**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




(Mark
      One)




**x**
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the fiscal year ended December 31, 2006**




**o**
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




**For
      the transition period from ___________ to ___________**




**Commission
      file number** **000-15893**




**UNIVEC,
      INC.**


(Exact
      name of registrant as specified 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,
                Maryland**
            **21202**(Address
                of principal executive offices)
            (Zip
                Code)Registrant’s
                telephone number, including area code:
            **(410)
                347-9959**





Securities
                registered under Section 12(b) of the Exchange Act:Title
                of each class
            Name
                of each exchange on which registered**None**
            **None**Securities
                registered under Section 12(g) of the Exchange Act:**Common
                Stock, par value $.0001**(Title
                of class)




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x  No o




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





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





State
      issuer’s revenues for its most recent fiscal year. $21,457


Aggregate
      market value of the voting and non-voting common stock held by non-affiliates
      of
      the Company as of December 31, 2006: $634,444.




Number
      of
      shares of the registrant’s Common Stock outstanding as of May 14, 2007:
      63,444,360





**TABLE
      OF CONTENTS**








**Part
                I**Item
                1.
            Description
                of Business.
            1Item
                2.
            Description
                of Property.
            10Item
                3.
            Legal
                Proceedings.
            11Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            11**Part
                II**Item
                5.
            Market
                for Common Equity and Related Stockholder Matters.
            11Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operations.
            12Item
                7.
            Financial
                Statements.
            FItem
                8.
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure.
            15Item
                8A.
            Controls
                and Procedures.
            15Item
                8B.
            Other
                Information.
            15**Part
                III**Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act.
            15Item
                10.
            Executive
                Compensation.
            18Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.
            19Item
                12.
            Certain
                Relationships and Related Transactions.
            21Item
                13.
            Exhibits.
            22Item
                14.
            Principal
                Accountant Fees and Services.
            24**Signatures**
            
            25








*Except
      as otherwise required by the context, all references in this prospectus to
      "we",
      "us”, "our", “UNVC”, or "Company" refer to the consolidated operations of
      Univec, Inc., a Delaware corporation, and its wholly owned
      subsidiaries.*




**Forward-Looking
      Statements and Associated Risks**






*The
      Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
      certain forward-looking statements. Some of the statements contained in this
      annual report of the Company discuss future expectations, contain
      projections of our operations or financial condition or state other
      forward-looking information. Some statements contained in this annual report
      on
      Form 10-KSB that are not historical facts (including without limitation
      statements to the effect that we "believe," "expect," "anticipate," "plan,"
      "intend," "foresee," or other similar expressions) and are forward-looking
      statements. These forward-looking statements are based on our current
      expectations and beliefs concerning future developments and their potential
      effects on us. There can be no assurance that future developments affecting
      us
      will be those anticipated by us. All comments concerning our expectations for
      future revenue and operating results are based on our forecasts of our plan
      of
      operation and do not include the potential impact of any future acquisitions
      or
      operations. These forward-looking statements involve significant risks and
      uncertainties (some of which are beyond our control) and assumptions. Should
      one
      or more of these risks or uncertainties materialize, or should any of our
      assumptions prove incorrect, actual results may vary in material respects from
      those projected in the forward-looking statements.*




**PART
      I**


**Item
      1.** Description
      of Business.





**Overview**





Univec,
      Inc. is an integrated licensing, manufacturing, and marketing company operating
      two divisions dedicated to providing safer health products to patients and
      caregivers worldwide. The Company’s Syringe Division develops, licenses and
      markets auto-disable and safety syringes worldwide. The Physician and
      Pharmaceutical Services Division assists pharmaceutical companies in marketing,
      fulfillment and tracking drug samples via an online system connecting pharmacies
      and managed payment providers. We are 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, we acquired 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.





During
      late 2004, we 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.


1





**Business
      Operations**





**Syringe
      Division**





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 its AD-Syringes in the
      United States.





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





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





In
      addition, Univec has developed a Bifurcated Needle Safety Syringe specifically
      designed to comply with the Federal Needlestick Safety and Prevention Act of
      the
      United States government. Univec has been granted 510(k)


clearance
      by the FDA. The device is intended for use in administering smallpox vaccines
      in
      response to potential bio-terrorist threats. The Needlestick Safety mandate
      requires all U.S. healthcare providers to evaluate and implement safer medical
      devices under their OSHA “Exposure Control Plans”. All healthcare providers must
      now adopt safer devices to protect workers and others from needles potentially
      contaminated with blood borne pathogens such as hepatitis B, hepatitis C, and
      HIV.





In
      general, this “safer device” rule applies in the normal course of operations, as
      well as in connection with any mass immunization program authorized by the
      federal government.





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





**Problems
      Associated With Traditional Disposable Syringes**





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


2





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





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





**Needlestick
      Prevention**





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





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





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




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





**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.






3





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.





**Physician
      and Pharmaceutical Services Division**





We
      market
      pharmaceutical company drug samples to physicians. Management believes that
      the
      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, which allows the
      patient to determine whether they can tolerate the medication under both
      physician and pharmacist oversight.




We
      believe that 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 what we believe is an easy,
      safe way to offer free samples through physicians and increase their value
      to
      patients who benefit through savings on prescriptions. In addition, we believe
      that 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 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. 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.






4





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





**Production**





Univec’s
      lcc locking syringes are being assembled by contract manufacturers in the United
      States, China and Portugal. The United States manufacturers also mold the
      Company’s proprietary syringe plungers. Univec owns stamping, assembly, and
      molding equipment at its U.S. contract manufacturers. After relocating our
      clip plunger assembly production facility designed to produce 1cc AD-Syringes
      from Farmingdale, New York to Baltimore, Maryland during July 2003, we recently
      ceased operating our production facility as we will rely more on contract
      manufacturers for production and assembly.





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.




**Competition** ****




Our
      principal competition for syringes is from traditional disposable syringes.
      Becton, Dickinson and Company, 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 us. To our
      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 our 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.





**Intellectual
      Property and Proprietary Rights**





Patents,
      trademarks and trade secrets are essential to the profitability of our products,
      and our company policy is to pursue intellectual property protection
      aggressively for all our products. We have patents for our syringe products.
      We
      have a total of 2 trademarks for our products. A summary of the patents and
      trademarks is provided in the following table:






5





**Trademarks**


1.
            
            **Mark:
                UNIVEC**Serial
                No. 74508244Registration
                No. 1947508Design
                Search Code:Goods
                and Services: Int’l Class 10 - sterilizers for dental drills; blood
                collection apparatus comprising needle tubing and multiple sample
                lure;
                hypodermic syringesFiling
                date: April 4, 19942.
            
            **Mark:
                UNIVEC**Serial
                No. 74508243Registration
                No. 2010527Goods
                and Services: Int’l Class 10 - sterilizers for dental drills; blood
                collection apparatus comprising needle tubing and multiple sample
                lure;
                hypodermic syringesFiling
                date: April 4, 1994





**United
      States Patents**


**Abstract**1.
              
              Patent No. 5,891,104
              Hypodermic
                  syringe having retractable needleDate issued: April 6, 1999
                
                Date expires: January 10, 2017
              An
                  economical hypodermic syringe is provided. A retractable needle
                  head is
                  provided to slide along longitudinal grooves in the barrel of the
                  syringe.
                  Notches in the grooves engage teeth provided on tabs of the needle
                  head,
                  and lock the needle head in a predetermined position. The tabs
                  are
                  resilient, and if squeezed against the resilient bias, will disengage
                  from
                  the notches in the grooves. In this way, the needle may be partially
                  or
                  fully withdrawn into the barrel. In addition or alternatively,
                  a needle
                  cover is included which is adapted to serve as the plunger of the
                  syringe.
                  The outer diameter of the needle cover is narrower than the inner
                  diameter
                  of both the barrel and an ampoule.**Abstract**2.
              
              Patent
                  No. 5,370,620
              Single
                  use hypodermic syringeDate issued: December 6, 1994
                
                Date expires: November 15, 2013
              A
                  non-reusable syringe is provided with an annular locking groove
                  having a
                  seat proximal to the rear end of the barrel and a second annular
                  locking
                  groove with a second seat located near the proximal end of the
                  barrel. The
                  plunger for the non-reusable syringe is provided with a flexible
                  disc
                  preferably located directly behind the piston head so that when
                  the
                  plunger is inserted with the barrel, the disc can bend upwardly
                  when
                  sliding the plunger downwardly past the first seat of the annular
                  locking
                  groove and, yet, proximal relative movement of the plunger with
                  respect to
                  the barrel is precluded by the cooperation of the disc and the
                  locking
                  groove. When the plunger is fully pushd in the distal direction,
                  the disc,
                  again, can pass in one direction beyond the second locking groove
                  and its
                  seat and, yet, reciprocation or proximal movement of the plunger
                  with
                  respect to the barrel is precluded by the mechanical interaction
                  of the
                  disc with respect to the second locking groove and seat. In this
                  manner, a
                  non-reusable syringe is provided.






