SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



FOR THE FISCAL YEAR ENDED                                 COMMISSION FILE NUMBER
-------------------------                                 ----------------------
MAY 31, 2004                                                     0-12561


                         MEDITECH PHARMACEUTICALS, INC.
              ----------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



    NEVADA                                                     95-3819300
---------------                                            -------------------
(STATE OR OTHER                                             (I.R.S.EMPLOYER
JURISDICTION OF                                            IDENTIFICATION NO.)
ORGANIZATION)


                        10105 E. VIA LINDA, #103, PMB-382
                                 SCOTTSDALE, AZ                   85258
                     --------------------------------------      --------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)    (ZIP CODE)

                                 (480) 614-2874
               --------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                          COMMON STOCK, $.001 PAR VALUE

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                                 YES  X  NO
                                    -----  -----

STATE THE ISSUER'S REVENUE FOR ITS MOST RECENT FISCAL YEAR.

$0

STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT. THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO THE
PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF SUCH
STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING.

$3,433,710 (COMPUTED ON THE BASIS OF $0.020 PER SHARE OF COMMON STOCK) AS OF
JULY 20, 2004.

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

171,685,487 SHARES OF $.001 PAR VALUE COMMON STOCK AS OF MAY 31, 2004.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE.

<PAGE>


                                     PART I

Item 1. Business
----------------

Meditech Pharmaceuticals, Inc. is a Nevada corporation. We began our business in
May 1982 and incorporated in Nevada on March 21, 1983.

Our Products

We have developed two patented compounds: MTCH-24(TM) and Viraplex(R). Both of
these compounds show positive test results for treatment of a variety of
enveloped viruses. An enveloped virus is one in which the infectious particle is
surrounded by a coating made of protein, fatty substances and carbohydrate.

MTCH-24(TM)

Herpes I and II are enveloped viruses. How MTCH-24(TM) acts against enveloped
viruses is not fully understood. However, based on laboratory tests conducted
for our Company, MTCH-24(TM) is believed to be effective against a wide range of
other enveloped viruses such as influenza, Epstein-Barr virus, respiratory
syncytial virus (a virus which affects the respiratory system), pseudorabies (a
specific virus in the rabies family), rhino tracheitis (an infection of the
lungs and throat), and cytomegalovirus. It is also believed to be effective
against rotavirus, a non-enveloped virus that is a major cause of diarrhea and
inflammation of the intestinal tract in infants and in certain animals.

Epstein-Barr Virus (EBV) is a herpes virus that causes infectious mononucleosis
and may be a cause of Burkitt's lymphoma, a disease found mostly in Africa and
New Guinea, and less frequently in the United States. EBV causes widespread
early childhood disease in developing countries, and is also associated with
nasopharyngeal carcinoma, a malignant tumor of the nose usually affecting young
adults.

Cytomegalovirus (CMV) is a virus, the effects of which vary substantially
depending upon the age and immune status of the infected person. Infection of an
infant can result in a fatal disease involving the nervous system and liver.
Infection acquired later in life may cause a syndrome clinically
indistinguishable from mononucleosis. Generalized CMV infection, which can be
fatal, may also occur in patients whose immune systems have been compromised.

Rotavirus is believed to be the causative agent in over 50% of all cases of
acute diarrhea in children requiring hospitalization. It can be highly
contagious and sometimes fatal. Rotavirus is also a major cause of
gastroenteritis in swine and lambs. Gastroenteritis is an inflammation often due
to an infectious agent of the intestinal tract with a mortality rate of 30% to
50%.

Initial therapeutic uses of MTCH-24(TM) will include the topical treatment of
Herpes Simplex Virus I and acne. We have developed an over-the-counter product
containing MTCH-24(TM) for treating symptoms of herpes simplex virus infections
of the lips, mouth, and face (e.g. cold sores and fever blisters). Initially,
the active ingredients shown in the product will be drugs other than
MTCH-24(TM), that previously have been recognized by the Food and Drug
Administration (FDA) as safe and effective for their intended use, as specified
in FDA monographs or proposed monographs. MTCH-24(TM) will be used in these
products as a non-active ingredient or a surfactant, an agent that is used
externally such as soap or topical anti-microbial agent plus wetting agent. An
anti-microbial agent is one that either prevents or kills microbes, including
bacterial germs and viruses. Under these conditions, we hope our
over-the-counter product will fall within the scope of the FDA regulations.
Consequently, we may be able to bring our product to market in the United States
without further FDA approval. Outside FDA and Federal Trade Commission counsel
will conduct extensive legal research prior to the release for sale of any of
our products.

Viraplex(R)

Since 1987, the National Cancer Institute has conducted studies to screen 60,000
drugs against cancer related organisms. One of the final drugs remaining in this
study as being potentially effective against some cancers is Viraplex(R). They
have not yet completed the testing to determine actual effectiveness.

One of the problems in moving this project forward was the inherent insolubility
of Viraplex(R). In 1997 and 1998, we reformulated the drug into a fully soluble
form, now making it possible to deliver the maximum therapeutic dose to the
intended site of delivery.

                                       2

<PAGE>


We are currently testing Viraplex(R), as well as MTCH-24(TM). Pending
satisfactory test results, we plan to develop additional products containing
these drugs. Viraplex(R) is administered orally in capsule form as a
prescription treatment for orofacial and genital herpes simplex virus infections
in humans. We received permission from the FDA in 1987 to initiate a 320-patient
Phase III study to test safety and effectiveness in humans, consisting of 160
patients with genital herpes and 160 patients with orofacial herpes. However, in
1987, these trials were suspended pending the obtaining of additional capital to
finance the trials. We had completed more than 50% of this testing prior to our
suspension of the testing due to lack of funds. Because this test was structured
as a double blind test (a test where half the patients unknowingly receive a
placebo and the other half unknowingly receive the drug) only the
bio-statistician has the ability to determine the test results prior to
completion of the testing. If we decide to complete this test instead of
commencing a new test, the results will be published upon completion.

Agricultural Products

Fungal, bacterial and viral plant diseases cause loss of crops worldwide. Fungi
pose a major health hazard by producing mycotoxins, toxic chemical substances
that cause potentially deadly diseases in humans and animals. In particular,
aflatoxin produced by Aspergillus flavus is among the most deadly substances
known to mankind. Aflatoxin is a plant disease that affects grain crops such as
corn and wheat. Aspergillus is a group of fungi that causes disease in humans,
animals and plants. In humans, Aspergillus commonly causes lung disease due
either to direct growth of the organism or by allergic mechanisms. The
Aspergillus flavus strain often grows on stored grain, corn and other foodstuffs
causing spoilage, and may produce toxic substances that render these foods
poisonous. MTCH-24 (TM) has been shown to be effective in inhibiting and
preventing the growth of Aspergillus on wheat and corn.

Organisms of the bacteria genus Xanthomonas cause citrus canker. Xanthomonas
consists of a group of bacteria that infects plants and causes significant loss
to commercially important fruits and vegetables. MTCH-24(TM) has been shown to
inhibit this organism at concentrations non-toxic to humans. Biosciences
Laboratories in Montana is currently conducting tests using MTCH-24(TM) against
this organism and two others.

We have engaged in limited testing and development in this area and are seeking
to interest potential licensees or joint venture partners to provide assistance
in testing, obtaining the necessary approvals for, and marketing one or more of
our agricultural products. At this point, we have not decided which of our
agricultural products we will seek to develop commercially or the order of such
development. This will depend in large part on the identity of the licensees or
joint venture partners and the wishes and interests of such parties.

Marketing Plan

Presently, depending upon the timing and amount raised through our investment
agreement with Swartz Private Equity, LLC, we estimate that we will have
commercial products that we will market in the United States within the next two
years. In addition, we intend to bring out an MTCH-24(TM)-based Cold Sore
product in the United States. The target customers for our products are drug
chains, drug wholesalers, mass marketers and food chains. We also plan to market
our product directly over the Internet. If available, we intend to employ
independent sales representative organizations. There is no assurance that even
if we are successful in raising sufficient money through Swartz, that there will
be a market for our products within the United States, or that we will receive
the required regulatory approval.

We would aim media at the appropriate segments of the population, as well as
publications targeting the self-medicating segment. We intend for most of the
advertising to be in print. We worked with a professional outside agency
specializing in drug naming to develop a brand name for MTCH-24(TM) that would
provide us with maximum consumer impact and long consumer attention span. We
have selected the name MDCH (TM) and have filed a trademark application with the
United States Patent and Trademark Office to register the mark.

In addition to our selling efforts upon commercialization of our products, we
are currently attempting to enter into licensing arrangements with larger
pharmaceutical and consumer product companies, on an international and domestic
level. Because we can enter into licensing arrangements prior to
commercialization of our products, licensing arrangements can be used to raise
capital and obtain assistance with research and development. For example, we
previously entered into a letter agreement with Immune Network Research, Ltd. in
February 2000. Pursuant to the agreement, we granted INR an irrevocable option
for a period of one year to obtain an exclusive license to make, have made,
promote, sell and distribute Viraplex(R) and MTCH-24(TM), and any derivatives or
formulation of either product, throughout the world, excluding the United
States. INR has paid to us $100,000 in anticipation of entering into a formal
license agreement, pursuant to which we would receive a seven percent and four
percent royalty on INR's net sales of MTCH-24(TM) and Viraplex(R), respectively.
In addition, INR initiated and funded in excess of $20,000 of research and
development activities on MTCH-24(TM) and Viraplex(R), and provided to us all
data from these activities. In May 2001, we entered into an agreement with INR
which terminated the first agreement and pursuant to which we granted to INR a

                                       3

<PAGE>


2% royalty on worldwide sales, excluding the United States, of MTCH-24(TM), and
a 2% royalty on worldwide sales of any agricultural product. This agreement was
entered into in consideration of INR's work under the letter agreement and in
lieu of the license agreement contemplated there under.

Pursuant to the letter agreement, we also granted to INR an irrevocable option
to purchase 10,000,000 shares of our common stock at an exercise price of $0.03
per share. The shares of common stock issuable upon exercise of the option have
been registered. All of the INR options have been exercised.

Competition

There are at least two FDA-approved products currently available, by
prescription, for the treatment of herpes infections. Burroughs-Wellcome Co.
sells them under the names Zovirax(R) (Acyclovir) and Valtrex. FDA approval of
Zovirax(R) is limited to selected cases of genital and mucocataneous herpes and
also to specific usage. Mucocataneous herpes relates to certain lubricating
linings in the body and/or skin. Herpes Simplex Viruses typically cause
infection at these sites. Other companies are testing vaccines intended to
prevent infection by herpes viruses. Treatment of persons presently afflicted
with recurrent herpes infections is the primary focus of the products we are
developing.

Many pharmaceutical companies and other researchers have announced their
intention to introduce, or are believed to be in the process of developing a
variety of products that may perform some or all of the functions of our
Viraplex(R) and MTCH-24(TM) products. Competing products are already available
for many of the functions of our MTCH-24(TM) products. Other current competitors
include Uniliver (with Vaseline Intensive lip care), Avanir Pharmaceuticals
(with Docusanol), Blistex and Zila Pharmaceuticals with Zilactin.

Patents

Our performance and ability to compete depends to a significant degree on our
proprietary knowledge. We rely or intend to rely on a combination of patent and
trade secret laws, non-disclosure agreements and other contractual provisions to
establish, maintain and protect our proprietary rights. Our policy is to seek
the issuance of patents that we consider important to our business.

