**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**






**FORM
      10-KSB/A**


**Amendment
          No. 3**




x Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934


For
      the fiscal year ended **December
      31, 2004**




o Transition
      report under Section 13 or 15(d) of the Securities Act of 1934


For
      the
      transition period from _______ to _______




**UNIVEC,
      INC.**


(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




**Delaware**
            **0-22413**
            **11-3163455**(State
                or other jurisdiction
            (Commission
                File Number)
            (IRS
                Employerof
                incorporation)
            
            Identification Number)




**822
          Guilford Avenue, Suite 208** **,
          Baltimore, MD** **21202**
 (Address
      of principal executive offices)




**(410)
      347-9959**


(Registrant’s
      telephone number, including area code)




**4810
          Seton Drive, Baltimore, MD 21215**
 (Former
        Name or Former Address, if Changed Since Last Report).




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 o




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. x




Revenues
        for the issuer's most recent fiscal year were $327,827.






Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x




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 August 31, 2005
      was $1,693,933.




-1-


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 o No o




APPLICABLE
      ONLY TO CORPORATE REGISTRANTS




As
      of
      August 31, 2005 the issuer had 56,464,432 shares of common stock, $.001 par
      value, outstanding.




DOCUMENTS
      INCORPORATED BY REFERENCE


None




-2-




Part
      I




Item
      1.
      Description of Business.




UNIVEC,
      Inc. ("UNIVEC" or "the Company") is an integrated licensing, manufacturing,
      and
      marketing company dedicated to providing safer health products to patients
      and
      caregivers worldwide. Univec also assists  pharmaceutical companies in
      marketing, fulfillment, and tracking drug samples. Univec produces auto-disable
      and safety syringes. 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 engaged in group purchasing (GPO) and
      promoting  Pharmaceutical company prescription samples to physicians for
      their patients. PPSI reduces the cost in the prescription-sampling channel
      by
      providing efficient fulfillment and tracking of prescription usage. PPSI's
      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. PPSI’s group purchasing programs provide for
      reduces prices on prescription drugs and other products through leveraged
      purchasing and closed system market share. Univec also is a distributor of
      a
      highly r egulated
      pharmaceutical drug, methadone and other prescription drug
      products.




Univec
      during late 2004 established the company as a distributor of specialty and
      highly regulated pharmaceutical products. The company intends to expand the
      product line to take further advantage of its group purchasing and closed
      systems purchasing.




Univec
      extended its product line to include a highly regulated pharmaceutical
      (methadone) and other pharmaceutical products. The company will continue to
      sell
      it products through large United States based wholesalers as well as direct
      in
      large bulk to the larger customers of the company. The company’s group purchase
      programs and closed market purchasing positions the company’s product line
      well.




In
      1997,
      Univec commenced production and sales of its 1cc Auto-Disable Syringes
      (AD-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. Univec has received 510(k) clearance from the
      U.S. Food and Drug Administration (the "FDA") to market it's AD-Syringes in
      the
      United States.




Univec
      believes that its 1cc difficult-to-reuse syringes are more effective than
      competitive syringes and that they are competitively priced. Univec 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.
      Univec 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, Univec believes that aspirating syringes are preferred by diabetes
      patients and needle-exchange programs. Pursuant to programs of international
      relief agencies, Univec 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). Univec has FDA approval for an extendible barrel sleeve
      syringe used in the sliding sheath syringes based on technology licensed by
      Univec.




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. Univec has been granted 510(k) clearance by the FDA.
      The device is intended for use in administering smallpox vaccines in response
      to
      potential bio-terrorist 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 blood borne pathogens such as hepatitis B, hepatitis C, and
      HIV.




-3-


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.




Univec
      markets its AD-Syringes and Sliding Sheath Safety Syringes to governments of
      developing countries, provided that such syringes are manufactured in the United
      States, private hospitals and health facilities in the United States, and
      distributors in the United States.




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 who 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 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 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.




Extendible
      Barrel Sleeves 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.


-4-


UNIVEC
      Syringes




Univec
      has developed a 1cc AD-Syringe for aspirating and non-aspirating applications,
      which are 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.




Univec'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.




Univec'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.




Univec'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.




Univec
      has 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




PPSI
      patient StarterScript prescription drug program allows the physician to
      provide  to the patient a cost effective means to support medication
      management from both a clinical and economic perspective. The patient sees
      if
      they may tolerate the medication under both the physician and pharmacist
      oversight.




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, DEA number, 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. Pharmaceutical manufacturers
      spend over $16 billion a year for the marketing of 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.




-5-


Sales,
      Marketing and Distribution




Univec
      has entered into several agreements with large United States based wholesalers
      for the support and expansion of distribution channels for nationwide delivery
      of the Univec product line.




Univec
      also markets its StarterScript patient prescription sampling services to 
pharmaceutical companies desiring to maintain or expand market position. The
      company management believes that with the growth of third party payments of
      prescription drug such as Medicare and managed care companies the direct to
      consumer programs will grow. Univec also believes that with more branded
      pharmaceutical products coming off patent will  further enhance direct
      patient sampling or StarterScript programs as an offense to  generic drug
      substitution.




Univec
      has shipped its lcc AD-Syringes to over 80 countries. Univec intends to market
      its 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. Univec
      is a licensee of products and proprietary manufacturing processes relating
      to
      1cc AD-Syringes. For manufacturing in our facilities. The Company


markets
      such syringes to governments of developing countries, private hospitals and
      medical facilities. To stimulate demand for its safety syringes, Univec 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.




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




Production




Univec's
      lcc locking syringes are being assembled by contract manufacturers in the United
      States, China and Portugal. (See Item 1, "Description of Business" and Item
      3
      "Legal Proceedings" for the current status of the Company's business. The United
      States manufacturers also mold the Company's proprietary syringe  plungers.
      Univec owns stamping, assembly, and molding equipment at its U.S.  contract
      manufacturer. Univec relocated its clip plunger assembly production facility
      designed to produce 1cc AD-Syringes from Farmingdale, New York to 
Baltimore, Maryland during July 2003. These assemblies are shipped to our
      contract manufacturers to produce Auto-Disable Syringes.







Univec'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 Univec. The locking clip and plunger can be assembled, with minor
      modifications, into barrels manufactured by Becton-Dickinson, Tyco, and other
      syringe manufacturers. Univec 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 Univec have been
      manufactured by a Portuguese contract manufacturer. Univec has been successful
      through other sources worldwide in purchasing barrels to increase the overall
      production capacity. In addition, Univec continues to send clip plunger
      assemblies produced in the U.S. to syringe manufacturers to also increase
      overall production. Univec 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 Univec's business.




-6-




Competition




Univec's
      principal competition for syringes is from traditional disposable syringes.
      Becton-Dickinson, Tyco and Terumo control 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 Univec'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.
      Univec 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 Univec will be able to successfully compete
      in
      this market.




PPSI's
      competition comes from traditional sampling providers that include the actual
      drug samples and other pharmaceutical benefit management companies that offer
      similar services such as Caremark and Medco Health.




Patents,
      Licenses and Proprietary Rights




In
      1995,
      Univec 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 Univec.
      Univec 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.




In
      the
      past, Univec 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. In December 2003, to settle an outstanding note with
      Syrinter, Ltd. (Switzerland), the Company assigned certain patents for the
      1cc
      auto-disabled syringe as in full payment of the note and interest thereon.
      The
      Company in turn received relief from restrictive patent payments and a perpetual
      license to exploit these patents provided manufacturing occurs in the United
      States. In addition, the Company will continue to receive 15% of future
      royalties being earned from the licensing of these items. Univec 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, Univec 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. Univec 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,
      2004, Univec has sold only an insignificant amount subject to royalties under
      this agreement.




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




In
      August
      2000, Univec entered into a licensing agreement providing for the non-exclusive,
      worldwide use of Univec 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. In accordance with this agreement, Univec has earned
      royalties of $30,284 and $109,690 for the years ended December 31, 2004 and
      2003, respectively.




-7-


In
      2003
      the Company assigned certain patents to a creditor in payment of an amount
      due
      and also assigned the future royalties under the auto-disable syringe licensing
      agreement. The Company has licensed back the rights under these patents to
      market and manufacture in North America.




In
      2004
      the Company applied for and received a Provisional Patent from the U.S. 
Patent and Trademark Office on September 21, 2004, the Patent #60/611,670 and
      Foreign Filing  License Granted October 15,2004, code US60/611,670.
      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. In brief
      description, a medical device with  a sliding sheath to protect caregivers
      in the dental and the cosmetic market.


Revenue
            Recognition
 
 As
            a
            result of the differing circumstances related to the Company’s manufacture,
            procurement, distribution and physician sampling programs diverse financial
            accounting methods are utilized to recognize revenue from its various
            revenue
            sources. The Company’s manufacturing and specialty pharmaceutical drug
            distribution programs employ the “gross” method of recognizing revenue. However,
            because of the distinctive type of services provided to customers, the
            GPO and
            physician sampling programs utilize the “net” method of revenue recognition.
 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. With the 510(k) notification, the Company
      may 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 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. Univec's manufacturing facilities have not been certified as
      satisfying GMP requirements. Univec'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, Univec 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 Univec's products in foreign markets will also subject Univec
      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.
      Univec's products are required to satisfy international manufacturing
      standards for sale in certain foreign countries.




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 Univec to comply with regulatory requirements. There can be no assurance
      that Univec 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
      Univec's business, financial position and results of operations.


-8-


Research
      and Development




For
      the
      years ended December 31, 2004 and 2003, Univec expended $28,871 and $28,547,
      respectively, on product development expenses.




Employees




As
      of
      July 31, 2005, Univec employed four persons, including two full time in
      sales
      and marketing, one full time in financial administration, and one full time
      in
      production. None of Univec's employees is covered by a collective bargaining
      agreement.




As
        of
        July 31, 2005, PPSI had no employees, but utilizes outside marketing representatives
        and consultants for marketing and administrative services.




Univec
      occupies a production facility, warehouse, administrative, and executive
      offices in Baltimore, MD (comprised of approximately 22,000 square feet
      of
      space) pursuant to a lease that expired on July 15, 2004 with ten (10) renewable
      one (1) year option terms which are automatically renewable by Univec. Rental
      expense for the space is $72,000 per annum plus certain common charges, maintenance
      costs and real estate taxes, subject to a maximum increase of 3% for each
      three year term.




PPSI
        shares office space with a related company, owned by the Chief Executive
        Officer
        of Univec. The expenses of the space, together with other expenses, that
        would
        be allocated to PPSI are insignificant.


Item
      3.
      Legal Proceedings.




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 consulting fees are due and will continue to vigorously defend this action.




Item
      4.
      Submission of Matters to Vote of Security Holders.




The
      Annual Meeting of Stockholders of Univec, Inc. for the year ended December
      31, 2003, was held on August 12, 2004, to consider and vote upon a proposal to
      elect
      S. Robert Grass, Dr. David Dalton, John Frank and William Wooldridge as directors,




The
      number of votes cast for and against each of the foregoing proposals and the
      number of
      abstentions are set forth below.




Proposals
      to Elect Directors:




**For**
            
            **Withheld**S.
                Robert Grass
            
            19,641,801
            
            0David
                Dalton
            
            19,620,601
            
            21,200John
                Frank
            
            19,620,601
            
            21,200William
                Wooldridge
            
            19,641,801
            
            0




-9-


I tem
      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 (expired April 2002) traded on the Nasdaq SmallCap Market.
      Following that date, the common stock and warrants have been quoted on the
      OTC
      Bulletin Board under the symbols "UNVC" and "UNVCW", respectively.




Set
      forth
      below are the high and low closing sale prices for the Common Stock on
      the
      over-the-counter bulletin board from January 1, 2003 through December 31, 2004
      and
      the first quarter of 2005.




**Common
                Stock****("UNVC")****Quarter
                Ended**
            **High**
            
            **Low**March
                31, 2003
            $
            0.070
            
            $
            0.040June
                30, 2003
            $
            0.110
            
            $
            0.100September
                30, 2003
            $
            0.260
            
            $
            0.050December
                31, 2003
            $
            0.140
            
            $
            0.070March
                31, 2004
            $
            0.150
            
            $
            0.090June
                30, 2004
            $
            0.120
            
            $
            0.070September
                30, 2004
            $
            0.090
            
            $
            0.060December
                31, 2004
            $
            0.110
            
            $
            0.040March
                31, 2005
            $
            0.110
            
            $
            0.100




(1)
      As of
      December 31, 2004, there were 120 holders of record of the Common Stock.




(2)
      During the fiscal year ended December 31, 2004, Univec 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 Univec, and in the case of transactions exempt from registration
      under Section 4(2) of the Securities Act, were sophisticated


investors.




1.
      During
      2004, a Univec officer converted $125,262 of contractual benefits to 1,660,035
      common shares.




2.
      On
      February 5, 2004, Univec converted 50 shares of Series E Preferred Stock to 799,371
      common shares at $.064 per common share.




3.
      On
      February 15, 2004, two Company officers exchanged 500,000 common shares in
      payment of a total of $50,000 compensation options at $.05 per
      share.




4.
      On
      July 3, 2004, Univec issued 500,000 shares at $.02 per common
      share of
      common
      stock to a former director as payment of $10,000 of notes payable.




5.
      On
      November 12, 2004 Univec issued 6,000,000 shares of common stock to a vendor
      in
      exchange for $240,000 financial consulting services at $.04 per
      share.




6.
      On
      December 8, 2004, Univec converted 30 shares of Series E Preferred Stock to 990,970
      common shares at $.0323 per common share.




-10-


Item
      6.
      Management's Discussion and Analysis




The
      following discussion and analysis should be read in conjunction
      with


Univec,
      Inc's ("Univec", "we" or "our"), consolidated financial statements,


including
      the notes thereto, appearing elsewhere in this report.




Condensed
      Consolidated Results of Operations


**2004**
                      
                      **2003**
                      
                      **Change****(Restated)**Revenues
                      
                      $
                      327,827
                      
                      $
                      939,747
                      
                      
                      (65
                      %)
  Cost
                          of Revenues
                      
                      $
                      128,933
                      
                      
                      948,490
                      
                      
                      (86
                      %)
  Gross
                          Margin
                      
                      
                      198,894
                      
                      
                      (8,743
                      )
                      
                      (2,375
                      %)Expenses:Marketing
                          and SellingExpense
                      
                      
                      123,400
                      
                      
                      379,738
                      
                      
                      (68
                      %)Product
                          Development
                      
                      
                      28,871
                      
                      
                      28,547
                      
                      
                      1
                      %General
                          andAdministrative
                      
                      
                      1,772,246
                      
                      
                      847,013
                      
                      
                      109
                      %Interest
                          Expense, Net
                      
                      
                      108,092
                      
                      
                      91,564
                      
                      
                      18
                      %Gain
                          on Extinguishmentof Debt
                      
                      
                      (144,819
                      )
                      
                      (24,872
                      )
                      
                      482
                      %Loss
                          on write-off ofGoodwill
                      
                      
                      1,774,119
                      
                      
                      -
                      
                      
                      -Other
                          Income
                      
                      
                      (47,795
                      )
                      
                      -
                      
                      
                      -Loss
                          on capitalized lease
                      
                      
                      -0-
                      
                      
                      121,366
                      
                      
                      -Total
                          Continuous Expenses
                      
                      
                      3,614,114
                      
                      
                      1,443,356
                      
                      
                      150
                      %Discontinued
                          Operations
                      
                      
                      (8,260
                      )
                      
                      (93,502
                      )
                      
                      (91
                      %)Loss
                          on sale of Subsidiary
                      
                      
                      (597,056
                      )Net
                          Loss
                      
                      $
                      (4,020,536
                      )
                      $
                      (1,545,601
                      )
                      
                      (160
                      )%
 Sales
                  within PPSI’s GPO program utilizing the “net” revenue recognition method
                  comprised more than 82% of the total sales for 2004. A breakdown
                  of revenues and
                  cost of revenues for 2004 between the Company and its wholly-owned
                  subsidiary,
                  PPSI, are as follows:
  **Univec**
                        
                        **PPSI**
                        
                        **Total**Revenue
                        
                        $
                        59,819
                        
                        $
                        268,008
                        
                        $
                        327,827Cost
                            of Revenues
                        
                        
                        128,933
                        
                        
                        
                        
                        
                        128,933Gross
                            Margin
                        
                        $
                        (69,114
                        )
                        $
                        268,008
                        
                        $
                        198,894
  The
                    Company has corrected an error which occurred during the year
                    ended December 31,
                    2003  in
                    connection with the capitalized lease of equipment. The underlying
                    fixed assets
                    were  purchased
                    by an affiliated company owned by an officer of the company and
                    leased to the Company.
                    In 2003, the Company originally reported the payoff of the lease
                    from proceeds
                    of loans.
  The Company
                    determined that the goodwill with a carrying value of $1,774,119
                    had
                    been  fully
                    impaired and has written-off the entire balance.
  The
                    Company has its focus on the marketing, production, development
                    and distribution
                    of its pharmaceutical and proprietary products and licensing
                    of the  technology
                    of its insulin and tuberculin sliding sheath safety syringes.
 Gross
                      profit for the year
                      ended December
                      31, 2004 increased to 61% from
                      (0.1%)  in
                      2003. Gross
                      profit based on product sales for 2004 decreased increased
                      to $198,894 as compared to $(8,743) in
                      2003. The increased gross profit is primarily due to the  increased
                      gross profit from
                      PPSI’s GPO revenue and which was offset in part by lower sales  volume
                      of our 1cc clip syringe.
                      During 2003 the Company encountered a non-recurring $381,949
                      cost adjustment adjustment
                      being paid
                      to a significant GPO customer. The reduction of syringe gross
                      profit is largely
                      the result of decreased sales volume and fixed overhead costs
                      of $7,290. We
                      anticipate gross profit levels to remain at current levels,
                      unless we increase
                      our  market
                      penetration, our prices, product mix and/or realize anticipated
                      production  or
                      economic benefits that we anticipate as a result of our relocation
                      to Maryland  from New
                      York during 2003 and recent financings.