6




**Abstract**3.
              
              Patent
                  No. 5,562,623
              Single-use
                  syringe assembly including spring clip lock and plungerDate
                  issued: October 8, 1996
                
                Date
                  expires: April 25, 2014
              A
                  single-use syringe is provided with a rod-like plunger having a
                  plurality
                  of frusto-conical ratchet teeth. A radially resilient locking spring
                  clip
                  having a circumferential opening, dangles on the ratchet teeth
                  of the
                  plunger. The original location of the spring clip on the plunger
                  determines the maximum dosage which can be administered by the
                  syringe. In
                  use, a first withdrawal of the plunger allows medication to be
                  drawn into
                  the barrel of the syringe. The spring clip glides, by radial flexing,
                  over
                  the surface of the ratchet teeth during plunger withdrawal. The
                  spring
                  clip is maintained in relative position along the sidewall of the
                  barrel
                  by outwardly directed contact points which embed into the interior
                  sidewall of the barrel. During administration of the medication
                  previously
                  drawn into the barrel, the spring clip moves along with the plunger
                  since
                  an interiorly directed camming tooth of the clip mechanically cooperates
                  with the base of a ratchet tooth of the plunger. The clip is thus
                  carried
                  along with the plunger during distal/dispensing movement. A second
                  use of
                  the syringe is blocked once the spring clip has been moved to its
                  full
                  distal position. The tensile strength of the plunger is less than
                  the
                  embedding force of the locking clip to the sidewall of the barrel
                  so that,
                  after a full distal movement of the plunger, a second forced attempt
                  of
                  proximal movement will break the plunger.**Abstract**4.
              
              Patent
                  No. 5,531,691
              Single
                  use syringe assemblyDate
                  issued: July 2, 1996
                
                Date
                  expires: February 14, 2014
              A
                  single use syringe is provided having a rod-like plunger comprising
                  a
                  plurality of cylindrical ratchet teeth. A resilient locking spring
                  dangles
                  on the ratchet teeth of the plunger. The original location of the
                  locking
                  spring determines the maximum dosage which may be administered
                  by the
                  syringe. A first withdrawal of the plunger with respect to the
                  barrel
                  allows medication to be drawn into the barrel. The tab of the locking
                  spring resiliently cams over the surface of the ratchet teeth.
                  The locking
                  spring is maintained in position along the barrel by outwardly
                  directed
                  contact points which embed into the interior side wall of the barrel.
                  During administration of the medication, i.e., when the plunger
                  is
                  distally pushed with respect to the barrel, the locking spring
                  tab
                  cooperates with the base of the ratchet teeth and causes the spring
                  to
                  move along with the plunger. A second attempted withdrawal of the
                  plunger
                  is blocked once the locking spring has been moved to its full distal
                  position. The thumb engaging disk of the plunger can be bent and
                  broken
                  off to further prevent a second use of the syringe. The disk is
                  also
                  useful for inventory control. The thumb engaging disk and the proximal
                  end
                  of the barrel mechanically cooperate as a further locking mechanism
                  to
                  also prevent reusability.




We
      have
      also filed patent applications for our 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 earned
      from the licensing of these items.





We
      also
      license Patent Nos. 5498243, 5205825 and 2241893 for various technical pieces
      and components for medical syringes.


7





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, 2006, Univec has sold only an insignificant amount subject to
      royalties under this agreement.





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





In
      August
      2000, Univec entered into a licensing agreement providing for the non-exclusive,
      worldwide use of Univec patents for the manufacturing, use and marketing of
      its
      auto-disable syringes through the period any patents are still in effect,
      providing for royalties on sales and for the sale of equipment necessary to
      manufacture the product. In accordance with this agreement, Univec has earned
      royalties of $30,284 and $109,690 for the years ended December 31, 2004 and
      2003, respectively.





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.





**Products
      Liability**





Beginning
      with the design phase of product development, the Company has incorporated
      preventive measures aimed at reducing its potential exposure to liability risk.
      The Company’s product development and manufacturing program includes high
      product reliability standards meant to result in high mean times between
      failures (MTBF). The company plans to achieve a high MTBF factor by pursuing
      strict quality control procedures and by holding its manufacturing partners
      to
      such high standards by written contract. By designing and manufacturing a
      reliable, high quality product, the Company will minimize, but not eliminate,
      the possibility and occurrence of defective products.




The
      manufacturing and marketing of the Company’s products, incorporating new and
      unproved technology, has inherent risk. No one can be sure how each product
      will
      operate over time and under various conditions of actual use. Even if the
      products are successfully manufactured and marketed, the occurrence of warranty
      or product liability, or retraction of market acceptance due to product failure
      or failure of the product to meet expectations could prevent the Company from
      ever becoming profitable. Development of new technologies for manufacture is
      frequently subject to unforeseen expenses, difficulties and complications,
      and
      in some cases such development cannot be accomplished. In the opinion of
      management, the products, and services, as designed, has many positive
      attributes, but such attributes must be balanced against limited field operating
      experience and unknown technological changes.






8
 
  **Government
        Regulation**





**Medical
      Device Approval Process.** Medical
      devices are regulated by the Food and Drug Administration (“FDA”) according to
      their classification. The FDA classifies a medical device into one of three
      categories based on the device’s risk and what is known about the device. The
      three categories are as follows:




•
            
            Class
                I devices are generally lower risk products for which sufficient
                information exists establishing that general regulatory controls
                provide
                reasonable assurance of safety and effectiveness. Most class I devices
                are
                exempt from the requirement for pre-market notification under section
                510(k) of the Federal Food, Drug, and Cosmetic Act. FDA clearance
                of a
                pre-market notification is necessary prior to marketing a non-exempt
                class
                I device in the United States.




•
            
            Class
                II devices are devices for which general regulatory controls are
                insufficient to provide a reasonable assurance of safety and effectiveness
                and for which there is sufficient information to establish special
                controls, such as guidance documents or performance standards, to
                provide
                a reasonable assurance of safety and effectiveness. A 510(k) clearance
                is
                necessary prior to marketing a non-exempt class II device in the
                United
                States.




•
            
            Class
                III devices are devices for which there is insufficient information
                demonstrating that general and special controls will provide a reasonable
                assurance of safety and effectiveness and which are life-sustaining,
                life-supporting or implantable devices, or devices posing substantial
                risk. Unless a device is a preamendments device that is not subject
                to a
                regulation requiring a Premarket Approval (“PMA”), the FDA generally must
                approve a PMA prior to the marketing of a class III device in the
                United
                States.





Univec’s
      syringes are “Class-II” devices.





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.


9


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.





**Labeling
      and Advertising.** The
      nature of marketing claims that the FDA will permit us to make in the labeling
      and advertising of our medical devices will be limited to those specified in
      our
      FDA 510(k)s. Should be make claims exceeding those that are warranted, such
      claims will constitute a violation of the Federal Food, Drug, and Cosmetics
      Act.
      Violations of the Federal Food, Drug, and Cosmetics Act, Public Health Service
      Act, or regulatory requirements at any time during the product development
      process, approval process, or after approval may result in agency enforcement
      actions, including voluntary or mandatory recall, license suspension or
      revocation, 510(k) withdrawal, seizure of products, fines, injunctions and/or
      civil or criminal penalties. Any agency enforcement action could have a material
      adverse effect on us. The advertising of our products will also be subject
      to
      regulation by the Federal Trade Commission, under the FTC Act. The FTC Act
      prohibits unfair methods of competition and unfair or deceptive acts in or
      affecting commerce. Violations of the FTC Act, such as failure to have
      substantiation for product claims, would subject us to a variety of enforcement
      actions, including compulsory process, cease and desist orders, and injunctions.
      FTC enforcement can result in orders requiring, among other things, limits
      on
      advertising, corrective advertising, consumer redress, and restitution.
      Violations of FTC enforcement orders can result in substantial fines or other
      penalties.





**Foreign
      Regulation.** Outside
      the United States, our ability to market our products will also depend on
      receiving marketing authorizations from the appropriate regulatory authorities.
      The foreign regulatory approval process includes all of the risks associated
      with FDA procedures described above. The requirements governing the conduct
      of
      clinical trials and marketing authorization vary widely from country to country.