We have two U.S. patents pending for new formulations of MTCH-24(TM) and
Viraplex(R), and the following issued patents:

                                   MTCH-24(TM)

1. Canadian Patent #1,242,147 (Method for Treating Viral Infection), issued
September 20, 1988 (6 claims)

2. Canadian Patent #1,256,032 (Method and Composition for Treating Viral
Infections), issued July 20, 1989 (16 claims)

                                  VIRAPLEX (R)

1. Canadian Patent #1,261,269 (Herpes Simplex Treatment), issued September 26,
1989 (14 claims)

We may file additional patent applications in the United States and under
international treaties depending on the evaluation of the costs and anticipated
benefits that may be obtained by expanding possible patent coverage.

Government Regulation

Pharmaceutical products are subject to extensive regulation in the United States
and most foreign countries. In the United States, ethical pharmaceutical
products cannot be marketed or sold before they have passed the FDA's required
three-stage process. Providing adequate test data, completing filings and
obtaining final regulatory approval is usually a multi-year process.

Once ethical pharmaceutical products are approved for sale, many of them are
purchased through health plans which are subject to state and Federal
regulations including the Health Maintenance Act of 1973, the Knox-Keene Act in
California, and numerous other regulations which bar some forms of treatment and
some pharmaceutical products as being experimental or not medically necessary.

Similar regulations and regulatory oversight are in place in most countries.
This ongoing regulatory oversight can also result in the withdrawal of products
from the market after their approval for sale in instances where new test data
creates additional regulatory concerns.

Employees

We currently have three employees. We currently contract with outside partners
to perform the testing and registration of our patented products. As we move
toward completion of testing and introduction of products to the market, we plan
to substantially increase the number of employees in administrative and
marketing roles.

                                       4

<PAGE>


Item 2. Properties
------------------

We currently operate out of space owned by Gerald Kern, our Chairman and CEO,
that is provided to us at nominal cost. This space will not be adequate for
operations as we move forward. We anticipate acquiring an office if and when
revenue permits.

Item 3. Legal Proceedings
-------------------------

We are not a party to any material legal proceedings nor are we aware of any
pending litigation against our Company.

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

None.

                                       5

<PAGE>


                                     PART II

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

The Company's common stock is traded on the over-the-counter (OTC) market. On
May 31, 2004, the closing bid price for the common stock of the Company was
$.018. The high and low closing bid prices during the quarterly fiscal periods
indicated were as follows:

            Quarter Ended                Low Bid              High Bid
          ------------------           -----------          ------------

          August 31, 2002                 .020                  .030
          November 30, 2002               .010                  .020
          February 28, 2003               .050                  .060
          May 31, 2003                    .080                  .090
          August 31, 2003                 .040                  .090
          November 30, 2003               .040                  .060
          February 28, 2004               .030                  .080
          May 31, 2004                    .020                  .030


Some of the above prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
The Company's common stock was reported on NASDAQ through April 30, 1986, at
which time it was delisted because of failure to meet the minimum capital,
surplus and asset requirements of the NASD by-laws.

As of May 31, 2004 there were approximately 3,000 holders of record of the
Company's outstanding shares of common stock.

The Company has not paid any dividends to its shareholders and has no present
intention of changing this policy.

The following sets forth recent sales by the Company of unregistered securities
during the fiscal year ended May 31, 2004.

1. During the year ended May 31, 2004, we granted 3,000,000 shares of our common
stock as payment against a loan given to Meditech. The loan of $30,000 was paid
off through this issuance.

2. During the year ended May 31, 2004, we issued an aggregate of 9,800,000
shares of our common stock for cash of $142,222.

No underwriter was involved in any of the above issuances of securities. All of
the above securities were issued in reliance upon the exemptions set forth in
Section 4(2) of the Securities Act of 1933 on the basis that they were issued
under circumstances not involving a public offering.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

The consolidated financial statements and the related notes included elsewhere
in this filing. This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors.

Overview

We are a drug development company, founded in 1982, focused in the areas of
research, development, and marketing in the biomedical industry, with an
emphasis on anti-infective drugs. The Company has completed various stages of
planning and developing products containing its proprietary drugs Viraplex (R)
and MTCH-24(TM).

Our development activities since inception (May 4, 1982) have included efforts
to secure financing, create a management and business structure, and develop and
test Viraplex (R) and MTCH-24(TM) for release as both over-the-counter (OTC) and
ethical products. These activities have produced very little in operating
revenues.

Since we became a public company, our operations have related primarily to
securing patents, initiating and continuing clinical tests, recruiting personnel
and raising capital. Through May 31, 2004, we have derived our revenues from the
sale of a license option to INR to develop and market new patented products.

                                       6

<PAGE>


Going Concern

The Company's independent certified public accountants have stated in their
report included in this Form 10KSB, that the consolidated 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 shown in the consolidated financial statements, the Company incurred a loss
of $307,866 during the year ended May 31, 2004, had a cash balance of
approximately $58,964, and had a deficit accumulated during the development
stage of approximately $17.4 million and a stockholders' deficit of
approximately $8.4 million at May 31, 2004. These factors, among others, raise
substantial doubt about our ability to continue as a going concern.

We must raise additional funds in order to actively reinstate our research and
development efforts, to complete existing product testing which was suspended in
1987, or commence new testing on such products, and to conduct additional
testing on our products. We intend to obtain the necessary financing through our
Investment Agreement with Swartz Private Equity, LLC and other sources. There
can be no assurance that we will be successful in raising from Swartz sufficient
additional capital in order to continue and complete our research and
development and testing. Our future success is dependent upon raising additional
money to provide for the necessary operations of the Company. If we are unable
to obtain such additional financing, there would be a material adverse effect on
our business, financial position, and results of operations. Our continuation as
a going concern is dependent on our ability to generate sufficient capital to
meet our obligations on a timely basis, and to continue and complete our
research and development and testing efforts. However, no assurance can be given
that additional capital, if needed, will be available when required or upon
terms acceptable to the Company.

RESULTS OF OPERATIONS FOR THE YEARS ENDED MAY 31, 2004 AND 2003.

Sources of Revenues and Revenue Recognition

Our revenues were $0 in 2004 and $27,132 in 2003. Revenues in 2003 consisted
entirely of the fees paid to us for consulting services rendered during the
fiscal year.

We recognize revenues from licenses over the period of the applicable license.

Operating Expenses

Our expenses include research and development and general and administrative.
Research and development consists of laboratory expenses, consulting expenses,
test expenses, and other costs associated with the development of products not
yet being marketed. General and administrative expenses include the salaries and
benefit costs of management and other non-manufacturing employees, sales and
marketing expenses, rent, accounting, legal and operational costs. Personnel
compensation and facilities costs represent a high percentage of our operating
expenses and are relatively fixed in advance of each quarter.

Research and Development Costs. Direct research and development costs for 2004
were $0. Research and development costs for 2003 were $30,000, which consisted
of additional costs of the clinical trials on the products. The decrease results
from a slowdown in the testing done on potential product offerings.

General and Administrative Expenses. Direct costs were $307,936 for 2004, as
compared with $412,611 for 2003. The decrease was primarily due to lower
miscellaneous expenses, accounting fees, and accrual of interest charged on
accounts payable, which was partially offset by an increase in consulting and
legal fees. In the future, we expect direct costs to increase in absolute dollar
terms but to decrease as a percentage of revenues due to OTC products reaching
the market and the sale of additional product licenses. In the future, we expect
selling, general and administrative expenses to increase in absolute dollars but
to decrease as a percentage of revenues due to improved economies of scale and
higher overall revenues.

Interest Expense. Interest expense was $0 for 2004 as compared to $197,699 for
2003. This interest consists of interest accrued at a rate of 9% simple interest
per annum on funds advanced to the Company by Petro-Med Inc. During the fiscal
year ending May 31, 2003, both companies agreed to stop accruing interest on the
advanced funds. Our Company's Chief Executive Officer, Gerald N. Kern, also
serves as Chairman of Petro-Med Inc.

Net Loss. Net loss was approximately $307,866 for 2004 and $612,894 for 2003.
The decrease in the net loss in fiscal year 2004 is due primarily to the
decrease in interest expense and general and administrative expenses.

                                       7

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES FOR THE YEARS ENDED MAY 31, 2004 AND 2003

Since inception, we have funded our operations and investments in property and
equipment through cash from equity financings and cash from licensing fees.

Our cash and cash equivalents were $58,964 at May 31, 2004 (up from $10,053 at
May 31, 2002). This increase was due to the increase of cash inflow from
contributed capital.

Net cash used in operations in 2004 was approximately $91,538, as compared to
cash used in operations of $115,724 in 2003. Cash was used in operations in
fiscal year 2004 for payment of accounting, consulting, legal and travel
expenses.

Net cash used in investing activities in 2004 and 2003 was approximately $1,773
and $0, respectively, which was due to purchases of office equipment.

Net cash provided by financing activities in 2004 was approximately $142,222, as
compared to $94,000 in 2003. This increase was primarily due to proceeds
received from the sale of restricted stock.

On June 30, 2000, we entered into an investment agreement with Swartz Private
Equity, LLC which was amended and restated on February 15, 2001. The investment
agreement entitles us to issue and sell our common stock to Swartz for up to an
aggregate of $30 million from time to time during a three-year period beginning
on the date that the registration statement registering the resale of these
shares became effective, which was May 4, 2001. This is also referred to as a
put right. The trading volume limits the dollar amount of each sale and a
minimum period of time must occur between sales. In order to sell shares to
Swartz, there must be an effective registration statement on file with the SEC
covering the resale of the shares by Swartz and we must meet certain other
conditions. Through May 31, 2004, we have received $118,946 from Swartz under
this agreement.

We have incurred recurring operating losses and negative cash flows from
operating activities and have negative working capital. We believe that our
available equity financing arrangement with Swartz will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
two years. However, there can be no assurance that we will receive financing
from Swartz, that we will not require additional financing within this time
frame or that such additional financing, if needed, will be available on terms
acceptable to us, if at all.

Inflation

The Company has no experience with respect to the effect of inflation on its
business. However, the pharmaceutical industry is well developed and, based on
management's understanding of the industry, it believes that inflation will not
have a significant impact on the results of the Company's operations in the
future.

Item 8. Financial Statements and Supplementary Data
---------------------------------------------------
The financial statements required by this item are set forth as indicated in
Item 13.

Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure.
--------------------

On August 11, 2003, the Company dismissed Corbin & Company, LLP as its
independent auditor. Corbin & Company, LLP has not issued any opinion on the
Company's financial statements. The decision to dismiss Corbin & Company, LLP
was approved by the Company's Board of Directors.

Management of the Company knows of no past disagreements between the Company and
Corbin & Company, LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. There were no
reportable events (as such term is defined in Item 304 of Regulation S-K) that
occurred within the Company's two most recent fiscal years nor any subsequent
interim period preceding the replacement of Corbin & Company, LLP.

On August 11, 2003, the Company engaged MGB Partners, LLP, which appointment was
approved by the Company's Board of Directors. During the Company's two most
recent fiscal years and any subsequent interim period prior to the engagement of
MGB Partners, LLP, neither the Company nor anyone on the Company's behalf
consulted with MGB Partners, LLP regarding either (i) the application of
accounting principles to a specified transaction, either contemplated or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements or (ii) any matter that was either the subject of a
disagreement or a reportable event.

The Company has authorized Corbin & Company, LLP to respond fully to all
inquiries of MGB Partners, LLP.

                                       8

<PAGE>


                                    PART III

Item 10. Directors and Executive Officers
-----------------------------------------

The present directors and executive officers of the Company are listed below,
together with brief accounts of their experience and certain other information.

