**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**__________________________**




**FORM
      10-KSB**


**Amendment
        No. 1**


__________________________





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




For
      the fiscal year ended **December
      31, 2005**





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




For
      the
      transition period from _______ to _______




Commission
      file number: **0-22413**




**UNIVEC,
      INC.**


(Name
      of
      Small Business Issuer in its Charter)





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




**__________________________**




**822
      Guilford Avenue, Suite 208, Baltimore, MD 21202**


**(410)
      347-9959**


(Address
      and telephone number of principal executive office)


__________________________




**Former
      address: 4810 Seton Drive, Baltimore, MD 21215**


**(Former
      name, former address, and former fiscal year, if changed since last
      report)**




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





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





Title
      of
      Class


Common
      Stock, $.001 par value


__________________________













Check
      whether the issuer: (1) filed all reports required to be filed by  Section
      13 or 15(d) of the Exchange Act during the past 12 months (or for
      such  shorter
      period that the registrant was required to file such reports), and
      (2)  has
      been
      subject to such filing requirements for the past 90 days.


Yes
      /X/
      No / /





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





Revenues
      for the issuer's most recent fiscal year were $81,398.





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





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 December 31,  2005
      was
      $1,144,602.







ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
      THE PAST FIVE YEARS





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





APPLICABLE
      ONLY TO CORPORATE REGISTRANTS





As
      of
      December 31, 2005 the issuer had 57,230,128 shares of common stock, $.001 par
      value, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE


None








1





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 regulated
      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.




2


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 vacines 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.




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 not
      sterile. 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:








3







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.





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 and foreign countries. (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.










4




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,
      2005, 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 $0 and $30,284 for the years ended December 31, 2005 and 2004,
      respectively.










5





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.











6





Research
      and Development





For
      the
      years ended December 31, 2005 and 2004, Univec expended $3,802 and $28,871,
      respectively, on product development expenses.





Employees





As
      of
      December 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
      December 31, 2005, PPSI had no employees, but utilizes outside marketing
      representatives and consultants for marketing and employees of affiliated
      companies, owned by a stockholder/officer of the Company, to provide certain
      administrative services. These expenses, together with other expenses, have
      not
      been allocated between these companies.




Item
      2.
      Description of Property.





Univec
      occupied 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. The lease on this facility was terminated on February
      6,
      2006.





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.










7





Item
      4.
      Submission of Matters to Vote of Security Holders




The
      Annual Meeting of Stockholders of Univec, Inc. for the year ended December
      31,
      2004, was held on October 14, 2005, to consider and vote upon a proposal to
      elect S. Robert Grass, Dr. David Dalton and William Wooldridge as
      directors.





A
      second
      proposal was presented and voted upon to amend the Articles of Incorporation
      to
      effect a one-for-ten reverse stock split of the issued and outstanding shares
      of
      common stock and correspondingly to decrease the share capital from 75,000.000
      shares to 7,500,000 shares, then to increase the share capital from 7,500,000
      shares to 50,000,000 shares on a date to be determined by the Board of
      Directors.





A
      third
      proposal was considered and voted upon to give authorization to the Board of
      Directors to change the name of the corporation to another or new name on a
      date
      to be determined by the Board of Directors.




The
      number of votes cast for and the number of abstentions are set forth
      below:





Proposal
      1 **-** Election
      of Directors




For
            
            WithholdS.
                Robert Grass
            
            35,227,022
            
            0David
                Dalton
            
            35,227,022
            
            0William
                Wooldridge
            
            35,227,022
            
            0




Proposal
      2 **-** To
      amend
      the Articles of Incorporation to effect a one-for-ten reverse stock split of
      the
      issued and outstanding shares of common stock and correspondingly to decrease
      the share capital from 75,000.000 shares to 7,500,000 shares, then to increase
      the share capital from 7,500,000 shares to 50,000,000 shares on a date to be
      determined by the Board of Directors.





For
            
            WithholdTotal
                vote result for Proposal 2
            
            35,227,022
            
            0





Proposal
      3 **-** To
      give
      authorization to the Board of Directors to change the name of the corporation
      to
      another or new name on a date determined by the Board of Directors.




For
            
            WithholdTotal
                vote result for Proposal 3
            
            35,227,022
            
            0












8





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





(a)(1)
      Prior to July 2, 1999, the Company's Common Stock and redeemable Common Stock
      Purchase Warrants (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, 2004 through December 31, 2005
      and the first quarter of 2006.





Common
                Stock("UNVC")Quarter
                Ended
            High
            LowMarch
                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
            $
                0.120
            $
                0.080June
                30, 2005
            $
                0.110
            $
                0.030September
                30, 2005
            $
                0.050
            $
                0.020December
                31, 2005
            $
                0.040
            $
                0.020March
                31, 2006
            $
                0.020
            $
                0.020








(1)
      As of
      December 31, 2005, there were 120 holders of record of the Common
      Stock.





(2)
      During the fiscal year ended December 31, 2005, 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.
      On
      January 10, 2005, the Company issued 698,893 shares of common stock to officers
      of the Company in exchange for payroll earned of $35,364. During March 2005,
      another 250,000 common shares were issued to an officer in exchange for payroll
      earned of $20,400.




2.
      On
      January 10, 2005, the Company issued 339,087 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $17,158.





3.
      On
      January 20, 2005, the Company issued 804,688 common shares to a preferred
      stockholder in exchange for 30 shares of Series E preferred stock and unpaid
      dividends worth an aggregate of $32,188.





4.
      During
      March 2005, the Company sold 350,000 common shares to independent investors
      for
      $35,000.





5.
      On
      March 9, 2005, the Company sold 20,833 Series D Preferred shares for $50,000.





6.
      On
      April 6, 2005, the Company issued 1,386,527 common shares to a preferred
      stockholder in exchange for 70 shares of Series E preferred stock and unpaid
      dividends worth an aggregate of $5,843.





7.
      On
      June 28, 2005, the Company issued 1,896,970 shares of common stock to two
      officers in exchange for operating expenses incurred by them but not previously
      paid.





8.
      On
      June 29, 2005, the Company issued 1,500,000 shares of common stock to an
      independent marketing consultant in exchange for fees not paid of
      $45,000.





9.
      On
      June 30, 2005, the Company issued 1,286,082 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $42,441.




10.
      On
      June 30, 2005, the Company converted $70,000 of notes payable to an affiliated
      company owned by an executive officer in exchange for 2,333,333 shares of common
      stock.





11.
      On
      October 10, 2005, the Company issued 1,169,850 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $12,868.









9




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





2005
            
            2004
            
            ChangeRevenues
            
            $
            81,398
            
            $
            327,827
            
            
            (75
            %)





Cost
                of Revenues
            
            
            (3,164
            )
            
            128,933
            
            
            (102
            %)





Gross
                Margin
            
            
            84,562
            
            
            198,894
            
            
            (57
            %)Expenses:Marketing
                and SellingExpense
            
            
            233,990
            
            
            123,400
            
            
            90
            %Product
                Development
            
            
            3,802
            
            
            28,871
            
            
            (87
            %)General
                andAdministrative
            
            
            1,535,840
            
            
            1,772,246
            
            
            (13
            %)Interest
                Expense, Net
            
            
            200,019
            
            
            108,092
            
            
            85
            %Gain
                on Extinguishmentof Debt
            
            
            
            
            
            (144,819
            )
            
            -Loss
                on write-off ofGoodwill
            
            
            
            
            
            1,774,119
            
            
            -Other
                Income
            
            
            
            
            
            (47,795
            )
            
            -Total
                Expenses
            
            
            1,973,651
            
            
            3,614,114
            
            
            (45
            %)Discontinued
                Operations
            
            
            
            
            
            (8,260
            )
            
            -Loss
                on sale of Subsidiary
            
            
            
            
            
            (597,056
            )
            
            -Net
                Loss
            
            $
            (1,889,089
            )
            $
            (4,020,536
            )
            
            (53
            )%







Sales
      within PPSI’s GPO comprised 50% of the total sales for 2005. The GPO program
      utilizes the “net” method of revenue recognition.





A
      breakdown of revenues and cost of revenues for 2005 between the Company and
      its
      wholly-owned subsidiary, PPSI, are as follows:





Univec
            
            PPSI
            
            TotalRevenue
            
            $
            40,793
            
            $
            40,605
            
            $
            81,398Cost
                of Revenues
            
            
            3,164
            
            
            
            
            
            3,164Gross
                Margin
            
            $
            43,957
            
            $
            40,605
            
            $
            84,562




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.





Sales
      within PPSI’s GPO program utilizing the “net” revenue recognition comprised 48%
      and 82% of the total revenue for 2005 and 2004, respectively.