**Employees**





As
      of May
      14, 2007, the Company has three (3) employees, including two (2) full time
      sales
      and marketing and one (1) full time financial administrator.





As
      of May
      14, 2007, PPSI had no employees, but utilizes outside marketing representatives
      and consultants for marketing and administrative services.





**Item
      2.**  **Description
      of Property.**




We
      do not
      own real property. The Company’s corporate offices are located at 822 Guilford
      Avenue, Suite 208, Baltimore, Maryland 21202 for a minimal charge of
      approximately $75 per month.


10





We
      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 were automatically renewable by Univec. Rental
      expenses for the space were $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.**




Neither
      the Company nor any of its subsidiaries is a party to any pending or threatened
      legal proceedings.





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




There
      were no matters submitted to a vote of security holders in the fourth quarter
      of
      the fiscal year ended December 31, 2006.




**PART
      II**





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




**Market
      Information**





Our
      Common Stock is currently quoted on the OTCBB under the symbol “UNVC”. There is
      a limited trading market for our Common Stock. The following table sets forth
      the range of high and low bid quotations for each quarter within the last two
      fiscal years and the subsequent interim period. These quotations as reported
      by
      the OTCBB reflect inter-dealer prices without retail mark-up, mark-down, or
      commissions and may not necessarily represent actual transactions.





**Closing
                Bid****YEAR 2005**
            **High
                Bid**
            **Low
                Bid**1stQuarter Ended March 31
            $0.120
            $0.0802ndQuarter Ended June 30
            $0.110
            $0.0303rdQuarter Ended September 30
            $0.050
            $0.0204thQuarter Ended December 31
            $0.040
            $0.020**YEAR 2006**
            **High
                Bid**
            **Low
                Bid**1stQuarter Ended March 31
            $0.020
            $0.0202ndQuarter Ended June 30
            $0.021
            $0.0133rdQuarter Ended September 30
            $0.029
            $0.0124thQuarter Ended December 31
            $0.023
            $0.011**YEAR 2007**
            **High
                Bid**
            **Low
                Bid**1stQuarter Ended March 31
            $0.013
            $0.011Period Ended May 14
            $0.011
            $0.011





**Holders**




As
        of May 14, 2007 in
        accordance with our transfer agent records, we had 134 record holders of
        our
        Common Stock, holding 63,444,360 shares.


**Dividends**





Holders
      of our common stock are entitled to receive dividends if, as and when declared
      by the Board of Directors out of funds legally available therefore. We have
      never declared or paid any dividends on our common stock. We intend to retain
      any future earnings for use in the operation and expansion of our business.
      Consequently, we do not anticipate paying any cash dividends on our common
      stock
      to our stockholders for the foreseeable future.






11




**Recent
      Sales of Unregistered Securities**




During
        the fiscal year ended December 31, 2006, the Company issued an aggregate
        of
        5,810,078 shares of common stock to David Dalton in exchange for benefits
        not
        taken of $93,143.
 
 Except
        as previously
        disclosed in our quarterly reports on Form 10-QSB and current reports on
        Form
        8-K, we did not sell or issue any additional shares of stock during the fourth
        quarter of 2006.





**Equity
      Compensation Plan Information**





None.





**Item
      6.**  **Management’s
      Discussion and Analysis or Plan of Operations.**





*The
      following discussion should be read in conjunction with the Consolidated
      Financial Statements and Notes thereto appearing elsewhere in this Form 10-KSB.
      The following discussion contains forward-looking statements within the meaning
      of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
      Exchange Act of 1934 relating to future events or our future performance. Actual
      results may materially differ from those projected in the forward-looking
      statements as a result of certain risks and uncertainties set forth in this
      prospectus. Although management believes that the assumptions made and
      expectations reflected in the forward-looking statements are reasonable, there
      is no assurance that the underlying assumptions will, in fact, prove to be
      correct or that actual results will not be different from expectations expressed
      in this report.*





**Results
      of Operations**





***For
      the Fiscal Year Ended December 31, 2006 as Compared to the Fiscal Year Ended
      December 31, 2005***





Condensed
      Consolidated Results of Operations


2006
              
              2005
              
              ChangeRevenues
              
              $
              21,457
              
              $
              81,398
              
              
              (74
              %)
 
 Cost
                  of Revenues
              
              
              (32,344
              )
              
              (3,164
              
              
              (922
              %)
 
 Gross
                  Margin
              
              
              (10,887
              )
              
              84,562
              
              
              (113
              %)Expenses:Marketing
                  and SellingExpense
              
              
              92,893
              
              
              233,990
              
              
              (60
              %)Product
                  Development
              
              
              (2,578
              )
              
              3,802
              
              
              (168
              %)General
                  andAdministrative
              
              
              943,610
              
              
              1,535,840
              
              
              (39
              %)Interest
                  Expense, Net
              
              
              138,255
              
              
              200,019
              
              
              (31
              %)Other
                  Income
              
              
              -
              
              
              -
              
              
              -Total
                  Expenses
              
              
              1,172,180
              
              
              1,973,651
              
              
              (41
              %)Net
                  Loss
              
              $
              (1,183,067
              )
              $
              (1,889,089
              )
              
              37
              %




12





The
      Company has its focus on the marketing, production, development and distribution
      of its pharmaceutical and proprietary products and licensing of the technology
      of its insulin and tuberculin sliding sheath safety syringes.





Gross
      profit for the year ended December 31, 2006 decreased to (51%) from 104% in
      2005. 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 certain of our syringes. The GPO gross profit was 0.0% and
      0.4%
      for the years 2006 and 2005, 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 recent economic
      activities.





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 2006 decreased $141,097 (60%) from 2005. This decrease
      is
      attributable primarily to reductions in compensation and consulting
      costs.





Product
      development expense for 2006 decreased by $6,380 (168%) as compared to 2005.
      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, 2006 decreased
      $592,230 (39%) as compared to 2005. 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, 2006 increased by $61,764 (31%) as
      compared to 2005 primarily as a result of decreased debt outstanding during
      2006.





During
      the years ended December 31, 2006 and 2005, the Company experienced net losses
      which had been generated primarily due to substantial reductions in sales and
      gross profit.





The
      Company had a net loss of $1,183,067 for the fiscal year ended December 31,
      2006, as compared to a net loss of $1,889,089 for the year ended December 31,
      2005. The decreased loss of $706,022, or 37%, during 2006 was attributable
      to
      the reduced general and administrative, marketing and selling and interest
      expenses.





The
      December 31, 2006 net loss included $66,261 payroll and related expenses versus
      $787,447 for the year ended December 31, 2005. Insurance expense was $92,640
      during 2006 versus $153,969 during 2005. Professional fees for the year ended
      December 31, 2006 were $205,992 versus $385,093 incurred for the year ended
      December 31, 2005.




**Liquidity
      and Capital Resources**





The
      working capital deficit of $4,745,422 at December 31, 2006, decreased from
      a
      deficit of $5,116,766 at December 31, 2005. This reduction of the working
      capital deficit is primarily attributable to the Company’s year-end December 31,
      2006 $1,183,067 net loss. However, net decreases of $12,888 in accounts
      receivable and increases in deferred compensation of $58,608 were partially
      offset by $160,086 increases in accounts payable and accrued expenses and also
      by a $ 573,685 increase in total loans payable. All of these factors contributed
      to the overall decrease in the corporate working capital deficit.






13





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, 2006, the Company had
      negative working capital of $4,745,422 and a stockholders' deficit of $5,945,452
      and incurred net losses of $(1,183,067) and $(1,889,089) for the years ended
      December 31, 2006 and 2005, 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 $194 ,879 (61%) to
      ($574,361) for the year ended December 31, 2006 from 2005, primarily due to
      the
      continued net loss.




Net
      cash
      used for investing activities was $0 during the year ended December 31,
      2006.




Net
      cash
      provided by financing activities increased by $609,562 to $573,685 for the
      year
      ended December 31, 2006 from ($35,877) used during 2005. This increase in net
      cash provided by financing activities resulted primarily from increased
      aggregate borrowings of $694,562.





During
      the years ended December 31, 2006 and 2005, we suffered from a serious shortage
      of working capital, which resulted in the Company’s limited ability to market
      and sell its products.





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.




**New
      Accounting Pronouncements**





Management
      has demonstrated that any recently issued or not yet effective accounting
      pronouncements would have a material effect on the accompanying financial
      statements. Financial Accounting Standards Board Statement # 123R Stock Based
      Compensation has not proven to have a material effect on the Company’s financial
      statements.