                                                                         Year
                                                                         first
           Name                  Age             Office                 elected
     ----------------------     -----     ------------------------      -------

     Gerald N. Kern              66       Chairman of the Board           1982
                                          Chief Executive Officer,
                                          Director

     Cynthia S. Kern             54       Vice Chairman                   2001
                                          Secretary                       1983

     Steven I. Kern              37       President and Director          2001
                                          Chief Operating Officer         2000
                                          Chief Financial Officer

     Lester F. Goldstein         60       Director                        1983

     Harry Hall                  69       Director                        1990


All officers serve at the pleasure of the board. Directors are elected for a
period of one year at our annual meeting of shareholders and serve until the
next annual meeting of shareholders or until their respective successors are
elected and qualified.

Gerald N. Kern
Chairman of the Board and Chief Executive Officer; Director

Mr. Gerald N. Kern has been our Chairman of the Board and Chief Executive
Officer since July 1982 and has been a director of our Company since July 1982.
Mr. Kern served as our President from July 1982 until June 1995. From August
1996 to February 1998, Mr. Kern also served as Chairman of the Board, President
and Chief Executive Officer of GumTech International, Inc., a chewing gum
manufacturer. From August 1994 to August 1996, Mr. Kern served as President of
AURA Interactive, an electronics company. Since July 1982, he has served as
President and Chief Executive Officer and a director of Petro-Med, Inc., a
shareholder of our Company. Prior to that, Mr. Kern served in senior executive
positions with International Playtex Corporation and Max Factor and Company.

Steven I. Kern
Director

Mr. Steven I. Kern has served as a director of our Company and as our President
since August 2001, and as our Chief Operating Officer and Chief Financial
Officer since February 2000. During fiscal year 2003, he resigned as Chief
Operating Officer and Chief Financial Officer. Prior to joining our Company, Mr.
Kern was the Vice President of Marketing for Financial Management Advisors, Inc.
from February 1999 to January 2000. From July 1996 to January 1999, Mr. Kern
served as a Vice President for Merrill Lynch in its Private Client Group. Mr.
Kern was also a Vice President for Smith Barney from October 1993 to July 1996.
He graduated from the University of California, Los Angeles with a B.A. in
English.

Cynthia S. Kern
Vice Chairman, Director and Corporate Secretary

Mrs. Kern has served as our Vice Chairman since August 2001, and as a director
of our Company and our Corporate Secretary since July 1982. She also served as
our President from 1995 until August 2001. Prior to joining our Company, Mrs.
Kern served as President and Treasurer of FSL Cosmetics, Ltd. Mrs. Kern received
a B.A. in English from the University of California, Los Angeles.

                                       9

<PAGE>
<TABLE>
<CAPTION>


Lester F. Goldstein, Ph.D.
Director

Dr. Goldstein has been a member of our Board of Directors since July 1982. Since
January 2000, Dr. Goldstein has served as the President and Chief Operating
Officer of Island Mist, a manufacturer of portable misting systems. From April
1998 to January 2000, Dr. Goldstein was Vice President of Coast Energy, a
manufacturer of energy saving devices. From August 1996 to February 1998, Dr.
Goldstein served as Executive Vice President of Gumtech International, Inc., a
chewing gum manufacturer, where he was responsible for operations. Prior to that
position, from July 1992 to August 1996 Dr. Goldstein served as Vice President
of AURA Systems, an electronics company. Dr. Goldstein obtained a B.A. from
Hofstra University in Physics and Mathematics and an M.S. and Ph.D. in Physics
from the Polytechnic University of New York.

Harry Hall
Director

Mr. Hall has been a member of our Board of Directors since 1984. Mr. Hall has
over 30 years of corporate management experience. Since 1986, Mr. Hall has been
a principal at Hall & Associates, a sales and marketing consulting firm. Mr.
Hall is a graduate of Auburn University where he received a B.S. in Business
Administration and he has completed the Effective Executive Program at Wharton
University. Mr. Hall has also served as the President of the Consumer Affairs
Committee of the American Apparel Manufacturers Association.

Mrs. Kern is the wife of, and Mr. Steven Kern is the son of, Mr. Gerald Kern,
our Chairman and Chief Executive Officer.

Item 11. Executive Compensation

The following table sets forth all cash compensation for the fiscal years ended
May 31, 2004, 2003 and 2002 for (1) the Company's Chief Executive Officer and
(2) each of its most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000.

                                                      Summary Compensation Table
                                                        Annual Compensation                    Long-Term Compensation Award
                                   --------------------------------------------------------    -----------------------------
                                                                                                                 Securities
           Name and                                                                              Restricted      Underlying
      Principal Position           Fiscal Year         Salary         Bonus        Other        Stock Awards       Options
-------------------------------    -----------     -------------     -------    -----------     ------------    ------------
<S>                                   <C>          <C>       <C>      <C>        <C>                 <C>                   <C>
Gerald N. Kern                        2004         $ 150,000 (1)      $ 0        $12,000(1)          0                     0
  Chairman of the Board and           2003         $ 150,000 (1)      $ 0        $12,000(1)          0               500,000
  Chief Executive Officer             2002         $ 150,000 (1)      $ 0        $12,000(1)          0            24,050,000



Steven I. Kern                        2004         $      0  (2)      $ 0        $ 0    (2)          0                     0
  Chief Operating Officer and         2003         $   30,000(2)      $ 0        $ 3,000(2)          0               500,000
   Chief Financial Officer            2002         $ 120,000 (2)      $ 0        $12,000(2)          0            22,050,000

--------------
(1) The Company accrued the total annual compensation for the last three fiscal
years.

(2) The Company accrued the total annual compensation for the last three fiscal
years.

                                       10
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


OPTION GRANTS IN FISCAL 2004

The following table provides information concerning grants of options to
purchase the Company's common stock that we made to (1) the Company's Chief
Executive Officer and (2) each of its most highly compensated executive officers
whose cash compensation exceeded $100,000 during the fiscal year ended May 31,
2004. We did not grant stock appreciation rights to these individuals during
fiscal year ended May 31, 2004 and 2003.

                            Number of           Percentage of Total
                           Securities           Options Granted to
                           Underlying           Employees in Fiscal      Exercise Price       Expiration
    Name                 Options Granted              2004                  Per Share           Date
-----------------     --------------------      -------------------      --------------       ----------
<S>                          <C>                      <C>                    <C>               <C>
Gerald N. Kern               500,000                  13%                    $0.010            12/24/07


Steven I. Kern               500,000                  13%                    $0.010            12/24/07



OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table provides information on option exercises in the fiscal year
ended May 31, 2004, by the Named Executive Officers and the value of unexercised
options held by the Named Executive Officers as of May 31, 2004.


                                                   Number of securities underlying       Value of unexercised in-the-money
                                                 unexercised options at May 31, 2004         options at May 31, 2004
                                                 ------------------------------------   ----------------------------------

                       Shares
                      Acquired
                         on           Value
     Name             Exercise     Realized (1)    Exercisable       Unexercisable      Exercisable (1)     Unexercisable
--------------       ----------     ----------      ----------       -------------      --------------      --------------

Gerald N. Kern                0              0      25,550,000                 0             500,000                   0
                     ==========     ==========      ==========        ==========          ==========          ==========

Steven I. Kern                0              0      24,550,000                 0            500,000                   0
                     ==========     ==========      ==========        ==========          ==========          ==========

(1) Based on the closing price of our common stock of $0.018 for the last
business day of the fiscal year ended May 31, 2004.

Employment Agreements

We entered into an employment agreement with Gerald N. Kern dated as of February
3, 2000 and approved by our directors on April 20, 2000, providing for his
employment as Chief Executive Officer effective February 3, 2000 and amended on
May 3, 2001. During the period between February 3, 2000 and May 3, 2001, Mr.
Kern acted in his capacities without accruing salary. The agreement was
contingent upon completion of the Swartz offering, which took place on May 3,
2001. The agreement provides for a three-year term terminating on March 15,
2003, however if it not terminated by either party, the term shall be
automatically renewed for successive one year periods commencing on each
anniversary date of the original term. As of May 31, 2003, the agreement did not
terminate. The agreement provides for a base salary of $150,000 per annum for
the first year with a minimum annual increase equal to the consumer price index.
He is also eligible for bonuses at the discretion of our Board of Directors.
Certain other expenses, such as a car allowance, travel and expense account,
will also be paid to him on a monthly basis. We may terminate Mr. Kern's
employment with or without cause. However, if we terminate him without cause
this would result in a lump sum severance payment based on two years of base
salary and bonus, as defined. Also, upon a change of control, Mr. Kern may elect
to terminate his employment and obtain a lump sum severance payment based on two
years of base salary and bonus, as defined.

                                       11
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

On February 3, 2000 we entered into an employment agreement with Steven I. Kern,
which was approved by our directors on February 3, 2000 and amended on May 3,
2001, providing for his employment as Chief Operating Officer and Chief
Financial Officer. During the period between February 3, 2000 and May 3, 2001,
Mr. Kern acted in his capacities without accruing salary. The agreement was
contingent upon completion of the Swartz offering, which closing took place on
May 3, 2001. The agreement provides for a three-year term terminating on March
15, 2003, however if it not terminated by either party, the term shall be
automatically renewed for successive one year periods commencing on each
anniversary date of the original term. As of May 31, 2003, the agreement did not
terminate. The agreement provides for a base salary of $120,000 per annum. The
base salary may be increased at the discretion of our Board. The agreement
provides for payment of certain expenses, such as a car allowance, expense
account and travel, and eligibility for executive bonuses at the discretion of
our Board of Directors. We may terminate Mr. Kern's employment with or without
cause. However, if we terminate him without cause this would result in a lump
sum severance payment based on two years of base salary and bonus, as defined.
If within 12 months of a change in control Mr. Kern's employment is terminated
other than for cause, or if Mr. Kern refuses to accept or voluntarily resigns
from a position other than a qualified position, then he will receive a lump sum
severance payment based on two years of base salary and bonus, as defined.

The following table sets forth, as of May 31, 2004, the composition of the
Company's equity compensation plans:

                                                        EQUITY COMPENSATION PLANS

                                                      (a)                       (b)                          (c)
                                       ---------------------------    ----------------------     ------------------------------
                                                                                                     Number of Securities
                                                                        Weighted-average         Remaining Available for Future
                                       Number of Securities to be       Exercise Price of            Issuance Under Equity
                                        Issued upon Exercise of            Outstanding            Compensation Plans (excluding
                                         Outstanding Options,           Options, Warrants         Securities reflected in Column
                                          Warrants and Rights               and Rights                        (a))
           Plan Category                        (#)                             ($)                           (#)
------------------------------         ---------------------------    ----------------------     ------------------------------
<S>                                                       <C>              <C>                                     <C>
Equity compensation plans
approved by security holders                                 0          $              0                            0

Equity compensation plans not
approved by security holders                        57,890,000                      0.06                            0
                                          --------------------          ----------------                -------------

Total                                               57,890,000          $           0.06                            0
                                          ====================          ================                =============

Item 11. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

The following table sets forth, as of May 2004, the stock ownership of each
officer and director of our Company, of all our officers and directors as a
group, and of each person known by us to be a beneficial owner of five percent
or more of our common stock. Except as otherwise noted, each person listed below
is the sole beneficial owner of the shares and has sole investment and voting
power over such shares. Unless otherwise indicated, the address of each named
beneficial owner is the same as that of our principal executive offices located
at 10105 E. Via Linda, No. 103, Scottsdale, Arizona 85258.

