SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K/A

                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, 2000                                                     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 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.

$23,341,260.36 (COMPUTED ON THE BASIS OF $.22 PER SHARE OF COMMON STOCK) AS OF
FEBRUARY 26, 2001.

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

146,713,432 SHARES OF $.001 PAR VALUE COMMON STOCK AS OF FEBRUARY 26, 2001.

                      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.

     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.

     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. Future dosage forms and uses covered by
patents include creams, lotions, mouthwashes, cleansers, surface disinfectants,
impregnated facial tissues, douches and inhalants. 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 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.

<PAGE>


Viraplex(R)

     The National Cancer Institute has conducted studies since 1987 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(TM). 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. We may use part of the proceeds from this
offering to continue the cancer trials via the production of the more soluble
form of the drug.

     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), which is administered orally in capsule form as a
prescription treatment for orofacial and genital herpes simplex virus
infections, started Phase III clinical trials for safety and effectiveness in
humans. However, we have suspended these trials pending the obtaining of
additional capital to finance the trials. We received permission from the FDA in
1987 to initiate a 320-patient Phase III study, consisting of 160 patients with
genital herpes and 160 patients with orofacial herpes. 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. Xanthomas
consist of a group of bacteria that infects plants and causes significant loss
of 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, 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.

<PAGE>


     We hope to use an independent advertising group to market and promote our
products. 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 have assigned the task of developing a
brand name to a professional outside agency specializing in drug naming. We hope
to select a name with maximum consumer impact and long consumer attention span.
We are also working with a drug naming consulting firm to develop a name we will
use commercially for MTCH-24(TM). We have selected the name Zorex(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, especially on an international
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, on
February 3, 2000, we entered into a letter agreement with INL. Pursuant to the
agreement, we granted INL an irrevocable option for a period of one year to
obtain an exclusive license to make, have made, promote, sell and distribute
Viraplex and MTCH-24(TM), and any derivatives or formulation of either product,
throughout the world, excluding the United States. Pursuant to this letter
agreement, INL has paid to us $100,000 in anticipation of entering into a formal
license agreement in which we will receive a seven percent and four percent
royalty on INL's net sales of MTCH-24(TM) and Viraplex, respectively. In
addition, INL will initiate and fund a minimum of $20,000 worth of research and
development activities on MTCH-24(TM) and Viraplex, and will provide to us all
data from these activities.

     Pursuant to the letter agreement, we also granted to INL 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
are being registered in this registration statement. INL paid to us an
additional $25,000 relating to this irrevocable option. Finally, we have also
agreed to nominate INL's president to our board of directors upon the
effectiveness of a Registration Statement to be filed registering shares to be
issued to Swartz Private Equity, LLC pursuant to an investment agreement.

Competition

     There is at least one FDA-approved product currently available, by
prescription, for the treatment of herpes infections. Burroughs-Wellcome Co.
sells it under the name Zovirax(R) (Acyclovir). FDA approval of Zovirax 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) and Blistex.

<PAGE>


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.

     MTCH-24(TM)

     1.   United States Patent #4,717,735 (Antibacterial Methods and Agent),
          issued January 1, 1988 (6 claims)


     2.   United States Patent #4,719,235 (Methods and Compositions for Treating
          Viral Infections), issued January 12, 1988 (37 claims)

     3.   United States Patent #4,752,617 (Antibacterial Methods and Agent),
          issued June 21, 1988 (6 claims)

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

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

     6.   United States Patent #4,885,310 (Antifungal Methods and Agent), issued
          December 205, 1989 (26 claims)



<PAGE>


     VIRAPLEX (R)(R)

     1.   Italian Patent #1,196,739 (Herpes Simplex Treatment), issued November
          25, 1988 (6 claims)

     2.   United States Patent #4,810,707 (Herpes Simplex Treatment), issued
          March 7, 1989 (5 claims)

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

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.

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

     We currently operate out of space owned by Gerald Kern, our Chairman and
CEO, that is provided to us without charge. This space will not be adequate for
operations as we move forward. We anticipate acquiring a small office in Los
Angeles within the next 12 months.


Item 3. Litigation
------------------

     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.

<PAGE>



                                     PART II

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

     The Company's common stock is traded on the over-the-counter market. On May
31, 2000, the closing bid price for the common stock of the Company was $.3532.
The high and low closing bid prices therefore during the quarterly fiscal
periods indicated were as follows:

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

August 31, 1998                         .015                     .078
November 30, 1998                       .015                     .052
February 28, 1999                       .00                      .02
May 28, 1999                            .00                      .00
August 31, 1999                         .06                      .15
November 30, 1999                       .008                     .054

February 29, 2000                       .31                      .97
May 31, 2000                            .27                      .44

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 deleted because of failure to meet the minimum capital and
surplus and asset requirements of the NASD by-laws.

     As of May 31, 2000, there were 2865 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, 2000.

1.   On June 6, 1999, we issued warrants to purchase an aggregate of 5,800,00
     shares of our common stock to two employees and two consultants at an
     exercise price of $0.01 per share.

2.   On January 17, 2000, we issued an aggregate of 450,000 shares of our common
     stock to three consultants as compensation for services valued at $11,250.
     The shares were issued at an agreed value of $0.025 per share.

3.   On January 17, 2000, we issued an aggregate of 400,000 shares of our common
     stock to four service providers and consultants as compensation for
     services valued at $10,000. The shares were issued at an agreed value of
     $0.025 per share.

4.   On January 17, 2000, we issued an aggregate of 3,000,000 shares of our
     common stock to two employees pursuant to the exercise of common stock
     purchase warrants at an exercise price of $0.01 per shares.
<PAGE>


5.   On February 1, 2000, we granted options to purchase an aggregate of
     5,000,000 shares of our common stock to three employees at an exercise
     price of $0.05 per share (as to 2,500,000 shares) and $0.21 per share (as
     to 2,500,000 shares).

6.   On February 1, 2000, we issued warrants to seven consultants and service
     providers to purchase an aggregate of 1,600,000 shares of our common stock
     at an exercise price of $0.21 per share.

7.   On February 1, 2000, we issued warrants to one consultant to purchase an
     aggregate of 50,000 shares of our common stock at an exercise price of
     $0.05 per share.

8.   On February 3, 2000, we issued 1,000,000 shares of our common stock to one
     consultant as compensation for services valued at $65,000. The shares were
     issued at an agreed value of $0.065 per share.

9.   On February 3, 2000, we issued and aggregate of 2,000,000 shares of our
     common stock to two employees pursuant to the exercise of common stock
     purchase warrants at an exercise price of $0.01 per shares.

10.  On February 3, 2000, we issued and aggregate of 500,000 shares of our
     common stock to two consultants pursuant to the exercise of common stock
     purchase warrants at an exercise price of $0.01 per shares.

11.  On February 3, 2000, we granted an option to Immune Network, Limited, to
     purchase 10,000,000 shares of our common stock at an exercise price of
     $0.03 per shares.

12.  On May 16, 2000, we issued an option to Swartz to purchase 7,000,000 shares
     of our common stock at an exercise price of $0.33 per share.

     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. In addition, the
issuance to Immune Network, Limited was pursuant to Regulation S.
<PAGE>


Item 6. Selected Financial Data
-------------------------------

     The following consolidated selected financial data has been derived
from annual financial statements for the fiscal years indicated.

This information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto.

<TABLE>
<CAPTION>

                                  Twelve month      Twelve month     Twelve month     Twelve month     Twelve month      Inception
                                  period ended      period ended     period ended     period ended     period ended         To
                                  May 31, 1996      May 31, 1997     May 31, 1998     May 31, 1999     May 31, 2000     May 31, 2000
                                  ------------      ------------     ------------     ------------     ------------     ------------
<S>                               <C>               <C>              <C>             <C>               <C>              <C>
Results of Operations:
Net loss and deficit
 accumulated during
 development stage                ($   501,600)    ($   957,400)    ($   555,200)   ($   767,400)     ($ 1,150,100)    ($16,051,600)

Consolidated Balance
 Sheet Data:
                                                                                                                      Inception to
                                   May 31, 1996     May 31, 1997     May 31, 1998     May 31, 1999    May 31, 2000    May 31, 2000
                                   ------------     ------------     ------------     ------------    ------------    ------------

Working Capital Deficit           ($ 5,900,000)    ($ 6,421,785)    ($ 6,976,985)   ($ 7,567,885)     ($ 7,992,500)         --

Total assets                       $     1,100      $       600      $       600     $       600       $   117,500          --

Long-term debt                               0                0                0               0                 0          --

Total liabilities                  $ 5,900,700      $ 6,422,385      $ 6,977,585     $ 7,568,455       $ 8,107,900          --

Shareholders' Deficit             ($ 6,090,900)    ($ 6,613,085)    ($ 7,168,285)   ($ 7,759,185)     ($ 8,181,700)         --


Net loss and deficit accumulated
 during development stage per
 share of common stock            ($        0l)    ($      0.01     ($      0.01)   ($      0.01)     ($      0.01)    ($      0.18)


</TABLE>

<PAGE>



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

     You should read the following discussion of our financial condition and
operations in conjunction with the condensed 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 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 our patents, initiating and continuing clinical tests, recruiting
personnel and raising capital. Through May 31, 2000, we have derived our
revenues from the sale of a license option to Immune Network Research, Inc. to
develop and market our patented products. Both companies are currently
negotiating the terms of the license.

Going Concern

     Our 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, we experienced a loss of approximately $1,150,100 during
the year ended May 31, 2000, had a cash balance of approximately $115,000, and
had an accumulated deficit of approximately $16,051,600 at May 31, 2000. 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 product, and to conduct
additional testing on our products. We intend to obtain the necessary financing
through our Investment Agreement with Swartz Private Equity, LLC. 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.



RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE YEARS ENDED MAY 31, 2000 AND 1999.

Results of Operations

     The consolidated May 31, 2000 financial statements included a net loss of
$1,150,100, of which $309,000, or approximately 41%, was due to interest
accruals. The consolidated May 31, 1999 financial statements included a net loss
of $767,400, of which $283,000, or approximately 40%, was due to interest
accruals and salary accruals. The increase in net loss from fiscal year 1999 to
fiscal year 2000 is due primarily to the recognition of stock based compensation
of approximately $400,000 attributable to the option granted to Immune Network,
Limited.