-11-


As
            a
            result of the acquisitions of PPSI, we have broadened our pharmaceutical
            product
            distribution base. We anticipate increases in sales on a period by period
            basis
            from  PPSI if we can increase our market penetration in these
            areas.
  Marketing
            and selling costs in 2004 decreased $256,338 (68%) from 2003. This decrease
            is due to decreases in shipping costs, rent and compensation costs, as
            a result
            of limited funds available to conduct marketing activities. As a result
            of our
            2004 financing, we anticipate increasing our marketing activities.
  Product
            development expense for 2004 increased by $324 (1.1%) as compared to
            2003. This
            increase was the result of increased expenditures for patent legal costs
            and
            product testing expense.
  General and
              administrative
              expenses for the year ended December 31,
              2004 increased $925,233 (109%) as compared
              to 2003.
              This increase is due primarily to increases in professional fees, insurance
              and
              relocation costs offset in part by decreases in compensation, GPO cost
              adjustments, and securities maintenance expenses. There was also an
              $85,088
              provision for equipment located at former suppliers, which is no longer
              being
              used in production activities of the Company.
 Interest
            expense for the year ended December 31, 2004 increased by $16,528  (18%)
            as
            compared to 2003 primarily as a result of increased debt during
            2004.
  Other
            income for the year ended December 31, 2004 includes $36,349 gain on
            the sale of marketable
            securities plus $11,446 gain on the sale of equipment.
  Net loss for
              2004 increased
              by $(2,474,935) (160%) primarily due to the $1,774,119 write-off of
              goodwill and
              a loss of $597,056 on the sale of a subsidiary. The subsidiary was
              sold during
              August 2004 in order to reduce fixed costs associated with its operation.
              Without considering the loss on the sale of the subsidiary and gain
              on
              extinguishment  of
              debt ($144,819), the gain on the sale of equipment and marketable securities
              of
              $47,795, the  increase
              in the net loss before non-recurring items of $(2,044,620) was primarily
              related
              to  the $925,233
              increase in general and administrative expenses .
 The
            Company restated its year-ended December 31, 2003 financial statements
            to
            properly reflect certain financial transactions which were previously
            not
            previously reported in accordance with generally accepted accounting
            principles
            (GAAP). Although the year-ended December 31, 2003 net loss of $(1,545,601)
            was not changed, several non-GAAP practices were corrected. These GAAP
            restatements are described in the following paragraphs and related
            table.
  The
            Company restated its year ended December 31, 2003 gross profit margin
            by an
            aggregate $419,510. This restatement includes three distinct non-GAAP
            reporting
            factors. The Company restated its 2003 sales and related cost of revenues
            by a
            net $12,439 increase in gross margin to reflect the overall effect of
            an
            incorrect 2003 year-end sales cutoff. The
            Company incurred $50,000 for the year 2003 as a result of inventory write-downs,
            which have been reclassified to be reported as components of cost of
            revenues..  Finally, 2003 GPO cost adjustments of  $381,949.00
            have been reclassified to be reported as a reduction of revenue.  For
            the
            year-end December 31, 2003, the Company recognized $381,949 of cost adjustments
            provided to the Company’s group purchasing customer as general and
            administrative expenses. However, EITF 01-9 requires that such cost adjustments
            be reported as a reduction of revenues. This reclassification is reported
            on the
            enclosed Statement of Operations for year-end December 31, 2003. No such
            cost
            adjustment payments have been made to any customer after that time.
  The
            Company has corrected a $121,366 error on the loss on write-off of a
            capital
            lease less $11,958 related depreciation expense and $5,623 increased
            related
            interest expense restatement which occurred during the year ended December
            31,
            2003 in connection with the correction of a prior error in reporting
            capitalized
            lease of equipment. The underlying fixed assets were purchased by a related
            company owned by an officer of the Company and leased to the Company.
            In 2003,
            the Company originally incorrectly reported the payoff of the lease from
            proceeds of loans.  This
            restatement recorded the reinstatement and subsequent write-off of the
            old
            capitalized lease and the capitalization of the new lease, which resulted
            in a
            prior period net loss of $115,031, less than $0.01, per share. The
            new
            lease was for a term of three years and provided for monthly rent of
            $3,944 and
            a purchase option of $100,000 at the end of the lease term.
  The
            Company has corrected the previous reporting of this non-GAAP capitalized
            the
            lease. The capitalized lease obligation and related assets have been
            recorded at
            the lower of the present value of the minimum lease obligations or the
            fair
            value of the minimum lease obligations or the fair value of the related
            assets
            of $250,000. In
            July
            2004, the Company purchased the equipment under the lease for $250,000,
            effectively canceling the lease.
  The
            general and administrative expenses for 2003 have been reduced by $101,388
            to
            correct certain previously reported costs actually incurred as 2003 GAAP
            expenditures. Certain previously reported fee expenses were established
            to be
            subsequent period costs.
  The
            restated Consolidated Statement of Operations for the Year-ended December
            31,
            2003 is composed of the following accounting corrections to these non-GAAP
            reporting items. Various reclassifications have also been included
            therein.
  Year-end
                    December 31, 2003 (net loss) as originally reported
                
                
                ($1,545,601
                )Increase
                    in gross margin - year-end cutoff
                
                
                12,439Decrease
                    in gross margin - inventory write-down
                
                
                (50,000
                )Decrease
                    in gross margin - reduction of revenue
                
                
                (381,949
                )Net
                    Decrease in gross margin
                
                
                (419,510
                )Increase
                    in net interest expense
                
                
                (5,623
                )Decrease
                    in depreciation expense
                
                
                11,958Loss
                    on write-off of capital lease
                
                
                (121,366
                )Reclassification
                    of General and Administrative expenses
                
                
                431,949General
                    and Administrative expense adjustment
                
                
                101,388Miscellaneous
                    adjustments
                
                
                1,204Year-end
                    December 31, 2003 (net loss) as restated
                
                
                ($1,545,601
                )




Liquidity
      and Capital Resources




Liquidity
      and Capital Resources, Page 11 - “Viable Plan” to generate positive
      cash .




The
      Form
      10-KSB states that the Registrant’s management is currently seeking additional
      investment capital to support its entrance into new business ventures and
      provide the capital needed to operate. Further, in Part I, Item 1 the Registrant
      states that during late 2004 the company was established as a distributor of
      specialty and highly regulated pharmaceutical products. The company intends
      to
      expand the product line to take further advantage of its group purchasing and
      closed systems purchasing. Additionally, In 2004 the Company applied for and
      received a Provisional Patent from the U.S. Patent and Trademark Office on
      September 21, 2004, the Patent #60/611,670 and Foreign Filing License Granted
      October 15, 2004, code US60/611,6700 .... in brief description, a medical device
      with a sliding sheath to protect caregivers in the dental and cosmetic
      markets.




These
      significant new products are anticipated to provide the company with revenue
      sources and gross profits which will adequately support its continued
      operations. Because of their prior discussion in the Description of the Business
      segment of the Form 10-KSB, any revisions to Note 3 of the financial statements
      would be repetitious in these circumstances.







Management
      is currently seeking additional investment capital to support its entrance
      into new
      business ventures and provide the capital needed to operate.




Net
      cash
      used in operating activities increased by $ 463,293 (163%)
      to $747,984 for the year
      ended December 31, 2004 from 2003, primarily due to the increased net
      loss.




Net
      cash
      used in investing activities of $743,145 resulted from the purchases of
      restricted cash deposits,
      fixed assets and cash used in the sale of the subsidiary during 2004.




Net
        cash
        provided by financing activities increased by $1,299,498 (620%) to
        $1,508.751 for 2004 from $209,253 provided during 2003. This increase resulted
        from an increase in aggregate borrowings of $1,244,795 and decrease in aggregate
        repayments of borrowings of approximately $27,870. There was also a $50,000
        non-recurring sale of securities during 2004.


Although
      revenue increased as a result of the 2004 PPSI GPO operations for the entire
      year as we continued
      to market our safety syringes, we suffered from a serious shortage of working
      capital, which
      resulted in the Company’s limited ability to market and sell its
      products.


-12-


In
      July
      2004, the Company borrowed an aggregate of $1,000,000 from a city development
      agency, a
      state
      development agency and a stockholder. These proceeds provided us with resources
      to acquire equipment,
      refinance an equipment capital lease and for working capital to enable us to
      continue implement
      our business strategy. The proceeds from the above loans and our designation
      as
      a minority
      business enterprise (MBE) should increase our marketing services to
      pharmaceutical companies,
      to increase our sales of safety syringes and develop new products.





As
      a
      result of these actions, Univec’s management anticipates that operations will
      generate a positive
      cash flow during our next fiscal year, but there can be no assurance this will
      occur.




The
      relatively low trading price and volume of our common shares hampers our ability
      to raise equity
      capital. There is no assurance that any such equity financing will be available
      to the Company
      or on terms we deem favorable. Management will continue its efforts to obtain
      debt and/or equity
      financing.




Significant
      Estimates




In
      conformity with interpretive MD&A guidance provided in Release 33-8350, we
      herein provide details of significant estimates and assumptions involved in
      the
      Company’s application of GAAP.


In
          accordance with SFAS 142 - Goodwill and Other Intangible Assets the Company
          wrote-off of the entire $1,774,119 balance of impaired goodwill. This judgment
          was provided in accordance with the GAAP provisions used to evaluate the
          future
          value of intangible assets such as
          estimated future discounted cash flow which could be reasonably anticipated
          from
          the Company’s carrying value of such goodwill. The Company’s determination is
          based primarily on limited gross profits which are presently generated
          by the
          subsidiary’s primary business activity .
          The
          Company determined that the excess value of goodwill paid in the course
          of the
          acquisition of its wholly owned subsidiary, Physicians and Pharmacy Services,
          Inc. could no longer be supported by the evaluation of potential future
          profitability of the subsidiary. Management’s appraisal of future discounted
          cash flows and other factors resulted in the complete write-off of the
          wholly
          impaired asset. Further, the Company applied SFAS 5 to determine its provision
          for losses on litigation. Finally, the Company, which was listed as a public
          company during 2004 on the OTC Bulletin Board during 2004, applied SFAS
          123 and
          EITF 96-18 to value equity securities which were issued in payment of various
          corporate obligations. The
          Company’s previous significant financial estimates have resulted in fair
          presentations of its financial statements. Therefore, the Company believes
          that
          these goodwill and litigation provisions will result in additional future
          fair
          presentation of its financial statements.


New
      Accounting Pronouncements




Management
      does not believe that any recently issued, but not yet effective accounting
      pronouncements, if adopted, would have a material effect on the accompanying
      financial statements. Financial Accounting Standards Board Statement #
      123R
      Stock Based Compensation is not expected to have a material effect on the Company’s
      financial statements.




Major
      Customer




For
      the
      year ended December 31, 2004, our largest customer was a company owned
      by
      our chief executive officer. We intend to reduce our reliance on
      this
      customer through expanding sales to others.




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 Univec'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 Univec'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 13 of this report.




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




A
      Form
      8-K was filed on June 13, 2005 and amended by a Form 8-K/A filed on August 1,
      2005,
      reporting the resignation of the Company’s principal registered independent public
      accounting firm. Further, the Registrant reported that the auditor’s report for the
      previously issued Form 10-KSB for the year ended December 31, 2003 could no longer
      be
      relied upon. Also, the former principal registered independent public accounting firm
      has informed the Registrant that it may no longer rely upon review reports
      issued for all
      Form
      10-QSB for all quarters starting with the quarter-ended March 31, 2003 through
      the quarter -ended
      September 30, 2004.


-13-




Item
      8A
      CONTROLS AND PROCEDURES





(a)
            Based
            on their evaluation required by Rule 13a-15(b) or 15d-15(b) under the
            Securities
            and Exchange Act of 1934 (the “Exchange Act”), management, including the Chief
            Executive Officer and Chief Financial Officer, concluded that our disclosure
            controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
            under the
            Exchange Act) were effective as of the end of the period covered by this
            report.
  (b)
        Changes in internal controls. There were no significant changes in the Company's
        internal controls or in other factors that could significantly affect the
        Company's disclosure controls and procedures subsequent to the Evaluation
        Date,
        nor any significant deficiencies or material weaknesses in such disclosure
        controls and procedures requiring corrective actions. As a result, no corrective
        actions were taken.


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 Univec are as
      follows:




Name
            Age
            PositionDr.
                David Dalton
            56
            Chief
                Executive Officer, President and a DirectorS.
                Robert Grass
            71
            Chairman
                of the Board of DirectorsWilliam
                Wooldridge
            60
            DirectorRaphael
                Langford
            60
            Chief
                Operating Officer and Executive Vice PresidentMichael
                Lesisko
            55
            Treasurer,
                Secretary and Chief Financial
                Officer




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 Physician and Pharmaceutical Services, Inc. (PPSI), 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, Tennessee and
      Pennsylvania.




On
      March
      15, 2002 S. Robert Grass was elected a director of Univec. He was elected
      Chairman of the Board of Directors in May, 2002. 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.


-14-


William
      Wooldridge has been a director since August 5, 2003. Mr. Wooldridge
      is a recognized and respected entrepreneur. He is the founder of MedEcon,
      Inc. one of the largest group purchasing organizations in the United States.
      Over a twenty-eight year period he has developed a corporation with medical
      portfolio sales in excess of $3.5 billion. In 1999, Mr. Wooldridge formed OrderButton.Net,
      a new web-based transaction processing service that facilitates the
      establishment of merchant sites on the internet. Since 2002, Mr. Wooldridge has
      been
      developing a franchised, non-traditional based photography company.