Name and Address                  Amount and Nature                   Percentage
of Beneficial Owner (1)           of Beneficial Ownership              of Class
-----------------------           -----------------------             ----------

Gerald N. Kern                    58,316,794       (2)                  27.3%

Petro-Med, Inc.                   26,256,794                            12.3%

Steven I. Kern                    24,905,000       (3)                  11.7%

Cynthia S. Kern                    3,455,000       (4)                   1.6%

Lester Goldstein                   1,490,000       (5)                    *

Harry Hall                         1,100,000       (6)                    *

Immune Network, Limited            9,145,000                             4.3%
3650 Westbrook Mall
Vancouver, Canada, BC V6S ZLZ

All directors & officers          89,266,794                            41.8%
as a group (5 persons)

                                       12
</TABLE>

<PAGE>


* Less than 1%.

(1) Beneficial ownership has been determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934. Pursuant to the rules of the Securities and
Exchange Commission, shares of common stock that each named person and group has
the right to acquire within 60 days pursuant to options, warrants, conversion
privileges or other rights, are deemed outstanding for purposes of computing
shares beneficially owned by and the percentage ownership of each such person
and group. However, such shares are not deemed outstanding for purposes of
computing the shares beneficially owned by or percentage ownership of any other
person or group.

(2) Mr. Kern is the Chairman of the Board and Chief Executive Officer of
Petro-Med, Inc. and may be deemed the beneficial owner of the 26,256,794 shares
owned by Petro-Med, Inc. Includes 25,550,000 shares issuable upon exercise of
outstanding stock options. Does not include an aggregate of 25,210,000 shares of
our common stock beneficially owned by Mr. Kern's spouse and adult children. Mr.
Kern disclaims beneficial ownership of the shares held by such persons.

(3) Includes 24,550,000 shares issuable upon exercise of outstanding stock
options.

(4) Includes 1,100,000 shares issuable upon exercise of outstanding stock
options. Does not include an aggregate of 7,260,000 shares of common stock held
by Ms. Kern's spouse and adult children. Ms. Kern disclaims beneficial ownership
of the shares held by such persons.

(5) Includes 950,000 shares issuable upon exercise of outstanding stock purchase
warrants and options.

(6) Includes 750,000 shares issuable upon exercise of outstanding stock purchase
warrants and options.

The directors of Petro-Med are Gerald N. Kern, Harry Hall and Jerry Tennant.
Gerald N. Kern is the Chairman, President and Chief Executive Officer of
Petro-Med.

Petro-Med may be deemed a parent or promoter of the Company under the Securities
Act. Gerald N. Kern may be deemed a parent of Petro-Med and therefore a parent
of the Company under the Securities Act.

The following table sets forth, as of May 31, 2004, the shares of common stock
of Petro-Med owned of record and beneficially by certain officers and directors
of the Company and by all such officers and directors of the Company as a group.

           Name                             Shares Owned     Percentage of Class
     ------------------------             ---------------    -------------------

     Gerald N. Kern                       3,613,840   (1)           15.85%

     Lester F. Goldstein                      8,000                  0.4%

     All directors and officers as a
       group (4 persons)                  3,621,840                 15.89%

(1) 2,087,270 shares are owned by FSL Cosmetics, Ltd., of which Gerald N. Kern
is the sole shareholder. Cynthia S. Kern, as the wife of Gerald N. Kern, may be
deemed, as a result of community property laws, to be a beneficial owner of 50%
of the shares owned by Mr. Kern.

Except for Gerald N. Kern, the above table does not include those persons who
beneficially own more than 5% of Petro-Med's outstanding common stock, which
persons are Sergei Givotovsky who owns 1,683,640 shares, and Lakestone
Acceptance Corp., who owns 1,370,000 shares or approximately 7.4% and 6%
respectively.

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

For a description of employment agreements between the Company and certain
officers, see Directors and Executive Officers of the Registrant - Employment
Agreements.

At May 31, 2004, the Company maintained short-term advances from affiliates of
$4,539,346 which are due on demand. Accrued interest is attributed to the
outstanding balance as incurred. The advances bear interest at 9% per annum on
any outstanding balance. During fiscal year 2003, both partners agreed to stop
accruing interest on the advanced funds. Interest expense on the advances was $0
and $197,699 for the years ended May 31, 2004 and 2003, respectively.

                                       13

<PAGE>


                                     Part IV

Item 13. Exhibits and Reports on Form 8-K
-----------------------------------------

Index to Financial Statements

INDEPENDENT AUDITORS' REPORTS................................................F-1

CONSOLIDATED FINANCIAL STATEMENTS

        Consolidated Balance Sheet as of May 31, 2004........................F-2

        Consolidated Statements of Operations for the years ended
          May 31, 2003 and 2002 and for the period from May 4, 1982
         (date of inception) through May 31, 2004............................F-3

        Consolidated Statements of Stockholders' Deficit for the
          years ended May 31, 2003 and 2002 and for the period
          from May 4, 1982 (date of inception) through May 31, 2004...F-4 - F-10

        Consolidated Statements of Cash Flows for the years ended
          May 31, 2003 and 2002 and for the period from May 4, 1982
          (date of inception) through May 31, 2004..........................F-11

        Notes to Consolidated Financial Statements for the years
          ended May 31, 2004 and 2003................................F-12 - F-21


                                       14

<PAGE>


Board of Directors
Meditech Pharmaceuticals, Inc.
Scottsdale, AZ


                          INDEPENDENT AUDITORS' REPORT


We have audited the accompanying consolidated balance sheet of Meditech
Pharmaceuticals, Inc. and subsidiary (development stage companies) (the
"Company") as of May 31, 2004, and related consolidated statement of operations,
stockholders' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
May 31, 2004, and the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the Untied States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. During the year ended May 31,
2004, the Company incurred a net loss of $307,866. In addition, at May 31, 2004,
the Company had an accumulated deficit during development stage of $17,098,644
and a negative working capital of $8,201,462. Recovery of the Company's assets
is dependent upon future events, the outcome of which is indeterminable. In
addition, successful completion of the Company's transition, ultimately, to the
attainment of profitable operations is dependent upon obtaining adequate
financing to fulfill its development activities and achieving a level of sales
adequate to support the Company's cost structure. These factors, among others,
as discussed in Note A of the consolidated financial statement, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note A. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




MGB Partners, LLP
Los Angeles, CA
August 27, 2004

                                      F-1

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                          (Development Stage Companies)
                           CONSOLIDATED BALANCE SHEET
       FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
================================================================================



                                     ASSETS


                                                                   May 31, 2004
                                                                   ------------

Current assets:
      Cash and cash equivalents                                    $     58,964
                                                                   ------------

          Total current assets                                           58,964

Property and equipment
      Property and equipment                                              5,366
      Less: accumulated depreciation                                     (4,508)
                                                                   ------------

          Total property and equipment, net                                 858

Other assets                                                              7,448
                                                                   ------------
          Total assets                                             $     67,270
                                                                   ============


            LIABILITIES AND STOCKHOLDERS' DEFICIT





Current liabilities:
      Accounts payable and accrued expenses                        $    257,893
      Accrued compensation                                            3,493,187
      Advances from affiliates                                        4,509,346
                                                                   ------------

          Total current liabilities                                   8,260,425

Minority interest in consolidated subsidiary                            191,300

Commitments and contigencies

Stockholders' deficit:
      Preferred stock, $0.001 par value; 25,000,000 shares
        authorized; no shares issued and outstanding
      Common stock, $0.001 par value; 400,000,000 shares
        authorized; 171,685,487 shares issued and outstanding           198,672
      Subscriptions receivable                                         (165,000)
      Additional paid-in capital                                      8,963,610
      Deficit accumulated during the development stage              (17,381,738)
                                                                   ------------

           Total stockholders' deficit                               (8,384,455)
                                                                   ------------
           Total liabilities and stockholders' deficit             $     67,270
                                                                   ============


               See independent auditors' report and accompanying
                   notes to consolidated financial statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                              MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                      (Development Stage Companies)
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
=======================================================================================================



                                                                                         For The Period
                                                                                          May 14,1982
                                                        For The Year     For The Year      (Date of
                                                           Ended            Ended         of Inception
                                                        May 31, 2004     May 31, 2003     May 31, 2004
                                                        -------------    -------------    -------------
<S>                                                     <C>              <C>              <C>
Revenue                                                 $        --      $      27,132    $     125,000
                                                        -------------    -------------    -------------

Operating expenses:
     Research and development                                    --             30,000        1,869,450
     General and administrative                               307,936          412,611       13,579,522
     General                                                     --               --            325,400
                                                        -------------    -------------    -------------

              Total Operating expenses                        307,936          442,611       15,774,372
                                                        -------------    -------------    -------------

Loss before other income (expense)                           (307,936)        (415,479)     (15,649,372)
                                                        -------------    -------------    -------------

Other income (expense):
     Interest expense                                            --           (197,699)      (3,241,675)
     Interest income                                               70              284          305,559
     Other income, net                                           --               --             81,612
     Gain on writedown of accounts payable                       --               --          1,405,232
                                                        -------------    -------------    -------------

              Total other income (expenses)                        70         (197,415)      (1,449,272)
                                                        -------------    -------------    -------------

Loss before minority interest in losses of subsidiary        (307,866)        (612,894)     (17,098,644)
                                                        -------------    -------------    -------------
Minority interest in losses of subsidiary                        --               --            329,800
                                                        -------------    -------------    -------------

Net (loss) income                                       $    (307,866)   $    (612,894)   $ (16,768,844)
                                                        =============    =============    =============

Net (loss) income available to common stockholders
   per common share:

Net (loss) income per common share  basic and diluted   $        --      $        --
                                                        =============    =============
Weighted average shares outstanding:
     Basic                                                164,901,971      155,512,905
                                                        =============    =============

     Diluted                                              164,901,971      155,512,905
                                                        =============    =============


                            See independent auditors' report and accompanying
                               notes to consolidated financial statements.