<PAGE>


Sources of Revenues and Revenue Recognition

     Our revenues have grown to $25,000 in 2000 after no revenues in 1999.
Revenues consist entirely of a $25,000 fee paid to us by INL in connection with
the execution of our letter agreement dated February 3, 2000. Pursuant to the
letter agreement, we granted INL an irrevocable option to license, develop and
market several applications of MTCH-24(TM) and Viraplex (R). In addition,
pursuant to the letter agreement, INL is obligated to pay to us the sum of
$100,000 upon execution of a definitive license agreement. Although we have not
completed negotiations of the license, INL has paid the $100,000, which has been
recorded as deferred revenue as of May 31, 2000.

     We will 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, clinical and research salaries, and other
costs associated with the development of products not yet being marketed.
General and administrative expenses include the salaries and benefits 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 2000
were $1,200, consisting of the costs of additional clinical trials on the
products. There were no research and development costs for 1999.

General and Administrative Expenses. Direct costs were $864,900 for 2000, as
compared with $484,400 for 1999. The increase was primarily due to the expense
recorded in 2000 of $400,000 for the exercise of options granted to IMM. 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 $309,000 for 2000 as compared to $283,000
for 1999. This increase was due to the additional debt incurred in 2000. This
interest is accrued at a rate of 9% simple interest per annum on funds advanced
to the company by Petro-Med Inc. Meditech's Chief Executive Officer, Gerald N.
Kern, also serves as Chairman of Petro-Med Inc.

Net Loss. Net loss was $1,150,100 for 2000 as compared to $767,400 for 1999. The
increase in net loss was due to the expense recorded in 2000 of $400,000 for the
exercise of options granted to INL.

RESULTS OF OPERATIONS FOR 1999 AND 1998.

Revenues. There were no revenues during 1999, nor were there any revenues for
the year ended May 31, 1998 ("1998").

Research and Development Costs. There were no direct research and development
costs for 1999 or for 1998.

General and Administrative Expenses. Direct costs were $484,400 for 1999, as
compared with $297,000 for the 1998. The increase was primarily due to expenses
recorded in 1999 for stock issued to employees and vendors totaling $171,700. 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 $283,000 for 1999, as compared to
$258,200 for 1998. This increase was due to the additional debt incurred in
1999. This interest is accrued at a rate of 9% simple interest per annum on
funds advanced to the company by Petro-Med Inc. Meditech's Chief Executive
Officer, Gerald N. Kern, also serves as Chairman of Petro-Med Inc.

<PAGE>


Net Loss. Net loss was $767,400 in 1999, as compared to $555,200 in 1998. The
increase was primarily due to expenses recorded in 1999 for stock issued to
employees and vendors totaling $171,700.

LIQUIDITY AND CAPITAL RESOURCES FOR THE YEARS ENDED MAY 31 2000 AND 1999

     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 $114,800 at May 31, 2000 (up from $0 at
May 31, 1999). Cash was augmented at May 31, 2000 by net proceeds from $125,000
in licensing fees received from INL.

     Net cash provided by operations in 2000 was $108,200, as compared to cash
used in operations of $8,185 in 1999.

     There was no net cash used in investing activities in 2000 or 1999.

     Net cash provided by financing activities in 2000 was $6,600, as compared
to $8,185 in 1999.

     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 this registration statement is declared
effective. 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. The agreement is for a
three-year period ending June 30, 2003. Any time that we put shares to Swartz,
the discount between the put price to Swartz and the trading price will result
in a selling discount for the Swartz shares which will be part of our operating
expenses in the income statement.

     We have incurred recurring operating losses and positive 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.

     Should the Swartz financing fail to close, we will lack the capital
necessary to meet operational requirements and achieve our business plan. In
addition, the shareholders will suffer dilution from the 7 million warrants
which have been granted to Swartz prior to the proposed offering. The warrants
are valued at $2,380,000 and represent offering costs. If the transaction is
aborted, these costs will be charged to operations.







<PAGE>


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 industry experience, it believes that inflation
will not have a significant impact on the results of the Company's operations in
the future.

Item 7A.  Quantitative and Qualitative Disclosures Amount Market Risk
---------------------------------------------------------------------

     A significant change in interest rates would not have a material adverse
effect on the Company's financial position or results of operation due to the
limited amount of cash on hand at May 31, 2000, and as the Company's interest
bearing debt obligations have fixed interest rates.



Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------


The financial statements required by this item are set forth as indicated in
Item 14(a)(1).

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


None.


                                    PART III

Management
----------


Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

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

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

Gerald N. Kern           62      Chairman of the Board,              1982
                                 Chief Executive Officer,
                                 Director

Cynthia S. Kern          50      President                           1995
                                 Secretary                           1983

Steven I. Kern           33      Chief Operating Officer and         2000
                                 Chief Financial Officer

Lester F. Goldstein      56      Director                            1983

Harry Hall               65      Director                            1990

<PAGE>


All officers serve at the pleasure of the board. Directors serve until the next
annual meeting of shareholders and until their respective successors are elected
and qualified.


Business Experience of Directors and Executive Officers
-------------------------------------------------------

Gerald N. Kern is chairman of the company. Mr. Kern served as President until
September, 1995. He is also Chairman, President and Chief Executive Officer of
Viral Research Technologies, Inc., a minority owned subsidiary of the company.
Since February, 1983, Mr. Kern has also been Chairman, President and Chief
Executive Officer of Petro-Med, the principal shareholder of the company.
Petro-Med had filed a Chapter XI bankruptcy petition which was converted to a
Chapter VII on August 26, 1992. He was President and Chief Executive Officer of
GumTech International, Inc., a manufacturer of nutrient chewing gum products,
from August of 1996 through January of 1998. From September, 1994, to August,
1996, Mr. Kern was President of Aura Interactive, an international electronics
firm based in El Segundo, California. See "Security Ownership of Certain
Beneficial Owners and Management."

Mr. Kern has been an officer and director of the company since its formation in
May, 1982. From 1981 through April, 1982, Mr. Kern was president of HJK
Consulting, Inc., a marketing consulting company specializing in consumer
products marketing. During 1980, Mr. Kern was president of Philip Merrill
International, Ltd., a subsidiary of Parfums Lamborghini, and was responsible
for product development, sales and marketing. From 1978 to 1979, he was
assistant to the President and was Executive Vice President of the United States
division of Max Factor & Company, in charge of sales, marketing and general
management, in addition to being head of the worldwide military and PX
divisions. From 1967 to 1977, Mr. Kern was employed by International Playtex,
Inc., in a variety of positions, including Vice President and General Sales
Manager of the branded apparel division, and General Manager of Playtex, Ltd.,
Canada.

Mr. Steven I. Kern has served as our Chief Operating officer and Chief Financial
Officer since February 2000. 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 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.

Lester F. Goldstein, Ph.D., is currently a business technology consultant. From
1992 to 1996, he served as physicist for Aura Systems, Inc. From 1989 to 1992,
he served as the Senior Program Manager at the TRW Applied Technology Division,
Space and Technology Group. Previously, from 1986 to 1989, he served as Program
Manager of high technology advanced programs in the Satellite and Space
Electronics Division of Rockwell International. He served as Director of
Electro-Optics for the Satellite Systems Division of Rockwell International from
1981 to 1985. From 1978 to 1981, he was Program Manager at Hughes Aircraft
overseeing various radar and sensor projects. Dr. Goldstein obtained a BA degree
from Hofstra University in physics and mathematics and MS and Ph.D. degrees in
physics from Polytechnic University of New York. He has been a director of
Meditech since March, 1983.

Harry Hall has had more than 30 years of experience as a senior executive in
major consumer products companies. He as served as a consultant to industry
leaders in the apparel and non- durable goods fields. He is presently a director
of Petro-Med, Inc., and Viral Research Technologies, Inc.

Cynthia S. Kern has been President since September, 1995. Mrs. Kern served as
Vice President of administration from 1982 to 1995. She is the wife of Gerald N.
Kern. From 1979 to 1981, she served as Administrative Assistant with Edgar Rice
Burroughs, Inc. From 1978 to 1979, she was an Administrative Assistant with Max
Factor & Company. Ms. Kern devotes up to 50% of her working time to the affairs
of the Company.


Item 11. Executive Compensation
-------------------------------

The following table sets forth all cash compensation for the fiscal year ended
May 31, 2000 for (1) the Company's Chief Executive Officers and (2) each of its
most highly compensated executive officers whose aggregate cash compensation
exceeded $100,000.



<PAGE>



Name of
Individual or                  Capacities in
Persons in Group               Which they serve                Salaries
----------------               ----------------                --------

Gerald N. Kern                 Chairman of the Board           $108,000 (1)
                               Chief Executive Officer


(1)  Of the cash compensation set forth for Mr. Kern, $108,000 was accrued but
     unpaid.

     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. The
agreement is contingent upon completion of the Swartz offering. The agreement
provides for a three-year term and 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, is we terminate him without cause
this would result in a lump sum severance payment, including the unearned salary
for the remainder of the term plus any prorated earned bonuses. Also, upon a
change of control, Mr. Kern may elect to terminate his employment and obtain a
lump sum severance payment equal to the base salary for the remaining term of
the agreement plus any prorated earned bonuses. In the event that the Swartz
financing is completed, we will grant Mr. Kern an option to purchase 15,950,000
common shares that will vest over the term of his employment agreement.

     On February 3, 2000 we entered into an employment agreement with Steven I.
Kern, which was approved by our directors on February 3, 2000, providing for his
employment as Chief Operating Officer and Chief Financial Officer. The agreement
is contingent upon completion of the Swartz offering. The agreement provides for
a three-year term and 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.
In the event that the Swartz financing is completed, we will grant Mr. Kern an
option to purchase 13,950,000 shares that will vest over the term of his
employment agreement. We may terminate Mr. Kern's employment with or without
cause. However, is we terminate him without cause this would result in a lump
sum severance payment equal to the remainder of the base salary due under the
agreement. 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 equal to 12 months of his then current salary.