Raphael
      Langford has been Chief Operating Officer and Executive Vice-President of
      Univec
      Corporation since April 2003. Prior to April 2003, Raphael Langford was Vice-President
      of Physician Pharmaceutical Services, Inc. (PPSI) A nationwide PBM with Over
      50,000 pharmacies in its network. Mr. Langford managed the design and creation
      of products/services
      that serve the PBM market for PPSI, he was responsible for operations planning
      and control; material management; total quality management; benchmarking; and performance
      measurement. Mr. Langford career highlights also include as Executive Director of
      the
      National Foundation of Women Legislators. Mr. Langford served as liaison to
      Federal and
      State
      elected officials. He was responsible for implementing National Policy
      Committees for
      Women
      Legislators to set guidelines for Alternative, Holistic & Complementary
      Health. Mr.
      Langford co-chaired committees on Alcohol and Substance Abuse and served as
      chairman for
      Health, Longevity & Long-Term Care Pain Management. He has work on special
      projects with
      HHS
      and DEA in Washington, DC. Mr. Langford is a past President & CEO of Olympic


International,
      Inc. The company specialized in international brokering, manufacturing and the
      network of raw materials to more than 17 countries. Mr. Langford has over
      thirty-five years
      experience in senior management positions with AT&T, Inc., Norton Simon,
      Inc. and
      other
      telecommunications and pharmaceuticals entities. He has received credits in business
      management studies and Industrial psychology at Case Western Reserve University.




Michael
      Lesisko, a certified public accountant, was named as Chief Financial
      Officer of Univec on September 9, 2002. Mr. Lesisko was named Treasurer
      and Secretary of Univec on February 11, 2003. From June 1996 to September
      2002 Mr. Lesisko was a CPA in public practice. He served as Vice President
      of Finance of CarrerCom Corporation and Subsidiaries from November 1988
      to
      May 1996. Prior thereto, he served as a partner with KPMG Peat Marwick from
      July
      1982 to August 1988, where he managed financial audits and a diverse tax
      practice.




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 August 12, 2004, Mr. John Frank and William
      Wooldridge 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 Univec, and reviewing the effectiveness of procedures intended
      to prevent violations of law and regulations. The Audit Committee held two meetings
      in 2004. On August 12, 2004, Mr. S. Robert Grass was elected to
      the Compensation
      Committee. There was one meeting of the Compensation Committee in
      2004.




The
      Board
      of Directors held four meetings in 2004, which included special telephonic
      meetings. 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 2004.




Section
      16(a) Beneficial Ownership Reporting


Section
      16(a) of the Securities Exchange Act of 1934 requires Univec's Officers, Directors
      and persons who own more than ten percent of a registered class of Univec'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 Univec with copies of all Section 16(a) forms
      they file. Based solely on a review of Copies of such reports received by Univec
      and written representations from such persons concerning the necessity to file
      such
      reports, Univec is not aware of any failures to file reports or report transactions
      in a timely manner during the fiscal year ended December 31, 2004.


-15-


Item
      10.
      Executive Compensation.


The
      following table sets forth the compensation awarded to, earned by or paid
      to
      Univec's Chief Executive Officer and each other executive officers of the
      Company whose salary and bonus for the two years ended December 31, 2004 exceeded
      $100,000.




Annual
                Compensation
            Long-Term
                CompensationOther
                Annual
            SecuritiesName
                and Principal Position
            Year
            Salary
            Compensation
            Underlying
                OptionsDr.
                David Dalton
            2003
            $
                360,000(1)
            -
            1,000,000(1)Chief
                Executive Officer andPresident2004
            $
                396,000(2)
            -
            -Jonathan
                Bricken
            2003
            $
                129,969
            -
            NoneVice
                President




(1)
      During 2003, Dr. David Dalton earned a salary of $360,000, plus life, health
      and disability insurance, as well as an automobile lease and insurance
      allowance equal to $24,000 per year. He was granted an option to
      purchase 1,000,000 shares of common stock on April 21, 2003.




(2)
      During 2004, Dr. David Dalton earned a salary of $396,000, plus life, health
      and disability insurance, as well as an automobile lease and insurance
      allowance equal to $24,000 per year.




Employment
      Agreements


Dr.
      David
      Dalton provides the amount of time necessary to perform his corporate
      duties. Dr Dalton's salary was $396,000 for 2004, plus a bonus determined
      by the agreement of Dr. Dalton and the Compensation Committee. On each
      January 1, the base salary will be increased by an amount agreed upon by Dr.
      Dalton and the Compensation Committee. The agreement also provides Dr. Dalton
      with an option to purchase 2,000,000 shares of Common Stock at an exercise
      price of $.24 per share, vesting 500,000 shares on the first anniversary
      of the agreement, and an additional 41,667 shares vesting 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 not be
      less
      than two years following each extension. The agreement provides for payment
      by Univec of annual premiums on a term life insurance policy with a face amount
      of
      $2 million. The agreement also provides for health and disability benefits,
      as well as an automobile lease and insurance allowance equal to $24,000
      per year. Under the terms of the agreement, Dr. Dalton is entitled to a severance
      payment equal to his highest annual base salary during the term for the
      remainder of the term if the agreement is terminated by Dr. Dalton for good reason,
      or in the event of a change in control of Univec.




Stock
      Options




The
      following table contains information concerning the grant of stock options
      to Dr. David Dalton ( the "Named Executive Officer") during the fiscal year
      ended December 31, 2004.




Number
                of Shares
            Percent
                of Total OptionsUnderlying
                Options
            Granted
                to Employees in
            Exercise
                Price
            ExpirationName
            Granted
            Fiscal
                Year
            Per
                Share
            DateDr.
                David Dalton
            -
            0%
            $0.00
            N/A






-16-


AGGREGATED
      OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR
      VALUES




The
      following table summarizes for Dr. Dalton the total number of shares
      acquired upon exercise of options during the year ended December 31, 2004,
      and
      the value realized (fair market value at the time of exercise less exercise
      price), the total number of unexercised options, if any, held at December
      31, 2004, and the aggregate dollar value of in-the-money, unexercised options,
      held at December 31, 2004. The value of the unexercised,
      in-the-money


options
      at December 31, 2004, is the difference between their exercise or base price,
      and the fair market value of the underlying Common Stock on December 31, 2004.
      The
      closing bid price of the Common Stock on December 31, 2004 was
      $0.11.






Shares
                Acquired Upon
            Number
                of Securities
            In-The-MoneyExercise
                of Options
            Underlying
                Unexercised
            Options
                atDuring
                Fiscal 2004
            Options
                at December 31, 2004
            December
                31, 2004Name
            Number
            Value
                Realized
            Exercisable
            Unexercisable
            Exercisable
            UnexercisableDr.
                David Dalton
            None
            None
            2,500,000
            500,000
            $40,000
            $
                -




Certain
      Transactions




At
      December 31, 2004, the following Deferred Payroll was payable to executive
      officers and other employees:


David
                    Dalton, Chief Executive Officer and President
                
                $
                856,000Raphael
                    Langford, Chief Operating Officer
                
                
                127,585Michael
                    Lesisko, Secretary - Treasurer
                
                
                97,3001,080,885Other
                    employees
                
                
                190,603$
                1,271,488


On
      July
      3, 2003, the Company authorized the issuance of 500,000 shares of common
      stock to Richard Mintz, a Director of the Company, at $0.02 per share in full discharge
      of a $10,000 note payable.




At
      December 31, 2004, notes payable to companies owned by David Dalton, President,
      amounted to $578,800. These loans are the result of providing working capital
      to the Company.




At
      December 31, 2004, notes payable to David Dalton, President amounted to
      $100,000 and notes payable to S. Robert Grass, Chairman of the Board of Directors
      amounted to $153,300. These amounts were advanced to the Company at terms
      and
      rates similar to commercial bank provisions. The funds were provided to
      the
      Company for working capital operating needs.




On
      February 5, 2004, the Series E preferred stockholder exchanged 50 preferred
      shares plus $1,170 accrued dividends for 799,371 shares of Common Stock
      at
      $0.064 per share On December 8, 2004 this the Series E preferred stockholder
      exchanged 30 preferred shares plus $2,008 accrued dividends for 990,970
      shares of Common Stock at $0.0323 per share




On
      February 15, 2004, two executive officers exchanged a combined $50,000
      of accrued Payroll for 500,000 common shares at $0.10 per share. These exchanges
      were authorized by the Company's Board of Directors on August 5,
      2003.




On
      April
      16, 2004, the Company's Chief Executive Officer exchanged $108,104
      of employment Contract benefits for 1,403,948 common shares. On August 31,
      2004,
      the Chief Executive Officer exchanged an additional $17,158 of


employment
      contract benefits for 256,087 common shares. These exchanges were
      authorized by the Company's Board of Directors on August 5,
      2003


-17-




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 August 31, 2005 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.








Amount
                and Nature of Beneficial
            Percentage
                of common Stock BeneficiallyName
            Ownership
                (1)
            Owned
                (2)David
                Dalton (4)
            23,396,378(5)
            39.40%
                (6)S.
                Robert Grass (4)
            1,065,951
                (9)
            1.87%
                (10)William
                Wooldridge (4)
            250,000
                (13)
            0.44%
                (14)Raphael
                Langford (4)
            3,366,667
                (7)
            5.85%
                (8)Michael
                Lesisko (4)
            2,474,001
                (11)
            4.31%
                (12)All
                directors and executiveofficers
                as a group (5 persons)
            30,552,997
                (3)(16)
            49.02%
                (17)Emerald
                Capital Partners LP
            6,000,000
            10.63%
                (15)




(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
      August
      31, 2005 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 56,464,432 shares of Common
      Stock issued and outstanding on August 31, 2005.




(3)
      For
      purposes of this calculation, shares of Common Stock beneficially owned by
      more
      than one person have only been included once.




(4)
        Address is c/o the Company, 822 Guilford Avenue, Suite 208, Baltimore, Maryland
        21202.




(5)
      Includes 2,916,674 shares issuable upon exercise of presently exercisable options.




(6)
      Calculated on the basis of 59,381,106 shares of Common Stock issued and outstanding.




(7)
      Includes 1,133,333 shares issuable upon exercise of presently exercisable options.




(8)
      Calculated on the basis of 57,597,765 shares of Common Stock issued and outstanding.




(9)
      Includes 312,501 shares issuable upon conversion of Series D Preferred Stock
      and
      250,000 issuable upon exercise of presently exercisable options.




(10)
      Calculated on the basis of 57,026,933 shares of Common Stock issued and outstanding.




(11)
      Includes 1,000,000 shares issuable upon exercise of presently exercisable options.




(12)
      Calculated on the basis of 57,464,432 shares of Common Stock issued and outstanding.




(13)
      Includes 250,000 shares issuable upon exercise of presently exercisable options.




(14)
      Calculated on the basis of 56,714,432 shares of Common Stock issued and outstanding.




(15)
      Calculated on the basis of 56,714,432 shares of Common Stock issued and outstanding.




-18-


(16)
      Includes 5,862,508 shares issuable upon exercise of presently exercisable options.




(17)
      Calculated on the basis of 56,464,432 shares of Common Stock issued and outstanding.






Item
      12.
      Certain Relationships and Related Transactions




During
      2003, Univec received a line of credit from Dr. David Dalton, President
      and Chief Executive Officer, and S. Robert Grass, Chairman of the Board
      of
      prime plus 2%, per annum. This line of credit was issued under the
      same


terms
      as
      an underlying line of credit which Dr, Dalton and Mr. Grass
      received f rom
      a
      commercial bank. As of December 31, 2004, the outstanding balance of this loan was
      $200,000.




During
      February 2004, Univec borrowed $50,000 from Mr. S. Robert Grass, Chairman
      of the Board of Directors, repayable on demand at prime plus 2%, per annum.




During
      the years ended December 31, 2004 and 2003, Univec has borrowed an aggregate
      of $388,305 from Pharmacy Services, Inc., Health Resources, Inc. and other
      companies all owned by Dr. David Dalton, President and Chief Executive Officer.
      These loans are repayable on demand at 10%, per annum. At December 31, 2004
      and
      2003, the aggregate balance outstanding was $578,800 and $378,569, respectively.







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 entered 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 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 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
      security-holder.




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
      security-holder.


-19-


4.11(5)
      Registration Rights Agreement dated July 27, 1998, between the Company'
      and selling security-holder.




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




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 security-holder.




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, NV.




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




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




10.10(9)
      Employment Agreement dated as of January 1, 2002, between the Registrant
      and David L. Dalton.




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




21.1(3)
      List of Subsidiaries.


31.1(10)
              Statement of the Chief Executive Officer pursuant to Section 302 of
              theSarbanes-Oxley
              Act of 2002.
  31.2(10)
              Statement of the Chief Financial Officer pursuant to Section 302 of
              theSarbanes-Oxley
              Act of 2002.
  32.1(10)
              Statement of the Chief Executive Officer pursuant to 18 U.S.C. Section1350,
              as
              adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002.
  32.2(10)
              Statement of the Chief Financial Officer pursuant to 18 U.S.C.Section
              1350, as adopted pursuant to Section 906 of theSarbanes-Oxley
              Act of 2002.
 
 (1)
              Incorporated by reference to the Registrant's Form 8K filed January 4,
              2002.
 
 (2)
              Incorporated by reference to the Registrant's Form 8K 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 Registrant's 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 December
              11, 1999.
 
 (6)
              Incorporated by reference from Amendment No. 2 to the Registrant's Registration
              Statement Form 10-S-3 (File 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 filed during the fourth quarter 2003.
 
 No
              Forms
              8-K were filed during the fourth quarter 2003.
  -20-
  Item
          14.
          Principal Accountant Fees and Services.
  The
          following table presents the cost of Univec's principal accountants' fees
          and
          services for the years ended December 31, 2004 and 2003,
          respectively:
 
 **2004**
                ********
                **2003**Audit
                    fees
                
                $
                110,261
                
                $$
                98,794Audit
                    related fees
                
                
                --
                
                
                -Tax
                    fees
                
                
                18,750
                
                
                14,199All
                    other fees
                
                
                -
                
                
                --Total
                
                $
                129,011
                
                $
                112,993
 
 Univec's
          Audit Committee pre-approves the engagement of the principal accountant
          and the estimated audit fee, by each category.
  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.
   **UNIVEC,
                    INC.**Date: September
                      12, 2006
                  By:
                  /s/ Dr.
                    David
                    DaltonDr.
                    David DaltonChief
                      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 September
        12, 2006 in the capacities indicated.
  Signatures    Title
 
 /s/
        Dr. David Dalton  Chief
        Executive Officer and
        a Director
 Dr.
        David
        Dalton                            
Principal Executive Officer)
  /s/
        Michael Lesisko             
Chief Financial Officer,
        Treasurer, Secretary
 Michael
        Lesisko
  /s/
        S.
        Robert Grass               
Chairman and a Director
 S.
        Robert
        Grass
  /s/
        William Wooldridge       Director
 William
        Wooldridge
 
 
 
 -21-
  UNIVEC,
        INC. AND SUBSIDIARIES
 CONSOLIDATED
        FINANCIAL STATEMENTS
 DECEMBER
        31, 2004 AND FOR THE TWO YEARS THEN ENDED
 
 Index
        to
        Consolidated Financial Statements
 PageReport
                    of Independent Registered Public Accounting Firm
                F--3Consolidated
                    Balance Sheet - December 31, 2004
                F--4Consolidated
                    Statements of Operations - years endedDecember 31, 2004 and 2003
                F--5Consolidated
                    Statements of Stockholders' Equity - yearsended December 31, 2004 and 2003
                F--6Consolidated
                    Statements of Cash Flows - years endedDecember 31, 2004 and 2003
                F--7Notes
                    to Consolidated Financial Statements
                F--8
 
 
 
  F-1
 
  The
            Registrant’s auditor has amended their opinion of the 2003 financial statements
            as being “restated”.
  Report
            of
            Independent Registered Public Accounting Firm
 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, 2004 and the related consolidated
                  statements of
                  operations, stockholders' equity and cash flows for each of the
                  years in the
                  two-year period ended December 31, 2004. These consolidated financial
                  statements
                  are the responsibility of the Company's management.  Our responsibility is
                  to express an opinion on these consolidated financial statements
                  based on our
                  audit.
  We
                  conducted our audit in accordance with the standards of the Public
                  Company
                  Accounting Oversight Board (United States). Those standards require
                  that we plan
                  and perform the audit to obtain reasonable assurance about whether
                  the
                  consolidated financial statements are free of material misstatement.
                  The company
                  is not required to have, nor were we engaged to perform, an audit
                  of its
                  internal control over financial reporting. Our audit included consideration
                  of
                  internal control over financial reporting as a basis for designing
                  audit
                  procedures that are appropriate in the circumstances, but not for
                  the purpose of
                  expressing an opinion on the effectiveness of the company’s internal control
                  over financial reporting. An audit also includes examining, on
                  a test basis,
                  evidence supporting the amounts and disclosures in the consolidated
                  financial
                  statements, assessing the accounting principles used and significant
                  estimates
                  made by management, as well as evaluating the overall consolidated
                  financial
                  statement presentation. We believe that our audits provide 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, 2004 and the consolidated
                    results of their
                    operations and their consolidated cash flows for each of the
                    years in the
                    two-year period ended December 31, 2004 in conformity with accounting
                    principles
                    generally accepted in the United States of America.
  As
                      discussed in Note 2 to the financial statements, certain errors
                      related to
                      accounting for capital leases and year-end cutoffs for the
                      year ended December
                      31, 2003 were discovered by management of the Company during
                      the current year.
                      In addition the Company has restated its year endended December
                      31, 2003 revenue
                      to reflect the Company’s change to the “net” revenue method for its GPO product
                      sales. Accordingly, the 2003 financial statements have been
                      restated to reflect
                      these changes and corrections.
 The
                    accompanying consolidated financial statements have been prepared
                    assuming that
                    the Company will continue as a going concern. As discussed in
                    Note 3 to the
                    consolidated financial statements, the Company has suffered from
                    recurring
                    losses from operations, has negative working capital, has a total
                    stockholders’
deficit and is in default on certain debt, all of which raise
                    substantial doubt
                    about its ability to continue as a going concern. Management’s plans in regard
                    to these matters are also discussed in Note 3.  The consolidated financial
                    statements do not include any adjustments that might result from
                    the
 outcome
                    of this uncertainty.
 