                                                   F-3

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
========================================================================================



                                           Common Stock              Treasury Stock
                                   -------------------------   -------------------------
                                       Shares        Amount        Shares        Amount
                                   -----------   -----------   -----------   -----------
<S>                                 <C>          <C>             <C>         <C>
Initial capitalization              48,000,000   $    48,000          --      $     --

Net loss                                  --            --            --            --
                                   -----------   -----------   -----------   -----------
Balance, May 31, 1983               48,000,000        48,000          --            --

Private placement of stock           4,715,000         4,700          --            --

Initial public offering             13,200,000        13,200          --            --

Offering costs                            --            --            --            --

Cash on sale of common
 stock to officer                       50,000            50          --            --

Compensation on stock
 issued to officer                      50,000            50          --            --

Net loss                                  --            --            --            --
                                   -----------   -----------   -----------   -----------

Balance, May 31, 1984               66,015,000        66,000          --            --

Net loss                                  --            --            --            --
                                   -----------   -----------   -----------   -----------

Balance, May 31, 1985               66,015,000        66,000          --            --

Issuance of stock for
 subscriptions to officers           8,000,000         8,000          --            --

Issuance of options for services
 to consultants                           --            --            --            --

Net loss                                  --            --            --            --
                                   -----------   -----------   -----------   -----------

                                           F-4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                        MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                (Development Stage Companies)
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
             FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                        (Continued)
===========================================================================================

                                                                   Deficit
                                                                 Accumulated
                                                   Additional     During the
                                   Subscriptions    Paid-in      Development
                                    Receivable      Capital         Stage          Total
                                   -----------    -----------    -----------    -----------
<S>                                <C>            <C>            <C>            <C>
Initial capitalization             $      --      $   529,400    $      --      $   577,400

Net loss                                  --            --        (1,022,600)    (1,022,600)
                                   -----------    -----------    -----------    -----------
Balance, May 31, 1983                     --          529,400     (1,022,600)      (445,200)

Private placement of stock                --          584,700           --          589,400

Initial public offering                   --        3,946,800           --        3,960,000

Offering costs                            --         (935,435)          --         (935,435)

Cash on sale of common
 stock to officer                         --            7,450           --            7,500

Compensation on stock
 issued to officer                        --           20,500           --           20,550

Net loss                                  --             --       (1,338,400)    (1,338,400)
                                   -----------    -----------    -----------    -----------

Balance, May 31, 1984                     --        4,153,415     (2,361,000)     1,858,415

Net loss                                  --             --       (1,794,100)    (1,794,100)
                                   -----------    -----------    -----------    -----------

Balance, May 31, 1985                     --        4,153,415     (4,155,100)        64,315

Issuance of stock for
 subscriptions to officers          (1,440,000)     1,440,000           --            8,000

Issuance of options for services
 to consultants                           --          160,200           --          160,200

Net loss                                  --             --       (1,533,800)    (1,533,800)
                                   -----------    -----------    -----------    -----------


                    See independent auditors' report and accompanying
                        notes to consolidated financial statements

                                         F-4(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                    MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                            (Development Stage Companies)
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
         FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
====================================================================================



                                        Common Stock              Treasury Stock
                                   -----------------------   -----------------------
                                     Shares       Amount       Shares       Amount
                                   ----------   ----------   ----------   ----------

<S>                                <C>              <C>      <C>           <C>
Balance, May 31, 1986              74,015,000       74,000         --           --

Conversion of advances from
 affiliates                        10,000,000       10,000         --           --

Rescission of common stock
 issued to officer and held in
 treasury                                --           --      8,000,000         --

Issuance of shares for services
 rendered                             310,000          300         --           --

Issuance of Viral Research
 Technologies, Inc. common
 stock for services                      --           --           --           --

Issuance of Viral Research
 Technologies, Inc. options
 for services                            --           --           --           --

Issuance of options for services         --           --           --           --

 Net loss                                --           --           --           --
                                   ----------   ----------   ----------   ----------

Balance, May 31, 1987              84,325,000       84,300    8,000,000         --

Issuance of shares to
 consultants for services           1,540,000        1,500         --           --

 Stock options exercised              366,000          400         --           --

Stock options issued to
 employees and consultants               --           --           --           --

                                        F-5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                        (Continued)
=======================================================================================


                                                                 Deficit
                                                               Accumulated
                                                 Additional    During the
                                 Subscriptions    Paid-in      Development
                                   Receivable     Capital         Stage         Total
                                   ----------    ----------    ----------    ----------
<S>                                <C>            <C>          <C>           <C>
Balance, May 31, 1986              (1,440,000)    5,753,615    (5,688,900)   (1,301,285)


Conversion of advances from
 affiliates                              --         549,900          --         559,900


Rescission of common stock
 issued to officer and held in
 treasury                           1,440,000    (1,440,000)         --            --


Issuance of shares for services
 rendered                                --          77,900          --          78,200


Issuance of Viral Research
 Technologies, Inc. common
 stock for services                      --         296,700          --         296,700


Issuance of Viral Research
 Technologies, Inc. options
 for services                            --         190,400          --         190,400


Issuance of options for services         --          42,200          --          42,200


 Net loss                                --            --      (1,706,300)   (1,706,300)
                                   ----------    ----------    ----------    ----------


Balance, May 31, 1987                    --       5,470,715    (7,395,200)   (1,840,185)


Issuance of shares to
 consultants for services                --         125,800          --         127,300


 Stock options exercised                 --           9,500          --           9,900


Stock options issued to
 employees and consultants               --          13,800          --          13,800


                    See independent auditors' report and accompanying
                        notes to consolidated financial statements

                                         F-5(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
 =====================================================================================



                                         Common Stock              Treasury Stock
                                    -----------------------   -----------------------
                                      Shares       Amount       Shares       Amount
                                    ----------   ----------   ----------   ----------
<S>                                 <C>           <C>         <C>          <C>
Issuance of common stock of
 subsidiary                               --           --           --           --

Net loss                                  --           --           --           --
                                    ----------   ----------   ----------   ----------

Balance, May 31, 1988               86,231,000       86,200    8,000,000         --

Common stock issued to
  officers                           8,000,000        8,000         --           --

Stock options issued to employees
  and consultants                         --           --           --           --

Sale of common stock                 2,756,832        2,800         --           --

Net loss                                  --           --           --           --
                                    ----------   ----------   ----------   ----------

Balance, May 31, 1989               96,987,832       97,000    8,000,000         --

Sale of common stock                   100,000          100         --           --

Stock options issued to employees         --           --           --           --

Net loss                                  --           --           --           --
                                    ----------   ----------   ----------   ----------

Balance, May 31, 1990               97,087,832       97,100    8,000,000         --

Stock issued for services            2,750,000        2,800         --           --

Net loss                                  --           --           --           --
                                    ----------   ----------   ----------   ----------

Balance, May 31, 1991               99,837,832       99,900    8,000,000         --

                                         F-6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                       (Continued)
======================================================================================



                                                                Deficit
                                                               Accumulated
                                                   Additional   During the
                                    Subscriptions    Paid-in   Development
                                      Receivable     Capital      Stage         Total
                                    ----------   ----------   ----------    ----------
<S>                                 <C>          <C>          <C>           <C>
Issuance of common stock of
 subsidiary                               --        290,000         --         290,000

Net loss                                  --           --       (880,200)     (880,200)
                                    ----------   ----------   ----------    ----------

Balance, May 31, 1988                     --      5,909,815   (8,275,400)   (2,279,385)

Common stock issued to
  officers                                --         72,000         --          80,000

Stock options issued to employees
  and consultants                         --         15,600         --          15,600

Sale of common stock                      --        131,600         --         134,400

Net loss                                  --           --       (641,400)     (641,400)
                                    ----------   ----------   ----------    ----------

Balance, May 31, 1989                     --      6,129,015   (8,916,800)   (2,690,785)

Sale of common stock                      --          3,200         --           3,300

Stock options issued to employees         --          7,300         --           7,300

Net loss                                  --           --       (522,000)     (522,000)
                                    ----------   ----------   ----------    ----------

Balance, May 31, 1990                     --      6,139,515   (9,438,800)   (3,202,185)

Stock issued for services                 --         38,300         --          41,100

Net loss                                  --           --       (479,100)     (479,100)
                                    ----------   ----------   ----------    ----------

Balance, May 31, 1991                     --      6,177,815   (9,917,900)   (3,640,185)


                    See independent auditors' report and accompanying
                       notes to consolidated financial statements

                                        F-6(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
====================================================================================



                                     Common Stock               Treasury Stock
                               -------------------------   -------------------------
                                 Shares        Amount        Shares        Amount
                               -----------   -----------   -----------   -----------
<S>                              <C>               <C>     <C>           <C>
Sale of common stock             2,000,000         2,000          --            --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1992          101,837,832       101,900     8,000,000          --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1993          101,837,832       101,900     8,000,000          --

Stock issued for services        7,385,300         7,400          --            --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1994          109,223,132       109,300     8,000,000          --

Committed stock for services          --            --            --            --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1995          109,223,132       109,300     8,000,000          --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1996          109,223,132       109,300     8,000,000          --

Stock issued for services        3,360,300         3,300          --            --

Stock issued to employees
as compensation                 11,980,000        12,000          --            --

Net loss                              --            --            --            --
                               -----------   -----------   -----------   -----------
Balance, May 31, 1997          124,563,432       124,600     8,000,000          --

                                         F-7
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                             (Development Stage Companies)
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
          FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2003
                                     (Continued)
=====================================================================================



                                                             Deficit
                                                           Accumulated
                                              Additional   During the
                               Subscriptions   Paid-in     Development
                                Receivable     Capital        Stage          Total
                               -----------   -----------   -----------    -----------
<S>                            <C>           <C>           <C>            <C>
Sale of common stock                  --          29,400          --           31,400

Net loss                              --            --        (483,100)      (483,100)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1992                 --       6,207,215   (10,401,000)    (4,091,885)

Net loss                              --            --        (449,400)      (449,400)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1993                 --       6,207,215   (10,850,400)    (4,541,285)

Stock issued for services             --         208,400          --          215,800

Net loss                              --            --        (753,900)      (753,900)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1994                 --       6,415,615   (11,604,300)    (5,079,385)

Committed stock for services          --          13,600          --           13,600

Net loss                              --            --        (515,600)      (515,600)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1995                 --       6,429,215   (12,119,900)    (5,581,385)

Net loss                              --            --        (501,600)      (501,600)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1996                 --       6,429,215   (12,621,500)    (6,082,985)

Stock issued for services             --          89,100          --           92,400

Stock issued to employees
as compensation                       --         322,900          --          334,900

Net loss                              --            --        (957,400)      (957,400)
                               -----------   -----------   -----------    -----------
Balance, May 31, 1997                 --       6,841,215   (13,578,900)    (6,613,085)


                  See independent auditors' report and accompanying
                      notes to consolidated financial statements

                                      F-7(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
=========================================================================================



                                         Common Stock               Treasury Stock
                                    -------------------------   -------------------------
                                      Shares        Amount        Shares        Amount
                                    -----------   -----------   -----------   -----------

<S>                                 <C>           <C>           <C>           <C>
Net loss                                   --            --            --            --
                                    -----------   -----------   -----------   -----------
Balance, May 31, 1998               124,563,432       124,600     8,000,000          --

Stock issued to employees             3,500,000         3,500          --            --

Stock issued to consultants
  for services                        1,300,000         1,300          --            --

Net loss                                   --            --            --            --
                                    -----------   -----------   -----------   -----------
Balance, May 31, 1999               129,363,432       129,400     8,000,000          --

Stock issued to employees
  as compensation                       450,000           400          --            --

Stock issued to vendors
  for services                        1,400,000         1,400          --            --

Exercise of options for
  accrued compensation                5,000,000         5,000          --            --

Exercise of options for
  subscriptions receivable              500,000           500          --            --

Stock options issued to
  consultants                              --            --            --            --

Stock options issued to employees          --            --            --            --

Contributed services                       --            --            --            --

                                           F-8
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                        MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                (Development Stage Companies)
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
             FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                        (Continued)
===========================================================================================



                                                                   Deficit
                                                                 Accumulated
                                                   Additional    During the
                                   Subscriptions     Paid-in     Development
                                    Receivable       Capital        Stage          Total
                                    -----------    -----------   -----------    -----------
<S>                                 <C>            <C>           <C>            <C>
Net loss                                   --             --        (555,200)      (555,200)
                                    -----------    -----------   -----------    -----------
Balance, May 31, 1998                      --        6,841,215   (14,134,100)    (7,168,285)

Stock issued to employees                  --          120,000          --          123,500

Stock issued to consultants
  for services                             --           51,700          --           53,000

Net loss                                   --             --        (767,400)      (767,400)
                                    -----------    -----------   -----------    -----------
Balance, May 31, 1999                      --        7,012,915   (14,901,500)    (7,759,185)

Stock issued to employees
  as compensation                          --           10,850          --           11,250

Stock issued to vendors
  for services                             --           73,600          --           75,000

Exercise of options for
  accrued compensation                     --           45,000          --           50,000

Exercise of options for
  subscriptions receivable              (10,000)         9,500          --             --

Stock options issued to
  consultants                              --           29,000          --           29,000

Stock options issued to employees          --           35,435          --           35,435