<PAGE>


OPTION GRANTS IN LAST FISCAL  YEAR


     The following table provides information on option grants in the fiscal
year ended May 31, 2000 to the Named Executive Officers.

<TABLE>
<CAPTION>

---------------------- ---------- ------------------------- ------------------- --------------- ------------- -------------
                                                                 Percent
                                                              Total Options
                                    Number of Securities        Granted to         Exercise                      Grant
                       Grant             Underlying          All Employees in       Price        Expiration       Date
     Named Officer     Date            Options Granted          Fiscal Year        ($/Share)         Date         Value
---------------------- ---------- ------------------------- ------------------- --------------- ------------- -------------

<S>                    <C>                <C>                        <C>              <C>       <C>           <C>
Gerald N. Kern         6/1/99             3,000,000                  33.3%            $0.01     5/31/06       $30,000
                       2/1/00             1,500,000                  16.7%            $0.21     5/1/07        $45,000
---------------------- ---------- ------------------------- ------------------- --------------- ------------- -------------
Steven I. Kern         2/1/00             2,500,000                  16.7%            $0.05     5/1/07        $75,000
---------------------- ---------- ------------------------- ------------------- --------------- ------------- -------------
Cynthia Kern           6/1/99             2,000,000                  22.2%            $0.01     5/31/06       $20,000
                       2/1/00             1,000,000                  11.1%           $0.21      5/1/07        $30,000
---------------------- ---------- ------------------------- ------------------- --------------- ------------- -------------

OPTION EXERCISES AND FISCAL YEAR-END VALUES

     The following table provides information on option exercises in the fiscal
year ended May 31, 2000, by the Named Executive Officers and the value of
unexercised options held by the Named Executive Officers as of May 31, 2000.

------------------------- --------------- ----------- ---------------------------------- ----------------------------------
                                                              Number of
                                                         securities underlying                Value of unexercised
                              Shares                       unexercised options              in-the-money options at
                           acquired on      Value            at May 31, 2000                     May 31, 2000
Name                         Exercise      realized    Exercisable     Unexercisable     Exercisable       Unexercisable
----                         --------      --------    -----------     -------------     -----------       -------------
       Gerald N. Kern     3,000,000       $810,000      1,500,000            None        $477,150                --
------------------------- --------------- ----------- -------------- ------------------- ----------------- ----------------
       Steven I. Kern     None                  --      2,500,000            None        $695,250                --
------------------------- --------------- ----------- -------------- ------------------- ----------------- ----------------
       Cynthia Kern       2,000,000       $580,000      1,000,000            None        $318,100                --
------------------------- --------------- ----------- -------------- ------------------- ----------------- ----------------
</TABLE>

<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

As of May 31, 2000, Petro-Med owned 26,256,794 shares of common stock of the
Company, which constitutes approximately 19.2% of the issued and outstanding
stock of the Company. Petro-Med has filed a Chapter XI bankruptcy petition which
was converted to a Chapter VII on August 26, 1992. Management has been advised
by Petro-Med's bankruptcy counsel that this matter has been closed, Petro-Med's
debts have been discharged and that Petro-Med has retained its stock in
Meditech.

Petro-Med has been delinquent for some years in making filings with the
Securities and Exchange Commission required by the Securities Exchange Act of
1934. The delinquencies pre-date by a number of years the acquisition by Gerald
N. Kern of substantial holdings in, and control of, Petro-Med. Mr. Kern has been
attempting since 1983 to rectify Petro-Med's filing deficiencies. Petro-Med has
engaged in discussions with the staff of the Securities and Exchange Commission
with respect to compliance. The staff indicated to Petro-Med's counsel that it
would likely seek injunctive relief against Petro-Med, requiring Petro-Med to
make timely filings in the future. See "Certain Relationships and Related
Transactions" for information relating to transactions between Mr. Kern,
Petro-Med and the Company during the last five years.

     The following table sets forth, as of May 31, 2000, 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 names
beneficial owner is the same as that of our principal executive offices located
at 10105 E. Via Linda, No. 13, Scottsdale, Arizona 85258.

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

    Petro-Med, Inc.                     26,256,794                     18.7%

    Gerald N. Kern                      33,266,794 (1)                 23.5%

    Steven I. Kern                       2,500,000 (2)                  1.8%

    Cynthia S. Kern                      3,000,000 (3)                  2.1%

    Lester Goldstein                     1,050,000 (4)                   *

    Harry Hall                             800,000 (5)                   *

    Immune Network, Limited             10,000,000 (6)                  6.8%
    3650 Wesbrook Mall
    Vancouver, Canada, BC V6S ZLZ

    All directors & officers            40,616,794                     27.8%
             as a group (5 persons)

* Less than 1%.

     (1)  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 1,500,000 shares
          issuable upon exercise of outstanding stock options. Does not include
          an aggregate of 2,250,000 shares of our common stock held by Mr.
          Kern's spouse and adult children. Mr. Kern disclaims beneficial
          ownership of the shares held by such persons.
     (2)  Includes 2,500,000 shares issuable upon exercise of outstanding stock
          options.
     (3)  Includes 1,000,000 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.
     (4)  Includes 450,000 shares issuable upon exercise of outstanding stock
          purchase warrants.
     (5)  Includes 450,000 shares issuable upon exercise of outstanding stock
          purchase warrants.
     (6)  Includes 10,000,000 shares issued upon exercise of the stock option
          we granted to Immune Network, Limited. INL exercised the entire option
          subsequent to May 31, 2000.


<PAGE>

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 of 1933. Gerald N. Kern may be deemed a "parent" of Petro-Med and
therefore a "parent" of the company under the Securities Act of 1933. See
"Directors and Executive Officers of the Registrant" and "Certain Relationships
and Related Transactions."

The following table sets forth, as of May 31, 2000, the shares of common stock
of Petro-Med owned of record and beneficially by the directors and 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                        .04%

All Directors and Officers       3,621,840                      15.89%
as a group (4 persons)

(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, because 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 at 1,683,640 shares, and Lakestone Acceptance
Corp., 1,370,000 or approximately 7.4% and 6% respectively. The shares of Mr.
Givotovsky are subject to the agreements described above.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

Cynthia S. Kern has been employed as President since September, 1995. She served
as Vice President of Administration from 1982 to 1995, and has served as
Secretary of the Company since 1983, and presently draws a salary of $45,000 per
annum. In August, 1993, she purchased 3,000,000 shares of the Company's common
stock for total consideration of $90,000. She is the wife of Gerald N. Kern,
Chairman of the Board and Chief Executive Officer of the Company. Mrs. Kern's
employment was approved by Mr. Rosenberg and Dr. Goldstein, as directors of the
Company. She devotes up to 50% of her time to the affairs of the Company. Robert
M. Kern has been employed as General Counsel of the Company since September,
1984. His present retainer is $36,000 per annum. He is the son of Gerald N.
Kern. Board approval was not required, although it was received in March, 1985.
Robert M. Kern devotes up to 10% of his time to the affairs of the Company. Mrs.
Kern's and Mr. Robert Kern's salaries and fees are based upon current market
rates.

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

The Company's administrative offices are located at 10105 E. Via Linda, Suite
103, PMB 382, Scottsdale, AZ 85258. See "Business - Property".

<PAGE>



                                     Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         A.  Documents filed with report:

                  1.  Financial statements and financial statement schedules.

                       The  financial   statements   and   financial   statement
                       schedules listed in the accompanying  index to financial
                       statements are filed as part of this report.

                  2.   Exhibits.

                        The  exhibits  listed  on  the  accompanying   index  to
                        exhibits are filed are filed as part of this report.

         B.       Reports on Form 8-k

                        None.
--------------------------------------------------------------------------------





<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: March   , 2001

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:   March   , 2001
-----------------------------
Gerald N. Kern, Chairman and
Chief Executive Officer


/s/ Cynthia S. Kern                         Dated:   March   , 2001
-----------------------------
Cynthia S. Kern, President


/s/  Steven I. Kern                         Dated:   March   , 2001
-----------------------------
Steven I. Kern, Chief
Operating Officer and Chief
Financial Officer


/s/ Harry Hall                              Dated:   March   , 2001
-----------------------------
Harry Hall, Director


/s/ Lester F. Goldstein                     Dated:   March   , 2001
-----------------------------
Lester F. Goldstein, Director





<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY

                                                   (DEVELOPMENT STAGE COMPANIES)
                                                                        CONTENTS
                                                                    May 31, 2000

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

                                                                         Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                        F-1

FINANCIAL STATEMENTS

        Consolidated Balance Sheets                                     F-2-F-3

        Consolidated Statements of Operations                             F-4

        Consolidated Statements of Stockholders' Deficit                F-5-F-7

        Consolidated Statements of Cash Flows                           F-8-F-9

        Notes to Consolidated Financial Statements                     F-10-F-27











<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders
Meditech Pharmaceuticals, Inc.

We have audited the accompanying consolidated balance sheets, as restated (see
Note 2) of Meditech Pharmaceuticals, Inc. and subsidiary (development stage
companies) as of May 31, 2000 and 1999, and the related consolidated statements
of operations, and cash flows, as restated (see Note 2) for each of the three
years in the period ended May 31, 2000, and the statement of stockholders'
deficit, as restated (see Note 2) for each of the four years ended May 30, 2000.
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 audits. We have not audited the consolidated statements of operations,
the consolidated statements of stockholders' deficit, and the consolidated
statement of cash flows, as restated (see Note 2) for the periods from May 4,
1982 (Inception) to May 31, 1996, which constituted accumulated deficits
aggregating to $12,621,500. These periods have been audited by other auditos.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis for our opinion.

