring payments of
$12,500, per month. In addition, the Company granted the consultants options to
purchase 1,650,000 shares of common stock, exercisable through January 1, 2012,
at $.24, per share. The options were vested 25% on the effective date and 34,375
each subsequent month.


                                      F-18
<PAGE>


      Preferred Stock

      In January 2002, the Company designated and authorized 1,250,000 shares of
Series D 5% Cumulative Preferred Shares (Series D) which are entitled to
receive, prior to the payment of dividends to the Series C, Series B, Series A
and common stock, cumulative dividends of $.12 per share, per annum. Each
Series D share may be redeemed at the option of the Company, after two years, if
the market price of the common stock is $1.60, per share, as defined, and
convertible by the holder into three shares of common for each share of Series
D. In addition, Series D stockholders are entitled to a liquidation preference
of $2.40, per share, plus accrued and unpaid dividends.

      In January 2002, the Company issued 104,167 shares of Series D Convertible
Preferred stock for a cash purchase price of $2.40, per share, for an aggregate
of $250,000.

      Equity

      In January, February, and March 2002, a vendor exercised options to
purchase an aggregate of 30,000 shares of common stock at $.15, per share, in
exchange for reductions in a loan payable to the vendor.

      In January 2002, an aggregate of 23.5 shares of Series B Preferred Stock
was converted to 241,499 shares of common stock at an average price of $.097,
per share.

      In January 2002, the Company issued 30,000 shares of common stock at
$.1473, per share, to a vendor for professional services rendered to the
Company.

      In January 2002, the Company issued an aggregate of 326,680 shares of
common stock at $.10, per share, to two vendors as partial payment for licensing
fees which were accrued as of December 31, 2001.

      Borrowings

      In January 2002, the Company borrowed $30,000 from a stockholder/director
payable on demand with interest at 6%, per annum, and in March 2000, repaid
$5,200.

      In January and February 2002, the Company borrowed $101,450 from an
officer/ director, without specific payment terms or interest.

      Acquisition of Thermal Waste Technologies, Inc.

      Effective February 28, 2002, the Company acquired all the outstanding
shares of Thermal Waste Technologies, Inc. (TWT), a medical equipment
manufacturer, in exchange for 620,000 shares of common stock of the Company and
an option to purchase 1,080,145 shares of common stock of the Company. The
option is exercisable at $.01, per share, for 10 years. In connection with the
acquisition, the Company has agreed to pay: (1) a fee of $37,888, which may be
converted into options to purchase shares of common stock exercisable at the
closing price of the Company's common stock for a period of ten years and (2)
transaction costs of TWT for up to $20,000.

      In connection with the acquisition, the Company entered into an employment
contract with an officer requiring annual compensation of $125,000 through 2005,
plus a bonus, benefits and terms similar to other officers of the Company. In
addition, the Company will grant an option to purchase 333,639 shares of common
stock of the Company, subject to adjustment, exercisable at the market value on
February 28, 2002 for ten years. The option is fully vested in February 2003.


                                      F-19