**Major
      Customer - Certain Relationships and Related
      Transactions**





For
      the
      year ended December 31, 2006, our largest customer, Pharmacy Services, Inc.,
      a
      company owned and operated by Dr. David Dalton, our President and Chief
      Executive Officer, purchased goods and generated significant revenues from
      PPSI’s GPO. We intend to reduce our reliance on this customer through expanding
      sales to other parties.


14





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements, financings, or other relationships
      with
      unconsolidated entities or other persons, also known as “special purpose
      entities” (SPEs).





**Item
      7.**  **Financial
      Statements.**




Our
      financial statements begin on page F-1 below.





**Item
      8.**   **Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure.**




None.




**Item
      8A.  Controls and
      Procedures.**





**Evaluation
      of Disclosure Controls and Procedures**





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
      Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2006. Based
      on this evaluation, our principal executive officer and principal financial
      officer have concluded that our disclosure controls and procedures are effective
      to ensure that information required to be disclosed by us in the reports we
      file
      or submit under the Exchange Act is recorded, processed, summarized, and
      reported within the time periods specified in the Securities and Exchange
      Commission's rules and forms and that our disclosure and controls are designed
      to ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is accumulated and communicated to our
      management, including our principal executive officer and principal financial
      officer, or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure.





**Changes
      in Internal Controls**





There
      were no changes (including corrective actions with regard to significant
      deficiencies or material weaknesses) in our internal controls over financial
      reporting that occurred during the fiscal year ended December 31, 2006 that
      has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.





**Item
      8B.  Other
      Information.**




None.





**PART
      III**




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




The
      following table sets forth the name, age and position of each of our executive
      officers and directors as of May 14, 2007.


15





**Name**
            
            **Age**
            
            **Position**
            
            **Date
                Appointed Director**Dr. David Dalton
            
            58
            
            Chief
                Executive Officer, President and Director
            
            January
                1, 2002Raphael Langford
            
            62
            
            Chief
                Operating Officer and Executive Vice PresidentMichael
                Lesisko
            
            56
            
            Chief
                Financial Officer, Treasurer and SecretaryS.
                Robert Grass
            
            73
            
            Chairman
            
            March
                15, 2002William Wooldridge
            
            60
            
            Director
            
            August
                5, 2003





Set
      forth
      below is a brief description of the background and business experience of our
      executive officers and directors for the past five years (and, in some
      instances, for prior years).





***Dr. David
      Dalton*** has
      served as our President and Chief Executive Officer since 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 and
      our wholly-owned subsidiary. Dr. Dalton has been the President of PPSI
      since 1995. 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.
      Dr. Dalton graduated from West Virginia University in 1971 with a B.S. in
      Pharmacy.





***Raphael
      Langford*** has been
      Chief Operating Officer of the Company since April 2003 and is alos our
      Executive Vice President. 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.
      Mr. Langford attended Western Reserve University.





***Michael
      Lesisko*** ,
      a
      certified public accountant, has served as our Chief Financial Officer since
      September 9, 2002, and as our Treasurer and Secretary since
      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. Mr. Lesisko
      graduated from Pennsylvania State University in 1970 with a B.S. in Business.





***S.
      Robert Grass*** was
      elected as Director of Univec on March 15, 2002. 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. Mr. Grass graduated from the
      University of Pittsburgh in 1954 with a B.A. focusing on Business.





***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,


16


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.




**Term
      of Office**




Our
      directors are appointed for a one-year term to hold office until the next annual
      general meeting of our shareholders or until removed from office in accordance
      with our bylaws. Our officers are appointed by our board of directors and hold
      office until removed by the board.





**Audit
      Committee**





The
      Company has an audit committee charter. The audit committee: (i) appoints the
      Company's independent auditors and monitors the independence of the Company's
      independent auditors; (ii) reviews the Company's policies and procedures on
      maintaining its accounting records and the adequacy of its internal controls;
      (iii) reviews management's implementation of recommendations made by the
      independent auditors and internal auditors; (iv) considers and pre-approves
      the
      range of audit and non-audit services performed by independent auditors and
      fees
      for such services; and (v) reviews and votes on all transactions between the
      Company and any of its officers, directors or other affiliates.





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. On October 14, 2005, Mr. S. Robert
      Grass was elected to the Compensation Committee.





**Significant
      Employees**





None.





**Family
      Relationships**





No
      family
      relationships exist among our directors or executive officers.





**Involvement
      in Certain Legal Proceedings**




To
      our
      knowledge, during
      the past five years, none of our directors, executive officers, promoters,
      control persons, or nominees has been:




•
            the
                subject of any bankruptcy petition filed by or against any business
                of
                which such person was a general partner or executive officer either
                at the
                time of the bankruptcy or within two years prior to that time;





•
            convicted
                in a criminal proceeding or is subject to a pending criminal proceeding
                (excluding traffic violations and other minor offenses);





•
            subject
                to any order, judgment, or decree, not subsequently reversed, suspended
                or
                vacated, of any court of competent jurisdiction, permanently or
                temporarily enjoining, barring, suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking activities;
                or





•
            found
                by a court of competent jurisdiction (in a civil action), the Commission
                or the Commodity Futures Trading Commission to have violated a federal
                or
                state securities or commodities law.





17


**Compliance
      with Section 16(a) of the Exchange Act**




Section
      16(a) of the Securities Exchange Act of 1934 requires the Company's officers
      and
      directors, and persons who own more than 10 percent of a registered class of
      the
      Company's equity securities, to file reports of ownership and changes in
      ownership with the Securities and Exchange Commission (SEC). Officers,
      directors, and greater than 10 percent stockholders are required by SEC
      regulation to furnish the Company with copies of all Section 16(a) forms they
      file.




To
        the Company's
        knowledge, based solely on a review of the copies of such reports furnished
        to
        the Company, all reports under Section 16(a) required to be filed by its
        officers and directors and greater than ten percent beneficial owners were
        not
        timely filed as of the date of this filing.




**Item
      10.**  **Executive
      Compensation.**





**Compensation
      of Executive Officers**




The
      following summary compensation table sets forth in U.S. dollars all compensation
      awarded to, earned by, or paid to the named executive officers paid by us during
      the fiscal years ended December 31, 2006 and 2005 in all capacities for the
      accounts of our executives, including the Chief Executive Officer (CEO) and
      Chief Financial Officer (CFO):





**SUMMARY
      COMPENSATION TABLE**


**Name
                  and Principal Position**
              
              **Year**
              
              **Salary**
                **($)**
              
              
              **Bonus**
                **($)**
              
              **Stock
                  Awards**
                **($)**
              
              **Option
                  Awards**
                **($)**
              
              **Non-Equity
                  Incentive Plan Compensation**
                **($)**
              
              **Non-Qualified
                  Deferred Compensation Earnings**
                **($)**
              
              **All
                  Other Compensation**
                **($)**
              
              **Totals**
                **($)**Dr.
                  David Dalton,(1)
                  (5)
              
              2006
              
              39,930
              (4)
              
              0
              
              93,143
              
              0
              
              0
              
              0
              
              0
              
              133,073Chief
                  Executive Officer,
              
              2005
              
              435,600
              
              
              0
              
              84,881
              
              0
              
              0
              
              0
              
              0
              
              520,481PresidentRaphael
                  Langford,(2)
              
              2006
              
              13,333
              (4)
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              13,333Chief
                  Operating Officer,
              
              2005
              
              160,000
              
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              160,000Executive
                  Vice PresidentMichael
                  Lesisko,(3)
                  (6)
              
              2006
              
              12,500
              (4)
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              12,500Treasurer,
                  Chief Financial Officer
              
              2005
              
              150,000
              
              
              0
              
              6,303
              
              0
              
              0
              
              0
              
              0
              
              156,303




(1)
            All
                of Dr. Dalton’s salary for 2006 and 2005 has been deferred and unpaid
                until the Company becomes profitable. For each year of employment,
                pursuant to an employment agreement. Dr. Dalton’s employment contract also
                received provides for benefits of life, health and disability insurance,
                as well as an automobile lease and insurance allowance equal to $24,
                000
                per year.(2)
            All
                of Mr. Langford’s salary for 2006 and 2005 has been deferred and unpaid
                until the Company becomes profitable. For 2004, the Company paid
                to Mr.
                Langford a portion of his salary, $82,675, and deferred the balance
                of
                $57,325, which will not be paid until the Company becomes profitable.(3)
            All
                of Mr. Lesisko’s salary for 2006 and 2005 has been deferred and unpaid
                until the Company becomes profitable. For 2004, the Company paid
                to Mr.
                Lesisko a portion of his salary, $65,650, and deferred the balance
                of
                $84,350, which will not be paid until the Company becomes
                profitable(4)
            The
                Company stopped accruing and deferring salaries as of February 1,
                2006. As
                a result, this compensation reflects accrued and deferred salary
                for
                January 1, 2006 through January 31, 2006 for each officer based on
                the
                following annual salaries had they accrued for the year: $479,160
                for Dr.
                Dalton, $160,000 for Mr. Langford, and $150,000 for Mr.
                Lesisko.(5)
            The
                  total number of our common shares issued to Dr. Dalton for 2005
                  and 2006
                  was 8,605,097. These shares were issued as payment in lieu of accrued
                  but
                  unpaid benefits (life, health and disability insurance, as well
                  as an
                  automobile lease and insurance allowance equal to $24,000 per year)
                  under
                  Dr. Dalton’s employment contract.(6)
            The
              total number of our common shares issued to Mr. Lesisko for 2005 630,303.
              These shares were issued as payment in lieu of accrued but unpaid
              benefits.