Gross
      profit for the year ended December 31, 2005 decreased to 0.4% from 1.0% in
      2004.
      Gross profit based on product sales for 2005 decreased to $39,871 as compared
      to
      $198,894 in 2004. The reduced gross profit is primarily due to the lower sales
      revenue and lower gross profit contribution from PPSI’s GPO revenue and also
      from lower sales volume of our 1cc clip syringe. The GPO gross profit was 0.4%
      and 1.4% for the years 2005 and 2004, respectively. The reduction of syringe
      gross profit is largely the result of decreased sales volume. 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 our 2004 financings.










10




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. However,
      during 2005 our largest CPO customer was unable to renew a significant contract,
      which resulted in a significant loss of sales by PPSI.





Marketing
      and selling costs in 2005 increased $110,590 (90%) from 2004. This increase
      is
      attributable primarily to increases in compensation and consulting costs, which
      were as a result of our increased efforts to increase corporate
      revenues.





Product
      development expense for 2005 decreased by $25,069 (87%) as compared to 2004.
      This decrease was the result of reduced expenditures for product design and
      engineering costs, which were curtailed until financing became available to
      market a new medical syringe with a sliding sheath to protect caregivers in
      the
      dental and the cosmetic market.





General
      and administrative expenses for the year ended December 31, 2005 decreased
      $236,406 (13%) as compared to 2004. This decrease is due primarily to reductions
      in compensation, insurance, equipment costs and securities maintenance expenses
      offset in part by increases in professional fees and travel costs.





Interest
      expense for the year ended December 31, 2005 increased by $91,927 (85%) as
      compared to 2004 primarily as a result of increased debt outstanding during
      2005.





During
      the year ended December 31, 2004, the Company determined that an extremely
      minimal net income had been generated by the wholly owned subsidiary which
      had
      been acquired utilizing $1,774,119 of goodwill. The Company also determined
      that
      future profitability of the subsidiary was also in doubt. This lack of
      profitable operations led to the conclusion that the goodwill had been
      completely impaired and therefore the entire goodwill balance was written-off.
      The subsidiary owns no physical assets.





Other
      income for the year ended December 31, 2004 included $36,349 gain on the sale
      of
      marketable securities plus $11,446 gain on the sale of equipment.





The
      Company had a net loss of $1,889,089 for the fiscal year ended December 31,
      2005, as compared to a net loss of $4,020,536 for the year ended December 31,
      2004. The decreased loss of $2,131,447, or 53%, during 2005 was attributable
      in
      part to the 2004 nonrecurring loss of $597,056 on the sale of a subsidiary.
      The
      subsidiary was sold during August 2004 in order to reduce the fixed costs
      associated with its operation. The Company incurred a 2004 nonrecurring
      $1,749,235 loss on the write-off of goodwill, the $597,056 loss on the sale
      of a
      subsidiary and an offsetting gain on extinguishment of debt of $144,819. This
      increased portion of the Company’s net loss was further related to the 2005
      $131,332 reduction in gross profit.





The
      December 31, 2005 net loss included $787,447 payroll and related expenses versus
      $849,547 for the year ended December 31, 2004. Insurance expense was $153,969
      during 2005 versus $210,696 during 2004. Product development expense was $3,802
      during 2005 versus $28,871 during 2004. Professional fees for the year ended
      December 31, 2005 were $385,093 versus $335,875 incurred for the year ended
      December 31, 2004.




Liquidity
      and Capital Resources





The
      working capital deficit of $4,207,570 at December 31, 2004, increased to a
      deficit of $5,116,766 at December 31, 2005. This reduction of working capital
      is
      primarily attributable to the Company’s $1,933,780 net loss. However, net
      decreases in accounts receivable and increases in deferred compensation were
      partially offset by decreases in accounts payable and accrued expenses and
      also
      by a decrease in total loans payable. All of these factors contributed to the
      overall decrease in working capital.





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, 2005, the Company had
      negative working capital of $5,116,766 and a stockholders' deficit of $4,900,219
      and incurred net losses of $(1,933,780) and $(4,020,536) for the years ended
      December 31, 2005 and 2004, respectively. 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.





Net
      cash
      used in operating activities decreased by $428 ,502 (57%) to
      $319,482 for the  year
      ended December 31, 2005 from 2004, primarily due to the continued net
      loss.




Net
      cash
      provided by investing activities of $326,907 resulted from the redemption of
      restricted cash  deposits,
      which was partially offset by the purchase of fixed assets during 2005.




Net
      cash
      used in financing activities increased by $1,544,628 (102%) to $(35,877) for
      2005 from $1,508,751 provided during 2004. This increase in net cash used in
      financing activities resulted from a decrease in aggregate borrowings of
      $1,363,827 and an increase in aggregate repayments of borrowings of
      approximately $218,969. There was also an $85,000 non-recurring sale of
      securities during 2005.




Although
      revenue decreased as a result of the 2005 PPSI GPO operations for the year
      ended
      December 31, 2005, 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.








11




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 to implement our business strategy. The
      proceeds from the above loans and our designation as a minority business
      enterprise (MBE) should increase our marketing service capabilities to
      pharmaceutical companies and to develop new products.





Unless
      we
      introduce new products or increase our market share Univec’s management
      anticipates that operations will generate a negative cash-flow during our next
      fiscal year, but there can be no certainty 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





Univec's
      business plan upon acquiring PPSI was to fully utilize each other's capabilities
      to increase their sales and profitability. Although a shortage of cash flow
      has
      slowed the plan, management has reviewed the carrying amount of goodwill and
      fixed assets. We have considered all the circumstances, specifically the fair
      value based on current and anticipated future undiscounted cash flows. In
      addition, as part of our relocation strategy, various production equipment
      is
      being reevaluated. During 2004, 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.




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 - Certain Relationships and Related Transactions





For
      the
      year ended December 31, 2005, our largest customer, Pharmacy Services, Inc.,
      a
      company owned and operated by Dr. David Dalton, President and Chief Executive
      Officer, purchased goods and generated revenues of $40,605 from PPSI’s GPO. We
      intend to reduce our reliance on this customer through expanding sales to other
      parties.





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 two Forms 8-K/A filed on August
      1,
      2005 and January 11, 2006. These filings reported 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.





The
      Company did file a Form 10-KSB amendment on January 11, 2006. This report bore
      a
      qualification as to the Company’s ability to continue as a going
      concern.








12




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.
      Although the Company did change from the “gross” to the “net” revenue method of
      accounting for the GPO (Group Purchasing) and physician sampling programs use
      the “net” method of revenue recognition, this change to a more appropriate
      accounting method does not reflect on the effectiveness of the controls applied
      in the circumstances.




(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
            57
            Chief
                Executive Officer, President and a DirectorS.
                Robert Grass
            72
            Chairman
                of the Board of DirectorsWilliam
                Wooldridge
            60
            DirectorRaphael
                Langford
            61
            Chief
                Operating Officer and Executive Vice PresidentMichael
                Lesisko
            56
            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.









13




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 of the Company since April 2003.
      Prior
      to April 2003, Mr. Langford was the Executive Director of the National
      Foundation of Women Legislators. Mr. Langford served as liaison to Federal
      and
      State elected officials. Mr. Langford has over thirty-five years experience
      in
      senior management positions with AT&T, Inc., Norton Simon, Inc. and other
      telecommunications entities. Mr. Langford is a past president and past Chief
      Executive Officer of Olympic International, Inc. This company is an
      international broker and manufacturing network of raw materials to third world
      countries.





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 June 21, 2005, William Wooldridge was 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. TheAudit Committee held two meetings in
      2005.
      On October 14, 2005, Mr. S. Robert Grass was elected to the Compensation
      Committee. There was one meeting of the Compensation Committee in
      2005.





The
      Board
      of Directors held seven meetings in 2005, 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 2005.





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,
      2005.









14





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, 2005
      exceeded $100,000.




Annual
                Compensation
            
            Long-Term
                CompensationOther
                Annual
            
            SecuritiesName
                and Principal Position
            
            
            Year
            
            
            Salary
            
            
            Compensation
            
            
            Underlying
                OptionsDr.
                David Dalton
            
            
            2004
            
            $
            396,000(1
            )
            
            -
            
            
            0
                (1
            )Chief
                Executive Officer andPresident2005
            
            $
            435,600(2
            )
            
            -
            
            
            0
                (2
            )





(1)
      )
      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.





(2)
      During 2005, Dr. David Dalton earned a salary of $435,600, 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 $435,600 for 2005, 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, 2005.





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










15





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, 2005, 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, 2005, and
      the
      aggregate dollar value of in-the-money, unexercised options, held at December
      31, 2005. The value of the unexercised, in-the-money options at December 31,
      2005, is the difference between their exercise or base price, and the fair
      market value of the underlying Common Stock on December 31, 2005. The closing
      bid price of the Common Stock on December 31, 2005 was $0.02.