 Abrams,
                    Foster,
                    Nole & Williams, P.ABaltimore,
                          Maryland
                        September
                            9, 2005, except for Note 2, as to which the date is September
                            8, 2006
                  By:
                  /s/ Abrams,
                    Foster, Nole & Williams, P.AAbrams,
                    Foster, Nole & Williams, P.A
 
 
  F-2
 The
              Company has labeled the appropriate 2003 financial statements as being
              “restated”. Also, the Company has referred to the footnote which describes the
              restatement.
 **Univec,
                          Inc. and Subsidiaries****Consolidated
                          Balance Sheet****December
                          31, 2004****ASSETS**Cash
                      
                      $
                      29,443Marketable
                          securities
                      
                      
                      36,349Accounts
                          receivable
                      
                      
                      3,123,493Inventories
                      
                      
                      179,878Certificates
                          of deposit - restricted
                      
                      
                      340,407Other
                          current assets
                      
                      
                      46,630Total
                          current assets
                      
                      
                      3,756,200Fixed
                          assets, net
                      
                      
                      622,685Other
                          assets
                      
                      
                      79,468Total
                          assets
                      
                      $
                      4,458,353**LIABILITIES
                          AND STOCKHOLDERS' DEFICIT**Accounts
                          payable and accrued expenses
                      
                      $
                      4,380,826Deferred
                          payroll
                      
                      
                      1,271,488Notes
                          and loans payable - current
                      
                      
                      1,472,163Loans
                          payable - officers/directors
                      
                      
                      260,493Due
                          to affiliated companies
                      
                      
                      578,800Total
                          current liabilities
                      
                      
                      7,963,770Notes
                          and loans payable - long-term
                      
                      
                      211,852Total
                          liabilities
                      
                      
                      8,175,622Commitments
                          and contingencies (Notes 3, 4, 12 and 13)STOCKHOLDERS'
                          DEFICITPreferred
                          stock $.001 par value; 3,743,500 sharesauthorized;
                          none issued and outstandingSeries
                          D 5% cumulative convertible preferred stock,$.001
                          par value; authorized: 1,250,000; issued andoutstanding:
                          125,000 shares (aggregate liquidationvalue:
                          $336,808)
                      
                      
                      125Series
                          E cumulative convertible preferred stock,$.001
                          par value; authorized: 2,000 shares; issued andoutstanding:
                          412 shares (aggregate liquidationvalue:
                          $441,397)
                      
                      
                      1Common
                          stock $.001 par value; authorized: 75,000,000 shares;
                      
                      
                      45,619issued:
                          45,618,852 and outstanding: 45,214,698 sharesAdditional
                          paid-in capital
                      
                      
                      10,977,627Treasury
                          stock, 404,154 shares - at cost
                      
                      
                      (28,291
                      )Stock
                          Subscription Receivable
                      
                      
                      (210,000
                      )Accumulated
                          deficit
                      
                      
                      (14,502,350
                      )Total
                          stockholders' deficit
                      
                      
                      (3,717,269
                      )Total
                          liabilities and stockholders' deficit
                      
                      **$**
                      4,458,353
 
 F-3
  
 **Univec,
                        Inc. and Subsidiaries****Consolidated
                        Statement of Operations****Years
                        ended December 31, 2004 and 2003****(Restated)**
 
 **Year-Ended**
                      
                      **Year-Ended****Dec.
                          31, 2004**
                      
                      **Dec.
                          31, 2003****(****Restated****)**Revenues(Note 5)
                      
                      $
                      327,827
                      
                      $
                      939,747Cost
                          of revenues
                      
                      
                      128,933
                      
                      
                      948,490Gross
                          Margin
                      
                      
                      198,894
                      
                      
                      (8,743
                      )Operating
                          ExpensesMarketing
                          and selling
                      
                      
                      123,400
                      
                      
                      379,738Product
                          development
                      
                      
                      28,871
                      
                      
                      28,547General
                          and administrative
                      
                      
                      1,772,246
                      
                      
                      847,013Loss
                          on write-off of goodwill
                      
                      
                      1,774,119
                      
                      
                      -Loss
                          on write-off of capitalized lease
                      
                      
                      -
                      
                      
                      121,3663,698,636
                      
                      
                      1,376,664Loss
                          from Operations
                      
                      
                      (3,499,742
                      )
                      
                      (1,385,407
                      )Other
                          Income (Expense)Interest
                          expense, net
                      
                      
                      (108,092
                      )
                      
                      (91,564
                      )Gain
                          on extinguishments of debt
                      
                      
                      144,819
                      
                      
                      24,872Other
                          income(expense)
                      
                      
                      47,795
                      
                      
                      -Total
                          other expenses
                      
                      
                      84,522
                      
                      
                      (66,692
                      )Loss
                          from continuing operations
                      
                      
                      (3,415,220
                      )
                      
                      (1,452,099
                      )Loss
                          from discontinued operations:Discontinued
                          operating losses
                      
                      
                      (8,260
                      )
                      
                      (93,502
                      )Loss
                          on sale of subsidiary
                      
                      
                      (597,056
                      )
                      
                      -Net
                          loss
                      
                      
                      (4,020,536
                      )
                      
                      (1,545,601
                      )Dividends
                          attributable to preferred stock
                      
                      
                      (35,921
                      )
                      
                      (39,025
                      )Loss
                          attributable to common stockholders
                      
                      $
                      (4,056,457
                      )
                      $
                      (1,584,626
                      )Share
                          informationBasic
                          net loss per common share
                      
                      $
                      (0.11
                      )
                      $
                      (0.05
                      )Basic
                          weighted average numberof
                          common shares outstanding
                      
                      
                      38,510,467
                      
                      
                      33,751,508
 
 F-4
 **Univec,
              Inc. and Subsidiaries**
 **Consolidated
              Statement of Stockholders' Equity**
 **Years
              ended December 31, 2004 and 2003** **(Restated)**
 
 ****
                      ****
                      **Series
                          A Preferred**
                      ****
                      ****
                      **Series
                          B Preferred**
                      ****
                      ****
                      **Series
                          C Preferred**
                      ****
                      ****
                      **Series
                          D Preferred**
                      ****
                      ****
                      **Series
                          E Preferrred**
                      ****
                      ****
                      **Common
                          Stock**
                      ****
                      ****
                      **Additional
                          Paid-in**
                      ****
                      ****
                      **Treasury
                          Stock**
                      ****
                      ****
                      **Prepaid
                          Consulting**
                      ****
                      ****
                      **Accumulated**
                      ****
                      ****
                      **Total
                          Stockholders'**
                      ********
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Capital**
                      ****
                      ****
                      **Shares**
                      ****
                      ****
                      **Amount**
                      ****
                      ****
                      **Services**
                      ****
                      ****
                      **Deficit**
                      ****
                      ****
                      **Equity**Balance,
                          January 1, 2003
                      
                      
                      124
                      
                      $
                      1
                      
                      
                      167
                      
                      $
                      1
                      
                      
                      250
                      
                      $
                      1
                      
                      
                      104,167
                      
                      $
                      104
                      
                      
                      
                      
                      
                      
                      
                      
                      31,772,773
                      
                      $
                      31,773
                      
                      $
                      10,296,627
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      ($8,843,338
                      )
                      $
                      1,485,169Exchange
                          of Series B and Cfor
                          Series E
                      
                      
                      
                      
                      
                      
                      
                      
                      (122
                      )
                      
                      (1
                      )
                      
                      (250
                      )
                      
                      (1
                      )
                      
                      
                      
                      
                      
                      
                      
                      522
                      
                      $
                      1
                      
                      
                      
                      
                      
                      
                      
                      
                      89,708
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (89,707
                      )Common
                          stock
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      .issued
                          for Cash
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      500,000
                      
                      
                      500
                      
                      
                      19,500
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      20,000Consulting
                          fees
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      100,000
                      
                      
                      100
                      
                      
                      9,900
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      10,000Loans
                          payable - officers/directors
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      444,805
                      
                      
                      444
                      
                      
                      49,556
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      50,000Adjustment
                          to conversion of series A andoptions
                      
                      
                      (124
                      )
                      
                      (1
                      )Convert
                          Series B
                      
                      
                      
                      
                      
                      
                      
                      
                      (45
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      1,843,322
                      
                      
                      1,841
                      
                      
                      (1,843
                      )Convert
                          Series E
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (30
                      )
                      
                      
                      
                      
                      340,909
                      
                      
                      341
                      
                      
                      (341
                      )Exercise
                          of options by officer
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      166,667
                      
                      
                      167
                      
                      
                      6,500
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      6,667Options
                          issued
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      36,400
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      36,400Net
                          loss
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (1,545,601
                      )
                      
                      (1,545,601
                      )Balance,
                          December 31, 2003
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      104,167
                      
                      
                      104
                      
                      
                      492
                      
                      
                      1
                      
                      
                      35,168,476
                      
                      
                      35,169
                      
                      
                      10,506,007
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (10,478,646
                      )
                      
                      62,635Sale
                          of Series D
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      20,833
                      
                      
                      21
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      49,979
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      50,000Common
                          stock issued forCashConsulting
                          fees
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      6,000,000
                      
                      
                      6,000
                      
                      
                      234,000
                      
                      
                      
                      
                      
                      
                      
                      
                      ($240,000
                      )Deferred
                          payroll and accruedexpenses
                          - officers
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      2,160,035
                      
                      
                      2,160
                      
                      
                      173,102
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      175,262Loans
                          payable - officers/directors
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      500,000
                      
                      
                      500
                      
                      
                      9,500
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      10,000Sale
                          of subsidiary
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      2,829
                      
                      
                      404,154
                      
                      
                      ($28,291
                      )
                      
                      
                      
                      
                      
                      
                      
                      (25,462
                      )Convert
                          Series E and dividends
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (80
                      )
                      
                      
                      
                      
                      1,790,341
                      
                      
                      1,790
                      
                      
                      (1,790
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (3,168
                      )
                      
                      (3,168
                      )Amortization
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      30,000
                      
                      
                      
                      
                      
                      30,000Options
                          issued
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      4,000
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      4,000Net
                          loss
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (4,020,536
                      )
                      
                      (4,020,536
                      )Balance,
                          December 31, 2004
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      125,000
                      
                      $
                      125
                      
                      
                      412
                      
                      $
                      1
                      
                      
                      45,618,852
                      
                      $
                      45,619
                      
                      $
                      10,977,627
                      
                      
                      404,154
                      
                      
                      ($28,291
                      )
                      
                      ($210,000
                      )
                      
                      ($14,502,350
                      )
                      
                      ($3,717,269
                      )
  See
              notes
              to consolidated financial statements.
  
 F-5
 **Univec,
                        Inc. and Subsidiaries****Consolidated
                        Statement of Cash Flows****Years
                        ended December 31, 2004 and 2003****(Restated)**
  **2004**
                      
                      **2003****(Restated)**Cash
                          flows from operating activitiesNet
                          loss
                      
                      $
                      (4,020,536
                      )
                      $
                      (1,545,601)
                      )Adjustments
                          to reconcile net loss to net cashused in operating activitiesLoss on write-off of goodwill
                      
                      
                      1,774,119Loss on sale of subsidiary
                      
                      
                      481,719Depreciation and amortization
                      
                      
                      189,008
                      
                      
                      165,511Write-off of equipment
                      
                      
                      57,295Valuation allowance for inventories
                      
                      
                      75,000
                      
                      
                      45,000Stock based compensation
                      
                      
                      4,000
                      
                      
                      36,400Loss (gain) on cancellation of capital lease
                      
                      
                      (2,894
                      )
                      
                      121,366Gain on extinguishment of debt
                      
                      
                      (98,547
                      )
                      
                      (24,872
                      )Gain on receipt of marketable securities
                      
                      
                      (36,349
                      )Other
                      
                      
                      (11,435
                      )Changes
                          in assets and liabilities, net ofeffects from sale of TWTAccounts receivable
                      
                      
                      (506,983
                      )
                      
                      (2,293,183
                      )Inventories
                      
                      
                      17,698
                      
                      
                      128,413Other current assets and other assets
                      
                      
                      (3,320
                      )
                      
                      7,727Accounts payable and accrued expenses
                      
                      
                      713,610
                      
                      
                      2,547,614Deferred payroll
                      
                      
                      619,631
                      
                      
                      536,934Escrow deposits
                      
                      
                      
                      
                      
                      (10,000
                      )Net cash used in operating activities
                      
                      
                      (747,984
                      )
                      
                      (284,691
                      )Cash
                          flows from investing activitiesPurchases of fixed assets (net of capitalizedlease obligation of $250,000 in 2003)
                      
                      
                      (397,068
                      )
                      
                      (1
                      )Increase in restricted cash
                      
                      
                      (340,407
                      )Cash used in sale of subsidiary (net of notes andother payables of $103,600)
                      
                      
                      (5,670
                      )Net cash used in investing activities
                      
                      
                      (743,145
                      )
                      
                      (1
                      )Cash
                          flows from financing activitiesProceeds from notes and loans payable,net of expenses of $80,146 in 2004
                      
                      
                      1,104,343
                      
                      
                      178,453Increase in due from affiliated companies
                      
                      
                      567,194
                      
                      
                      71,870Increase in loans payable - officers/directors
                      
                      
                      54,000
                      
                      
                      230,419Proceeds from sale of stock
                      
                      
                      50,000
                      
                      
                      20,000Payments on notes and loans payable
                      
                      
                      (242,386
                      )
                      
                      (229,363
                      )Payments of capitalized lease obligations
                      
                      
                      (21,232
                      )
                      
                      (62,126
                      )Dividends converted to preferred stock
                      
                      
                      (3,168
                      )Net cash provided by financing activities
                      
                      
                      1,508,751
                      
                      
                      209,253Net increase (decrease) in cash
                      
                      
                      17,622
                      
                      
                      (75,439
                      )Cash,
                          beginning of period
                      
                      
                      11,821
                      
                      
                      87,260Cash,
                          end of period
                      
                      $
                      29,443
                      
                      $
                      11,821Supplemental
                          disclosure of cash flow informationCash paid for interest
                      
                      $
                      48,709
                      
                      $
                      102,961Supplemental
                          disclosures of non-cash activityCommon stock issued in payment ofloans payable - officers/directors
                      
                      $
                      10,000
                      
                      $
                      20,000Common stock and options issued in payment
                      
                      $
                      179,262of deferred payroll and accrued expensesConversions of Series E to common stock,including dividends
                      
                      $
                      3,168
                      
                      $
                      89,807Treasury stock received, net of options issued,on sale of subsidiary
                      
                      $
                      (125,462
                      )
   F-6
 Univec,
                  Inc. and Subsidiaries
 
 Notes
                  to
                  Consolidated Financial Statements
 
 1.
                  Nature
                  of Operations
 
 Univec,
                  Inc. (Company) produces, licenses and markets medical products,
                  primarily
                  syringes, on
                  a
                  global basis. Physician and Pharmaceutical Services, Inc. (PPSI),
                  a subsidiary,
                  provides pharmaceutical
                  sample and group purchasing services of pharmaceutical products.
                  Thermal Waste Technologies,
                  Inc. (TWT), a subsidiary until its sale, marketed a medical waste
                  disposal
                  unit.
 