Contributed services                       --          126,900          --          126,900


                      See independent auditors' report and accompanying
                         notes to consolidated financial statements

                                          F-8(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                             (Development Stage Companies)
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
          FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
======================================================================================



                                       Common Stock              Treasury Stock
                                 -------------------------   -------------------------
                                   Shares        Amount        Shares        Amount
                                 -----------   -----------   -----------   -----------
<S>                              <C>           <C>           <C>           <C>
Stock option issued to Immune
  Network Research, Ltd.                --            --            --            --

Net loss                                --            --            --            --
                                 -----------   -----------   -----------   -----------
Balance, May 31, 2000            136,713,432       136,700     8,000,000          --

Exercise of Immune Network
   Research, Ltd. stock option    10,000,000        10,000          --            --

Contributed services                    --            --            --            --

Employee option exercise           1,500,000         1,500          --            --

Exercise of put option to
   Swartz LLC                        605,055           605          --            --

Shares to be returned from
   Swartz LLC                           --            --         894,945          --

Cost incurred to register
  common stock                          --            --            --            --

Stock options issued to
consultants                             --            --            --            --

Net income                              --            --            --            --
                                 -----------   -----------   -----------   -----------
Balance, May 31, 2001            148,818,487       148,805     8,894,945          --

Proceeds received for
  exercise of put option
  to Swartz LLC                         --            --            --            --

                                          F-9
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                      MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                        (Continued)
==========================================================================================



                                                                 Deficit
                                                               Accumulated
                                                Additional     During the
                                Subscriptions     Paid-in      Development
                                  Receivable      Capital         Stage          Total
                                 -----------    -----------    -----------    -----------
<S>                              <C>            <C>            <C>            <C>
Stock option issued to Immune
  Network Research, Ltd.                --          400,000           --          400,000

Net loss                                --             --       (1,150,100)    (1,150,100)
                                 -----------    -----------    -----------    -----------
Balance, May 31, 2000                (10,000)     7,743,200    (16,051,600)    (8,181,700)

Exercise of Immune Network
   Research, Ltd. stock option          --          290,000           --          300,000

Contributed services                    --          336,150           --          336,150

Employee option exercise            (155,000)       153,500           --             --


Exercise of put option to
   Swartz LLC                        (48,404)        47,799           --             --

Shares to be returned from
   Swartz LLC                           --             --             --             --

Cost incurred to register
  common stock                          --          (76,973)          --          (76,973)

Stock options issued to
consultants                             --           19,500           --           19,500

Net income                              --             --          562,695        562,695
                                 -----------    -----------    -----------    -----------
Balance, May 31, 2001               (213,404)     8,513,176    (15,488,905)    (7,040,328)

Proceeds received for
  exercise of put option
  to Swartz LLC                       48,404           --             --           48,404


                See independent auditors' report and accompanying
                   notes to consolidated financial statements

                                   F-9(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                               (Development Stage Companies)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
            FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
==========================================================================================



                                         Common Stock              Treasury Stock
                                 ---------------------------   ---------------------------
                                    Shares         Amount         Shares         Amount
                                 ------------   ------------   ------------   ------------
<S>                              <C>            <C>            <C>            <C>
Exercise of put option to
  Swartz LLC                        1,157,000          1,157           --             --

Shares to be returned from
  Swartz LLC                             --             --        3,843,000           --

Reimbursement for costs
  incurred to register common
  stock                                  --             --             --             --

Stock issued to consultant for
  fundraising activity                250,000            250           --             --

Stock options issued to
  consultants                            --             --             --             --

Stock issued for exercise of
  option                            2,500,000          2,500           --             --

Net loss                                 --             --             --             --
                                 ------------   ------------   ------------   ------------
Balance, May 31, 2002             152,725,487        152,712     12,737,945           --

Sale of Stock                       5,860,000          5,860           --             --

Stock issued to consultant            300,000            300           --             --

Stock options issued to
 consultants                             --             --             --             --

Net loss                                 --             --             --             --
                                 ------------   ------------   ------------   ------------

Balance, May 31, 2003             158,885,487   $    158,872     12,737,945   $       --

Sale of Stock                       9,800,000          9,800           --             --

Stock issued as forgiveness
 of debt                            3,000,000         30,000           --             --

Net loss                                 --             --             --             --
                                 ------------   ------------   ------------   ------------

Balance, May 31, 2004             171,685,487        198,672     12,737,945           --

                                           F-10
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                         MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                 (Development Stage Companies)
                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
              FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
                                         (Continued)
=============================================================================================



                                                                  Deficit
                                                                Accumulated
                                                  Additional     During the
                                 Subscriptions      Paid-in      Development
                                  Receivable        Capital         Stage           Total
                                 ------------    ------------    ------------    ------------
<S>                              <C>             <C>             <C>             <C>
Exercise of put option to
  Swartz LLC                             --            69,385            --            70,542

Shares to be returned from
  Swartz LLC                             --              --              --              --

Reimbursement for costs
  incurred to register common
  stock                                  --            14,637            --            14,637

Stock issued to consultant for
  fundraising activity                   --              (250)           --              --

Stock options issued to
  consultants                            --            56,400            --            56,400

Stock issued for exercise of
  option                                 --            72,500            --            75,000

Net loss                                 --              --          (972,073)       (972,073)
                                 ------------    ------------    ------------    ------------
Balance, May 31, 2002                (165,000)      8,725,848     (16,460,978)     (7,747,418)

Sale of Stock                            --            58,140            --            64,000

Stock issued to consultant               --            14,700            --            15,000

Stock options issued to
 consultants                             --            32,500            --            32,500

Net loss                                 --              --          (612,894)       (612,894)
                                 ------------    ------------    ------------    ------------

Balance, May 31, 2003                (165,000)   $  8,831,188    $(17,073,872)   $ (8,248,812)

Sale of Stock                            --           132,422            --           142,222

Stock issued as forgiveness
 of debt                                 --              --              --            30,000

Net loss                                 --              --          (307,866)       (307,866)
                                 ------------    ------------    ------------    ------------

Balance, May 31, 2004                (165,000)      8,963,610     (17,381,738)     (8,384,456)



                       See independent auditors' report and accompanying
                          notes to consolidated financial statements

                                          F-10(Con't)
</TABLE>






<PAGE>

<TABLE>
<CAPTION>

                               MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                       (Development Stage Companies)
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE PERIOD MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
=========================================================================================================

                                                                                           For The Period
                                                                                             May 14,1982
                                                             For The Year    For The Year      (Date of
                                                                Ended           Ended        of Inception
                                                             May 31, 2004    May 31, 2003    May 31, 2004
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
Cash flows from operating activities:
     Net loss                                                $   (307,866)   $   (612,894)   $(16,768,844)
     Adjustments to reconcile net )loss) income to
       net cash used in operating activities:
          Depreciation and amortization                             1,493           1,346         140,183
          Warrants and options issued to employees,
            vendors and consultants                                  --            32,500         851,000
          Minority interest in losses of subsidiary                  --          (329,800)
          Stock issued to employees, vendors and
            consultants                                              --            15,000       1,667,300
          Contributed services                                       --           463,050
          Accrued interest on advances from affiliates               --           197,697       3,241,648
          Gain on write-down of accounts payable                     --        (1,405,232)
          Changes in operating assets and liabilities:
              Other receivable                                       --               621            --
              Trade mark                                             (189)           --              (189)
              Other assets                                           --              (161)         (9,140)
              Accounts payable and accrued expenses                (3,976)          1,333       1,590,794
              Accrued compensation                                219,000         248,834       3,244,353
                                                             ------------    ------------    ------------

     Net cash used in operating activities                        (91,538)       (115,724)     (7,314,877)


Cash flows used in investing activities:
      Purchases of furniture and equipment                         (1,773)           --          (140,966)
                                                             ------------    ------------    ------------
Cash flows from financing activities:
     Proceeds from advances from affiliates, net                     --            30,000       2,190,800
     Proceeds from loan payable                                      --              --            71,000
     Proceeds from sale of stock and exercise options, net        142,222          64,000       5,320,568
     Cost incurred to register securities                            --              --           (62,336)
     Principal payments on advances from stockholder                 --              --           (43,500)
                                                             ------------    ------------    ------------

Net cash provided by financing activities                         142,222          94,000       7,476,532
                                                             ------------    ------------    ------------

Net change in cash and cash equivalents                            48,911         (21,724)         20,689


Cash and cash equivalents, beginning of period                     10,053          31,777            --
                                                             ------------    ------------    ------------

Cash and cash equivalents, end of period                     $     58,964    $     10,053    $     20,689
                                                             ============    ============    ============

Supplemental disclosure of cash flow information:
Cash paid during the period for:
              Interest                                       $       --      $       --      $       --
                                                             ============    ============    ============

              Income taxes                                   $       --      $       --      $       --
                                                             ============    ============    ============


                            See independent auditors' report and accompanying
                               notes to consolidated financial statements.

                                                    F-11

</TABLE>

<PAGE>



                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Business activity (Company and Subsidiaries)

     Meditech Pharmaceuticals, Inc. ("Meditech") is a drug development company,
     which is focused in the areas of research, development, and marketing in
     the biomedical industry, with an emphasis on anti-infective drugs. Meditech
     was incorporated in Nevada on March 21, 1983. Since then, it has been
     engaged in research and development activities associated with bringing its
     products to market.

     Principles of Consolidation

     The consolidated financial statements include the accounts of Meditech and
     its 37% owned and controlled subsidiary Viral Research Technologies, Inc.
     ("Viral" - see Note C) (Collectively, the "Company"). All significant
     transactions and balances have been eliminated in consolidation.

     Development Stage Enterprise

     The Company is a development stage company as defined in Statement of
     Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by
     Development Stage Enterprises." The Company is devoting substantially all
     of its present efforts to establish a new business, and its planned
     principal operations have not yet commenced. The Company has not generated
     significant revenues from operations and has no assurance of any future
     revenues. All losses accumulated since inception have been considered as
     part of the Company's development stage activities. The Company will
     require substantial additional funding for commercialization of its
     products. There is no assurance that the Company will be able to obtain
     sufficient additional funds when needed, or that such funds will be
     obtainable on terms satisfactory to the Company. The Company's products, to
     the extent that they may be deemed medical devices or biologics, are
     governed by the Federal Food, Drug and Cosmetics Act and by the regulations
     of state agencies and various foreign government agencies. There can be no
     assurance that the Company will maintain or obtain the regulatory approvals
     required to market its products.

     Basis of Presentation

     The accompanying consolidated financial statements have been prepared in
     conformity with accounting principles generally accepted in the United
     States of America, which contemplate continuation of the Company as a going
     concern. The Company incurred a net loss of $307,866 during the year ended
     May 31, 2004 and had a cash balance of approximately $58,964 at May 31,
     2004. In addition, at May 31, 2004, the Company's deficit accumulated
     during the development stage was $17,381,738 and the Company had negative
     working capital of $8,201,462. Management recognizes that the Company must
     generate additional resources for the eventual achievement of sustained
     profitable operations. Management's plans include obtaining additional
     capital through equity financing and the extension of existing debt.
     However, no assurance can be given that additional capital, if needed, will
     be available when required or upon terms acceptable to the Company or that
     the Company will be successful in its efforts to negotiate the extension of
     its existing debt.

     These factors, among others, raise substantial doubt about the Company's
     ability to continue as a going concern. The accompanying consolidated
     financial statements do not include any adjustments relating to the
     recoverability and classification of asset carrying amounts or the amount
     and classification of liabilities that might result from the outcome of
     these uncertainties.