Shares
                Acquired Upon
            Number
                of Securities
            In-The-MoneyExercise
                of Options
            Underlying
                Unexercised
            Options
                atDuring
                Fiscal 2005
            Options
                at December 31, 2005
            December
                31, 2005Name
            Number
            Value
                Realized
            Exercisable
            Unexercisable
            Exercisable
            UnexercisableDr.
                David Dalton
            None
            None
            3,083,342
            416,658
            $
                -
            $
                -





Certain
      Transactions





At
      December 31, 2005, the following Deferred Payroll was payable to


executive
      officers and other employees:




David
                Dalton, Chief Executive Officer and President
            
            $
            1.291,600Raphael
                Langford, Chief Operating Officer
            
            
            205,169Michael
                Lesisko, Secretary - Treasurer
            
            
            181,4421,678,211Other
                employees
            
            
            200,272$
            1,878,483




At
      December 31, 2005, notes payable to companies owned by David Dalton, President,
      amounted to $815,510. These loans are the result of providing working capital
      to
      the Company.





At
      December 31, 2005, 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 $208,300. 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
      January 20, 2005, the Series E preferred stockholder exchanged 30 preferred
      shares plus $2,187 accrued dividends for 804,688 shares of Common Stock at
      $0.040 per share On April 6, 2005 this Series E preferred stockholder exchanged
      70 preferred shares plus $5,843 accrued dividends for 1,386,527 shares of Common
      Stock at $0.0547 per share





On
      January 7, 2005, two executive officers exchanged a combined $52,879 of accrued
      payroll for 698,893 common shares at $0.075 per share. On March 13, 2006 an
      executive officer exchanged $29,892 of accrued payroll for 250,000 common shares
      at $0.120 per share These exchanges were authorized by the Company's Board
      of
      Directors on August 5, 2003.





On
      June
      30, 2005, the Company's Chief Executive Officer exchanged $42,441 of employment
      Contract benefits for 1,286,082 common shares. On October 12, 2004, the Chief
      Executive Officer exchanged an additional $12,868 of employment contract
      benefits for 1,169,850 common shares. These exchanges were authorized by the
      Company's Board of Directors on August 5, 2003









16







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 December 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)
            24,816,320
                (5)
            40.82%
                (6)S.
                Robert Grass (4)
            1,065,951
                (9)
            1.83%
                (10)William
                Wooldridge (4)
            250,000
                (13)
            0.43%
                (14)Raphael
                Langford (4)
            3,366,667
                (7)
            5.73%
                (8)Michael
                Lesisko (4)
            2,640,668
                (11)
            4.49%
                (12)All
                directors and executiveofficers
                as a group (5 persons)
            32,139,606
                (3)(16)
            50.29%
                (17)Emerald
                Capital Partners LP
            6,000,000
            10.41%
                (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 December 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 57,634,282 shares
      of  Common
      Stock issued and outstanding on December 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, 10 E. Baltimore Street, Suite 1404, Baltimore,  Maryland
      21202.





(5)
      Includes 3,166,676 shares issuable upon exercise of presently
      exercisable  options.





(6)
      Calculated on the basis of 60,800,958 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 58,767,615 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 58,196,783 shares of Common Stock issued
      and  outstanding.





(11)
      Includes 1,166,667 shares issuable upon exercise of presently
      exercisable  options.





(12)
      Calculated on the basis of 58,800,949 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 57,884,282 shares of Common Stock issued
      and  outstanding.





(15)
      Calculated on the basis of 57,634,282 shares of Common Stock issued
      and  outstanding.









17




(16)
      Includes 6,279,177 shares issuable upon exercise of presently
      exercisable  options.





(17)
      Calculated on the basis of 57,634,282 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 from a
      commercial bank. As of December 31, 2005, 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, 2005 and 2004, Univec has borrowed an aggregate
      of
      $873,904 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 31,2005
      and
      2004, the aggregate balance outstanding was $815,510 and $578,800,
      respectively.





During
      2005, Pharmacy Services, Inc., a company owned by Dr. David Dalton, President
      and Chief Executive Officer, purchased $9,936,042 from PPSI's GPO. This
      transaction represented 99% of total revenue.





PPSI
      shares office space and other administrative expenses with affiliated companies
      owned by Dr. David Dalton, the Chief Executive Officer of Univec. These expenses
      have not been allocated between the companies, but PPSI's portion would be
      insignificant.





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





A
      Form
      8-K was filed on July 31, 2006, reporting the completion of a private placement
      of a $2,000,000 6% Note and Warrants Securities Purchase Agreement. The
      agreement allows the investor to purchase 10,000,000 common stock warrants
      for
      seven years at an exercise price of $0.02 each. The Note and Warrants were
      issued in reliance upon exemptions from registration pursuant to Section 4(2)
      of
      the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereto.
      Each of the Investors is an accredited investor as defined in Rule 501 of
      Regulation D under the Securities Act of 1933.





(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.









18





4.11
            (5)
                Registration Rights Agreement dated July 27, 1998, between theCompany'
                and selling security-holder.4.12
            (6)
                Registration Rights Agreement, dated February 8, 1999, between
                theCompany
                and the selling security-holder.4.13
            (6)
                Certificate of Designation of Series C Preferred Stock. 4.14(6)
                Formof
                Warrant Agreement dated February 8, 1999. between the Companyand
                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 theRegistrant
                and Joel Schoenfeld.10.5
            (9)
                Patent License Agreement dated August 16, 2000 by and between theCompany
                and Terumo Europe, NV.10.6
            (9)
                Manufacturing Agreement dated August 16, 2000, by and between
                theCompany
                and Terumo, N.V.10.7
            (9)
                Equipment Purchase Agreement dated August 16, 2000, by and
                betweenthe
                Company and Terumo Europe, N.V.10.10
            (9)
                Employment Agreement dated as of January 1, 2002, between theRegistrant
                and David L. Dalton.10.11
            Employment
                Agreement dated as of December 31, 2001, between theRegistrant
                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 of
                2002.32.2
            (10)
                Statement of the Chief Financial Officer pursuant to 18 U.S.C. Section1350,
                as adopted pursuant to Section 906 of the Sarbanes-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 to the Registrant's Form 8K filed February
      10,  2005.





(4)
      Incorporated by reference to the Registrant's Form 8K filed June 13,  2005.





(5)
      Incorporated by reference to the Registrant's Form 8K/A Amendment 2  filed
      January 11, 2006.





(6)
      Incorporated by reference from the Registrant's Registration  Statement
      on Form SB-2 (File No. 333-20187) declared effective on  April
      24,
      1997.




(7)
      Incorporated by reference from the Registrant's Periodic Quarterly  Report
      on
      Form 10-QSB for the fiscal quarter ended September 30,  2000.





(8)
      Incorporated by reference from the Registrant's Registration  Statement
      on Form S-3 (File No. 333-62261) declared effective  December
      11, 1999.





(9)
      Incorporated by reference from Amendment No. 2 to the Registrant's  Registration
      Statement Form 10-S-3 (File 333-74199).





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





(11)
      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.





(12)
      Incorporated by reference to the Registrant's Annual Report on Form  10-KSB
      for the year ended December 31, 2000 (File No. 0-22413).





(13)
      Filed herewith.





(b)
      Reports on Form 8-K filed during the fourth quarter 2005.





No
      Forms
      8-K were filed during the fourth quarter 2005.









19




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, 2005 and 2004,
      respectively:





2005
            
            2004Audit
                fees
            
            $
            153,240
            
            $
            110,261Audit
                related fees
            
            
            -
            
            
            -Tax
                fees
            
            
            -
            
            
            18,750All
                other fees
            
            
            -
            
            
            -Total
            
            $
            153,240
            
            $
            129,011





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.





Dated: January
      3, 2007





UNIVEC,
      INC.





By: s/
      Dr.
      David Dalton


Dr.
      David
      Dalton


Chief
      Executive Officer


(Principal
      Executive Officer)




In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the Registrant in the capacities and on the
        dates
        indicated.


**UNIVEC,
                INC.**Date: 
                January 3, 2007
            By:
            /s/ Dr.
                David DaltonChief
                Executive Officer and a Director
              (Principal
                Executive Officer)





Date: 
                  January 3, 2007
            By:
            /s/ Michael
                LesiskoChief
                Financial Officer, Treasurer,
                Secretary





Date: 
                  January 3, 2007
            By:
            /s/ S.
                Robert GrassChairman
                and a Director





Date: 
                  January 3, 2007
            By:
            /s/ William
                WooldridgeDirector












20


UNIVEC,
      INC. AND SUBSIDIARIES


CONSOLIDATED
      FINANCIAL STATEMENTS


DECEMBER
      31, 2005 AND FOR THE TWO YEARS THEN ENDED





Index
      to
      Consolidated Financial Statements








PageReport
                of Independent Registered Public Accounting Firm
            F--2Consolidated
                Balance Sheet - December 31, 2005
            F--3Consolidated
                Statements of Operations - years endedDecember 31, 2005 and 2004
            F--4Consolidated
                Statements of Stockholders' Equity - yearsended December 31, 2005 and 2004
            F--5Consolidated
                Statements of Cash Flows - years endedDecember 31, 2005 and 2004
            F--6Notes
                to Consolidated Financial Statements
            F--7


















21


**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, 2005 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, 2005. 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, 2005 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, 2005 in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 2 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 2.  The consolidated financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.