 2.
                  Restatement
 
 The
                  Company has restated (see Note # 5) its year ended December 31,
                  2004 and 2003
                  revenue by $19,120,561 and $16,038,075, respectively and the related
                  Cost of
                  Revenues by $19,120,561 and $16,038,075, respectively to reflect
                  the Company’s
                  change to the “net” revenue method for its GPO product sales. The Company
                  restated its year ended December 31, 2003 gross profit margin by
                  an aggregate
                  $419,510. This restatement includes three distinct factors. The
                  Company restated
                  its 2003 sales and related cost of revenues by a net $12,439 increase
                  in gross
                  margin to reflect the overall effect of an incorrect 2003 year-end
                  sales cutoff. The
                  Company incurred $50,000 for the year 2003 as a result of inventory
                  write-downs,
                  which have been reclassified to be reported as components of cost
                  of
                  revenues..  Finally, 2003 GPO cost adjustments of  $381,949.00
                  have been reclassified to be reported as a reduction of revenue.  For
                  the
                  year-end December 31, 2003, the Company recognized $381,949 of
                  cost adjustments
                  provided to the Company’s group purchasing customer as general and
                  administrative expenses. However, EITF 01-9 requires that such
                  cost adjustments
                  be reported as a reduction of revenues. This reclassification is
                  reported on the
                  enclosed Statement of Operations for year-end December 31, 2003.
                  No such cost
                  adjustment payments have been made to any customer after that time.
 
 The
                  Company has corrected a $121,366 error on the loss on write-off
                  of a capital
                  lease less $11,958 related depreciation expense and $5,623 increased
                  related
                  interest expense restatement which occurred during the year ended
                  December 31,
                  2003 in connection with the correction of a prior error in reporting
                  capitalized
                  lease of equipment. The underlying fixed assets were purchased
                  by a related
                  company owned by an officer of the Company and leased to the Company.
                  In 2003,
                  the Company originally incorrectly reported the payoff of the lease
                  from
                  proceeds of loans.  This
                  restatement recorded the reinstatement and subsequent write-off
                  of the old
                  capitalized lease and the capitalization of the new lease, which
                  resulted in an
                  additional prior period net loss of $115,031, less than $0.01,
                  per share. The
                  new
                  lease was for a term of three years and provided for monthly rent
                  of $3,944 and
                  a purchase option of $100,000 at the end of the lease term.
 
 The
                  Company has corrected the reporting of this capitalized the lease.
                  The
                  capitalized lease obligation and related assets have been recorded
                  at the lower
                  of the present value of the minimum lease obligations or the fair
                  value of the
                  minimum lease obligations or the fair value of the related assets
                  of $250,000. In
                  July
                  2004, the Company purchased the equipment under the lease for $250,000,
                  effectively canceling the lease.
  The
                  general and administrative expenses for 2003 have been reduced
                  by $101,388 to
                  properly report only costs actually incurred as 2003 expenditures.
                  Certain
                  previously reported fee expenses were established to be subsequent
                  period costs.
 
 The
                  restated Consolidated Statement of Operations for the Year-ended
                  December 31,
                  2003 is composed of the following accounting corrections. Various
                  reclassifications have also been included therein.
  Year-end
                              December 31, 2003 (net loss) as originally reported
                          
                          
                          ($1,545,601
                          )Increase
                              in gross margin - year-end cutoff
                          
                          
                          12,439Decrease
                              in gross margin - inventory write-down
                          
                          
                          (50,000
                          )Decrease
                              in gross margin - reduction of revenue
                          
                          
                          (381,949
                          )Net
                              Decrease in gross margin
                          
                          
                          (419,510
                          )Increase
                              in net interest expense
                          
                          
                          (5,623
                          )Decrease
                              in depreciation expense
                          
                          
                          11,958Loss
                              on write-off of capital lease
                          
                          
                          (121,366
                          )Reclassification
                              of General and Administrative expenses
                          
                          
                          431,949General
                              and Administrative expense adjustment
                          
                          
                          101,388Miscellaneous
                              adjustments
                          
                          
                          1,204Year-end
                              December 31, 2003 (net loss) as restated
                          
                          
                          ($1,545,601
                          )
  **Univec,
                                Inc and Subsidiaries****Consolidated
                                Statement of Operations****(Restated)****Year
                                ended December 31, 2003****Year-Ended**
                            
                            
                            
                            **Year-Ended****Dec.
                                31, 2003**
                            
                            
                            
                            **Dec.
                                31, 2003****(Originally****reported)**
                            
                            **Restatements**
                            
                            **(****Restated****)**Revenues
                                (Note 5)
                            
                            $
                            16,133,652
                            
                            $
                            (15,193.,905
                            )
                            $
                            939,747Cost
                                of revenues
                            
                            
                            15,722,885
                            
                            
                            (14,774,395
                            )
                            
                            948,490Gross
                                Margin
                            
                            
                            410,767
                            
                            
                            (419,510
                            )
                            
                            (8,743
                            )Operating
                                ExpensesMarketing
                                and selling
                            
                            
                            387,769
                            
                            
                            (8,031
                            )
                            
                            379,738Product
                                development
                            
                            
                            28,617
                            
                            
                            (70
                            )
                            
                            28,547General
                                and administrative
                            
                            
                            1,478,913
                            
                            
                            (631,900
                            )
                            
                            847,013Loss
                                on write-off of capitalized lease
                            
                            
                            
                            
                            
                            121,366
                            
                            
                            121,366Total
                                Operating
                                Expenses
                            
                            
                            1,895,299
                            
                            
                            (518,635
                            )
                            
                            1,376,664Loss
                                from Operations
                            
                            
                            (1,484,532
                            )
                            
                            99,125
                            
                            
                            (1,385,407
                            )Interest
                                expense, net
                            
                            
                            (85,941
                            )
                            
                            (5,623
                            )
                            
                            (91,564
                            )Gain
                                on extinguishments of debt
                            
                            
                            24,872
                            
                            
                            
                            
                            
                            24,872Total
                                other expenses
                            
                            
                            (61,069
                            )
                            
                            (5,623
                            )
                            
                            (66,692
                            )Income
                                (loss)
                                from continuing operations
                            
                            
                            (1,545,601
                            )
                            
                            93,502
                            
                            
                            (1,452,099
                            )Loss
                                from discontinued operations
                            
                            
                            -
                            
                            
                            (93,502
                            )
                            
                            (93,502
                            )Net
                                loss
                            
                            
                            (1,545,601
                            )
                            
                            -
                            
                            
                            (1,545,601
                            )Dividends
                                attributable to preferred stock
                            
                            
                            (39,025
                            )
                            
                            -
                            
                            
                            (39,025
                            )Loss
                                attributable to common stockholders
                            
                            $
                            (1,584,626
                            )
                            $
                            -
                            
                            $
                            (1,584,626
                            )Share
                                informationBasic
                                net loss per common share
                            
                            $
                            (0.05
                            )
                            $
                            -
                            
                            $
                            (0.05
                            )Basic
                                weighted average numberof
                                common shares outstanding
                            
                            
                            33,751,508
                            
                            
                            -
                            
                            
                            33,751,508
  3.
                  Going
                  Concern
 
 The
                  accompanying financial statements have been prepared on a going
                  concern basis,
                  which contemplates
                  the realization of assets and the satisfaction of liabilities in
                  the normal
                  course of business.
                  As of December 31, 2004, the Company had negative working capital
                  of $4,207,570 and
                  stockholders' deficit of $3,717,269 and had previously incurred
                  net losses of
                  $(4,020,536) and
                  $(1,584,626) for the years ended December 31, 2004 and 2003. The
                  Company is also
                  in default
                  of approximately $1,200,000, of loans and notes payable all of
                  which are payable
                  on demand
                  as
                  a result of such defaults. These factors, among others, indicate
                  that the
                  Company's continuation
                  as a going  concern is dependent upon its ability to obtain adequate
                  financing and/or
                  achieve profitable operations. The financial statements do not
                  include any
                  adjustments related
                  to the recoverability and classification of recorded asset amounts
                  or the
                  amounts and classification
                  of liabilities that might be necessary should the Company be unable
                  to continue in
                  existence.
 
 Management
                  is currently seeking additional investment capital to support its
                  entrance into new
                  business ventures and provide the capital needed to operate.
 
 4.
                  Significant Accounting Policies
 
 Basis
                  of
                  Presentation
 
 The
                  consolidated financial statements include all the accounts of the
                  Company and
                  its
                  wholly-owned subsidiaries, Physician and Pharmaceutical Services,
                  Inc. (PPSI),
                  Thermal Waste Technologies, Inc. (TWT), until its sale and Rx Ultra,
                  Inc.
                  (inactive). All material
                  inter-company balances and transactions have been eliminated. The
                  consolidated
                  financial statements
                  include all the accounts of Thermal Waste Technologies, Inc. until
                  its sale
 
 Accounts
                  Receivable
 
 Accounts
                  receivable consisted of receivables from customers. The Company records
                  a
                  provision for doubtful receivables, if necessary, to allow for
                  any amounts
                  which may be unrecoverable and is based upon an analysis of the Company's
                  prior collection experience, customer creditworthiness, and current economic
                  trends. As of December 31, 2004, no allowance was necessary.
 
 Inventories
 
 Inventories
                  are valued at the lower of cost, determined by the first-in, first-out
                  method, or market.
 
 F-7
 Fixed
                  Assets
 
 Fixed
                  assets are stated at cost, less accumulated depreciation, and are depreciated
                  on a straight-line basis over the estimated useful lives of seven
                  years. 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.
 
 The
                  carrying value of fixed assets is evaluated whenever changes in circumstances
                  indicate the carrying amount of such assets may not be recoverable.
                  If necessary, the Company recognizes an impairment loss for the difference
                  between the carrying amount of the assets and their estimated fair value.
                  Fair value is based on current and anticipated future undiscounted
                  cash
                  flows.
 
 Shipping
                  Income and Expense
 
 Shipping
                  income is included in product sales. Shipping expenses are included in
                  marketing and selling.
  Product
                  Development
 
 Research
                  and development costs have been expensed as incurred.
 
 Basic
                  Loss per Share
 
 Basic
                  net
                  loss per common share was computed based on the weighted average number
                  of
                  common shares outstanding during the year. Dilutive net loss per
                  share has
                  not
                  been presented as they are anti-dilutive.
 
 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.
                  Revenues for
                  PPSI's group purchasing service (GPO) are recognized using the “net” sales
                  method of revenue
                  reporting.
 
 Stock
                  Based Compensation
 
 Compensation
                  cost for stock, stock options, warrants, etc., issued to employees
                  and non-employees is based on the fair value method.
 
 Income
                  Taxes
 
 Deferred
                  income taxes have been provided for temporary differences between
                  financial statement
                  and income tax reporting under the liability method , using expected
                  tax rates
                  and laws that
                  are
                  expected to be in effect when the differences are expected to reverse.
                  A
                  valuation allowance
                  is provided when it is more likely than not , that the deferred
                  tax assets will
                  not be realized.
  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.
 
 Fair
                  Values
 
 The
                  carrying amounts of cash, accounts receivable, accounts payable
                  and accrued
                  expenses, notes and loans payable and deferred payroll approximate
                  their fair
                  values.
  F-8
 New
                  Accounting Pronouncements
 
 Financial
                  Accounting Standards Board Statement # 123R, Stock Based Compensation, effective
                  for the year ended December 31, 2006, has not been analyzed to
                  determine if it
                  will have
                  a
                  material effect on the Company’s financial statements.
 
 Management
                  does not believe that any other recently issued, but not yet effective accounting
                  pronouncements, if adopted, would have a material effect on the accompanying
                  financial statements.
 
 Note
                  5. Concentrations
 
 The
                  Company purchased 99% of its pharmaceutical drugs for its group
                  purchasing
                  service (GPO) from one vendor. This supplier is not a related party
                  as defined
                  in SFAS 57. The arrangement requires the Company to pay for the
                  drugs within
                  forty five days after the respective period month-end.
  The
                  Company maintains a corporate group purchasing sales arrangements
                  with an
                  affiliated company, Pharmacy Services, Inc. (PSI), which is a related
                  party as
                  defined in SFAS 57. This related party is a private company wholly
                  owned by the
                  President of Univec, Inc. The president of Univec, Inc. is also
                  a significant
                  shareholder of Univec, Inc. The Company, through its wholly owned
                  subsidiary
                  Physicians and Pharmaceutical Services, Inc. (PPSI) operates the
                  GPO. PSI pays
                  PPSI at group purchasing prices. PSI paid $19,046,224 for pharmaceutical
                  drugs
                  to PPSI during 2004. PSI must pay the Company for such goods within
                  thirty days
                  of the appropriate month-end. PSI pays the Company a specified
                  price, which is
                  based on the cost of the drugs as determined by the Company’s market experience
                  with its non-related providers.
  Revenue
                  Recognition
 
 As
                  a
                  result of the differing circumstances related to the Company’s manufacture,
                  procurement, distribution and physician sampling programs, diverse
                  financial
                  accounting methods are utilized to recognize the revenue from its
                  various
                  financial sources.
 
 The
                  Company utilizes the “gross” sales method of recognizing the amount of revenue
                  from its syringe manufacturing and specialty pharmaceutical drug
                  product sales.
                  This method is influenced by several factors as defined by EITF
                  99-19, which the
                  Company’s market agreements indicate to be in accordance with the gross
                  sales
                  method. The most significant factor under these agreements include
                  the Company’s
                  retention of the inventory’s risk of loss for these products.
 
 The
                  GPO
                  and physician sampling programs use the “net” method of revenue recognition (see
                  Note # 2). However, the Company rather than the supplier is the
                  primary credit
                  obligor in these arrangements.
 
 The
                  details of the Company’s total revenue, payments for revenue, cost of goods sold
                  and gross margin are as follows:
 
 **Description**
                        
                        **First
                            Quarter**
                        
                        **Second
                            Quarter**
                        
                        **Third
                            Quarter**
                        
                        **Fourth
                            Quarter**
                        
                        **Year
                            End Dec. 31**
                        
                        **Year
                            End Dec. 31****2004**
                        
                        **2004**
                        
                        **2004**
                        
                        **2004**
                        
                        **2004**
                        
                        **2003**Total
                            revenue
                        
                        $
                        4,208,323
                        
                        $
                        4,530,029
                        
                        $
                        3,369,986
                        
                        
                        7,340,050
                        
                        $
                        19,448,388
                        
                        $
                        15,714,142Payments
                            for revenue
                        
                        
                        (4,149,128
                        )
                        
                        (4,382,663
                        )
                        
                        (3,273,858
                        )
                        
                        (7,314,912
                        )
                        
                        (19,120,561
                        )
                        
                        (14,774,395
                        )Net
                            revenue
                        
                        
                        59,195
                        
                        
                        147,366
                        
                        
                        96,128
                        
                        
                        25,138
                        
                        
                        327,827
                        
                        
                        939,747Cost
                            of goods sold
                        
                        
                        (25,337
                        )
                        
                        (23,147
                        )
                        
                        (31,939
                        )
                        
                        (48,510
                        )
                        
                        (128,933
                        )
                        
                        (948,490
                        )Gross
                            margin
                        
                        $
                        33,858
                        
                        $
                        124,219
                        
                        $
                        64,189
                        
                        $
                        (23,372
                        )
                        $
                        198,894
                        
                        $
                        (8,743
                        )
  Distributor
                  Arrangements
 
 The
                  Company markets its syringe products exclusively through distributors
                  and
                  various government agencies. Accounts receivable balances are payable
                  within
                  thirty days of shipment. Univec provides a product quality warranty
                  on its
                  products. The Company has never had any of its products returned
                  due to product
                  deficiencies. The products are priced under competitive arrangements
                  with each
                  customer. The product revenue recognition is based upon the prices
                  charged to
                  each customer. The Company has no price concessions which allow
                  payments below
                  the agreed prices.
  Product
                  Warranties
 
 The
                  Company provides a product warranty for the products sold. However,
                  the Company
                  has never had a product returned due to defective quality. Further,
                  there are no
                  warranty costs recognized in any of the years ended December 31,
                  2004 and 2003.
                  The Company believes that because no warranty costs were incurred
                  during any of
                  the periods mentioned, there is no need to disclose any additional
                  warranty cost
                  policy or amounts.
  6 .
                  Marketable Securities
 
 As
                  of
                  December 31, 2004, marketable securities consisted of an investment
                  in an equity
                  security, with
                  a
                  fair market value of $36,349. Management has classified the investment
                  as
                  available-for-sale.
 The
                  Company received this security in December 2004 upon the conversion
                  from a
                  mutual to a stock
                  insurance company in which Univec had owned a policy.
 