In our opinion, the restated, consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Meditech Pharmaceuticals, Inc. and subsidiary as of May 31, 2000 and 1999, and
the results of their consolidated operations and their consolidated cash flows
for each of the three years in the period ended May 31, 2000, in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. During the years ended May
31, 2000, 1999, and 1998, the Company incurred net losses of $1,150,100,
$767,400, and $555,200, respectively. In addition, the Company's accumulated
deficit was $16,051,600 and $14,901,500 as of May 31, 2000 and 1999,
respectively. 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 3 to the
consolidated financial statements, 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 3. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
November 8, 2000, except for
the fifth and sixth paragraphs
of Note 5, as to which the date
is November 30, 2000

                                      F-1


<PAGE>

                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                                     CONSOLIDATED BALANCE SHEETS
                                                                         May 31,

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


                                     ASSETS
                                   (restated)
                                                          2000            1999
                                                        --------        --------
Current assets
     Cash                                               $114,800        $   --
     Prepaid expenses                                        600             600
                                                        --------        --------

         Total current assets                            115,400             600

Other assets                                               2,100            --
                                                        --------        --------

                      Total assets                      $117,500        $    600
                                                        ========        ========



                 The accompanying notes are an integral part of
                          these financial statements.

                                      F-2
<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                                     CONSOLIDATED BALANCE SHEETS
                                                                         May 31,

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


                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                                   (restated)

                                                       2000             1999
                                                   ------------    -------------
Current liabilities
     Accounts payable and accrued expenses         $  1,502,500    $  1,448,800
     Accrued compensation                             2,787,100       2,717,000
     Advances from affiliates                         3,603,800       3,294,700
     Advances from stockholders                          43,500          36,985
     Loan payable                                        71,000          71,000
     Deferred revenue                                   100,000            --
                                                   ------------    ------------

         Total current liabilities                    8,107,900       7,568,485
                                                   ------------    ------------

Minority interest in consolidated subsidiary            191,300         191,300
                                                   ------------    ------------

Commitments and contingencies

Stockholders' deficit
     Preferred stock, $0.001 par value
         25,000,000 shares authorized
         none issued and outstanding                       --
     Common stock, $0.001 par value
         400,000,000 shares authorized
         136,713,432 and 129,363,432 shares
         issued and outstanding                         136,700         129,400
     Subscriptions receivable                           (10,000)           --
     Additional paid-in capital                       7,743,200       7,012,915
     Accumulated deficit                            (16,051,600)    (14,901,500)
                                                   ------------    ------------

             Total stockholders' deficit             (8,181,700)     (7,759,185)
                                                   ------------    ------------

               Total liabilities and
               stockholders' deficit               $    117,500    $        600
                                                   ============    ============


                 The accompanying notes are an integral part of
                          these financial statements.

                                       F-3

<PAGE>
<TABLE>
<CAPTION>

                                                                          MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                          (DEVELOPMENT STAGE COMPANIES)
                                                                                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                   For the Years Ended May 31, 2000, 1999, and 1998 and
                                                            for the Period from May 4, 1982 (Inception) to May 31, 2000

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


                                                                                                             For the
                                                                                                           Period from
                                                                                                              May 4,
                                                               For the Year Ended                              1982
                                                                     May 31,                                (Inception)
                                            -------------------------------------------------------          to May 31,
                                                2000                 1999                 1998                  2000
                                            -------------        -------------        -------------        -------------
                                              (restated)          (restated)           (restated)            (restated)

<S>                                         <C>                  <C>                  <C>                  <C>
Revenue                                     $      25,000        $        --          $        --          $      25,000
                                            -------------        -------------        -------------        -------------

Operating expenses
   Research and development                         1,200                 --                   --              1,838,300
   General and administrative                     864,900              484,400              297,000           12,083,000
   Aborted stock offering costs                      --                   --                   --                325,400
                                            -------------        -------------        -------------        -------------

     Total operating expenses                     866,100              484,400              297,000           14,246,700
                                            -------------        -------------        -------------        -------------

Loss before other income
   (expense)                                     (841,100)            (484,400)            (297,000)         (14,221,700)
                                            -------------        -------------        -------------        -------------

Other income (expense)
   Interest expense                              (309,000)            (283,000)            (258,200)          (2,533,800)
   Interest income                                   --                   --                   --                298,500
   Other income, net                                 --                   --                   --                 75,600
                                            -------------        -------------        -------------        -------------

     Total other income (expense)                (309,000)            (283,000)            (258,200)          (2,159,700)
                                            -------------        -------------        -------------        -------------

Loss before minority interest in
   losses of subsidiary                        (1,150,100)            (767,400)            (555,200)         (16,381,400)

Minority interest in losses of
   subsidiary                                        --                   --                   --                329,800
                                            -------------        -------------        -------------        -------------

Net loss                                    $  (1,150,100)       $    (767,400)       $    (555,200)       $ (16,051,600)
                                            =============        =============        =============        =============

Basic and diluted loss per share            $       (0.01)       $       (0.01)       $       (0.01)       $       (0.13)
                                            =============        =============        =============        =============

Weighted-average shares
   outstanding                                136,272,691          129,363,432          124,563,432          119,536,985
                                            =============        =============        =============        =============

                           The accompanying notes are an integral part of these financial statements.

                                                             F-4
<PAGE>


                                                                                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                                      (DEVELOPMENT STAGE COMPANIES)

                                                                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                                        For the Period from May 4, 1982 (Inception) to May 31, 2000

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

                                                                                                          Deficit
                                                                                                         Accumulated
                                Common Stock            Treasury Stock                     Additional    During the
                           ----------------------   ----------------------  Subscriptions    Paid-In     Development
                             Shares      Amount        Shares      Amount    Receivable      Capital        Stage          Total
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Initial capitalization     48,000,000    $ 48,000                 $          $             $   529,400   $              $   577,400
Net loss                                                                                                  (1,022,600)    (1,022,600)
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Balance May 31, 1983       48,000,000      48,000          --         --            --         529,400    (1,022,600)      (445,200)
Private placement of
   stock                    4,715,000       4,700                                              584,700                      589,400
Initial public offering    13,200,000      13,200                                            3,946,800                    3,960,000
Offering costs                                                                                (935,435)                    (935,435)
Cash on sale of common
   stock to officer            50,000          50                                                7,450                        7,500
Compensation on stock
   issued to officer           50,000          50                                               20,500                       20,550
Net loss                                                                                                  (1,338,400)    (1,338,400)
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Balance May 31, 1984       66,015,000      66,000          --         --            --       4,153,415    (2,361,000)     1,858,415
Net loss                                                                                                  (1,794,100)    (1,794,100)
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Balance May 31, 1985       66,015,000      66,000          --         --            --       4,153,415    (4,155,100)        64,315
Issuance of stock for
   subscriptions to
   officer                  8,000,000       8,000                             (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)
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Balance May 31, 1986       74,015,000    $ 74,000          --     $   --     $(1,440,000)  $ 5,753,615   $(5,688,900)   $(1,301,285)
Conversion of advances
   from affiliates         10,000,000      10,000                                              549,900                      559,900
Rescission of common
   stock issued to
   officer and
   held in treasury                                   8,000,000                1,440,000    (1,440,000)
Issuance of shares for
   services rendered          310,000         300                                               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)
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

                                   The accompanying notes are an integral part of these financial statements.

                                                                   F-5


<PAGE>
                                                                                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                                      (DEVELOPMENT STAGE COMPANIES)

                                                                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                                        For the Period from May 4, 1982 (Inception) to May 31, 2000

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


                                                                                                          Deficit
                                                                                                         Accumulated
                                Common Stock            Treasury Stock                     Additional    During the
                           ----------------------   ----------------------  Subscriptions    Paid-In     Development
                             Shares      Amount        Shares      Amount    Receivable      Capital        Stage          Total
                          -----------    --------   -----------   --------   -----------   -----------   -----------    -----------

Balance, May 31, 1987      84,325,000      84,300     8,000,000        --        --        5,470,715     (7,395,200)     (1,840,185)
Issuance of shares to
   consultants for
   services                 1,540,000       1,500                                            125,800                        127,300
Stock options exercised       366,000         400                                              9,500                          9,900

Stock options issued
   to employees and
   consultants                                                                                13,800
                                                                                                                             13,800
Issuance of common
   stock of subsidiary                                                                       290,000                        290,000
Net loss                                                                                                   (880,200)       (880,200)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1988      86,231,000      86,200     8,000,000        --        --        5,909,815     (8,275,400)     (2,279,385)
Common stock issued
   to officer               8,000,000       8,000                                             72,000                         80,000
Stock options issued
   to employees and
   consultants                                                                                15,600                         15,600
Sale of common stock        2,756,832       2,800                                            131,600                        134,400
Net loss                                                                                                   (641,400)       (641,400)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1989      96,987,832      97,000     8,000,000        --        --        6,129,015     (8,916,800)     (2,690,785)
Sale of common stock          100,000         100                                              3,200                          3,300
Stock options issued
   to employees                                                                                7,300                          7,300
Net loss                                                                                                   (522,000)       (522,000)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1990      97,087,832      97,100     8,000,000        --        --        6,139,515     (9,438,800)     (3,202,185)
Stock issued for
  services                  2,750,000       2,800                                             38,300                         41,100
Net loss                                                                                                   (479,100)       (479,100)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1991      99,837,832      99,900     8,000,000        --        --        6,177,815     (9,917,900)     (3,640,185)
Sale of common stock        2,000,000       2,000                                             29,400                         31,400
Net loss                                                                                                   (483,100)       (483,100)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1992     101,837,832     101,900     8,000,000        --        --        6,207,215    (10,401,000)     (4,091,885)
Net loss                                                                                                   (449,400)       (449,400)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1993     101,837,832     101,900     8,000,000        --        --        6,207,215    (10,850,400)     (4,541,285)
Stock issued for
  services                  7,385,300       7,400                                            208,400                        215,800
Net loss                                                                                                   (753,900)       (753,900)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1994
   (restated)             109,223,132     109,300     8,000,000        --        --        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
   (restated)             109,223,132     109,300     8,000,000        --        --        6,429,215    (12,119,900)     (5,581,385)
Net loss                                                                                                   (501,600)       (501,600)
                         ------------  ----------  ------------   ---------  --------   ------------   ------------    ------------

Balance, May 31, 1996
   (restated)             109,223,132     109,300     8,000,000        --        --        6,429,215    (12,621,500)     (6,082,985)


                               The accompanying notes are an integral part of these financial statements.