Baltimore,
      Maryland     / s/
      Abrams, Foster, Nole & Williams, P.A


September
      8, 2006           Abrams, Foster,
      Nole & Williams, P.A.


Revised
      November 15, 2006








F-2





**Univec,
                Inc. and Subsidiaries****Consolidated
                Balance Sheet****December
                31, 2005**ASSETSCash
            
            $
            991Accounts
                receivable
            
            
            174,864Inventories
            
            
            193,325Total
                current assets
            
            
            369,180Fixed
                assets, net
            
            
            520,092Other
                assets
            
            
            64,638Total
                assets
            
            $
            953,910LIABILITIES
                AND STOCKHOLDERS' DEFICITAccounts
                payable and accrued expenses
            
            $
            1,598,524Deferred
                payroll
            
            
            1,878,483Notes
                and loans payable - current
            
            
            890,438Loans
                payable - officers/directors - current
            
            
            258,300Due
                to affiliated companies
            
            
            815,510Total
                current liabilities
            
            
            5,441,255Notes
                and loans payable - long-term
            
            
            318,183Loans
                payable - officers/directors - long term
            
            
            50,000Total
                liabilities
            
            
            5,809,438Commitments
                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:
                208,333 shares (aggregate liquidationvalue:
                $554,272)
            
            
            208Series
                E cumulative convertible preferred stock,$.001
                par value; authorized: 2,000 shares; issued andoutstanding:
                312 shares (aggregate liquidationvalue:
                $350,747)
            
            
            1Common
                stock $.001 par value; authorized: 75,000,000 shares;
            
            
            57,634issued:
                57,634,282 and outstanding: 57,230,128 sharesAdditional
                paid-in capital
            
            
            11,514,390Treasury
                stock, 404,154 shares - at cost
            
            
            (28,291
            )Accumulated
                deficit
            
            
            (16,399,470
            )Total
                stockholders' deficit
            
            
            (4,855,528
            )Total
                liabilities and stockholders' deficit
            
            $
            953,910See
                notes to consolidated financial statements.









F-3


**Univec,
      Inc. and Subsidiaries**


**Consolidated
      Statement of** **Operations**


**Years
      ended December 31, 2005 and 2004**


2005
            
            
            2004Revenues
                (Note 4)
            
            $
            81,398
            
            $
            327,827Cost
                of revenues
            
            
            (3,164
            )
            
            128,933Gross
                Margin
            
            
            84,562
            
            
            198,894Operating
                ExpensesMarketing
                and selling
            
            
            233,990
            
            
            123,400Product
                development
            
            
            3,802
            
            
            28,871General
                and administrative
            
            
            1,535,840
            
            
            1,772,2461,773,632
            
            
            1,924,517Loss
                from Operations
            
            
            (1,689,070
            )
            
            (1,725,623
            )Other
                Income (Expense)Interest
                expense, net
            
            
            (200,019
            )
            
            (108,092
            )Gain
                on extinguishments of debt
            
            
            -
            
            
            144,819Loss
                on write-off of goodwill
            
            
            -
            
            
            (1,774,119
            )Loss
                on sale of subsidiary
            
            
            -
            
            
            (597,056
            )Other
                income
            
            
            -
            
            
            47,795Total
                other expenses
            
            
            (200,019
            )
            
            (2,286,653
            )Loss
                from continuing operations
            
            
            (1,889,089
            )
            
            (4,012,276
            )Loss
                from discontinued operations
            
            
            -
            
            
            (8,260
            )Net
                loss
            
            
            (1,889,089
            )
            
            (4,020,536
            )Dividends
                attributable to preferred stock
            
            
            (34,844
            )
            
            (35,921
            )Loss
                attributable to common stockholders
            
            $
            (1,923,933
            )
            $
            (4,056,457
            )Share
                informationBasic
                net loss per common share
            
            $
            (0.04
            )
            $
            (0.11
            )Basic
                weighted average numberof
                common shares outstanding
            
            
            52,729,533
            
            
            38,510,467See
                notes to consolidated financial statements.






F-4


**Univec,
      Inc. and Subsidiaries**


**Consolidated
      Statement of Stockholders'** **Equity**


**Years
      ended December 31, 2005 and 2004**





Additional
            
            
            
            
            
            
            
            
            Prepaid
            
            
            
            
            
            TotalSeries
                D Preferred
            
            
            Series
                E Preferred
            
            
            Common
                Stock
            
            
            Paid-in
            
            
            Treasury
                Stock
            
            
            Consulting
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Shares
            
            
            Amount
            
            
            Services
            
            
            Deficit
            
            
            EquityBalance,
                January 1, 2004
            
            
            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 for:CashConsulting
                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
            )Sale
                of Series D
            
            
            83,333
            
            
            83
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            199,917
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            200,000Common
                stock issued for:Cash
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            350,000
            
            
            350
            
            
            34,650
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            35,000Consulting
                fees
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,500,000
            
            
            1,500
            
            
            43,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            45,000Deferred
                payroll and accruedexpenses
                - officers
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,640,882
            
            
            5,641
            
            
            185,189
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            190,830Loans
                payable - affiliates
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,333,333
            
            
            2,333
            
            
            67,667
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            70,000Loans
                payable - officers/directorsConvert
                Series E and dividends
            
            
            
            
            
            
            
            
            (100
            )
            
            
            
            
            2,191,215
            
            
            2,191
            
            
            5,840
            
            
            
            
            
            
            
            
            
            
            
            (8,031
            )
            
            0Amortization
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            210,000
            
            
            
            
            
            210,000Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,889,089
            )
            
            (1,889,089
            )Balance,
                December 31, 2005
            
            
            208,333
            
            $
            208
            
            
            312
            
            $
            1
            
            
            57,634,282
            
            $
            57,634
            
            $
            11,514,390
            
            $
            404,154
            
            
            ($28,291
            )
            $
            0
            
            
            ($16,399,470
            )
            
            ($4,855,528
            )








F-5




**Univec,
      Inc. and Subsidiaries**


**Consolidated
      Statement of** **Cash****Flows**


**Years
      ended December 31, 2005 and 2004**





2005
            
            
            2004Cash
                flows from operating activitiesNet
                loss
            
            $
            (1,889,089
            )
            $
            (4,020,536
            )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
            
            
            342,122
            
            
            189,008Write-off
                of equipment
            
            
            -
            
            
            57,295Valuation
                allowance for inventories
            
            
            -
            
            
            75,000Stock
                based compensation
            
            
            -
            
            
            4,000Loss
                on cancellation of capital lease
            
            
            -
            
            
            (2,894
            )Gain
                on extinguishment of debt
            
            
            -
            
            
            (98,547
            )Gain
                on receipt of marketable securities
            
            
            36,349
            
            
            (36,349
            )Other
            
            
            -
            
            
            (11,435
            )Changes
                in assets and liabilities, net ofeffects
                from sale of subsidiary -TWTAccounts
                receivable
            
            
            3,098,629
            
            
            (506,983
            )Inventories
            
            
            (13,447
            )
            
            17,698Other
                current assets and other assets
            
            
            45,431
            
            
            (3,320
            )Accounts
                payable and accrued expenses
            
            
            (2,629,243
            )
            
            713,610Deferred
                payroll
            
            
            689,766
            
            
            619,631Net
                cash used in operating activities
            
            
            (319,482
            )
            
            (747,984
            )Cash
                flows from investing activitiesPurchases
                of fixed assets
            
            
            (13,500
            )
            
            (397,068
            )(Increase)
                decrease in restricted cash
            
            
            340,407
            
            
            (340,407
            )Cash
                used in sale of subsidiary (net of notes andother
                payables of $103,600)
            
            
            -
            
            
            (5,670
            )Net
                cash used in investing activities
            
            
            326,907
            
            
            (743,145
            )Cash
                flows from financing activitiesProceeds
                from notes and loans payable,net
                of expenses of $80,146 in 2004
            
            
            -
            
            
            1,104,343Increase
                in due from affiliated companies
            
            
            306,710
            
            
            567,194Increase
                in loans payable - officers/directors
            
            
            55,000
            
            
            54,000Proceeds
                from sale of common stock
            
            
            35,000
            
            
            -Proceeds
                from sale of preferred stock
            
            
            50,000
            
            
            50,000Payments
                on notes and loans payable
            
            
            (482,587
            )
            
            (242,386
            )Payments
                of capitalized lease obligations
            
            
            -
            
            
            (21,232
            )Dividends
                converted to preferred stock
            
            
            -
            
            
            (3,168
            )Net
                cash provided by financing activities
            
            
            (35,877
            )
            
            1,508,751Net
                increase (decrease) in cash
            
            
            (28,452
            )
            
            17,622Cash,
                beginning of period
            
            
            29,443
            
            
            11,821Cash,
                end of period
            
            $
            991
            
            $
            29,443Supplemental
                disclosure of cash flow informationCash
                paid for interest
            
            $
            87,667
            
            $
            48,709Supplemental
                disclosures of noncash activityCommon
                stock issued in payment ofloans
                payable - officers/directors
            
            $
            0
            
            $
            10,000Common
                stock and options issued in payment
            
            $
            262,837
            
            
            179,262of
                deferred payroll and accrued expensesConversions
                of Series E to common stock,including
                dividends
            
            $
            8,031
            
            $
            3,168Treasury
                stock received, net of options issued,on
                sale of subsidiary
            
            $
            0
            
            
            (125,462
            )See
                notes to consolidated financial statements.