 In
                  January 2005, the security was sold for $36,101.
  7.
                  Inventories
 
 Inventories
                  consisted of the following:
  Raw
                            materials
                        
                        $
                        152,252Work-in-process
                        
                        
                        89,740Finished
                            goods
                        
                        
                        62,886304,878Less:
                            allowance for valuation
                        
                        
                        (125,000
                        )$
                        179,878
 
 The
                  Company provided a $75,000 and $50,000 valuation allowance in 2004 and
                  2003,
                  respectively.
 
 8.
                  Fixed
                  Assets
 
 Fixed
                  assets consisted of the following:
   Equipment
                        
                        $
                        1,100,784Less:
                            accumulated depreciation
                        
                        
                        478,099$
                        622,685
 
 
 As
                  of
                  December 31, 2004, the Company wrote-off fixed assets located at
                  former
                  suppliers with
                  a
                  cost of $371,764 and a net book value of $85,088.
 
 Depreciation
                  expense was $128,901 and $174,541 in 2004 and 2003, respectively.
                  For the year ended
                  December 31, 2004, fully depreciated assets were approximately
                  $43,000.
 
 F-9
 9.
                  Notes
                  and Loans Payable
 
 As
                  of
                  December 31, 2004, notes and loans payable consisted of:
  Loan
                            due to a shareholder through July, 2009,with interest at 4% (1) (3)
                        
                        $
                        500,000Loans
                            payable to agencies for economicdevelopment payable at $9,230 per month untilJuly 2009, with interest at 4% per annum (1) (3)
                        
                        
                        470,208Loan
                            payable to a vendor without specificpayment terms or interest (2)
                        
                        
                        211,852Loan
                            payable to a vendor without, specific interest (3)
                        
                        
                        135,000Loan
                            payable to a vendor due April 30, 2007with interest at prime plus 2% per annum (3)
                        
                        
                        105,516Notes
                            payable on August 14, 2005, with interest at 8%
                        
                        
                        85,000Note
                            payable on to a former officer upon sale ofsubsidiary due June 2005, without specific interest
                        
                        
                        60,000Notes
                            payable on June 2005, with interest at 12%,per annum
                        
                        
                        55,000Notes
                            payable to a shareholder's trusts, with interestat 12%, per annum (2)
                        
                        
                        27,000Other
                        
                        
                        34,4381,684,014Less:
                            Current portion of notes and loans payable
                        
                        
                        1,472,162$
                        211,852
  (1)
                  On
                  July 23, 2004, the Company borrowed an aggregate of $500,000 from
                  the City of Baltimore
                  Development Corporation and the Maryland Department of Business
                  and Economic Development
                  payable in aggregate equal monthly installments of $9,230 over
                  five years, with
                  interest at 4%, per annum. Proceeds are to be used to purchase
                  equipment of $450,000,
                  which together with certain other equipment of the Company, collateralize the
                  borrowings. The borrowings also required deposits of $335,000 and
                  an irrevocable standby
                  letter of credit of $200,000. Loans from certain officers and directors
                  of approximately
                  $180,000 have been subordinated.
  As
                  required under the borrowings, the Company has obtained a revolving
                  line of
                  credit of
                  $500,000 from a stockholder of the Company under which the Company
                  may borrow
                  for working
                  capital through July 22, 2009. Loans under the line bear interest
                  at the prime rate,
                  plus 2%, per annum, and may be converted into common stock at $.065,
                  per share,
                  as defined.
                  If the line of credit is terminated within one year, there is a
                  penalty of up to 90
                  days
                  of interest. The Maryland Department of Business and Economic Development
                  has guaranteed
                  80% of the loan and interest thereon. In July 2004, the Company
                  borrowed
                  $500,000 under
                  the
                  line of credit. As of December 31, 2004, interest rate was 7%,
                  per annum.
  Financing
                  expenses in connection with these borrowings were $80,146 and will
                  be amortized over
                  the
                  term of the borrowings.
  (2)
                  Subject to forgiveness upon the vendor's sale of shares of the
                  Company’s common
                  stock.
  (3)
                  In
                  default due to either noncompliance or late payments. As a result
                  of these defaults,
                  the Company has reclassified long-term debt of $457,376 to current.
 
 10.
                  Due
                  to Affiliated Companies
 
 Due
                  to
                  affiliated companies, owned by the chief executive officer of the
                  Company, on demand, with interest at 10%, per annum.
 
 11.
                  Loans
                  Payable - Officer/Directors
 
 As
                  of
                  December 31, 2004, loans payable - officer / directors consisted
                  of:
 
 Note
                            payable to the chief executive officerand
                            the chairman of the board of theCompany,
                            due on demand, with interestat
                            prime, plus 2%, per annum (1)
                        
                        $
                        200,000Note
                            payable to a director
                        
                        
                        53,300Others
                        
                        
                        7,193$
                        260,493
  F-10
 
 (1)
                  The
                  same terms as an underlying borrowing from a bank and collateralized
                  by certain
                  equipment. As of December 31, 2004 the interest rate was 7%, per
                  annum.
 
 12.
                  Income Taxes
 The
                  Company files consolidated income tax returns with its subsidiaries. Prior
                  to
                  its acquisition, PPSI was a Subchapter S Corporation.
 
 As
                  of
                  December 31, 2004, the Company had net operating loss carry forwards of
                  approximately $15,250,000 available to reduce future taxable income
                  expiring through
                  2024, which may be limited due to ownership changes.
 
 For
                  the
                  years ended December 31, 2004 and 2003, the Company's deferred
                  tax benefits
                  (expenses) were as follows:
 
 **2004**
                        
                        **2003**Net
                            operating loss carry forwards
                        
                        $
                        615,000
                        
                        $
                        200,000Depreciation
                        
                        
                        191,000
                        
                        
                        184,000Goodwill
                        
                        
                        (19,000
                        )
                        
                        (59,000
                        )Compensation
                        
                        
                        132,000
                        
                        
                        200,000Inventory
                            and equipment valuationallowances
                        
                        
                        60,000Valuation
                            allowance
                        
                        
                        (979,000
                        )
                        
                        (525,000
                        )None
                        
                        
                        None
 
 As
                  of
                  December 31, 2004, the tax effects of the components of deferred
                  tax assets
                  and liabilities were as follows:
 
 Deferred
                            tax assetsNet
                            operating loss carry forwards
                        
                        $
                        5,352,000Compensation
                        
                        
                        482,000Depreciation
                        
                        
                        183,000Total
                            deferred tax asset
                        
                        
                        6,017,000Deferred
                            tax liabilitiesGoodwill
                        
                        
                        (120,000
                        )Net
                            deferred tax asset
                        
                        
                        5,897,000Valuation
                            allowance
                        
                        
                        (5,897,000
                        )None
 
 As
                  of
                  December 31, 2004, realization of the Company's net deferred tax
                  asset of
                  approximately $5,425,000 was not considered more likely than not
                  and, accordingly,
                  a valuation allowance of $5,425,000 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.
 
 **2004**
                        
                        **2003**Expected
                            income tax benefit
                        
                        $
                        (437,000
                        )
                        $
                        (303,000
                        )Change
                            in valuation allowance arising in current year
                        
                        
                        1,164,000
                        
                        
                        504,000State
                            income tax benefit, net of federal income tax effect
                        
                        
                        (107,000
                        )
                        
                        (75,000
                        )Other
                        
                        
                        (620,000
                        )
                        
                        (126,000
                        )None
                        
                        
                        None
  F-11
 
 13.
                  Commitments and Contingency
 
 Lease
 
 The
                  Company is committed under a non-cancelable lease for production, storage
                  and office space through July 2005. The lease provides for minimum annual
                  rent of $72,000, additional rents for the Company's share of normal maintenance
                  plus its pro-rata share of real estate taxes and eight one year renewals
                  at the Company's option.
 
 For
                  2004
                  and 2003, total rent expense was $73,200 and $77,439, respectively.
 
 Employment
                  Agreement
 
 The
                  Company is committed under an employment agreement to the chief executive
                  officer, through January 2005, requiring annual compensation to
                  be
                  determined annually by the officer and Company. Annually, the agreement shall
                  automatically renew for one year, resulting in a new three year
                  term each January
                  1. For the years ended December 31, 2004 and 2003, the compensation
                  was
 $396,000
                  and $360,000, respectively, which have been deferred by the chief
                  executive officer.
                  The agreement also provides for bonuses, as determined by the officer
                  and the
                  Company, an automobile allowance (of $24,000, per annum, for 2004)
                  and
                  life, disability
                  and health insurance. In addition, the officer was granted options
                  to purchase
                  2,000,000 shares of common stock exercisable at $.24, per share,
                  through 2012.
                  The
                  options vest 25% on January 1, 2003 and 41,667 during each subsequent
                  month.
 
 14.
                  Litigation Reserve
 
 In
                  December 2003, the Company assigned certain of their patents, earned royalties
                  of $72,125 and 85% of all future royalties being earned from these patents
                  in payment of a note payable and interest thereon for an aggregate
                  of $99,434,
                  in settlement to a collection matter. The Company recognized a
                  $24,872 gain
                  upon
                  extinguishment of the debt. The Company in turn received relief
                  from
 the
                  restrictive patent payments and a perpetual license to exploit,
                  market and manufacture
                  these patents in North America. As the value of the license received could
                  not
                  be determined, no value was assigned to them.
 
 In
                  March
                  2004, the Company settled a collection matter with a former consultant
                  in the amount of $165,000, payable in varying amounts through March 2007
                  and
                  options to purchase 359,375 shares of common stock of the Company,
                  all of
                  which
                  have been accrued as of December 31, 2003.
 
 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 consulting fees are due and will continue to vigorously defend
                  this action.
  15.
                  Stockholders' Equity
  During
                  2004, the Company was listed as a public company on the OTC Bulletin
                  Board. All
                  of the transactions reported in Note 14 - Stockholders’ Equity had fair market
                  valuations based on the publicly listed closing prices of the Company’s common
                  stock for the pertinent transaction dates. Such publicly listed
                  valuations are
                  in accordance with the guidance provided by SFAS 123 and EITF
                  96-18
 Common
                  Stock
 
 During
                  the year ended December 31, 2003, the Company issued an aggregate
                  of 444,805
                  shares of common stock to a stockholder and an officer in payment
                  of notes and
                  loans and deferred payroll of $20,000 and compensation of $30,000.
 
 In
                  August
                  2003, the Company sold 500,000 shares of common stock for $20,000.
 
 In
                  December 2003, an officer exercised options to purchase 166,667
                  shares of common
                  stock for $6,667.
 
 In
                  December 2003, the Company issued 100,000 shares of common stock
                  in exchange for
                  financial consulting services of $10,000.
  During
                  the year ended December 31, 2004, the Company issued an aggregate
                  of 2,660,034
                  shares of common stock to a stockholder and three officers in payment
                  of notes
                  and loans of $10,000, deferred payroll of $$50,000 and benefits
                  of
                  $125,262.
  F-12
 
 In
                  November 2004, the Company exchanged 6,000,000 shares of common
                  stock for
                  $240,000 of professional consulting services over a one-year term.
                  As of
                  December 31, 2004, the remaining balance of services to be rendered
                  was
                  $210,000, which is reflected as Stock Subscription Receivable in
                  the
                  Stockholders’ Deficit.
 
 During
                  2004, the Company was listed as a public company on the OTC Bulletin
                  Board. All
                  of the transactions reported in the preceding discussion had fair
                  market
                  valuations based on the publicly listed closing prices of the Company’s common
                  stock for the pertinent transaction dates. Such publicly listed
                  valuations are
                  in accordance with the guidance of SFAS 123 and EITF 96-18.
 
 Preferred
                  Stock
  During
                  the year ended December 31, 2002, 31.5 shares of Series B were
                  converted into
                  949,464 shares of common stock at prices of $.0525 to $.15, per
                  share. During
                  the year ended December 31, 2003, 45 shares of Series B were converted
                  into
                  1,843,322 shares of common stock at prices of $.0163 to $.0325,
                  per
                  share.
 
 Series
                  D
 
 The
                  Company has designated 1,250,000 shares of 5% cumulative convertible
                  preferred
                  stock (Series D), which are entitled to receive, prior to the payment
                  of
                  dividends to the common stock, cumulative dividends of 5%, per
                  share, per annum.
                  The Series D stock may be redeemed at the option of the Company,
                  in cash at
                  $2.40, per share. In addition, Series D stockholders are entitled
                  to a
                  liquidation preference of $2.40, per share, plus unpaid dividends.
                  Each share of
                  Series D is initially convertible into three shares of common
                  stock.
 
 In
                  December 2004, the Company sold 20,833 shares of Series D preferred
                  stock to a
                  customer for $50,000. The Company will also sell similar amounts
                  on March 31,
                  June 30,
 September
                  30 and December 31, 2005.
  F-13
 Series
                  E
 
 In
                  August
                  2003, the Company designated 2000 shares of 5% cumulative convertible preferred
                  stock (Series E), which are entitled to receive, prior to the payment
                  of
                  dividends to the Series D and common stock, cumulative dividends
                  of 5%, per
                  share, per annum. The Series E stock may be redeemed at the option
                  of the
                  Company, in cash, at 135% of the stated value, per share, plus
                  all unpaid
                  dividends. In addition, Series E stockholders are entitled to a
                  liquidation
                  preference of $1,000, per share, plus all unpaid dividends. Each
                  share of Series
                  E is convertible into shares of common stock at the lesser of $1.10
                  or 80% of
                  market value, as defined. In August 2006, the Company is required
                  to convert all
                  the Series E into common stock at the conversion price, unless
                  the holder
                  becomes a 5% or greater stockholder. The Company may redeem the
                  Series E in cash
                  at $1,350, per share, plus all unpaid dividends, as defined.
 
 On
                  August
                  5, 2003, the Company exchanged 122 shares of Series B and 250 shares
                  of Series
                  C, all the outstanding shares, for 522 shares of Series E.
 
 In
                  2004
                  and 2003, 80 and 30 shares of Series E were converted into 1,790,341
                  and 340,909
                  shares of common stock at prices ranging from $.03 to $.09, per
                  share.
 
 Holders
                  of preferred shares have no voting rights.
 
 As
                  of
                  December 31, 2004, cumulative dividends in arrears on preferred
                  stock
                  were:
  Series
                            D
                        
                        $
                        36,736Series
                            E
                        
                        
                        30,994$
                        67,730
  Non
                  Plan
                  Options
 
 During
                  the year ended December 31, 2003, the Company issued options to
                  purchase an
                  aggregate of 6,200,000 shares of common stock of the Company to
                  officers,
                  directors and others. The options are exercisable at $.04 to $.25,
                  per share,
                  through various dates until November 2008 and were valued at $36,400.
                  Certain of
                  these options to officers and directors vest over three years.
 
 During
                  the year ended December 31, 2004, the Company issued options to
                  purchase an
                  aggregate of 1,050,000 shares of common stock of the Company to
                  two officers and
                  an employee. The options are exercisable at $.04, per share, through
                  December
                  2009 and were valued at $4,000.
 