     Estimates

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

                                      F-12

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)


     Cash and Cash Equivalents

     The company considers all highly liquid investments purchased with an
     original maturity of three months or less to be cash equivalents.

     Revenue

     Revenue represents license fees that are recognized when earned over the
     period of the applicable license agreement.

     Property and Equipment

     Property and Equipment is stated at cost. Depreciation is computed using
     the straight-line method over the estimated useful lives of the related
     assets, which range from 3 to 5 years. Repairs and maintenance are charged
     to expense as incurred while improvements are capitalized. Upon the sale or
     retirement of property and equipment, the accounts are relieved of the cost
     and the related accumulated depreciation, with any resulting gain or loss
     included in the consolidated statements of operations.

     Impairment of Long-Lived Assets

     The Company reviews its long-lived assets for impairment whenever events or
     changes in circumstances indicate that the carrying amount of an asset may
     not be recoverable. Recoverability of assets to be held and used is
     measured by a comparison of the carrying amount of the assets to future net
     cash flows expected to be generated by the assets. If the assets are
     considered to be impaired, the impairment to be recognized is measured by
     the amount by which the carrying amount exceeds the fair value of the
     assets. Based on its analysis, the Company believes that no impairment of
     the carrying value on its long-lived assets exists at May 31, 2004. There
     can be no assurance, however, that market conditions will not change which
     could result in impairment on long-lived assets in the future.

     Stock-Based Compensation

     The Company accounts for non-employee stock-based compensation under
     Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
     "Accounting for Stock-Based Compensation." SFAS 123 defines a fair value
     based method of accounting for stock-based compensation. However, SFAS 123
     allows an entity to continue to measure compensation cost related to stock
     and stock options issued to employees using the intrinsic method of
     accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB
     25"), "Accounting for Stock Issued to Employees." Under APB 25,
     compensation cost, if any, is recognized over the respective vesting period
     based on the difference, on the date of grant, between the fair value of
     the Company's common stock and the grant price. Entities electing to remain
     with the accounting method of APB 25 must make pro forma disclosures of net
     income (loss) and earnings per share, as if the fair value method of
     accounting defined in SFAS 123 had been applied. The Company has elected to
     account for its stock-based compensation to employees under APB 25.

     For purposes of pro forma disclosures, the estimated fair value of the
     options is amortized to expense over the option vesting period. Adjustments
     are made for options forfeited prior to vesting. The effect on compensation
     expense and net (loss) income had compensation cost for the Company's stock
     option issues been determined based on fair value on the date of grant
     consistent with the provisions of SFAS 123 is as follows for the years
     ended May 31:

                                      F-13

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

     Stock-Based Compensation (cont.)


                                                         2004           2003
                                                      ----------     ----------
     Net (loss) income, as reported                     (307,866)      (612,896)

     Additional compensation expense under SFAS 123         --             --
                                                      ----------     ----------

     Pro forma net (loss) income                      $ (307,866)      (612,896)
                                                      ==========     ==========

     Pro forma net (loss) income per share            $     --       $     --
                                                      ==========     ==========


     Income Taxes

     The Company recognizes deferred tax assets and liabilities for the expected
     future tax consequences of events that have been included in the financial
     statements or tax returns. Under this method, deferred income taxes are
     recognized for the tax consequences in future years of differences between
     the tax bases of assets and liabilities and their financial reporting
     amounts at each period end based on enacted tax laws and statutory tax
     rates applicable to the periods in which the differences are expected to
     affect taxable income. A valuation allowance is provided for significant
     deferred tax assets when it is more likely than not those assets will not
     be recovered.

     Fair Value of Financial Instruments

     The carrying values of the Company's certain financial instruments as of
     May 31, 2004, including cash, accounts payable and accrued expenses, and
     accrued compensation, approximate their respective fair values due to their
     short-term nature. The fair value of advances from affiliates are not
     determinable as the transactions are with related parties.

     Concentration of Credit Risk

     The financial instrument which potentially subjects the Company to
     concentration of credit risk is cash and cash equivalents. The Company
     maintains cash and cash equivalents balances at certain high quality
     financial institutions, and at times such balances may exceed the Federal
     Deposit Insurance Corporation $100,000 insurance limit. As of May 31, 2004,
     there were no uninsured portions of cash.

     Loss Per Share

     Basic loss per share is computed by dividing loss available to common
     stockholders by the weighted-average number of common shares outstanding.
     Diluted loss per share is computed similar to basic loss per share except
     that the denominator is increased to include the number of additional
     common shares that would have been outstanding if the potential common
     shares had been issued and if the additional common shares were dilutive.
     As the Company has incurred net losses for 2004 and 2003, potential common
     shares (totaling 3,800,000 and 3,800,000 shares, respectively) were
     excluded from the computation as the effect would be anti-dilutive.

     Comprehensive Income

     Comprehensive income is not presented in the Company's consolidated
     financial statements since the Company did not have any items of
     comprehensive income in any period presented.

     Segments of an Enterprise and Related Information

     As the Company operates in one segment, the Company has not made segment
     disclosures in the accompanying consolidated financial statements.

                                      F-14

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

     New Accounting Standard

     On December 31, 2002, the Financial Accounting Standards Board ("FASB")
     issued Statement of Financial Accounting Standards No. 148, "Accounting for
     Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
     Statement No. 123" SFAS 148 provides alternative methods of transition for
     a voluntary change to the fair value based method of accounting for
     stock-based employee compensation. Application of the provisions of SFAS
     148 may be as of the beginning of the fiscal year or as of the beginning of
     the interim period in which SFAS 148 was issued. The Company has elected to
     adopt SFAS 148 as of the beginning of the current fiscal year.

     On April 30, 2003, the FASB issued a Financial Interpretation No. 45,
     "Disclosure Requirements Mandate Fair Value at Inception." FIN 45 states
     that "a guarantor is required to recognize, at the inception of a
     guarantee, a liability for the obligations it has undertaken in issuing the
     guarantee, including its ongoing obligations to stand ready to perfom over
     the term of the guarantee of the event that the specified triggering events
     or conditions occur. The objective of the initial measurement of that
     liability is the fair value of the guarantee at its inception." FIN 45
     covers guarantee contracts such as financial and market value guarantees,
     performance guarantees, and indirect guarantees of the indebtedness of
     others. As of May 31, 2003, The Company does not have any guarantee
     contracts affected by this interpretation.

     On May 31, 2003 the FASB issued Statement of Financial Accounting Standards
     No. 150, "Accounting for Certain Financial Instruments with Characteristics
     of Both Liabilities and Equity." This statement establishes standards for
     how an issuer classifies and measures certain financial instruments with
     characteristics of both liabilities and equity. It requires that an issuer
     classify a financial instrument that is within its scope as a liability (or
     an asset in some circumstances). Many of those instruments were previously
     classified as equity. Some of the provisions of this Statement are
     consistent with the current definition of liabilities in FASB Concepts
     Statement No. 6, Elements of Financial Statements. The remaining provisions
     of this statement are consistent with the Board's proposal to revise that
     definition to encompass certain obligations that a reporting entity can or
     must settle by issuing its own equity shares, depending on the nature of
     the relationship established between the holder and the issuer. Application
     of the provisions of SFAS 150 is effective at the beginning of the first
     interim period beginning after June 15, 2003. The Company has elected to
     adopt SFAS 150 at the beginning of the next fiscal year.

     Reclassifications

     Certain reclassifications have been made to prior year amounts in the
     consolidated financial statements in order to conform to the current year
     presentation. These reclassifications have no effect on previously reported
     results of operations.



NOTE B - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY

     On January 22, 1987, the Company and a 50% investor formed VRT, Inc.
     ("VRT"), a Nevada corporation, for the purposes of developing a marketing
     strategy for its products. On January 26, 1987, the Company granted certain
     exclusive rights to VRT to market and distribute the Company's products.
     The agreement expired on November 30, 1996.

     On April 30, 1987, pursuant to a merger agreement, VRT was combined with
     Viral, a Nevada corporation and an inactive public shell, which became the
     surviving corporation. In the transaction, Viral issued 15,000,000 shares
     of common stock to the company and its investor for all outstanding shares
     of VRT. After the merger, the Company owned 37% of Viral. Viral's Board of
     Directors is controlled by officers and directors of the Company.
     Additionally, the companies have the same management team, and Viral is
     economically dependent on the Company to fund its continuing operations.
     Therefore, Viral has been consolidated as it is effectively controlled by
     the Company.

                                      F-15

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE B - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY (cont.)

     At May 31, 2004, the assets and liabilities of Viral were as follows:


     ASSETS

           Due from Meditech                             $    400,000
                                                         ------------
                 Total Assets                            $    400,000
                                                         ============


     LIABILITIES

           Accounts Payable                              $     5,000

           Due to Meditech                                    129,000
                                                         ------------

                 Total Liabilities                            134,000

     EQUITY                                                   266,000
                                                         ------------

                 Total Liabilities and Equity            $    400,000
                                                         ============

     Amounts recorded as minority interest in consolidated subsidiary on the
     accompanying consolidated balance sheet represent the pro rata portion of
     Viral's equity attributable to minority stockholders.



NOTE C - COMMITMENTS AND CONTINGENCIES

     Leases

     Currently, the Company uses its operating facilities provided by its Chief
     Executive Officer, without a license agreement. The Company incurred
     approximately $18,000 for the years ended May 31, 2004 and 2003 of rent
     expense related to this lease. There is no guarantee the officer will be
     willing to provide these facilities in the future (see Note G).

     Employment Agreements

     The Company entered into employment agreements dated February 3, 2000
     (amended on May 31, 2001) with two of its officers. The agreements are for
     three-year terms ending on March 15, 2003, however if it is not terminated
     by either party, the term shall be automatically renewed for successive
     one-year periods commencing on each anniversary date of the original term.
     As of May 31, 2003, the agreements were not terminated. The agreements
     provide for a combined base salary of $270,000 per annum for the first year
     with an increase at least equal to the consumer price index over each
     succeeding year. The agreements also provide for an annual bonus based on
     certain performance goals and a severance payment based on two years of
     base salary and bonus based, as defined, upon termination without cause or
     change of control of the Company. Additionally, on August 9, 2001, the
     Company granted to its officers, options to purchase a total of 44,900,000
     shares of common stock exercisable at $0.056 per share and vesting
     immediately on the date of grant. No compensation expense was recognized
     for the granting of these options as the exercise price was equal to the
     market price on the date of grant.

     Litigation

     The Company may become involve in various legal proceedings and claims
     which arise in the ordinary course of its business. Management does not
     believe that these matters will have a material adverse effect on the
     Company's consolidated financial position or results of operations.

                                      F-16

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE C - COMMITMENTS AND CONTINGENCIES (cont.)

     License Agreement

     On February 3, 2000, the Company received $25,000 from Immune Network
     Research, Ltd. ("INR"), a Canadian pharmaceutical development company,
     under a letter of intent. The payment was made for a one-year irrevocable
     option granting INR the right to negotiate for an exclusive license for
     pharmaceutical applications worldwide outside of the United States. The
     Company then received an additional $100,000 from INR in anticipation of a
     definitive agreement. Under the terms of the letter, if an agreement is
     reached, the Company will issue an option to INR for up to 10,000,000
     shares of common stock, exercisable at $0.03 per share. In return, the
     Company will receive royalties equal to 7% of net sales for all MTCH-24
     (TM) products sold and 4% of net sales for all Viraplex (R) products sold
     by INR. The option was valued at $400,000 using the Black-Scholes
     option-pricing model, which was recorded as an operating expense on the
     date granted.