F-6


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.
      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, 2005, the Company had
      negative working capital of $5,175,588 and stockholders' deficit of $4,959,041
      and had incurred net losses of $(1,842,602) and $(4,020,536) for the years
      ended
      December 31, 2005 and 2004, respectively. 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.





3.
      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, 2005, 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. Shipping expense was $2,396 and $5,312 for the years ended December
      31 2005 and 2004, respectively. The Company has included these immaterial
      shipping expenses in marketing and selling expenses on the consolidated
      statement of operations. This method is in accordance4 with Emerging Issues
      Task
      Force (EITF) Issue No. 00-10, paragraph 6 .




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 (GPO)service are recognized when the products are
      shipped.





The
      Company utilizes the net sales method of recognizing the amount of revenue
      from
      GPO product sales. This method is influenced by several factors as defined
      by
      EITF 99-19, which the Company’s market agreement has indicated to be in
      accordance with the net sales method, The suppliers maintain the general
      inventory risk until the point when the pharmaceutical drug is dispensed to
      the
      patient in compliance with the “just in time” inventory method.





The
      suppliers maintain the general inventory risk until the point when the
      pharmaceutical drug is dispensed to the patient in compliance with the “just in
      time” inventory method.





As
      a
      result of the different circumstances related to the Company’s manufacture,
      procurement, distribution and physician sampling programs diverse financial
      accounting methods are utilized to recognize revenues 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 the customers, GPO
      and
      physician sampling programs utilize the “net” method of revenue
      recognition.




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.








F-8





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 the years ended December 31, 2005 and 2004. 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.





Stock
      Based Compensation





Compensation
      cost for common stock, stock options, warrants, etc., issued to employees and
      non-employees is based on the fair value method. The corporate stock is publicly
      traded. In accordance with Statement of Financial Accounting Standards Board
      Statement Number 123, paragraph 47(d), the cost of such transactions are
      measured at the closing trade price of the common stock at the date of issue
      of
      the stock and stock options.





During
      the year ended December 31, 2005, 5,640,882 common shares valued at $190,830
      were exchanged for $82,771 of payroll expenses plus $108,059 of employee benefit
      costs and other employee expenses. During the year ended December 31, 2004,
      2,160,035 common shares valued at $175,262 were exchanged for $50,000 of payroll
      expenses plus $125,262 of employee benefit costs





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-9


New
      Accounting Pronouncements





Financial
      Accounting Standards Board (FASB) Statement # 123R, Stock Based Compensation,
      is
      effective for the year ended December 31, 2006. The interpretive response states
      that a registrant should evaluate each new accounting standard to SEC Staff
      Accounting Bulletin Topic 11:M - Question 2 directs the registrant to determine
      the appropriate disclosure in the given circumstances. Univec, Inc. intends
      to
      adopt Statement # 123R, Stock Based Compensation, for the year ended December
      31, 2006. This response also applies to the unaudited interim financial
      statements for the six months ended June 30, 2006.





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.




4.
      Concentrations





Cash


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




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.
      However, the Company remains as the primary credit obligor in these
      arrangements.










F-10





Purchases





During
      both 2005 and 2004, the Company purchased 99% of its pharmaceutical drugs for
      its group purchasing service (GPO) from one non-related vendor. The arrangement
      requires the Company to pay for the drugs within forty five days after the
      respective period month-end. As of December 31, 2005, accounts payable to that
      one vendor were 2% of total accounts payable.





5.
      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 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.




6.
      Inventories





Inventories
      consisted of the following:




Raw
                materials
            
            $
            158,499Work-in-process
            
            
            89,641Finished
                goods
            
            
            25,494273,634Less:
                allowance for valuation
            
            
            (125,000
            )$
            148,634





The
      Company provided a $0 and $75,000 valuation allowance in 2005  and
      2004,
      respectively.





7.
      Fixed
      Assets





Fixed
      assets consisted of the following:




Equipment
            
            $
            1,114,284Less:
                accumulated depreciation
            
            
            594,192$
            520,092




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 $116,093 and $128,901 in 2005 and 2004, respectively. For the
      year  ended
      December 31, 2005, fully depreciated assets were approximately
      $180,000.







F-11


8.
      Notes
      and Loans Payable





As
      of
      December 31, 2005, notes and loans payable consisted of:







Loan
                due to a shareholder through July, 2009,with interest at prime plus 2% (1)
            
            $
            500,000Loans
                payable to agencies for economicdevelopment payable at $4,615 per month untilJuly 2009, with interest at 4% per annum (1)
            
            
            97,321Loan
                payable to a vendor without specificpayment terms or interest (2)
            
            
            211,852Loan
                payable to a vendor without, specific interest
            
            
            135,000Loan
                payable to a vendor due April 30, 2007with interest at prime plus 2% per annum
            
            
            78,151Notes
                payable with interest at 8%
            
            
            85,000Notes
                payable with interest at 12%,per annum
            
            
            55,000Notes
                payable to a shareholder's trusts, with interestat 12%, per annum (2)
            
            
            27,000Other
            
            
            19,2971,208,621Less:
                Current portion of notes and loans payable
            
            
            890,438$
            318,183




(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 remaining equal monthly installments
      of $4,615 over five years, with interest at 4%, per annum. Proceeds were used
      to
      purchase equipment of $450,000, which together with certain other equipment
      of
      the Company, collateralize the borrowings. 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. 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, 2005, the interest rate was 9%, per annum. Financing expenses
      in
      connection with these borrowings were $80,146 and are being
      amortized


over
      the
      term of the borrowings.




(2)
      Subject to forgiveness upon the vendor's sale of shares of the
      Company’s  common
      stock.




9.
      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.





10.
      Loans
      Payable - Officer/Directors





As
      of
      December 31, 2005, 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)
            
            $
            200,000Notes
                payable to a directors
            
            
            108,300$
            308,300







F-12


(1)
      The
      same terms as an underlying borrowing from a bank and collateralized by certain
      equipment. As of December 31, 2005 the interest rate was 9%, per
      annum.





11.
      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, 2005, the Company had net operating loss carry forwards of
      approximately $14,950,000 available to reduce future taxable income expiring
      through 2025, which may be limited due to ownership changes.





For
      the
      years ended December 31, 2005 and 2004, the Company's deferred tax benefits
      (expenses) were as follows:





2005
            
            
            2004Net
                operating loss carry forwards
            
            $
            632,000
            
            $
            615,000Depreciation
            
            
            7,000
            
            
            191,000Goodwill
            
            
            (45,000
            )
            
            (19,000
            )Compensation
            
            
            230,000
            
            
            132,000Inventory
                and equipment valuationallowances
            
            
            -
            
            
            60,000Valuation
                allowance
            
            
            (824,000
            )
            
            (979,000
            )None
            
            
            None





As
      of
      December 31, 2005, the tax effects of the components of deferred tax assets
      and
      liabilities were as follows:





Deferred
                tax assetsNet
                operating loss carry forwards
            
            $
            6,000,000Compensation
            
            
            712,000Goodwill
            
            
            509,000Total
                deferred tax asset
            
            
            7,221,000Deferred
                tax liabilitiesDepreciation
            
            
            (91,000
            )Net
                deferred tax asset
            
            
            7,130,000Valuation
                allowance
            
            
            (7,130,000
            )None





As
      of
      December 31, 2005, realization of the Company's net deferred tax asset of
      approximately $7,130,000 was not considered more likely than not and,
      accordingly, a valuation allowance of $7,130,000 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.





2005
            
            
            2004Expected
                income tax benefit
            
            $
            (632,000
            )
            $
            (437,000
            )Change
                in valuation allowance arising in current year
            
            
            1,233,000
            
            
            1,164,000State
                income tax benefit, net of federal income tax effect
            
            
            (120,000
            )
            
            (107,000
            )Other
            
            
            (481,000
            )
            
            (620,000
            )None
            
            
            None









F-13


12.
      Commitments and Contingency





Lease





The
      Company was 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. This lease was terminated on February 6, 2006.