18








**Outstanding
      Equity Awards at Fiscal Year-End Table.** There
      were no individual grants of stock options to purchase our common stock made
      to
      the named executive officers in the Summary Compensation Table during the fiscal
      year ended December 31, 2006, and the subsequent period up to the date of the
      filing of this prospectus.




**Employment
      Agreements**




We
      have
      an employment agreement with our President and Chief Executive Officer.
      Dr. David Dalton provides the amount of time necessary to perform his
      corporate duties. Dr Dalton’s base 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.




**C** **ompensation
      of Directors**




For
      the
      fiscal year ended December 31, 2006, we did not compensate our directors for
      their services.




**Termination
      of Employment and Change of Control Arrangement**




The
      Company does not have compensatory plans or arrangements, including payments
      to
      be received from the Company, with respect to any persons which would in any
      way
      result in payments to any person because of his/her resignation, retirement,
      or
      other termination of such person’s employment by the Company, or any change in
      our control, or a change in the person’s responsibilities following a changing
      in the Company’s control.




**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters.**




The
      following table sets forth certain information regarding the ownership of our
      capital stock, as of May 14, 2007, for: (i) each director; (ii) each person
      who
      is known to us to be the beneficial owner of more than 5% of our outstanding
      common stock; (iii) each of our executive officers named in the Summary
      Compensation Table; and (iv) all of our current executive officers and directors
      of as a group. Except as otherwise indicated in the footnotes, all information
      with respect to share ownership and voting and investment power has been
      furnished to us by the persons listed. Except as otherwise indicated in the
      footnotes, each person listed has sole voting power with respect to the shares
      shown as beneficially owned.


19




**Title
                  of Class**
              
              **Name
                  and Address of**
                **Beneficial
                  Owner**
              
              **Amount
                  and Nature of**
                **Beneficial
                  Owner**
              
              
              **Percent
                  of Class****(2)**Common
                  Stock
              
              Dr.
                  David Dalton(1)
              
              33,251,310
              (4)
              
              49.70%(5)Common
                  Stock
              
              Raphael
                  Langford(1)
              
              3,366,667
              (6)
              
              5.21%(7)Common
                  Stock
              
              Michael
                  Lesisko(1)
              
              2,640,668
              (8)
              
              4.09%(9)Common
                  Stock
              
              S.
                  Robert Grass(1)
              
              1,065,951
              (10)
              
              1.67%(11)Common
                  Stock
              
              William
                  Wooldridge(1)
              
              250,000
              (12)
              
              0.49%(13)Common
                  Stock
              
              Emerald
                  Capital Partners LP(3)
                425
                  Broadhollow Road
                Melville,
                  NY 11747
              
              6,000,000
              
              
              9.46%**Common
                  Stock**
              
              **All
                  officers and directors as a group (5 in number)**
              
              **40,574,596**
              **(14)**
              
              **57.95%(15)**




(1)
              The
                  address for each beneficial owner is 822 Guilford Avenue, Suite
                  208,
                  Baltimore, Maryland 21202.(2)
              Unless
                  otherwise indicated in the footnotes to this table and subject
                  to
                  community property laws where applicable, we believe that each
                  of the
                  stockholders named in this table has sole voting and investment
                  power with
                  respect to the shares indicated as beneficially owned. Applicable
                  percentages are based on 63,444,360 common shares outstanding as
                  of May
                  14, 2007, adjusted as required by rules promulgated by the Commission.(3)
              Michael
                  Xirinachs is the Managing Partner of Emerald Capital Partners LP
                  and has
                  sole voting and investment control over these shares.(4)
              Includes
                  3,458,345 shares issuable upon exercise of presently exercisable
                  options.Includes
                  2,333,333 (--% of the issued and outstanding common stock) shares
                  held by
                  Pharmacy Services, Inc. for which Dr. Dalton is the President of and
                  has sole voting and investment power in regards to those
                  shares.(5)
              Calculated
                  on the basis of 66,902,705 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 3,458,345 shares issuable
                  upon the
                  exercise of presently exercisable options.(6)
              Includes
                  1,133,333 shares issuable upon exercise of presently exercisable
                  options.(7)
              Calculated
                  on the basis of 64,577,693 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 1,133,333 shares issuable
                  upon the
                  exercise of presently exercisable options.(8)
              Includes
                  1,166,667 shares issuable upon exercise of presently exercisable
                  options.(9)
              Calculated
                  on the basis of 64,611,027 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 1,166,667 shares issuable
                  upon the
                  exercise of presently exercisable options.(10)
              Includes
                  312,501 shares issuable upon conversion of Series D Convertible
                  Preferred
                  Stock and 250,000 issuable upon exercise of presently exercisable
                  options.(11)
              Calculated
                  on the basis of 64,006,861 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 312,501 shares issuable
                  upon
                  conversion of Series D Convertible Preferred Stock and 250,000
                  shares
                  issuable upon the exercise of presently exercisable options.




20


(12)
              Includes
                  250,000 shares issuable upon exercise of presently exercisable
                  options.(13)
              Calculated
                  on the basis of 63,694,360 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 250,000 shares issuable
                  upon the
                  exercise of presently exercisable options.(14)
              Includes
                  6,570,846 shares issuable upon exercise of presently exercisable
                  options
                  and upon conversion of Series D Convertible Preferred Stock.(15)
              Calculated
                  on the basis of 70,015,206 shares of Common Stock issued and outstanding
                  on a fully diluted basis including the 6,570,846 shares issuable
                  upon the
                  exercise of presently exercisable options and upon conversion of
                  Series D
                  Convertible Preferred Stock.
  **Changes
        in control**





No
      arrangements exist which may result in a change in control of us.





**Item
      12.**  **Certain
      Relationships and Related Transactions.**




Except
      as
      indicated below, and for the periods indicated, there were no material
      transactions, or series of similar transactions, since the beginning of the
      Company’s last fiscal year, or any currently proposed transactions, or series of
      similar transactions, to which we were or are a party, in which the amount
      involved exceeds $60,000, and in which any director or executive officer, or
      any
      security holder who is known by us to own of record or beneficially more than
      5%
      of any class of our common stock, or any member of the immediate family of
      any
      of the foregoing persons, has an interest.





For
      the
      year ended December 31, 2006, our largest customer, Pharmacy Services, Inc.,
      a
      company owned and operated by Dr. David Dalton, our President and Chief
      Executive Officer, purchased goods and generated significant revenues from
      PPSI’s GPO. We intend to reduce our reliance on this customer through expanding
      sales to other parties.





During
      the years ended December 31, 2006 and 2005, Univec repaid an aggregate of
      $813,918 and borrowed an aggregate of $306,710, respectively from Pharmacy
      Services, Inc., Health Resources, Inc. and other companies all owned by Dr.
      Dalton. These loans are repayable on demand at 10%, per annum. At December
      31,
      2006 and 2005, the aggregate balance outstanding due to affiliated companies
      was
      $16,408 and $815,510, respectively.





Since
      2004, PPSI shared office space and other administrative expenses with affiliated
      companies owned by Dr. Dalton. These expenses have not been allocated
      between the companies, but PPSI’s portion is insignificant.





During
      2003, Univec received a line of credit from Dr. David Dalton, our President
      and
      Chief Executive Officer, and S. Robert Grass, our 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, 2006, the outstanding balance of this loan
      was $200,000.