 During
                  2004 and 2003, options to purchase 4,850,000 and 1,763,941 shares,
                  respectively,
                  of common stock expired or were cancelled without being exercised.
 
 Reserved
                  Shares
 
 As
                  of
                  December 31, 2004, the Company has reserved shares of common stock
                  as
                  follows:
  Non-plan
                            options and warrants
                        
                        
                        9,280,172Options
                            under the Plans
                        
                        
                        1,335,000Series
                            D conversions
                        
                        
                        375,000Series
                            E conversions(a)
                        
                        
                        4,027,218Litigation
                        
                        
                        250,00015,267,390
  (a)
                  assumes conversions as of December 31, 2004 at $.11, per share.
 
 16.
                  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
                  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.
  Under
                  the
                  2000 Stock Option Plan (2000 Plan), the Company may grant options to
                  purchase 2,000,000 shares of common stock to employees, directors,
                  i ndependent
                  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.
 
 The
                  following table summarizes the activity of the Plans for 2004 and
                  2003.
  **2004**
                        **2003****Weighted**
                        
                        **Weighted****Average**
                        
                        **Average****Exercise**
                        
                        **Exercise****Shares**
                        **Price**
                        **Shares**
                        **Price**Options
                            outstanding, beginning of year
                        1,335,000
                        $0.70
                        2,569,000
                        $1.20Granted
                        None
                        -
                        NoneCanceled,
                            exercised, expired or exchanged
                        None
                        -
                        (1,234,000)
                        $1.74Options
                            outstanding, end of year
                        1,335,000
                        $0.70
                        1,335,000
                        $0.70Options
                            exercisable, end of year
                        1,335,000
                        $0.70
                        1,335,000
                        $0.70Options
                            available for grant, end of year
                        1,050,000
                        
                        1,050,000Weighted-average
                            fair value of options grantedduring
                            the year
                        $.00
                        
                        $.00
 
  F-14
  
 The
                  following table summarizes information about stock options outstanding under
                  the
                  Plan at December 31, 2004:
 
 **Weighted****Average**
                        
                        **Weighted****Remaining**
                        
                        **Average****Range
                            of**
                        **Outstanding**
                        **Contractual**
                        **Exercisable**
                        **Exercisable****Exercise
                            Prices**
                        **Options**
                        **Life
                            (Years)**
                        **Options**
                        **Price**$3.50
                        65,000
                        2.50
                        65,000
                        $3.50$2.00
                        70,000
                        3.00
                        70,000
                        $2.00$0.675
                        650,000
                        .50
                        650,000
                        $0.675$0.50
                        100,000
                        6.25
                        100,000
                        $0.50$0.24
                        35,000
                        8.00
                        35,000
                        $0.24$0.20
                        60,000
                        1.75
                        60,000
                        $0.20$0.15
                        355,000
                        5.50
                        355,000
                        $0.15$0.15
                            to $3.50
                        1,335,000
                        2.70
                        1,335,000
                        $0.70
 
 
 17.
                  Revenues
 
 Sales
                  of
                  Technology
 
 Through
                  September 1, 2003, the Company licensed the non-exclusive, worldwide use
                  of
                  the Company's patents for the manufacture, use and marketing of
                  its auto-disable
                  syringes providing for royalties on sales. In December 2003, the
                  Company sold
                  this
                  license and assigned certain patents to a creditor in payment of
                  $99,433 and
                  also
                  assigned certain future royalties under the auto-disable syringe licensing
                  agreement. The Company has licensed back the rights under these patents
                  to market and manufacture in North America.
 
  F-15
  
 Note
                  18, Discontinued Operations
 
 The
                  Company recognized a loss of $597,056 on the 2004 sale of Thermal
                  Waste
                  Technology Corporation (TWT) a wholly owned subsidiary. This loss
                  included a
                  $554,542 write-off for the total impairment of goodwill attributable
                  to the
                  subsidiary. TWT was sold to an officer of the Company and his related
                  parties,
                  all former owners of TWT, in exchange for 404,154 shares of common
                  stock of the
                  Company, cancellation of deferred compensation to the officer of
                  $221,042 and
                  cancellation of the officer’s employment agreement. In addition, the officer
                  received options to purchase 97,710 shares of common stock of the
                  Company,
                  exercisable at $.01, per share, for 10 years and the other purchasers
                  received
                  option to purchase 296,444 shares of common stock of the Company,
                  exercisable at
                  $.07, per share, for 10 years. The officer also will receive $100,000
                  in cash,
                  payable in monthly installments of $10,000, commencing August 2004
                  and medical
                  insurance payments of $3,600. All of the Univec, Inc. common stock
                  and options
                  exchanged in the transaction was valued at publicly listed closing
                  prices of the
                  Company’s common stock. Such publicly listed valuations are in accordance
                  with
                  the guidance of SFAS 123 and EITF 96-18.
 
 During
                  the year-ended December 31, 2003 the Company reported that a corporate
                  officer
                  had instituted a legal action for approximately $200,000 for wages
                  plus
                  approximately $12,000 related to health and dental insurance premiums
                  plus
                  interest. All amounts within the claim were previously accrued
                  by the Company as
                  operating expenses as they were incurred. However, the Company’s defense in the
                  matter included a claim that the officer had entered into one or
                  more agreements
                  with third parties on behalf of the Company without notifying the
                  Company’s
                  President or Board of Directors. The Company asserted that damages
                  to the
                  Company in excess of the alleged liability to the officer had been
                  incurred.
  F-16
 19.
                  Goodwill
 
 Goodwill
                  had represented the excess purchase prices paid by the Company
                  over the fair
                  value of the tangible and other intangible assets and liabilities
                  at the dates
                  of
                  acquisitions. Goodwill had not been amortized, but instead was subject
                  to an annual assessment of impairment by applying a fair-value
                  based test.
                  The
                  Company evaluated the carrying value of goodwill as of December
                  31,
                  2004.
 The
                  Company determined the carrying value of goodwill has been fully
                  impaired and
                  has written-off
                  the carrying value of $1,774,119.
  20.
                  Subsequent Events
 
 Common
                  Stock
 
 In
                  January 2005, 30 shares of Series E and unpaid dividends thereon
                  of $2,188 were converted
                  into 804,688 shares of common stock at $.04, per share.
 
 In
                  January 2005, the Company issued an aggregate of 1,037,980 shares
                  of common
                  stock to three
                  officers of the Company in exchange for deferred compensation of
                  $60,000 and
                  accrued expenses
                  of $17,158.
 
 In
                  February 2005, the Company issued 50,000 shares of common stock
                  to an officer in payment
                  of deferred compensation of $5,000.
 
 In
                  March
                  2005, the Company sold 350,000 shares of common stock to two investors
                  for an
                  aggregate of $35,000.
 
 Due
                  to
                  Affiliated Companies and Officers
 
 Subsequent
                  to December 31, 2004, the Company borrowed an additional $70,000
                  from the affiliated
                  companies.
  21. Selected
                  Quarterly Financial Data - 2004 and 2003 (Unaudited)


Univec,
                    Inc. and SubsidiariesBalance
                    Sheets**December
                    31, 2004**
                
                **September
                    30, 2004**
                
                **June
                    30, 2004**
                
                **March
                    31, 2004**AssetsCash
                
                $
                29,443
                
                $
                8,024
                
                $
                49,162
                
                $
                852Marketable
                    securities
                
                
                36,349Accounts
                    receivable
                
                
                3,123,493
                
                
                1,628,446
                
                
                1,508,933
                
                
                1,472,635Inventories
                
                
                179,878
                
                
                269,672
                
                
                301,913
                
                
                295,248CDs
                    -
                    restricted
                
                
                340,407
                
                
                335,000
                
                
                335,000Other
                    current assets
                
                
                46,630
                
                
                83,341
                
                
                96,297
                
                
                124,888Total
                    current assets
                
                
                3,756,200
                
                
                2,324,483
                
                
                2,291,305
                
                
                1,893,623Fixed
                    assets - net
                
                
                622,685
                
                
                894,802
                
                
                542,401
                
                
                587,598Goodwill
                
                
                
                
                
                1,774,119
                
                
                2,328,662
                
                
                2,328,662Other
                    assets
                
                
                79,468
                
                
                83,475
                
                
                6,000
                
                
                6,000Total
                    assets
                
                $
                4,458,353
                
                $
                5,076,879
                
                $
                5,168,368
                
                $
                4,815,883Liabilities
                    and Stockholders DeficitAccounts
                    payable &accrued
                    expenses
                
                $
                4,380,826
                
                $
                2,946,251
                
                $
                2,877,647
                
                $
                2,762,038Deferred
                    payroll
                
                
                1,271,488
                
                
                1,092,697
                
                
                1,261,588
                
                
                1,064,292Notes
                    and loans pay-
                    current
                
                
                1,472,163
                
                
                1,065,795
                
                
                350,872
                
                
                166,376Loans
                    payable –officers/directors
                
                
                260,493
                
                
                260,493
                
                
                270,493
                
                
                270,493Due
                    to
                    affiliatedcompanies
                
                
                578,800
                
                
                504,643
                
                
                663,452
                
                
                328,017Total
                    current liabilities
                
                
                7,963,770
                
                
                5,869,879
                
                
                5,424,052
                
                
                4,591,216Notes
                    and loanspayable
                    - long-term
                
                
                211,852
                
                
                696,814
                
                
                409,051
                
                
                497,033Total
                    liabilities
                
                
                8,175,622
                
                
                6,566,693
                
                
                5,833,103
                
                
                5,088,249Stockholders’
                    deficitPreferred
                    stock
                    – D
                
                
                125
                
                
                104
                
                
                104
                
                
                104Preferred
                    stock
                    – E
                
                
                1
                
                
                1
                
                
                1
                
                
                1Common
                    stock
                
                
                45,619
                
                
                38,628
                
                
                37,872
                
                
                37,872Additional
                    paid-incapital
                
                
                10,977,627
                
                
                10,690,639
                
                
                10,661,408
                
                
                10,661,408Treasury
                    stock
                
                
                (28,291
                )
                
                (28,291
                )Stock
                    subscription
                
                
                (210,000
                )Accumulated
                    deficit
                
                
                (14,502,350
                )
                
                (12,190,895
                )
                
                (11,364,120
                )
                
                (10,971,751
                )Total
                    stockholders'deficit
                
                
                (3,717,269
                )
                
                (1,489,814
                )
                
                (664,735
                )
                
                (272,366
                )Total
                    liabilities andstockholders
                    deficit
                
                $
                4,458,353
                
                $
                5,076,879
                
                $
                5,168,368
                
                $
                4,815,883
 F-17
 Univec,
                      Inc. and SubsidiariesBalance
                      Sheets**December
                      31, 2003**
                  
                  **September
                      30, 2003**
                  
                  **June
                      30, 2003**
                  
                  **March
                      31, 2003**AssetsCash
                  
                  $
                  11,821
                  
                  $
                  5,968
                  
                  $
                  7,738
                  
                  $
                  54,823Accounts
                      receivable
                  
                  
                  1,273,322
                  
                  
                  61,308
                  
                  
                  72,820
                  
                  
                  163,851Inventories
                  
                  
                  291,715
                  
                  
                  448,438
                  
                  
                  457,021
                  
                  
                  459,480Other
                      current assets
                  
                  
                  147,635
                  
                  
                  157,422
                  
                  
                  137,832
                  
                  
                  129,301Total
                      current assets
                  
                  
                  1,724,493
                  
                  
                  673,136
                  
                  
                  675,411
                  
                  
                  807,455Fixed
                      assets - net
                  
                  
                  633,536
                  
                  
                  573,011
                  
                  
                  620,714
                  
                  
                  665,887Goodwill
                  
                  
                  2,328,662
                  
                  
                  2,328,662
                  
                  
                  2,328,662
                  
                  
                  2,328,662Other
                      assets
                  
                  
                  6,000
                  
                  
                  46,691
                  
                  
                  55,581
                  
                  
                  55,581Total
                      assets
                  
                  $
                  4,692,691
                  
                  $
                  3,621,500
                  
                  $
                  3,680,368
                  
                  $
                  3,857,585Liabilities
                      and Stockholders DeficitAccounts
                      payable &accrued
                      expenses
                  
                  $
                  2,571,528
                  
                  $
                  1,397,920
                  
                  $
                  1,388,157
                  
                  $
                  1,322,089Deferred
                      payroll
                  
                  
                  922,899
                  
                  
                  681,047
                  
                  
                  582,167
                  
                  
                  502,262Notes
                      and loans pay-
                      current
                  
                  
                  177,663
                  
                  
                  412,997
                  
                  
                  418,545
                  
                  
                  423,093Loans
                      payable –officers/directors
                  
                  
                  216,493
                  
                  
                  200,419
                  
                  
                  112,419
                  
                  
                  4,419Due
                      to
                      affiliatedcompanies
                  
                  
                  235,734
                  
                  
                  133,224
                  
                  
                  54,037
                  
                  
                  45,645Total
                      current liabilities
                  
                  
                  4,124,317
                  
                  
                  2,825,607
                  
                  
                  2,555,325
                  
                  
                  2,297,508Notes
                      and loanspayable
                      - long-term
                  
                  
                  505,739
                  
                  
                  403,246
                  
                  
                  403,246
                  
                  
                  403,246Total
                      liabilities
                  
                  
                  4,630,056
                  
                  
                  3,228,853
                  
                  
                  2,958,571
                  
                  
                  2,700,754Stockholders’
                      deficitPreferred
                      stock
                      – A
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1Preferred
                      stock
                      – B
                  
                  
                  
                  
                  
                  
                  
                  
                  1
                  
                  
                  1Preferred
                      stock
                      – C
                  
                  
                  
                  
                  
                  
                  
                  
                  1
                  
                  
                  1Preferred
                      stock
                      – D
                  
                  
                  104
                  
                  
                  104
                  
                  
                  104
                  
                  
                  104Preferred
                      stock
                      – E
                  
                  
                  1
                  
                  
                  1Common
                      stock
                  
                  
                  35,169
                  
                  
                  34,366
                  
                  
                  33,616
                  
                  
                  33,616Additional
                      paid-incapital
                  
                  
                  10,506,007
                  
                  
                  10,410,745
                  
                  
                  10,294,788
                  
                  
                  10,294,785Treasury
                      stockStock
                      subscriptionAccumulated
                      deficit
                  
                  
                  (10,478,646
                  )
                  
                  (10,052,569
                  )
                  
                  (9,606,713
                  )
                  
                  (9,171,677
                  )Total
                      stockholders'deficit
                  
                  
                  62,635
                  
                  
                  392,647
                  
                  
                  721,797
                  
                  
                  1,156,831Total
                      liabilities andstockholders
                      deficit
                  
                  $
                  4,692,691
                  
                  $
                  3,621,500
                  
                  $
                  3,680,368
                  
                  $
                  3,857,585


F-18





Univec,
                  Inc. and SubsidiariesStatements
                  of Operations**Year
                  ended**
              
              **Three
                  months ended**
              
              **Nine
                  months ended**
              
              **Three
                  months ended**
              
              **Six
                  months ended**
              
              **Three
                  months ended**
              
              **Three
                  months ended****Dec.
                  31, 2004**
              
              **Dec.
                  31, 2004**
              
              **Sept.
                  30, 2004**
              
              **Sept.
                  30, 2004**
              
              **June
                  30, 2004**
              
              **June
                  30, 2004**
              
              **March
                  31, 2004**Revenues
              
              $
              327,827
              
              $
              31,658
              
              $
              296,169
              
              $
              99,631
              
              $
              196,538
              
              $
              171,688
              
              $
              24,850Cost
                  of revenues
              
              
              (128,933
              )
              
              (71,997
              )
              
              (56,936
              )
              
              (33,861
              )
              
              (23,075
              )
              
              (38,511
              )
              
              15,426Gross
                  margin
              
              
              198,894
              
              
              (40,339
              )
              
              239,233
              
              
              65,770
              
              
              173,463
              
              
              133,177
              
              
              40,286Operating
                  expensesMarketing
                  and
                  selling
              
              
              (123,400
              )
              