For
      2005
      and 2004, total rent expense was $72,000 and $78,000, 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, 2005 and 2004, the compensation was $435,600 and
      $396,000, respectively, which have been fully 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 2005)
      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.





13.
      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.




14.
      Stockholders' Equity





Common
      Stock





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 and benefits of
      $125,262.




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.





On
      April
      6, 2005, the Company issued 1,386,527 common shares to a preferred stockholder
      in exchange for 70 shares of Series E preferred stock and unpaid dividends
      worth
      an aggregate of $5,843.





On
      June
      28, 2005, the Company issued 1,896,970 shares of common stock to two officers
      in
      exchange for operating expenses incurred by them but not previously
      paid.





On
      June
      29, 2005, the Company issued 1,500,000 shares of common stock to an independent
      marketing consultant in exchange for fees not paid of $45,000.





On
      June
      30, 2005, the Company issued 1,286,082 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $42,441.




On
      June
      30, 2005, the Company converted $70,000 of notes payable to an affiliate owned
      by an executive officer in exchange for 2,333,333 shares of common
      stock.





On
      October 10, 2005, the Company issued 1,169,850 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $12,868.








F-14





Preferred
      Stock




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.





During
      December 2004 and again during March, 2005 the Company sold 20,833 shares of
      Series D preferred stock to a customer for $50,000 for each respective group
      of20,833 shares. At December 31, 2005, another $150,000 is receivable from
      the
      shareholder  for
      Series D stock purchase commitments due under this agreement.





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
      2005
      and 2004, 100 and 80 shares, respectively of Series E were converted into
      2,191,215 and 1,790,431 shares of common stock at prices ranging from $.03
      to
      $.06, per share.





Holders
      of preferred shares have no voting rights.





As
      of
      December 31, 2005, cumulative dividends in arrears on preferred  stock
      were:




Series
                D
            
            $
            54,272Series
                E
            
            
            38,747$
            93,019





Non
      Plan
      Options





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
      the year ended December 31, 2005, the Company issued no options to purchase
      common stock of the Company





During
      2005 and 2004, options to purchase 802,236 and 4,850,000 shares, respectively,
      of common stock expired or were cancelled without being exercised.






F-15


Reserved
      Shares





As
      of
      December 31, 2005, the Company has reserved shares of common stock as
      follows:







Non-plan
                options and warrants
            
            
            7,446,862Options
                under the Plans
            
            
            685,000Series
                D conversions
            
            
            350,000Series
                E conversions(a)
            
            
            17,537,350Litigation
            
            
            250,00026,269,212





(a)
      assumes conversions as of December 31, 2005 at $.02, per share.





15.
      Stock
      Option Plans





The
      1996
      Stock Option Plan (96 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, independent
      contractors and consultants of the Company. The Plan includes options to
      purchase an addition 250,000 shares of common stock, reserved for an Industrial
      and Scientific Advisory Committee to be formed as necessitated by the
      Company.





The
      following table summarizes the activity of the Plans for 2005 and
      2004.





F-16





2005
            2004Weighted
            
            
            
            
            
            WeightedAverage
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            ExerciseShares
            
            
            Price
            
            
            Shares
            
            
            PriceOptions
                outstanding, beginning of year
            
            
            1,335,000
            
            $
            0.70
            
            
            1,335,000
            
            $
            0.70Granted
            
            
            None
            
            
            -
            
            
            None
            
            
            -Canceled,
                exercised, expired or exchanged
            
            
            (650,000
            )
            $
            0.675
            
            
            None
            
            
            -Options
                outstanding, end of year
            
            
            685,000
            
            $
            0.72
            
            
            1,335,000
            
            $
            0.70Options
                exercisable, end of year
            
            
            685,000
            
            $
            0.72
            
            
            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-17




The
      following table summarizes information about stock options
      outstanding  under
      the
      Plan at December 31, 2005:








WeightedAverage
            
            WeightedRemaining
            
            AverageRange
                of
            Outstanding
            Contractual
            Exercisable
            ExercisableExercise
                Prices
            Options
            Life
                (Years)
            Options
            Price$3.50
            65,000
            1.50
            65,000
            $3.50$2.00
            70,000
            2.00
            70,000
            $2.00$0.50
            100,000
            5.25
            100,000
            $0.50$0.24
            35,000
            7.00
            35,000
            $0.24$0.20
            60,000
            0.75
            60,000
            $0.20$0.15
            355,000
            4.50
            355,000
            $0.15$0.15
                to $3.50
            685,000
            2.70
            685,000
            $0.72







16.
      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.




17.
      Discontinued Operations




On
      August
      16, 2004, in settlement of litigation, the Company sold TWT, a wholly-owned
      subsidiary, 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.




Expenses
      in connection with the sale were $87,307.






F-18




18
      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. During the
      year ended December 31, 2004. The Company determined the carrying value of
      goodwill has been fully impaired and wrote-off the carrying value of
      $1,774,119.





In
      accordance with Statement of Financial Accounting Standards No. 142 - Goodwill
      and Other Intangible Assets, paragraph 47(a) and 47(b), the Company determined
      that because the entire balance of this goodwill had ceased being of any
      economic value to the Company the entire carrying value of the asset was subject
      to write-off. The Company determined that this goodwill was providing no
      economic value and therefore in accordance with the provisions of Financial
      Accounting Standards No. 142, the entire economic value of the asset was
      written-off.





19.
      Subsequent Events


Common
      Stock





In
      February 2006, the Company issued an aggregate of 1,410,639 shares of common
      stock to an executive officer of the Company in exchange for accrued employment
      contract benefits of $29,842.





In
      July
      2006, the Company issued an aggregate of 3,264,669 shares of common stock to
      an
      executive officer of the Company in exchange for accrued employment contract
      benefits of $42,441.





On
      July
      31, 2006 the Company completed the private placement of a $2,000,000 6% Note
      Warrants Securities Purchase Agreement. The Agreement allows the investor to
      purchase 10,000,000 common stock warrants for seven years at an exercise price
      of $0.02 each. The Notes and Warrants were issued in reliance upon exemptions
      from regulation pursuant to section 4(2) of the Securities Act of 1933 and
      Regulation 506 of Regulation D promulgated thereto. Each of the Investors is
      an
      accredited investor as defined in Rule 501 of Regulation D under the Securities
      Act of 1933.





The
      initial closing was for financing of the principal amount of $700,000 for which
      callable secured convertible notes were issued. Under the securities purchase
      agreement, the principal amount of $600,000 is be received when the SB-2
      registration statement is filed with the SEC. The final amount of $700,000
      is to
      be received when the registration statement is declared effective. At both
      times, callable secured convertible notes will be issued for such amounts.
      The
      note is convertible into the Company’s common shares at the lowest three
      intra-day trading prices during the twenty trading days immediately prior to
      the
      conversion date as discounted by 40%. The investors in the financing shall
      not
      be entitled to convert the promissory note if such conversion would result
      in
      any investor solely owning more than 4.99% of the outstanding common shares
      of
      the Company





The
      Notes
      carry an interest rate of 6% per annum and a maturity date of July 31, 2009.
      The
      notes are convertible into our common shares at the Applicable Percentage of
      the
      average of the lowest three (3) trading prices for our shares of common stock
      during the twenty (20) trading day period prior to conversion. The “Applicable
      Percentage” means 50%; provided, however, that the Applicable Percentage shall
      be increased to (i) 55% in the event that a Registration Statement is filed
      within thirty days of the closing and (ii) 60% in the event that the
      Registration Statement becomes effective within one hundred and twenty days
      from
      the Closing.





At
      our
      option, we may prepay the Notes in the event that no event of default exists,
      there are a sufficient number of shares available for conversion of the Notes
      and the market price is at or below $.25 per share. In addition, in the event
      that the average daily price of the common stock, as reported by the reporting
      service, for each day of the month ending on any determination date is below
      $.25, we may prepay a portion of the outstanding principal amount of the Notes
      equal to 101% of the principal amount hereof divided by thirty-six (36) plus
      one
      month’s interest. Exercise of this option will stay all conversions for the
      following month. The full principal amount of the Notes is due upon default
      under the terms of Notes. In addition, the Company has granted the investors
      a
      security interest in substantially all of its assets and intellectual property
      as well as registration rights.





The
      Investors have contractually agreed to restrict their ability to convert the
      Notes and exercise the Warrants and receive shares of the Company's common
      stock
      such that the number of shares of the Company's common stock held by them and
      their affiliates after such conversion or exercise does not exceed 4.99% of
      the
      then issued and outstanding shares of the Company's common stock.