At
      December 31, 2006, the following Deferred Payroll was payable to executive
      officers and other employees:




David
                Dalton, Chief Executive Officer and President
            
            $
            1,327,900Raphael
                Langford, Chief Operating Officer
            
            
            216,184Michael
                Lesisko, Secretary - Treasurer
            
            
            187,9271,732,011Other
                employees
            
            
            205,080$
            1,937,091




21


At
      December 31, 2006, 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 $145,412. 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
      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





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.





**Item
      13.**   **Exhibits.**




**Exhibit No.**
              
              **Title
                  of Document**
              
              **Location**2.1
              
              Stock
                  Purchase Agreement and Plan of Reorganization made and entered
                  into as of
                  December 31, 2001, by and among Physician and Pharmaceutical Services,
                  Inc., the stockholder of PPSI and UNVC
              
              Incorporated
                  by reference to Form 8-K filed January 4, 20022.2
              
              Agreement
                  and Plan of Merger dated as of October 7, 1996 between the Registrant
                  and
                  UNIVEC, Inc., a New York corporation
              
              Incorporated
                  by reference as Exhibit 4.1 to Form SB-2 filed April 21,
                  19973.1.1
              
              Restated
                  Certificate of Incorporation of the Registrant, as amended
              
              Incorporated
                  by reference as Exhibit 3 to Form 10-QSB filed on November 13,
                  20003.1.2
              
              Certificate
                  of Amendment to the Restated Certificate of Incorporation as filed
                  with
                  the Delaware Secretary of State on or about August 29,
                  2000
              
              Incorporated
                  by reference as Exhibit 3 to Form 10-QSB filed on November 13,
                  20003.1.3
              
              Certificate
                  of Designation of Series D Convertible Preferred Stock
              
              Incorporated
                  by reference as Exhibit 3(i) to Form 10-QSB filed on May 14,
                  20023.1.4
              
              Certificate
                  of Designation of Series E Convertible Preferred Stock
              
              Incorporated
                  by reference as Exhibit 3.1 to Form 10-QSB filed on January 5,
                  20043.1.5
              
              Amended
                  Restated By-laws
              
              Incorporated
                  by reference as Exhibit 3(ii) to Form 10-QSB filed on May 14,
                  20024.1
              
              Securities
                  Purchase Agreement dated July 31, 2006, by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC
              
              Incorporated
                  by reference as Exhibit 4.1 to Form 8-K filed on August 7,
                  20064.2
              
              Form
                  of Callable Convertible Secured Note by and among New Millennium
                  Capital
                  Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
                  and AJW
                  Partners, LLC
              
              Incorporated
                  by reference as Exhibit 4.2 to Form 8-K filed on August 7,
                  2006






22




4.3
              
              Form
                  of Stock Purchase Warrant issued to New Millennium Capital Partners
                  II,
                  LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
                  LLC
              
              Incorporated
                  by reference as Exhibit 4.3 to Form 8-K filed on August 7,
                  20064.4
              
              Registration
                  Rights Agreement dated July 31, 2006 by and among New Millennium
                  Capital
                  Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
                  and AJW
                  Partners, LLC
              
              Incorporated
                  by reference as Exhibit 4.4 to Form 8-K filed on August 7,
                  20064.5
              
              Security
                  Agreement dated July 31, 2006 by and among the Company and New
                  Millennium
                  Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                  Ltd.
                  and AJW Partners, LLC
              
              Incorporated
                  by reference as Exhibit 4.5 to Form 8-K filed on August 7,
                  20064.6
              
              Intellectual
                  Property Security Agreement dated July 31, 2006 by and among the
                  Company
                  and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                  LLC,
                  AJW Offshore, Ltd. and AJW Partners, LLC
              
              Incorporated
                  by reference as Exhibit 4.6 to Form 8-K filed on August 7,
                  200610.1
              
              Employment
                  Agreement dated as of January 1, 2002, between the Registrant and
                  David L.
                  Dalton
              
              Incorporated
                  by reference as Exhibit 10.10 to Form 10-KSB filed on April 1,
                  200210.2
              
              Patent
                  License Agreement dated August 16, 2000, by and between the Company
                  and
                  Terumo Europe N.V.
              
              Incorporated
                  by reference as Exhibit 10.5 to Form 10-QSB filed on April 2,
                  200110.3
              
              Manufacturing
                  Agreement dated August 16, 2000, by and between the Company and
                  Terumo
                  Europe N.V.
              
              Incorporated
                  by reference as Exhibit 10.6 to Form 10-QSB filed on April 2,
                  200110.4
              
              Equipment
                  Purchase Agreement dated August 16, 2000, by and between the Company
                  and
                  Terumo Europe N.V.
              
              Incorporated
                  by reference as Exhibit 10.7 to Form 10-QSB filed on April 2,
                  200121.1
              
              Subsidiaries
              
              Filed
                  herewith31.1
              
              Certification
                  of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002
              
              Filed
                  herewith31.2
              
              Certification
                  of Chief Financial Officer Pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002
              
              Filed
                  herewith32.1
              
              Certification
                  of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  herewith32.1
              
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  herewith






23


**Item
      14.**  **Principal
      Accounting Fees and Services.**




**Audit,
      Tax and All Other Fees**




The
      following table presents the cost of Univec's principal accountants' fees and
      services for the years ended December 31, 2006 and 2005,
      respectively:





2006
            
            2005Audit
                fees
            
            $
            107,069
            
            $
            153,240Audit
                related fees
            
            
            -
            
            
            -Tax
                fees
            
            
            -
            
            
            -All
                other fees
            
            
            -
            
            
            -Total
            
            $
            107,069
            
            $
            153,240





Univec's
      Audit Committee pre-approves the engagement of the principal accountant and
      the
      estimated audit fee, by each category.










24


**SIGNATURES**




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




**UNIVEC,
                INC.**By:
            */s/
                Dr. David Dalton*DR.
                DAVID DALTONPresident,
                Chief Executive Officer,
              Chief
                Financial OfficerDate:
            May
                14, 2007By:
            */s/
                Michael Lesisko*MICHAEL
                LESISKOChief
                Financial Officer,Date:
            May
                14, 2007











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





**SIGNATURE**
            
            **TITLE**
            
            **DATE***/s/
                Dr. David Dalton*
            
            Chief
                Executive Officer and President
            
            May
                14, 2007Dr. David
                Dalton*/s/
                Michael Lesisko*
            
            Treasurer,
                Secretary and Chief Financial Officer
            
            May
                14, 2007Michael
                Lesisko*/s/
                Raphael Langford*
            
            Chief Operating Officer and Executive Vice President
            
            May
                14, 2007Raphael
                Langford*/s/
                S. Robert Grass*
            
            Chairman
            
            May
                14, 2007S.
                Robert Grass*/s/
                William Wooldridge*
            
            Director
            
            May
                14, 2007William
                Wooldridge














25





































**UNIVEC,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006 AND FOR THE TWO YEARS THEN ENDED**





**Index
      to Consolidated Financial Statements**








PageReport
                of Independent Registered Public Accounting Firm
            F--2Consolidated
                Statement of Financial Position - December 31, 2006
            F--3Consolidated
                Statements of Operations - years endedDecember 31, 2006 and 2005
            F--4Consolidated
                Statements of Stockholders' Equity - yearsended December 31, 2006 and 2005
            F--5Consolidated
                Statements of Cash Flows - years endedDecember 31, 2006 and 2005
            F--6Notes
                to Consolidated Financial Statements
            F--7




















F-1






**Report
      of Independent Registered Public Accounting Firm**







To
      the
      Board of Directors and


Stockholders
      of Univec, Inc.




We
      have
      audited the accompanying consolidated statement of financial position of Univec,
      Inc. and Subsidiaries as of December 31, 2006 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, 2006. 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, 2006 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, 2006 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


May
      11,
      2007    Abrams, Foster, Nole & Williams, P.A.