                                                                F-6
<PAGE>





                                                                                     MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                                      (DEVELOPMENT STAGE COMPANIES)

                                                                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                                        For the Period from May 4, 1982 (Inception) to May 31, 2000

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


                                                                                                         Deficit
                                                                                                         Accumulated
                                Common Stock            Treasury Stock                      Additional    During the
                          ------------------------    ----------------------  Subscriptions  Paid-In     Development
                             Shares      Amount         Shares      Amount    Receivable     Capital        Stage           Total
                          -----------   ----------    ----------- ----------  -----------   -----------   -----------    -----------
Stock issued for
  services                  3,360,300   $    3,300                $           $             $     89,100 $             $     92,400
Stock issued to
   employees as
   compensation            11,980,000       12,000                                               322,900                    334,900
Net loss                                                                                                     (957,400)     (957,400)
                         ------------   ----------   -----------  ----------  ------------  ------------ ------------  ------------

Balance, May 31, 1997
   (restated)             124,563,432      124,600     8,000,000        --            --       6,841,215  (13,578,900)   (6,613,085)
Net loss                                                                                                     (555,200)     (555,200)
                         ------------   ----------   -----------  ----------  ------------  ------------ ------------  ------------

Balance, May 31, 1998
   (restated)             124,563,432      124,600     8,000,000        --            --       6,841,215  (14,134,100)   (7,168,285)
Stock issued to
   employees                3,500,000        3,500                                               120,000                    123,500
Stock issued to
   vendors for services     1,300,000        1,300                                                51,700                     53,000
Net loss                                                                                                     (767,400)     (767,400)
                         ------------   ----------   -----------  ----------  ------------  ------------ ------------  ------------

Balance, May 31, 1999
   (restated)             129,363,432      129,400     8,000,000        --            --       7,012,915  (14,901,500)   (7,759,185)
Stock issued to
   employees as
   compensation               450,000          400                                                10,850                     11,250
Stock issued to vendors
   for services             1,400,000        1,400                                                73,600                     75,000
Exercise of options for
   accrued compensation     5,000,000        5,000                                                45,000                     50,000

Exercise of options for
   subscriptions
   receivable                 500,000          500                                 (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
Stock options issued to
   Immune Network
   Research, Ltd.                                                                                400,000                    400,000
Net loss                                                                                                   (1,150,100)   (1,150,100)
                         ------------   ----------   -----------  ----------  ------------  ------------ ------------  ------------

  Balance, May 31, 2000
       (restated)         136,713,432   $  136,700     8,000,000  $     --    $    (10,000) $  7,743,200 $(16,051,600) $ (8,181,700)
                         ============   ==========   ===========  ==========  ============  ============ ============  ============


                                The accompanying notes are an integral part of these financial statements.

                                                                 F-7
<PAGE>



                                                                             MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                             (DEVELOPMENT STAGE COMPANIES)
                                                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                   For the Years Ended May 31,  2000,  1999,  and 1998 and
                                                               for the Period from May 4, 1982 (Inception) to May 31, 2000

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


                                                                                                               For the
                                                                                                              Period from
                                                                                                                 May 4,
                                                                    For the Year Ended                            1982
                                                                         May 31,                              (Inception)
                                                  ----------------------------------------------------         to May 31,
                                                      2000                1999               1998                 2000
                                                  ------------        ------------        ------------        ------------
                                                   (restated)          (restated)          (restated)          (restated)
Cash flows from operating activities
   Net loss                                       $ (1,150,100)       $   (767,400)       $   (555,200)       $(16,051,600)
   Adjustments to reconcile net loss to
     net cash provided by (used in)
     operating activities
       Depreciation and amortization                      --                  --                                   135,600
       Warrants and options issued to
         employees and vendors                          86,200                --                                   775,100
       Minority interest in losses of
         subsidiary                                       --                  --                                  (329,800)
       Stock issued to employees and
         vendors                                       514,500             176,500                               1,667,300
       Contributed services                            126,900                                                     126,900
       Accrued interest on advances
         from affiliates                               309,000             283,000             258,200           2,533,800
   Increase in
     Prepaid expenses                                     --                  --                                      (600)
     Other assets                                       (2,100)               --                                    (2,100)
   Increase in
     Accounts payable and accrued
       expenses                                         53,700              58,915              50,000           1,502,500
     Accrued compensation                               70,100             240,800             240,400           2,787,100
     Deferred revenue                                  100,000                --                  --               100,000
                                                  ------------        ------------        ------------        ------------

Net cash provided by (used in)
operating activities                                   108,200              (8,185)             (6,600)         (6,755,800)
                                                  ------------        ------------        ------------        ------------

Cash flows from investing activities
   Purchase of furniture and equipment                    --                  --                  --              (135,600)
                                                  ------------        ------------        ------------        ------------

Net cash used in investing activities                     --                  --                  --              (135,600)
                                                  ------------        ------------        ------------        ------------



                     The accompanying notes are an integral part of these financial statements.

                                                      F-8
<PAGE>



                                                                       MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                                                       (DEVELOPMENT STAGE COMPANIES)
                                                                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             For the Years Ended May 31,  2000,  1999,  and 1998 and
                                                         for the Period from May 4, 1982 (Inception) to May 31, 2000

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


                                                                                                            For the
                                                                                                          Period from
                                                                                                             May 4,
                                                                     For the Year Ended                      1982
                                                                           May 31,                        (Inception)
                                                        --------------------------------------------       to May 31,
                                                           2000             1999             1998             2000
                                                        ----------       ----------       ----------       ----------
                                                        (restated)       (restated)       (restated)       (restated)
Cash flows from financing activities
   Proceeds from advances from
     affiliates, net                                    $    6,600       $    8,185       $    6,600       $2,250,800
   Proceeds from loan payable                                 --               --               --             71,000
   Proceeds from sale of stock, net                           --               --               --          4,684,400
                                                        ----------       ----------       ----------       ----------

Net cash provided by financing
activities                                                   6,600            8,185            6,600        7,006,200
                                                        ----------       ----------       ----------       ----------

Net increase in cash                                       114,800             --               --            114,800

Cash, beginning of period                                     --               --               --               --
                                                        ----------       ----------       ----------       ----------

Cash, end of period                                     $  114,800       $     --         $     --         $  114,800
                                                        ==========       ==========       ==========       ==========


Supplemental disclosures
 of cash flow information

   Interest paid                                        $     --         $     --         $     --         $     --
                                                        ==========       ==========       ==========       ==========

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


                       The accompanying notes are an integral part of these financial statements.

                                                         F-9
</TABLE>


<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 1 - DESCRIPTION OF BUSINESS

         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 and completed its initial public offering in August 1983. Since
         then, it has been engaged in research and development activities
         associated with bringing its products to market.


NOTE 2 - RESTATEMENTS

         Shares Issued and Outstanding Restatement
         -----------------------------------------
         Meditech has restated its prior period financial statements for certain
         adjustments related to accounting for shares issued during the years
         ended May 31, 1994 through May 31, 2000. Meditech had recorded certain
         stock grants to consultants that were not transacted during the years
         ended May 31, 1995 and 1994. In addition, Meditech incorrectly recorded
         the acquisition of 8,000,000 shares of common stock into treasury as a
         retirement of those shares. The resulting misstatements affect shares
         outstanding in those periods as follows:

                                              Common
                                              Shares            Common
                                           Outstanding,         Shares
                   Year Ending            as Previously       Outstanding,
                     May 31,                Reported          as Corrected
                     -------                --------          ------------
                                            (in 000s)          (in 000s)

                      1994                   102,593            109,223
                      1995                   103,681            109,223
                      1996                   103,681            109,223
                      1997                   119,016            124,563
                      1998                   119,016            124,563
                      1999                   123,816            129,363
                      2000                   131,166            136,713


                                      F-10
<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 2 - RESTATEMENTS (Continued)

         Compensation to Officers, Employees, and Consultants
         ----------------------------------------------------
         During the years ended May 31, 2000 and 1999, Meditech incorrectly
         recorded the fair market value of its shares and stock options issued
         to employees and consultants.

         Meditech had previously recorded stock grants at discounted rates and
         grants of options to consultants and employees at their intrinsic
         value. These grants have been corrected to reflect the fair market
         value of the services or the fair market value of the instrument
         granted for these grants to consultants and vendors and to properly
         reflect the application of Meditech's stock based compensation policies
         where employees are concerned.

         The Company had recorded the option for 10,000,000 shares of common
         stock issued to Immune Network Research, Ltd. (see Note 5) as
         contingent on the signing of a definitive agreement. However, as the
         option was issued with no recourse to cancel or recover the option in
         the event the agreement was not finalized, the Company should have
         recognized the fair market value of the option as a charge when it was
         granted. The charge for the fair market value of the option was
         $400,000 and is included under the caption "Adjustment for corrected
         values attributed to stock based compensation."

         In addition, during the year ended May 31, 2000, Meditech did not
         record the fair market value of services provided by certain officers
         and directors. Meditech has restated its financial statements to
         include expenses relating to the fair market value of services
         performed where the officers were not compensated by Meditech.

         These changes have been corrected to reflect the appropriate values.
         Total adjustments and their relative impact on Meditech's net loss are
         as follows:

<TABLE>
<CAPTION>

                                                                             Adjustment
                                                         Fair Market       for Corrected
                                                          Value of            Values
                                         Net Loss,        Services         Attributed to
                    Year Ending       as Previously       Provided          Stock-Based          Net Loss,
                      May 31,            Reported        by Officers       Compensation        as Corrected
                      -------            --------        -----------       ------------        ------------

<S>                   <C>              <C>               <C>               <C>                <C>
                      2000           $    (1,002,300)   $     (126,900)     $     (20,900)    $   (1,150,100)
                      1999           $      (721,500)   $     -             $     (45,900)    $     (767,400)
</TABLE>


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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


                                      F-11
<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Basis of Presentation
         ---------------------
         The accompanying consolidated financial statements have been prepared
         in conformity with generally accepted accounting principles, which
         contemplate continuation of the Company as a going concern. The Company
         incurred net losses of $1,150,100, $767,400, and $555,200 during the
         years ended May 31, 2000, 1999, and 1998, respectively. In addition,
         the Company had an accumulated deficit of $16,051,600 and $14,901,500
         as of May 31, 2000 and 1999, respectively. Management recognizes that
         the Company must generate additional resources and the eventual
         achievement of sustained profitable operations. Management's plans
         include obtaining additional capital through equity financing and the
         extension of existing debt. The consolidated financial statements do
         not include any adjustments that might be necessary if the Company is
         unable to continue as a going concern.