F-19








Based
      on
      this recent financing, we have also issued 10,000,000 warrants convertible
      into
      shares of the Company’s common stock. Each warrant entitles the holder to one
      share of common stock. The exercise price is $0.02 per share and is exercisable
      for seven years from the date of issuance. The warrants have a cashless exercise
      feature. For the 10,000,000 warrants issued on July 31, 2006, the expiration
      date is July 31, 2013.





The
      convertible notes and warrants (the “Securities”) were issued in reliance on the
      exemption from registration provided by Section 4(2) of the Securities Act.
      No
      commission was paid for the issuance of such Securities. The above issuance
      of
      Securities qualified for exemption under Section 4(2) of the Securities Act
      since the issuance of such shares by the Company did not involve a public
      offering. The holders of these Securities were each accredited.





None
      of
      the Securities has been converted to common stock as yet. The Securities have
      been recoded as convertible debt payable by the Company.








As
      defined by EITF 00-19, paragraph 12 to 32, because the Contracts include a
      provision that could require net-cash settlement then the contracts cannot
      be
      accounted for as equity of the Company (that is liability classification is
      required for such contracts). Further, the Company has concluded that this
      obligation qualifies as conventional convertible debt.





As
      provided by SFAS No. 133 and EITF Issue 11-19, because the warrants are not
      a
      hedging instrument, the gain or loss resulting from changes in the fair value
      of
      the instrument are to be recognized in earnings of the period of the change
      in
      value.





Because
      the Callable Convertible Secured Notes and warrants were not issued until July
      31, 2006, their value has not been included in the financial statements of
      the
      Company at June 30, 2006





Subsequent
      to December 31, 2005, the Company borrowed an additional **$** 4,208
      from the  affiliated
      companies.







F-20







20.
                Selected Quarterly Financial Data - 2005 (Unaudited)Univec,
                Inc. and SubsidiariesBalance
                SheetsDecember
                31, 2005
            
            
            September
                30, 2005
            
            
            June
                30, 2005
            
            
            March
                31, 2005(AsRestated)
            
            
            (AsRestated)
            
            
            (AsRestated)
            
            
            (AsRestated)AssetsCash
            
            $
            991
            
            $
            3,301
            
            $
            2,970
            
            $
            10,079Accounts
                receivable
            
            
            174,864
            
            
            970,529
            
            
            3,066,601
            
            
            2,956,590Inventories
            
            
            193,325
            
            
            179,877
            
            
            179,878
            
            
            179,878Certificates
                of Deposit -Restricted
            
            
            
            
            
            348,949
            
            
            340,407
            
            
            340,407Other
                current assets
            
            
            
            
            
            
            
            
            
            
            
            5,967Total
                current assets
            
            
            369,180
            
            
            1,502,656
            
            
            3,589,856
            
            
            3,492,921Fixed
                assets - net
            
            
            520,092
            
            
            542,031
            
            
            578,139
            
            
            606,185Other
                assets
            
            
            64,638
            
            
            67,310
            
            
            70,117
            
            
            75,461Total
                assets
            
            $
            953,910
            
            $
            2,111,997
            
            $
            4,238,112
            
            $
            4,174,567Liabilities
                and Stockholders DeficitAccounts
                payable &accrued
                expenses
            
            $
            1,598,524
            
            $
            2,310,356
            
            $
            4,279,589
            
            $
            4,180,057Deferred
                payroll
            
            
            1,878,483
            
            
            1,711,081
            
            
            1,535,309
            
            
            1,354,639Notes
                and loans pay-
                current
            
            
            890,438
            
            
            1,334,446
            
            
            1,337,946
            
            
            1,417,199Loans
                payable -officers/directors
            
            
            258,300
            
            
            265,493
            
            
            260,493
            
            
            260,493Due
                to affiliatedcompanies
            
            
            815,510
            
            
            752,360
            
            
            684,175
            
            
            685,225Total
                current liabilities
            
            
            5,441,255
            
            
            6,373,736
            
            
            8,097,512
            
            
            7,897,613Notes
                and loanspayable
                - long-term
            
            
            318,183
            
            
            216,332
            
            
            258,352
            
            
            211,152Loans
                payable -officers/directors
                long-term
            
            
            50,000Total
                liabilities
            
            
            5,809,438
            
            
            6,590,068
            
            
            8,355,864
            
            
            8,108,765










F-21








Stockholders’
                deficitPreferred
                stock - D
            
            
            208
            
            
            146
            
            
            146
            
            
            146Preferred
                stock - E
            
            
            1
            
            
            1
            
            
            1
            
            
            1Common
                stock
            
            
            57,634
            
            
            56,464
            
            
            56,465
            
            
            48,062Additional
                paid-incapital
            
            
            11,514,390
            
            
            11,352,754
            
            
            11,352,754
            
            
            11,135,273Treasury
                stock
            
            
            (28,291
            )
            
            (28,291
            )
            
            (28,291
            )
            
            (28,291
            )Stock
                subscription
            
            
            
            
            
            (30,000
            )
            
            (90,000
            )
            
            (150,000
            )Accumulated
                deficit
            
            
            (16,399,470
            )
            
            (15,829,145
            )
            
            (15,408,827
            )
            
            (14,939,389
            )Total
                stockholders'deficit
            
            
            (4,855,528
            )
            
            (4,478,071
            )
            
            (4,117,752
            )
            
            (3,934,198
            )Total
                liabilities andstockholders
                deficit
            
            $
            953,910
            
            $
            2,111,997
            
            $
            4,238,112
            
            $
            4,174,567










F-22








20.
                Selected Quarterly Financial Data - 2004 (Unaudited)Univec,
                Inc. and SubsidiariesBalance
                SheetsDecember
                31, 2004
            
            
            September
                30, 2004
            
            
            June
                30, 2004
            
            
            March
                31, 2004(AsRestated)
            
            
            (AsRestated)
            
            
            (AsRestated)
            
            
            (AsRestated)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
            
            
            295,248Certificates
                of Deposit -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-23





20. Selected
                Quarterly Financial Data - 2005 (Unaudited)Univec,
                Inc. and SubsidiariesStatements
                of OperationsYear
                ended
            
            
            Three
                months ended
            
            
            Nine
                months ended
            
            
            Three
                months ended
            
            
            Six
                months ended
            
            
            Three
                months ended
            
            
            Three
                months endedDec.
                31, 2005
            
            
            Dec.
                31, 2005
            
            
            Sept.
                30, 2005
            
            
            Sept.
                30, 2005
            
            
            June
                30, 2005
            
            
            June
                30, 2005
            
            
            March
                31, 2005(As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)Revenues
            
            $
            81,398
            
            $
            3,014
            
            $
            78,384
            
            
            ($6,683
            )
            $
            85,067
            
            $
            45,056
            
            $
            40,011Cost
                of revenues
            
            
            3,164
            
            
            9,176
            
            
            (6,012
            )
            
            17,135
            
            
            (23,147
            )
            
            (8,201
            )
            
            (14,946
            )Gross
                margin
            
            
            84,562
            
            
            12,190
            
            
            72,372
            
            
            10,452
            
            
            61,920
            
            
            36,855
            
            
            25,065Operating
                expensesMarketing
                and selling
            
            
            (233,990
            )
            
            (1,015
            )
            
            (232,975
            )
            
            (74,897
            )
            
            (158,078
            )
            
            (65,988
            )
            
            (92,090
            )Product
                development
            
            
            (3,802
            )
            
            (3,154
            )
            
            (648
            )
            
            0
            
            
            (648
            )
            
            (648
            )General
                & administrative
            
            
            (1,535,840
            )
            
            (524,333
            )
            
            (1,011,507
            )
            
            (283,161
            )
            
            (728,346
            )
            
            (389,941
            )
            
            (338,405
            )Total
                operating expenses.
            