     On May 25, 2001, the Company and INR entered into a definitive licensing
     agreement, which terminated the letter of intent. Under this licensing
     agreement the Company assigned its rights and interests in two applications
     of its proprietary products. In consideration of the assignment, INR agreed
     to pay a royalty equal to 2% of the gross worldwide sales of each of the
     products. The term of the royalty is the longer of 10 years or the life of
     any patent based on the products. The Company has not yet recognized any
     royalty revenue related to this agreement.



NOTE D - STOCKHOLDERS' DEFICIT

     Preferred Stock

     The Company is authorized to issue 25,000,000 shares of its $0.001 par
     value preferred stock. The Company has not issued any preferred stock to
     date.

     Common Stock

     In May 2003, the Company issued 300,000 shares of common stock to a
     consultant for work performed in connection with a proceeding against
     Meditech, recording consulting expense of $15,000.

     During the year ended May 31, 2003, the Company issued 5,860,000 shares of
     common stock for cash of $64,000.

     During the year ended May 31, 2004, the Company issued 3,000,000 shares of
     common stock as a payment against a loan. This issuance paid off the entire
     loan of $30,000.

     During the year May 31, 2004, the Company issued 9,800,000 shares of common
     stock for cash of $142,222.

     Stock Options

     The Company has no formal stock option plan. From time to time, the Company
     issues stock options pursuant to various agreements and other compensating
     arrangements.

     The following summarizes all transactions for the years ended May 31, 2004
     and 2003 involving the Company's stock options:

     During the year ended May 31, 2003, the Company issued options to purchase
     1,500,000 shares of its common stock to vendors and consultants of the
     Company. The options are exercisable at $0.010 per share for 1,250,000
     options and $0.028 per share for 250,000 options and expire at various
     dates through February 2008. All of these options vest immediately. The
     Company recognized $32,500 as consulting expense under general and
     administrative expenses in the accompanying consolidated statement of
     operations related to these options (based on the Black- Scholes option
     pricing model pursuant to SFAS 123).

                                      F-17

<PAGE>
<TABLE>
<CAPTION>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE D - STOCKHOLDERS' DEFICIT (cont.)

     Stock Options (cont.)

     During the year ended May 31, 2003, the Company issued options to purchase
     2,250,000 shares of common stock to employees and stockholders of the
     Company, vesting immediately. The options are exercisable at $0.010 per
     share and expire at various dates through December 2007. No compensation
     expense was recognized as the exercise price at the dates of grant
     approximates the fair market value of the stock on those dates.

     Stock option activity for the years ended May 31, 2004 and 2003, is as
     follows:

                                                       2004                      2003
                                              -----------------------   -----------------------
                                                            Weighted                  Weighted
                                                            Average                   Average
                                                            Exercise                  Exercise
                                                Options      Price       Options       Price
                                              ----------   ----------   ----------   ----------
     <S>                                      <C>          <C>          <C>          <C>
     Outstanding, beginning of year           57,890,000   $     0.06   54,140,000   $     0.14

     Granted                                        --         --        3,750,000         0.05

     Exercised                                      --         --             --

     Outstanding, end of year                 57,890,000         0.06   57,890,000         0.06
                                              ==========   ==========   ==========   ==========

     Exercisable, end of year                 57,890,000         0.06   53,640,000         0.06
                                              ==========   ==========   ==========   ==========

     Weighted average fair value of
     options granted                                             0.06                      0.05
                                                           ==========                ==========


     The following summarizes information about stock options outstanding at May
     31, 2004:


                                         Options Outstanding                     Options Exercisable
                             --------------------------------------------     ---------------------------
                                              Weighted
                                              Average           Weighted                        Weighted
                              Number of      Remaining          Average       Number of         Average
     Range of Exercise         Shares        Contractual        Exercise        Shares          Exercise
     Prices                  Outstanding     Life (Years)        Price        Exercisable         Price
     -----------------       -----------     ------------      ----------     -----------      ----------
     $ 0.010 - $ 0.028         7,650,000        5.4            $    0.020       7,650,000      $    0.018
     $ 0.050 - $ 0.056        46,990,000        6.9                 0.060      46,990,000           0.056
     $ 0.130 - $ 0.210         3,250,000        0.7                 0.210       3,250,000           0.206
                              ----------     ----------        ----------      ----------      ----------
                              57,890,000                       $    0.059      57,890,000      $    0.059
                              ==========                       ==========      ==========      ==========



     Pro Forma Stock Option Information

     Pro Forma information regarding net (loss) income is required by SFAS 123
     and is determined as if the Company accounted for its employee stock
     options under the fair value method pursuant to SFAS 123,

                                      F-18

</TABLE>

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE D - STOCKHOLDERS' DEFICIT (cont.)

     Pro Forma Stock Option Information  (cont.)

     rather than the method pursuant to APB 25, as discussed in Note A. The fair
     value of these options is estimated at the date of grant based on the
     Black-Scholes options pricing model (the "Model") with the following
     assumptions for the years ended May 31, 2004 and 2003, respectively; risk
     free interest rate of 3.9% and 4.4%; expected dividend yield of 0%;
     expected life of the options of 5 years; and volatility factor of the
     expected market price of the Company's common stock of 88% and 207%.

     The Model was developed for use in estimating the fair value of traded
     options which have no vesting restrictions and are fully transferable. In
     addition, the Model requires the input of highly subjective assumptions
     including the expected stock price volatility. The Company's employee stock
     options have characteristics significantly different from those of traded
     options; changes in the subjective input assumptions can materially affect
     the fair value estimate.



NOTE E - INVESTMENT AGREEMENT

     On June 30, 2000, and subsequently amended on February 15, 2001, the
     Company entered into an investment agreement with Swartz Private Equity,
     LLC ("Swartz"). The investment agreement entitles the Company to issue and
     sell common stock to Swartz in the form of put rights for up to an
     aggregate of $30,000,000 from time to time during a three-year period
     beginning on the date of an effective registration statement which was May
     3, 2001.

     Under the agreement, in order to invoke a put right, the Company must
     provide Swartz with at least 10 but not more than 20 business days advance
     notice of the date on which the Company intends to exercise a put right and
     must indicate the number of shares of common stock the Company intends to
     sell to Swartz. The Company may also designate a maximum dollar amount of
     common stock (not to exceed 2,000,000), which the Company will sell to
     Swartz during the put/and or a minimum purchase price per common share at
     which Swartz may purchase shares during the put. The number of shares of
     common stock sold to Swartz in a put may not exceed the lesser of (i)
     1,500,000 shares; (ii) 15% of the aggregate daily reported trading volume
     of the Company's common shares, excluding certain block trades, during the
     20 business days after the date of a put notice, with certain restrictions;
     (iii) 15% of the aggregate daily reported trading volume of common shares
     during the 20 days before the put date, excluding certain block trades; or
     (iv) a number of shares that, when added to the number of shares acquired
     by Swartz under the investment agreement during the 31 days preceding the
     put date, would exceed 9.99% of the total number of shares of common stock
     outstanding. For each common share, Swartz will pay the Company the lesser
     of (i) the market price for such put, minus $0.075 or (ii) 91% of the
     market price for the put.

     Further, under the provisions of the agreement, during the term of the
     investment agreement and for a period of one year thereafter, the Company
     is prohibited from engaging in certain financing transactions involving the
     Company's equity securities.

     During the year ended May 31, 2004 and 2003, the Company exercised no put
     options.

                                      F-19

<PAGE>


                  MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                          (Development Stage Companies)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
--------------------------------------------------------------------------------


NOTE F - INCOME TAXES

     Significant components of the Company's defered tax assets and liabilities
     consisted of the following at May 31, 2004:

     Deferred Tax Assets:
        Reserve for finance charges                       $     57,416
        Accrued compensation                                 1,454,541
        Interest on related party advances                   1,375,430
        Net operating loss carryforwards                     1,022,330
        Valuation allowance                                 (3,909,717)
                                                          ------------
        Net deferred tax asset                            $       --
                                                          ============

     The valuation allowance decreased by $74,964 and increased by $571,681
     during the years ended May 31, 2004 and 2003, respectively. No current
     provision for income taxes for the year ended May 31, 2004 and 2003 is
     required, since the Company incurred net operating losses through May 31,
     2004.

     As of May 31, 2004, the Company had net operating loss carryforwards of
     approximately $1,771,838 for federal income tax reporting purposes
     available to offset future taxable income, which expire on 2019.

NOTE G  - RELATED PARTY TRANSACTIONS

     Since inception, the Company has received advances from Petro-Med, Inc., an
     affiliate, to fund its working capital requirements. At May 31, 2004, the
     Company maintained short-term advances from affiliates of $4,539,346 which
     are due on demand. Accrued interest is attributed to and included in the
     outstanding balance as incurred. The advances bear interest at 9% per annum
     on any outstanding balance. During fiscal year ended May 31, 2003, both
     partners agreed to stop accruing interest on these advances. Interest
     expense on the advances was $0 and $197,699 for the years ended May 31,
     2004 and 2003, respectively.

     The Company maintains its primary place of business in facilities owned by
     the Chief Executive Office, for which it is charged rent expense (see Note
     C).



NOTE H - EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of the
     basic and diluted earnings per share computation for the years ended May
     31, 2004 and 2003.

                                      F-20

<PAGE>
<TABLE>
<CAPTION>


                          MEDITECH PHARMACEUTICALS, INC AND SUBSIDIARY
                                  (Development Stage Companies)
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             FOR THE PERIOD OF MAY 4, 1982 (Date of Inception) THROUGH MAY 31, 2004
-----------------------------------------------------------------------------------------------


                                                                  2004                 2003
                                                               -----------          -----------
     <S>                                                       <C>                  <C>
     Numerator for basic and diluted earning per share:

     Net loss contributed to common stockholders               $   307,866          $   612,896
                                                               ===========          ===========
     Denominator for basic and diluted earnings per share:

              Weighted average shares (basic)                  164,901,971          155,512,905

              Common stock equivalents                                --                   --
                                                               -----------          -----------
              Weighted average shares (dilutive)               164,901,971          155,512,905
                                                               ===========          ===========
     Basic and diluted earnings per share -
              Loss per common share                            $      0.00          $      0.00
                                                               ===========          ===========

                                              F-21

</TABLE>

<PAGE>


Index to Exhibits

Exhibit No          Description
-----------         -----------

31.1                Certification of CEO Pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002

31.2                Certification of CFO Pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002

32.1                Certification of Chief Executive Officer to Section 906 of
                    the Sarbanes-Oxley Act of 2002

32.2                Certification of Chief Financial Officer to Section 906 of
                    the Sarbanes-Oxley Act of 2002

Reports on Form 8-K

none

                                       15

<PAGE>


                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

Meditech Pharmaceuticals, Inc.





By:  /s/  Gerald N. Kern
--------------------------------------------------------------
          Gerald N. Kern, Chairman and Chief Executive Officer



Dated:    08/27/04

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and/or the class indicated.





/s/  Gerald N. Kern                          Dated: 08/27/04
------------------------------------
     Gerald N. Kern, Chairman and
     Chief Executive Officer

/s/  Steven I. Kern                          Dated: 08/27/04
------------------------------------
     Steven I. Kern, Director

/s/  Cynthia S. Kern                         Dated: 08/27/04
------------------------------------
     Cynthia S. Kern, Vice Chairman,
     Director and Secretary

/s/  Harry Hall                              Dated: 08/27/04
-----------------------------
     Harry Hall, Director

/s/  Lester F. Goldstein                     Dated: 08/27/04
------------------------------------
     Lester F. Goldstein, Director

                                       16