         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. All losses
         accumulated since inception have been considered as part of the
         Company's development stage activities.

         Estimates
         ---------
         In preparing financial statements in conformity with generally accepted
         accounting principles, management makes 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 reporting period. Actual results could differ from those
         estimates.

         Cash and Cash Equivalents
         -------------------------
         For purposes of the statements of cash flows, the Company considers all
         highly liquid investments purchased with original maturity of three
         months or less to be cash equivalents.

         Offering Costs
         --------------
         Offering costs arose from warrants issued to the underwriter currently
         involved with offerings of the Company's securities. Such costs are
         offset against the proceeds of such offerings upon their successful
         completion and are charged to operations in the event the offering is
         not successful.

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



                                      F-12
<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         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. To date, no impairment has
         occurred.

         Income Taxes
         ------------
         The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
         requires the recognition of 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. Valuation allowances
         are established, when necessary, to reduce deferred tax assets to the
         amount expected to be realized.

         Fair Value of Financial Instruments
         -----------------------------------
         The Company measures its financial assets and liabilities in accordance
         with generally accepted accounting principles. For certain of the
         Company's financial instruments, including cash, accounts payable and
         accrued expenses, and accrued compensation, the carrying amounts
         approximate fair value due to their short maturities.

         Concentrations of Credit Risk
         -----------------------------
         The financial instrument which potentially subjects the Company to
         concentrations of credit risk is cash. The Company places its cash with
         high quality financial institutions, and at times it may exceed the
         Federal Deposit Insurance Corporation $100,000 insurance limit. As of
         May 31, 2000 and 1999, uninsured portions of cash amounted to $15,000
         and $0, respectively.

         Loss per Share
         --------------
         The Company utilizes SFAS No. 128, "Earnings 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. For
         the years ended May 31, 2000 and 1999, the Company incurred net losses;
         therefore, basic and diluted loss per share are the same.



                                      F-13
<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Accounting for Stock Options and Warrants
         -----------------------------------------
         The Company's policy is to account for stock-based compensation in
         accordance with SFAS No. 123, "Accounting for Stock-Based
         Compensation." As allowed by SFAS No. 123, the Company has elected to
         continue to measure compensation cost under Accounting Principles
         Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued to
         Employees," and comply with the pro forma disclosure requirements of
         the standard.

         Reclassifications
         -----------------
         Certain reclassifications have been made to the May 31, 1999 and 1998
         financial statements to conform with the May 31, 2000 presentation.

         Comprehensive Income
         --------------------
         For the year ended May 31, 2000, the Company adopted SFAS No. 130,
         "Reporting Comprehensive Income." This statement establishes standards
         for reporting comprehensive income and its components in a financial
         statement. Comprehensive income as defined includes all changes in
         equity (net assets) during a period from non-owner sources. Examples of
         items to be included in comprehensive income, which are excluded from
         net income, include foreign currency translation adjustments and
         unrealized gains and losses on available-for-sale securities.
         Comprehensive income is not presented in the Company's financial
         statements since the Company did not have any of the items of
         comprehensive income in any period presented.

         Recently Issued Accounting Pronouncements
         -----------------------------------------
         In June 1999, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 136, "Transfer of Assets to a Not-for-Profit Organization or
         Charitable Trust that Raises or Holds Contributions for Others." This
         statement is not applicable to the Company.

         In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
         Instruments and Hedging Activities." The Company does not expect
         adoption of SFAS No. 137 to have a material impact, if any, on its
         financial position or results of operations.

         In December 1999, the Securities and Exchange Commission staff released
         Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," to
         provide guidance on the recognition, presentation, and disclosure of
         revenue in financial statements. Changes in accounting to apply the
         guidance in SAB No. 101 may be accounted for as a change in accounting
         principle effective January 1, 2000. Management has not yet determined
         the complete impact of SAB No. 101 on the Company; however, management
         does expect that application of SAB No. 101 will have a material effect
         on the Company's revenue recognition and results of operations.


                                      F-14
<PAGE>




                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recently Issued Accounting Pronouncements (Continued)
         -----------------------------------------
         In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting
         for Certain Transactions Involving Stock Compensation," (an
         Interpretation of Accounting Principles Bulletin Opinion No. 25 ("APB
         25")) ("FIN 44"). FIN 44 provides guidance on the application of APB
         25, particularly as it relates to options. The effective date of FIN 44
         is July 1, 2000, and the Company has adopted FIN 44 as of that date.

         In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
         Instruments and Certain Hedging Activities." This statement is not
         applicable to the Company.

         In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB
         Statement No. 53 and Amendments to Statements No. 63, 89, and 121."
         This statement is not applicable to the Company.

         In September 2000, the FASB issued SFAS No. 140, "Accounting for
         Transfers and Servicing of Financial Assets and Extinguishments of
         Liabilities, a replacement of FASB Statement No. 125." This statement
         is not applicable to the Company.


NOTE 4 - 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, whose Chief Executive Officer is the
         Chairman. 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
                                                                    May 31, 2000

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


NOTE 4 - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY (Continued)

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


                                                            2000        1999
                                                         ---------    ---------
              Assets
                  Due from Meditech                      $ 400,000    $ 400,000
                                                         ---------    ---------

                        Total assets                     $ 400,000    $ 400,000
                                                         =========    =========

              Liabilities
                  Accounts payable                       $   5,000    $   5,000
                  Due to Meditech                          129,000      129,000
                                                         ---------    ---------

                    Total liabilities                      134,000      134,000

              Equity                                       266,000      266,000
                                                         ---------    ---------

                        Total liabilities and equity     $ 400,000    $ 400,000
                                                         =========    =========

         Amounts recorded in the minority interest on the accompanying balance
         sheets represent the pro-rata portion of Viral's equity attributable to
         minority stockholders.


NOTE 5 - COMMITMENTS AND CONTINGENCIES

         Leases
         ------
         Currently, the Company uses its operating facilities, which are
         provided by its Chief Executive Officer, without a lease. There is no
         guarantee the officer will be willing to provide these facilities in
         the future (see Note 9).

         Employment Agreements
         ----------------------
         The Company entered into an employment agreement dated as of February
         3, 2000 with its Chief Executive Officer, contingent upon completion of
         the offering discussed in Note 7. The agreement is for a three-year
         term and provides for a base salary of $150,000 per annum for the first
         year with an increase at least equal to the consumer price index over
         each succeeding year. The agreement provides for a severance payment
         including the unearned salary for the remainder of the contract plus
         any prorated earned bonuses in the event of termination without cause
         or upon change of control. Additionally, the agreement grants options
         to purchase 15,950,000 shares of common stock exercisable at various
         prices and vesting over the course of his employment agreement.


                                      F-16



<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)

         Employment Agreements (Continued)
         ---------------------
         The Company entered into an employment agreement dated as of February
         3, 2000 with its Chief Financial Officer, contingent upon completion of
         the offering discussed in Note 7. The agreement is for a three-year
         term providing for a base salary of $120,000 per annum for the first
         year and not less than $120,000 per annum during the second and third
         years of the agreement. In addition, the officer will be granted a
         total of 13,950,000 warrants exercisable at various prices and vesting
         over the course of the agreement. The agreement provides for a
         severance payment including the remainder of the base salary due under
         the agreement if the officer is discharged without cause or if the
         officer is terminated within 12 months of a change of control of the
         Company. The severance payment will be equal to 12 months of the
         current salary.

         Litigation
         ----------
         The Company may become involved 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 position or results of operations.

         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 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. During the second quarter of 2000,
         the agreement was executed. The option was valued at $400,000 using the
         Black-Scholes option-pricing model, which has been recorded as an
         operating expense on the date granted.


NOTE 6 - 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.

                                      F-17


<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Common Stock
         ------------
         On June 30, 1983, the Company sold 4,715,000 shares of its common stock
         at $0.125 per share in a private offering. Total gross proceeds
         received from the private offering, net of $250,000 of cancelled stock
         subscriptions, were $589,400.

         In July and August 1983, the Company sold 12,000,000 and 1,200,000
         shares, respectively, of its common stock at $0.30 per share in a
         public offering. Total gross proceeds received from the offering were
         $3,960,000.

         In December 1983, the Company sold 50,000 shares of common stock to an
         officer at $0.15 per share for $7,500 and recorded $6,500 in
         compensation expense, representing the difference between the price
         paid and the discounted market value of the stock at the date of
         issuance.

         In February 1984, the Company issued 50,000 shares of common stock to a
         director for services. The Company recorded $14,000 in compensation
         expense, representing the market value of the services at the date of
         issuance.

         On June 1, 1984, the Company issued 100,000 shares of common stock to
         its former Chief Financial Officer for services rendered during the
         six-month period ended May 31, 1984. Subsequently, this grant of shares
         was rescinded, and an option to purchase common stock was issued.

         In October 1985, the Company sold 8,000,000 shares of its common stock
         to its Chief Executive Officer in exchange for the settlement of an
         $8,000 salary obligation and a note in the amount of $1,440,000 from
         the officer. In December 1986, the note was cancelled and the 8,000,000
         shares taken into treasury. At that date, the officer received an
         option to purchase 8,000,000 shares of the Company's common stock for
         $0.01 per share. This option was exercised in March 1989 for $80,000 in
         cash.

         In June 1986, the Company converted advances of $559,900 from
         Petro-Med, Inc. into 10,000,000 shares of common stock of the Company.

         On April 7, 1987, the Company issued 210,000 shares of common stock to
         two consultants for services rendered. The Company recorded $52,200 in
         compensation expense, representing the discounted market value of the
         stock at the date of issuance.

         On April 16, 1987, the Company issued 100,000 shares of common stock to
         three consultants for services rendered. The Company recorded $26,000
         in compensation expense, representing the discounted market value of
         the stock at the date of issuance.