              (7,986
              )
              
              (115,414
              )
              
              14,052
              
              
              (129,466
              )
              
              (5,328
              )
              
              (124,138
              )Product
                  development
              
              
              (28,871
              )
              
              (609
              )
              
              (28,262
              )
              
              (25,530
              )
              
              (2,732
              )
              
              (1,886
              )
              
              (846
              )General
                  & administrative
              
              
              (1,772,246
              )
              
              (457,965
              )
              
              (1,314,281
              )
              
              (393,881
              )
              
              (920,400
              )
              
              (486,329
              )
              
              (434,071
              )Loss
                  on
                  write-off ofgoodwill
              
              
              (1,774,119
              )
              
              (1,774,119
              )Total
                  operating expenses
              
              
              (3,698,636
              )
              
              (2,240,679
              )
              
              (1,457,957
              )
              
              (405,359
              )
              
              (1,052,598
              )
              
              (493,543
              )
              
              (559,055
              )Loss
                  from operations
              
              
              (3,499,742
              )
              
              (2,281,018
              )
              
              (1,218,724
              )
              
              (339,589
              )
              
              (879,135
              )
              
              (360,366
              )
              
              (518,769
              )Other
                  income (expense)Interest
                  expense, net
              
              
              (108,092
              )
              
              (23,288
              )
              
              (84,804
              )
              
              (38,424
              )
              
              (46,380
              )
              
              (32,003
              )
              
              (14,377
              )Gain
                  on
                  extinguishmentof
                  debt
              
              
              144,819
              
              
              64,225
              
              
              80,594
              
              
              40,554
              
              
              40,040
              
              
              0
              
              
              40,040Other
                  income (expense)
              
              
              47,795
              
              
              47,795Total
                  other income(expense)
              
              
              84,522
              
              
              88,732
              
              
              (4,210
              )
              
              2,130
              
              
              (6,340
              )
              
              (32,003
              )
              
              25,663Loss
                  from continuingoperations
              
              
              (3,415,220
              )
              
              (2,192,286
              )
              
              (1,222,934
              )
              
              (337,459
              )
              
              (885,475
              )
              
              (392,369
              )
              
              (493,106
              )Loss
                  from discontinuedoperationsDiscontinued
                  operatinglosses
              
              
              (8,260
              )
              
              
              
              
              (8,260
              )
              
              (8,260
              )Loss
                  on
                  sale ofsubsidiary
              
              
              (597,056
              )
              
              (116,000
              )
              
              (481,056
              )
              
              (481,056
              )Net
                  loss
              
              
              (4,020,536
              )
              
              (2,308,286
              )
              
              (1,712,250
              )
              
              (826,775
              )
              
              (885,475
              )
              
              (392,369
              )
              
              (493,106
              )Dividends
                  attributable topreferred
                  stock
              
              
              (35,921
              )
              
              (8,721
              )
              
              (27,200
              )
              
              (8,650
              )
              
              (18,550
              )
              
              (9,275
              )
              
              (9,275
              )Loss
                  attributable tocommon
                  stockholders
              
              
              ($4,056,457
              )
              
              ($2,317,007
              )
              
              ($1,739,450
              )
              
              ($835,425
              )
              
              ($904,025
              )
              
              ($401,644
              )
              
              ($502,381
              )Basic
                  net loss per share
              
              
              ($0.11
              )
              
              ($0.06
              )
              
              ($0.05
              )
              
              ($0.02
              )
              
              ($0.02
              )
              
              ($0.01
              )
              
              ($0.01
              )Basic
                  weighted avg
              
              
              38,510,467
              
              
              39,393,090
              
              
              37,394,433
              
              
              38,244,097
              
              
              36,952,559
              
              
              37,871,795
              
              
              35,331,157number
                  commonshares
                  outstanding


F-19




Univec,
                    Inc. and SubsidiariesStatements
                    of Operations**Year
                    ended**
                
                **Three
                    months ended**
                
                **Nine
                    months ended**
                
                **Three
                    months ended**
                
                **Six
                    months ended**
                
                **Three
                    months ended**
                
                **Three
                    months ended****Dec.
                    31, 2003**
                
                **Dec.
                    31, 2003**
                
                **Sept.
                    30, 2003**
                
                **Sept.
                    30, 2003**
                
                **June
                    30, 2003**
                
                **June
                    30, 2003**
                
                **March
                    31, 2003**Revenues
                
                $
                939,747
                
                $
                296,642
                
                $
                643,105
                
                $
                234,698
                
                $
                718,617
                
                $
                197,866
                
                $
                520,751Cost
                    of revenues
                
                
                (948,490
                )
                
                (366,830
                )
                
                (581,660
                )
                
                (247,832
                )
                
                (644,038
                )
                
                (262,916
                )
                
                (381,122
                )Gross
                    margin
                
                
                (8,743
                )
                
                (70,188
                )
                
                61,445
                
                
                (13,134
                )
                $
                74,579
                
                
                (65,050
                )
                
                139,629Operating
                    expensesMarketing
                    and
                    selling
                
                
                (379,738
                )
                
                (16,008
                )
                
                (363,730
                )
                
                (109,061
                )
                
                (254,669
                )
                
                (119,289
                )
                
                (135,380
                )Product
                    development
                
                
                (28,547
                )
                
                (5,544
                )
                
                (23,003
                )
                
                (2,850
                )
                
                (20,153
                )
                
                (15,530
                )
                
                (4,623
                )General
                    & administrative
                
                
                (847,013
                )
                
                (228,882
                )
                
                (618,131
                )
                
                (206,054
                )
                
                (412,077
                )
                
                (242,824
                )
                
                (169,253
                )Loss
                    on write-off ofcapitalized
                    lease
                
                
                (121,366
                )
                
                
                
                
                (121,366
                )
                
                
                
                
                (121,366
                )
                
                
                
                
                (121,366
                )Total
                    operating expenses
                
                
                (1,376,664
                )
                
                (250,434
                )
                
                (1,126,230
                )
                
                (317,965
                )
                
                (808,265
                )
                
                (377,643
                )
                
                (430,622
                )Loss
                    from operations
                
                
                (1,385,407
                )
                
                (320,622
                )
                
                (1,064,785
                )
                
                (331,099
                )
                
                (733,686
                )
                
                (442,693
                )
                
                (290,993
                )Other
                    income (expense)Interest
                    expense, net
                
                
                (91,564
                )
                
                (14,516
                )
                
                (77,048
                )
                
                (27,501
                )
                
                (49,547
                )
                
                (20,108
                )
                
                (29,439
                )Gain
                    on
                    extinguishmentof
                    debt
                
                
                24,872
                
                
                24,872Total
                    other income(expense)
                
                
                (66,692
                )
                
                10,356
                
                
                (77,048
                )
                
                (27,501
                )
                
                (49,547
                )
                
                (20,108
                )
                
                (29,439
                )Loss
                    from continuingoperations
                
                
                (1,452,099
                )
                
                (310,266
                )
                
                (1,141,833
                )
                
                (358,600
                )
                
                (783,233
                )
                
                (462,801
                )
                
                (320,432
                )Loss
                    from discontinuedoperationsDiscontinued
                    operatingincome
                    (losses)
                
                
                (93,502
                )
                
                (117,809
                )
                
                24,307
                
                
                4,450
                
                
                19,857
                
                
                27,765
                
                
                (7,908
                )Net
                    loss
                
                
                (1,545,601
                )
                
                (428,075
                )
                
                (1,117,526
                )
                
                (354,150
                )
                
                (763,376
                )
                
                (435,036
                )
                
                (328,340
                )Dividends
                    attributable topreferred
                    stock
                
                
                (39,025
                )
                
                (9,704
                )
                
                (29,321
                )
                
                (8,811
                )
                
                (20,510
                )
                
                (10,255
                )
                
                (10,255
                )Loss
                    attributable tocommon
                    stockholders
                
                
                ($1,584,626
                )
                
                ($502,810
                )
                
                ($1,081,816
                )
                
                ($362,961
                )
                
                ($718,855
                )
                
                ($495,291
                )
                
                ($338,595
                )Basic
                    net loss per share
                
                
                ($0.05
                )
                
                ($0.02
                )
                
                ($0.03
                )
                
                ($0.01
                )
                
                ($0.02
                )
                
                ($0.01
                )
                
                ($0.01
                )Basic
                    weighted avg
                
                
                33,751,508
                
                
                33,298,675
                
                
                33,421,349
                
                
                33,790,008
                
                
                32,307,211
                
                
                33,616,095
                
                
                32,847,588number
                    commonshares
                    outstanding


F-20





Univec,
                  Inc. and SubsidiariesStatement
                  of Cash Flow**Year
                  Ended**
              
              **Nine
                  Months Ended**
              
              **Six
                  MonthsEnded**
              
              **Three
                  Months Ended****December
                  31, 2004**
              
              **September
                  30, 2004**
              
              **June
                  30, 2004**
              
              **March
                  30, 2004**Cash
                  flows from operating activitiesNet
                  loss
              
              
              ($4,020,536
              )
              
              ($1,712,250
              )
              
              ($885,475
              )
              
              ($493,106
              )Adjustments
                  to reconcile net loss to net cashused
                  in
                  operating activitiesLoss
                  on
                  write-off of goodwill
              
              
              1,774,119Loss
                  on
                  sale of subsidiary
              
              
              481,719
              
              
              489,316Depreciation
                  and amortization
              
              
              189,008
              
              
              135,686
              
              
              91,135
              
              
              45,938Write-off
                  of
                  equipment
              
              
              57,295Valuation
                  allowance for inventories
              
              
              75,000Stock
                  based compensation
              
              
              4,000Loss
                  (gain) on cancellation of capital lease
              
              
              (2,894
              )Gain
                  on
                  extinguishment of debt
              
              
              (98,547
              )
              
              (80,594
              )
              
              (40,040
              )
              
              (40,040
              )Gain
                  on
                  receipt of marketable securities
              
              
              (36,349
              )Other
              
              
              (11,435
              )Changes
                  in assets and liabilities, net ofeffects
                  from sale of TWTAccounts
                  receivable
              
              
              (506,983
              )
              
              (367,110
              )
              
              (235,611
              )
              
              (199,313
              )Inventories
              
              
              17,698
              
              
              2,904
              
              
              (10,198
              )
              
              (3,533
              )Other
                  current assets and other assets
              
              
              (3,320
              )
              
              (104,130
              )
              
              51,338
              
              
              28,332Accounts
                  payable and accrued expenses
              
              
              713,610
              
              
              674,430
              
              
              306,120
              
              
              228,872Deferred
                  payroll
              
              
              619,631
              
              
              440,840
              
              
              496,793
              
              
              299,497Net
                  cash used in operating activities
              
              
              (747,984
              )
              
              (520,908
              )
              
              (225,938
              )
              
              (133,353
              )Cash
                  flows from investing activitiesPurchases
                  of
                  fixed assets (net of capitalized
              
              
              (397,068
              )
              
              (397,068
              )Increase
                  in
                  restricted cash
              
              
              (340,407
              )
              
              (335,000
              )
              
              (335,000
              )Cash
                  used in sale of subsidiary (net of notes andother
                  payables in 2004)
              
              
              (5,670
              )
              
              (92,977
              )Net
                  cash used in investing activities
              
              
              (743,145
              )
              
              (825,045
              )
              
              (335,000
              )
              
              0Cash
                  flows from financing activitiesProceeds
                  from
                  notes and loans payable,net
                  of
                  expenses
              
              
              1,104,344
              
              
              1,184,623
              
              
              140,585Increase
                  in due
                  to affiliated companies
              
              
              567,193
              
              
              270,883
              
              
              429,693
              
              
              92,283Increase
                  in
                  loans payable - officers/directors
              
              
              54,000
              
              
              54,000
              
              
              54,000
              
              
              54,000Proceeds
                  from
                  sale of stock
              
              
              50,000Payments
                  on
                  notes and loans payable
              
              
              (242,386
              )
              
              (167,350
              )
              
              (25,999
              )
              
              (23,899
              )Payments
                  of
                  capitalized lease obligations
              
              
              (21,232
              )Dividends
                  converted to proferred stock
              
              
              (3,168
              )Net
                  cash provided by financing activities
              
              
              1,508,751
              
              
              1,342,156
              
              
              598,279
              
              
              122,384Net
                  increase (decrease) in cash
              
              
              17,622
              
              
              (3,797
              )
              
              37,341
              
              
              (10,969
              )Cash,
                  beginning of period
              
              
              11,821
              
              
              11,821
              
              
              11,821
              
              
              11,821Cash,
                  end of period
              
              $
              29,443
              
              $
              8,024
              
              $
              49,162
              
              $
              852






F-21


Univec,
                    Inc. and SubsidiariesStatement
                    of Cash Flow**Year
                    Ended**
                
                **Nine
                    Months Ended**
                
                **Six
                    MonthsEnded**
                
                **Three
                    Months Ended****December
                    31, 2003**
                
                **September
                    30, 2003**
                
                **June
                    30, 2003**
                
                **March
                    30, 2003**Cash
                    flows from operating activitiesNet
                    loss
                
                
                ($1,545,601
                )
                
                ($1,052,495
                )
                
                ($698,345
                )
                
                ($213,309
                )Adjustments
                    to reconcile net loss to net cashused
                    in
                    operating activitiesDepreciation
                    and amortization
                
                
                165,511
                
                
                144,278
                
                
                96,575
                
                
                51,402Valuation
                    allowance for inventories
                
                
                45,000
                
                
                45,000
                
                
                50,000Stock
                    based compensation
                
                
                14,400Issuance
                    of
                    common stock and options for services
                
                
                22,000
                
                
                22,000Loss
                    (gain) on cancellatioin of capital lease
                
                
                121,366Gain
                    on
                    extinguishment of debt
                
                
                (24,872
                )Changes
                    in assets and liabilitiesAccounts
                    receivable
                
                
                (2,293,183
                )
                
                274,005
                
                
                262,493
                
                
                171,462Inventories
                
                
                128,413
                
                
                21,690
                
                
                8,107
                
                
                5,648Other
                    current assets and other assets
                
                
                7,727
                
                
                (42,751
                )
                
                (17,051
                )
                
                (23,520
                )Accounts
                    payable and accrued expenses
                
                
                2,547,614
                
                
                (6,526
                )
                
                (9,288
                )
                
                (50,359
                )Deferred
                    payroll
                
                
                536,934
                
                
                295,081
                
                
                196,201
                
                
                116,296Escrow
                    deposits
                
                
                (10,000
                )Net
                    cash used in operating activities
                
                
                (284,691
                )
                
                (299,718
                )
                
                (111,308
                )
                
                57,620Cash
                    flows from investing activitiesPurchases
                    of
                    fixed assets
                
                
                (1
                )Net
                    cash used in investing activities
                
                
                (1
                )Cash
                    flows from financing activitiesProceeds
                    from
                    notes and loans payable,net
                    of
                    expenses
                
                
                178,453
                
                
                179,452
                
                
                51,375
                
                
                18,200Increase
                    in due
                    to affiliated companies
                
                
                71,870
                
                
                112,579
                
                
                18,392Increase
                    in
                    loans payable - officers/directors
                
                
                230,419
                
                
                200,419
                
                
                112,419
                
                
                5,019Proceeds
                    from
                    sale of stock
                
                
                20,000
                
                
                20,000Payments
                    on
                    notes and loans payable
                
                
                (229,364
                )
                
                (144,985
                )
                
                (114,150
                )
                
                (77,026
                )Payments
                    of
                    capitalized lease obligations
                
                
                (62,125
                )
                
                (149,039
                )
                
                (36,250
                )
                
                (36,250
                )Net
                    cash provided by financing activities
                
                
                209,253
                
                
                218,426
                
                
                31,786
                
                
                (90,057
                )Net
                    increase (decrease) in cash
                
                
                (75,439
                )
                
                (81,292
                )
                
                (79,522
                )
                
                (32,437
                )Cash,
                    beginning of period
                
                
                87,260
                
                
                87,260
                
                
                87,260
                
                
                87,260Cash,
                    end of period
                
                $
                11,821
                
                $
                5,968
                
                $
                7,738
                
                $
                54,823


F-22