F-2





**UNIVEC,
                INC. AND SUBSIDIARIES****CONSOLIDATED****STATEMENT
                OF FINANCIAL POSITION****DECEMBER
                31, 2006**








ASSETS
            
            2006
            
            2005Cash
            
            $
            315
            
            $
            991Accounts
                receivable
            
            
            12,197
            
            
            24,864Inventory
            
            
            44,700
            
            
            193,325Other
                amounts receivable
            
            
            151,200
            
            
            150,000Total
                current assets
            
            
            208,412
            
            
            369,180Fixed
                assets
            
            
            406,544
            
            
            520,092Other
                assets
            
            
            41,409
            
            
            64,638Total
                assets
            
            $
            656,365
            
            $
            953,910LIABILITIES
                AND STOCKHOLDERS' DEFICITAccounts
                payable and accrued expenses
            
            $
            1,758,610
            
            
            1,598,524Accrued
                payroll
            
            
            1,937,091
            
            
            1,878,483Notes
                and loans payable - current
            
            
            890,438
            
            
            890,438Due
                to affiliated companies
            
            
            123,283
            
            
            815,510Loans
                payable - officers/directors - current
            
            
            244,412
            
            
            258,300Total
                current liabilities
            
            
            4,953,834
            
            
            5,441,255Notes
                and loans payable - long-term
            
            
            1,597,983
            
            
            318,183Loans
                payable - officers/directors - long term
            
            
            50,000
            
            
            50,000Total
                liabilities
            
            $
            6,601,817
            
            $
            5,809,438Commitments
                and contingencies (Notes 3, 4, 12 and 13)











F-3




**UNIVEC,
                INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENT OF FINANCIAL POSITION****DECEMBER
                31, 2006**








**STOCKHOLDERS'
                DEFICIT**
            
            2006
            
            2005Preferred
                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:
                $571,736)
            
            $
            208
            
            $
            208Series
                E cumulative convertible preferred stock,$.001
                par value; authorized: 2,000 shares; issued andoutstanding:
                312 shares (aggregate liquidationvalue:
                $366,135)
            
            
            1
            
            
            1Common
                stock $.001 par value; authorized: 75,000,000 shares;
            
            
            63,444
            
            
            57,634issued:
                63,444,360 and outstanding: 63,040,206 sharesAdditional
                paid-in capital
            
            
            11,601,723
            
            
            11,514,390Treasury
                stock, 404,154 shares - at cost
            
            
            (28,291
            )
            
            (28,291
            )Accumulated
                deficit
            
            
            (17,582,537
            )
            
            (16,399,470
            )Total
                stockholders' deficit
            
            
            (5,945,452
            )
            
            4,855,528Total
                liabilities and stockholders' deficit
            
            $
            656,365
            
            $
            953,910.








F-4




**Univec,
      Inc. and Subsidiaries**


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


**Years
      ended December 31, 2006 and 2005**





2006
            
            2005Revenues
                (Note 4)
            
            $
            21,457
            
            $
            81,398Cost
                of revenues
            
            
            (32,344
            )
            
            (3,164
            )Gross
                Margin
            
            
            (10,887
            )
            
            84,562Operating
                ExpensesMarketing
                and selling
            
            
            92,893
            
            
            233,990Product
                development
            
            
            (2,578
            )
            
            3,802General
                and administrative
            
            
            943,610
            
            
            1,535,8401,033,925
            
            
            1,773,632Loss
                from Operations
            
            
            (1,044,812
            )
            
            (1,689,070
            )Other
                Income (Expense)Interest
                expense, net
            
            
            (138,255
            )
            
            (200,019
            )Other
                income
            
            
            -
            
            
            -Total
                other expenses
            
            
            (138,255
            )
            
            (200,019
            )Net
                loss
            
            
            (1,183,067
            )
            
            (1,889,089
            )Dividends
                attributable to preferred stock
            
            
            32,852
            
            
            34,844Loss
                attributable to common stockholders
            
            $
            (1,215,919
            )
            $
            (1,923,933
            )Share
                informationBasic
                net loss per common share
            
            $
            (0.02
            )
            $
            (0.04
            )Basic
                weighted average numberof
                common shares outstanding
            
            
            59,831,084
            
            
            52,729,533See
                notes to consolidated financial statements.








F-5




**Univec,
      Inc. and Subsidiaries**


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


**Years
      ended December 31, 2006 and 2005**





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, 2005
            
            
            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
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            70,000Convert
                Series E and dividends
            
            
            
            
            
            
            
            
            (100
            )
            
            
            
            
            2,191,215
            
            
            2,191
            
            
            5,840
            
            
            
            
            
            
            
            
            
            
            
            (8,031
            )
            
            0Amortization
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            210,000
            
            
            
            
            
            210,000Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,889,089
            )
            
            (4,020,536
            )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
            )Common
                stock issued for:Deferred
                payroll and accruedexpenses
                - officers
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,810,078
            
            
            5,810
            
            
            87,333
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            93,143Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,183,067
            )
            
            (1,494,956
            )Balance,
                December 31, 2006
            
            
            208,333
            
            $
            208
            
            
            312
            
            $
            1
            
            
            63,444,360
            
            $
            63,444
            
            $
            11,601,723
            
            $
            404,154
            
            
            ($28,291
            )
            $
            0
            
            
            ($17,582,537
            )
            
            ($6,257,341
            )









F-6




**Univec,
      Inc. and Subsidiaries**


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


**Years
      ended December 31, 2006 and 2005**





2006
            
            2005Cash
                flows from operating activitiesNet
                loss
            
            $
            (1,183,067
            )
            $
            (1,889,089
            )Adjustments
                to reconcile net loss to net cashused
                in operating activitiesDepreciation
                and amortization
            
            
            105,666
            
            
            342,122Gain
                on receipt of marketable securities
            
            
            
            
            
            36,349Fixed
                assets abandoned
            
            
            23,911Changes
                in assets and liabilities, net ofAccounts
                receivable
            
            
            12,667
            
            
            3,098,629Inventories
            
            
            148,625
            
            
            (13,447
            )Other
                current assets and other assets
            
            
            6,000
            
            
            45,431Accounts
                payable and accrued expenses
            
            
            253,229
            
            
            (2,629,243
            )Accrued
                payroll
            
            
            58,608
            
            
            689,766Net
                cash used in operating activities
            
            
            (574,361
            )
            
            (319,482
            )Cash
                flows from investing activitiesPurchases
                of fixed assets
            
            
            
            
            
            (13,500
            )(Increase)
                decrease in restricted cash
            
            
            0
            
            
            340,407Net
                cash used in investing activities
            
            
            0
            
            
            326,907Cash
                flows from financing activitiesProceeds
                from notes and loans payable,
            
            
            1,279,800
            
            
            0Increase
                (decrease) in due from affiliated companies
            
            
            (692,227
            )
            
            306,710Increase
                in loans payable - officers/directors
            
            
            (13,888
            )
            
            55,000Proceeds
                from sale of common stock
            
            
            
            
            
            35,000Proceeds
                from sale of preferred stock
            
            
            
            
            
            50,000Payments
                on notes and loans payable
            
            
            0
            
            
            (482,587
            )Net
                cash provided by financing activities
            
            
            573,685
            
            
            (35,877
            )Net
                decrease in cash
            
            
            (676
            )
            
            (28,452
            )Cash,
                beginning of period
            
            
            991
            
            
            29,443Cash,
                end of period
            
            $
            315
            
            $
            991


F-7




Supplemental
                  disclosure of cash flow informationCash
                  paid for interest
              
              $
              0
              
              $
              87,667Supplemental
                  disclosures of noncash activityCommon
                  stock and options issued in payment
              
              
              
              
              $of
                  deferred payroll and accrued expenses
              
              
              0
              
              
              262,837Conversions
                  of Series E to common stock,including
                  dividends
              
              $
              0
              
              $
              8,031See
                  notes to consolidated financial statements.












F-8





**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. RX
        Ultra
        Corporation, a medical products provider, remains inactive for the previous
        five
        years.


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, 2006, the Company had
      negative working capital of $4,745,422 and stockholders' deficit of $6,257,341
      and had incurred net losses of $(1,183,067) and $(1,889,089) for the years
      ended
      December 31, 2006 and 2005, 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, 2006, no allowance was necessary.





Inventories





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










F-9







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 $553 and $2,396 for the years ended December
      31 2006 and 2005, 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.





F-10








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.





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, 2006 and 2005.
        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, 2006, 5,810,078 common shares valued at $93,143
      were
      exchanged for employee benefit costs. 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.




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.











F-11








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.





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, which 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 accounting pronouncements 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-12








Purchases


During
      both 2006 and 2005, 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, 2006, accounts payable to that
      one vendor were less than 2% of total accounts payable.





5.
      Marketable Securities





As
      of
      December 31, 2006, the Company owned no marketable securities.