                                      F-18


<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Common Stock (Continued)
         ------------
         During the year ended May 31, 1987, Viral issued 350,000 shares of its
         common stock to consultants for services valued at $296,700.

         On June 11, 1987, the Company issued 100,000 shares of common stock to
         a consultant for services rendered valued at $12,200.

         On October 2, 1987, the Company issued 665,000 shares of common stock
         to two consultants for services rendered valued at $51,100.

         On March 2, 1988, the Company issued 150,000 shares of common stock to
         a consultant for services rendered valued at $13,900.

         On March 17, 1988, the Company issued 25,000 shares of common stock to
         a consultant for services rendered valued at $3,200.

         On March 22, 1988, the Company issued 100,000 shares of common stock to
         a consultant for services rendered valued at $13,000.

         On May 25, 1988, the Company issued 500,000 shares of common stock to a
         consultant for services rendered valued at $33,900.

         During the year ended May 31, 1988, Viral sold shares of its common
         stock for net proceeds of $290,000.

         On March 27, 1989, the Company sold 250,000 shares of common stock for
         $0.10 per share for gross proceeds of $25,000.

         During the year ended May 31, 1989, the Company sold 2,506,832 shares
         of common stock for net proceeds of $109,400.

         During the year ended May 31, 1990, the Company sold 100,000 shares of
         its common stock in a private transaction for net proceeds of $3,300.

         On January 2, 1991, the Company issued 2,750,000 shares of common stock
         as compensation for services valued at $41,100.

         During the year ended May 31, 1992, the Company sold 2,000,000 shares
         of its common stock in a private transaction for net proceeds of
         $31,400.

                                      F-19



<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Common Stock (Continued)
         ------------
         On July 12, 1993, the Company issued 5,700,000 shares of its common
         stock to employees as compensation and for relief of certain accrued
         salaries. The aggregate value of the compensation was $151,000, which
         included forgiveness of $90,450 of accrued payroll.

         On July 12, 1993, the Company issued 1,685,300 shares of common stock
         to consultants for services valued at $64,800.

         During the year ended May 31, 1994, the Company committed certain stock
         to a consultant for services. The services were performed through the
         year ended May 31, 1997. The Company issued 3,360,300 shares of stock
         on July 11, 1996 and recognized consulting expense in the amount of
         $92,400 during the year ended May 31, 1997. Consulting expense related
         to years prior to May 31, 1997 was immaterial.

         On July 11, 1996, the Company issued 11,980,000 shares of common stock
         to employees for services and recognized $334,900 in compensation
         expense.

         On July 9, 1998, the Company issued 3,500,000 shares of common stock to
         employees for a total of $123,500 in compensation for services.

         On July 9, 1998, the Company issued 1,300,000 shares of common stock to
         consultants for a total of $53,000 in compensation for services.

         During the year ended May 31, 2000, the Company issued 450,000 shares
         of common stock to employees for compensation. The shares were valued
         at $11,250.

         During the year ended May 31, 2000, the Company issued 1,400,000 shares
         of common stock to vendors for services rendered. In connection with
         the issuance, the company recorded $75,000 in consulting expense.

         During the year ended May 31, 2000, holders of 5,000,000 employee
         options exercised their options to purchase common stock for
         forgiveness of $50,000 of accrued compensation, which represented the
         exercise price of the options.

         During the year ended May 31, 2000, holders of 500,000 options
         exercised their option to purchase common stock for a subscription
         receivable of $10,000.

                                      F-20


<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Stock Purchase Warrants and Options
         -----------------------------------
         During the year ended May 31, 1985, the Company issued options to
         purchase 480,000 shares of common stock at various exercise prices to
         employees and consultants of the Company. The fair market value of the
         options was immaterial. None of these options were exercised, and all
         have expired.

         On August 16, 1985, the Company issued options to purchase 1,600,000
         shares of its common stock at $0.023 per share to employees of the
         Company. These options were issued at an exercise price that
         approximated market, and as such, no compensation expense was recorded.
         All of these options have expired.

         On October 28, 1985, the Company issued options to purchase 8,000,000
         shares of its common stock at $0.01 per share in connection with the
         cancellation of a subscription receivable to its Chief Executive
         Officer. Related to these options, the Company recognized compensation
         expense in the amount of $104,000.

         On February 27, 1986, the Company issued options to purchase 50,000
         shares of its common stock at the average of the bid/ask price on the
         date of exercise to a consultant of the Company. Additionally, during
         the year ended May 31, 1986, the Company issued options to purchase
         462,000 shares of its common stock to various consultants at exercise
         prices ranging from $0.001 to $0.023 per share. The total consulting
         expense recognized in connection with these options was $56,200. All of
         these options have expired or been exercised.

         During the year ended May 31, 1987, the Company issued options to
         purchase 1,675,000 shares of its common stock to employees of the
         Company. These options were issued with an exercise price that
         approximated the fair market value of the underlying common stock, and
         as such, no compensation expense was recognized. All of these options
         have expired.

         During the year ended May 31, 1987, the Company issued options to
         purchase 975,000 shares of its common stock to consultants of the
         Company at exercise prices ranging from $0.01 to $0.08 per share. In
         connection with these options, the Company recognized consulting
         expense of $42,200. All of these options have expired.

         During the year ended May 31, 1987, the Company's consolidated
         subsidiary issued stock options to purchase 350,000 shares of Viral's
         common stock at various exercise prices to consultants for services
         valued at $190,400. All of these options have expired.

                                      F-21



<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Stock Purchase Warrants and Options (Continued)
         -----------------------------------
         During the year ended May 31, 1988, the Company issued options to
         purchase 550,000 shares of its common stock at exercise prices ranging
         from $0.05 to $0.15 per share to consultants for services rendered. In
         connection with these options, the Company recognized consulting
         expense in the amount of $13,800. All of these options have expired.

         During the year ended May 31, 1989, the Company issued options to
         purchase 450,000 shares of its common stock at exercise prices ranging
         from $0.01 to $0.07 per share to consultants for services rendered. In
         connection with these options, the Company recognized consulting
         expense in the amount of $15,600. All of these options have expired.

         During the year ended May 31, 1990, the Company issued options to
         purchase 100,000 shares of its common stock at an exercise price of
         $0.06 per share to two consultants for services rendered. In connection
         with these options, the Company recognized consulting expense in the
         amount of $7,300. All of these options have expired.

         On January 17, 2000, the Company issued options to purchase 5,000,000
         shares of common stock to employees and stockholders of the Company.
         The options are exercisable at $0.21 per share for 2,500,000 options
         and $0.05 per share for 2,500,000 options and expire on February 3,
         2007. The Company recognized $15,435 as compensation expense related to
         these options.

         On February 1, 2000, the Company issued to employees of the Company
         options to purchase 700,000 shares of common stock exercisable at $0.21
         per share, vesting immediately and expiring on May 1, 2007. No
         compensation expense was recognized as the exercise price at the time
         of the grant approximated the fair market value of the stock at the
         date of grant.

         On February 1, 2000, the Company issued options to purchase 900,000
         shares of its common stock to consultants of the Company. The options
         are exercisable at $0.21 per share and expire on May 31, 2006. Related
         to these options, the Company recognized $27,000 in compensation
         expense, which represents the fair market value of the options at the
         date of grant.

         On February 1, 2000, the Company issued options to purchase 50,000
         shares of its common stock to a consultant of the Company. The options
         are exercisable at $0.05 per share and expire on May 1, 2007. Related
         to these options, the Company recognized consulting expense of $2,000.

                                      F-22



<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Stock Purchase Warrants and Options (Continued)
         -----------------------------------
         On May 16, 2000, the Company issued warrants to purchase 7,000,000
         shares of common stock as a condition of entering into the investment
         agreement described in Note 7. The warrants are exercisable immediately
         at $0.03 per share and expire in 10 years. The warrants are valued at
         $2,380,000 and represent offering costs. When the transaction closes,
         it will be reflected as a reduction in the net proceeds from the
         offering or, if the transaction is aborted, will be charged to
         operations.

         During the year ended May 31, 2000, the Company issued options to
         purchase 5,800,000 shares of common stock exercisable at $0.01 per
         share, vesting immediately and expiring on May 31, 2006 to employees of
         the Company. Related to these options, the Company recognized $20,000
         of compensation expense, which represents the intrinsic value of the
         options. As of May 31, 2000, options representing 300,000 shares of
         stock remained unexercised.

         Employee Stock Option Transactions
         ---------------------------------
         The Company has no formal stock option plan. The following summarizes
         all transactions for the year ended May 31, 2000 involving the
         Company's common stock purchase options issued to employees. (The
         Company did not have any transactions during the years ended May 31,
         1999, 1998, and 1997):
<TABLE>
<CAPTION>

                                                                                         Weighted-
                                                                                         Average
                                                                         Number          Exercise
                                                                       of Options           Price
                                                                     ---------------    -------------

<S>                                                                   <C>                <C>
             Outstanding, May 31, 1997, 1998, and 1999                             -     $       -
                 Granted                                                  11,500,000     $    0.08
                 Exercised                                                (5,500,000)    $    0.01
                                                                     ---------------

                      Outstanding, May 31, 2000                            6,000,000     $    0.15
                                                                     ===============

                      Exercisable, May 31, 2000                            6,000,000     $    0.15
                                                                     ===============

</TABLE>


         The weighted-average remaining contractual life of the options
         outstanding at May 31, 2000 is six years. The exercise prices for the
         options outstanding at May 31, 2000 ranged from $0.01 to $0.21.