            
            (1,773,632
            )
            
            (528,502
            )
            
            (1,245,130
            )
            
            (358,058
            )
            
            (887,072
            )
            
            (456,577
            )
            
            (430,495
            )Loss
                from operations
            
            
            (1,689,070
            )
            
            (516,312
            )
            
            (1,172,758
            )
            
            (347,606
            )
            
            (825,152
            )
            
            (419,722
            )
            
            (405,430
            )Other
                income (expense)Interest
                expense, net
            
            
            (200,019
            )
            
            (54,012
            )
            
            (146,007
            )
            
            (72,712
            )
            
            (73,295
            )
            
            (43,874
            )
            
            (29,421
            )Total
                other income(expense)
            
            
            (200,019
            )
            
            (54,012
            )
            
            (146,007
            )
            
            (72,712
            )
            
            (73,295
            )
            
            (43,874
            )
            
            (29,421
            )Net
                loss
            
            
            (1,889,089
            )
            
            (570,324
            )
            
            (1,318,765
            )
            
            (420,318
            )
            
            (898,447
            )
            
            (463,596
            )
            
            (434,851
            )Dividends
                attributable topreferred
                stock
            
            
            (34,844
            )
            
            (9,704
            )
            
            (26,631
            )
            
            (8,213
            )
            
            (18,418
            )
            
            (8,213
            )
            
            (10,205
            )Loss
                attributable tocommon
                stockholders
            
            
            ($1,923,933
            )
            
            ($502,810
            )
            
            ($1,345,396
            )
            
            ($428,531
            )
            
            ($916,865
            )
            
            ($471,809
            )
            
            ($445,056
            )





Basic
                net loss per share
            
            
            ($0.04
            )
            
            ($0.01
            )
            
            ($0.03
            )
            
            ($0.01
            )
            
            ($0.02
            )
            
            ($0.01
            )
            
            ($0.01
            )Basic
                weighted averagenumber
                commonshares
                outstanding
            
            
            52,729,533
            
            
            57,634,282
            
            
            50,999,828
            
            
            56,464,432
            
            
            48,222,239
            
            
            49,500,728
            
            
            47,330,653














F-24






20. Selected
                Quarterly Financial Data - 2004 (Unaudited)Univec,
                Inc. and SubsidiariesStatements
                of OperationsYear
                ended
            
            
            Three
                months ended
            
            
            Nine
                months ended
            
            
            Three
                months ended
            
            
            Six
                months ended
            
            
            Three
                months ended
            
            
            Three
                months endedDec.
                31, 2004
            
            
            Dec.
                31, 2004
            
            
            Sept.
                30, 2004
            
            
            Sept.
                30, 2004
            
            
            June
                30, 2004
            
            
            June
                30, 2004
            
            
            March
                31, 2004(As
                Restated
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)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
            )
            
            (15,436
            )Gross
                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 of goodwill
            
            
            (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 extinguishment of debt
            
            
            144,819
            
            
            64,225
            
            
            80,594
            
            
            40,554
            
            
            40,400
            
            
            
            
            
            40,400Other
                income (expense)
            
            
            47,795
            
            
            47,795Total
                other income (expense)
            
            
            84,522
            
            
            88,732
            
            
            (4,210
            )
            
            2,130
            
            
            (6,340
            )
            
            (32,003
            )
            
            25,663Loss
                from continuing operations
            
            
            (3,415,220
            )
            
            (2,192,284
            )
            
            (1,222,934
            )
            
            (337,459
            )
            
            (885,475
            )
            
            (392369
            )
            
            (493,106
            )








F-25





Loss
                from discontinued operationsDiscontinued
                operating losses
            
            
            (8,260
            )
            
            
            
            
            (8,260
            )
            
            (8,260
            )Loss
                on sale of subsidiary
            
            
            (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
                distributable topreferred
                stock
            
            
            (35,921
            )
            
            (8,721
            )
            
            (27,200
            )
            
            (8,650
            )
            
            (18,550
            )
            
            (9,275
            )
            
            (9,275
            )Loss
                attributable to commonstockholders
            
            
            ($4,056,457
            )
            
            ($2,317,007
            )
            
            ($1,739,450
            )
            
            ($835,425
            )
            
            ($904,025
            )
            
            ($401,644
            )
            
            ($502,371
            )








Basic
                net loss per share
            
            
            ($0.11
            )
            
            ($0.06
            )
            
            ($0.05
            )
            
            ($0.02
            )
            
            ($0.02
            )
            
            ($0.01
            )
            
            ($0.01
            )Basic
                weighted average numbercommon
                sharesoutstanding
            
            
            38,510,467
            
            
            39,393,090
            
            
            37,394,433
            
            
            38,244,097
            
            
            36,952559
            
            
            37871795
            
            
            35,331,157









F-26








20. Selected
                Quarterly Financial Data - 2005 (Unaudited)Univec,
                Inc. and SubsidiariesStatement
                of Cash FlowYear
                Ended
            
            
            Nine
                Months Ended
            
            
            Six
                MonthsEnded
            
            
            Three
                Months EndedDecember
                31, 2005
            
            
            September
                30, 2005
            
            
            June
                30, 2005
            
            
            March
                30, 2005(As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)
            
            
            (As
                Restated)Cash
                flows from operating activitiesNet
                loss
            
            
            ($1,889,089
            )
            
            ($1,318,765
            )
            
            ($898,447
            )
            
            ($434,851
            )Adjustments
                to reconcile net loss to net cashused
                in operating activitiesDepreciation
                and amortization
            
            
            342,122
            
            
            286,312
            
            
            187,397
            
            
            94,007Stock
                based compensation
            
            
            167,198
            
            
            167,198
            
            
            167,198Gain
                on receipt of marketable securities
            
            
            36,349
            
            
            36,349
            
            
            36,349
            
            
            36,349Changes
                in assets and liabilities, netAccounts
                receivable
            
            
            3,098,629
            
            
            2,152,963
            
            
            56,891
            
            
            166,902Inventories
            
            
            (13,447
            )Other
                current assets and other assets
            
            
            45,431
            
            
            46,630
            
            
            46,630
            
            
            40,663Accounts
                payable and accrued expenses
            
            
            (2,629,243
            )
            
            (2,097,474
            )
            
            (128,241
            )
            
            (210,617
            )Deferred
                payroll
            
            
            522,068
            
            
            522,364
            
            
            346,592
            
            
            165,922Net
                cash used in operating activities
            
            
            (319,982
            )
            
            (204,423
            )
            
            (185,631
            )
            
            (141,625
            )Cash
                flows from investing activitiesPurchases
                of fixed assets
            
            
            (13,500
            )
            
            (13,500
            )
            
            (13,500
            )
            
            (13,500
            )(Increase)
                decrease in restricted cash
            
            
            340,407
            
            
            (8,542
            )Net
                cash used in investing activities
            
            
            326,907
            
            
            (22,042
            )
            
            (13,500
            )
            
            (13,500
            )Cash
                flows from financing activitiesIncrease
                in due to affiliated companies
            
            
            306,710
            
            
            243,560
            
            
            175,375
            
            
            106,423Increase
                in loans payable - officers/directors
            
            
            55,000
            
            
            55,000
            
            
            50,000Proceeds
                from sale of stock
            
            
            85,000
            
            
            85,000
            
            
            85,000
            
            
            85,000Payments
                on notes and loans payable
            
            
            (482,587
            )
            
            (183,237
            )
            
            (137,717
            )
            
            (55,662
            )Net
                cash provided by financing activities
            
            
            (35,877
            )
            
            200,323
            
            
            172,658
            
            
            135,761Net
                increase (decrease) in cash
            
            
            (28,952
            )
            
            (26,142
            )
            
            (26,473
            )
            
            (19,364
            )Cash,
                beginning of period
            
            
            29,443
            
            
            29,443
            
            
            29,443
            
            
            29,443Cash,
                end of period
            
            $
            491
            
            $
            3,301
            
            $
            2,970
            
            $
            10,079






F-27


20. Selected
        Quarterly Financial Data - 2005 (Unaudited)




Univec,
                  Inc. and SubsidiariesStatement
                  of Cash FlowYear
                  Ended
              
              Nine
                  Months Ended
              
              Six
                  Months Ended
              
              Three
                  Months EndedDecember
                  31, 2004
              
              September
                  30, 2004
              
              June
                  30, 2004
              
              March
                  30, 2004(As
                  Restated)
              
              (As
                  Restated)
              
              (As
                  Restated)
              
              (As
                  Restated)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
                  equipment
              
              
              57,295Valuation
                  allowance for inventories
              
              
              75,000Stock
                  based compensation
              
              
              4,000(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, netAccounts
                  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 expense
              
              
              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)
              
              
              (397,068
              )
              
              (397,068
              )(Increase)
                  in restricted cash
              
              
              (340,407
              )
              
              (335,000
              )
              
              (335,000
              )Cash
                  used in sale of subsidiary (net)
              
              
              (5,670
              )
              
              (92,977
              )Net
                  cash used in investing activities
              
              
              (743,145
              )
              
              (825,045
              )
              
              (335,000
              )
              
              0




F-28





Cash
                flows from financing activitiesProceeds
                from loans payable (net)
            
            
            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 capital lease obligations
            
            
            (21,232
            )Dividends
                converted to preferred stock
            
            
            (3,168
            )Net
                cash provided by financing activity
            
            
            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






The
      year
      ended December 31, 2005 and 2004, including all quarterly periods within those
      years, financial statements have been restated to properly reflect the revenues
      and related cost of revenues from its Group Purchasing Operation (GPO) and
      physician sampling programs. The Company has restated the revenue and cost
      of
      revenue from these activities to the “net” method of revenue recognition.
      Previously, the Company utilized the “gross” method of revenue recognition for
      such activities.





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 manufacturing and specialty pharmaceutical drug product sales 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.
      However, the Company rather than the supplier is the primary credit obligor
      in
      these arrangements.