6.
      Inventories





Inventories
      consisted of the following:




2006
            
            2005Raw
                materials
            
            $
            0
            
            $
            158,499Work-in-process
            
            
            0
            
            
            89,641Finished
                goods
            
            
            44,700
            
            
            25,49444,700
            
            
            273,634Less:
                allowance for valuation
            
            
            0
            
            
            (125,000
            )44,700
            
            $
            148,634





7.
      Other
      Amounts Receivable





Other
      amounts receivable consisted of the following:





2006
            
            2005Due
                from stockholder
            
            $
            150,000
            
            $
            150,000Advance
                to employee
            
            
            1,200
            
            
            1,200$
            151,200
            
            $
            151,200




8.
      Fixed
      Assets





Fixed
      assets consisted of the following:




2006
            
            2005Equipment
            
            $
            1,053,774
            
            $
            1,114,284Less:
                accumulated depreciation
            
            
            647,230
            
            
            594,192$
            406,544
            
            $
            520,092




Depreciation
        expense was $ 89,638 and $116,093 in 2006 and 2005, respectively. For the
        year
        ended December 31, 2006, fully depreciated assets were approximately
        $36,000.





F-13




9.
      Notes
      and Loans Payable





As
      of
      December 31, 2006, notes and loans payable consisted of:




Loan
                due to an investment group in accordance with a 6% Stock Purchase
                Agreement
            
            $
            1,279,800Loan
                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
            
            
            19,2972,488,421Less:
                Current portion of notes and loans payable
            
            
            890,438Long-term
                portion of notes and loans payable
            
            $
            1,597,983




(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. over the term of the
      borrowings.




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





Future
      minimum repayments required for existing loans with initial terms of one year
      or
      more are as follows:




Year
            
            Amount2007
            
            $
            890,4382008
            
            
            374,0312009
            
            
            305,3002010
            
            
            300,0002011
            
            
            300,000Thereafter
            
            
            318,652Total
                minimum payments
            
            $
            2,488,421





F-14








10.
      Due
      to Affiliated Companies




As
        of
        December 31, 2006, the Company owed $123,283 to affiliated companies, owned
        by
        the chief executive officer of the Company, due on demand, with interest
        at 10%,
        per annum. The affiliated companies, by definition, qualify as related parties
        of Univec, Inc.


11.
      Loans
      Payable - Officer/Directors





Loans
      payable to officers/directors consisted of the following:





2006
            
            2005Note
                payable to the chief executive officerand
                the chairman of the board of theCompany,
                due on demand, with interestat
                prime, plus 2%, per annum (1)
            
            $
            200,000
            
            $
            200,000Notes
                payable to a director
            
            
            94,412
            
            
            108,300$
            294,412
            
            $
            308,300





(1)
      The
      same terms as an underlying borrowing from a bank and collateralized by certain
      equipment.





The
      officers/directors, by definition, qualify as related parties of Univec,
      Inc.





12.
      Income Taxes





The
      Company files consolidated income tax returns with its subsidiaries. Prior
      to
      its acquisition, PPSI was a Subchapter S Corporation.





As
      of
      December 31, 2006, the Company had net operating loss carry forwards of
      approximately $16,700,000 available to reduce future taxable income expiring
      through 2025, which may be limited due to ownership changes.





For
      the
      years ended December 31, 2006 and 2005, the Company's deferred tax benefits
      (expenses) were as follows:





2006
            
            2005Net
                operating loss carry forwards
            
            $
            856,000
            
            $
            632,000Depreciation
            
            
            -
            
            
            7,000Goodwill
            
            
            -
            
            
            (45,000
            )Compensation
            
            
            24,000
            
            
            230,000Valuation
                allowance
            
            
            (880,000
            )
            
            (824,000
            )None
            
            
            None








F-15








As
      of
      December 31, 2006, the tax effects of the components of deferred tax assets
      and
      liabilities were as follows:





Deferred
                tax assetsNet
                operating loss carry forwards
            
            $
            5,514,000Compensation
            
            
            736,000Net
                deferred tax asset
            
            
            6,250,000Valuation
                allowance
            
            
            (6,250,000
            )None





As
      of
      December 31, 2006, realization of the Company's net deferred tax asset of
      approximately $6,250,000 was not considered more likely than not and,
      accordingly, a valuation allowance of $6,250,000 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.





2006
            
            2005Expected
                income tax benefit
            
            $
            (490,000
            )
            $
            (632,000
            )Change
                in valuation allowance arising in current year
            
            
            880,000
            
            
            1,233,000State
                income tax benefit, net of federal income tax effect
            
            
            (120,000
            )
            
            (120,000
            )Other
            
            
            (270,000
            )
            
            (481,000
            )None
            
            
            None








F-16







13.
      Commitments and Contingency





Lease




The
        Company was committed under a non-cancelable lease for production, storage
        and
        office space through February 6, 2006. The lease provided for minimum annual
        rent of $72,000, additional rents for the Company's share of normal maintenance
        plus its pro-rata share of real estate taxes and eight one year renewals
        at the
        Company's option.





For
      2006
      and 2005, total rent expense was $72,000 and $72,000, 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, 2006 and 2005, the compensation was $36,300 and
      $435,600, respectively, which have been fully deferred by the chief executive
      officer. The chief executive officer has agreed to temporarily forego all
      payroll earned after January 31, 2006. The employment agreement also provides
      for bonuses, as determined by the officer and the Company, an automobile
      allowance (of $24,000, per annum, for 2006) and life, disability and health
      insurance. In addition, the officer was granted options to purchase 2,000,000
      shares of common stock exercisable at $.24, per share, through 2012. The options
      vest 25% on January 1, 2003 and 41,667 during each subsequent
      month.





14.
      Litigation Reserve





In
      December 2003, the Company assigned certain of their patents, earned royalties
      of $72,125 and 85% of all future royalties being earned from these patents
      in
      payment of a note payable and interest thereon for an aggregate of $99,434,
      in
      settlement to a collection matter. The Company recognized a $24,872 gain upon
      extinguishment of the debt. The Company in turn received relief from the
      restrictive patent payments and a perpetual license to exploit, market and
      manufacture these patents in North America. As the value of the license received
      could not be determined, no value was assigned to them.




In
        March
        2004, the Company settled a collection matter with a former consultant in
        the
        amount of $165,000, payable in varying amounts through March 2007 and options
        to
        purchase 359,375 shares of common stock of the Company, all of which had
        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.










F-17





15.
      Stockholders' Equity





Common
      Stock





During
      the year ended December 31, 2006, the Company issued an aggregate of 5,810,078
      shares of common stock to a stockholder in exchange for benefits not taken
      of
      $93,143.




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-18







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
      of
      20,833 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. 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, 2006, cumulative dividends in arrears on preferred stock
      were:




Series
                D
            
            $
            71,736Series
                E
            
            
            54,135$
            125,871








F-19








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 years ended December 31, 2006 and 2005, the Company issued no options to
      purchase common stock of the Company





During
      2006 and 2005, options to purchase 510,000 and 802,236 shares, respectively,
      of
      common stock expired or were cancelled without being exercised.




Reserved
      Shares





As
      of
      December 31, 2006, the Company has reserved shares of common stock as
      follows:







Non-plan
                options and warrants
            
            13,008,345Options
                under the Plans
            
            375,000Series
                D conversions
            
            375,000Series
                E conversions(a)
            
            
            27,700,00041,458,345





(a)
      assumes conversions as of December 31, 2006 at $.02, per share.




16.
      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 96 Plan and
        authorizes the issuance of ISO's, NQSO's and Stock Appreciation
        Rights.







F-20





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 additional 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 2006 and
      2005.








2006
            
            2005Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageExercise
            
            
            
            ExerciseShares
            
            Price
            
            Shares
            
            PriceOptions
                outstanding, beginning of year
            
            
            685,000
            
            $
            0.70
            
            
            1,335,000
            
            $
            0.70Granted
            
            
            None
            
            
            -
            
            
            None
            
            
            -Canceled,
                exercised, expired or exchanged
            
            
            (250,000
            )
            $
            (0.48
            )
            
            (650,000
            )
            
            0.675Options
                outstanding, end of year
            
            
            435,000
            
            $
            1.18
            
            
            685,000
            
            $
            0.72Options
                exercisable, end of year
            
            
            435,000
            
            $
            1.18
            
            
            685,000
            
            $
            0.72Options
                available for grant, end of year
            
            
            1,050,000
            
            
            
            
            
            1,050,000Weighted-average
                fair value of options grantedduring
                the year
            
            $
            .00
            
            
            
            
            $
            .00





The
      following table summarizes information about stock options outstanding under
      the
      Plan at December 31, 2006:





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
            105,000
            4.50
            105,000
            $0.15$0.15
                to $3.50
            435,000
            2.70
            435,000
            $0.72















F-21








17.
      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.




18.
      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-22








19.
      Financing Agreements





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 to be received when the Form
      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
      the
      Company’s option, it 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-23








Based
      on
      this recent financing, the Company has 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 have been converted to common stock as yet. The Securities have
      been recorded 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.





F-24