                                      F-23



<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Employee Stock Option Transactions (Continued)
         ----------------------------------
         The Company has adopted only the disclosure provisions of SFAS No. 123,
         "Accounting for Stock-Based Compensation." It applies Accounting
         Principles Bulletin ("APB") Opinion No. 25, "Accounting for Stock
         Issued to Employees," and related interpretations in accounting for its
         plans and does not recognize compensation expense for its stock-based
         compensation plans other than for restricted stock and options/warrants
         issued to outside third parties. If the Company had elected to
         recognize compensation expense based upon the fair value at the grant
         date for awards under these plans consistent with the methodology
         prescribed by SFAS No. 123, the Company's net loss and loss per share
         for the years ended May 31, 2000 and 1999 would be reduced to the pro
         forma amounts indicated below:

                                                            May 31,
                                                ------------------------------
                                                      2000           1999
                                                ---------------  -------------
              Net loss
                As reported                     $    (1,150,100) $   (767,400)
                Pro forma                       $    (1,326,100) $   (767,400)
              Loss per common share
                As reported                     $         (0.01) $      (0.01)
                Pro forma                       $         (0.01) $      (0.01)

         These pro forma amounts may not be representative of future disclosures
         because they do not take into effect pro forma compensation expense
         related to grants made before 1995. The fair value of these options was
         estimated at the date of grant using the Black-Scholes option-pricing
         model with the following weighted-average assumptions for the year
         ended May 31, 2000: dividend yield of 0%; expected volatility of 90%;
         risk-free interest rate of 5.8%; and expected life of five years. The
         weighted-average fair value of options granted during the year ended
         May 31, 2000 was $0.02, and the weighted-average exercise price was
         $0.08.

         For options granted during the year ended May 31, 2000 where the
         exercise price was greater than the stock price at the date of grant,
         the weighted-average fair value of such options was $0.03, and the
         weighted-average exercise price of such options was $0.21. For options
         granted during the year ended May 31, 2000 where the exercise price was
         less than the stock price at the date of grant, the weighted-average
         fair value of such options was $0.16, and the weighted-average exercise
         price of such options was $0.18. No options were issued during the year
         ended May 31, 2000 where the exercise price equaled the stock price at
         the date of grant.

                                      F-24



<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 6 - STOCKHOLDERS' DEFICIT (Continued)

         Employee Stock Option Transactions (Continued)
         ----------------------------------
         The Black-Scholes option valuation model was developed for use in
         estimating the fair value of traded options which have no vesting
         restrictions and are fully transferable. In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility. Because the Company's employee stock
         options have characteristics significantly different from those of
         traded options, and because changes in the subjective input assumptions
         can materially affect the fair value estimate, in management's opinion,
         the existing models do not necessarily provide a reliable single
         measure of the fair value of its employee stock options.


NOTE 7 - INVESTMENT AGREEMENT

         On June 30, 2000, and subsequently amended on February 15, 2001
         Company entered into an investment agreement with Swartz Private
         Equiary, 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.

         Under the agreement, in order to invoke a put right, the Company must
         have an effective registration statement on file with the Securities
         and Exchange Commission and 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 business 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. This may be construed as a below-market issuance of
         securities and could result in significant charges to the Company's
         earnings.

                                      F-25


<PAGE>



                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 7 - INVESTMENT AGREEMENT (Continued)

         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.


NOTE 8 - INCOME TAXES

         Significant components of the Company's deferred tax assets and
         liabilities for income taxes consisted of the following at May 2000,
         1999, and 1998:
<TABLE>
<CAPTION>


                                                                2000            1999           1998
                                                            --------------  -------------  --------------
              Deferred tax assets
<S>                                                         <C>             <C>            <C>
                Reserve for finance charges                 $      400,000  $     380,000  $      360,000
                Accrued compensation                             1,100,000      1,086,800         990,500
                Interest on related party advances               1,010,000        889,900         770,700
              Operating losses                                   1,629,000      2,393,500       2,805,600
              Valuation allowance                               (4,139,000)    (4,750,200)     (4,926,800)
                                                            --------------  -------------  --------------

                  Net deferred tax asset                    $            -  $           -  $            -
                                                            ==============  =============  ==============
</TABLE>


         The federal operating loss carryforwards at May 31, 2000 were
         approximately $4,525,000.


NOTE 9 - 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,
         2000, 1999, and 1998, the Company maintained short-term advances from
         affiliates of $3,603,800, $3,294,700, and $3,011,700, respectively.
         Accrued interest is attributed to the outstanding balance as incurred.
         The advances bear interest at 9% per annum on any outstanding balance.
         Interest expense on the advances was $309,000, $283,000, and $258,200
         for the years ended May 31, 2000, 1999, and 1998, respectively.

                                      F-26


<PAGE>


                                   MEDITECH PHARMACEUTICALS, INC. AND SUBSIDIARY
                                                   (DEVELOPMENT STAGE COMPANIES)
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                    May 31, 2000

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


NOTE 9 - RELATED PARTY TRANSACTIONS (Continued)

         At May 31, 2000 and 1999, the Company maintained unsecured advances
         from stockholders in the amount of $43,500 and $36,985, respectively.
         The advances are unsecured, non-interest-bearing, and are payable on
         demand.

         Due to cash shortages, the Company has accrued deferred salaries and
         related taxes payable to certain officers who are stockholders and
         directors of the Company. At May 31, 2000 and 1999, the aggregate
         amount of accrued compensation was $2,787,100 and $2,717,000,
         respectively.

         The Company has entered into certain employment agreements with its
         officers and stockholders (see Note 5).

         The Company maintains its primary place of business in facilities owned
         by the Chief Executive Officer (see Note 5). In addition, the Company
         has not paid compensation to its officers for the year ended
         May 31, 2000. Related to these services, the Company has recorded
         expenses in the amount of $126,900 for the year ended May 31, 2000,
         which have been reflected as an increase in additional paid-in capital.


NOTE 10 - YEAR 2000 ISSUE

         The Company has completed a comprehensive review of its computer
         systems to identify the systems that could be affected by ongoing Year
         2000 problems. Upgrades to systems judged critical to business
         operations have been successfully installed. To date, no significant
         costs have been incurred in the Company's systems related to the Year
         2000.

         Based on the review of the computer systems, management believes all
         action necessary to prevent significant additional problems has been
         taken. While the Company has taken steps to communicate with outside
         suppliers, it cannot guarantee that the suppliers have all taken the
         necessary steps to prevent any service interruption that may affect the
         Company.

                                      F-27

<PAGE>


<TABLE>
<CAPTION>


                                         SCHEDULE II
                            Amounts receivable from related parties and
                   underwriters, promoters and employees other than related parties

                                                                                     Balance at
                                                                     Reductions    end of Period
-----------------------------------------------------------------------------------------------------
Name of           Period     Balance at     Additions      Amounts    Amounts   Current   Not Current
Debtor                        Beginning                   Collected   Written
                              Of Period                                Off
-----------------------------------------------------------------------------------------------------

<S>               <C>          <C>            <C>           <C>         <C>     <C>         <C>

Mas
Industries, Inc. 6/1/99 to      $250            -             -          -     $250           -
                   5/31/00

                 6/1/98 to      $250            -             -          -     $250           -
                   5/31/99

                 6/1/97 to      $250            -             -          -     $250           -
                   5/31/98

Skin Control     6/1/99 to      $900            -             -          -     $900           -
Systems, Inc.      5/31/00

                 6/1/98 to      $900            -             -          -     $900           -
                   5/31/99

                 6/1/97 to      $900            -             -          -     $900           -
                   5/31/98

JCR             6/1/99 to       $100            -             -          -     $100           -
Marketing, Inc.   5/31/00

                6/1/98 to       $100            -             -          -     $100           -
                  5/31/99

                6/1/97 to       $100            -             -          -     $100           -
                  5/31/98

</TABLE>

<PAGE>


                                   SCHEDULE V
                          PROPERTY, PLANT AND EQUIPMENT



Classification                        Balance at    Additions      Retirement
                                     Beginning of                   At Cost
                                       Period
--------------------------------------------------------------------------------

May 31, 2000                           $135,600      $      0      $      0

Year Ended May 31, 1999
Furniture, Fixtures & Equip            $135,600             0             0
Clinic Equipment                              0             0             0
Leasehold Improvements                        0             0             0
                                       --------      --------      --------
                                       $135,600      $      0      $      0

Year Ended May 31, 1998
Furniture, Fixtures & Equip            $135,600      $      0      $      0
Clinic Equipment                              0             0             0
Leasehold Improvements                        0             0             0
                                       --------      --------      --------
                                       $135,600      $      0      $      0


                                                Other Changes    Balance at
                                                 Add (Deduct)   End of Period
--------------------------------------------------------------------------------

May 31, 2000                                       $      0     $135,600

Year Ended May 31, 1999
Furniture, Fixtures & Equip                        $      0     $135,600
Clinic Equipment                                   $      0     $      0
Leasehold Improvements                             $      0     $      0
                                                   --------     --------
                                                   $      0     $135,600

Year Ended May 31, 1998
Furniture, Fixtures & Equip                        $      0     $135,600
Clinic Equipment                                   $      0     $      0
Leasehold Improvements                             $      0     $      0
                                                   --------     --------
                                                   $      0     $135,600

<PAGE>


                                   SCHEDULE VI
              ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
                        OF PROPERTY, PLANT AND EQUIPMENT


                                            Balance at    Additions
Description                                 Beginning     Charged to  Retirement
                                            Of Period   Costs/Expenses
--------------------------------------------------------------------------------


May 31, 2000                                $135,600      $      0      $      0

Year Ended May 31, 1999
Furniture, Fixtures & Equip                 $135,600      $      0      $      0
Clinic Equipment                            $      0      $      0      $      0
Leasehold Improvements                      $      0      $      0      $      0
                                            --------      --------      --------
                                            $135,600      $      0      $      0

Year Ended May 31, 1998
Furniture, Fixtures & Equip                 $135,600      $      0      $      0
Clinic Equipment                            $      0      $      0      $      0
Leasehold Improvements                      $      0      $      0      $      0
                                            --------      --------      --------
                                            $135,600      $      0      $      0


                                              Other Changes      Balance at
                                              Add (Deduct)      End of Period
--------------------------------------------------------------------------------

May 31, 2000                                    $      0         $135,600

Year Ended May 31, 1999
Furniture, Fixtures & Equip                     $      0         $135,600
Clinic Equipment                                $      0         $      0
Leasehold Improvements                          $      0         $      0
                                                --------         --------
                                                $      0         $135,600

Year Ended May 31, 1998
Furniture, Fixtures & Equip                     $      0         $135,600
Clinic Equipment                                $      0         $      0
Leasehold Improvements                          $      0         $      0
                                                --------         --------
                                                $      0         $135,600